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GATT Library
rn969sk7426
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 22, 1947
United Nations. Economic and Social Council
22/08/1947
official documents
E/PC/T/TRF/101, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/rn969sk7426
rn969sk7426_90260120.xml
GATT_154
127
852
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/ 101 22 A ugust, 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Saturday, 23 August: Negotiating Countries Brazil - New Zealand Number of Meeting 3rd Australia - Cuba Time 9 30 10.00 Room Number 101 435 DEUXIEME SESSION DE LA COMMISSION PREPRATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires Les rèunions suivantes ont été prévues pour le samedi 23 août: Pays participant aux négociations Brésil - Nouvelle Zélande Numéro de la réunion 3ème Numéro de Heure la salle 9.30 101 Australie - Cuba NATIONS UNIES 3 ème 10. 00 435
GATT Library
qn012yy2920
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 14, 1947
United Nations. Economic and Social Council
14/10/1947
official documents
E/PC/T/TRF/146, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/qn012yy2920
qn012yy2920_90260165.xml
GATT_154
173
1,277
ECONOMIC CONSEIL E/PC/T/TRF/146 AND ECONOMIQUE 14 October 1947. SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations No meetings have been fixed for Wednesday, 15th October 1847. Nate The Secretariat has been advised that the following additional meetings took place on Friday, 10 October, Saturday, 11 October, Monday, 13 October and Tuesday, 14 October: Australia - Newfoundland 2nd meeting Benelux - France 59th, 60th, 61st and 62nd meetings France - United States 46th and 47th meetings DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DES NATIONS UNIES SUR LE COMMERCE ET L'EMPLOI. Négociations tarifaires Aucune séance n'a été fixée pour le mercredi 15 octobre 1947. Remarque : Le Secrétariat a été avisé que les séances supplémentaires suivantes ont eu lieu les vendredi 10 octobre, samedi 11 octobre, lundi 13 octobre et mardi 14 octobre: Australie - Nouvelle-Zélande 2ème séance Benelux - France 59ène, 60ème, Clème et 62ème séances France - Etats-Unis 46ème et 47ème séances UNITED NATIONS NATIONS UNlES SECRET
GATT Library
sd679hj1715
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 19, 1947
United Nations. Economic and Social Council
19/08/1947
official documents
E/PC/T/TRF/98, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/sd679hj1715
sd679hj1715_90260117.xml
GATT_154
254
1,583
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE E/PC/T/TRF/98 ET SOCIAL 19 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Wednesday 20 August:- Negotiating Countries Brazil - South Africa Brazil - Norway Benelux - China Australia - China Benelux - France Benelux - United Kingdom Chile - India Benelux - United Kingdom Brazil - France France - United Kingdom Lebanon-Syria -- United States Number of Meeting 3rd 3rd 9th 5th 34th 27 th 4th 28th 5th 14th 12th Time 10. 00 10. 30 10.30 10.30 10.30 10.45 3 .00 3. 00 3.30 3.30 5.00 Room Number 400 400 435 Sténodactylo 3 18 400 402B 402A 402A 18 435 DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L 'EMPLOI DE L'ORGANISATION DES NATIONS UNIES. Négociations Tarifaires Les réunions suivntes ont ééé4 péevues pour le mercredi 20 oûi:; Pays participant aux éngoications Bérsil - Unoin Sud Africaine Bérsil - Norvege Benelux - Chine Australie - Chine Benelux - France Benelux - Royaume Uni Chili - Inde Benelux - Royaume Uni Bérsil - France France - Royaume Uni Liban-Syrie - Etats Unis Nuémro de la érunion 3é3 mem 5 34 27 28é5é14ééé4 eec me éme éme éme éme éme éme éme 12éme Heure 10.00 10.30 10.30 10.30 10 30 10.45 15.00 15.00 15.30 15 30 17.00 Numéro de la salle 400 400 402A 435 Sténodactylo 18 400 402B 18 435 3 SECRET NATIONS UNIES
GATT Library
rr857yv6221
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 17, 1947
United Nations. Economic and Social Council
17/09/1947
official documents
E/PC/T/TRF/123, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/rr857yv6221
rr857yv6221_90260142.xml
GATT_154
229
1,566
UNITED NATIONS' iA ! -, ECONOMIC AND SOCIAL COUNCIL CONS IL E 'SOCIA ET SCCIAL E/9&/T/TRF/123 17 September 1947 SECOND SESSION OF THE PREPARAPTORY COMMITTEE OF THE UNITED TRTIONS CONFERENCE ONT rADE AND EMPLOYMENT. TARIFF NEGOTIATIONS The following meetings have been arranged for Thursday, 18 September: Ne~otiating Cotitries Czechoslovakia - France France - United States Cuba - United States Number rf N Eetzin ,- '' ,. - ime 2Oth 26th 55tl 10 00 10.30 3,00 Room Number Stenodactyl 3 402A Salle de Comite L-4. NOTE: In gddition to the meetin,s listed in E/PC/T/TRF/122, the Secretariat has been notified that the following additional meetings were held on Wednesday, 17 September: Cuba - United Statec Czechoslovakia - United Kingdom SECRET E/PC/T/TRF/123 17 septembre 1947 DEUXMEME SESSION DE LA COM\ISSION PREPARATOIRE MMERA CONFERELCEMDU CO>A4ECE ET DE l'E1PLOI DE LEORGANISATION DES NATIONS UNIES. NEGOCTATTONS TARIFAT-ES. Les éeé prèv suivantes ont 6t6lrtvues pour le jeudi 18 septembre: Pays prenant part aux negociations Tchdcoslovaquie - France France - Etats-Unis éuba - Etats-Unis d'Amerique Num6ro d~ord3re de la stance Heure Salle 2O6ni 26 6r. 5, o e j. :.C 10,L Stdnodactyl 3 402-A Salle de Comite L-4. éOTE: En plus des seancues dont la liste figre au document E/Pé/T/TRF/12é,éle Seér6tariat a et6 avise que les s6ances supplementaires suivantus ont eu lieu le mercredi 17 septembre: Céba- Etats-Unis d'Am6rique ume-cos3 irevi..p' '.,.Uni SECRET NAT.'] I V r
GATT Library
xg578pt7279
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 26, 1947
United Nations. Economic and Social Council
26/08/1947
official documents
E/PC/T/TRF/104, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/xg578pt7279
xg578pt7279_90260123.xml
GATT_154
161
1,091
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/104 26 August 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for 27 August: Negotiating Countries New Zealand - United States Brazil - United States Brazil - United Kingdom; Norway - Burma Number of Meeting. 2nd 6th 7th 3rd Wednesday, Room Time Number 9.30 Salle de Comité L 4 10.00 402C 10.45 402B 3.30 0402A DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires Les réunions suivantes ont été prevues pour le mercredi 27. août: Pays participant aux négociations Nouvelle-Zélande - Etats-Unis Brésil - Etats-Unis Brésil - Royaume-Uni Numéro de la reunion Heure 2 ème 6 ème 7 ème Numéro de la Salle 9.30 Salle de Comite 14 10.00 402C 10.45 402B Norvège - Birmanie NATIONS UNIES 3 ème 1 5.30 402A
GATT Library
xg598gh8813
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 12, 1947
United Nations. Economic and Social Council
12/09/1947
official documents
E/PC/T/TRF/119, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/xg598gh8813
xg598gh8813_90260138.xml
GATT_154
165
1,136
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/119 12 Septermber 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meeting has been arranged for Saturday, 13 September: Negotiating Countries Benelux - United States Number of Meeting 33rd Time 10.00 Room Number Selle de Comite L. 4 NOTE: The Secretariat has not been notified of any other meetings held on Friday, 12 Septem.iber, in addition to those listed in E/PC/T/TRF/118. DEUXIEME SESSION DE LA. COMMSSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations tarifaires La séance suivante a été prévue pour le samedi 13 septemLre Pays prenant Dart aux négociations Numéro de la séance Salle Heure Numer; Benelux - Etats-Unis 3èeme 10.00 Salle de o miè6 L,4 NOTE : Le Secé6tariat n'a pasé6éA inforée que d'autres é6ances aient eu lieu, le vendredi 12 septembre, en plus des é6ancesé6nméaé6es dan's le document E/PC/T/TRF/18:. NATIONS UI1ES
GATT Library
wm989mf3295
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 23, 1947
United Nations. Economic and Social Council
23/09/1947
official documents
E/PC/T/TRF/128, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/wm989mf3295
wm989mf3295_90260147.xml
GATT_154
249
1,991
UNITED NATIONS ECONOMIC CONSEIL SECRET AND ECONOMIQUE E/PC/T/TRF/128 SOCIAL COUNCIL ET SOCIAL 23 September 1947 SECOND SESSION OF THE. PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Wednesday, 24 September 1947: Number of Negotiating Countries Meeting Time Room Number Ceylon - China 4th 9.30 402B Australia - Czecho- 5th 10.00 435 slovakia Benelux - France 53rd 10.30 Stenodactyl 3 France - India 8th 3.00 400 France - United States 31st 5.00 402A Note: The meeting listed in E/PC/T/TRF/127 between Benelux and France was cancelled. The Secretariat has been informed that in addition to the meetings listed in E/PC/T/TRF/127 the following additional meeting was held on Tuesday, 23 September: China - Cuba DEUXIEME SESSION DE L. COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires Les séances suivantes ont été prévues pour le mercredi, 24 septembre 1947: Pays participant Numero de Numéro de aux négociations la reunion Heure la salle Ceylan - Chine 4ème 9.30 402B Australie - Tchéco- slovaquie 5ème 10.00 435 Benelux - France 53ème 10.30 Stenodactyl 3 France - Inde 8ème 15.00 400 France - Etats-Unis 31ème 17.00 402A N.B. La séance prévue dans le document E/PC/T/TRF/127 entre Benelux et France a été annulée. En plus des seances dont la liste figure au document E/PC/T/TRF/127, le Secretariat a été avisé que la stance supplémentaire suivante a eu lieu le mardi, 23 septembre: Chine - Cuba NATIONS UNlES
GATT Library
wd102bm5835
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 16, 1947
United Nations. Economic and Social Council
16/10/1947
official documents
E/PC/T/TRF/148, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/wd102bm5835
wd102bm5835_90260167.xml
GATT_154
75
525
UNITED NATIONS. ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL 16 October 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations No meetings have been fixed for Friday, 17 October 1947. DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES. Négociations Tarifaires Aucune réunion n'a été prévue pour le vendredi, 17 octubre 1947. NATIONS UNIES SECRET
GATT Library
rj665wj3407
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 30, 1947
United Nations. Economic and Social Council
30/09/1947
official documents
E/PC/T/TRF/134, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/rj665wj3407
rj665wj3407_90260153.xml
GATT_154
183
1,271
UNITED NATIONS SECRET ECONOMIC AND SOCIAL COUNCIL CONSElL ECONOMIQUE ET SOCIAL E/PC/T/TRF/134 30 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations The following meeting has been arranged for Wednesday, 1st October 1947: Negotiating Countries Czechoslovakia - France Number of Meeting 22nd Time Room Number 10.00 Stenodactyl 3 Note: The Secretariat has been informed that in addition to the meetings listed in E/PC/T/TRF/134, the following additional meetings were held on Tuesday, 30 September: India - China 5th meeting United States - China DEUXIEME SESSION DEL LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires La séance suivante a été prévue pour le mercredi, 1 Octobre, 1947: Pays participant aux négociations Numéro de la réunicn Tchécoslovaquie - France 22ème 10.00 Sténodactyl 3 Note: En plus de séances dont la liste figure au document E/PC/T/TRF/133, le Secrétariat a été avisé que les stances supplémentaires suivantes ont eu lieu le mardi, 30 Septembre Inde - Chine 5ème-réunion Etats-Unis - Chine Heure Numéro de la salle NATIONS UNIES
GATT Library
rd898tz7723
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Information Center Geneva, April 22, 1947
United Nations Information Center Geneva
22/04/1947
press releases
Press Release No.71 and PRESS RELEASE NO.36-354
https://exhibits.stanford.edu/gatt/catalog/rd898tz7723
rd898tz7723_90260216.xml
GATT_154
788
5,832
UNITED NATIONS Information Center Geneva. Press Release No.71 22 April, 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE- UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYEMNT Tariff Negotiations The schedule below shows the dates which it has been possible to establish for the exchange of lists of offers of tariff concessions between members of the Preparatory Committee. Tariff negotiations shall be deemed to have commenced when on the dates established negotiating teems from any two members meet and exchange such lists of offers. Mr. .E Wyndham-White, Executive Secretary of the Preparatory Committee, will hold this afternoon at 5 p.m. in RoomH - 3 a press conference o nthis plan of work. Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia - Belgium-Netherlands-Luxemburg - Brazil - Canada - Chile - China - Cuba - Czechoslovakia - France - India - Lebanon-Syria - New Zealand - Norway 30 May 20M ay 17 May 30 May 30 April 28 May 7 May Press Release No.71 Page 2. Australia - Union f South Africa Australia - United Kingdom Australia - United States Belgium-Netherlands-Luxemburg - Brazil Belgium-Netherlands-Luxemburg - Canada Belgium-Netherlands-Luxemburg - Chile Belgium-Netherlands-Luxemburg - China Belgium-Netherlands-Luxemburg - Cuba Belgium-Netherlands-Luxemburg - Czechoslovakia Belgium-Netherlands-Luxemburg - France Belgium-Netherlands-Luxemburg - India Belgium-Netherlands-Luxemburg - Lebanon-Syria Belgium-Netherlands-Luxemburg - New Zealand Belgium-Netherlands-Luxemburg - Norway Belgium-Netherlands-Luxemburg - Union of South Africa Belgium-Netherlands-Luxemburg - United Kingdom Belgium-Netherlands-Luxemburg - United States Brazil - Canada Brazil - Chile Brazil - China Brazil - Cuba Brazil - Czechoslovakia Brazil - France Brazil - India Brazil - Lebanon-Syria Brazil - New Zealand Brazil - Norway Brazil - Union of South Africa Brazil - United Kingdom Brazil - United States 28 May 23 April 9 May 10 May 30 May 14 May 12 May 30 May 21 May 9 May 14 May 12 May 10 May 12 May. 21 May 9 May 8 May 30 May 8 May 9 May 26 May 15 May 9 May 30 May 17 May 30 April - Chile - China - Cuba - Czechoslovakia - France - India - Lebanon-Syria - New Zealand - Norway - Union of South Africa - United Kingdom - United States - China - Cuba - Czechoslovakia - France - India - Lebanon-Syria - New Zealand - Norway - Union of South Africa - United Kingdom - United States - Cuba - Czechoslovakia - France - India - Lebanon-Syria - New Zealand - Norway - Union of South Africa Press Release No.71 Page 3. 14 May 5 May 5 May 23 April 25 April- 1 May 30 April 23 19 19 21 15 April May May May May 12 May 26 28 30 1 25 19 7 13 5 May Aprie April May April May May May May Canaad Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada aCnaad Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile China China China China China China China China Press Release No.71 Page 4. China - United Kingdom 8 May China - United States 9 May Cuba - Czechoslovakia 30 April Cuba - France 2 May Cuba - India 21 May Cuba - Lebanon-Syria Cuba - New Zealand 13 May Cuba - Norway 5 May Cuba - Union of South Africa 15 May Cuba - United Kingdom 30 April Cuba - United States 12 May Czechoslovakia - France 22 May Czechoslovakia - India 9 May Czechoslovakia - Lebanon-Syria 15 May Czechoslovakia - New Zealand 30 April Czechoslovakia - Norway 12 May Czechoslovakia - Union of South Africa 5 May Czechoslovakia - United Kingdom 27 May Czechoslovakia - United States 23 April France - India 12 May France - Lebanon-Syria 29 April France - New Zealand 10 May France - Norway 30 April France - Union of South Africa 25 April France - United Kingdom 28 April France - United States 24 April India - Lebanon-Syria (subject to revision) 1 May India - New Zealand 16 May India - Norway 14 May Press Release No.71 Page 5. India - Union of South Africa India - United Kingdom 30 April India - United States 28 April Lebanon-Syria - New Zealand Lebanon-Syria - Norway Lebanon-Syria - Union of South Africa Lebanon-Syria - United Kingdom 7 May Lebanon-Syria - United States 2 May New Zealand - Norway .9 May New Zealand- Union of South Africa 5 May New Zealand - United Kingdom New Zealand - United States 30 April Norway - Union of South Africa 6 May Norway - United Kingdom 3 May Norway - United States 2 May Union of South Africa -United K domO 6 a _ _ _ _ _ _ _ _ _ 16 M a y Union of South Africa - United States 28 April United Kingdom - United States 23 April
GATT Library
rf829cm5981
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 22, 1947
United Nations. Economic and Social Council
22/10/1947
official documents
E/PC/T/TRF/153, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/rf829cm5981
rf829cm5981_90260172.xml
GATT_154
120
804
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/153 22 October, 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations No meetings have been fixed for Thursday, 23 October 1947 Note: The Secretariat has been informed that the following meeting was held on Saturday, 18 October: India - United States 9th meeting DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATlON DES NATIONS UNIES Négociations Tarifaires Aucune réunion n'a été prevue pour le jeudi, 23 octobre 1947. Note: Le Secrétariat a été avisé que la séance suivante a eu lieu le samedi, 18 octobre: Inde - Etat-Unis NATIONS UNlES 9ème réunion
GATT Library
rm245rx4052
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 9, 1947
United Nations. Economic and Social Council
09/09/1947
official documents
E/PC/T/TRF/116, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/rm245rx4052
rm245rx4052_90260135.xml
GATT_154
246
1,646
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE, ET SOCIAL SECRET E/PC/T/TRF/116 9 September 1947 SSION OF TTiB P PARATOY?Y COMkITTNII OF THTI? SECOND SESSION OF THE PREPARATO"Y C0M-ITTEE OF THE UNITED NATIONS CONFERENCE ON TRPDE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Wednesday, 10 September: Negotiating Countries Benelux - France Benelux - India Cuba - United States Benelux - Czechoslovakia Number of MMetini.: 48th 5th 44th 7th Time 10.30 11.00 3.00 4.oo Room Number Stenodactyl 3 400 Salle de Comite L-4 40o NT0E: In addition to the meetings listed in E/PC/T/TRF/115 the Secretariat has been notified that the following additional meetings were held on Tuesday, 9 September: Brazil - Czechoslovakia Benelux - United States Benelux - Norway RELUXEi SESSION DE L7 CO!iiS6I01 PREPA-ATOIHL DE LA C0NI-.ElCE DU COikERt3 ET DE L EiLO1 DB 1 ORGAirIbTIOl DES NATIONS UNIES. Nzgociations tariifires Tes seénces suivantes sont prdvues pour la journce du mlrcredi 10 seotemore: Pays nedociateurs N, do I, sdance - Benelux - France 48 me / Benelux - Inde 5&me Cuba - tats-Unis d'*eA-. 4&mb rique Benelux - Tch6coslovaouie 7tme H1ure 10. 30 11 h. 15 h. 16 h. 1i.o do salle StUnoac l '3 400 Salle de Co- dit-6 L-4 400 NOTE: Outre les stances dont la liste figure au document E/PC/T/TéF/115, io Secretariat a Ctd avise cue les stances muppl6mentapres suivantes ont 6t6 tenues le xardi ': seotembre: Br6sil - Tchdcoslovaouie Benelux - Etats-Unis d'd^irique Benelux - Norvege NATIONS UNlES
GATT Library
rm377cf0913
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 23, 1947
United Nations. Economic and Social Council
23/10/1947
official documents
E/PC/T/TRF/154, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/rm377cf0913
rm377cf0913_90260173.xml
GATT_154
78
555
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNlES SECRET CONSEIL E/PC/T/TRF/154 ECONOMIQUE 23 October 1947 ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations No meetings have been fixed for Friday, 24 October 1947. DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES - N goniatiris Taiifaires Auéune reunioé é'a éte pr&vue pour le vendredi, 24 octo4re 1917.
GATT Library
my159gt6795
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 6, 1947
United Nations. Economic and Social Council
06/10/1947
official documents
E/PC/TRF/139, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/my159gt6795
my159gt6795_90260158.xml
GATT_154
279
1,897
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL SECRET ECONOMIQUE E/PC/TRF/139 ET SOCIAL 6 October 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Tuesday, 7th October: Negotiating Countries France - United Kingdom (Palestine) Australia - China Australia - Benelux Czechoslovakia - Beralux Australia - France Number of Meeting 3rd 9th 6th 11th 14th Time 10.30 2.30 3.00 3.30 4.00 Room Number 18 402B 435 400 402A Note: The Secretariat has been advised that in addition to the meetings listed in E/PC/T/TRF/137, the following additional meetings were held on Saturday, October 4 and Monday, October 6: United States - France United States - France United States - Canada United Kingdom - Brazil Czechoslovakia - France 38th meeting 39th m. " 44th " 7th " 23rd " DEUXIEME SESSION DE LA COMMISSION PREPARTOIRE DE LA CONFERENCE DU COMMERCE ET DE L'RMPLOI DE L'ORGANISATIONS DES NATIONS UNIES Négociations Tarifaires Les seances suivantes ont été prévues pour le mardi 7 octobre: Pays Participant aux négociations Numéro de la réunion France - Reyaume Uni (Palestine) 3ème Australie - Chine 9ème Australie - Benelux 6ème Tchécoslovaquie - Benelux 11ème Australie - France 14ème Heure 10.30 14.30 15.30 15.30 16. 00 Numéro de la salle 18 402B 435 400 402A Note: En plus des séances dont la liste figure au document E/PC/T/TRF/137, le Secrétariat a été avisé que les seances supplémentaires suivantes ont eu lieu le samedi, 4 octobre et lundi, 6 octobre: Etats-Unis - France Etats-Unis - France Etats-Unis - Canada Royaume-Uni - Brésil Tchécoslovaquie - France 38ème réunion 39ème réunion 44ème " 7ème " 23ème " NATIONS UNIES
GATT Library
nf354kn3784
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 7, 1947
United Nations. Economic and Social Council
07/10/1947
official documents
E/PC/T/TRF/140, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/nf354kn3784
nf354kn3784_90260159.xml
GATT_154
176
1,209
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/140 7 October 1947. SESCOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations The following meeting has been arranged for Wednesday, 8th October: Negotiating Countries Australia - United Kingdom Number of Meeting 2nd Time 11.00 Room Number 435 Note: The Secretariat has been advised that in addition to the meetings listed in E/PC/T/TRF/139, the following additional meeting was held on Tuesday, 7th October: Australia - United kingdom 1st meeting DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires La seance suivante a été prévue pour le mereredi 8 octobre: Pays Participant aux négociations Australie - Royaume Uni Numéro de la réunion 2ème Heure 11.00 Numéro de la salle 435 Note: En plus des seances dont la listed figure au document E/PC/T/TRF/139, le Sécrétariat a été avisé que la séance supplémentaire suivante a eu lieu le mardi, 7 octobre. Australie - Royaume-Uni NATIONS UNIES Iére réunion
GATT Library
ng096zs8551
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 11, 1947
United Nations. Economic and Social Council
11/10/1947
official documents
E/PC/T/TRF/144, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/ng096zs8551
ng096zs8551_90260163.xml
GATT_154
121
829
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SLCRET E/PC/T/TRF/144 11 October 1947 SECOND SESSION UNITED NATIONS OF THE PREPARATORY COMMITTEE OF THE CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations No meetings have been fixed for Monday, 13th October 1947 Note: The Secretariat has been advised that the following additional meeting took place on Saturday 11 October: Canada - France 12th meeting DEUXEME SESSION DE LA COMMISSION PREPARATOIRE DE L.A CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATONI DES NATIONS UNIES Négociations Tarifaires Aucune réunion n'a été prévue pour le lundi, 13 octobre 1947. Note: Le Secrétariat a été avisé que la séance supplémentaire suivante a eu lieu le samedi, 11 octobre: Canada - France 12ème réunion NATIONS UNIES
GATT Library
mr186kv5800
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 11, 1947
United Nations. Economic and Social Council
11/09/1947
official documents
E/PC/T/TRF/118, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/mr186kv5800
mr186kv5800_90260137.xml
GATT_154
213
1,536
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/118 11 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations The following meetings have been arranged for Friday, 12 September: Negotiating Countries Number of Meeting China - Cuba 4th France - New Zealand 6th Czechoslovakia - United Kingdom 6th Cuba - United States 46th Cuba - United States 47th Room Time Number 9.30 10.00 10. 30 400 402B 18 11.00 Salle de Comite L-4 3.00 Salle de Comite L-4 NOTE: The Secretariat has not been notified of any other meetings held on Thursday, 11 September, in addition to those listed in E/PC/T/TRF/117. DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES. Négociations tarifaires. Les séancas suivantos ont été prévues pour le Vendredi 12 Septembre: Numéro d'ordre de China - Cuba France-Nouvelle-Zélande Tchécoslovaquie-Royaume-Uni Cuba--Etats-Unis Cuba-Etats-Unis Heure Salle la séance - 41me 6eme 6 me 46emo 9.30 10.00 10.30 ll-00 4.00 402 B 1B solle de 002i1t L 4 15.00 Salle do Comit6 L-4 N'TEé éLe Sccré6tariat nta 6ro infséanceaucune auto UancG tenue le jeud'9l1 septembere, en dehors de cells qui ont 6t6 cnumer6ee dans le dooumant E/PC/T/TRF/117 py!s en negociations NATIONS VNIES
GATT Library
kk384pd9686
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 29, 1947
United Nations. Economic and Social Council
29/08/1947
official documents
E/PC/T/TRF/107, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/kk384pd9686
kk384pd9686_90260126.xml
GATT_154
200
1,404
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL SECRET ECONOMIQUE E/PC/T/TRF/107 ET SOCIAL 29 August 1947 SECOND SESSION OF THE PREPARATORV COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meeting has been arranged for Saturday, 30 August: Number of Meeting Negotiating Countries Czechoslovakia - United States 25th Room Time Number 10.00 Salle de Comite L-4 NOTE: In addition to the meetings listed in E/PC/T/TRF/106, the Secretariat has been notified that the following additional meetings were held on Friday, 29 August Benelux - Lebanon/Syria United States - Lebanon/Syria United States - United Kingdom United States - China (2 meetings) DEUXIEME SESSION DE LA. COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations tarifaires La séance suivante aura lieu le samedi 30 août : Pays participant aux négociations Tchécoslcvaquie - Etats-Unis No d'ordre de la séance Heure 25ème No de la salle 10.00 Salle de Comité L-4 NOTE: En plus des seances indiquées dans le document E/PC/T/TRF/106 le Secrétariat a été informé que les séances supplémentaires suivantes ont eu lieu le vendredi, 29 août Benelux - Liban/Syrie Etats-Unis - Liban/Syrie Etats-Unis - Royaume-Uni Etats-Unis - Chine (2 séances) NATIONS UNlES
GATT Library
hv478cq6430
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 13, 1947
United Nations. Economic and Social Council
13/09/1947
official documents
E/PC/T/TRF/120, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/hv478cq6430
hv478cq6430_90260139.xml
GATT_154
156
1,082
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL E/PC/T/TRF/120 13 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations The following meetings have been arranged for Monday, 15 September: Negotiating: Countries Australia - Czechoslovakia Benelux - Czechoslovakia Number of Meeting 5th 7th Room Time Number 3.15 4. 00 435 402B Note: The following meeting has been arranged for Sunday, 14 September: Cuba - United States DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations tarifaires Les séances suivantes ont été prévues pour le lundi 15 septembre : Pays prenant part aux négociations Numéro d'ordre de la séance Heure Salle Numéro Australie - Tchécoslovaquie Benelux - Tchécoslovaquie 5ème 7 ème 15.15 16.00 Note : La séance suivante a été prevue pour le dimanche 14 septembre : Cuba - Etats-Unis 435 402B NATIONS UNIES SECRET
GATT Library
jd429kj5838
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 18, 1947
United Nations. Economic and Social Council
18/10/1947
official documents
E/PC/T/TRF/150, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/jd429kj5838
jd429kj5838_90260169.xml
GATT_154
124
825
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL COINSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/150 18 October 1947. SECOND SECTION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations No meetings have beer. fixed for Monday, 20 October 1947. Note : The Secretariat has been informeu that the following meeting was held on Friday, 17 October: France - United States 49th meeting DEUXIEME SESCION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORNGANISATION DES :n's flT ci: Ta UNIES Négociations Tarifaires ducune réunion n'a élé prévue pour le lundi, 20 octobre. Note : Le Secretariat a été avisé aue la séance suivante a eu lieu le vendredi, 17 octobre: France - Etats-Unis 49ème réunion NATIONS UNIES
GATT Library
gd770qx8497
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 14, 1947
United Nations. Economic and Social Council
14/08/1947
official documents
E/PC/T/TRF/94, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/gd770qx8497
gd770qx8497_90260113.xml
GATT_154
186
1,234
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL SECRET ECONOMIQUE E/PC/T/TRF/94 ET SOCIAL 14 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Friday, 15 August: Negotiating Countries Australia - South Africa Brazil - China Czechoslovakia - France Australia - Chile Benelux - United Kingdom Brazil - France Chile - China Number of Meeting 4th 3rd 16th 3rd 25th 4th 2nd Time 9.30 10.00 10.00 10.30 3.00 3.00 5.00 Room Number 402A 436 402C 435 18 436 402B DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires Les réunions suivantes ont été prévues pour le vendredi 15 août: Pays participant aux négociations Australie - Afrique du Sud Brésil - Chine Tchécoslovaquie - France Australie - Chili Benelux - Royaume-Uni Brésil - France Chili - Chine Numéro de la réunion Heure 4ème 3 ème 16ème 3ème 25ème 4ème 2ème 9.30 10.00 10.00 10.30 15.00 15.00 17.00 Numéro de la salle 402A 436 402C 435 18 436 402B NATIONS UNIES
GATT Library
hm944hn3563
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 5, 1947
United Nations. Economic and Social Council
05/09/1947
official documents
E/PC/T/TRF/113, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/hm944hn3563
hm944hn3563_90260132.xml
GATT_154
233
1,588
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/113 5 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Saturday, 6 September: Negotiating Countries Australia - Lebanon/Syria Benelux - France Canada - Cuba China - United Kingdom Australia - Newfoundland Number of Meeting 1st 45th 4th 9th 1st Time 10.30 10.30 10.30 10.55 11.30 Room Number 435 Stenodactyl 3 400 402B 435 NOTE: In addition to the meetings listed in E/PC/T/TRF/112 the Secretariat has been notified that the following additional meetings were held on Friday, 5 September: Cuba - United States France - United States (2 meetings) DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations tarifaires Les réunions suivantes ont été prévues pour le samedi, 6 septembre: Pays participant aux négociations Australie - Liban/Syrie Benelux - France Canada - Cuba Chine - Royaume-Uni Australie - Terreneuve Numéro de Numéro de la réunion Heure la salle lère 45 ème 4ème 9 ème lère 10.30 10.30 10.30 10.55 11. 30 435 Sténodactyl 3 400 402B 435 NOTE: En plus des séances indiquées dans le document E/PC/T/TRF/112 le Secrétariat a été informé que les séances supplémentaires suivantes ont eu lieu le vendredi, 5 septembre: Cuba - Etats-Unis France - Etats-Unis (2 séances) NATlONS UNIES
GATT Library
cn258vt9478
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 28, 1947
United Nations. Economic and Social Council
28/08/1947
official documents
E/PC/T/TRF/106, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/cn258vt9478
cn258vt9478_90260125.xml
GATT_154
304
2,020
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC,/T/TRF/106 28 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following Meetings have been arranged for Friday, 29 August: Negotiating Countries Australia - United States Benelux - United States Benelux - France Brazil - China Chile - India Benelux - France Cuba - India Czechoslovakia - United States Cuba - United States France - Lebanon/Syria Number of Meeting 3rd 27th 40th 5th 5th 41st 4th 24th 34th 5th Room Time Number 9.30 435 9.30 Salle de Comite L-4 10.15 Stenodactyl 3 10.30 436 11.30 400 3.00 Stenodactyl 3 3.00 400 3.30 Salle de Comite L-4 4.00 402B 4.00 402C NOTE: In addition to the meetings listed in E/PC/T/TRF/105, the Secretariat has been notified that the following additional meetings were held on Thursday, August 28th: United States - Lebanon/Syriu Benelux - Chile DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations tarifaires Les seances suivantes auront lieu le vendredi 29 août: Pays participant aux négotiations Australie - Etats-Unis Benelux - Etats-Unis No d'ordre de la séance 3ème . 27ème Benelux - France Brésil - Chine - Chili - Inde Benelux - France Cuba - Inde. Etats-Unis - Tchécoslovaquie Cuba - Etats-Unis France - Liban/Syrie 40ème 5ème 5ème 41ème 4ème 24ème 34ème 5 ème No de la Heure salle 9.30 435 9.30 Salle de Comité L-4 10.15 Sténodactyl 3 10.30 436 11.30 400 15.00 Sténodactyl 3 15.00 400 15.30 Salle de Comité 16.00 16.00 L-4 402B 402C NOTE: En plus des séances indiquées dans le document E/PC/T/TRF/10, le Secretariat a été informé que les séances supplémentaires suivantes ont eu lieu le jeudi 28 août: Etats-Unis - Liban/Syrie Benelux - Chili NATIONS UNIES
GATT Library
sw653yb1856
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, October 1, 1947
United Nations. Economic and Social Council
01/10/1947
official documents
E/PC/T/TRF/135, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/sw653yb1856
sw653yb1856_90260154.xml
GATT_154
217
1,476
UNITED NATIONS A ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQU E ET SOCIAL E/PC/T/TRF/135 14October, 1917. SECOND HESESSIARAOF T POMM.'AEORY C01'ITT7E OF THE UNITED NAEIONS CONFER NCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Thursday, 2nd O:tober, 1947; Negotiating Countries Czechoslovakia - France Canada - United States Canada - United States Australia - China Number of ?eeting 22nd 37th 38th 8th Time Room Number 10.00 10.00 3.00 3.00 400 4023 402B 135 Note: The Secretariat has been informed that in addition to the meetings listed in E/PC/T/TRF/131, the following additional meeting was eeld on Wednosday, 1st October; Canada - United States 36th meeting. PEUXIEME AESSMONSDE Lk COAMI3SION PREPARATOIRE DE LA CONFMMENCE DU CO1IERME ET DE L'ELPLOI DE L'ORGANISATION DES NATIONS UNIES N6gociations tarifaires Les s6ancaes suévénteé ont 6t6 pr6vues pour le jeudi 2 octobre 1947: Pays participant aux n6gociations Tch6coslovaquie - France Canada - Etats-Unis Canada - Etats-Unis Australie - Chine Numero de la reunion 22bme 37Tme 38 me 8eme Note: én plus de s6ances dont la liste figure au document E/PC/T/TRF/ é34, le Seérétariaé a 6te avés6 que la éeance suppl6mentaire suivante a eu lieu le mercredi 1 octobre: Canada - Etèts-Uéis 366me reunion. Heure iL.CO 10.00 15 .00 15.00 Numero de la salle 400 402B 402B 435 NATIONS UNIES SECRET
GATT Library
sw918tb1732
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 1, 1947
United Nations. Economic and Social Council
01/09/1947
official documents
E/PC/T/TRF/109, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/sw918tb1732
sw918tb1732_90260128.xml
GATT_154
272
1,935
UNITED NATIONS tl';'NS LCONOMIC AND SOCIAL COUNCIL NATIONS UNIES SECRET CONSEIL ECONOMPIQUE E/C/T/TRF/109 ET SOCIAL 1st September 1947 ESSION OF T? P?ZBPARATORY COIv?ITT2R OF THE SECOND SE3510N, OF TIU PREP.R.T0RY COM,4TT>E OF THE UNITED N-TIONS CONFERENCE ON TR.DE khD RIPLOWIENT. Tariff Negotiations The following meetings have been arranged for Tuesday, 2 September: Negotiating Countries Number of Meeting Room Time Number Australia - United States Benelux - United States Benelux - France Burma - China Brazil - United States Brazil - France 5th 28th 43rd 4th 8th 6th 9.30 9.30 10.30 10.30 11.00 300 435 Salle de Comite L-4 Stenodactyl 3 402B 402A 400 NOTE 1n addition to the moetinUs listed in E/PC/T/TRF/l08 the Secretariat has been notified that the following additional meetings were held on Monday, ist September: Benelux - France Chile - United Kingdom China - United States France - United States India - Lebanon/Syria DEUXIHME SESSION DE LL CO!9yiISV_,FNRPARATOIPR DE LA COUY7ERZNC DU COETz!CR ET B 'EMPLOI DE L'01GAIS.-.T1OQ DES 1 IITIO.UJIES N6gociations tarifaires Les s6ances suivantes auront lieu le mardi 2 septembre Fays participant aux negocietions australie - Etats-Unis Benelux - Etats-Unis No d'ordre de la se6nce 5eme 28 me No de la Heure salle 9,30 435 9,30 Salle de Comite L,- 4 Benelux- France 43eme 10.30 Stenodactyl 3 Birmanie - Chine 4eme 10.30 402B Br6sil -tats-Unis 86me 11.00 402A Bresil - France 66me 15 00 400 NOTE: En plus dRF s108ces indiquees dans le document E/PC/T/TEtF/lOS le Sécretariat a ete informe que les seances suppl6muntaires suivantes ont eu lieu le lundi ler seytembre: Benelux - France Chili - Royaurne-Uni Chine - Etats-Unis France - Etats-Unis Inde -. Liban/Syrie
GATT Library
ss816pf9749
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, September 24, 1947
United Nations. Economic and Social Council
24/09/1947
official documents
E/PC/T/TRF/129, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/ss816pf9749
ss816pf9749_90260148.xml
GATT_154
215
1,429
UNlTED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET E/PC/T/TRF/129 24 September 1947 SECOND SESSICN OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meeting has been arranged for Thursday, 25 September 1947: Negotiating Countries China - India Number of Meeting 5th Time 3.30 Room Number 400 Note: The Secretariat has been informed. that in addition to the meetings listed in E/PC/T/TRF 127 and 128, the following additional meetings were held on Tuesday and Wednesday, 23 and 24 September: United Kingdom - Benelux 35th meeting United States - Benelux 36th " New Zealand - Benelux 5th " Benelux Ceylon 3rd " DEUXIEME SESSION DE LA. COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI - DE L'ORGANISATION DES NATIONS UNIES Négotiations Tarifaires La seance suivante a été prevue pour le jeudi, 25 Septembre 1947: Pays participant aux négociations Chine - Inde Numéro de la réunion 5 ème Numéro de Heure la salle 15.30 400 Note: Outre les réunions énumérées dans les documents E/PC/T/TRF 127 and 128, le Secrétariat a été avisé que le mardi at mercredi, 23 et 24 Septembre: Royaume-Uni - Benelux 35ème réunion Etats-Unis - Benelux 36ème " Nouvelle Zélande - Bénelux. - Cey Benelux 5ème lan 3 ème " NATIONS UNIES
GATT Library
vw085wb4571
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations
United Nations Economic and Social Council, August 20, 1947
United Nations. Economic and Social Council
20/08/1947
official documents
E/PC/T/TRF/99, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/vw085wb4571
vw085wb4571_90260118.xml
GATT_154
137
1,001
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL SECRET EPC/T/TRF/99 20 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations The following meetings have been arranged for Thursday, 21 August: Negotiating Countries Benelux- Norway Benelux-France Australia - France Brazil-India Number of Meeting 6th 35th 13 th 2nd Time 10.30 10.30 11.00 3. 00 Room Number 402B Stenodactyl 3 435 400 DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Négociations Tarifaires Les réunions suivantes ont été prévues pour le jeudi 20 août: Pays participant aux négociations Benelux-Norvège Benelux-France Australie-France Brésil-Inde Numéro de la réunion 6ème 35ème 13ème 2ème Numéro de Heure la salle 10.30 402B 10.30 Sténodactyl 3 11. 00 435 15.00 400 NATIONS UNIES
GATT Library
kt721hw0126
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations No meetings have been fixed for Saturday, 25 October 1947
United Nations Economic and Social Council, October 24, 1947
United Nations. Economic and Social Council
24/10/1947
official documents
E/PC/T/TRF/155, E/PC/T/TRF/90-155, and E/PC/T/S/1-3
https://exhibits.stanford.edu/gatt/catalog/kt721hw0126
kt721hw0126_90260174.xml
GATT_154
77
553
UNITED NATIONS SECRET ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL E/PC/T/TRF/155 24 October 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Tariff Negotiations No meetings have been fixed for Saturday, 25 October 1947. DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES. Négociations Tarifaires Aucune réunion n'a été prévue pour le samedi, 25 octobre 1947. NATIONS UNIES E/PC/T/S/1-12
GATT Library
rg823sh1978
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations. Note to Delegutions by the Tariff Negotiations Working Party
United Nations Economic and Social Council, July 12, 1947
United Nations. Economic and Social Council
12/07/1947
official documents
E/PC/T/126 and E/PC/T/124-135
https://exhibits.stanford.edu/gatt/catalog/rg823sh1978
rg823sh1978_92290152.xml
GATT_154
301
2,045
E/PC/T/126 ECONOMIC CONSEIL 12 July 1947 AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TARIFF NEGOTIATIONS Note to Delegutions by the Tariff Negotiations Working Party. It has been brought to the notice of the Workïng Party, in connection with the issue by Delegations of revised lists of the concessions offered to other countries with whom they have entered into negotiation, that the examination and use of these lists, especially by countries other than those to whom the offers were originally made, would be greatly facilitated if the existing tariff rates were given for each item in addition to the concessions offered. Not all delegations have followed this practice, and the Working Party wishes tn recommend that in all future lists issued by Delegations the existing tariff rates should appear. DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES. NEGOCIATIONS TARIFAIRES Note adressée aux délégations par le Groupe de travail charge des négociations tarifaires. L'attention du Groupe de travail a été attirée, à propos de la publication par les délégations du listes révisées des concessions offertes aux autres pays avec lesquels ils ont entamé des négociations, sur le fait que l'examen et l'utilisation de ces listed, notamment par les pays autres que ceux auxquels les offres ont été initialement présentées, seraient grundement facilitiés si les taux de drofts de douane actuellement en vigueur étaient indiqués pour chaque article en même temps que les concessions offerces. Toutes les délégations ne se sont pas conformées à cet usage, et le Groupe de travail tient à recommander qu'à l'avenir toutes les listes publiées par les délégations comportent la mention des taux de droits de douane en vigueur. RESTRICTED UNITED NATIONS NATIONS UNIES
GATT Library
bz766my8097
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party
United Nations Economic and Social Council, October 2, 1947
United Nations. Economic and Social Council
02/10/1947
official documents
E/PC/T/223 and E/PC/T/214/ADD.1/REV.1-228
https://exhibits.stanford.edu/gatt/catalog/bz766my8097
bz766my8097_92290287.xml
GATT_154
146
1,085
RESTRICTESD ECONOMIC CONSEIL E/PC/T/223 AND ECONOMIQUE 2 October 1947 SOCIAL COUNCIL ET SOClAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Tariff Negotiations working Party The brazilian Government has authorized the Head of the Brazillian Delegation. His Excellency Antonio de Vilhena Ferreira-.Braga, to accept and sign the Protocol of Provisional Application of the General Agreement on Tariffs and Trade. The Working Party has considered this question at its meeting on October 1 and recommends that the name of Brazil be added to the list of countries which intend to give pro- visional application to the Agreement. Should no comment to the contrary have bean received from Delegations by Saturday, October 4, at noon, it will be under- stood that Brazil will become one of the countries mentioned in the Protocol of Provisional Application. .NATIONS UNIES UNITED NATIONS
GATT Library
ty650rx9244
Second session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party
United Nations Economic and Social Council, September 4, 1947
United Nations. Economic and Social Council
04/09/1947
official documents
E/PC/T/W/320 and E/PC/T/W/307-344
https://exhibits.stanford.edu/gatt/catalog/ty650rx9244
ty650rx9244_90050474.xml
GATT_154
521
3,532
UNITED NATIONS NATIONS UNIES RESTRICTED ECONOMlC CONSEIL E/PC/T/W/320 AND ECONOMIQUE 4 September 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL : ENGLISH SECOND SESSION OF THE PREPARATOR COMMMITTE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. TARIFF NEGOTTATIONS WORKING PARTY When considering document E/PC/T/S/8 at its meeting on September 3, the Tariff Agreement Committee referred to the Tariff Negotiations Working Party the question of what would be the best way of meetin the situation of those Delegtions which will soon be terminating their tariff negotiations and which are desirous of leaving Geneva on the completion of their work. The Delegate of South Africa suggested that the text of the General Agreement exceptingg the Schedules) should be prepared for signature immediatel it is agreed, so that when a Delegation finishes all its tariff negotiations it should authenticate the text of the Agreement and initial the Schedules with each country concerned and hand the to the Secretariat. In this manner, no delay would, be entailed for Delegations which have finished or are about to finish their negotiations. This proposal was supported by the Delegation of Chile. The Tariff Negotiations Working Party has considered these proposals and wishes to subnit the following comments. 1. Schedules to be attached to the General Agreement will consist of one consolidated Schedule per country; in other words, it will not be a question of each Delegation lodging one list in respect of each of its bilateral negotiations. Consequently, on finishing negotiations, each Delegation must establish one consolidated list incorporating all concessions. E/PC/T/W/320 page 2. 2. Due to the multilateral character of the negotiations and to the fact that Delegations will, therefore, expect to receive a number of indirect concessions arising from negotia- tions between other pairs of countries, it does not appear as if any Delegation would wish to put its signature to the Final Act covering the general provisions and all Schedules, in advance of other Delegations. 3. It would appear as if Delgations which have finished or are about to finish their negotiations, and whose principal Delegates wish to return home, could: (a) Assure their representation in the committee work now taking place for the establishment of the text of the General Agreement and form of the Schedules. (b) Prepare their consolidated Schedule in the form established under (a), incorporation all tariff concessions granted. (c) Leave whatever technically qualified experts are necessary to clear up any doubtful points in respect of their own Schedule and its translation and to check the Schedules of other countries to ascertain that all negotiated benefits are incorporated therein. (d) Make provision for a duly qualified representative (who could, if desared, be a diplomatic representa- tive accredited in a nearby capital) to sign the General Agreement in due course. 4. The Tariff Negotiations Working Party is keeping in close touch with the progress of the remaining negotiations and will suggest to the Delegations concerned all practical measures necessary to expendite negotiations. The Working Party will indicate to all Delegations as soon as it is in a position to do so, the data on which all the negotiations are likely to be terminated.
GATT Library
hv901hj2143
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Communïcation of information concerning changes in lists of tariff concessions
United Nations Economic and Social Council, October 3, 1947
United Nations. Economic and Social Council
03/10/1947
official documents
E/PC/T/225 and E/PC/T/214/ADD.1/REV.1-228
https://exhibits.stanford.edu/gatt/catalog/hv901hj2143
hv901hj2143_92290289.xml
GATT_154
200
1,528
RESTRICTED ECONOMIC CONSEIL E/PC/T/225 AND ECONOMIQUE 3 October 1947. SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TARIFF NEGOTIATIONS WORKING PARTY Communïcation of information concerning changes in lists of tariff concessions In Document E/PC/T/82 of May 30th, 1947 (formerly issued as E/PC/T/143), a procedure was established for the fortnightly submission by delegations of lists of the changes made in concessions offered to all other delegations with which tariff negotiations were in progresss. The Tariff Negotiations Working Party has reviewed this arrangement and, considering the advanced stage of the negot- iations and the fact that delegations are now distributing lists in respect of bilateral negotiations completed and, in some cases, consolidated lists, has come to the conclusion that the maintenance of the system is no longer necessary, Accordingly the Tariff Negotiations Working Party proposes that the procedure established by document E/PC/T,/82 should be discontinued forthwith. With the disconti-uance of this procedure, it becomes all the more necessary that delegations communicate promptly to the other delegations with which they are negotiating their final lists on bilateral negotiations and, as soon as possible, their consolidated lists. UNITED NATIONS NATIONS UNlES
GATT Library
rs873vj7318
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Effects of the General Agreement on Tariffs and Trade
United Nations Economic and Social Council, June 3, 1947
United Nations. Economic and Social Council
03/06/1947
official documents
E/PC/T/85 and E/PC/T/66-91
https://exhibits.stanford.edu/gatt/catalog/rs873vj7318
rs873vj7318_92290101.xml
GATT_154
0
0
GATT Library
qb194fw9083
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Effects of the General Agreement on Tariffs and Trade
United Nations Economic and Social Council, June 3, 1947
United Nations. Economic and Social Council
03/06/1947
official documents
E/PC/T/85 and E/PC/T/66-91
https://exhibits.stanford.edu/gatt/catalog/qb194fw9083
qb194fw9083_92290101.xml
GATT_154
906
5,904
UNITED NATIONS UNIES ECONOMIC CONSEIL E/PC/T/85 AND ECONOMIQUE 3 June 1947 SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TRIFF NEGOTIATIONS WORKING PARTY Effects of the General Agreement on Tariffs and Trade on Pre-existing Bilateral Treaties. The Cuban Delegation, in paper E/PC/T/W 29, of May 7, put forward for consideration certain questions regarding the affects of the General Agreement on Tariffs and Trade on existing bi- lateral treaties. It was decided by the Preparatory Committee meeting in Executive Session that the Secretariat, in consulta- tion with the Cuba. Delegation and with the Tariff Negotiations Working Party, should prepare a paper on the points that had been raised. The issues raised by the Cuban Delegation were - in short - the following: 1. In case of any inconsistency between the terns of the General Agreement and any commitment previously entered into by a contracting party, do the provi- sions of the General Agreement prevail? 2. Do products not included in the schedule annexed to the General Agreement which are subject to regula- tion by existing bilateral treaties or agreements, r- in their former status? ' 3. Are general and specific preferences contained in existing bilateral treaties to be maintained as such, in so far as they have not been eliminated or reduced, or replaced by preferences explicitly provided for in the schedules annexed to the General Agreement? 4. Should the reply to question 3 above be in the affirmative, do the provisions of paragraph 1 - of Article I of the General Agreement, require the granting to other contracting parties of any preferential treatment maintained? In addition, the Cuban Delegation has since asked for clarification of a fifth point: 5. Does the General Agreement prevent the contracting parties from entering into commercial treaties or agreements among themselves or with other countries, provided such treaties or agreements are not in- consistent with the purpose of the General Agreement? NATIONS UNI ES RESTRICTED E/PC/T/85 page 2 Clarification of the above issue can be given as follows, on the.basis of the present texts of the Draft Charter and General "Agreement: In the case of any inconsistency between the General Agreement _ _ onTariffs and Trade and provides bilateral agreements, signa- tories to the General Agreement must take such steps as may be necessary to amend their bilateral agreements to the extent necessary to remove such inconsistency. ..here no such inconsistency exists, the General Agreement imposes no obligation with respect to previous bilateral agreements. The Tariff Negotiations Working Party feels that - in accordance with the suggestion made by the Cuban Delegation in the last paragraph of document E/PC/T/W/29 - a paragraph should be added to Article XXV of the General Agreement incorporating the general principle that in case of any inconsistency between the terms of the General Agreement and any commitment .previously entered into by a contracting party, such contracting : party must be governed by the terms of the General Agreement. The precise wording of such a paragraph should - of course - await the drafting of Article XXV. 2. Products not included in the schedules annexed to the General Agreement, but which are subject to regulation by existing bilateral treaties cr agreements, will retain their status provided that such bilateral treaties remain in force and that, in the case of preferential treatment, such preferences comply with -Article I of the General Agreement which will presumably be drafted along the lines of Article 14 of the Draft Charter. The extent to which the parties to the General Agreement decide to-retain or to negotiate commercial agreements among themselves or with other countries should be left for their determination, so long as such agreements do not conflict with the General Agreement. 3. General and specific preferences not included in the schedules annexed to the General Agreement, which are subject to regulation by bilateral agreements, may retain the same status provided there is no inconsistency with the terms of the General Agreement; if there is any inconsistency, they cease to have the old status (see reply to question 1 above). In particular, the conditions established in Article I. of the General Agreement (Article 14 of the Draft Charter) must be complied with and would preclude any increase in the margin existing on the base date between the preferential rate and the m.f.n. rate. 4. The provisions of paragraph 1 of Article I of the General Agreement require the extension to other contracting parties of any preferential treatment which is not covered by paragraph 2 of the same Article. 5. The General Agreement does not prevent the contracting parties from entering into commercial treaties or agreements among themselves or with other countries, provided such treaties or *agreements do not contain any provision inconsistent with the terms.of the General Agreement. E/PC/T/85 page 3 The Cuban Delegation feels that the points raised in its five questions should be specifically covered in the text of the General Agreement. The Tariff Negotiations Working Party is of the opinion that there would be advantage in incorporating in the General Agreement the principle set out under No. 1 above. It would seem that in the course of discussions to take place on the text of the General Agreement, the Preparatory Committee will decide what texts, if any, should be added to the General Agreement as a consequence of its consideration of the points raised by the Cuban Delegation.
GATT Library
sf706zm4988
Second session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Final Act
United Nations Economic and Social Council, September 4, 1947
United Nations. Economic and Social Council
04/09/1947
official documents
E/PC/T/W/319 and E/PC/T/W/307-344
https://exhibits.stanford.edu/gatt/catalog/sf706zm4988
sf706zm4988_90050473.xml
GATT_154
249
1,725
RESTRICTED E/PC/T/W/319 NATIONS UNIES ECONOMIC NATIONS UNIES CONSEIL 4 September 1947 AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TARIFF NEGOTIATIONS WORKING PARYT FINAL ACT several Delegates have asked for assurances that signature or application of the General Agreement will not prejudice their freedom to maintain reservations to the Charter. The Tariff Negotiations Working Party suggests that these assurances could be provided by adding the following provisions at the end of the first paragraph of the Final Act, which will be signed by all countries at Geneva: "It is understood that the signature of this Final Act or the signature or application by any of the above- mentioned governments of the General Agreement or its accompanying Protocols does not in any way prejudice their freedom to maintain at the United Nations Conference on Trade and Employment the reservations which they may have made to the provisions of the draft Charter for an Inter- national Trade Organization recommended by the Preparatory Committee." In order to make the purpose of tne Final Act completely clear, the Tariff Nagotiations Working Party also suggests the following amendments to the closing phrases of the Final Act (see Document E/PC/T/W/315 and corrigendum). "IN [FAITH] WITNESS WHEREOF [,] the respective Representatives [of the above-mentioned Governments have signed the present Act and have thereby authenticated the text of the General Agreement on Tariffs and Trade with accompanying Protocols annexed hereto. "DONE, etc." . .
GATT Library
ft756qn6660
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Report on Preferential Arragements Not Effected By the Method of a Difference in Rates of Duty
United Nations Economic and Social Council, August 9, 1947
United Nations. Economic and Social Council
09/08/1947
official documents
E/PC/T/158 and E/PC/T/156-161
https://exhibits.stanford.edu/gatt/catalog/ft756qn6660
ft756qn6660_92290197.xml
GATT_154
0
0
GATT Library
bc231xy6300
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Report on Preferential Arragements Not Effected By the Method of a Difference in Rates of Duty
United Nations Economic and Social Council, August 9, 1947
United Nations. Economic and Social Council
09/08/1947
official documents
E/PC/T/158 and E/PC/T/156-161
https://exhibits.stanford.edu/gatt/catalog/bc231xy6300
bc231xy6300_92290197.xml
GATT_155
1,071
6,948
RESTRICTED ECONOMIC CONSEIL E/PC/T/158 AND ECONOMIQUE 9 August 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. TARIFF NEGOTIATIONS WORKING PARTY Report on Preferential Arragements Not Effected By the Method of a Difference in Rates of Duty The note appearing in Page 12 of the Report of the First Session (Chapter III, Section C, paragraph 1, sub-paragraphs (a) and (c) ) dealing with certain preferential arrangements not effected by the normal method of a difference in rates of duty, was considered by the Sub-Committee on Articles 25 and 27 which recommended, subject to the views of the Tariff Negotiations Working Party, that the note should be maintained in the Report of the Second Session and that the attention of the Working Party should be invited to the recommendation contained in that note to the effect that an appropriate provision should be included in a protocol to the General Agreement on Tariffs and Trade. The Working Party has given careful consideration to the proposal of the Sub-Committee on Articles 25 and 27 and, after taking into account the facts relating to the matter in question, (See Annex A, consisting of a statement of the facts, provided by the United Kingdom Delegation) has come to the conclusion that it would be preferable for an appropriate provision to be incor- porated in one of the Articles of Chapter V of the Charter and also in the General Agreement. The arrangements in question have both a preferential and a quantitative restriction aspect, and it is therefore necessary to take Into account Articles 25, 27 and 28 as well as Article 14 of the Charter. Consequently, it is proposed that the following text should be added to Article 28, as sub-paragraph (b) of paragraph 1. UNITED NATlONS NATIONS UNIES E/PC/T/158 Page 2 "(c) Restrictions under the preferential arrangements provided for in Annex A of this Charter, subject to the conditions set forth therein." It is further proposed that the note to Annex A to the Charter (mentioned in Article 14) as now-drafted by the Sub- Committee on Articles 14, 15 and 24 should be amended as follows: "The imposition of a margin of tariff preference to replace a margin of preference in an internal tax existing on 10 April, 19477,or to replace the preferential quantitative arrangements described in the following paragraph shall not be deemed to constitute an increase in a margin of tariff preference. ."The preferential arrangements referred to in para- graph 1(b) of Article 28 are those existing in the United Kingdom on 10th Apri1, 1947, under contractual agreements with the Governments of Canada, Australia and New Zealand, in respect of chilled and frozen beef and veal. frozen mutton and lamb, chilled and frozen pork. and bacon /and hams7. It is the intention, without, prejudice to any action taken under sub-paragrarh (h) of Part I of Article 37. that these arrangements shall be eliminated or replaced by tariff preferences. and that negotiations to this end shall take. place as soon as practicable among the countries substantially concerned or involved," The Working Party considers that this Report could best be considered by Commission A when dealing with the Report of the Sub-Committee on Articles 26, 28 and 29. E/PC/T/158 Page 3 ANNEX A Note by United Kingdom Delegation. 1. In the Report (a) of the First Session, the Preparatory Committee recommended that certain existing preferential arrange- ments which were established under international agreement but were not effected by the normal method of a difference in rates of duty and which remained after the current negotiations, should be dealt with by a provision in a Protocol to the Charter or to the General Agreement on Tariffs and Trade to the effect that the Member applying the arrangements shall be entitled to continue them or equivalent measures pending either (i) an international commodity agreement or (ii) some other arrangement between the Members concerned. 2. When the United Kingdom negotiated the Trade Agreements now in force with the Governrments of Australia and New Zealand in 1932 and with the Government of Canada in 1937, they undertook to give preferential treatment to imports from the Dominions of certain meat products, not through the normal method of tariff preferences but by providing for the Dominions to have an ex- panding share of imports under United Kingdom arrangements for the quantitative regulation of imports from foreign sources. 3. In the Agreement (b)with Australia, the United Kingdom Government declared that their policy in relation to meat product- ion was, first, to secure development of home production, and, secondly, to give to the Dominions an expanding share of imports into the United Kingdom. (c)In pursuance of this policy, the United Kingdom Government undertook to regulate imports of foreign frozen mutton and lamb and chilled and frozen (a) Chapter III, Section C, paragraph 1, sub-paragraphs (a) and (c). (b) Ottawa Agreement, 1932, Schedule H. (c) ibid Article 6. E/PC/T/158 Page 4 beef, while placing no restriction on imports of any meat fi Australia. 4. In the Agreement (d) with New Zealand, the United King Government gave a similar undertaking in respect of beef, mutton and lamb, and undertook in respect of bacon and other pig products that their future policy of controlling foreign imports would provide for some extension of Home and Dominion supplies and would give to New Zealand a reasonable share of this expansion. 5. In the Agreement (e) with Canada, the United Kingdom Government undertook that their policy of promoting the orderly marketing of bacon and hams and of meat in the United Kingdom would not entail any regulation of imports of bacon and hams from Canada unless the rate at which the trade from Canada progressed towards two-and-one-half million hundredweight per annum should become abnormal; and recognised that special provision might become necessary for increased shipments of beef from Canada, and that reductions might be necessary in shipments of chilled beef from foreign countries. 6. The principle of according an expanding share of the United Kingdom market to Commonwealth imports was duly followed in subsequent international agreements, such as the U.K./ Argentine Trade Agreements, 1933 and 1936, which provided for a reduction of imports of chilled beef from Argentina and to this extent increased the measure of preference accorded to imports from Commonwealth countries. (d) Ottawa Agrcement, 1932, Article 4. (e) Agreement with Canada, 1937, Article 5.
GATT Library
jq869dd4825
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Report on the Text of Articles 24 and 67 of the Draft Charter (E/PC/T/136)
United Nations Economic and Social Council, July 29, 1947
United Nations. Economic and Social Council
29/07/1947
official documents
E/PC/T/136 Corr.1 and E/PC/T/135-142
https://exhibits.stanford.edu/gatt/catalog/jq869dd4825
jq869dd4825_92290164.xml
GATT_155
192
1,244
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/133 Corr.1 29 July 1947 ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TARIFF NEGOTIATIONS WORKING PARTY REPORT ON THE TEXT OF ARTICLES 24 AND 67 OF THE DRAFT CHARTER (E/PC/T/136) The following corrections should be made: Page 2, Article 24, paragraph 1, line 3: The word "negotiations" should be in square brackets. Page 3, paragraph (d), line 3: The word "Agreement" should be added after the word that" . Page 5, Article 67, paragraph 2, line 9: Sentence should read "paragraph 1 of Article 24 ......." and not "Article 4". DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L 'EMPLOI DE L'ORGANISATIO DES NATIONS UNIES GROUPE DE TRAVAIL CHARGE :DES NEGOCIATIONS TARIFAIRES RAPPORT SUR LE TEXTE DES ARTICLES 24 ET 67 DU PROJET DE CHARTE (E/PC/T/136 ) Il convient d'apporter au document précité la correction suivante: Page 5, Article 67. 2ème paragraph 8ème ligne: Lire "...conformément au paragraphe 1 de l'article 24....n au lieu de " ...... conformément au paragraphe l de l'article 4...." NATIONS UNIES
GATT Library
fm754db3466
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Report on the Text of Arttcles 24 and 67 of the Draft Charter
United Nations Economic and Social Council, July 29, 1947
United Nations. Economic and Social Council
29/07/1947
official documents
E/PC/T/136 and E/PC/T/135-142
https://exhibits.stanford.edu/gatt/catalog/fm754db3466
fm754db3466_92290163.xml
GATT_155
1,279
8,329
UNITED NATIONS NATIONS UNIES RESTRICTED ECONOMIC CONSEIL E/PC/T/136 ECONOMIC 29 July 1947 AND ECONOMIQUE ORIGINAL: ENGLISH. SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYEMENT TARIFF NEGOTIATIONS WORKING PARTY REPORT ON THE TEXT OF ARTTCLES 24 and 67 OF THE DRAFT CHARTER In the course of its consideration of the text of the General Agreement on Tariffs and Trade, the Tariff Negotiations Working Party has come to certain conclusions regarding the contents of Articles 24 and 67 of the Draft Charter. It considers that instead of the terms of Article 21+ parmitting negotiations either through the Tariff Committee or on a strictly bilateral basis, it would be preferable for the Article to be so drafted that all negotiations would be through the Tariff Committee and that the results of such negotia- tions should be incorporated in the General Agreement on Tariffs and Trade. This would have the advantage of uniformity and would avoid the anomaly of some Members complying with Article 24 by adhering to the General Agreement and other Members complying with the provisions of that Article simply by undertaking independent bilateral negotiations with certain other Members, The proposed redrafts of Articles 24 and 67 have been prepared on the above basis. As a consequential change, it is proposed that paragraph 2 of Article 24 should be deleted. As the Organization will be arranging for the negotiations through the Tariff Committee, E/PC/T/136 page 2 there is no need to maintain a provision to the effect that each Member participating in such negotiations shall advise the Organizations accordingly. Some minor drafting changes are proposed to paragraph 3 of the New York Draft of Article 24- (new paragraph 2). The last sentence of this paragraph is transferred to a new paragraph 3. As regards Article 67, it is suggested that provision relating to the voting power of each Member and to majority votes required for decisions of the Committee, must be left over until the Proparatory Committee has reached a decision on these points in connection with its consideration of Chapter VIII of the Charter. The Working Party therefore wishes to recommend that the amendments incorporated in the attached redrafts of the two Articles should be dealt with by the Preparatory Committee in whatcver way it considers most appropriate. ARTICLE 24 Reduction of Tariffs and Elimination of Preferences 1. Each Member, other than a Member subject to the provisions of Article 33, shall, upon the request of [any other Member or Members], theOrganlization center into and carry out negotiations with such other Member or Members as the Organization may specify, negotiations directed te the substantial reduction of tariffs and other charges on imports and exports and to the climination of the preferences referred to in paragraph 2 of Article 14 on a reciprocal and mutually advantageous basis. These negotiations shall proceed in accordance with the following rules: E/PC/T/136 page 3 (a) Prior international obligations shall not be permitted to stand in the way of negotiations with respect to preferences, it being understood that agreements resulting from such negotiations shall not require the modification or termination of exist ng international obligations except (i) with the consent of the parties to such obligations, or, in the absence of such consent, (ii) by termination of such obligations in accordance with their terms. (b) In the negotiations relating to any specific product - (i) when a reduction is negotiated only in the most- favoured-nat on rate), such reduction shall operate automatically to reduce or eliminate the margin of preference applicable to that product; or (ii) when a reduction is negotiated only in the preferential rate, the most-favoured-nation rate shall automatically be reduced to the extent of such reduction; or (iii) when it is agreed that reductions will be negotiated in both the most-favoured-nation rate and the preferential rate, the reduction in each shall be that agreed by the parties to the negotiations; and (iv) no margin of preference shall be increased. (c) The binding 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. (d) The results of such negotiations shall be incorporated in the General Agreement on Tariffs and Trade. signed at Geneva on .... 1947, by agreement with the parties to that E/PC/T/136 page [2. Each Member participating in negotiations pursuant to paragraph 1 shall keep the Organization informed of the progress thereof and shall transmit to the Organization a copy of the agreement or agreements incorporating the results of such negotiations.] [3.] 2. If any Member considers that any other Member has failed to fulfil its obligations under Paragraph 1 of ',.s Article, such Member may refer the matter to the Organization which, after investigation, shall male appropriate recommendations to th Members concerned. If the Organization finds that a Member has failed without sufficient justification, having regard to its economic position and the provisions of the Charter as a whole, to carry out negotiations with such complaining Member7 within a reasonable period of time in accordance with the requirements of paragraph 1 of this Article, the Organization may determine that / he complaining Member, or in exceptional cases the Members generally,] any Member or Members shall, notwith- standing the provisions of Article 14, be entitled to withhold from the trade of the other Member any of the tariff benefits which [the complaining Member, or the Members generally as the case may be.] may have been negotiated pursuant to paragraph 1 of this Article. If such benefits are in fact withheld, so as to result in the application to the trade of the other Member of tariffs higher than would otherwise have been applicable, such other Member shall then be free, within sixty days after such action is taken, to withdraw from the Organization upon the expiration of sixty days from the date on which written notice of such with- drawal is received by the Organization. [The provisions of this paragraph shall operate in accordance with the provisions of Article 67] 3. The provisions of this Article shall operate in accordance with the provisions of Article 67. E/PC/T/136 page 5 ARTICLE 67 The Tariff Committee 1. There shall be a Tariff Committec which shall act on behalf of the Organization in initiating and arranging for the negotiations provided for under paragraph 1 of Article 24 and in the making of recommendations and determinations pursuant to paragraph 47 2 of Article 24. 2. The Committee shall consist [originally] of those Members [of the Organization] which are [parties to] applying the General Agreement on Tariffs and Trade, [dated] signed at Geneva on ......... .... 1947, [on the day on which this Charter enters into force,] in accordance with Articles XXIV or XVXII of that Agrreement. [Any other Member of the Organization shall be a member of the Committee when, in the judgment of the Committee, *that member shall have completed negotiations pursuant to paragraph 1 of Article 4 comparable in scope or effect to those completed by the original members of the Committee.] 3 3 4, X 5. The Committee shall adopt its own rules of procedure, including provision for the election of its officers. x The text of paragraph 3 (provision relating to voting power of each Member,)and 4( provision relating to majority votes required for decisions of the Committee) is still under consideration in Sub-Committee. NOTE: The preceding texts, on which the Working Party's proposed deletions and additions air shown, are the ones which have been tentatively approved by the Sub-Committees on Articles 14, 15 and 24, and Chapter VIII; respectively.
GATT Library
dr660zg2646
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Schedules To Be Attached to the General Agreement on Tariffs and Trade
United Nations Economic and Social Council, August 7, 1947
United Nations. Economic and Social Council
07/08/1947
official documents
E/PC/T/153 and E/PC/T/153-156
https://exhibits.stanford.edu/gatt/catalog/dr660zg2646
dr660zg2646_92290189.xml
GATT_155
0
0
GATT Library
zx803xj0785
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tariff Negotiations Working Party. Schedules To Be Attached to the General Agreement on Tariffs and Trade
United Nations Economic and Social Council, August 7, 1947
United Nations. Economic and Social Council
07/08/1947
official documents
E/PC/T/153 and E/PC/T/153-156
https://exhibits.stanford.edu/gatt/catalog/zx803xj0785
zx803xj0785_92290189.xml
GATT_155
1,568
10,261
RESTRTCTED ECONOMIC CONSEIL E/PC/T/153 AND ECONOMIQUE 7 August 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT, TARIFF NEGOTIATIONS WORKING PARTY Schedules To Be Attached to the General Agreement on Tariffs and Trade. In paragraph 10 on page 3 of its Report on the General Agreement on Tariffs and Trade (document E/PC/T/135), the Tariff Negotiations Working Party stated that it was giving consideration to the form of the Schedules of tariff concessions which are to be annexed to the Agreement. Having completed its study of the Schedules, the Working Party now reports accordingly. In considering the Schedules, the Working Party has taken account of the contents of Séction E, "Form of Tariff Schedules"' and "Status of Preferential Rates of Duty" and Section G of Annexure 10 to the Report of the First Session, as well as of Part III of the Report of the Drafting Committee, relating to the General Agreement. As regards Section G, the Working Party feels that an arrangement on the general lines of that which is proposed in the Report of the First Session, will be adequate. However, in the light of develop- ments since the First Session, the Schedules should now be identified as follows: Commonwealth of Australia Schedule I Belgium-Luxemburg-Netherlands Schedule II United States of Brazil Schedule III Burma Schedule IV Canada Schedule V Ceylon Schedule VI Republic of Chile Schedule VII Republic of China Schedule VIII Republic of Cuba Schedule IX Czechoslovak Republic Schedule X UNITED NATIONS NATIONS UNIES E/PC/T/1 53 page 2. French Republic (French Union) Schedule XI India Schedulc XII Dominion of New Zealand Schedule XIII Kingdom of Norway Schedule XIV Pakistan Schodule XV Southern Rhodesia Schedule XVI Syro-Lebanese Customs Union Schedule XVII Union of South Africa Schedule XVIII United Kingdom of Great Britain and Northern Ireland Schedule XIX United States of America Schedule XX Subdivided Schedules will be necessary in the case of some countries in order to provide adequately for certain overseas territories. The first subdivision would relate to the metropolitan territory and would be headed "Section A". Those subdivisions relating to the overseas territories would be headed Sections B, C, D, etc. There is attached a draft sample Schedule covering various types of concessions that may be granted. The Schedule consists of a covering statement plus two Parts: (1) Part I deals with obligations to m.f.n. countries, and (2) Part II deals with obligations to countries receiving preferential treatment. The Working Party is of the view that this division into Parts I and II, although loading to a certain amount of repetition in the description of products, has the advantage of separating the concessions granted to two different groups of Countries. In the attached sample Schedule, the manner of dealing with various types of concessions to countries enjoying m.f.n. treatment is shown as follows: (a) An ad valorem rate (Item 23 - Naphthenic acids) (b) A maximum margin of preference (Item 48 - Electrical apparatus) E/PC/T/153 page 3. (c) A specific rate (Items 67 - Zinc oxide and 84 - Apples, fresh ) (d) A free rate (Item 112 - Turpentine) (e) (1) An ad valorem rate and (2) A specific rate on items within the same tariff item number (Item 167 - Fish) (f) Specific rates varying according to the value of the product concerned, within the same tariff item number (Item 202 - Steel ingots, cogged ingots, blooms and slabs) (R) A specific rate plus freedom to impose an additional duty on importation on removal of an existing margin of internal tax preference (Item 331 - Linseed oil) (h) An ad valorem rate of duty which is supplemented by a special ad valorem charge (Item 367 - Automobiles) (i) An ad valorem special charge other than ordinary customs duty (Item 538 - Table and kitchen articles) (i) An ad valorem rate and an ad valorem maximum margin of preference on the same item (Item 841- - Typewriters) The main questions that are likely to arise in connoction with the manner of setting forth tariff concessions to countries enjoying preferential treatment, are covered by the above and by the examples given in Part II of the attached sample Schedule. E/PC/T/1 53 page 4. Consideration has been given to the case of certain territories which are negotiating exclusively on maximum margins of preference. In such cases, it is proposed that paragraph 1 of the attached sample Schedule should be replaced by a paragraph reading as follows: "The products of the territories of the contracting parties enumerated and described in Part I of this Schedule, shall, on their importation into Ruritania, be exempt from ordinary most- favoured-nation customs duties which exceed the preferential duties on such projects by more than the margin of preference set forth and provided for in Part I of this Schedule subject to the conditions therein set out." Ruritania Tariff Description of Products Margin of Item Number Description of Products Preference 91 Petroleum 104 per gal. 110 Grease nil. 251 China Vases 10% ad val. Where, however, negotiations are mainly on maximum margins of preference but some concessions are granted on m.f.n. rates, the procedure employed in the attached sample Schedule rather than in the foregoing example should be followed. It is proposed that the Schedules to be annexed to the General Agreement should be authentic in the two working languages of the United Nations (English and French). E/PC/T/153 SCHEDULE I - RURITANIA page 5 1. The products of the territories of the contracting parties, enumerated and described in Part I of this Schedule, shall, on their importation into Ruritania, be exempt from ordinary customs duties in excess of those set forth and provided for in Part I of this Schedule, subject to the conditions therein set out. Such products shall also be exempt from any other duties or charges imposed on or in connection, with importation in excess of those inposed on the day of the signature of this Agreement or required to be imposed there- after under laws of Ruritania in force on that day. 2. The products enumerated and described in Part II of this Schedule, which are products of the territories of contracting parties entitled to receive preferential treatment upon importation into Ruritania consistently with paragraphs 2 and 3 of Article I of this Agreement, shall, upon importation into Ruritania, be exempt from ordinary customs duties in excess of those set forth and pro- vided for in Part II of this Schedule, subject to the conditions therein set out, Such products shall also be exempt from all other duties or charges imposed on or in connection with importation in excess of those imposed on the day of the signature of this Agreement or required to be imposed thereafter under laws of Ruritania in force. on that day. 3. Nothing in this Schedule shall prevent the Government of Ruritania from imposing at any time on the importation of any product (a) a charge equivalent to an internal tax imposed in respect of the like domestic product or in respect of an article from which the imported product has been manufactured or produced in whole or in part, or (b) any anti-dumping or countervailing duty applied consis- tently with the provisions of Article V of this Agreement, or (c) fees or other charges commensurate with the cost of ser- vices rendered. E/PC/T/153 page 6 SCHEDULE I - RURITUNIA Ruritania Tariff Item Number Description of Products Rate of Duty Naphthenic Acids Electrical apparatus NOTE: The products provided for under Item 48 shall be exempt from ordin- ary most-favoured-nation customs duties which exceed the preferential duties on such products by more than 10% ad valorem Zinc oxide Apples, fresh Turpentine Fish: Salmon Oysters Stee1 ingots, cogged ingots, blooms and slabs, by whatever process made: valued at not more than 1½¢ per lb. valued at more than l½¢ per lb. Linseed oil 12½% ad val. 1-1/10¢ per lb. 60 per 100 lbs gross Free 10% ad val. $1.40 per 100 lbs. 3/10¢ per lb. 4/10¢ per lb. 2/ per lb. NOTE: The Government of Ruritania shall, on or after the day on which it re- moves the existing margin of internal tax preference on linseed oil, be free to impose, in addition to the duty specifically provided for under this item, a duty on importation which shall not be more than equivalent to such margin of preference. Automobiles 40% ad val. plus special charge (eg., primage, mon- opoly fee, sur- tax,etc.) not in excess of 8% ad val. Table and kitchen articles NOTE: The products provided for under Item 538 shall not be subject to Li ame of special charge other than ordinary customs duty, such as primage, monopoly fee, surtax,etc] in excess of 8% ad val. 841 Typewriters Part I 23 48 67 84 112 167 202 331 367 538 30% ad val. E/PC/T/153 page 7 SCHEDULE I - RURITANIA Part I (Cont'd) NOTE: The products provided for under Item 841 shall be exempt from any ordinary most- favoured-nation customs duty which exceeds the preferential duty on such products by more than 5% ad valorem. Part II Description of Products Naphthenic acids Linseed oil Table and kitchen articles Scientific instruments Wheat flour Rate of Duty 8% ad, val. 1½c per lb, 20% ad val. 15% ad val. $1.00 par 100 kgs. Ruritania Tariff Item Number 23 331 538 io06 1348
GATT Library
wb552dy4909
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tenth Report By the Tariff Negotiations Working Party
United Nations Economic and Social Council, July 23, 1947
United Nations. Economic and Social Council
23/07/1947
official documents
E/PC/T/133 and E/PC/T/124-135
https://exhibits.stanford.edu/gatt/catalog/wb552dy4909
wb552dy4909_92290159.xml
GATT_155
198
1,315
UNITED NATIONS ECONOMIC CONSEIL AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL UNRESTRICTED E/PC/T/133 23 July 1947 ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TENTH REPORT By the Tariff Negotiations Working Party. Three more of the tariff negotiations were completed in their bilateral stage auring the fortnight ending 12 July. The South African delegation was a party to each of these and the other parties were China, Czechoslovakia and Norway. The number of negotiations that have now reached this stage of completion is seven. It is to be understood that the results of these negotiations are subject to any adjustment that may be required in the light of other negotiations as they are completed and are to be incorporated in the schedules to be annexed to the General Agreement on Tariffs and Trade; further, the General Agreement, when arrived at, may be subjet o approval by the authorities of the countries concerned. The total number of negotiations is now 102, 84 meetings ware held during the fortnight ending 12 July, bringing the total number of meetings to 467. Nine pairs of countries have held more than ten meetings. NATIONS UNlES
GATT Library
sg735yr3996
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tenth Report by the Tariff Negotiations Working Party
United Nations Economic and Social Council, July 3, 1947
United Nations. Economic and Social Council
03/07/1947
official documents
E/PC/T/120 and E/PC/T/106-124
https://exhibits.stanford.edu/gatt/catalog/sg735yr3996
sg735yr3996_92290146.xml
GATT_155
214
1,460
UNITED NATIONS NATIONS UNIED UNRESTRICTED ECONOMIC CONSEIL E/PC/T/120 AND ECONOMIQUE 3rd July 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. TENTH REPORT BY THE TARIFF NEGOTIATIONS WORKING PARTY. During the fortnight ended 28 June 4 pairs of countries completed the bilateral stage of their negotiations. These are: Chile - Norivay Chile - South Africa China - South Africa Cuba - South Africa It is to be understood that the results of these negotiations are subject to any adjustment that may be requIred ln the light of other negotiations as they are completed and are to be incorporated in the schedules to be annexed to the General Agreement on Tariffs and Trade; further, the General Agreement, when arrived at, may be subject to approval by the authorities of the countries concerned. (The completion of negotiations between Canada and Norway was reported in E/PC/T/107 of 24 June.) Three meetings for the opening of tariff negotiations were held during the fortnight ending 28th June, and the total number of negotiations is now ninety-six. 85 meetings were held during the past fortnight bringing the total number to 383. 6 pairs of countries have held more than 10 meetings. UNITED NATIONS NATIONS UNIES I UC
GATT Library
jm272sz2390
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Article 44 - A as Adopted by Commission B
United Nations Economic and Social Council, June 19, 1947
United Nations. Economic and Social Council
19/06/1947
official documents
E/PC/T/104 and E/PC/T/92-105
https://exhibits.stanford.edu/gatt/catalog/jm272sz2390
jm272sz2390_92290124.xml
GATT_155
404
2,742
ECONOMIC CONSEIL 19 June 1947 AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. TEXT OF ARTICLE 44 - A AS ADOPTED BY COMMISSION B Pursuant to the instructions received by the Chairman of Commission B, the Secretariat herewith re-produces the text of Article 44 - A, as adopted by Commission B in its 12th meeting, held on Thursday, l9th June 1947 : Article 44 - A Procedure with respect to services 1. Members recognize that certain services, such as transportation, telecommunications, Insurance and banking, are substantial elements of international trade, and that any restrictive business practices In relation to them may have harmful consequences similar to'those described in Article 39. Such practices shall be dealt 'ith in accordance with the following paragraphs of this Article. 2. If any Member should consider that there exist restrictive business practices in relation to an International service In the,meaning of Paragraph 1 which have or are about to have such harmful effect, and that its interests are seriously prejudiced by this situation, the Member may submit a written statement explaining the situation to the Member or Members the public or private enterprises of which are engaged in the services in question. The Member or Members concerned shall give sympathetic consideration to the statement and to such proposals as may be made with a view to affording adequate opportunities of consultation and effecting a satisfactory adjustment of the matter. 3. If no adjustment can be effected in accordance with the provisions of Paragraph 2, and if the matter Is referred to the Organization it shall be transferred to the appropriate specialized inter-governmental agency if one exists, with such observations as the Organization in its discretion may wish to make. If no such specialized agency exists, Members may, under Article 61 (c), ask the Organization to make recommendations for, and promote international agreement on, measures designed to remedy the particular situation so far as it relates to the Purposes of the Organization. P. T.O. NATIONS UNIES UNITED NATIONS RESTRICTED page 2 4.. The Organization shall, subject to Article 61 (e), co-operate with specialised inter- governmental agencies ln connection with restrictive business practices affecting the gencral field covered by the Charter and those agencies shall be entitled to consult the Organization, to seek advice, and to ask that a study of a particular problem be made."
GATT Library
vp783rj7452
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Article XXIX of the General Agreement on Tariffs and Trade as Amended up to September 18, 1947 by the Tariff Agreement Committee
United Nations Economic and Social Council, September 17, 1947
United Nations. Economic and Social Council
17/09/1947
official documents
E/PC/T/204 and E/PC/T/196-209
https://exhibits.stanford.edu/gatt/catalog/vp783rj7452
vp783rj7452_92290259.xml
GATT_155
502
3,255
RESTRICTED ECONOMIC CONSEIL E/PC/T/204 AND ECONOMIQUE 17 September 1947 SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Text of Article XXIX of the General Agreement on Tariffs and Trade as Amended up to September 18, 1947 by the Tariff Agreement Committee ARTICLE XXIX "Relations of this Agreement to the Charter of an International Trade Organization". 1. The Contracting Parties, recognizing that the objectives laid down to this Agreement, can best be attained through the adoption by the United Nations Conference on Trade and Employment of a Charter for an International Trade Organization, thereby leading to the creation of such an Organization, undertake, pend- ing their acceptance of a Charter in accordance with their constit- utional procedures, to observe to the fullest extent of their executive authority the general principles of the Draft Charter submitted to the Conference by the Preparatory Committee. 2. On the day on which the Charter of the International Trade Organization enters into force, Part II of this Agreement shall be suspended and superseded by the corresponding provisions of the Charter. Provided that within sixty days of the closing of the United Nations Conference on Trade and Employment any contracting party to this Agreement may lodge with the Contracting Parties an objection to any provision or provisions of this Agreement being so suspended and superseded. 3. Within sixty days after the final date for the lodging of objections, the contracting parties shall, if any such objection has been lodged, confer to consider the objection and to agree UNITED NATIONS^N TIONS UNIES N N' P '.S E/PC/T/204 page 2 whether the relevant provisions of thE Charter to which objection has been lodged shall apply, or whether the relative provision of this Agreement in its existing form, or in any amended form, should apply. The contracting parties will agree concerning the transfer to the International Trade Organization of their functions under Article XXV. 4. If any contracting party has not accepted the Charter when it has entered into force, the contracting parties shall confer to agree whether, and if so in what way, the Agreement insofar as it affects relations between the contracting party which has not accepted the Charter and other contracting parties shall be sup- plemented or amended. 5. On 1 January 1949, should the Charter not have entered into force, or on such earlier date as may be agreed if it is known that, the Charter will not enter into force or on such later date as is agreed if the Charter ceases to be in force, the contracting parties shall meat to agree whether this Agreement should be amended, supplemented or maintained. 6. Any objection lodged by a contracting party under the pro- visions of paragraph 2 of this Article and any Agreement which may be reached between the contracting parties under Paragraphs 3 or 4, shall be notified for information to the signatories of the Final Act which are not at the time contracting parties.
GATT Library
qg610mc3690
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Article XXVI as amended up to September 18, 1947
United Nations Economic and Social Council, September 17, 1947
United Nations. Economic and Social Council
17/09/1947
official documents
E/PC/T/205 and E/PC/T/196-209
https://exhibits.stanford.edu/gatt/catalog/qg610mc3690
qg610mc3690_92290260.xml
GATT_155
514
3,401
UNITED NATIONS NATIONS UNIES RESTRICTED E/PC/T/205 ECONOMIC CONSEIL AND ECONOMIQUE 17 September 1947 SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TARIFF AGREEMENT COMMITTEE GENERAL AGREEMENT ON TARIFFS AND TRADE Text of ARTICLE XXVI as amended up to September 18, Article XXVI - Acceptance, Entry into Force and Registration. 1. The present Agreement shall boar the date of the signature of the Final Act adopted at the conclusion of the Second Session of the Preparatory Committee for the United Nations Conference on Trade and Employment and shall be open to acceptance by any government signatory to the Final Act. 2. The original of this Agreement done in the English and French languages, each in single copy, both authentic, shall be deposited with the Secretary-General of the United Nations, who shall furnish certified copies thereof to all interested govern- ments. 3. Each government accepting this Agreement shall deposit an instrument of acceptance with the Secretary-General of the United Nations, who will inform all interested governments of the date of deposit of each instrument of acceptance and of the date on which this Agreement enters into force under paragraph 5. 4. Éach government accepting this Agreement does so in respect of its metropolitan territory and of the other territories for 'ich it has international responsibility; Provided that it rnay the time of acceptance declare that any separate customs rritory for which it has international responsibility possesses E/PC/T/205 Page 2. full autonomy in the conduct of its external commercial relations and of the other matters provided for by this Agreement, and that acceptance does not relate to such territory; provided further that if any of tho customs territories on behalf of which a con- tracting party has accepted this Agreement possesses or acquires full autonomy in the conduct of its external commercial relations and of the other matters provided for by this Agreement, such a territory shall, upon sponsorship through a declaration by the responsible contracting party establishing the above-mentioned fact be deemed to be a contracting party. 5. This Agreement shall enter into force, as among the govern- ments which have accepted it, on the thirtieth day following the day on which instruments of acceptance have been deposited with the Secretary-General of the United Nations on behalf of signatory governments the territories of which account for 85% of the total trade of the territories of the governments signatory of the Final Act adopted at the conclusion of the Second Session of the Prepara- tory Committee for the United Nations Conference on Trade and Employment, as set forth in Annex G. The instrument of acceptance of each other government sïgnatory to the Final Act shall take effect on the 30th day following the day on which such instrument was deposited; Provided that no such entry into force shall take place until any agreement necessary under the Provïsions of para- graph 2 of Article XXIX has been reached. 6. The United Nations is authorized to effect registration of this Agreement as soon as it comes into force.
GATT Library
qy073hn8972
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Chapter VI as Approved by Commission B on June 27, 1947
United Nations Economic and Social Council, June 28, 1947
United Nations. Economic and Social Council
28/06/1947
official documents
E/PC/T/112 and E/PC/T/106-124
https://exhibits.stanford.edu/gatt/catalog/qy073hn8972
qy073hn8972_92290134.xml
GATT_155
2,087
14,385
UNITED NATIONS RESTRICTED ECONOMIC CONSEIL E/PC/T/112 AND ECONOMIQUE 28 June, 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMITTEE OF THE UNITED NATIONS CONFRENCE ON TRADE AND EMPLOYMENT. TEXT OF CHAPTER VI AS APPROVED BY COMMISSION B ON JUNE 27, 1947. CHAPTER VI. RESTRICTIVE BUSINESS PRACTICES Article 39 Policy towards restrictive business practices 1. Members shall take appropriate measures, individually or through the Organization or in both ways to prevent business practices atfecting international trade whether engaged in by private or public commercial enterprises) which restrain -.oompetition, limit access to markets, or foster monopolistic control, whenever such practices have harmful effects on the expansion of production or trade and interfere with the achieve.. ment of any of the other purposes of the Organization as set -forth In Article 1. 2. Without limiting the generality of paragraph 1 of this Article, and in order that the Organization may decide in a particular instance whether certain practices 'ave or are about to have any of the effects referred to in paragraph 1, complaints regarding any of the practices listed in paragraph 3 shall be subject to investigation in accordance with the procedure regarding complaints provided in Articles 40 and 42, whenever (a) such complaint is presented to the Organization; and (b) the practices are engaged in or are made effective by one or more public or private commercial enterprises or by a combination, agreement or other arrangement between commercial enterprises, whether betwecn private.commercial enterprises., between public commercial enterprises, or between private and public commercial enterprises; and (o) such cL=nercir.1 enterprises, individually or collectively, possess effective control of trade among two or more countries in one or more 3. The-practices referred to in paragraph 2 above are the following: (a) fixing prices ir terms or conditions to be observed in dealing with others in the purchase, sale or lease of any product; NA TIONS UNIES E/PC/T/112 page 2 (b) excluding enterprises from sny territorial market or field of business activity, relocating or dividing eny territorial market or field of business activity, allocating customers, or fixing sales or purchase quotas; (o) discriminating against particular enterprises; (d) limiting production or fixing production quotas; (e) preventing by agreement the application or develop- ment of technology or invention whether patented or unpe tented; (f) extending the use of rights under patents, trade marks or copyrights, granted by any Member, to metters which are determined by its system of law not to be within the scope of such grants, or to products or. conditions of production, use or sale which are similarly determined not to be the subjects of such grants; * (g.) any similar practices which the Organization may from time to time decide to be restrictive business practices. 4. In this Article "public commerciRl enterprises" means (a) trading agencies of governments, und (b) enterprises wholl;- or mainly owned by public >"g authority over which there is effective control by public authority, including control of engagement in the practices listed in paragraph 3. "Private commercial. enterprises"means all other * commercial enterprises. Article 40 Procedure with respect to Investigations end consultations 1. The Orgenization s8all arrange, if it considers such action to be Justified on the basis of information * suBmitted by the Members concerned, for particular Merobers to take part in a consultation requested by eny affected Member which considers that in any particular instance practices exist (%hether engaged in by private or public commercial enterprises) which have or are about to have the effect described in paragraph 1 of Article 39. E/PC/T/112 page 3 2. A complaint may be presented to the Organization by any affected Niember on its own behalf, or by any Member on behalf of any affected person, organization or business entity within that Meniber1s jurisdiction, provided that, in the case of a complaint against a single public commercial enterprise (us defined in Articie 39) acting independently, such complaint rany be presented only by a ±viumber on its own behalf and only after the Member has resorted to the proced- ure under paragraph 1 of this Article. 3. The OrLaniïxtiocu shall prescribe minimum information te be included in complaints claiming that particular practices exist and have or are about te have the effect described in paragraph 1 of Article 39. T'he information shall give substantial indication of the nature and harmful effects of the practices. 4. In order te decide whether an investigation of a complaint is justified, the Organization shall consider each written complaint submitted in accordance with paragraph 2 of this iAticle, review all relevarnt'information, and decide whether an investigation is justified. If the Orùanization deems that further inforoLtion is necessary before such decision can be reached, it shall request each Mcubcr ,c.eccrned to furnish supplementary information, including for exunple information from cornmerciaJ enterprises wi.;hin the jurisdiction of the Liembers concerned. 5. If the Organization decides that an investigation is justified, it shall notify all Meubers of the complaint, request any Miember te provide such additional information rele- vant te the complaint as the O._anization may deem necessary, and shall conduct or arrange for hearings on the complaint. Any Member, and any affected person, organization or business entity on whose behalf a complaint is made, as well as the parties alleged te have engSaed in,the practice complained of, shall be afforded. reasonable opportunity te be heard at such hearings. 6. The_ Orbanization shall review all information available and decide whether the practices in question have had or are about te have the effect described in paragraph 1 of Article 39 7. Tixi Organization shall report fully te all Members its decision and the reasons therefor. 8. If ttiç Organization decides that in any pqrUicular case the practices comuplained of have had or ere aGout te have tbe effect described in paraGraph 1 of hricle 39, it shall request each Member concerned te take evury possible remedial action, and may recommend te the L±>tUX Wv;c4r'ed remedial measures to bu carried out in accordance with their respective laws and procedures. 9. The Orcanization may request any.Mrvbers concerned te report fully on the remedial action it has taken in any particular case. E/PC/T/112 page 4 10 As soon as possible after its enquiries concerning any complaint dealt with under paragraphs 3 to 7 of this Article have been provisionally or finally closed, the Organization shall prepare and publish a report showing fully the decisions reached, the reasons therefor and any action recommended to the Minmbers concerned. however, the Organization shall not, if a Membbor so requests, disclose confidential, information furnished by that Member which would materially damage the legitimate business interests of a commercial E-nterprise. 11. The Organization shall report to ail Memberb and make public the remei.ial actions which have been taken by tho Members concerned in any particular case, Article 41 Studies relating to restrictive business practices 1. The Organization is authorized (a) to conduct studies either on its own initiative or at the request of any Member or of any organ of the United Nations or of any other inter-governmental organization, relating to (i) general aspects of restrictive business practices affecting international trade; and (ii) conventions, laws and procedures concerning, for example, incorporation, company registration, invest- * moments, securities, prices, markets, fair trade practices, trade marks, copyrights, patents and the exchange and development of technology, insofar as they are relevant to restrictive business practices affecting international trade; and (iii) registration of restrictive business agreements and other arrangements affecting international trade; and (b) to request information from Members in connection with such studies. 2e The Organization is authorized (a) to make recommendations to Members concerning su^h conventions, laws and procedures as are relevant to thoir obligations under this Chapter; and (b) to arrange for conferences of Members to discuss any matters relating t, restrictive business practices affecting international trade. E/PC/T/I112 Page 5. Article 42 Obligations of Members 1. Each Member shall take all possible measures by legis- lation or otherwise to Pnsure, within its jurisdiction, that private and public commercial enterprises do not engage in practices which have the effect described in paragraph 1 of Article 39 and in addition shall assist the Organization in preventing these practices, such measures to be taken in accordance with the Momber's system of law and economic organization. 2. Each Member shdll make adequate arrangements for presenting complaints, conducting investigations and preparing information ana reports requested by the Organization. 3. Each Member shall furnish to the Organization, as promptly and as fully as possible, such information as is requested by the Organization for its consideration and its investigation of complaints and for its conduct of studies under this Chapter, provided that any Member (a) may withhold confidontial information relating to its national security; and (b) on proper notification to the Organization, may withhold information which the Member considers is not essential to the Organization in conducting an adequate investigation and which, if disclosed, would materially damage the legitimate business interests of a commercial enterprise. In notifying the Organization that it is withholding information pursuant to this clause, the Member shall indicate the general character of the information withheld, and the reasons why it considers it not essential. 4. Each Momber shall take full account of each decision, request and recommendation of the Organization under para- graphs 6 and 8 of Article 40 and, in accordance with its system of law and economic organization, take in the particular case the action it considers appropriate in the light of its obligations under this Chapter. 5. Bach Member shall report any action taken, independently or in concert with other Members, to implement decisions. made by the Organization, and, when no action has beon taken, inform the Organization oe the reasons therofor and discuss the matter further with the Organization if requested to do s9. E/PC/T/112 page 6. 6. Each MIember shall, at the request et the organizatinn, take part in consultations and conferences provided for in this Chapter with a view to reaching mutually satisf'oc.tory conclusions. Article 43 Supplementary enforcement arrangements 1. Members may co-operate with each other in prohibitive, preventive or other measures for the purpose pf making mriorc effective any remedial order issued by a duly authorized ugency of any Member in furtherance of the objectives of this Chapter. 2. ILiembers participating in or intending to participate in such cQ-oporative action shall notify tho Organization. Article 44 Continued effectiveness of domestic measures against restrictive business practices No act or omission to act on the part of the Organization shall preclude any Member from enforcing any national statute or decree directed towards preventing monopoly or restraint of trade. Article 44 - A Procedure with respect to services 1. Members recognize that certain services, such as transportation, telecommunications, insurance and banking, are substantial elenients of international trade, eFnd that any restrictive business practices in relation to them may have harmful consequences similar to those doscribed in Article 39. Such practices shall be dealt with in accordance with'the following paragraphs of this Article. 2. If any Miember should consider that there exist restrictive business precçices in relation to an international service in the meaning of Paragraph 1 which have or are about to have such harmful effects, and that its interests are seriously prejudiced by this situation, the Miember may submit a written statement explaining the situation to the blember or Members the public or private enterprises of which are engaged in the services in question. The Member or Members concerned shall give sympathetic consideration to the statement and to such proposals as may be made with a view to affording adequate opportunities of consultation and effecting a satisfactory adjustment of the matter, E/PC/T/1 12 page 7, 3. IlI no adjustment can be eff1ected in accordance with the provisions of Pararraph 2, and if the matter is referred to tho Organizatior. it shall be transferred to the appropriate %nter-governmontal organization if one existed, with such obsorvationo as the Organization in its discretion may wiïh to maku. If no such inter- governmental organization existed, blombers may, urder Article 61(c), ask the Organization to, make recommanda- tions for, and proinote international agreement on, measures designed to remedy the particular situation so far as it relates to the purposes of the Organization. >4. The Organization shall, subject to Article 61(e), co-operate with inter-governmental organizations in connect' on with restrictive business pract ices af'octing tho general field covorèd by the Charter and those intor-governmental organization shall be antitlad to cc:isult the Organization, to seek advice, and to ask that a study of a particular problem be inade.»
GATT Library
ts709ht0903
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Chapter VII as approved by Commission B Chapter VII - Inter-Governmental Commodity Agreements
United Nations Economic and Social Council, July 7, 1947
United Nations. Economic and Social Council
07/07/1947
official documents
E/PC/T/123 and E/PC/T/106-124
https://exhibits.stanford.edu/gatt/catalog/ts709ht0903
ts709ht0903_92290149.xml
GATT_155
0
0
GATT Library
nb738pf6250
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Chapter VII as approved by Commission B Chapter VII - Inter-Governmental Commodity Agreements
United Nations Economic and Social Council, July 7, 1947
United Nations. Economic and Social Council
07/07/1947
official documents
E/PC/T/123 and E/PC/T/106-124
https://exhibits.stanford.edu/gatt/catalog/nb738pf6250
nb738pf6250_92290149.xml
GATT_155
3,612
24,342
UNITED NATIONS ECONOMIC CONSEIL RESTRICTED AND ECONOMIQUE E/PC/T/123 SOCIAL COUNCIL ET SOCIAL 7 July 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TEXT OF CHAPTER VII AS APPROVED BY COMMISSION B CHAPTER VII - INTER-GOVERNMENTAL COMMODITY AGREEMENTS* SECTION A - GENERAL CONSIDERATIONS ARTICLE 46 (46)** DIFFICULTIES RELATING TO PRIMARY COMMODITIES The Members recognize that the conditions under which some primary commodities are produced, exchanged and consumed are such that international trade in these commodities may be affected by special difficulties such as the tendency towards persistent disequilibrium between production and consumption, the accumulation of burdensome stocks and pronounced fluctuations in prices. The special difficulties may have serious adverse effects on the interests of producers and consumer, as well as widespread repercussions jeopardizing the general policy of economic expansion. Members agree that such difficulties may, at times, necessitate special treatment of the international trade*** in such commodities through inter-governmental agreement, * Throughout this text, the word "arrangement" has been replaced by "agreement". This change is subject to the approval of the Legal Drafting Committee. It is under- stood that all forms of inter-governmental arrangement, understanding or other form of co-ordinated action, are intended to be covered by the one term "agreement". ** Numbers in brackets indicate equivalent Article in New York text: *** In Article 46, in speaking of the need to adopt "special treatment if the international trade in such commodities", the Sub-Committee had in mind merely that international trade is the aspect of a particular commodity problem directly appropriate for international treatment. It was understood, however, that agreement regarding the treatment of the international trade in a commodity might involve agreement regarding production or consumption of the commodity. NATIONS UNIES E/PC/T/123 page 2 ARTICLE 47 (60(1)) PRIMARY AND RELATED COMMODITIES 1. For the purposes of this Chapter, the term "primary commodity" means any product of farm, forest or fishery or any mineral, in its natural form or subjected to such processing as is customarily required to prepare it for marketing in substantial volume in international trade. 2. The term shall also cover a group of commodities, of which one is a primary commodity as defined in paragraph 1 and the others are commodities (whether primary or non- primary) which are so closely related, as regards conditions of production or utilisation, to the other commodities in the group, that it is appropriate to deal with them in a single agreement. 3. If, in exceptional circumstances, the Organization finds that the conditions set forth in Article 53 exist in the case of a commodity which does not fall precisely under paragraphs 1 or 2 above, the Organization may determine that the principles and provisions of Chapter VII, together with any other requirements it may establish, shall apply to inter- governmental agreements regarding that commodity. ARTICLE 48 (47) 7 OBJECTIVES OF INTER-GOVERNMENTAL COMMODITY AGREEMENTS The Members recognize that inter-governmental commodity agreements may be employed to achieve the following objectives: (a) to prevent or alleviate the serious economic problems which may arise when adjustments between production and consumption cannot be effected by normal market forces alone as rapidly as the circumstances require; (b) to provide, during the period which may be necessary, a framework for the consideration and development of measures which have as their purpose economic adjustments designed to promote the expansion of consumption or a shift of resources and manpower out of over-expanded industries into new and productive occupations; (c) to moderate pronounced fluctuations in the price of a primary commodity with a view to achieving a reasonable degree of stability on a basis of prices fair to consumers and remunerative to efficient producers, having regard to the desirability of securing long- term equilibrium between the forces of supply and demand; (d) to maintain and develop the natural resources of the world and protect them from unnecessary exhaustion; E/PC/T/123 page 3 (e) to provide for the expansion of the production of a primary commodity where this can be accomplished with advantage to consumers and producers; (f) to assure the equitable distribution of a primary commodity in short supply. SECTION B - INTER-GOVERNMENTAL COMMODITY AGREEMENTS IN GENERAL ARTICLE 49 (48) SPECIAL COMMODITY STUDIES 1. Any Member which is substantially interested in the production or consumption of, or trade in, a particular primary commodity, and which considers that international trade in that commodity is, or is likely to be, affected by special difficulties, shall be entitled to ask that a study of the commodity be made. 2. Unless it resolves that a prima face case has not been established, the Organization shall promptly invite all Members to appoint representatives to a Study Group to make a study of the commodity, if they consider that they have a substantial interest in the production or consumption of, or trade in, the commodity. Non-Members may also be invited. 3. The Study Group shall promptly investigate the production, consumption and trade situation in regard to the commodity, and shall report to the participating Governments and to the Organization its findings and its recommendations as to how best to deal with any special difficulties which may exist or may be expected to arise. The Organization shall promptly transmit to the Members these findings and recommendations. ARTICLE 50 (49) COMMODITY CONFERENCES 1. On the basis of the recommendations of a Study Group, or at the request of Members whose interest represents a substantial part of world production or consumption of, or trade in, a particular primary commodity, the Organization shall promptly convene an inter-governmental conference to discuss measures designed to meet the special difficulties which exist or are expected to arise. The Organization may also, on its own initiative, call such a conference on the basis of information agreed to be adequate by the Members having a substantial interest in the commodity. 2. Every Member which considers that it has a substantial interest in the production or consumption of, or trade in, the commodity concerned, shall be invited to participate in such a Conference. Non-Members may also be invited to participate. E/PC/T/123 page 4 ARTICLE 51 (51 and 58) GENERAL PRINCIPLES OF INTER-GOVERNMENTAL COMMODITY AGREEMENTS 1. Members shall adhere to the following principles governing the operation of all types of inter-governmental commodity agreements: (a) such agreements shall be open initially to participation by any Member on terms no less favourable than those accorded to any other country and thereafter in accordance with such procedure and upon such terms as may be established by the Commodity Council subject to approval by the Organization; (b) non-Members may be invited by the Organization to participate in such agreements and the provisions of sub-paragraph (a) of this Article applying to Members shall apply to any non-Member so invited; (c) under such agreements there shall be equitable treatment as betwcen participating countries and non- participating Members, and the treatment accorded by participating countries to non-participating Members shall be no less favourable than that accorded to any non-participating non-Member; due consideration being given in each case to policies adopted by non- participants in relation to obligations assumed and advantages conferred under the agreement; (d) such agreements shall include provision for adequate participation of countries substantially intevested in the importation or consumption of the commodity as well as those substantially interested in its exportation or production; (e) full publicity hall be given to any inter-governmental commodity agreement proposed or concluded, to the statements of considerations and objectives advanced by the proposing Members, to the nature and development of measures adopted to correct the underlying situation which gave rise to the agreement and, periodically, to the operation of the agreement. 2. Members, including Members not parties to a particular commodity agreement, shall give favourable consideration to any recommendation made under such agreement for expanding consumption of the commodity in question. E/PC/T/123 page 5 ARTICLE 52 (60(3) and 53(a)) TYPES OF AGREEMENTS 1. For the purposes of this Chapter, there shall be recognized two classes of inter-governmental commodity agreements: (a) Commodity control agreements as defined in this Article; and (b) Agreements other than commodity control agreements. 2. [ Subject to the provisions of paragraph 5 of this Article]* a commodity control agreement" is an inter-governmental agreement which involves: (e) the regulation of production or the quantitative control of exported or imported of primary commodity and has the purpose or might have the effect of reducing, or preventing an increase in, the production of, or trade in, that commodity; or (b) the regulation of prices 3. The Organization shall, on the request of a Member, a Study Group, or a Commodity Conference, make a finding as to whether an existing or proposed inter-governmental agreement is a commodity control agreement within the term of paragraph 2 of this Article. 4. (a) Commodity control agreements shall be subject to all of the provisions of this Chapter. (b) Agreements other than commodity control agreements shall be subject to the provisions of this Chapter other than those of Section C. If, however, the Organization finds that an agreement which involves the regulation of production or the quantitative control of exported or imports is not a commodity control agreement within the term of paragraph 2, the Organization shall stipulate to which, if any, of the provisions of Section C that agreement shall conform. * The Legal Drafting Committee is to be asked whether, in its view, the words shown in square brackets are redundant and might be deleted. E/PC/T/123 page 6 5. The Organization may find that an existing or proposed inter-governmental agreement which has the purpose of securing the co-ordinated expansion of aggregate world production and consumption of a primary commodity is not a commodity control Agreement even though the agreement contains provision for the future application of minimum prices; provided that any such agreement shall be deemed to be a commodity control agreement and shall conform to all the provisions of Section C from the date on which its minimum price provisions become operative. 6. Members agree not to enter into any new commodity control agreement, unless it has been recommended by a conference called in accordance with Article 50. If, in an exceptional case, there has been unreasonable delay in the proceedings of the Study Group or of the Commodity Conference, Members substantially interested in the production and consumption of or trade in, a particular primary commodity, m.y proceed by direct negotiation to the conclusion of an agreement, provided that it conforms to the other provisions of this Chapter. SECTION C - INTER-GOVERNMENTAL COMMODITY CONTROL AGREEMENTS ARTICLE 53 (52) CIRCUMSTANCES GOVERNING THE USE OF COMMODITY CONTROL AGREEMENTS. 1. Members agree that commodity control agreements may be employed only when it is determined that: (a) a burdensome surplus of a primary commodity has developed or is expected to develop, which, in the absence of specific governmental action, would cause serious hardship to producers, among whom are small producers who account for a substantial portion of the total output, and these conditions could not be corrected by normal market forces in time to prevent such hardship, because characteristically, in the case of the primary commodity concerned, a substantial reduction in price does not readily lend to a significant increase in consumption nor to a significant decrease in production; or (b) widespread unemployment or underemployment in connection with a primary commodity, arising out of difficulties of the kind referred to in Article 46, has developed or is expected to develop, which, in the absence of specific governmental action, would not be corrected by normal market forces in time to prevent widespread and undue hardship to workers, because characteristically, in the case of the industry concerned, a substantial reduction in price does not readily lead to a significant increase in consumption but to the reduction of employment and because areas in which the commodity is produced in substantial quantity do not afford alternative employment opportunities for the workers involved. 2. Determinations under this Article shall be made through the Organization by consultation among the Members substantially interested in the commodity concerned. E/PC/T/123 page 7 ARTICLE 54 (53) ADDITIONAL PRINCIPLES GOVERNING COMMODITY CONTROL AGREEMENTS Members shall adhere to the following principles governing commodity control agreements in addition to those stated in Article 51: (a) such agreements shall be designed to assure the availability of supplies adequate at all times for world demand at reasonable prices, and, when practicable, shall provide for measures designed to expand world consumption of the commodity; * (b) under such agreements, participating countries which are largely interested in import of the commodity concerned. shall, in determinations made relating to substantive matters, have together a voice equal to that of those largely interested in obtaining export markets for the commodity, provided that any country, which is largely interested in the commodity but which does not fall precisely under either of the above classes, shall have an appropriate voice within such classes; ** (c) such agreements shall make appropriate provision to afford increasing opportunities for satisfying national consumption and world market requirements from sources from which such requirements can be supplied in the most effective and economic manner, due regard being had to the need for preventing Serious economic and social dislocation and to the position of producing areas which may be suffering from abnormal disabilities; (d) participating countries shall formulate and adopt programmes of domestic adjustment believed to be adequate to ensure as much progress as practicable within the time limits of the agreement towards solution of the commodity problem. * The provision contained in sub-paragraph (f) of Article 51 of the New York text has been transferred to this sub-paragraph. ** Under sub-paragraph (b) it is intended: (1) that there shall be no more than two groups of countries within an agreement, and that the principle of "equal voice" in substantive matters shall apply as between them; (ii) that countries which are large producers and consumers of the commodity concerned, but which are not large exporters or importer, shall have an appropriate voice. It is understood that any difference in a Commodity Conference on voting arrangements may naturally be the subject of an appeal to the Organization under Chapter VIII (Article 86(2)). E/PC/T/123 page 8 ARTICLE 55 (54) ADMINISTRATION OF COMMODITY CONTROL AGREEMENTS 1. Each commodity control agreement shall provide for the establishment of a governing body, herein referred to as a Commodity Council. 2. Each of the countries participating iln an agreement sha.ll be entitled to have one representative on the Commodity Council. These representatives alone shall have the right to vote. Their voting power shall be determined in such a way as to conform with the provisions of sub-paragraph (b) of Article 54. 3. The Organization shall be entitled to appoint a non- voting representative to each Commodity Council and may invite any competent inter-governmental organization to nominate a non-voting representative for appointment to a Commodity Council. 4. Each Commodity Council shall have a non-voting chairman who, if the Council so requests, shall be nominated by the Organization. 5. The Secretariat of each Commodity Council shall be appointed by the Council after consultation with the Organization. 6.. Each Commodity Council shall adopt appropriate rules of procedure and regulations regarding its activities, provided that they are not found by the Organization to be inconsistent with the principles and provisions of this Chapter. 7. Each Commodity Council shall make periodic reports to the Organization on the operation of the agreement which it administers. In addition it shall make such special reports as the Organization may specify or as the Council itself considers to be of value to the Organization. 8. The expenses of a Commodity Council shall be borne by the participating countries. 9. When an agreement is terminated, the Organization shall. take charge of archives and statistical material of the Commodity Council. E/PC/T/123 page 9 ARTICLE 56 (55) PROVISION FOR INITIAL TERMS, REVIEW AND RENEWAL OF COMMODITY CONTROL AGREEMENTS 1. Commodity control agreements shall be concluded for a period of not more than five years, and any renewal shall be for a period not exceeding five years. Such renewed agreements shall conform to the provisions of this Chapter. 2. Periodically, at intervals no greater than threc years, the Organization shall prepare and publish a review of the operation of each agreement in the light of the principles set forth in this Chapter. Moreover, a commodity control agreement shall provide that if, in the opinion of the Organization, its operation has failed substantially to conform to the principles laid down in this Chapter, participating countries shall revise the agreement to conform to the principles, or shall terminate it. 3. Commodity control agreements shall include provision governing the subject of withdrawalof any party. ARTICLE 57 (56) SETTLEMENT OF DISPUTES Any question or difference concerning the interpretation of the provisions of a commodity control agreement or arising out of its operation shall be discussed originally by the Commodity Council. If the question or difference cannot be resolved by the Council under the terms of the agreement, it shall be referred by the Council to the Commodity Commission for examination and recommendation to the Executive Board. The Executive Board shall then issue a ruling in pursuance of the provisions of Article 86. SECTION D - MISCELLANEOUS PROVISIONS ARTICLE 58 (50) RELATIONS WITH INTER-GOVERNMENTAL ORGANIZATIONS With the abject of ensuring appropriate co-operation in matters relating to inter-governmental commodity agreements, any inter-governmental organization, which is deemed to be competent by the Organization, such as the Food and Agriculture Organisation, shall be entitled; (a) to attend any Study Group or Commodity Conference; (b) to ask that a study of a primary commodity be made; (c) to submit to the Organization any relevant study of a primary commodity, and, on the basis thereof, to recommend to the Organization that further study of the commodity be made or that a Commodity Conference be convened. E/PC/T/123 page 10 ARTICLE 59 (57) OBLIGATIONS OF MEMBERS REGARDING EXISTING AND PROPOSED COMMODITY AGREEMENTS 1. Members shall transmit to the Organization the full text of each inter-governmcntal commodity agreement in which they are participating at the time of the coming into force of their obligations under this Charter. Members shall also transmit to the Organization appropriate information regarding the formulation, provisions and operation of such agreements. Members shall conform with the decisions made by the Organization regarding their continued participation in any such inter- governmental commodity agreement which, after review by the Organization, shall have been found. to be inconsistent with the intentions of this Chapter. 2. Members shall transmit to the Organization appropriate information regarding any negotiations, looking to the conclusion of an inter-governmental commodity agreement, in which they are participating at the time of the coming into force of their obligations under this Charter. Members shall also conform with decisions made by the Organization regarding their continued participation in any such negotiations. The Organization may dispense with the requirement of a Study Group or a Commodity Conference, if it finds them unnecessary in the light of the negotiations. ARTICLE 60 (60(2)) TERRITORIAL APPLICATION For the purposes of this Chapter, the term "Members or "non-Member" shall be taken to mean a Member or non-Member of the Organization with its dependent territories. If a Member or non-Member and its dependent territories form a group, of which one or nore units Rre mainly interested In the export of a commodity and one or more in the import of the commodity, there may be either joint representation for all the associated territories or, where it is so desired, separate representation for the territories mainly interested in export and separate representations for the territories mainly interested in import. E/PC/T/123 page 11 ARTICLE 61 (59) EXCEPTIONS TO PROVISIONS RELATING TO INTER-GOVERNMENTAL COMMODITY AGREEMENTS 1. The provisions of Chapter VII shall not apply: (a) to any bilateral agreement relating to the purchase and sale of a commodity falling under Section E of Chapter V; (b) to any inter-governmental commodity agreement Involving no more than one exporting country and no more than one importing country, and not covered by sub-paragraph (a) above, provided that if, upon complaint of a non-participating Member, the Organization finds that the interests of that Member are seriously prejudiced by the agreement, the agreement shall become subject to such provisions of Chapter VII as the Organization may stipulate; (c) to those provisions of inter-governmental commodity agreements which appropriately relate to the protection of public morale or of human, animal or plant life or health; provided that such agreements are not used to accomplish results inconsistent with the objectives of Chepter VI or Chapter VII; (d) to agreements relating to fissionable materials, to the traffic in arms, ammunition and implements of war and to such traffic in ether goods and materials as is carried on for the purpose of supplying a military establishment, or, in the time of war or other emergency in international relations, to the protection of the essential security interest of a Member.* 2. The provisions of Articles 49 and 50 and of Section C of Chapter VII shall not apply to inter-governmental commodity agreements found by the Organizatton to relate solely to the equitable distribution of commodities in short supply. 3. The provisions of Section C shall not apply to commodity control agreements found by the Organization to relate solely to the conservation of fisheries or wild life or other exhaustible natural resources. * A proposal has been made for the deletion of this sub- paragraph in the light of an amendment to be considered by Commission A regarding the exclusion of such agreements from the whole Charter. The attention of Commission A has been drawn to the relation of this amendment to sub-paragraph (d) of Article 61.
GATT Library
bs285yg7440
Second session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of final note. Proposed by Delegation of United States of America
United Nations Economic and Social Council, September 23, 1947
United Nations. Economic and Social Council
23/09/1947
official documents
E/PC/T/W/344 and E/PC/T/W/307-344
https://exhibits.stanford.edu/gatt/catalog/bs285yg7440
bs285yg7440_90050499.xml
GATT_155
14,955
91,252
UNITED NATIONS NATIONS UNIES RESTRICTED ECONOMIC CONSEIL E/PC/T/W/344 23 September 1947 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. TEXT OF FINAL NOTE Proposed by Delegation of United States of America. It is recognized that in the General Agreement on Tarifs and Trade the contracting parties have made no commitments in respect of trade of and with the areas under military occupation. The question of the applicability of the Agreement to such areas is reserved with a view to further study at an early date. DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L 'EMPLOI DE L' ORGANISATION DES NATIONS UNIES TEXTE DE NOTE FINALE proposé par la Délégation des Etats-Unis dAmérique. est recennu que, dans l'Accord général sur les tariffs douaniers et le commerce, les Parties Contractantes n'ont pris aucun engagement en ce qui concerne les éhanges commerciaux dans les territoires placés sous l'occupation militaire ou avec ces territoires. La question de l'application éventuelle dudit Accord à ces territoires est réservée en vue d'un examen ultérieur à une date rapprochée. 23 septembre 1947 A.1. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatin Report of the FIFTH-MEETING PROCEDURES SUB-COMMITTEE of COMMITTEE II held at Church House, Westminster, S. W.l. on TEMPORARY CHAIRMAN: DR H C. COOBS (Australia) (Verbatim Reports of the first four meetings of Sub-Committee were not made). (From the Shorthand Notes of this (From the Shortand Notes of W. B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.I.) Monday, 4th November, 1946 at 3. 0. p.m. E/PC/T/C.Il/PV.8 THE TEMPORARY CHAIRMAN (Dr Coorbs) (Australia): for Spcenkinbrink is absent, or will at any rate be absent for part of this afternoon, and therefore our first task is to select a substitute Chairman while he is absent. MR HAWKINS (USA): Mr Chairman, is there any reason why you should not continue to serve? THE TEMPORARY CHAIRMAN: I am in the hands of the Committee in this matter. (Several Delegates indicated their wish for Dr Coobs to take the Chair). Thank you. (It was agreed that Coombs, act as Chairman during the absence of Mr. Speekinbrink) THE CHAIRMAN: I have been asked to make this announcement: in case dele gates have not seen a notice whcih appeared in the Journal on Thursday, performances of the films "Henry V' and "Brief Encounter" are being given this afternoon and on Wednesday afternoon by the courtesy of the J.R.Rank Organization Limited for members of Delegations and their staffs. Tickets can be obtained from Miss Cunynghame-Robertson, Room 511. Now, I think that we were still discussing Article 8, para- graph 2, when we finished our last meeting, and I think we had reached the stage where it had been agreed that we could work on the existing draft of paragraph 2 of, Article 8 in the United States Charter, and that it could be accepted subject to the deletion of reference to the dates there and the insertion of a phrase something to the following effect: "Elimination of any preference in the ordinary import customs duty which does not exceed a preference in force in any Member country on a date to be agreed between on participating countries"- or words to that effect. I think it was suggested that the precise wording should be left for formal approval of the Committee after our newly-appointed Rapporteur had had an opportunity to examine the draft. MR ALAMILLA (Ciba): It was arranged that both Mr Hawkins and myself would try, in the absence of the Rapporteur, to reach agreement on the wording. 2. E/PC/T/C.II/PV.8 and I am now in a position to report to the Committee. THE CHAIRMAN: Have you got something to report upon that? Mr HAWKINS (USA): Yes. I think the Cuban delegate was going to have it distributed, but it does not seen to have arrived MR ALAMILLA (Cuba):- No; I thought you were going to distribute it. MR HAWKINS (USA): I would suggest that the Cuban delegate road from the draft which he has which is very simple. MR ALAMILLA (Cuba): Yes. I think you will be able to follow this draft. THE CHAIRMAN: Read it sufficiently slowly for people to write it down, and then I think that might save circulation MR ALAMIKKA (Cuba): It reads: "The provisions of paragraph 1 of this Article shall not be construed to require. the elimination of any prefer- ence in the rate of ordinary import customs duty which does not exceed the preference in force on dates to be agreed upon by the countries concerned in reference to the preferences described in the following sub-paragraphs; but such preferences shall be subject to processes elimination pursuant to the provisions of Article 18." B fols. E/PC/T/C.II/PV.8/W/5 THE CHAIRMAN: Has anybody any comment to make on that draft, as far as it goes? MR SHACKLE (United Kingdon): It is the mention of "ordinary import customs duty", In paragraph 1 the reference is to "customs duties and charges of any kind imposed on or in connection with importation". I think the wording of this in paragraph 2 should be the same as the wording in paragraph 1. If this is not done, it will mean that certain charges on impertation which are not called customs duties would not automatically eliminate that negotiation. I suggest that we make the wording of paragraph 2 the same as that in paragraph 1, so that instead of, "ordinary import customs duty", it would read "customs and other charges on importation". THE CHAIRMAN: Is that all right? MR HAWKINS (U.S.A.) That is all right. THE CHAIRMAN: Has anybody else any comment., or can we accept that? MR McKINNON (Canada): I think that probably it is difficult for us sometimes to keep in mind that we are drafting here an international instrument of a constitutional nature, which does not come into force, will not come into force and cannot come into force until after the tariff negotiations referred to in Article 18 have been undertaken and completed. One of the difficulties ve have been faced with from the start (and this is in no way a criticism of the American draft, but I have to refer to it by way of explanatition)in devising an appropriate paragraph here was that the American original draft had in the dates of July lst, 1939 and July lst, 1946 -- dates which in themselves might not appear appropriate at all in a document of the type we are trying to make in this Charter. Por that reason, we have been attempting a draft, and not by way of criticism of the draft read by the Cuban Delegate at all, but possibly because it is even simpler and may get away from the lack of appropriateness to which I have referred in a document of that character, in the Charter; and I would like to read it; I need not read it slowly, because it is so short: "The provisions of paragraph one of this Article shall not be construed to require the elimination of any preferences in respect of import customs duties and charges" -- and 4. B.2. E/PC/T/C.II/PW.8 there I meet Mr Shackle's point -- "Which do not exceed the preferences remaining after the negotiations contemplated in Article 18", and then going on in the manner set forth in subparagraphs a. and b. May I just add this, that the very excellent draft suggested by the Cuban Delegate still has reference to dates -- an oblique reference: "on dates to be agreed upon by the countries concerned". By the time the Charter is a Charter and comes into force, the tariff negotiations will have been completed and there will be an ambiguity about a phase lice that; whereas under the draft wording I have just read, it simply says; "in respect of preferences remaining after the negotiations contemplated in Article 18". I would like to submit that, not by my of a new motion, but by way of a slight amendment to the one which has just been read by the Cuban Delegate, MR HAWKINS (U.S.A): As I understand it; the approach is somewhat similar to the one taken by Mr Shackle in his draft, his purpose being, as I under- stood it, to save from extermination by the most-favoured-nation clause any preference which might remain after the negotiations had taken place; it is the same idea. I think there is a good, deal to be said for it. If we look at the time-table, the negotiations will take place next year; the Charter will not come into force until 1948. Then the Charter came before the international meeting it would purport to be thesame: those preferences remaining aIter the negotiations. I think there is a good deal in the point that this.'is a Charter. It may bc that perhaps atl'this point wo have got more procedure into the basic instrument than we ought to have, and ott-hand I would be inclined to think that that might meet our problem. THE CHAIRMAN: It seems to me that there are two points: one is the problems of the date, ehich is really a problem of procedure; and then there ie the .question of saving the preferences vihich survive negotiations. It seems to me thât if we could agree on a draft substantially along the lines suggested by Mr MeKinnon, and at the same time record a decision or recommendation in our functions as a sub-committeeon procedure that in the negotiations the dates to which preferences to be negotiated shall roter are to be a matter to bc agreed on by the countries concerned, then we would have dealt with that 5. B.3. E/PC/T/C.II/PV.8/ question and recorded our view on it as a matter of procedure, and at the same time we would have -in the Charter what is appropriate fo'r the Charter itself MR ADARKAR (India): I was going to say very much the same thing. I have nothing more to add, to what Mr Hawkins has said. I would' only say that the Indian Delegation would prefer the formula suggested by Mr MoKinnon. THE CHAIRMAN: I think that meets the Cuban and Chilean Delegates' points quite satistactorily, does not it? MR VIDELA (Chile) Yes. MR ALAMILLA (Cuba) Yes. THE CHAIRMAN: I think we can take it that Mr McKinnonis draft is agreed, and that we do record a recommendation that the question of the dates to which preferences shall refer shall be dates to be agreed upon by the interested parties, as part of the negotiations, MR ALAMILLA (Cuba): Just before we come to paragraph a. I just want to record the fact that Cuba has presented one amendment to delete all this last part of paragraph 2, to which we have agreed in this paragraph, but we agree that because we have been considering the possibility of putting out amendment in Article 18 instead of article 8, merely in order to go more in the way that .the Charter is drafted because we want to save our position: in case we do not get :in Article 18 what our object was in presenting this amendment, which is connected with another cne, we will bring this point in reference to, Article 8. THE CHAIRMAN: I think that is quite clear all Delegates must reserve the right to return to a matter dealt with, if, in theïr opinion, the way subsequent matters are decided-makes it necessary. So that I think that anything we agree to is a tentative agreement subject to the whole being satisfactory, We pass now to the question of the exception of the clasess E/PC/T/C.II/PV.8 of preferences that, will so to speak, be given an opportunity to survive the, negotiations, and here I think the main point at issue is whether this list should be extended to cover other exostomg preferences as well as those listed here Have any comments to make on this at this stage? SENOR DON HUMBERTO VIDELA: (Chile) : Mr, Chairman, I would just point out that I understood that what we have accepted f rom the Canada draft is that part which is substituted for those which do not exist at present in force but that the rest of the paragraph was drafted in order to leave open the possibility that as we come along in the discussion some other point may be raised as to what is left as it was in our original draft, which says: "In reforence to the preferences described in the following sub"-paragraph. Therefore, that does not make it obligatory for us to take exactly the point of how many we are going to put, We will come to paragraph (a) discuss that and I think that, is going to take a long time then we will come to paragraph (b); and then whoever wishes to in the course of the discussion can dissent, THE CHAIRMAN: Yes, I understand. that point It may, of course,. be possible to attain some wording which would more general and would cover not only (a) and (b), but any other which you would wish to. SENOR DON HUMBERTO VIDELA (Chile) Yes, we have this already in our draft; it says "In reference to the preferences. described in the following sub-paragraph"- That is what I wanted to have over our old draf here; so that we do not have to discuss at this moment how many there are going to be. Mr McKINNON (Canada); We discusses now paragraph (a) In reading my draft I said I was not going on to deal (a) and (b) below; I. was merely reading the substantive headings, so to speak, of the, THE CHAIRMAN: I take it the Chilean delegate point could be embodied in your draft E/PC/T/C.II/PV.8 Mr HARRY HAWKINS (USA): Mr Chiarman, I was about to suggest that we do have point (c) to consider, .and to remind you that the Chilean delegate had a point (c) to add, and I had an amendment on it; but in view of what has just been said,. I think it would be better first to consider the wording of paragraph (a). I think it is only a question of wording to describe in more appropriate terms what we were trying to describe and did not quite succeed in doing. I think we might look at the wording of paragraph (a) and get a description to cover the same ground and yet fit the particular circumstances of the British Empire, for example, a littIe better than our draft. THE CHAIRMAN: There is just one matter I should like to dispose of. I understood that one oa the possibilities was that pref- erences to be the subject of negotiation might be extended to Include all existing preferences, or, alternatively, all exist- ing operating preferences, the differenco there being that in the first casa you might include some preferential arrangements for which legislative authority existed but which did not operate. The second one would be general also, but would Include those for which legislatIve authority. existed but whlch were also operating, Now, it seems to me it becomes necessary only to list parti-cular preferences if those two alternatives are not acceptable, We could .dispose of those two first, and then it would be quite clear that we would not be adding to the list if we in effect cane to the same conclusion, Mr HARRY HAWKINS (USA): Mr Chairman, there is a point of considerable substance, I would not favour, for example, anything as broad as an exception to cover all existing preferences, even though. they are actually in force. Certainly I would not favour including preferences not in existence but only provided for. 1 had a formula which I was proposing as an alternative for a specific exception of the Chilean delegate whJlch would describe the sort of preferences which were to be provided for here and made subject 8. PAE C-3 E/PC/T/C.II/PV.8 of negotiation, and I will offer that at what you think is the appropriate point but in fairness to my Chilean colleague I think he ought to have an opportunity to put his exception first, I believe he has an exception to be included In (c). THE CHAIRMAN: Would your description cover (a) and (b)? MR. HARRY HAWKINS (USA).: No. It would cover long-standing pref- erences in force and materially affecting the economies of the countries concerned and there is a litle argument I would like to make on that point at tho appropriate time THE CHAIRMAN: In that case perhaps we had better switch back and take (a) and. (b), and then go on further Could we suggest what we are going to do? I suggest we take (a) Mr SHACKLE (UK): Mr Chairman, on paragraph (a) I have point which is really only a point of draft ting: that is that the yariety of constitutional situations which arise in the Common wealth cannot be covered by the form of words which is here wri-tten into the draft Charter, I think we should need some form of schedule. I have suggested a form of schedule in a paper already distributed, which Is 2/10. I think that .is the kind of method whIch we should have to adopt, and that would be simpler, THE CHAIRHAN: Would you suggest substi-tutingI for (a) preferences i-n force excluslvely between the territories listed In schedule ? Mr SHACKLE,(UK): In one of the scheduIes* THE CHAIEMANI Thon would you continue: "Each Membor to whIch thls provision apples shall provide a lst of such terrltorles in respect of which preferences were in force on the dateagreed, Lists incorporated and annexed.to this Charter"? Mr SHACKLE (UK): Yes : Mr McKINNON (Canada); Mr Chairman, when we first got Mr Shackle's suggestIon in paper 2/10 to whIch ho referred, I thought there. 9. PAE C-4 E/PC/T/C.II/PV.8 was probably great merit in listing individually all the countries named by by Shackle in that draft included in the British Commonwealth On the other hand, if we proceed from taken on to list all the other known or ascertanable preferen- tial regimes, it seems to me we are going to run into a very lengthy list naming individual countries or areas within cert- tain sovereignties; and it has bothered me from the start that as far as this small Committee is concerned, we are faced with the practical reality that we just do not know. For that reason we have been attempting a re-draft of the American Charter proposal (a), and, keeping in mind the point Mr Shackle has raised of a variety of constitutional situations, we had a very minor amendment of that draft, which would make it read as follows "(a) Preferences in force exclusively between territories com- prising until July 1st, 1939, a Commonwealth of Nations or in respect of which there exiested on that date common sovereignty or relations of protection or suzerainty"; and then running on as before, 10. Dl E/PC/T/C.II/PV.8/ Would Mr Shackle considerr that that wording would meet his point and obviate the necessity of listing separate. things? MR SHACKLE (U.K.): I should hope it might, but I am not able to give you an answer here and now. It would have to be gene into first. MR LECUYER (France) Interpretation): Mr Chairman, I wonder whether .the text of the United Kingdom delegation is consistent with the . new drafting of Article 8 which we have .just adopted. We have just decided that we should not mention any date, and this text is based on a date. Moreover, it is stated there this not only countries should be listed but also items of goods, and it has been said that those items would be fixed by tariff discussions. I go further than the Canadiar delegate. He feared that it might be difficult to include a list 'of countries, but I am very much afraid it will be difficult to add a list of items of goods to this Charter. MR SCACKLE (U.K.): On that I would say that my intention in suggesting (b) of my redraft, reference to actual items, was that the tariff agreements which might be negotiated would be scheduled, as they were concluded, to the charter, so that you would not have a special enumeration of items. As regards the point about. the description of the Commonwealth of Nations, I think the whole point is whether the simple use of the words "Commonwealth of Nations" can be regarded as satisfactorily covering the case. As I said just now,, I should certainly hope that it might do so - it would save a great deal of complication -but I do not think one can say here and now whether it would be entirely satisfactory for that purpose. It might very well he so. THE CHAIRMAN-: We are having the Canadian alternative draft typed out, and while we are' waiting for that could we leave item(a) and pass on to consider (b)? We can come back tn(a) when the revised draft has been distributed. MR ALAMILLA (Cuba): The Cubani delegation is quite satisfied with the drafting of 'paragraph (b). 11. D2 E/PC/T/C.II/.PV.8 THE CHAIRMAN: Does anyone .wish to comment on (b)? MR VIDELA (Chile): I would like to say that, in accordance with various agreements made between Chile and other countries - for instance, with Cuba in 1937 and with United States in 1938 - we have recognised preferences.. Later on I will explain how these agreements came ta be negotiated. Subject to the position I made clear the other day, I am quite agreeable to accept (b). THE CHAIRMAN: Does anybody else wish to comment on (b)? If not, I suggest we take (b) as approved and pass on to a consideration of any additional sub-clauses which countries may wish. to submit. I understand that the Chilean delegate has a suggestion to put forward for an additional sub-clause. MR VIDELA (Chile): You have bef ore you the proposal of the Chilean delegation to amend paragraph 2 of Atrticle 8 by having a new item, (c), which would read as follows; "Preferences in force between neighbouring countries", As I explained the other day, we have a common ancestry with certain other countries, and common interested, and * traditional preferences. Many of them originated in the period when my country was fighting for more ample preference, a doctrine known as the Doctrine Bello, which was extended to all the Latin American countries. In 1897 we. had a convention with Japan, where Chile reserved, preference to. the Latin American nations and Japan to any independent state of Asia. With Italy we had an agreement in 1898. in which we gave preference to Central and South American countries. In 1899, in our agreement with Denmerk, that country reserved preference te the Soandinavian countries and Chile to Central and South America. With Norway, in 1927, the Norwegians reserved preference to Iceland, and Chilex reserved preference te the Latin American countries. With Egype in 1930 preferent was reserved by them to the Sudan and by Chile to her neighbouring countries. In our D3 E/PC/T/C.II/PV.8 convention with Sweden in 1930 they reserved preference to Denmark and Norway,. and Chile. to South America. With Belgium in 1936 preference was reserved by them to their neighbouring countries. With Ecuador in .1930 preference. was reserved to the neighbouring countries. Then in 1937 Cuba reserved preference to the United States and Chile to her neighbour- ing countries. Then in 1938, with the United States, they reserved preference, to Cuba, the Panama Canal. Zone, the Philippine Islands, and Chile to the neighbouring countries. With Brazil in 1943 preference was reserved by both countries to their neighbours, in an exclusive form. In the convention with Canada in, I think, 1941 - I have not the date here - preference was reserved by them to the British Empire.and by Chile to the Argentine Bolivia and Peru In the con- vention just signed wïth France, op the 10th September 1946, she reserves preference to her. colonies, protectorates and territories, and Chile to her neighbouring countries. We have now under consideration a draft agreement with the United States, more or less on the same terms as those to whichI have already referred. I mentioned also the other day the General Convention at the Pan-American. Conference at Montevideo in 1933. I would like also to inform you that in our convention with Peru in 1941 the preference is exclusive. I have a text here in Spanish, so what I read out now will be a translation of it, 13. E/PQ/T/C. II,/PV.8 "The componsation of concessions whcih Chile and Peru are rivinr by the prcscret agreement wvith the object of cnccuraCinz ard intensifying trade between both countries exclude concessions concerned with the SenDral clause on nost-fa.voured-nation trentriient that one or other country may agree upon with other nations." As an ex=ralze we might quote the agreerment between Eranco anL Chilo oP thc 10th September in which is incorporated the followiing clause: '"Tho agreement formulated in the present convention, Irafter refering to the most-favoured-nation clause, "sh.al h ave the following exceptions: (a) âzvantages aî,rccd on at present are those which Chile might agree afterwards with borderinE nations; (b) the advcintaies that right arisd from tIa Cixttons Union already established, or which may be established. in the future, bY o~ne of the parties; (c) the advzntages accorded, or which moy be accorded, withl the colonies, protectorates or mnondated territorie s of the French Union; (d) the advaitcages agreed, or vhich mnoy be. reed - upon, by one or two si-ninm parties to facilitate traffic wvrith border- inM nations vwithin a zone which is not to exceed fifteen kilometers.- on either side of the border." Here you can sec, Mr Chairman, are included all porDanent and temporary prefeorancas. I do not think it is necessary to real the general convention of Montevidoo, but if it is necessary I have a translation here which I could hand to you.- Therefore, having read out this list to you, I think you will be able to see, Sir, that it is not a question of one or tro conventions. Wo have sixteen conventions in force. I ask you to consider all the remarks I have made on these points and te accept tho Chilomt proposal. MR HAWKINS (USA): I should. like to say that I do not ne.c zippose tho ar.iend- ment proposed by the-Cii0lenn delegate. Therc arc, however, a number of considerations which I would like to put beforo the Conmiittee, to see what-the reaction is in connection with the proposed amendment. 'n the first place, it *is necessary to consider the nature of the preferences pxMvided for in paraZraphs . and B. They have certain characteristics: they are of long-standing ane they have afected in an important de .ree 14.. E4/pT C. II/PV. 8.. -the-economies of .the countries. concerned. Nov<, in an ideal vo;rld it would be desirable,with one stroke of the open,to abolish cilprefer- onces' but in La practicol world that cannot -be donc where you have proferonces of the kin. described in anda paragraph a and B, nanely lonrg- standLigc, Well groupcd, and C ffcting to a vezy material degree the econord.es cf the countries concerned. Consequently, it has been accepted for purposes of nerZjtictiàn, -in the process of which those : countries whôse economies would le seriously disturbed if they were . abolished unilaterally, con got con.pnsation, or, in the long ri-n èer- I -_ps more th, rn compensation in the forim cf reduced tariffs andl the giving up of frontier restrictions with o thor countries. Now, that * beir iour aim atleast, I begin to ,,et a little nervous.every time a suggestion'is madce for additions, because if we added all preferences that might be thought of you miLht g&t a very lonS list and perjpetuate a Zood iony:preforences vhich vrould not have the effect provided for *in paragraphs A avr B. The alternative to the Chiloan delegate's e.,ceptions which I outlined in the full Comi;ni.ttee would be something of this sort (this wbuld be paragraph C): "Preferences.of long standing : in force and affeotihg in important derrce the economies of tlie coun- tries concerned4 those preferences, however, to be épecified." ow that calls for just one or twe remarks on the nature of what we are doing, as I.understand it, The report of the Preparatory Committee will bonea gendrrl report %vith instructions to a drafting comittoe and on annexed draft which would merely be put in to assist the draft ting committee. If an exception such as I have just proposed Nmre pult in now and irefnrred t. o.a drafting, committee later on, . z'of ter it had then examined any preferences which would fit that general description, I think then you would have a better chance of gettiug exoeptLons simUlar to those included in paraaraphs , and B. Noir, as I said at the outset, I de net oppose the Chilean exceptionas phrasedi but before Lt is adopted I would like the Conmittee. to consider the points I have jut put f oiward -i~ see how Lt feels bout them If. the ConiLttee .thinks the exce tion as phrased ly the Chilean delegate iL satisfactoy, having tokex account. cf the..considerations I have mentioned, then it Ls acceptable t mae. 15. THE CHAIRMAN: You have. two alternatives in front of you: tho Lirst, submittod. by the Chi1ean'Delcgato ,reads as follows: "c. Preforences in force between the neighbouring countries". The alternative submitted by the United Stntes Delegate roads as' f'ollos: "c. Preferences of long standing in forco anxd affecting in f considerable degree. the economics of thc countries concerned". The United States Delegate has drawn attentions to the fact that if hie alternative is adopted. -it differs in a significant way from the Chilean * Delegate s proposal, briefly, in that the ones which would be covered by the Chilean Delegateles proposal would be dctci.rÂod as a natter o factt, whereas in the United States proposal it would be a matter of judgment and it would- therefore be necessary to have submissions iiade and examined bysome appropriate authority, presumably. .re there any. comnents on these trio alternatives? ER VIDEU. (Chile): I am glad to offer to the Sub-Committee all my help in order to arrive a.t a satistactory- conclusion. On the other hand, I would. like to answer the United States Delegate. It is a question of' opinion, but I wvould like to point out very strongly that in this matter I should like to see discussion on the same level. I think a sovereign State 'has its own right to consider whether it is important or not, and I do not.. see why we should make a reservation or -a condition to the preferences asked by my Government if that condition does not apply to the other preferences. T*herofore, if there is anything conditional, I shall have it until. the last. moment when we have arrived at the approval of' the list of preferences, when we ay say-what we like. That -is one point. : IAnother point concerns: the amendimnt suggested by the Unitod States Delegate; in which he mentioned tho phrase "long standing". I do not knMw, whether that will. cover the position of Chile, because the preforenoes accorded. betWeen Chile and Peru werc signed on the iOth October, 1941. If we * aey long standing", I do not. think that will rrafcr to the convention already in force -ith Peru. That is the reason why I prefer the wording of the Chilean suggestion _- because ïi is in force. I viiLi back my argument with s very serious matter: às. France on the 10th Soptember last bas negotiated and put 16, on the same level the preferences accorded to the territorios and colonies- unaer her Mandate, and the Chilean preferences have been accorded to the neighbouring ,countries', ,why are we not here accepting, the fact? Why are we are here putting conditions, or leaving it to another body-to consider whether they are interested or important? I think we rust- agrec that the Chilean Government, hls the right -to negotiate preferences, and this ,has already been done -not only -with France, but with.other countries. Por instance, I have just sa.id.that we are negotiating now with ,the United. States a preference, and we had a. convç n1ion in 1938. It is-not a question of giving' anything ta Chie; it i9 a question of negotiatiAc. with Chile. I vwiIl repeat the words I.usec. the other day: ".e'are willing t -accept the pretorances in a. and b.u provided they a.cept Qur preterencès -- nothing less andc nothing morc. iR McXINNON (Canada): If we wore to take the amendment to the cause sucli as the Chilean Delegate suggests, as 3, would not it permit (I have.'aforgotten the exact wording of it) any two bordering countries in the world, between now and -the date-of the negotiations, toinstitute a preferential regime bet*eén them, and in 'so doing, to do this in any wvay in vrhich th¢y care to'achieve that'ënd?'' ER ArIALA (Cuba): I can sce perfectly veill the position taken by têe ' Canadian Dolegate, because I believe that if ve put this clause Just'as the Chiiean Delegate has proposed it, it vwill leave it open to'make some' other arrangements in'the future. Prom the listeof these convention.'whioh the Chilean Delegaâte has named, I gather that the'la'st of thcse preterédntital. treatments betweenneighbouring countries was signed on October 1Oth, 1941, and that ail the other treatments to which he has referred (those wlih the nited States and with ali the other countries)'are only recognising the existence o. these'preterences that are in this contract or eocumént'signed on October lOth, 1914. If!'the proposal of the Chilean Delegation diâd' no` t exist, I would lice to accept thie proposition of the United States-, se I believe that -ours is of 1èng-standing and 1S absolutely .I aamentia: or tey existene of Ouba from the commercial point ost viwv of the Republic . r . . : - ;- . PAE 'E/PC/T/C II/V But I would .try to moet in the middle the difficulty in order -to eave.:the p6siti-on- o0 the Cahjlean deogcato - Jit>rhe Comriitteo ;..; will accept it, just by saying: 'preuérentlai treatment between:nèightourlng .countries signed before Oct'oer 31ist, . 194V!I, wh-tlch.would ab e:t put a stô a to the future ones; and then-I. woùild a}se propose tha t-th6y subject be subject to the condition th1at they affect to an important delgreeg the - economy of thescontractIng country es, as Ido not. doubt that that * this one affects veal.ty the economy of Ohile I-ncaà fundaxnental way, If'iotj they.woild not be d1soussing and flihtIng for them as they are in this Comralittee, I wouldîIkèe tdo iead i-t just as. I'- have it drafted hérei "Preference treàtrnent between neighbouring countries signed before October 31st, 1941, and which-would a'afect i-n liortant degt'ee th' economy oLthe con- t rvdting, countries', : SENOR DON1 HUFBRTO VIDELA -(Chile): aIr Chairmani,. I do not want te go on with this di-ocussi-on; I would like, to finish it, because,. after ail, it is not the rnost important thInS here; but I am agreeable and I very much thanks ny colleaBueethe Ouban delegate for hi-s suÈgestlonf but I want-to explai-n that when'we'drafted this proposal'we put In the worcla "1in rfoece11belause we assumed that we are here making & general princi-ple applying to dl-f f erent countries,"- Thérefore I could not ptt 'here the-date of the lait âoonventlon, Th&t date' would not' apply 'tà oher' countri-es, I supposé the leittr (a) is applyi-png to France, Poland and dmferent countries asvwell as Great Brtai-n, and ; ..thls i- the main reason why I only put in "in: rfe'1j but I am quite aoceptîng the suggestion of h0 Cuban del eate in connmc-: ti-on w1th the date of the lbst cofiVention -e heve signed on that matter, The other point I wanted tQ discuss le the last para- graph suggested by the Ouban delegate. As I-o6ald before, I think we ought to be on the samne level as the other preferences, and I should not agree to add those words lion conditions unless this condition would be put coverIng the three, four or flive .18. . - preferences we have agreed. here* I thi.nk that l6 quite olear, Mr. Chairman,'perhaps it willl clear the matter if' we change the wording and say: "-Chile and neighbaourïng counteresil instead of ref errl.ng to general pri-nciple. Then we can put tie last date ofa our convention, But it is for the Committee to make the altera- ` tion, I could not .i'er.that alternative, because I think it is a question of principle we are hara study Ing; but it is just up to you, Sir, to decide whether th3 s wi-ll apply only to Chile, and . then make the alteration and say "Oh.-le and nei-lgbourlhg countries'1, tkhe convention si-gned on thie 31st October- 1941,,, THE-CHAIRMAN:. Gentlemen, it seeres to rme that there are. two alter- natives. I understand f romr what Ktr Hawkii-s said -(I hope I ami 'InterpretIng correctly) that hd was prepareci s9 far as the part- icular preferences to which.the Chilean delegate i- referriningi..to regard thom as bing- subject to negotiation. At the -same tlme he felt that' it was perhaps undesirable to have an addiltlonàl' exception, (c), whi-ch opened the door very widely to possibly other preferences about which we are not aware at' the moment bu t whîch may not i-n fact be of the same kind as tho ones covered b: y (a) and (b) and the Chllcan pref erences. That 'I understood to be his me.an objectlon to a phraseology as broad as ls. suggested by the'Chilean draft itself, At the same time, I do feel thalz as.far. as the preferences i-n which the Chilean delegates i>arU- i-cularly Interested, there i- a good deal in his contention tha t conditions which are going te.be applied to them should be. quite reasonably apphiedto others covered by (a) and (b),. I feel thére ls a good deal ln that, It seems to me we might do.one or. two thIngs: either accept 1i;r Hawki-nsl suggestion with the undex-' standing that the Chilean preferences referred to by the Chilean delegate would bs takon to conform to those requirements In the se-Ue way as the ones ln (a) and (b) are taken to conform, That would, however, leave it possible for same examination to be made Of :Euture c ubmls; onr .;hlch mJght'be made on this by other 19* E/PC/T/G .II/PV.8 countries, Altbrnati vely; iI we do not th'nk the danger of Cother producing countri.es/hIth rto uni1oard-of preferences to be a v ery serious one, it seenis to me ie. could without much diCufSi-culty accept the. Ohl.e1an dratt with perhaps the inclusino of. a date after the words !"i;nforce", in f'orte art some date. I do not-myself like the suggestion that we-take the date -of the last Chilean conven- tion, because thare may be others which could properly be included; but I thlnk it 1-s necessary to avold, thie danger to whi-ch iM'Mr EàoKinnon has referred of now pref'erentJal arrangements being made. So that I thInk a suitable change woulCd be to say:. preferences. i-n force in June 1936, or soma date v!h.ch i-s past but not very far past, What do you fe1l about .1 t, l-r ii4,wkins? Do -you feel that the dangers of other preferential arrangements being brought In under (c) i-s a sufficiently serl-ous one to adhere to your clause, or would you thJ rnk that Mr H.ARY HAWKINS (USA): Mir Che rrnman, I ;vould accept the Ouban delegatIon's solution, or, If the one .I offered were taeen; the Ohllean delegate could easily protect hs liositi.on by making his assent subject to the reservation that the 1hi1leàn preferences are Included, Elither one I think would take care of itt,. The Guban delegations proposal scems tome to be all r5eht,. THE CHAIPMAN: Unless you have the seamoereservatlon, Jt i-s subject 'to the crlticiem whi-oh theChi.lean delegatonon w1ade that it appears to-subject certain preferences to the standard whi.lst -:others are apparently exempt from the standard, although, as .lr Hawkins has poInted out, his standard is lierJved from tho prof- .orences exlstlhg under (a) and (b); but there i- an apparent . formal differentiation which I catn understand is not necessarily very acceptable. 20. H . 1 X E/Pc/T/C .I I/Pv;8 MR Afi.RKAR (IndiI): Mr Chairmnan, when wo are almost in sight of the smlu1tion of the problem raised by'the Chilean delegate, may I briefly state the positi-n of the Indian delegation in regard ti prefrences batween. neighbouring countries& in order tc seü whether such preferences could be in some way recognised in the particular exception we are now considering, or whether a separate exception will have to be proviced-for the purpose. The formula suggested by Mr Hawkins, namely, preferences between neighboring countries which are of long standing and a `ect tc an important degree the economies of the countries concerned would certainly take care of the sort of preferences which exist between India and Burma, but the Indian. delegation feels that an important question of principle',is' involved. These preferences would certainly be saved by the adoption of thieparticular formula, but this Ils subject t'o-the process of elimination which ontemplated in Articiel18. It seems to me utterly unrealistic tD assume that which preferences/exist.between countries like .In.dia and.Burma could ever be eliminated. These preferences rest on certain permanent geogrpphicand econimip considerations. Burma, as I said on Saturday, was part of India uhtil 1937, and the preferences exchangc-d between the two countries have their origin in. long standing economic and historical considera- jions. These preferences may be subject to negotiation, but - it should be recognisea that they will fc'rm a more or less permanent feature of the import tariffs of the two countries. * That is'one diffïiulty. The other difficult is that, although so far a's the neighboring countries are concerned : -India i's'at present giving preferences only to Burma'and Ceylon. and other countries within the Commonwealth, it is quite conceivable that in future India may ha-ve to give' preferences to certain other noighbouring countries. There preferences to certain H.2 E/PG/T/O. Il/PV;B../ are certain small countries on the frontiers of India, and these' countries a.iay like to industrialise themselves. It is quite possible 'or India to absorb: the whole f- the .rtput cf the industries located in those countries. Afly preferences given by India tothose countries will therefore be completely effective in the sense that they will accord very powerful protection to the industries located in those small territories. Iniia i8 a natural market for those àcuntries and India is alsrj very sympathetic. to their indus- trial aspirations. Such preférence s` should be allowed to pome into existence in future and should" be recognised as morer or less permanent exceptions to the most favoured.lnati-n elase. There are two ways of' loking at this-.probler_.. Supposing we amend this exception (c) to read,. "Pref'érances accorded by a member country tn.neighbouring countries", it would take acoccunt of future preferences; it would also make such , ' preferenices sub.Jeet ti negotintion. On the other hand, a further.amendiment will also be necessary, namely, to describe . the process. contemplated in Articlel, 18 as. not one of eliminatt: :0' preferences but, reduction or elimination. These two * ; amendments. will have the e fect oe permittingprefrrenoes * between neighbouring countries to ,comeinto existence in future, making'such preferences subject to negotiation, and * thirdly recognising the fact that suoh preferences need not be eventually eliminated. altogether. * .There i8 another way of. tackling this problem, namely, te.make an amezudnent ïn Article-339 "Territorial Application, oustom6 Unions and Prontier Traf'fic", by, providing ii.ere in paragraph 2- -of Article 33 that the provisions of Chapter IV : shall not be construed to prevent the granting of preferences in respect of import duties or charges by any-member country :`to neighbouring countries. An amendment of this kind would be quite acceptable. ti the Indian delegation because it. would save the preferences of the sert which I mentioned. It would 22. H.3 ` E/PC/T/C.II/PW8 permit new preferences of the same sort to. come into existence. But it has one serious disacvantage, namely. that it will put those preferences beyond the scope of ngotiation. It seems a pity that for a mere draf ting convenience we shoulcl place these preferences outside the scope of negotiation. The point oa the Indian delegation is that thèse preferences should be recognised, that it is unrealistic to propose their eventual elimination, because that ignores the fundamental geographical and economic factors on which they depend; but, while recognizing them, they should also be subject to negotiation. When they affect the interests of other countries thère should be consultation aric bargaining, and, lifelimination: is possible, elimination. That is ail I wish to do at this stage - to put forward. those two alternatives. THE CHAIRMAN: I would like to suggest to the delegate for India that we .eave the question of new and permanent preferential arrangements. .I feel it would confuse the issue here. It i.s a matter af considerable importance in principle, and I think it would be wiser to deal with it in. that way rather than in an Article which is. designed for a diffe-rent purpose.. MR ADARKAR (India):. Mr.Chairman, do I understand that the point raised by the Indin delegation Would be discussed later in connection with Article 8 or in connection with some other Article? THE CHAIRMAN: I think myself that it needs to be discussed in connection with Article 8,or possibly (I am not quite: sure about this) the question could be taken with Artclie 33, which deals at present only with Oustome Unïins!... MR ADARKAR (India): Article 33, paragraph h2, deals wïth points whioli are outside the scope of negotiationsalatogether. If ofa course itïis the desire of the Committee that preéerenrces of that sort should be outside the scope of negotiations .23. I.1 3E/PC/T/O. II/PV; 8 altogether it vould suit the Indian delegation very well, but I t'tink it - would nottake account of the viider considerations. THE CHAIRMAN:i do net think it vould be irVossilc to.ldeci with it in a way that would WOULD it subject te negotiation. I Ledl it -iould, con- fuse the issue here at the moment whon -e.havo ta deaJl vnith a particular problem. 1IR ADARKAR(India): If it is desired by the Comnittee thc.t it should not bc discussed in connoction with Article 8, or if th-t is the ovontual docision of the Cornzitteo, then I surest that the point raised by me sh.mld at lcast bo oentioncd in the re.ort of thc sub-ccrmmitteo in ordor to cnsure thnt that will bo considorod by thç Coriittec deciiina - vith .Artiole 33. THE CHAIRMAN: I quite definitely think it is a natter f orc this sul- cor=nttoe ta deal with. R S}IACKME (UK): l.{r Chairman, I have one suggestion te mnlcc in roforonce to Y;hat theIndian delegate has just said. It seoms to rm' that as records p-.)references between India *cnd Burma W: ; would be taken into account, vould they not, by the suggestion alreacly mado by the Coaadian delegoate, which I think vre have more or lessclrody aclodeted. That, it seems te ria, then leaves us with the question cf the possible need te have preferentialarramgementswith some of the srimil States border- ins upon India, and I am v4onderinG whether when it is desirable te meet a case of tlut kind, it is vrise te put in somethinM which would open it such a very vide sooc of exception. Already we have I think in Article 55, (2) a provision by which. the Organization cazi waivo cor- tain obligations of members. Now, is it net possible when the time comes that a case could quite well be %.' out for the desirability of having. sOer of those local -references such as the Indian delegLte has nmntioned under that Article? I shottld have thought it wrould be very much preferable if one could deal with it in that sort. cd' 'W rather than put it in some very widely phrased exception which miZht lead us into unforeseeable consequences. THE CHAIRMAN: Could we leave th_.t question on one side and clear up this other point, because I thnk we may have it clear? New; I have a suggestion 24.. EP/T/C.II/PV.8. to make. I understand that there we two thingsthat are worrying the Chilean delegate One is the ;possibility th^.t the lreforances : t present in force between Chile and certain néighbouring countries -might not be included in the list; ana, secondly, the fact, or the possibility, that one of the dral'ts at cny rate apears to subject the orfferencee 0f his country to. an examinationby standards which - have -not been aprplied to other countries. At the sane time, Mr Hawkins felt it necessary that those stanMards should, in tact be allied , although we mpy recognize that certain existiC preferences conform to then, but that the standard should be st.nted in order that subsequent. applications for exceptions under this clause could be examined in accordance with those standards. Ncw it seeî-w to me that we can agree on phraseology viich will meet both requirements if we amend the draft t Article in this way. TakinSg the Canadien draft proposal thera wouli be no change dowa to the sedord last line'of the first paragraph; then tromi ",nd" it vrould read, "iand whichh affect in a considerable degree the economiies of the countries concerned, includiMg those falling within the description set forth in paragraphe (a),- (b) and (c) below." Then we have (a) as it stands and (b) as it- stands; and (c) vould re.d: "Preferences in-*orce exclusivoly between Chule and neighbouring countries." Is it only between Chile and.Peru? MR VIDELA (Chile): .>rgentina, 1933 and Peru, 1941. UR HAWKINS (USA): I an still -in doubt about this. Hovw vrould you deal with the other questions that are brought forward? I take it that there would be a- process by vhich .there voeud be an exmination Of the preferences actually granted and their economic facts, and that in the light of that examina.tion the preferences ivould be admitted or not. -1 think I vsouid prefer to have the first part; "he change in the Dirst paragraph takes care of, en point, but I viould lice te see (c) road: -"Preferences in force on the lst July 194.6 between neighbouring ooun- tries. 4 New I think the Chiloan case could easily be ta]cèn care off from the Chilean delegat' s point of view. He knows whet the preferential 25. I.3 E/PC/T/C. II,/PV.8. system there is - I do not know and I`do not think others do; but if his acceptaomc of (c) o'ulcl bu conditioned on his knowlodSe of those *preferenccs, ond Chile could come wiithin that category, it seems to me it protects his position fully. MR. VIDELA(Chile): I accept either your proposal, Sir, or the American Proposal, because both cover our wishes. THE CHAIRMAN: In that case, I thiink we will accept the United States alternativee, which includes incorporation of the qualfication in thc rain part of the paragraph and leaves (c) reading: "Preferences in force at the 30th June 1946' betiren neighbouring countries," MR VIDELA (Chile): Could we have this typed? `R McKIMTON (Canada)- Mr Chairman, before we take that, tho insertion of a second conjunctive clause thore miroy ma1o very C.esirable some consequential anendments in the form of the third paragra:ph, and I am vienderina - I am not attor.ritin:r ta redraft it - whether rle could have sorethin8 like this: "In respect of those preferences vhich fall withinn the description set forth in (a), (b) or (c) below the pro- visions of paragraph (1) of this Articld shall not bc construodo" and so on, otherwise you are goinM to have two conjunctive clauses modifying the word "1preferences" and adding greatly to the confusion cf the sentence. J. fois. 26. THE CHAIRMAN: LEt me read it. I thinkc perhaps we had better have it typed. A: present it would read as 'follows: "Tho provisions of paragraph 1 of' this Article shaIl not be construed to require the elimination cf ary pref'erences in respect of, irort customs duties and charges which do not :exceed theWpreferences remeïIhin& aIter the negotiations contei ed. - which shall affect in considerable degree the economies of -the countries concerned and which fall within the description set forth in a", b., and c. beloW". I thiflc this requires pretty carePul examination, and I would suggest tha vie defer it once more and have it type&. While we are waiting, ve could deal -with this 'question which the Indian Delegate has raised. Briefly, I understand his point to be that apart f:rom existing preferential arrangements which it is proposed should ba' eliminated by a process of negotiation, there should be provision for the establishmenlt of new preferences which include, presumably, the continuation possiblyy of some of`'the existing preferences where they conforn to certain -standards -- to certain requirements. As ho mentioned and emphasized, thére is the geographical proximity and close economic dependence; they have, I think, been`the two main factors. I think wea can discuss the thing in genera.. before we decide where is thé appropriate place to dcal with it. I think the Unitod Kingdom argued that there was in one of the general escape clauses, - Articlé 55, subparagraph 2, provision for the Organisation waiving certain obligations ofeIembers, and this could bo usod to permit the establishment oP preferential arrangements otherwise preclude. Would you like toe add - nything tg what you have said so far? MR AdRWKA3 (India.): Soefar as the first point raised by the United Kingdom Delegate is concerned, namely that the preferences in force between India and. - Burmna are covered by the opening portion of the revised draft of paragraph 2, I feel, Sir, tha tiihat would be so only on the assumption that sueh. preferences -my not be subject to eventual elimination, bùt tiat assumption, I believe would be contrary to the principle underlying this particular paragraph. As regard the second point, namely, that the need for such preferences is felt, the countries concerned could approach the Organisation aand ask &ob their 27 E/PC/T/C.II/FV.8 obligations to bo waived in viewi of their particular circumstances, I feel that that procedure would not take account of the very strong views expressed on the point of view of principle by not merely India.but other smaUler countries, su¢h as, for instances, .Lebanon, which are not- represented here. Since a.poirnt of principle is involved, it should be settled. - R HhWXINS (U.S.L.): .1 should be- very much opposed to the idea-of putting in a new permanent reggional exception. We stàrt cut with the idea of.getting rid of preféreences. Certain long-established important preferential systems are involved. Their effect under this scheme is put on the block with a view to having them eliminated. It seems to me wholly inconsistent to that objective to permit new preferences to an unlimited extent by every country in the world. I think that if we keep on watering down the most-favoure&-nation clause, we might do better. I agree fully with the view expressed by the United Kingdom Delegate. 'It seems to me that it. is just conceivable that there may be cases where conditions are peculiar, and where there would be justification for some sort of preferential arrangements. If so, tho countries concerned could bring up the matter before. the Organisation under paragraph 55.2. and have it examined,, if there is a case, if there is something special and peculiar in the situation which could be authorisod. . IM ADARXAR (India): Mr Chairman, may I suggest an amendment to what I have proposed? I quite see the point raised by the United States Delegate and also by the United Kingdom Delegate, that if vie describe these preferences as preferences between neighbouring countries, that might allow an undue scope for ail sorts of preferences to come into existence botvvoon neighbouring countries. Would it be acceptable to the Committee if ive say: "Preferences necessary to foster the economic development of amail countries", or "countries viith a smal, home markett? K.fs J.2. 28 I move this amendment Sir, without any commltant on the part of the Indian delegation, Mr. HAPPY HAWKINS (USA): Mr CHAIRMAN, my general- objection i.6 to any form of ne* preferences, I can ses tha point of-view-or the delegate or India when he-iakes the tentative suggestion ora 3-ml Mting it to eralil markets, but I should llke to make ti- polnt of vlew, that what.we:are trying to do is to make a big one for everyone, to make a world market and not to have i-t partiioned orr as -t has been i-n the past, It -1s our siencère view that the interest' as aill countries wlill be served iJ- that, - is done, Now', as I sald. efore, I th'nk there may be special- cases, Ir 6o0 thèy should be examined as -such, and the' machInery. '-i provided ror examIning them. If thera is a real case there, .I think youcani assume.that.the Organi-sati`an will give its sanction toi't,": Ech case ought to be examIned on its merIts, .1r ADARICAR (Indila): )ir Ohairman, can I have a word, M* r McKINNON (Oanada); Wi.thout attemptIng ta''pre-judge In the s-li-ghte'st degree thëmeri-ts of the prti-cul&r case whlch.-the delegate f'r ind&a has in mlnd, I feel that we are bound to'. support vei'y strongly.the. vews expressed by !Mr Hawkins, As rai' am- ny 'own aountry.is: concerned, one of the -most difficult features we'shall have in attampting to reaoh agreement on everything embodied In a Charter arises' out ,or the di-sposItion ,-o the preferences; and. at. the time when we.ar.e consentinG to -put those prerevences, to uee Mr Hawkins phrase, en bloc or in the pot with a-view to having them reduced or eliminated, we shoatld certaInjy rInd. It.very. di-frfrcult to go back wltth en-ameidment to the same Charter proved' ng for' the establ-shinent or new prerer- '...,..:ences an ddi-erent basoe i-n different parts of the world,' I . would lIke toarepeat`that.that i-s not in any way attempting to aeu.eaess the mer-te or the case presented 80 ably by the Indian .. delegate0; *but, Just as a r4atter of substance and pri-ciple we sliould rihd it very,.di-ifcult indeed tao agres ta amendments to 29. theCharter which would. allow the creatci n'of riew preferences, THE CHAZIB Pî Just beforee going on I would like to remnind. delegates that in the general dlscuss6on on .thJs soctiUon of the draft Charter Jn full Comnmlttee, as the Indlan delegate .has alreacly pointed out, the desirability of the waey bel-ne open in certain c1rcunstances ta the establisbrent of new regional profrerential treas was fade by the delegate for Lebanon. Furthermore, you will recall ais0 that the delegate for tha Netherlands drew,, attention to the possible problems associated with the changing political 'structure of the Dutch Emplre; that negotiations were in progress between the Coentrel Dutoh Government and the represen- tatl.ves of the local Inhabilants in'Indonnesla which would. possibly lead to a change in the nature of thelr political relationship, and that that may involve since change in thelr possible tariff relationship, Furthermore, there was a related fact that the customs union between the Netherlandls and Belglum would presumably enta-l same future preferentIal treatment.of the Netherlande East Ind.tes by Belgiumn. These are points wlth whi-ch I personally amn-not very familiar, but I feit it was desirrable that the attention of the Committee should be drawn to i-, Mr SHACKLE (UK): Mr Ohai-rrman, there have been mentioned to us a large number of possible excepti-onal cases which are so various and we do not know al1 the facts-about them, T.his seems to suggest that the wi se course la to leave them to be examined in future on some occasion when the merits and circumstances can be fully Eone into, rather than to attempt .new:.to cover them. in some form Of words 'which I think In the nature of the case would have to be very wide, That does seem to me to point to the deeirabilit of attemptt-ng to deal wIth them Ir not under Article 55 (2), at any rate, under some procedure.whi-ch would. ensurethat all their facts and circumstances shall be carefully gone Into -before a 30,' decision is reached, and in that way we may hope to avoid making large departures' from: the under1yl nge prlnri-ples of' the whole scheme of this draft Charter. Mr. ADARKAR(India). Mr. Chairman, it is,quite true that the circum stances, justifying new -.preferences may be rilany and. var.led; and in so far as that is so, they will require consideration at a later stage; but the fact has to be faced that one of those special circumstances has already bee mentioned and stressed to'the Oommittee axid the CommIttee has. beeri requested to takle that Into' consideration, the 'speOlal cl roumstanée bei:ng..that certain countiré 'ave. ,small home market and -find that prefer- * ences with thelr ne -ghbouring tèrrxitories wiÏl.-assist their e economic development4.» The only di feremoébetwee. ,the poi-nt of' .vilew of the Indlan delegation and t`at or the'UnltedStates and. - ' the Uni-ted Kingdom and the Oanadian delegati ons, is thatwhille the Indian delegation would like this specJal ciroumstances whi-ch has nlready been stressed; for. smaller countries tO-be taken into account .now, these other delegations would l1ke that to be con- s1dered later.' I f the Committee deci-ces that thls sha:llbe con- si-dered later, in.. spi.te'of the fact that It has been mentIoned now, there i8 a danger, Sir, I feel of the smalle' countrieS f eeli-nE ttiat their point of vî ew di d notroêcéive adequate con- sicaoration at the hands of' the ,Committee, THE CHIRMAN: Mel ,<Gentlor.on, I would chl.ë to switch baok to the -, . previous subject matter,' but just before I do, i-t mri-ght help if I , mention thi- matter so that people may bo turning lt over lin their- minds, I. think the 'eseent'ni. difference between the United - 'Klngdomr--United States point of vlew and tVlé' Indan i-s not 80 much the Lact that.t.he types of cases would, bo varied and difficult to cover i-n a'gnorCal, rule, but rather tht eacIl one did, require to .be examined individual. y that whether it waes Justified or.not would not be merely a mat..er of whether it canme under a certain 31. PAE E/PC?T/C.II/IV.8 classification,but whether on balance its offects would be advantageous or harmful, ana that that is not the sort of thing which -tit is easy to- ever in'a cl.audo of a Ohartor, but which couldJ only bojudged by indlivduàl oxarai-natlon I an, not quite -sure whether I -have i-nterpratod the UnJte. States-United Eingdom point ofview properly, but if that is a reasonable interpreta- tion, it seerms to-me there are two ways invihi-ch it coulà. be mot, possibly with satisf'ation to the Indian point of view - at least ,one'of thenm, I gather that the United Kingdom view' a that there does exist in Article 55 (2) th, possibility 0f excep- tional. cases being examined without any reference to the-excep- tlonal cases actually bei-nE lade i-n the rules ofthe Oharter, and thatrmay well be' correct. 0f course, it does not meet the point made by the- Indlan d.elegate that it is no open recognition of the claim which certr'.in of the smaller countries have made, kiAn aLternative mlght be, w1ilale reserving the shame type of pro-- cedure, to: mke specific reference'to this possi'ol-ty,' peraps. by. the inclusion of a clause somewhat along these lines' "The Memiers recoSnise that there may in exceptional cJrcum- stances! '-that ils the phrase usedd In Artlcle 55 <?) - 'Ibe justification for new prefaerentinl7arr&ngeminta0 Th .Organisation-should, therefore, be empowered to approve their. establishment. where the OrganIsatlon l-s satisfied that they are in the interests of the Inhabitarts of the countri-es con- .¢erned and wlll not prove restri-cti-ve of Internati-onal tracleu, That does not describe what they will be, but sets out a pro- cedure'whereby a country could apply for thelr establhI-shment;. and Indi-cates cortain possi-ble. ariterla - very broad criteria - by whi-ch the Organisatlon could assist them We might have that typed out, 32. ` E/PO/T/C.II/~V6. , THE CHAIRMAN: Shall we switch back ts c-.naiderati`on of : Artiole 8(2)?`; How do you eel about this?, MR HAWKINS (usA): I.think the idea is all- right but I am a : little concernèd bout the way it is drafted-. The Canadian proposal is that the provision in the Charter takes care of preferences remaining after negotiation, but if.you read the words "which affects to a considerable ,degree the economies of the countries concerned" in that o-ntext I wonder if it iits. MR KcKINNON (Canada): It gualifies it. MR HAWKINS Yes, it qualifies it. In other words,:it might be rea as meaning that those-who remain can only be MR"SHACKLE (U.K.): Might it not possibly be an advantgge-in the first place to omit the words affectinge the economies of the countries concerned" and then to change (o) .agaïn 80 as to specify the particular preferences of the Chilian delegate? In that way it seems to me we 'shall avoid the necessity for an examination as to whether particular preferences do affect to a considerable degreethe economies - of the countries concerned; and, in the second place, we should: not appear to give any kind of sanction to` the general proposition that there would be a. power tà set up new preferences between countries merely because they are., con- tiguous. Even wïth a date attached it looks rather arbitrary .and rather suggests that there is some kind of cloak of . 8afletjona th'oWn o'er:the idea of exceptions to the most 'favoured natin clause mereelybecause two countries .happen to be contiguous. I shoul . have thought that was a dangerous principle, to seem. to sanction any particular one, and I amr wondering whether by deleting the words whichh affeAts to a consiïcerable c'egree the economies of the countries. con^berned', andhaving a.speifio mention in (c) -of the Chilean preferences we might not gain considerably. L.2 E/PC/T/C.II/PV:8 MR H iWKINS (USA): should bè prepared tc` abandon that clause which I proposècl, in the interest, or getting on with this. Myeeling on it is this. I do not believe that you find many preièerences in force. There are a, lot of them pi'ovided for but I do not believe youFind many.if them in force, and it may be, therefore, that we are.targniFrying.the problem to aome extent I' should be prepared tentatively, then, to strike out from the first paragraph the words "which affected to a considerable degree the economies of the countries. ; concerned" and.leave the, rest of it as. it iS. The effect i' it would be that (.c) would cover any preference in aorce at the time mantïoned between neighbouring countries and make it' èubfoet ti negotiation. I say "tentatiely", as that will give members here an opportunity to.consult their: staffs and people who miïht kn3w what the effectual situation ia as-regarcds regional preferences which actually are ih force . THE CHI.AIM. f I presume that- is satisfactory ta the Chilean delegate, since it is hie own phrasing. MR VIDE'L (Chile): I wao only going to say that when the United States delegate made hie proposal I faet that we should be:on-'the oame level-as other people ix regard to preferences, but. aiter what he has. Just said I realize that that 'May not be the best .thing,,.and. I.am very willing to agree toa: his proposal. THE OHMÈRMiN-: Ie there any further, comment. on this, or may I take it as agBeed? ... Then I take it as agreed. DR SPEEENBRINK (Netherlands):.. Now that we have finished this point: Iviaifld like ta draw your attention ta what I thipkI is a special' case. We had certain preferences granted. in respect of the Belgian Congo. They are not very important 0 but i'Jr pa'iticai reasens jt is important that they should be dealt with, . L .3 - EM/PO/C.II/PVaB THE CHAIRMAN: I think it would be a matter ± or the Committee t . decide, but it does seem t3 me it,wu3uld be nn unusual type of' case which mîightbe coveredd by thu generai exception clause whîch, we were.iiiscussing -just- at the t.me you came in, either under 55(2) or unexer corresponding .clause resting to pre±erential arrangements in exceptional circumstances, DR SPEEKONBRINK (Natherlands): The Congo preference is one of very long stan.'ing. THE CHoeAIRM;N: Yhat ij..the view of the Commoittee on this question?.. Shoul.we cover this phase specifically by an additional category under article 8(2). oir would it:.be- of- the kind which -we would expect to be dealt with umde'r'an exceptional circumstances clause? MR Hl'SWKINS. (UM): There. must be quïte -a fèw of'-h'ese cases which require special treatment, I vwoul,.&suggestilt should be dealt with under a general clause :af -the Charter. Meantime, it will almost automatically be dealt with in the preliminary negotigations .which were ma.ntioned: .5 1., . . E/PCT/O, I/ rVr86. MR ADARKAR (INDIA): Mr. Chairman, I cm afrcld that I MM not in a. -osition to state thé point of vievi of tho Indian daleZ,-tion on t1m particbl.r amendment which is su Mosted, but, relying on r on judgement, I think thatt it should miet tho requirements of small countries very woll in- deed, na=mély, tho amondimnt vAith In ra.l clause to thc effect tz.th . nerlers recognize that thore r-ay bc in exceptionril circumstances, justification for new preferences. THE CHAIRMAN; Can you comment on this in advance of the document? Mr. HAWKINS(USA): I would like to have a chance to study it before, but ff-hand I am inclined to think that it is geting close to what is needed. MR McKINON (Cana.d):' Is it the assur;mtion that it vould bhc dealt %ith under .irtiole-55 (3) or would. it be new clause in the Chartor? T1M CHiIaML4N: The sueestion was that that should be referred to. somewhere in the Charter; precisely vehore I think i8 a ratter wo .iiiht le avc to aur Rap;»orteur. MR SPUEKIMBRINM (Netherlands): I aoc et that cposl.; YR IUM3ILL (Cuba): Mir Chairoan, %vhon ue started this discussion I thought tht the harOnz u? tho firàt ten liras of I)arcraph 2 W. s agreed u;pon as it wu agreed tho other Cay, a.nd. that me rr'cro nom only dealing vrith sub-arupae hs (a.), (b) me (c), whatever they vere. Novi I can see that vre are vorkdnr on the draft of the Canadian proposal which js different fru -the thin; that ve wero working, on the other dWo, and, in Mr éplnion miGht change sore of the ideas re ho.ve in accordance with the previous drafting of the first part of paragrwph 2. Therefore', if it is the feeling of, the Conmittee that we re, a.irovïinC, nov at least this part of paragraph 2 as it is in this Cnnadian pro;woB4, I have to reserve the right of the Cuban delegation to study thosc first ton lines which mWy affect our position in regard to certain exceptions, certain modifications- and.certain amendînents that ve have already proposed taking into consideration the Aimricon dratt, TH CHAIIUAN; I thouZht tho inIontion of the firet six or ci.ht linos of 36, this was identical with your own draft. Mr. ALAMILLA(CUba) No, tHINKare not at all. There is a great differences in then - or at: last I thinI therc are so;æ dif frcnces - in drafting : :aid riaybo in intention, THE CGHAIRMANThere are obVIOUS differences ih drafting, but I understood * the Caiodan proposal merely to bc the simpler wky cf eocpressinz the fact that the date to which`thc rates .of duty would be subject to negotiations was a matter for agreement betweenn the countries con- ocrned, not to be ùmy specific date. ER ALMMUd (Cuba): Yes; I thought that that was the only object, to.. : change that :?art of the draft which dealt with the dates. For ex=l le, at the end cf the paragrapih in the Amrican Charter it states that these exceptiions are,. going to have a process of- eliuinxbicn, which in ro oàiitLon, it right be - and I have not a perfect understanding of the EnC1ish. language - have a vcry different méaninî from. these words hero, where the phrase used reads, "not exceed the preferences remaininrg oftér the preferences contacmplated in Article 18i MR cKfMNON (Cannada): I am not sure that I Set the point of the Cuban * delegate's remarks. It seeras to mc that wdhen-vie meài this afternoon vwe had before us the original draft Charter; we had the proposed substitution by the United Kingdom delegate; and atter they had been both discuied for sosri little trie I moved a second alternative which vras discussed, for an hour, and I think I undcorstoodc at the time that it appeoled.to the Cuban deleSate. It seemed to.gàin general acceptance, and I- thought that he in particular thought that it was a simpler nnthoi ef expressing the same probleri4 Now wue hlwe been: dis- cussing t or a couple of days that there should be a comrpilote. elimination. . o ' of these preferences to dates which miSht `appear inaipropriate in an - instrument e' this kind, an instrument that will only bc signed and . com into for¢c atter the tarift, negotiations have all been concluded. I am nt at ar.l olear as to the point he is raisinS now. MlR .ALILLA (Cuda): Well, the point is just this, We have been oontermlating 37. E/PC/T/Co.II/V, 8 beforo the Process or pro sses of' elimination, and to that we have agreed, becase we think that tha ,process Of elimination many have 13evocr1l St2oBs -'it riri& bc .ore thin:; in Dre case ancl mother thïng in .nother. Novi herm thcy rokCe a stecia1 referor?ée te neSotiations con- teormlated in Aticle 18; but I ould.prefer to leave it is it is in the present .'iricmn tecxt, thp.t in general they would be subject to the process Of. elimination contaipl;ated in .article18. 14R. McKl:NON (C>ada): It scomas .to r that the Cuban delegates rcinrks riust hang entirely u;pon the word "eliTiination." THIE CHAIRMAN: It does seeri to me that therc is scathinM in this point. IMR A.LI^LLA (Cuba)i; The word "process. " MR McKCNNON (Ca "Eli.nation" in the C-anadian draft vas lifted from the Arnerican draft and froni 1r Shackle' s draft. There has been no change in the sense as regards the neaniri or connotation of the word "oliinination." II1 hTTi (Cube): It is the word ", rocess' that I vrould lïlco to have, not tho 'word "e1''uiiiation." *TIM CH\IUN: I Peei that 4hè OubCà delegate has put his finger-on a real drrCting weaicness b se.. 1I see it, the negotiations eontem- plated in Article 18 eant .to the, Cunadians ihen they drafted this thc neGotiations which mould be con.)lete -in June next. That is oane possible meanin,. The other is thnt these mgotiations referred to are a whole series of oerotiatiàns endin -ultimnately in the elimination of references. If you takce- the first alternative me.mninï, th-an this Phrasing viould ancar to preserve the references %ihich survived. the first nopotiationsfrrtlurther red.uctionsi but I knwu tht it was not the intention, although T think that is one possible noaning, On-the other hand, 'i the negotiations contemplated in A;rtiàle 18 here refer te the whole series ôf negotiati ns, then apparently the preferences are not protected until they have been oornpltely elininatedZ. 38 E. It does to tothat it is unsatisfactory. I am not 'quite sure what the r nswr ise. I suggest v'r might leaveit for our Rapporteur to work out in consultation vith the Delogatas concerned. I think it would be wise to - lave hat. point, and. perhaps if Mr `MKinnon and tho Dflegate for Cuba would stay behind for a minute afttreards with the Rapporteur, they might. sort-it :out. R MoIenIMN (Canada) z Would. it meet the point of the Cuban Delegate if it said: "after the processes of the negotiation contained in Article 18"? We thought of ..rticle 18 as a possible series of negotiations. IR ALAMILLA . (Cuba) : This is a very important point for Cuba, and I cannot take the responsibility of deciding it at this afternoon's meeting, as to what the vwording should be. We have been working for months on this previous draft and ka.Inew exactly what it amount and exactly. how m'uch we could go. This is. a nhovi draft and I must study it, and I must sec an7 the Counebllore and I shall be willing to do it tomorrvn7, after consulting my Delegation tonight. But I cannot do it now TUE CHIERM.L:. I think we could hx leave it to be worked out in that way. I think the idea we wànt to express is: that the recoanising of these are a series of processes, hnhatever preferences exist, and after each stage. of negotiations will be protected after'tho next one ER McKIMNN (Canada): Would it be possible, before we break up, to get the ;wording of c., if a wording has been agreed on? THE CMIRILaN: Yes:. "preferences in force In the 30th June, 1946, between. neighbouring countries", Yfhat is the 'wish of the Committee, thatwo adJourn at this stage? lI MOKEIf N: I. would propose that since you ndw hava a draft of- the paragraph relevant to the Indiîn Dolegatels proposal that wo attompt to ,get rid of that tonight.- THE CHAIREMG: Is that acceptable to the Committee? UR HAWKIN (U-.S.A.).: Could wo have tho text.read.? THE CHAEMAMN: Copies have been distributed, Ithink. They set out the two alternative conclusions there,. with tvio diffarônt degrees of generalitY. 39. E/FCA'T/C.II/PXs.8 , *- Mr. HAWKINS (U.S.A.) I think it would bc accuptable if we h d the first alternative'. THE CHAIRMAN: The Unitèd States Dcleate sUGGESTS that this would bc acceptable .to him, and he would prefer t'l fiirst alternative. I suggest, if that is all right, that we might delete the second "or warranted by the exceptional circumstances", and make that continue straight on, stopping at "international trade".. kR iLUILULA (Cuba): Can we hLn.vc sornibody road it as it is going ta bc left? (T' e Chairman read out the ,proposed text) . IR MOKINMN (Canada): Prom the point of vicvr of the Canad.ian Delegation, we could certainly say tlhat some of the preferances which are are now arranging to eliminate or reduce could bo justified for retention or enlargement -on either or both of the two bases mentioned. 'I could. go. Cfurthb- and say that we could provo that there.are certain proferences at present brought forward in negotiation which are:. (a) in the interests of the inhabitants of the country, and (b) which if continued, will not, prove'restrictiv- of international trade. MR SPEKENBRINK (Netherlands): I do nîDt think it would entirely meet the case. I wonder if we could not do it 'in this way: ; combine the last two sentences in this way: 'lin the interests of the inhabitants of the countries concerned, will not prove more restrictive ta -international -trade than is warranted by exceptional circumstances". MR McKINNON (Canada): Would not itbo better ta basa it ontireely and. solely on exceptional circumstances, vwhich cover ali the other things and many more? ' AsDARKAR (IndUi): The circumstanoos whicIl justify those preforencos are sa widely existing that I doubt whether they could be regarded as exceptional; they are peculiar ta many small countries, The amendment suggested by the Nothorlands Dolegate would perhaps, I think, mzke it more approximate ta the facts: "will not prove more rostrictïve ta international Tade than'is warranted by exceptional circumstances". 40. THE CHAIRMAN: I would just point out to the Delegate for the Netherlands that "!international trade" would, of course, include the trade betweeen the two parties to the preferential ARRAngement, and that would be . . . excluded rom international trade, I should have it requirements should have thought that theo were not 'unreasonableb. o. fs. PAE Mr SHACKLE (UX): ..You could say l'and would not on balance prove restrictive of nternatJonal trade", I think .t.hat would. make the point whichh you.were suggesting. THE CHAIRIMNA: Do you understand the point, M. Lecuver? M, LÈCUYER (France) (Interjretation): Yes, Mr hCal rman, I a.n under the ImpreésIon that we have arri-ved at a deadlock here, .and you have very correcotly suggested that the'same questions were dl-s.oussed In the Plenary Comrmission'; no solution was arrived * at' then; the various delegations merely set forth their various' points of view, I quite understand the position of India and I -also quite understand the disadvantage -explact-ned by Mr Hawkins of adoptIng-a text which would openthe-door to a series of excep- * tons, Everybody knows that everybody can always claim excep- tlonal circumstances, - Therefore I wonder whether ln such a. Committee on Procedure we can deal with a matter of substance as' important as this one, Extremely important lnterets are involved, The Netherlands delegate has pointed out the posi- tion of Belgium and Holland In conneetion with the dongo and the Duteh Ii-es; and I do not thlnk we can today dci-de that such a text will cover such important cases, I therefore thlnk It would be wlse only to state the diffleulty and to'leave the questJon open, Even if we'adopted such a text the same diff'leultl.es would arl-sewlIthin the Plenary Commjssjon, and I therefore suggest* leaving the question open to set forth the var.louùs pos8tioné and to leave the solution of thls question for a subsequent meetIng, It seems to me, agarn I say, very dIf'flult to arrive at a :i-nal solution of a question in -whJlch so important essential interests are involved, THE CHAIRMAN; Thank you. Wiell, I thl&n I should make It quite clear that thlse SubcbmmittaR I- not one dealing solely wlth procedural' matters, It was a Drafting Commlttee set up by Committee'II to seek In d-scussions l-n a emallor group a resolution of the Issues 42, whi-c hhad been placed be.ora' Corariittee Il by the various dele- gations, and I tno i.t to bo an essenti.i Thnction ofthi.ls CouIittee to soek.suoh 'rosolutlons which are practIcablo, If they do not prove to be practicablb, then the duty of thbo Comz.ifttee i-s to report to that elf'eot and'submit alternative drafts for the consideration of-CoomIttee-II or of the Plenary Comraittee., or> alternati-velY, o. the recxt session of the Prepara- tory Comm4ttee .tselt -next year. But l-n thu roan tio I think our lirst task iisto seak, if we can, adra'l't whi.eh would resolve the i-fleultios involved In-tho various confliotiîng poi-nts of vi2 w, Howover., it. doos appoar as if we may be ipproadhing a stage v.here wo wJi11. have to: resort -to thcJ process of' reportIng a dIf r nce ,of opinion which 18s not'capabl of resolUtilon unless tho various delegates can sce thelr way oloar to aoépti.ng some- thnig of 1he Ilind.wh5.ch has been:put forward. I gather that some of' the d-fficulty with the draftlng nhwc.h has been suggested arJ ses from the 'erlteria whilh wo suggested, and I can soe diff i- cultles J.n attempting to lay down orirteria. It mnght bo wise to -leave the crIterla to the Organi-sation to work outi Would it` bespossible for uu to agree on-a fo6ri such as thl-s: I think possibly theappropriate place for deallng w1th this is Artilele 33, vilhich deals wlth territorial applcati-on, customs unions, and 60 on. Clause. 1 of- that'ArtJcle reads: "The provsl.s-ôns of Chapter IV shall apply to.. the -customas terrfitorJes oe the Member . countrJe.s,' If there are-two or more oustomse'territoriles under -the jurJsdiction ol any Member, oadh 'suoh customs territory .. shall be considered as a separate Mei.ber- coun.tryl'for'the purpose ' ofl interpi7etiLng the' provisions of Chapt'er IV. 2. :The provisions of. Chapter IV shalI not bc construed to.prevent (a)"- and (b) k cleals wi-th the unzorî for oustoms purposes, We mighi add there U(C) any pref erenti.al arrangeMent whlch inay be approved.by the J Orgai rStlon J n aboordance wi-th or pursuant to Artsoie 55 (2)", E/PO/T/C. Il/ PV.8 Mr McKINNON (Canada): That is any now preference? THE CHAIRMAN: Yes, any nev: preference -- or arrangement which may be approved by the Organisatlon pursuant to paragraph 2 of Article 55", Paragraph 2 of Article 55 reads: '"The Conference may, by a vote of two thJrds of its Members, determine criteria and set up proeedures, for walving, In exceptional circumstances, obligations of !Kembers undertaken pursuant to Ohaptor IV of this .Charter." That wouldleave to the, Organisatlon not only the task of decVllng and approving these arrangements, but also leave to thoam the task of deterxainInf the criteria whi-oh would warrant Mr ADARAR .(India): Mr Chairraan, the fresh amendment suggested. by you, Si-r, has certain dicsadvantages, .I I may say so, from the point of view of the Indian delegation, because whJle In the fl-rst amendbuent suggested by you there is a fair recognition that in special clrcunstances -- we would prefor the word "special [ instead of "lexceptIonal" - there may be justif Icatlon lor new preferential arrangements, that recognition wlil be lessened In the second amendment, The other disadvantage.which we soe Is that by linking this new amendment to the provJsion of paragraph 2 of Art.icle 55, we shall be automatl-oglly laying down the con- ditlon of the two-thirds majority vote,, We would preofee that the type of majori-t'y which shall be required for a dec-sion of thi-s sort shall be left over for later consi-erati-on, The choice between exceptionall" and. "special'' i-s le$t to the Committee, of course, Whataver li the best iiiay be adopted, ~And finally I would say that with the amendment suggested by Mr Shackle, the fl-rst amendment suggested by you would In my Judg-- ment - agaln without committi-ng the Indian delegation -- meet the point of view of India and other countries l si-milar positIon very woll, Thé amendment to which I refer ia th18, that it `i8 ln the interests of the inhabitants of tUe countries con- cerned and.w4ll not on balance be restrlctive of International - , A Mr. HAPPY HAWKINS (usa): mR CHAIRMAN, on tde first point of the delegate of india, it seems to methat he solution proposed meets all viewpoints first because it is neutral: it does not prejudice the case in any way. it does, however, provide means of consJ`derin-, the, special casa. 4 45, Thé -se coni.pointwwas about the two-thirds vote. If' you *. ,ead paragraph 2 oSf .rticole 55 carefully yu wIll see that ."Tho Conference mlay, by n. vote or two thirds-of its members, determine orite-ria and set Up proceduress". That daes not necessarily mean th -àction oa a two-thirds vote. DR SPREK-NBRINK. (Netherlands): The only CIiifïculty I am.faced the with is this point about/customs union which I mentioned. to you earlier. It is the logical consequencesof an agreement and a new tariff will, as far as I can see, b6 in force before we have Dur negotiations ac.irdinZ to the charter, soathat In effect weshqll have preference there before we can even apply the appropriate i.rticle. That is just one oa the. - diïi'culties. MR McKINNON (Canada): I do not like to use the word "deadlock" but, I think probably the delegate for France is right, and I dobbt whether we can get much further. If' the proposal were linked definitely with 55(2) we would be inclined, difficult though it is, and running nounter to the whole spirit of the charter, to'accept it. We have io keep in mind that under this clause we would. have to permit the creation'cf new preferences n. the very basia on which we can justify the retention of the 3ines that we are being asked to give Up. With the thought that we may not get !any further with.this, I would like to say that the Canadian delegation would like to be shown as dissenting in thiscase. MR. .ADARR (India): Mr Chairman, so far as I can anticipate the reaction of the Indian delegation, I think there would be no *ob ection from their point of view to linking the first amendment suggested by you with paragraph 2 of Article 55, because tbe first amendment has the distinct advantage that it recognises the principle. THE CHAIRMAN: wE MIGHT SAY THIS: : "The members RECOGTNISE THAT P.2 E/PC/T/C. II/V.8 there may: in exceptional circumstances be justification for new; preferential arrangements. The Organisation should therefore be empowered to approve their establishment in accordance wïth the procedure set out in articlee 55(2)." Would that.meet the Indian delegate'é point - recognising that the procedure be establisheci through Article 55? MR J ADARKAR (India): I should think so, but THE CHAIRMAN: Agreement here is necessarily tentative. Then-may I say that wè tentatively agree on the draft which I mentioned, and ask. th-e Rapporteur to look at it more carefully, particularly in relation to its appropriate place in the Charter? Is that agreed? (iLgreeid.) It is suggested that we meet tomorrow morning. Would Mr Wyndham-White be good enough to acquaint us with the position EXECUTIVE SECRETiRY: I think.that is all right, provided it does.not matter thqt it conflicts withla meeting of the Drafting Sub-Committee of the Joint committee. The Technical Sub-Committee, I take it, is meeting tomorrow afternoon? MR VIDLA (.Chile): Yes, at 3 o'clock. THE CHAIRMAN: I suggest that when we rescue we might take up discussion on the point concerned in Article 1-I, the drafting point t.o be rernoiied between the delegates cf Cuba, Canada azd the Rapporteur. The meeting i8 adjourned, The meeting, rose at 6.55 p,m. i.. 47 1 f
GATT Library
wg992xv6510
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Protocol of Provisional Application as amended up to Septeniber 18, 1947 by the Tariff Agreement Committee
United Nations Economic and Social Council, September 18, 1947
United Nations. Economic and Social Council
18/09/1947
official documents
E/PC/T/202 and E/PC/T/196-209
https://exhibits.stanford.edu/gatt/catalog/wg992xv6510
wg992xv6510_92290257.xml
GATT_155
455
3,084
UNITED NATIONS ECONOMIC CONSEIL RESTRICTED AND ECONOMIQUE E/PC/T/202 SOCIAL COUNCIL ET SOCIAL 18 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Text of Protocol of Provisional Application as amended up to Septeniber 18, 1947 by the Tariff Agreement Committee PROTOCOL OF PROVISIONAL APPLICATION OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE The Governments of the Commonwealth of Australia, Belgium (in respect of the metropolitan territory), the Kingdom of the Netherlands (in respect of the metropolitan territory), and Luxemburg, Canada, the French Republic (in respect of the metropolitan territory), the United Kingdom of Great Britain and Northern Ireland (in respect of the metropolitan territory), and the United States of America, undertake, provided that all of such governments shall have signed this Protocol not later than November 15, 1947, to apply provisionally on and after January 1, 1948 (a) Parts I and III of the General Agreement on Tariffs and Trade and (b) Part II of that Agreement to the fullest extent not inconsistent with existing legislation. The above-named governments shall make effective such provisional application of the General Agreement, in respect of any of their territories other than their metropolitan territories, on or after January 1, 1948, upon the expiration of thirty days from the day on which notice of such application is received by the Secretary-General of the United Nations. Any other government signatory of this Protocol shall male effective such provisional application of the General Agreement, on or after January 1, 1948, upon the expiration of thirty days from the day of the signature of this Protocol by such government. NATIONS UNIES E/PC/T/202 Page 2. Any government applying this Protocol shall be from to withdraw such application on sixty days' written notice to the Secretary-General of the United Nations. This Protocol shall be open for signature untïl June 30, 1948, at the Headquarters of the United Nations, Lake Success, New York, by any government signatory of the Final Act adopted at the conclusion of the Sucond Session of the Preparatory Committee for the United Nations Conference on Trade and Employment which shall not have signed this Protocol on this day. The original of this Protocol shall be deposited with the Sacretary-General of the United Nations, who will furnish certified copies thereof to all interested governments. IN WITNESS WHEREOF the respective Representatives, after having communicated their full powers, found to be in good and due form, have signed this Protocol. DONE in duplicate, in the English and French languages, both authentic, at Geneva, this day of 1947, FOR THE etc. [Note: Each signature would be accompanied by an indication of the date of signature, i.e. FOR THE UNITED STATES OF AMERICA: John Doe 30 September 1947]
GATT Library
km707mp0659
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of Section D. (Article 30) of Chapter V - Subsidies as approved by Commission B
United Nations Economic and Social Council, July 18, 1947
United Nations. Economic and Social Council
18/07/1947
official documents
E/PC/T/130 and E/PC/T/124-135
https://exhibits.stanford.edu/gatt/catalog/km707mp0659
km707mp0659_92290156.xml
GATT_155
1,547
9,773
UNITED NATIONS RESTRICTED ECONOMIC CONSEIL E/PC/T/130 AND ECONOMIQUE 18 July 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREFARATORY COMMITTEE OF THE UNITED NATIONS C NFERENCE ON TRADE AND EMPLOYMENT. TEXT OF SECTION D. (ARTICLE 30) OF CHAPTER V - SUBSIDIES AS APPROVED BY COMMISSION B ARTICLE I* SUBSIDIES IN GENERAL If any Member grants or maintains any subsidy, including any form of income or price support; which operates directly or indirectly to increase exports of any product from, or to reduce imports of any product into, its territory, the Member shall notify the Organization in writing as to the extent and nature of the subsidization, as to the estimated effect of the subsidization on the quantity of the affected product or products imported into or exported from the territory of the Member country and as to the conditions making the subsidization necessary. In any case in which it is determined that serious prejudice to the interest of any other Member is caused or threatened by any such subsidization, the Member granting the subsidization shall, upon request, discuss with the other Member or Members concerned, or with the Organiz- ation, the possibility of limiting the subsidization. ARTICLE II* ADDITIOINAL PROVISIONS ON EXPORT SUBSIDIES 1. No Member shall grant, directly or indirectly, any subsidy on the exportation of any product, or establish or maintain any other system, which in either case results in the sale of such product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market, due allowance being made for differences in the conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability. 2. The provisions of paragraph 1 shall not prevent any Member from exempting exported products from duties or taxes imposed in respect of like products when consumed domestically or from remitting such duties or taxes which have accrued. The use of the proceeds of such duties or taxes to make payments to domestic producers, however, shall be considered as a case under Article I. except in so far as such payments subsidize exportation, in the sense of paragraph 1 of this Article, by more than the amount of the duties or taxes remitted or not imposed. * The Cuban Delegation has reserved its position on Articles I and Il pending a decision on the amendment which it originally submitted on Article 30 and which was referred to the Sub-Committee dealing with Article 15. NATIONS UNIES E/PC/T/130 page 2. 3. Members shall give effect to the provisions of paragraph 1 at the earliest practicable date, but in any event not later than two years from the day on which this Charter enters into force. If any Member considers itself unabIe to make the provisions of paragraph 1 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 notice in writing, riquesting a specific extension of the period and accompanied by a complete analysis of the system in question and the facts justifying it. It shall than be deter- mined whether the extension requested should be made. 4. Nothing in paragraph 1 shall prevent any Member from subsidizing exports of any product to the extent and for such time as may be necessary to offset a subsidy granted by a non-Member affecting its exports of such product. Provided that such Member shall, upon the request of the Organization or of any other Member which considers that its interests are adversely affected by such subsidy, consult with such other Members or with the Organization with a view to reachin, a satisfactory adjustment of the matter. ARTICLE III SPECIAL TREATMENT OF PRIMARY COMMODITIES *1. A system for the stabilization of the domestic price or of the return to domestic producers of a primary commodity, independently of the movements of export prices, which results at times in the sale of the product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market, shall be considered not to involve a subsidy on exportation under the terms of paragraph 1 of Article II, if it is determined (a) that the system has also resulted in the sale of the product for export at a price higher than the comparable price charged for the like product to buyers in the domestic market; and (b) that the system is so operated either because of the effective regulation of production or otherwise as not to stimulate exports unduly or otherwise seriously prejudice the interests of other Members. 2. In any case of subsidization of a primary commodity, if a Member considers that its interests are seriously prejudiced by the subsidy or if the Member granting the subsidy considers itself unable to comply with the provisions of paragraph 3 of Article II within the time limit laid down therein, the difficulty may be deemed to be a special difficulty of the kind referred to in Chapter VII, and in that event the procedure laid down in that Chapter shall be followed. * The Australian Delegation has reserved its position on paragraph 1 of Article III pending, its approval of the final agreed text of article 17, E/PC/T/130 Page 3. *3. If the measures provided for in Chapter VII have not succeed, or do not promise to succeed, within a reasonable period of time, either because no agreement has been reached or because the agrreement is terminated, a Member adversoly affected may apply for exemption from the requirements of paragraohs 1and 3 of article Il in respect of that commodity. If it is determined that the circumstances described in Article 53 (52 New York text) apply to the commodity concerned, and that the subsidization will not be so operated as to stimulated exports unduly or otherwise seriously prejudice the interests of other Members, the Organization shall grant such exemption until such data and within such limits as be determined. ARTICLE IV* UNDERTAKING REGARDING STIMULATION OF EXPORTS Notwithstanding the provisions of paragraphs 1, 2 and 3 of Article II and of paragraph 3 of Article III, no Member shall grant any subsidy on the exportation of any product which has the affect of acquiring for that Member a share of world trade in that product in excess of the share which it had during a previous representatives period, account being taken insofar as practicable * The United States Delgation has reserved its position on paragraph 3 of Article III and on Article IV. It wishes its reservation to be, recorded in the following terms: "The United States Delegation reserves its position regarding Section D, Subsidies, as that section would apply to the situation of a primary commodity which may be in burdensome world surplus as described in Chapter VII. In such a situation the provisions of the revised text would, result in inequitable treatment in two respects: 1. It would permit countries which, to meintain their primary exports in tires of world surplus, use export subsidies associated with a special type of stabilization scheme (Article III, para.1) or use domestic subsidies resulting in the stimulation of exports (Article 1) to apply such subsidies and to continue them while the procedures of Chpter VII were being, followed. It would not, however, permit countris which use export subsidies not associated with a special stabilization scheme to apply such subsidies. This permission would be denied not only during a reasonable effort to achieve multilateral international action to deal with the world problem through Chapter VII precedures, but also thereafter until it might be determined by consultation among interested countries that the particular export subsidization contemplated would not be so operated as to stimulate exports unduly or otherwise seriously prejudice the interests of other Members (Article III, para 3). 2. In any case, the revised text would present subsidies on exportation, whether or not associated with a special stabilization scheme, from being operated so as to stimulate exports unduly or otherwise seriously prejudice the interests of other Members (Article III, paras. 1 and 3), and it would place an additional limitation on export subsidies not associated with a special stabilization scheme (Article IV), but it would, put no binding limitation whatever on the use of domestic subsidies which stimulate exports (Article I) ." E/PC/T/130 page 4. Of any special factors which may have affected or may be affecting the trade in that product. The selection of a representative period for any product end the appraisal of any special factors affecting the trade in the product shall be made initially by the Member granting the subsidy; provided that such Member shall, upon the request of any other Member having en important interest in the trade in that product, or upon the request of the Organization, consult promptly with the other Mber or with the Orgeanization regarding the need for an adjustment of the base period selected or for the re-appraisal of the special factors involved. ARTICLE, V PROCEDURE Any determination required by or appropriate to the operation of this Section shall be made through the organization by consultation among the Members substantially interested in the product concerned.
GATT Library
cn976zz6519
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Text of the Final Act as amended up to September 18, 1947, by the Tariff Areement Committee
United Nations Economic and Social Council, September 18, 1947
United Nations. Economic and Social Council
18/09/1947
official documents
E/PC/T/203 and E/PC/T/196-209
https://exhibits.stanford.edu/gatt/catalog/cn976zz6519
cn976zz6519_92290258.xml
GATT_155
646
3,972
UNITED NATIONS ECONOMIC CONSEIL RESTRICTED AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL 18th September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Text of the Final Act as amended up to September 18, 1947, by the Tariff Areement Committee. FINAL ACT. In accordance with the Resolution adopted at the First Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, appointed by the Economic and Social Council of the United Nations on February 18, 1946, the Governments of the Commonwealth of Australia, Belgium, the Kingdom of the Netherlands, Luxemburg, the United States of Brazil, Burma, Canada, Ceylon, the Republic of Chile, the Republic of China, the Republic of Cuba, the Czechoslovak Republic, the French Republic, India, Lebanon, New Zealand, the Kingdom of Norway, Pakistan, Southern Rhodesia, Syria, the Union. of South Africa, the United Kingdom of Great Britain and Northern Ireland, and the United States of America, initiated negotiations between their representatives at Geneva on April 10, 1947 directed to the substantial reduction of tariff's and other trade barriers and to the elimination of preferences, on a reciprocal and mutually advantageous basis. These negotiations have terminated to-day and have resulted in the fráming of a General Agreement on Tariffs and Trade and a Protocol of Provisional Application, the texts of which are annexed hereto. These texts are hereby authenticated. It is understood that the signature of this Final Act or of the Protocol of Provisional Application by any of the above-mentioned governments does not in any way prejudice their NATIONS UNIES E/PC/T/203 page 2. freedom of action at the United Nations Conference on Trade and Employment. This Final Act, together with the General Agreement on Tariffs and Trade and the Protocol of Provisionai Application, will be released by the Secretary-General of the United Nations for publication on November eighteenth, one thousand nine hundred and forty-seven, provided that the Protocol of Provisional Application shall have been signed by November fifteenth, one thousand nine hundred and forty-seven by all tho countries named therein. IN WITNESS WHEREOF the respective Represontatives have signed the present Act. DONE, etc, For the Commonwealth of Australia .............................. For Belgium ... .......... .... ............... For the Kingdom of the Netherlands ........................... For Luxemburg ............................................. For the United States of Brazil For Burma ...................... Canada ................... Ceylon ................... the Republic of Chile .. the Republic of China ..... the Republic of Cuba ..... the Czechoslovak Republic .. the French Republic ...... India ....... Lebanon ........... New Zealand ............. the Kingdom of Norway Pakistan ........ . . Southern Rhodesia ......... Syria ....... . the Union of South Africa .. ........... ........................ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ . . . . . . . . . .. .. .. .. .. . .. . . . . ..... . . . . . . . . . . . . . . . . . . . . e ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........... . ... For the United Kingdor of Great Britain and Northern Ircland ................ For.t.e ........tates of A.erica .....................*.e.. *e @ For r For For For For For For For For For For For For For For For
GATT Library
ts223fd2444
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Texts Recommended by the Sub-Committee on Schedules Relating to the Possible Adjustment of Specific Rates of Duty
United Nations Economic and Social Council, September 19, 1947
United Nations. Economic and Social Council
19/09/1947
official documents
E/PC/T/208 and E/PC/T/196-209
https://exhibits.stanford.edu/gatt/catalog/ts223fd2444
ts223fd2444_92290263.xml
GATT_155
390
2,546
UNITED NATIONS NATIONS UNIES RESTRICTED E/PC/T/208 ECONOMIC CONSEIL 19 September 1947. AND ECONOMIQUE Original: ENGLISH SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. Texts Recommended by the Sub-Committee on Schedules Relat- ing to the Possible Adjustment of Specific Rates of Duty, If the provision is to appear as a note in the appropriate Schedules, the Sub-Committee recommends the following model text: "It is understood that the specific duties and charges included in this Schedule are expressed in [the currency unit of the country to which the Schedule relates of the par value accepted by the international Monetary Fund at the date of this Agreement. It is agreed that, in case this par value is reduced consistently with the Articles of Agreement of the International Monetary Fund by more than 20 per cent, the specific duties and charges may be adjusted to take account of such deduction in the par value of the currency; Provided that the Contracting Parties concur that such adjustments will not impair the value of the concessions granted in the Schedule, due account being taken of all factors which may influence the need for, or urgency of, such adjustments." If the provision is to be incorporated in the Agreement as part of Article II, the Sub-Committee recommends the following text: "It is understood that the specific duties and charges included in the Schedules are expressed E/PC/T/208 page 2. ln the appropriate currency at the par value accepted by the International Monetary Fund at the date of this Agreement. It is agreed that, in case this par value is reduced consistently with the Articles of Agreement of the International Monetary Fund by more than 20 per cent, the specific duties and charges may be adjusted to take account of such reduction in the par value of the currency; Provided that the Contracting Parties concur that such adjustments will not impair the value of the concessions granted in the Schedules, due account being taken of all factors which may influence the need for, or urgency of, such adjustments. Similar provisions shall be available to any contracting party not a member of the International Monetary Fund as from the date on which such contracting party enters into a special exchange agreement in pursuance of Article XV of this Agreement."
GATT Library
hw945ty7854
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Textual revision by the Secretariat of paragraph 3 of Article II to take account of revisions made in Article 31 of the Charter for which appropriate allowance had not been made in the version reproduced in E/PC/T/189
United Nations Economic and Social Council, September 1, 1947
United Nations. Economic and Social Council
01/09/1947
official documents
E/PC/T/189 Corr.2 and E/PC/T/189-196
https://exhibits.stanford.edu/gatt/catalog/hw945ty7854
hw945ty7854_92290244.xml
GATT_155
321
2,165
E/PC/T/189 Corr.2 ECONOMIC CONSEIL 1 September 1947 AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL ORIGINAL ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT Textual revision by the Secretariat of paragraph 3 of Article II to take account of revisions made in Article 31 of the Charter for which appropriate allowance had not been made in the version reproduced in E/PC/T/189 3. If any contracting party, after the day of signature of this Agreement, establishes, maintains or authorizes, formally or in effect, a monopoly of the importation of any product for which a maximum import duty is provided in the appropriate Schedule annexed to this Agreement, the price for such imported product charged by the monopoly in the home market shall not, except as otherwise provided for in any such Schedule, exceed the landed cost plus such maximum import duty; after due allowaance for internal taxes, trans- portation, distribution and other expenses incident to the purchase, sale or further processing, and for a reasonable margin of profit; Provided that regard may be had to average landed costs and selling prices over recent periods; and Provided further that, where the product concerned is a primary product and the subject of a domestic price stabilization arrangement; provision may be made for adjustment to take account of wide fluctuations or varia- tions in world prices subject to agreement between countries parties to the negotiat-lon of the maximum import duty. The monopoly shall, wherever this principle can be effectively applied and subject to the other provisions of this Agreement, import and off:r for sale such quantities of the product as will be sufficient to satisfy the full domestic demand for the imported product, account being taken of any rationing te consumers of the imported and like domestic product which may be in force at that time. * Corrigendum has been issued in French only. UNITED NATIONS RESTRICTED NATIONS UNIES
GATT Library
db522mm4563
Second session of the Preparatory Committee of the United Nations Conference on Trade and Employment : The Delegation of the United States of America submits the following proposed amendments to Articles 14 and 24: Article 14
United Nations Economic and Social Council, May 30, 1947
United Nations. Economic and Social Council
30/05/1947
official documents
E/PC/T/W/146 and E/PC/T/W/125-150
https://exhibits.stanford.edu/gatt/catalog/db522mm4563
db522mm4563_90050282.xml
GATT_155
1,119
7,263
RESTRICTED UNITED NATIONS NATIONS UNIES ECONOMIC CONSEIL E/PC/T/W/146 AND ECONOMIQUE 30 May, 1947. SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT The Delegation of the United States of America submits the following proposed amendments to Articles 14 and 24: Article 14 General Most-Favoured-Nation Treatment 1. With respect to customs duties and charges of any kind imposed on [,] or in connection with [,] importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation or exportation, and with respect to all matters [in regard to which national treatment is provided for in Article 15] referred to in paragraphs 1, 2, 3 and 4 of Article 15, any advantage, favour, privilege or immunity granted by any Member to any product originating in or destined for any other country, shall be accorded immediately and uncondit- ionally to the like product originating or destined for all other Member countries respectively. 2. The provisions of paragraph 1 of this Article shall not be construed to require the elimination, except as provided in Article 24, of any preferences in respect of [customs] import duties or [other] charges or internal taxes [imposed on importation] which do not exceed the preferences remaining in force after the negotiations [contemplated] provided for in Article 24 and which fall within the following descriptions: (a) ....... (b)....... (c) ....... Comment 1. The changes proposed in line 8 of paragraph 1 are designed to extend the grant of most-favoured-nation treat- ment to all matters dealt with in Article 15 (except gov- ernmental operations under paragraph 5 of article 15) re- gardless of whether national treatment is provided for in respect of such matters. . . E/PC/T/W/146 page 2. 2. Certain drafting suggestions are made in paragraph 2 with a view to making Articles 14 and 24 fully consistent. The insertion of the reference to internal taxes would place preferential internal taxes on the same footing as preferential tariffs, both of which would be subject to negotiation under Article 24 (sue below). Article 24 Reduction of Tariffs and Elimination of Preferences 1. Each Member, other than a Member subject to the provisions of Article 33, shall, upon the request of any other Member or Members, enter into [reciprocal and mutually advantageous] negotiations with such other Member or Members directed to the substantial reduction of tariffs [and other charges] on imports and exports and [to] the elimination of the [import tariff] preferences referred to in paragraph 2 of Article 14 on a reciprocal and mutually advantageous basis. These negotiations shall proceed in accordance with the following rules: (a) Prior international [commitments] obligations shall not be permitted to stand in the way of negotiations with respect to [tarriff] preferences, it being understood that [action] agreements resulting from such negotiations shall not require the modification or termination of existing international obligations except [by agreement between] (i) with the consent of the [contracting] parties to such obligations, [failing that] in the absence of such consent, (ii) by termination of such obligations in accor- danco with their terms. See (b) below (c) The binding [or consolidation] of low tariffs or of tariff-free treatment shall in principle be recognized as a concession equivalent in value to the substantial re- duction of high tariffs or the elimination of tariff prefer- ences. 2. ...... (b) All negotiated reductions in most-favoured- nation [import tariffs] rates shall operate automatically to reduce or eliminate margins of preference, and no margin of preference shall be increased. 3. If any Member considers any other Member has failed [within a reasonable period of time] to fulfil its obliga- tions under paragraph 1 of this Article, such Member may re- fer the matter to the Organization which, [shall make an] after investigation, shall make appropriate recommendations to the Members concerned. [The Organization, if it] If the Organization, taking into account the economic position of a Member under the Charter as a whole finds that a such Member has [, without sufficient justification, having regard to the provisions of the Charter as a whole] failed without E/PC/T/W/146 page 3. sufficient justification to negotiate with such complaining Member, within a reasonable period of time, in accordance with the requirements of paragraph 1 of this Article, the Organization may determine that the complaining Member, or in exceptional cases the Members [of the Organization] generally, shall, not- withstanding the provisions of Article 14, be entitled to with- hold from the trade of the other Member any of the tariff benefits which the complaining Member, or the Members [of the Organization] generally as the case may be, may have negotiated pursuant to paragraph 1 of this Article, If such benefits are in fact withheld, so as to result in the application to the trade of the other Member of tariffs higher than would otherwise have been applicable, such other Member shall then be free, within sixty days after such action is taken, to withdraw from the Organization upon the expira- tion of sixty days from the date on which written notice of such withdrawal is received by the Organization. The provisions of this paragraph shall operate in accordance with the provisions of Article 67. Comment 1. The proposed amendments to the opening sentence of paragraph 1 are designed (a) to make it clear that the reciprocal and mutually advantageous character of the arrangements in- visaged applies to the arrangements themselves rather than to the negotiations leading up to their conclusion, and (b) to assure that all preferences excepted from the most-favoured-nation clause by virtue of paragraph 2 of Article 14 will be subject to negotiations under Article 24. 1 (a) The changes proposed in paragraph 1 (a) are designed to clarify the provision and render it more precise. 1 (c) It is proposed to omit from paragraph 1 (c) the reference to the consolidation of duties in order to avoid the possible interpretation that a binding and a consolida- tion are different things. 3. The changes proposed in paragraph 3 are largely of a drafting nature. The phrase "within a reasonable period of time" has been moved so as to make it clear that the Organization, rather than a complaining Member, would judge whether another Member was complying with its obligations within a reasonable time. Note: The United States Delegation may wish at a later stage to make certain suggestions for a general regroupong of articles under Chapter V. Meanwhile, it is proposed that Articles 14, 15 and 24 should in any event be grouped to- gether under a single section.
GATT Library
nm545gh3967
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Third Special Report on the Progress of Tariff Negotiations by the Tariff Negotiations Working Party
United Nations Economic and Social Council, July 24, 1947
United Nations. Economic and Social Council
24/07/1947
official documents
E/PC/T/S/4 and E/PC/T/S/4-12
https://exhibits.stanford.edu/gatt/catalog/nm545gh3967
nm545gh3967_90260178.xml
GATT_155
2,562
16,752
NATIONS UNIES E/PC/T/S/4 ECONOMIC CONSEIL 24 July1947. AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL SECRET SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT THIRD SPECIAL REPORT ON THE PROGRESS OF TARIFF NEGOTIATIONS BY THE TARIFF NEGOTIATIONS WORKING PARTY The reports received from delegations for the fortnight ending 12th July present a discouraging picture, especially when compared with the reports of two and four weeks earlier. It seems that little progress has been made in these past four weeks; only six negotiations; all of minor importance, have been completed in this period, only eight others have advanced to the stage of nearing completion, and there are only a further eleven on which the two delegations agree that "considerable progress" has been made. Thus it is evident that the negotiations must progress far more rapidly in the coming month if the target date is to be observed. During the past fortnight the Working Party has made a careful survey of all the negotiations and has interviewed the representatives of several delegations. It is hoped that the results of these discussions will become apparent in the near future and that all delegations will press forward, with their negotiations as rapidly as possible. The reports on the state of negotiations received from delegations for the fortnight ending 12th July record that two pairs of countries have completed their negotiations in addition to the five which were mentioned in the last report. The UNITED NATIONS.S E/PC/T/S/4 page 2 negotiations now completed are: Canada - Norway China - South Africa Chile - Norway Cuba - South Africa Chile - South Africa Czechoslovakia - South Africa Norway - South Africa Thus, 7 pairs of countries have now completed the bilateral stage of their negotiations, but the trade between them is only 19 million dollars and is less than 0.3% of the total trade among the countries represented on the Preparatory Committee, Twenty negotiations are said to be nearing completion. On eight of these the reports of the two countries coincide: Brazil - United States China - Czechoslovakia. Cuba.- India Czechoslovakia - Norway India - New Zealand India - Norway France - South Africa New Zealand - South Africa But on the other twelve one of the countries gives a less favourable opinion: mpors" Australia - South Africa: (Austraysa sa. "making pr")ress) Brazil - Canada: (Canada "aas Mmiking progress") Canada - India: (Canada smys "raking considerable progress") Chile - India: eChilo "ays 'making pro"resso) China - Norway: (China "ays lmaking prog"ess H) Cube. Norway; (Cuba "makinakingg considerable progress") -Cuba - U.K. (Cuba "iys Kalimre].iinary s")ges) Czechoslovakia - IndiazechoslovakV,`kia s"ys imaking considerable progr")s ) Czechoslovakia - Leba/on! Sy:ia, (Lebanon/Syria sa"s. in preliminary stages") India anbPion/Syria: bLe anon/Syria say" :`in preliminary stag"s S) 'New Zealand - Lebanonriaia, bLeLanon/Syria says "in P: liminary sta"ess) South Africa - U.K.: (South Africa says " making progress"). E/PC/T/S/4 page 3 In the 16 reports there are 42 crosses in the column headed "making, considerable progress these include the following in addition to those mentioned above: (The opinion that the negotiations are "making considerable progress" is expressed by the countries underlined) Australia - Czechoslovakia Australia - France Australia - Norwary Benelux - Canada Benelux - France Benelux -South Africa Brazil - Chile Brazil - Czechoslovakia Brazil - India Brazil - United Kingdom Canada - China Canada - Czechoslovakia Canada - France Canada - India Chile - Cuba Chile - Czechoslovakia Chile - United Kingdom Chile - New Zealand China - United Kingdom China - U.S.A. Cuba - Czechoslovakia Cuba. - United States Czechoslovakia. - France :Czechoslovakia. - New Zealand Czechoslovakia - U.S.A. France - United Kingdom Lebanon/Syria - United Kingdom Lebanon/Syria - United States Norway - United Kingdom Norway _ United States United Kingdorn - United States E/PC/T/S/4 page 4 The following improvements, in the progress of negotiations in the past fortnight are reported: 15 opinions of improvement from "in preliminary stages" to making progress"; 3 opinions of improvement from "in preliminary stages" to "making considerable progress"; 1 opinion of improvement from "in preliminary stages" to "nearing completion" 13 opinions of improvement from "making progress" to making considerable progress"; 11 opinions of improvement from "making progress" to "nearring completion"; and 5 opinions of improvement from making considerable progress" to "nearing completion". In 123 cases no change in opinion is recorded. On the other hand, two delegations report that certain negotiations are less advanced than they were an fortnight ago: Cuba in its negotiations with Canada. Czechoslovakia. in its negotiations with United Kingdom One meeting for tho opening of tariff negotiations was held during the fortnight ending 12th July, and there are now 102 negotiations in progress. 84 meetings were held during the past fortnight bringing the total number to 467. 20 pairs of countries have held only one meeting, 20 have held two, 20 have held three, 14 have hold four and 12 have held five. Only 16 pairs of countries have held more than five meetings, and if these are deducted the average for the remaining 86 is only 2.7. E/PC/T/S/4 page 5 ANNEX . STATE OF TARIFF NEGOTIATIONS (as at 12th July) 1. 102 NEGOTIATIONS Number of meetings held up to 12 July tote of egot'ns s re- orted by he two ountries (1) 2 - 2 3 - 2 1 - 1 2 -2 2 -3 2 - 4 2 - 2 3 - 3 1 - 1 3 - 2 4 - 4 3 . 3 3 - 2 2 - 2 1 - 1 2 -.1 3 - 2 2 - 2 3- 2 S n a p t c 34 Canada - U.S.A. 26 U.K. - U.S.A. 2 India - U.K.. 14 Benelux - U.K. 9 Benelux - France 8 S. Africa - U.K. 13 Benelux - U.S.A. 15 France - U.K. 6 France - U.S.A. 30 Cuba - U.S.A. . 5 Brazil - U.S.A. 4 Norway - U.K. 10 China - U.S. 5 India - U.S.A. 1 A ustralia - U.S.A. 2 S. Africa - U.S.A. 4 Brazil - U.K. 3 Chile - U.S.A. 20 Czechoslov..- U.S.A. Trade in 1938 Approx. as a %' of value in total trade Dollars among all (millions) countries represented at the Conf. (2) 782 11. 3 607 10.0 405 5.9 361 . 5,2 287 4.2 263 3.8 249 3.6 212 3.1 198 2.9 194 2.8 .73 2.5 107 1.6 100 1.5 98 . 1,4 88 1.3 87 1.3 61 0 O.9 59 . 0o9 54 0.8 (1) The figure "1" indicates "in preliminary stages", t " f ""2' "making progress", "3"1*t " t "making considerable progress", 1" I ""4' " " nearing complet"onn, and .'" f" "I5f " that the negotiations have been completed. The first figure records the opin on.expressed by the first-named country, the second figure records that of the second-named country. (2) The trade of dependent territories is not included with that of the countries having international responsibility for them. Number of weeks since first meeting il 11 10 6 6 8 9 10 11 8 IC 10 9 10 11 10 7 10 11 E/PC/T/S/4 page 6 Number of meetings held up to meeting 12 July 3 Benelux - India Czechoslov. - U.K. China - U.K. Australia - France Chile - U.K. Norway - U.S.A. Benelux - Czechoslo Benelux - Brazil Bnelux - Canada France - India Benelux - S. Africa Benelux - Norway Australia - Benelux N. Zealand - U.S.A. Brazil - France Cuba -U.K. Czechoslov. - France France - Norway Australia - India Canada - France Benelux - China France - S. Africa China - India Chile - France China - France. Benelux - Chile Canada - India Czechoslov - India Canada - Norway Australi -- China China - Czechoslov. 3 France - Lebanon/Sy Trade in 1938 State of Approx. as a % of negot'ns value total trade as re- in among all ported by Dollars countries the two (millions) represented countries 2 - 2 50 1-1 48 2 3 47 3 -3 46 2 -3 45 3 -3 44 2 - 2 37 1 1 36 3 -2 35 2 -2 34 3 -2 34 2- 2 33 1- 1 33 1- 1 31 2 -1 30 1 -4 27 2 -3 22 2 - 2 20 1 -1 20 2 -3 20 2 -2 17 4 -4 16 1 -2 15 1-1 13 2 - 2 13 1- 1 12 3 -4 12 4 - 3 11 5 - 5 10 2-1 9 4 - 4 9 1-2 8 at the Conf. (2) 0.7 0.7 0.7 0.7 0.7 0.6 0. 5 0 . 5 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.3 0.3 o.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 Number of weeks since first 9 6 9 10 6 10 6 1 9 7 8 9 6 10 61 10 6 10 6 11 8 11 7 1 10 10 7 8 5 8 8 3 5 11 4 12 4 1 5 5 3 2 3 1 3 2 3 5 2 10 4 2 1 4 3 3 6 3 5 E/PC/T/S/4 page 7 Trade in 1938 Number Number State of Approx. as a % of of of negot'ns value total trade weeks meetings as re- in among all since held up ported by Dollars countries first to the two (millions) represented meeting 12 July countries at the Conf. _ _ ( 1) (2) 4 2 Benelux - Cuba 1 - 1 7 0.1 6 4 Czechoslov. - Norway 4 - 4 7 0.1 7 4 Czechoslov.- S.Africa 5-- 5 7 0.1 6 5 France - N. Zealand 2 - 2 7 0.1 4 1 Brazil - Czechoslov. 2 - 3 7 0.1 4 4 Australia - Czechosl. 2 - 3 6 0.1 9 5 Canada - Czechoslov. 2 - 3 6 0.1 6 3 Benelux - N. Zealand 2 - 2 5 0.1 6 3 Brazil - Canada 4 - 2 5 0.1 5 3 Australia - S.Africa 2 - 4 5 0.1 7 4 Canada - China 3 - 2 5 0.1 8 2 Cuba - France 1 - 1 5 0.1 7 5 Lebanon/Syr. - U.K. 3 - 3 5 0.1 8 7 Lebanon/Syr. - U.S.A. 3 - 3 5 0.1 5 5 India - Norway 4 - 4 4 0.1 :6 2 India - New Zealand 4 - 4 3 0.1 6 4 Benelux - Lebanon/Syr. 3 - 2 3 0.1 4 1 Brazil - India 2 - 3 3 0.1 7 2 Australia - Norway 3 - 3 2 - _ 1 3 Brazil - Chile 1 - 3 2 - 7 1 Brazil - Norway 2 - 1 2 - 2 3 Chile - Cuba 2 - 3 2 - 3 1 Chile - Czechoslovak 1 - 3 2 - 8 3 China - Norway 2 - 4 2 - 7 a 2 Cube - India 4 -4 2 - 1 Brazil-- China 2 -1 1 - 6 1 Srazil - 3. Africa 2 - 1 1 - 7 1 Canada - Chile 1 - 2 1 - 9 4 Canada - Cuba 1 - 2 1 - 6 2 Chile - India 2 -4 1 - 9 1 China- N. Zealand 1 -1 1 - E/PC/T/S/4 page 8 State of nageot'ns as re- ported by the two countries (1) China - S. Africa Cuba - Czechoslov. Cube - N. Zealand Cuba - Norway Czechoslov.-Leb/Syr. Czechosl. - N.Zealand India - Leb./Syria N. Zealend - S.Africa Norway - S. Africa Australia - Brazil Australia - Cuba Brazil - Cuba Brazil - N. Zealand Canada - Lebanon/Syr. Chile - N. Zealand. Chile - Norway Chile - S. Africa China - Cuba Cuba - S. Africa N. Zealand - Norway -5 -3 -1 -4 -1 -2 -1 -4 -5 -2 -2 -1 -2 -1 -2 -5 -5 -2 -5 -2 Trade in 1938 Approx. as a % of value total trade in among all Dollars countries (Millions) represented at the Conf . (2) 1 - 1 - 1. - 1 - 1 - 1 - 1 - 1 - 1 - 5426 Number of meetings held up to 12 July Number of weeks since first meeting 9 10 8 7 8 9 3 9 9 6 8 9 6 8 2 7 9 78,8 467 E/PC/T/S/4 page 9. 2. POSSIBLE NEGOTIATIONS NOT YET INITIATED Trade in 1938 Approx. value as a % of in dollars total trade (millions) among all countries repres.at the Conference (a) Two pairs of countries expected to initiate negotiations in the near future: Australia -Chile 1 Chile - China - 1_ (b) Eight pairs of countries - Members of a Preferential System: Australia - United Kingdom 527 7.6 Canada - United Kingdom 496 7.2 New Zealand - United Kingdom 310 4.5 Australia - Canada 45 0.7 Australia - New Zealand 36 0.5 Canada - New Zealand 24 0.3 Canada - South Africa 19 0.3 India - South Africa 8 0.1 1,465 21.2 (c) Bight pairs of countries having insufficient trade to provide a basis for negotiations: China - Lebanon/Syria 1 Australia - Lebanon/Syria Brazil - Lebanon/Syria - - Chile - Lebanon/Syris - - Cuba - Lebanon/Syria - - Lebanon/Syria - New Zealand - - Lebanon/Syria - Norway Lebanon/Syria - South Africa ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Total trade among countries reoresented at the ConferencU -6,893 100.0 E/PC/T/S/4 page 10 14 NEGOTIATIONS BEGUN PRIOR TO 1ST JUNE BUT ONLY OME £EETING HELD UP TO 12TH JULY Week ending: 26 April M3 bay 10 May M7 P y '24 May 31 May Australia - U.S. 23 April Brazil - China 8 May Brazil - Cuba 9 May BrazilC- Uzechosl. 30 May Brazil - India 27 May Brazil - N.Zealand 30 May B.azil - Norway 9 May Brazil - S.Africa 28 May Canada - Chile 20 May Canada - Lebanon/ Syria 1a Muy ChinaMN 4. Zealand 7 May Cuba - N.Zealand 13 May Czochcslov. - L.Syria 16 May N.Zealand - U.S. 30 April E/PC/T/S/4 page 11. ANNEX C THE 28 NEGOTIATIONS THAT HAVE PROCEEDED BEYOND THE FOURTH MEETING UP TO 12 JULY (Showing in brackets the percentage of the total trade in 1938 among the countries represented at the Conference) eetings: g LeetinRs: ngs etiee : 8 ieetlngs: g Ivet nzs 1g Meetin-s. 11 Yeetings; 1gsLeetin ' : 13 Meetings: 14 :eetings 15 Leetings: 20 M:etings 26 Meetings 30 ge:tines. 34 geetinrs: Benelux - Canada (0 Brazil - United States (2 Canada - Czechoslovakia0 (C China - Czechoslovakia 0 (C China - United Kingdom 0 (O France - India 0 (C France - New Zealand 0 (C France - Norway (0 France - South Africa (0 India - Norway (0 India - United Otates (1 Lebanon/Syria - United Kingdom 0 (° Canadaw- Nor'ay 0 (O France - United States (2 Lebanon/Syria - United States 0 (° South Africa - United Kingdom Benelux - France Canada - France China - United States Auetralia - France Norway - United States Benelux - United States Benelux - United Kingdom France - United Kingdom Czechoslovakia - United States United Kingdom - United States Cuba - United States Canada - United States . 5) '5) D1) .1 ) .7) . 5) .1) .3) D.2) 7.1) L. 4 ) .4) .1) .1) .9) ).1 ) (3.8) (4.2) (0.3) (1.3) (0.7) (o.6) (3.6) (5.2) (3.1 ) (0.8) (10.0) (2.3) (11.4)
GATT Library
qn100dc5626
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Thirteenth Report by the Tariff Negotiations Working Party
United Nations Economic and Social Council, August 15, 1947
United Nations. Economic and Social Council
15/08/1947
official documents
E/PC/T/176 and E/PC/T/169-178
https://exhibits.stanford.edu/gatt/catalog/qn100dc5626
qn100dc5626_92290223.xml
GATT_155
269
1,880
UNITED NATIONS NATION'S UNIES UNRESTRICTED E/PC/T/176 ECONOMIC CONSEIL 15 August 1947. AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT, THIRTEENTH REPORT by the Tariff Negotiations Working Party. During the fortnight ending 9 August the ten following tariff negotiations were completed in their bilateral stage bringing the total number of completed negotiations up to 22. Canada - Czechoslovakia Canada - Lebanon/Syria Chile - Lebanon/Syria Chile - New Zealand. China - Czechoslovakia China - Norway Czechoslovakia - Norway New Zealand - South Africa Norway - United Kingdom South Africa - United Kingdom \ It is to be understood that the results of these negotiations are subject to any adjustment that may be required in the light of other negotiations as they are completed and are to be incorporated in the schedules to be annexed to the General Agreement on Tariffs and Trade; P.T.O. E/PC/T/176 page 2 further, the General Agreement, when arrived at, may be subject to approval by the authorities of the countries concerned. Nine other negotiations are reported by both countries concerned to be nearing completion: Australia - South Africa Brazil - United States China - France China - United Kingdom Czochoslovakia - India Czechoslovakia - New Zealand India - New Zealand New Zealand - Norway Norway - United States Seventy-nine meetings of tariff negotiating groups held in the same period bring the total number of meetings held up to 9 August to 590. The total number of bilateral negotiations has now reached 105, three new negotiations having been opened during the current period.
GATT Library
dw143mc1865
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Tweleth Report by the Tariff Negotiations Working Party
United Nations Economic and Social Council, August 1, 1947
United Nations. Economic and Social Council
01/08/1947
official documents
E/PC/T/145 and E/PC/T/142-152
https://exhibits.stanford.edu/gatt/catalog/dw143mc1865
dw143mc1865_92290180.xml
GATT_155
237
1,638
UNITED NATIONS NATIONS UNIES UNRESTRICTED ECONOMIC CONSEIL 1 August 1947 AND ECONOMIQUE ORIGINAL ENGLISH SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT TWELETH REPORT by the Tariff Negotiations Working Party. Reports received for the fortnight ending 26th July show that five more tariff negotiations were completed in their bilateral stage, bringing-the--total in this category to twelve. These are the following: Benelux - South Africa Canada - India Cuba - Norway France - South Africa India - Norway. It is to be understood that the results of these negotiations are subject to any adjustment that may be required in the light of other negotiations as they are completed and are to be incorporated in the schedules to be annexed to the General Agreement on Tariffs and Trade; further, the General Agreements when arrived at, may be subject to approval by the authorities of the countries concerned. In addition, ten other negotiations are reported by both countries concerned to be. nearing completion: Brazil - United States China - Czechoslovakia P.T.O. P.T.O. E/PC/T/14 5 page 2. China - Norway Czechoslovakia - Norway India - New Zealand New Zealand - Norway New Zealand - South Africa Norway- United Kingdom Norway - United States South Africa - United Kingdom 81 meetings of tariff negotiating groups were held during the fortnight ending 26th July, bringing the total number of meetings to 5146.
GATT Library
yc525jb2976
Second session of the Preparatory Committee of the United Nations Conference on Trade and Employment : United States Delegation
United Nations Economic and Social Council, May 6, 1947
United Nations. Economic and Social Council
06/05/1947
official documents
E/PC/T/W/23 and E/PC/T/W/23-81
https://exhibits.stanford.edu/gatt/catalog/yc525jb2976
yc525jb2976_90050148.xml
GATT_155
1,118
7,260
RESTRICTED UNITED NATIONS NATIONS UNIES E/PC/T/W/23 6 May 1947 ECONOMIC CONSEIL AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. UNITED STATES DELEGATION The following amendments to Articles 15 to 23 and Article 37 of the New York Draft Charter are proposed by the United States Delegation: (l) Article 15 should be revised as follows (square brackets indicate deletions, underlining indicates additions): Nations Treatment on Internal Taxetion and Resulation 1. The Members agree that neither internal taxes nor other internal charges nor internal laws, regulations or requirements should be used to afford protection directly or indirectly for any national product. 2. The Products of any Member country imported into any other Member country shall be exempt from internal taxes and other internal charges of any kind higher than those imposed, directly or indirectly, on like products of national origin. Moreover, in cases in which there is no substantial domestic production of likt products of national origin, no Member shall impose new or higher internal taxes on the products of other Member countries for the purpose of affording protection to the production of competitive products. E/PC/T/W/23 page 2. [3.] 2. The products of any Member country imported into any other Member country shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations or requirements affecting their internal sale, offering for sale, purchase, transportation, distribution, exhibition or use of any kind whatsoever. The provisions of this paragraph shall be understood to preclude the application of internal requirements restricting the amount or proportion of [an] any imported product permitted to be mixed, .processed exhibited, or used, Provided that any such requirement in force on the day of the signature of this Charter may be continued until the expiration of one year from the day on which this Charter enters into force, or, in the case of laws, regulations or requirements relating to cinematograph films, until the expiration of three years from the day on which this Charter enters into force. [which period may be extended] Such requirements may be continued for additional periods in respect of any product if the Organization [concurs that the requirement concerned is less restrictive of international trade then other measures permissible under this Charter.], after consultation with the other Members whose trade is substantially affected by the requirement, determines that in the special circumstances alternative measures permissible under this Charter would not be practicable. Requirements permitted to be maintained under [the foregoing proviso] this paragraph shall be subject to negotiation for their liberalization or elimination in the manner provided for in respect of tariffs and preferences under Article 24. E/PC/T/W/23 page 3 [4]. The provisions of paragraphs 1 and 3 of this Article shall not be construed to prevent the applications of internal laws, regulations or requirements, other than taxes, relating to the distribution or exhibition of cinematograph films. Any laws, regulations or requirements so applied shall, however, be subject to negotiation for their liberalization or elimination in the manner provided for in respect of tariffs and preferences under Article 24.] [5] 3. The provisions of this Article shall not apply to the procurement by governmental agencies of [supplies] products purchased for governmental [use] purposes and not for commercial purposes such as resale [nor for] or use in the production of goods for sale." (2) A new Article should be inserted between Articles 15 and 16, reading as follows: "Article 15A The products of any Member country exported to any other Member country shall not be subject to any measure imposed by either the exporting or the importing country requiring such exports to be financed, shipped or insured by enterprises of any prescribed nationality. (3) Article 16: Delete the second sentence of paragraph 6. (4) Article 17:. A. Paragraph 1 of Article 17 should be revised as follows : E/PC/T/W/23 Page 4. "1. No anti-dumping duty or charge shall be imposed on any product of any Member country imported into any other Member country in excess of an amount equal to the margin of dumping under which such product is being imported. For the purposes of this Article, the margin of dumping shall be understood to mean the amount by which the price of the product exported from one country to another is less than [,](a)the comparable price for the like product [to buyers] for consumption in the domestic market of the exporting country, or, in the absence of such domestic price, is less than either (b) the highest comparable price [at which] for the like product [is sold] for export to any third country [in the ordinary course of commerce], or (c) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit; with due allowance in each case for differences in taxation, and for other differences affecting price comparability in the ordinary course of commerce." B. The second sentence of paragraph 2 of Article 17 should be revised as follows: "The term 'countervailing duty' shall be understood to mean an additional or separate duty imposed for the purpose of offsetting any bounty or subsidy..." etc. C. Delete paragraph 6 of Article 17. (5) Article 18: Delete sub-paragraph 2(c) and re-letter (d) as (c). (6) Article 19: A. At the end of paragraph 1 of Article 19, add the following sentence: E/PC/T/W/23 Page 5. The Organization is authorized to investigate and recommend to Members specific measures for the simplification and standardization of customs formal- ities and techniques and for the elimination of unnecessary customs requirements. B. Item (d) of paragraph 4 of Article 19 should be revised as follows: "(d) Foreign exchange [regulations] transactions;" C. A new item should be added to the list included. in paragraph 4, as follows: "(i) Port facilities" This wculd necessitate transferring the word "and" from sub-paragraph (g) to the end of (h) and changing the period to a comma. (7) Article 21: In paragraph 3, line 8, add the words retroactively or" after the word. "applied . (8) Article 37: It is proposed that items (c), (d), (e), (j) and (k) be removed from Article 37, which relates only to Chapter V, and that a new Article be inserted at an appropriate place toward the end of the Charter which would make these items general exceptions to the entire Charter. It is proposed, that the new Article contain the following introductory language: "Nothing in this Charter shall be construed to prevent the adoption or enforcement by any Member of measures (the foregoing would be followed by a list of the items transferred from Article 37).
GATT Library
vp156nr2674
Second session of the Preparatory Committee of the United Nations Conference on Trade and Employment : United States Proposal for a note on Article 23
United Nations Economic and Social Council, August 14, 1947
United Nations. Economic and Social Council
14/08/1947
official documents
E/PC/T/W/294 and E/PC/T/W/261-306
https://exhibits.stanford.edu/gatt/catalog/vp156nr2674
vp156nr2674_90050445.xml
GATT_155
242
1,704
UNITED NATIONS NATIONS UNIES RESTRICTED ECONOMIC CONSEIL E/PC/T/W/294 AND ECONOMIC 14 August 1947 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. United States Proposal for a note on Article 23 In connection with its proposal to delete Article 23, the United Statas Delegation suggests that the following note be included in the Report of the Preparatory Committee: "In omitting fron the Charter provisions relating to boycotts, such as appeared in earlier drafts, the Committee considered that this problen would be most effectively dealt with by the provisions of the Charter relating to consultation among members and to the possible nullification or impairment of the benefits of the Charter." DEUXIEME SESSION DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE DU COMMERCE ET DE L'EMPLOI DE L'ORGANISATION DES NATIONS UNIES Proposition des Etats-Unis relative à une note au sujet de l'article 23. Conformément à sa proposition de supprimer l'article 23, la délégation des Etats-Unis propose que la note suivante soit insérée dans le Rapport de la Commission Préparatoire: "En supprimant dans la Charte les dispositions relatives au boycottage telles qu'elles existent dans les rédactions antérieures, la Commission considered que ce problème serait réglé de la façon la plus efficace par les dispositions de la Charte qui ont trait aux consultations entre Etats Membres et oui reglent les cas ou les avantages de la Charte se trouveraient infirmes ou compromis. . . .
GATT Library
qc577jc0202
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. -1- Fourth Meeting held on Monday, 14 April 1947 at 10.30 a.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, April 14, 1947
United Nations. Economic and Social Council
14/04/1947
official documents
E/PC/T/PV.2/4 and E/PC/T/PV2/3/CORR.1-6
https://exhibits.stanford.edu/gatt/catalog/qc577jc0202
qc577jc0202_90260193.xml
GATT_155
7,458
46,220
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL E/PC/T/PV.2/4. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT FOURTH MEETING HELD ON MONDAY, 14th APRIL, 1947 AT 10.30 a.m. in the PALAIS DES NATIONS, GENEVA. M. MAX SUETENS (Chairman) (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (tel. 2247). NATIONS UNIES A1 - 2 - E/PC/T/PV2/4 CHAIRMAN (Interpreted): We will take up again the discussion of a general character. I now call on the Delegate of Chile. B E/PC/T/PV. 2/4 M. Angel Faivovich SITZCOVICH (Chile) (Interpretation): Mr President and fellow delegates, at the beginning of this second phase of work entrusted to the Preparatory Committee for Trade and Employment of the United Nations, the Chilean delegation which represents a country, the economic and industrial development of which is still in its beginning but which is proud of its political and constitutional structure, my delegation is glad to restate its willingness to contribute to the best of its ability to the success of this Conference, the object of which corresponds entirely to the policy which Chile has pursued in the field of international relations. At this time in the history of the world, there is no economy which could survive independently, nor can there be any strictly national economies. On the contrary, the increasing inter-dependance between peoples leads them towards solidarity of their interests, and towards the organization of world economy, which is to further political peace between nations. We agree, consequently - and we have stated this opinion at the London Conference - to contribute to the gradual elimination of any obstacles which are in the way of the policy outlined by me. But it is necessary, we feel, to approach this goal gradually and to base it on a mutual understanding between nations. For those countries more particularly for those whose economy is undeveloped it means as a necessary basis of such policy a gradual increase of their industrial position in order to satisfy the real legitimate and permanant interests. We feel equally that the success of the international Trade Organiaation is intimately linked up with the efficiant functioning of the numerous international organizations which E/PC/T/PV*2/4 -4 - have recently been set up and which are in close touch with the financial, commercial and economic development of nations in the world. The adequate functioning of this system of international agencies would gradually bring about full employment, which is one of the aims of our future organization, and it would afford the working classes in the world conditions of life compatible with human dignity. The fundamental problem of Chilean economy, and I believe this is equally true of many countries, is to increase its production capacity in its various aspects in order to obtain a permanent equilibrium of its balance of payments, thus increasing the purchasing power which the country has for her purchases abroad. For Chile, exports oonstitute the essential element of its economic life, since they afford for the country means of payment for purchases abroad, and consequently determine the volume of its imports and enables it to live up to its international organization, and in the long run this is the decisive factor of its monetary stability. These Chilean exports are constituted in their major part by raw materials and imply that prices paid for such goods are remunaritive and not subjected to fluctuations on the international market. If this was not so, it would be impossible for us to bring about the equilibrium of our balance of payments and to achieve an adquate capitilzation for the future development of the national economy. Imports in Chile are not seriously hampered by customs tariffs. The mainly difficulties which. we have experienced in our country, which needs to import considerable quantities of foreign goods which are urgently needed for the economic development B.3 . E/PC/ T/PV.2/4 -5- of our country, is the increasing rarity of foreign exchange, which has been made more acute by the constant rise in prices of our major imports. we note with pleasure that the proposed Charter recognizes that under certain circumstances it may be possible for certain countries to apply transitory measures. We feel, furthermore, that besides these measures there my be other measures of a broader nature which could be applied at certain times without necessarily violating the basic principles of the Charter. We wish to refer more particularly in this respect to the most-favoured-nation clause which is, in the proposed Charter, known by the term expansion of neighbouring countries. C C1 - 6 - E/PC/T/PV2/4 We agree that t.z equality of treatment ,ust be established as an indispensable condition for the expansion of international trade, but we feel also that in certain circumstances the economy of yet undeveloped countries may join and be amalgamated so as to form the first phase of their industrial development, and afford to ,the other countries a mass of economies which would afford a solid basis. This exception, as far as America is concerned, anyhow, is not only on a firm economic basis, but it is also good geographically, politically and historically, as its basis, which one cannot ignore. If it is true that it is not advisable to destroy existing unions, whether political or economic, it is equally true that one cannot refuse beforehand any tendency which may exist towards the formation of new economic units, the ultimate goal of which would be a Customs union. We have accepted to take part in the multilaterial negotiations in order to show our intention to co-operate in all efforts which may be made to find an equitable solution to all problems which exist in the domain of international trade. We feel, however, that in pursuing this aim, one must not lose sight of the necessity for certain countries to develop their production, and more particularly their industry, and this applies more particularly to the countries which are as yet insuffictently developed. If this was not applied one would obviously bring about in the world a system of inequality between those countries already highly developed, and those still undeveloped. We have thought it necessary to explain very clearly our point of view in respect of the problems which are brought before this Conference because we feel that both the Charter and the multilateral treaty must contain just and equitable principles which will guide international trade in future. If we recognise those principles we will do justice to the will of co-operation between the countries here represented and will make it easier for - 7 - E/PC/T/PV2/4 other countries to join us in our common effort. CHAIRMAN. (Interpretation): I now call on the First Delegate: from India. THE HON. Mr I.I. CHUNDRIGAR (India): probably in no country has the work accomplished by the Preparatory Committee at its first session evoked greater public interest than in India. With the basic idea of an international charter for the regulation of commercial policy there has throughout been in my country deep and genuine sympathy and appreciation has been spontaneous of the inspiring lead given,. in this, as in other sectors of the economic and moneta y.fields, by that great and distinguished country, the United States of Ameri.a, By our standards, however, earlier versions of the Draft Charter suffered from undue rigidity and a certain narrowness of outlook, and opinion in India has been insistent that an International Commercial Charter, if it is to be of permanent value,s,Should, whilst providing an enduri g'basis of international collaboration, be flexible enough to enable all countries, whatev r-the r.size, degree of economic development or political importanc : o. attain to their full economic stature. In the recognition of this prcnaiple - a principle to which under- developed countries attach special importance - lies, I believe, one of the. outstanding achievementsfo0 the first session, and the afPrt Charter, in the form in which it s' now being presented to us 4 -all the richer for the incorporation in it of the n ewchapter on Industrial Development. The economic development of the less advanced countries is no ngb er to be the exclusive concernfo responsibility f those countries butsi& to benai international obligation. The removal or reduction f trade barriers, however essential. to the expansionof world trade, is only neB aspect of. the problem confronting us, the more positive and constructive aspect being to promote development both as an end in itself and as a means 03 - 8 - E/PC/T/PV2/4 to increased trade. With this new understanding, the I.T.O. will find its proper orientation, not merely as a sort of international policeman, watchful of the conduct of countries in their observance of accepted regulations, but fulfilling a positive role as a guide in the developmental programmes of countries seeking its help, this is not to, s y that perfection has been imparted to the 'draft Charter. Far from it - there are still a number of divergent views to be reconciled and conflucting aims to be harmonised, but the signal success achieved at the London Conference encourages me to hope that we shall be able this, the Second ''Session, to settle all outstanding issues in a spirit of sympathy and understanding I am anxious that our advocacy of the cause of under- developed countries should not be interpreted to imply that we are wedded to a policy of blind protectionism. The old theory of "once protected, always protected" has had no application in India. Though the relevant criteria have varied from time to time, there has always been a, considerable element of selectivity in the choice of industries to be protected; more important still, decisions on the quantum of protection to be granted and the period of protection have been based on the findings of semi-judicial enquiries. It is worthy of note that we are now, without seeking counter advantages from other countries, contemplating the withdrawal of protection from certain of our major industries. I say this merely to emphasise that the protectionist policy we have in view is a sane and rational one, designed to safeguard our legitimate interests, and not to suggest that we can dispense with tariffs or with other necessary aids to protection. Tariffs are in any case essential to India for revenue reasons, while she may on occasion find it necessary to have recourse to other forms of protection if they prove to be on the whole less C4 - 9/10 - E/PC/T/PV2/4 burdensome to the interests affected and to the community at large. Nevertheless, we shall approach the tariff negotiations in a practica friendly and constructive spirit, though we hope it will be appreciated that inadequately developed countries may not be able to offer tariff concessions to anything like the same extent as the fully developed countries, and especially those with high tariffs, can and should India to-day is entering on a new, and what we Indians all fervently hope will be a glorious chapter in her long history. We know that the thoughts and good wishes of all our friends, and especially of those with whom we have for long been intimately associated, are with us; but we know, too, that our future is now for us alone to fashion. Great and urgent tasks await us, no least in the economic sphere. Our masses have for long lived in squalor, poverty and ignorance. To make life more tolerable for them, in a material and social sense in particular, is one of our immediate objectives. Translated into terms of human effort, this means the undertaking of a scheme of economic development on a scale never before attempted or thought of in my country. At no time, therefore have we felt more acutely than now the need to retain in their plenitude the economic-powers that we are now free to exercise. Nor, when saying this, can we be accused of taking too parochial view of our responsibilities, for who shall deny that service to found hundred million human beings is service to all mankind? D. D.1 E/PC/T/PV2/4 Nor, when saying this, can we be accused of taking too par- ochial a view of our responsibilities, for who shall deny that service to four hundred million human beings is service to all mankind? We are, nevertheless, deeply conscious of the fact that we are of the World, not apart; faith in inter- national co-operation is almost traditional with us; and we realise, none better, that economic prosperity, like peace, is one and indivisible. Therefore, consistent with the obligations that we owe to our own people, we are prepared, and indeed are anxious, to make our full contribution to the creation of a better world economic order. It is in this spirit that we of the Indian Delegation shall enter upon the di scussions that are about to begin, and we are confident that with so much goodwill displayed on all sides towards the common cause, the united labours of the Nations represented at this Conference will not be in vain. CHAIRMAN: (interpretation) I now, call upon the representative of the International Chamber of Commerce. MR. WALLACE B. PHILLIPS (International Chember of Commerce) Mr. President and Gentlemen, as a representative of the International Chember of Commerce, it is again my privilege and pleasure to address the Delegates to this Preparatory Committee. In the course of the last Session of the Economic and Social Council, the President of the Council reaffirmed the conviction of the leaders of the United, Nations that both the advice and the support of non-governmentl organizations were indispensable to the successful operation of the official organs of the United Nations. The International Chamber of Commerce is therefore glad to offer its views to this important meeting, for its success will be a vital factor not only in the future development of the world economy but also in the establishment of an enduring peace. Following the London meeting, many technical committees of the International Chamber working in a number of countries devoted much study and thought to the conclusions that had been reached by your committee. The men comprising these committees are among the great business leaders in their respective count- ries and are all deeply concerned with and desirous of seeing D.2. -12- E/PC/T/PV2/4 the earliest possible resumption of international commerce freed from the tiresome and restrictive rules that are still the order of the day. The results of the study of these combined committees were collated by our economic staff in Paris and have resulted in a considered document approved by the Executive Committee of the International Chamber of Commerce, which document has been sub- mitted to you, through the Secretariat, for consideration and such action as may be deemed pertinent. We have takin the liberty to comment on and discuss at very considerable length many of the articles in the draft Charter- in some cases expressing completely divergent views and in other instances suggesting additions, in the case of capital movements and conciliation and arbitration we have ventured to outline a new approach to these questions. The International Chamber's full report is based upon three fundamental postulates. First, the objectives we all share of higher standards of living and greater welfare for the peoples of the world can be attained only if there is a consider- able expansion of international trade. Second, this expansion is possible only if the international movement of goods and capital is allowed to develop with maximum freedom on a multi- lateral basic . And last, but by no means least, the full expan- sion of trade and economic activity can be achieved only if the widest possible scope is given to the energy and initiative of the individual producer and trader. In the contacts which the officers and members of the Inter- national Chamber are privileged to have, with many of the Delegates here assembled, we have gained the impression that it is the desire of the Economic and Social Council, as well as of this Committee, to encourage the Chamber to. make suggestions that are constructive and can contribute to your deliberations. Itis with this thought in mind that the International Chamber of Commerce is submitting its report which expresses a consensus of industrial, commercial and financial opinion in more than thirty countries. This collective thinking may, we hope, offer, suggestions that you will find acceptable. . The International Chamber, as an organization, has no con- cern wi h the' d tails' of the confidential tariff negotiations that are about to commence, but its membership hae a deop concern in their success and hopes teat tho movement of goods and onpital will be thereby freed from the burdensome restrictions D.3. -13- E/PC/T/PV2/4 under which they are at present laboring. During the course of this Conferenceo the International Chamber will maintain a liaison office in Geneva with its Assistant Secretary General in charge, assisted by an experienced economic adviser. These representatives, as well as leaders of the International Chamber, will be available for consultation throughout the Conference. In conclusion, may I thank you Mr. President, for having afforded me tne opportunity to address the Conference and to make these few explanatory remarks, and may I express the International Chamber's heartiest good wishes for your success in establishing the Charter of a vigorous and effective inter- national trade organization. E/PC/T/PV.2/4 - 14 - Mr. MOUSA MOUBARAK: (Lebanon): The Lebanese delegation of which I have the honour to be the President,is glad first of all to congratulate all members of this Preparatory Commission on Trade and Employment in the resultse obtained at London and New York. All delegations represented here in this Preparatory Committee have shared a responsibility in the success achieved so far. In view of its geographical position at the cross-roads of communication between East and West, Lebanon is, by its very nature, a country of In all times Lebanon has been in favour of freedom of commerce and development of exchanges. History tells us that our forefathers have been first navigators and also pioneers in international trade. It is consequently fitting and normal that we should be in these modern times also in favour of free trade. Exceptional circumstances have, at certain times, made it difficult for us to follow this policy in all its lines. We are consequently favourable in principle to world international co-operation which would tend to liberate trades in the world and do away with existing restrictions. One should however recognize that it would be necessary for a young country, a still undeveloped country such as my own, to take up when the time is come the modality of application of certain of the clauses contained in the proposed text. I should like however to make it perfectly clear right now that it would not be possible for a country like mine to change rapidly the existing system of our economy. A period of transition seems to be indispensable for us, all the more as modern economy implies a constant and careful control by the state authority over such economies. I fully understand the legitimate concern of certain chiefs of delegations who consider it worth the utmost care, the E/PC/T/PV.2/4 total and immediate adoption without any reservation of all the measures which have been contemplated by the Preparatory Committee. For some time to come Lebanon will be obliged to follow the policy of prudence which I have outlined and this will be done in order to .ensure the equilibrium of our balance of payments by the power of our currency and in order to enable us to give a sufficient amount of foreign exchanges for the needs of our national equipment. The Lebanese delegation is convinced that the transitory measures far from hampering the interests of United Nations will contribute to improve their situation, for their main object is to contribute to the development of the Lebanese market, and will consequently increase the purchasing power of my country. One of the aims of the Charter of the United Nations is to contribute to the economic development of its members and to favour the raisin of the standard of living of all the people. This development however, has not reached the same degree in all countries. It is consequently in the interest of the Nations which have not yet achieved a certain degree of economic development, to be able to reach it gradually and thus to contribute to the well-being of their populations. F. - 16 - Thus we will contribute not only to increasing the purchasing power but also to maintaining the economic stability which is the basis of a lasting peace. I wish to thank this meeting for having admitted the participation of Syria to the work of the Preparatory Committee, taking into account the fact that Syria is part of the customs union which exists between the Lebanon and that country. I hope sincerely that the participation of Syria in the work of this Preparatory Committee will contribute to the ultimate success of our tariff negotiations. Lebanon is linked to Syria by a customs union based on the mutual respect of our countries and the independence of thos two countries. Wa have joined this Conference in the hope of being able to contribute with loyal co-operation to the success of this Meeting. I hope this will be taken into account in our negotiations on certain final consi- derations due to the fact that in our two countries receipts from customs duties still represent one of the main sources of our budgets. In the same way the necessity for us to protect a certain number of goods of our young industries will be a guiding principle in the negotiations which our two countries will conduct here. I must point out the legitimacy of this principle has been recog- nised by the London Conference in the draft charter of the Inter- national Trade Organisation. Finally, our close contacts with all other Arabic countries and other countries in the Near East make it compulsory for us to interpret loyally to them the wishes of members of the United Nations in this part of the World. We know that we may count on your spiriti of co-operation to appreciate the difficulties of our task and the peculiar problems with which we are faced in our part of the world. We have started on a work of primary importance. The success of our work depends on the degree of loyalty and mutual understanding which is shown. E/PC/T/PV2/4. F1 E/PC/T/PV2/4. Lebanon for one is prepared to co-operate with all of you sincerely and firmly. CHAIRMAN(Interpreted): I now call on the First Delegate for Cuba. MR. I. Sergio CLARK (Cuba): Mr. Chairman, Ladies and Gentlemen, We are about to enter into the more advanced stage of the work that we commenced in London almost six months ago. This Second Session of our. Committee will probably be more laborious and complicated than the first - I purposely avoid using the word difficult. But I am certain that all will agree that the fruits that we shall reap if we succeed - and we must succeed - will amply justify our efforts. We have travelled a long and most promising road since the original "Proposals" were first put forward by the American government. The daring and brilliant work done by our colleagues from the United States was completed and improved by the contri- butions made by everyone of us in London. From that meeting there cam out a document further improved at New York - which is more comprehensive of the problems we are dealing with, has a bettor balanced and a more realistic approach to them, and offers a much more workable instrument for the attainment of our common goals, namely, an expanded world trade, a fuller degree of employment in all countries, and a fuller and better balanced economic development of those countries which have not reached, as yet, the degree of industrialisation which is essential to the well being of their people. It is a most important, in fact, an indispensable condi- tion for our success here, that the tariff negotiations we are going to undertake, be carried out with the same spirit that pre- vailed at the London meeting, the spirit which alone made possible the high degree of agreement we were able to reach there. -17 - F2 F3 - 18 - E/PC/T/PV2/4. We believe that the negotiations we are about to begin will be the test as to how real and sincere is the agreement on principles we have already reached, a test as to whether the Inter- national Trade Organisation can actually be set up to govern the economic relations of our countries. For the time has now come to put to actual work a very important part of the principles that we have in general accepted, and of the rules that we have gener- ally recognised as just and suitable to govern our commercial and economic intercourse. For my country, so very largely dependent for its well- being on a prosperous and expanded world trade, the stake is very great. During the last few years we have expanded our foreign trade to, a considerable degree, making a most vital contribution to the efforts of the United Nations in the conduct of the work and satisfying a considerable part of the world demand for many products. .Today we are the largest sugar-producing country and we also export great quantities of the best tobacco that is consumed in the world. On the maintenance of our exports of sugar, tobacco, alcohol, molasses, cordage, minerals and a diversity of industrial products, depends to a very large, extent the standard of living and the degree of employment of our population. Cuba depended principally on her own domestic industrial production during the dark days of the last war. The severe hard- ships suffered by our people during the deflationary years of the thirties, and those they are still suffering today, have forced the Cuban people to diversify agriculture and increase industrialisation, Today Cuba produces not only sugar and tobacco: we are growing sub- stantial amounts of fruits, vegetables, grains, milk and dairy pro- ducts, poultry and various other foodstuffs, Our industries of shoes, leather goods, textiles and others, satisfy today a very substantial portion of our domestic demand. This second recent development in our economy we are F4 - 19 - E/PC/T/PV2/4. necessarily determined to preserve and to foster. In our case, this determination springs not from a desire to reduce our foreign trade, nor to curtail the imports from other countries. We shall always need to import a great diversity of manufactured products and raw materials, Besides , our experience shows that our internal develop- ment fosters the exchange of goods with other nations instead of reducing it. The development of a more diversified and better balanced economy is a condition for the economic stability of our country and for the attainment of a fuller and a more stable employ- ment. We sincerely fool that these two different aspects of our economic development are not contradictory to each other and far from contradictory to the principles of the Charter we have almost completely drafted. We have one of the lowest tariffs of all countries repres- ented at this meeting, and we are not here in a spirit of betrayal of our liberal traditional policy in the conduct of international trade We feel that we can fully make our contribution to the common goal. But we very definitely expect that our contribution be rightly understood and appreciated, taking into consideration all the aspects of the problems and needs that we have, that is to say, honouring, in the actual negotiations, the principles and rules embodied in the Charter as a whole We very strongly feel that in order to give those principles more meaning and to make them more effective, it is necessary to expand Chapters III and IV of the Draft Charter setting up specific rules for the implementation of the principles there stated. It is also essential that the General Agreement on Tariffs and Trade contain, to the largest possible extent, the principles embodied in those two chapters and the rules that we suggest should be drawn to Implement them. F4 - 19a - E/PC/T/PV2/4. If the spirit of the Draft Charter is observed by every- body here present, in the conduct if the negotiations, and in the drafting of the General Agreement on Tariffs and trade, I am certain that we will succeed in our task, Our efforts and even sacrifices to achieve economic stabilisation and security will stand the test of comparison with these that can be made by any other nation. But no country should, think that it can sell to others without buying frm then, nor that it canachieve and maintain high levels of employment and standards of living, without giving the others the same opportunity. It is necessary to put an end as rapidly as possible to the inflation sharing in all countries. If the United Nations cannot defeat the present infationery trend the inflation will defeat our goal of economic peace and security. Ina world so interdependent as we live in, no nation could escape the disaster that would follow should we fail in our task To the success of that task, so vital for the future of all the people of the world, I pledge, in the name of Cuba, the best .and untiring efforts of our Delegation, Let us set ourselves to the task with faith and decision. C.1 E/PC/T/PV.2/4 -20- CHAIRMAN: I now call on the chief of the Brazilian delegation. H.E. MINISTER ANTONLOE DE VILHENA FERREIRA BRAZA (Brazil) (Interpretation) Mr. President, the importance which Brazil attaches to the Conference on International Trade and Employment is well evidenced by the reference to it contained in the recent message of the President of the United States of Brazil at our National Congress. The Brazilian government is convinced that the object of these meetings will be to establish such rules as to enable us to free international trade of all obstacles, whether official, or private, which have hampered it untill now. We are equally convinced that all the nations represented in this meeting of the Preparatory Committee will do their best to devise such means as to enable each country to unite to the fullest extent possible their means of production and to increase the standard of living of their populations. The Charter of the International Trade Organization, which it will be our duty to frame, will probably also contain certain basic principles which should guide international relations in the sphere of trade and commerce and will also contribute to establish the basis of an internation economic system in which the interests of all countries will be finally organized. Our co-operation in order to achieve this aim has already been reaffirmed and restated by the Brazilian delegations which have taken part in the previous meetings of this conference. I am particularly glad to be able, at this opening session of the conference, to recall the valuable contribution which the United States of America and the United Kingdom have G.2 //E/PC/T/PV.2/4 - 21 - made to our common efforts by their preparatory studies and their discussions on post war economic problems. The Brazilian delegation considers that the results of the negotiations which have taken place in London, and of the meetings which have since taken place in New York, justify the full confidence of all the delegations here represented in the final success of our work. The Brazilian delegation feels that the improvement of world economy depends to a large extent on the agreements which we will be able to conclude here. The development of trade currents is a factor of the essential importance for the prosperity of the nation and the fundamental basis of lasting peace. H We feel, furthermore, that the reviving of world economy and the guarantee of full employment is closely linked up to the problem of the development of yet undoveloped countries. The more these countries will be able to develop their economies the more the already developed countries will be able to develop their exports. The economic interdependence of nations is demonstrated by the mere fact that that solution of the problems of under-production and unemployment will not be possible as long as the purchasing power of the other countries is not increased. This establishes the necessity for sincere and complete co-operation between all nations of the world. In the long run, the final problem will always be to increase purchasing power both of the highly developed countries and of those which are not yet developed. Brazil, which is a country which supplies mainly raw products and basic products, and the foreign trade of which re- presents a large portion of its purchasing power, is fully aware that all these problems hare been already considered by the London Conference. Let us hope that at our Geneva meeting the consideration of these problems will be still improved and developed. Negotiations concerning tariffe constitute one of the main pieces of our whole machinery. As regards this question. I should like to note that Brazil has already gone forward in the way pointed by this Conference. Brazil's tariffs, in fact, have not been increased during the war and the depreciation of her national currency has had as a result that these tariffs have gone down. Consequently and conforming to the principle which provodes for the mutual concessions which we are here to negotiate, we raserve the right for us to adjust our tariffs until such point where they would not imply a of our tariffs. Mr. Prosident, we have gathered to work for the future; on the results of thiis Conference depends to a large extent the progress of the nations and the advance of civilisation. H2 E/PC/T/PV2/4 CHAIRMAN (Interpretation); I wish to inform the meeting that as there are only two speakers left on my list, and that all of us are anxious to complete our discussions this morning, we shall continue until those two delegates have spoken. I now call on the Head of the Czechoslovak delegation. Mr. ZDENEK AUGENTHALER (Czechoslovakia): Mr. Chairman, Ladies and Gentlemen: We had the opportunity to listen until now to a series of very interesting delcarations made by the Heads of delegations of different countries as well as of that made by the representative of the World Federation of Trade Unions. They have give us a quite comprehensive picture of different aspects of the problems we are faced with and of the views of different countries as they result out of their social and economic structure and I would add also out of conditions which are determining their internal and external economic policy. As I already had the honour to state in London, no country is entirely master of its international trade policy which is a result of a multitude of circumstances. One of those, of course, is the geographical position of a country. For instance, Czechoslovakia is a direct or indirect neighbour of some enemy or ex-enemy countries like Germany, Austria, Hungary, Rumania and Bulgaria and of important allied countries like Poland, Soviet Russia and Yugoslavia. It is quite clear that the economic situation and possibilitities of those countries must be taken in account if we are formulating our own international trade policy. May I. now, Mr. Chairman, try to elucidate a little my view on the tasks which lie before us in this Conference. Some time ago I had an opportunity to visit a large telephone factory. A telephone is more or less an instrument enabling the free flow of speech - pleasant as well as unpleasant talks sometimes - and I sincerely admired the tremendous amount of human knowledge, intelligence and skill which had to be H3 24 E/PC/T/PV2/4 accomplished before we get, as sometimes happens to us,/wrong number. I could see how many installations and machineries are necessary before the free flow of speech can be materialised. It seems to me that something verys similar applies to our work, which aims at developing as free and beneficial flow of goods among nations as possible. We shall need a huge amount of tact, mutual understranding, knowledge and skill to enable us to achieve our task and I hope that when this complicated machinery shall be completed we shall always get right numbers and not wrong ones. Anyhow, I feel that here ends the comparison between the telephone and our work, because we have to deal with life itself, in all its social and economic forms. No doubt we are living in great times, when many things are changing around us and inside us and when even words and notions are changing their meaning. That is why in our view this flexible instrument cannot be substitute by any itp slogan, as attractive and simple as/may seem, and that any instruments-which have to govern the relations between different States and types of economies must be elastic enough and adaptable, to the evolving and changing world. We are confident that it is possible, especially when all, the present countries will put, as they did until now, into the work the great amount of knowledge, experience and goodwill they are presenting here, Czechoslovakia, for her part, was from the beginning and is to-day as well ready to do her best; when we were lately reintroducing the Czechoslovak custom tariff we did not use the possibility we had to adapt our custom duties to the present purchasing power of the Czechoslovak. crown but we remained far behind our real pre-war tariff protection. To the countries represented here, it means that their. exports into Czechoslovakia are to-day charged by custom duties on the average less than one -half of the pre-war scale. H4 25 E/PC/T/PV2/4 As the Honourable Delegate for Norway, Mr. Colban, said in his speech, neither will I spend any more of your previous time because we think that the earlier we start our work on concrete problems the more could be done at the present Session. I. E/PC/T/PV2/4 CHAIRMAN: (Interpretation): I now call upon the Head of the United States Delegation: MR. CLAIR WILCOX (United States of America): It is a matter of regret that the Chairman of the Delegation of the United States, Mr.W.L.Clayton, Under Secretary of State for Economic Affairs, was unable to be present for the opening of this meeting. He is now on his very to Geneva and should be with us by the middle of the week. The statement that I shall make, on his behalf, is brief. In the speech which he delivered at Waco,Texas. on the sixth of March, the President of the United States made clear the great importance which he attaches to the success of this meeting.. Speaking of the preparation of a Charter for an International Trade Organization, he said: "The progress that has already been made on this project is one of the most heart- ening developments since the war. If the nations can agree to observe a code of good conduct in international trade, they will co-operate more readily in other international affairs. Such agreement will prevent the bitterness that is engendered by an economic war. It will provide an atmosphere congenial to the preservation of peace." And speaking further of the negotiations directed toward the reduction of tariffs, the elimination of other restrictive measures and the abandomment of discrimination, the President went on to say: "The success of this program is essential to the establishment of the Inter- national Trade Organization, to the effective operation of the International Bank and the Monetary Fund, and to the strength of the whole United Nations structure of co-operation in economic and political affairs. The negotations at Geneva must not fail." These last words may be taken as the message of the President to this meeting: "The negotiations at Geneva must not fail. " During the months that have intervened since the first meeting of this Committee, the Government of the United States has completed its preparation for the work that is about to begin. As a part of this preparation., it carried the London draft of the Charter to the American people and asked for their advice. In informal conferences and in public hearings, held in seven cities, testimony was received from some 250 persons representing business, labor, agricultural, consumer, civic and religious organizations from twenty states. This testimony I.1. revealed a careful and sympathetic appraisal of the document and brought forth a number of thoughtful suggestions for its clari- fication.and development. More recently, a committee of the United States Senate subjected the Charter to a detailed and painistaking, analysis. And, in the course of this inquiry, additional suggestions for the improvement of the draft were made. As a result of these suggestions, the American delegation is prepared, at the appropriate time, to present a number of proposals for amendment. All of these proposals, I may add, are in the spirit of the Charter and are consistent with the purposes upon which we are all agreed. The other part of our preparation for this meeting has con- sisted of steps leading up to definitive negotiations on tariffs and other barriers to trade. It will be recalled that this Committee had agreed, at its meeting in London, upon the pro- cedures that were to be followed at each stage of this work. At the first stage, each Member of the Committee was to "transmit to each other Member ... a preliminary list of concessions which it proposes to request....." This we have done. At the second stage, "each Member should submit a schedule of the proposed concessions which it, would be prepared to grant to all other Members in the light of the concessions it would have requested from each of them." This we are now prepared to do. The basis of these negotiations is set forth in the London Memorandum in the following words: "Article24 of the Charter provides that tariff negotiations shall be on a 'reciprocal' and 'mutually advantageous' basis, This means that no country would be expected to grant concessions unilaterally, without action by others, or to grant concessions to others which are not adequately counter-balanced by concessions in return." It is on this basis that the United States is now prepared to proceed. As soon as the Committee is ready, in accordance with the procedure upon Which it has agreed, to enter into actual nego- tiations, whether they be on the text of the Charter or on the details of trade concessions, we shall be ready to participate. It is our hope that these negotiations will be initiated at the earliest possible moment and carried forward with the greatest -27- E/PC/T/PV2/4 I.2 . I.3. -28 E/PC/T/PV2/4 possible dispatch. We realize, of course, that the magnitude and the complexity of this undertaking are without precedent. But we know, too, that this Committee has already earned for itself a reputation for quiet industry, steady progress, and the prompt completion of an appointed task - a reputation that gives ground for confidence of achievement in the weeks that lie ahead. CHAIRMAN: (Interpretation): Before we proceed with the trans- lation of Mr. Wilcox's remarks, I would like to call upon the delegate of France who has, I understand, a declaration to make in the name of his Government - a declaration which may be interesting to everybody. M. ROGER NATHAN (France) (Interpretation): France is struggling with great difficulties. However, she works as hard as she can, and she has the advantage of the vicinity of Switzerland. Therefore, in order to permit the delegations to have a better view of what France is doing, the Mayor of Lyons would be very happy to welcome the delegates on Saturdry and Sundy next. Two special trains will be put at the disposal of the delegates and they will be able to spend part of the days of Saturday and Sunday in Lyons. Either on the way there or on the way back they will stop at the Venissieux Dam in order to inspect one of the new dams of France. You are kindly requested to get into touch with the Secretaria of the French Delegation, Room 320, Telephone No.23.77, if poss- ible this very afternoon. J/K. - 29- E/PC/T/PV2/4. CHAIRMAN (Interpreted): As already announced, we will now suspend the course of our public meetings, The Commission will meet at an early date and you will be informed of the date when that will be possible, to take into consideration Point 5 of our Agenda, in Executive Commission. The meeting is adjourned. The meeting rose at 12.45 p.m.
GATT Library
gr373kk2646
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eighteenth Meeting of Commission A held on Wednesday, 25 June 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 25, 1947
United Nations. Economic and Social Council
25/06/1947
official documents
E/PC/T/A/PV/18 and E/PC/T/A/PV.18-20
https://exhibits.stanford.edu/gatt/catalog/gr373kk2646
gr373kk2646_90240120.xml
GATT_155
4,439
26,593
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL RESTRICTED E/PC/ T/A/PV/18 ECONOMIQUE 25 June 1947 ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT EIGHTEENTH MEETING OF COMMISSION A HELD ON WEDNESDAY, 25 JUNE 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, MAX S UETENIS (Chairman) GENEVA (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). NATIONS UNIES E/PC/T//A/PV/18 CHAIRMAN (Interpretation): Gentlemen, the meeting is called to order. We resume the discussion on Article 33. The first speaker on the list is Mr. Deutsch, the delegate for Canada. MR. J.J. DEUTSCH (Canada): Mr. Chairman, I wish very briefly to indicate the attitude of the Canadian delegation to the New Zealand proposal. The delegate for New Zealand emphasized particularly that the Charter should be developed in such a way that it would accommodate the different types of economies of countries whom we would wish to have Members of the I.T.O. To our mind, Mr. Chairman, the Charter does that now. The Charter is a compromise between economies which depend very largely - operate very largely - on the basis of private Enterprise and of economies that employ varying degrees of planning. That compro- mise has, by and large, been worked out and with that we agree - that it should be a compromise. The delegate for New Zealand pointed out that countries should, within the confines of the Charter, be able to plan their full employment programmes,to plan their development programmes, and he said also to plan their foreign trade. It seems to us in the first instance that nothing in the Charter would rule out the adoption of programmes of full employment in any country; indeed, the Charter requires Members to undertake certain obli- gations in that respect about maintaining full employment and the implications of that are recognised in various parts of the Charter, and particularly in the vital Balance of Payments Section. The programmes countries may wish to adopt regarding development are also recognised. In the present Chapter IV specific recogni- tion is given to the objectives of countries to promote the development of their economies and, with respect to the matter P. - 3 - E/PC/T/A/PV/18 of planning foreign trade, the instruments of tariffs and subsidies are permitted and, in certain exceptional cases, cases where it can be demonstrated that certain devices are necessary suh as quantitative restrictions, even those are permitted. So it is permitted to every Member of the Institution to plan its foreign trade by means of tariffs and subsidies; and there- fore the only weapon in which there is a general limitation, that is, the only device where there is a general limitation, is the one concerning quantitative restrictions; and we for our port feel that the device of quantitative restrictions is the one device which is capable of the most destructive effact upon world trade, and for that reason we feel it is important that limitations shall be laid down regarding the use of that particular device - limitations which in almost every case impose certain sacrifices upcn the countries concerned. Every country makes sacrifices in adhering to those limitations, but we agree that these sacrifices are necessary for the common good, and unless we are all prepared to make the sacrifices involved in those limitations we cannot auhieve the aims which we are seeking to attain. Now the New Zealand proposal would in effect create a very large loophole in that rule regarding the use of quantitative restrictions. It would be a major breach in that rule and that we cannot accept. In brief, Mr. Chairman, we feel that the aims of the New Zealand delegation are recognised in the Charter at present. P. 4. E/PC/T/A/PV/18 They may not be met quite in the details desired but that is something that can be examined, and we egree that that should be examined by the Sub-Committee. But as for the specific proposal of New Zealand which really would involve. a very major ohange in one of the fundamental principles of the Charter, that we could. not accept. If, however, the particular details at present throughout the Charter can be modified, perhaps, to make the present provisions more Applicable to New Zealand, we would be prepared to accede to that undertaking but the specific proposals which New Zealand. is now proposing we could not accept. E/PC/T/A/PV/18 CHAIRMAN (Interpretat ion) Mr. Coombs.. Dr. H.C. COOMBS (Australia): It tous almost without saying that the Australian delagation is in the strongest sympathy with the domestic policy outlined by the delegate for New Zealand out of which the problem he has presented to the Conference arises, the policy of the maintenance of high levels of .employment and effective demand. The policy of the progressive and concentrated development of the resources of the country which cheacterise the New Zealand policy, are, we believe, not only, sound policy, but also provide the first two pre-requisites of an expanding volume of world trade. So long as the levels of demand are maintained. at the maximum, and so long as the resources of the country are being progressively developed in a way which increases the purchasing power of the. economy for domestic and internationally purchesed products at loast two of the most important requirements of expending world trade have been fulfilled. The New Zealand delegate has pointed cut that his country is one of. the greatest traders in -the -orld 'n pr:onrtion I its size. I cbink we would als say we would feel perhaps less concerned for the future of world trade if we were confident that other countries of the world would maIation a similar Approach to at last these re- quirements. It is necessary to say, howevar, that important as those two requirement centainly are for the expension of world trade, they do not represent the what-: L :: i-r .mnt , It might be possible for them to be fulfilled and for there to take place at the same time developments which might lead to a construction of trade, and to a reduction in standards of productivity, end therefore to a reduction of standards of living throughout the world, if, by their unwise interpretation, they lend to a destruction of the specialisation between the countries upon which the highest level of productivity does depend. I think it is in this particular requirement that the difficulties of the New Zealand problem arise. L.. E/PC/T/A/PV/18 In our discussions in London, I think it is correct to say that we had the problems and types of economy of New Zealand very much in mind. We recognise that the maintenance of high effective levels of demand and a policy of internal development could, and in fact were very likely to, produce difficulties in the international payments of the country concerned - so much so that it was essential that the provision should be made for that country to plan or to control, whichever word you like to use, its international trade, Then, it enoounttzbalance-of-payments difficulties which we recognize would be almost inevitable in small country, particularly where it had a substantial overseas debt where it was unwilling to add to that debt at a high rate, and where it was maintaining a level of effective demand higher, probably, than that in the majority of other countries. In those circumstances it was recognised that it would be necessary for the country to control the level and, to some extent, the character of its imports, and provision was made for that. It was hoped that that would meet the requirments of economies of this character. It recognised. the need for a planning of international trade, but it recognisad that need as arising from, as being a consequence of, the. maintainence of effective demand and the pressing on of development as part of the domestic policy. Now, the New Zealand delegates, has, iisod that approach as being in admission so to speak, through the back door, or through a window indequately fastened. That, I feel, is perhaps a little unfair to the London Conference, since what was done there was done, I believe, in part at any rate; deliberately to meet the circumstances of economies of this kind. It is true that the right to control imports is granted not for itself, but as a necessary complement to the right to maintain a high effective demand -6- E/P C/T/A./PV/18 domonst ically. The New Zealand delegate now, in effect, says that it is necessary that countries which so desire it should. have the right to plan international trade as an end in itself, not merely as a necessary instrument to the carrying through of their domestic social policy. That view is understandaole where a country, for political or social reasons, decides that a given course of action is desirable. It is to be hoped, at any rate, that it will be possible for that to be provided for in an international instrument of this kind. That hope, however, can only be fulfilled if the planning of international trade, contemplated as an end in. itself, is consistent with the general purposes of the Charter, with the interests of the other countries concerned - or at least, not unduly inconsistent with them - and if it does not enable a country obtaining it to obtain privileges which are denied. other people. I regret that the United States delegate, in particular, has in his remarks yesterday choson to discuss this issue as, so to speak, one of doctrine. I cannot remember precisely the words of the leader of the United States delegation whon he spoke the other day, in which he reminded us that he had warned his delegation when they began that there would be moments in the course of this Conference when all would. appear to be threatened. I think perhaps this is one of them, but that the danger is not as acute as he may have imagined. I am not prepaod to bolieve at this stage that 'it is not possible to roso'.vo this difficulty in a way which recognises fundamentally the rights which the New Zealand delegation seeks, but recognises them in a way which fits then into the general structure of the Chartor, which recognizes also that whatever provission is made for economies of the, kind which New Zealand J . - 7 - J. entails embodies/for those economics obligations which are parallel with the obligations which the other parts of the Charter impose upon the economies to which they are applicable.. Here, I think the oritical. issue is the issue of protection. As I said earlier, the third. requirement of an expending volume of World trade is the best use of the world's resources - not merely the full use, but the best use, through international specialization in its blast sensor. When I say that I would like to remind delegates (it is unlikely, perhaps, that they will have forgotten) that I do not mean by that a division between industrial countries and primary prodcting countries, but a specialization in which all countries are able to produce . goods of all kinds according to their special capacities, and that international trade will gradually develop into an exchange between economies of a graat variety of goods of all elisees which are prodauoed. in the places where natural and human resources give a particular advantage It is clear that in some circumstances the use of protection may well be necessary for the Development of that spealisation. We have argued that it is. On the other hand, it is equally clear that the misuse of protection can destroy international specialisation. It can prevent its development and could ultimately lead to the development of a series of isolated independent economies, to standards of living that will necessarily be far lower than they need be. The Charter does seek to impose upon countries - while recognising their right to development ane the use of protective devices - it does seek to impose on them some discipline in the degree to which those devices are used, and the circumstances in which they are employed. It is important, therefore, if we seek to embody in the Charter provisions which will recognise the rights of countries to plan their international trade apart from the right already embodied to plan it when the consequences of a full employment end development policy make it necessary, that that provision should impose upon them the same sort of obligations as are imposed on other countries. Now I fear that there is a danger that we are going to be confused in this issue. It is important that we confine our discussions on the New Zealand Amendment, I believe, to the question of whether it is possible to write into the Charter, without destroying its general fabric, provision for a country which seeks to plan its international trade, recognising that if we do that one of the problems of doing it is to write into that part of the Charter which deals with those countries obligations of the same kind as are imposed on other people. Let us leave the question of what those obligations should G - 10 - be to be dealt with where they have been dealt with already, and confine our discussion of this particular problem as to how parallel obligations can be written into this part the Charter. For instance, it is clear that the issue here is going to be very closely bound up with the employment of quantitative restrictions for protective purposes. Now there is an argument going on around Conferences, whether the present provisions for the control of quantitative restrictions for protective purposes is good, or whether it does not go too far. Let us f ight that out in the place where it is provided in the Article which deals with the quantitative restrictions, and whatever is the answer there; let us make our job at this stage to apply that automatically - as automatically as it can be applied to the other sections of the Charter which deal with particular types of economy to which the article sealing with quantitative restrictions itself itself not necessarily apply. I believe if we do that there may be other problems, other measures of the same kind which are involved in this issue; but I feel certain that the New Zealand Dalegation in putting forward this proposal is not putting it forward as a means of obtaining for New Zealand privileges that they are not prepared to extends to other countries, but they are putting this forward because of the political and social policies of their Government, because the political and social policies of their Government are such that they doubt whether adequate provision is made for them in the Charter, and they would therefore be willing for us to approach this question on the basis that when seeking to recognise their particular problem we seek to recognise it on a basis which grants them no privileges which are not granted to other countries in other parts of the Charter. E/PC/T/A/PV/18 G G - 11 - E/PC/T/A/PV/18 Mr. Chairman, I do not believe there is any need for despair about this question, I think it can be adequately dealt with. I believe there is a prospect, at any rate, that it can be adequately provided for; and I would therefore suggest at the appropriate time that we can well do with this issue what has been done with so many others - that is, we can refer it to a small Committee with the confident expectation that human ingenuity (of which we appear to have a good. deal at this Conference) will find a solution to this problem also. - 12 - E/PC/T/A/PV/18 CHAIRMAN: The Delegate of Belgium. M. Pierre FORTHOMME (Belgium):(Interpretation): I merely wish to state, Mr. Chairman, that the Belgian Delegation fully supports the statement made by the Canadian Delegate. CHAIRMAN Does any Delegate wish to speak on this subject The Delegate of the United Kingdom. Mr. S.L. HOEMES (United Kingdom): Mr. Chairman, the United Kindom Delegation has studied with interest and, I think, like other Delegations, with thoughtful and sympathetic interest, the New Zealand amendment to Article 33 which we have before us. Whatever may be felt about the content and the implications involved in the New Zealand representative's speech, I feel that no one could but have listened to it with admiration as to its moderation and dignity, Just as we had listened on a previous occasion--I think on 20th May--to the speech delivered in this room by his distinguished leader, the Deputy Prime Minster of New Zealand. Bult in saying that, I should say also that we, like other Delegations, have tended to feel that the case presented by New Zealand was already largely met, and fairly mat, by the draft Charter as it stands. We have a great responsibility, and I suppose we do well to remind ourselves of the responsibility from time to time, of drafting a document which we hope will be greatly to the advantage of all countries in the world; and if I might turn for a moment to something my United States colleague said yesterday, we in the United Kingdom feel that the Charter must certainly be drafted in such a way that the United States could become a. member. However, I would not wish in anything I say to be thought to be minimising the difficulties, yet I was encouraged by V V E/PC/T/A/PV/18 and I think I share the restraint optimism of Dr. Coombs, whose usual masterly analysis of the problem I will not attempt to reproduce, in believing that a way out of this difficulty can and will be found. Perhaps Mr. Webb Quill. f.;r ive me if I say that much of the Charter (especially, I think, so far as concerns Chapters III and IV) is modelled on lines proposed by the New Zealand Delegation itself, to fit the circumstances and the stage of development reached in New Zealand, and the measures which New Zealand has been taking and wishes to continue to take in order to carry on her domestic policy. The Charter recognizes fully that it is for countries themselves to decide on their domestic policies, and insofar as this. does not adversely affect the interests of other countries or the purposes of the Charter as a whole, that it is for them to decide on the means whereby those domestic policies are effected. It can also be said that a good deal of latitude has been allowed for in the Charter to meet special cases, and we are up against the difficulty that if every country, whatever its shape, begins to have, as it were, a hole made to suit its individual shape, the shapes of countries are necessarily so varying that the resulting global hole, if I may use the term, would be rather large. There must, in other words, be a certain amount of give and take, and no one, I imagine, will be satisfied to the extent of one hundred per cent. with the document we finally evolve after a great deal of labour and a great deal of consideration to our own and other people's cases. I am sure that that will apply to the Delegation that I represent. Of course, it is said, and rightly said, that circumstances are difficult and peculiar: that they have been peculiar over a number of years now; but it might not, I think, be altogether unfair to say that some of the measures taken even in New Zealand in the course of the peculiar period have been such as might have led to certain complaints by others had the Charter been in effect complaints perhaps directed to the content of Article 13 (1). - 13 - ER - 14 - E/PC/T/A/PV/l8 Nevertheless, I believe that we all feel that there has been a great deal to admire in New Zealand's policy and development, and clearly we have to make every effort to satisfy ourselves that a reasonable satisfaction is given to all countries who find that the Charter as it stands may not be entirely appropriate to their individual circumstances, or that it bears heavily upon the domestic policies which they may be pursuing in their own interests, and as they would claim, in the interests of all other countries also. We therefore would welcome, Mr. Chairman, the proposal that the amendment suggested by the New Zealand delegation should be considered carefully by a strong and especially competent Committee, the exact composition of which will, of course, be very largely in your own hands. - 15 - E/PC/T/A/PV/18 CHAIRMAN (Interpretation): I suppose that other delegates wish to speak ? Mr. Webb. MR. L..C. WEBB (New Zealand) : Mr. President, it would be, I feel sure, less than grateful on my pert if I were to attempt to turn this into an argument. I would only ask your permission to correct certain misapprehensions which may have arisen as to what I said yesterday, and I would like to begin by referring to the remarks c the United States delegate and incidentally to thank him for those remarks, because I felt th t in some way we were perhaps looking at one another across a gulf created by different economic backgrounds and different economic experiences, but I felt all through his speech that he was making an effort to understand our problem, and I feel grateful for that. But I felt nevertheless a little unhappy over his fear that what we were seeking was to make a position of complete development of the protection of all the domestic industries, "wi h the only restraint on that development resting in the will of the country which controls its trade." Those are his exact words. That is not what we desire, and I am certain that it would not be the position were our amendment adopted, because it seems to me that paragraph 2 of Article 35 - and we specifically refer to Article 35 in our amendment - prevents that sort of thing from happening. And I think if we doubt the efficacy of Article 35 then really we doubt the possibility of enforcing any of the Rules in this Charter, Dr. Coombs in a very helpful speech has said that the New Zealand delegation has perhaps misunderstood Article 26 and perhaps been a little unfair in. its in .erpretation of the work which was done in London, and. if that is indeed the case then I regret it. We have read Article 26 very carefully and P. - 16 - E/PC/T/A/PV/18 we have read in particular those passages in the London Report which are relevant particularly - pages 12 to 14 - where the effect of Article 26 is set out, and our impression was that Article 26 means that as soon as a Member apparently has enough exchange to finance all types of imports, then it must abandon its system of import selection. If that is a wrong impression, then,I repeat, I regret that we have not studied .article 26 thoroughly enough. We chose to approach this problem in this particular way because at one point in the Charter we do make provision for a completely controlled economy of a certain type - the economy which works its whole foreign trade through a system of trade monopolies or one great trade monopoly; and we thought that it was logical there to provide for our particular type of economy, particularly as we saw the danger that i! we left the Charter as it was countries in our position - and. we believe that there are quite a number of countries in our position - are lieable to be forced by the Charter into a rather damaging choice between going over to liberal trade or going in the direction of state-monopoly, and we feel that the last thing perhaps that this Conference would desire. to do would be to push countries in our position further towards the state-monopoly system. And it was for that reason that we felt that it would perhaps be more helpful to the Conference and to ourselves to put the amendment in this particular place. That, Mr. Chairman, is all I have to say except to thank this Commission for its patience in listening to what they perhaps thought was an unconscionably long speech by myself yesterday, but above all to thank them for approaching this problem in a very sympathetic and understanding way, so sympathetic and understanding that I feel that I can almost share the optimism of Dr. Coombs. Thank you. - 17 - E/PC/ T/A/PV/18 CHAIRMAN (Interpretation): Are there any other delegates who wish to speak? Two delegates have asked that this question should be referred to an ad hoc/Committee who would try to find a solution to this difficult problem. Mr. Holmes considered that the membership of this Committee should be fixed by myself. Since the sub-Committee on Articles 31 and 32 is already over- worked and has a very large membership, end as I wiish a more restricted membership for the sub-Committee on Article 32, I propose the following members: New Zealad, United States and I. slovskia, the three delegations which presented amendments to this Article; and in addition, the United Kindom and Australia. I would ask your. permission to preside over the work of this Committee myself. Do you agree to this proposal? (The meeting agreed) Mr. B.J. BAYER (Czechoclovakia): I Would like to enquire to which of these sub-Committees the Czechoslovakian Amendment is to be referred, whether to the Committee dealing with Articles 31 and 32 or to this new Committee? I am speaking of the amendment relating to Article 35 where a representation is being made and the country concerned may be called upon for confidential information which would damage its internal economy. What we had in mind was that this amendment should refer to the whole of Section E Chapter V CHAIRMAN (Interpretation): I think it would be better if the Czechoslovakian amendment were referred to the Sub-Committee on Articles 31and 32. Ifi this Committee finds it difficult to solve the problem, it can refer it back to the Committee on Article 33. L.. L.. _ 18 _ E/PC/T/A/PV/18 Mr. B.J. BAYER (Czechoslovakia): We quite agree CHAIRMAN (Interpretation): Does any other delegate wish to speak? The meeting is adjourned. (The meeting rose at 4 p.m.)
GATT Library
tz212sd2384
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eighteenth Meeting of the Tariff Agreement Committee held on Friday, 12 September 1947 at 9.p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, September 12, 1947
United Nations. Economic and Social Council
12/09/1947
official documents
E/PC/T/TAC/PV/18 and E/PC/T/TAC/PV/17-19
https://exhibits.stanford.edu/gatt/catalog/tz212sd2384
tz212sd2384_90260066.xml
GATT_155
12,081
72,674
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/18 12 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT EIGHTEENTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON FRIDAY, 12 SEPTEMBER 1947 AT 9.P.M. IN THE PALAIS DES NATIONS, GENEVA. Hon. L. D. WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general -gui'dance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES J. 2 E/PC/T/TAC/PU/18 CHAIRMAN: The meeting is called to order. Before we broke up this afternoon I said that the Secretariat would prepare a redraft of the first two paragraphs of the Protocol of Signature in the light of the discussion. The draft of the first two paragraphs as prepared by the Secretariat has been circulated and I think it is now before each Member of the Committee. We regret very much that, owing to pressure of time, it has not been possible to circulate a French text, but I trust that we can consider the text in English. Are there any comments with regard to the text prepared by the Secretariat? Dr. Augenthaler. H.E. Dr. Z. AUGENALIAER (Czechoslovakia): Mrm Chairman, I vauld suggest that we finish the first paragraph at "duly authorised" and that we delete the rest: "by their respective governments". We think it is not necessary and that, with regard to the signature it could be, for instance, "On behalf of the Government of the United Kingdom" and, in the case of Czechoslovakia, it could be "On behalf of the President of the Republic, and so on. CHAIRMAN: The Delegate of New Zealand. MR. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, I was just wondering whether an undertaking of this nature would be given by Governments and not by representatives.. I thought that perhaps it Might read this way: "At the time of signing the General Agreement onTariffs and Trade, the undermentioned Governments through their duly authorised representatives". E/PC/T/TAC/PV/18 CHAIRMAN: We have now got two opposite proposals. Dr. Augenthaler H.E. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, as this is an international obligation, I chose a text as it is in hundreds of different protocols and treaties, because it is entirely neutral, and I thought that it would accommodate everybody. CHAIRMAN: I think that if we carried out the suggestion of Dr. Augenthaler the first paragraph would read as follows: "At the time of signing the General Agreement on Tariffs and Trade, the Undersigned duly authorised representatives". Would that be the way you suggest? The Delegate of New Zealand. MR. J.P.D. JOHNSEN New Zealand) Mr. Chairman, that is not quite consistent with the form of the Agreement itself, as we refer there to the Governments of certain countries. Is it a matter for the Legal Drafting Committee? J. 3 - 4 - Mr. SHACKLE (United Kingdom) Mr. Chairman, I wonder if we could not say "by the respective Governments and Heads of States," and then. everybody who is authorized by Heads of States and everybody who is authorized by Governments would be satisfied. M. ROYER (France) (Interpretation): Mr. Chairman, if you Just say plainly "duly authorized" everyone ought to be satisfied, because some of the representatives would be authorized by the Foreign Office, others by the Head of State. This depends entirely upon the constitutional rules of each State. CHAIRMAN: Are there any other comments? Cannot we find some solution of this difficulty? I understand that the New Zealand Delegate and the United Kingdom Delegate attach importance to the retention of the word "Governments." The Czechoslovak Delegate, supported by the French Delegate, thinks it is sufficient if we Just say: "The Undersigned duly authorized representatives. " Mr. SHACKLE (United Kingdom): Mr. Chairman, I would not like to be understood as insisting in any way about it. We shall no doubt have some provision to allow for the Government of the United Kingdom, Great Britain, Northern Ireland, etc. I suppose that really, in an indirect way, conveys the sense. Mr. J.P.D. JOHNSEN (New Zealand); We shall get into another difficulty, too, when we look at ,She third paragraph of this Article. CHAIRMAN: The Delegate of the United States. Mr. J. M. LEDDY (United States): I wonder whether it could be solved by saying that at the time of signing the General Agreement on Tariffs and Trade the Governments in respect of E/PC//T/TAC/PV/18 S E/PC/T/TAC/PV/18 which, or on behalf of which, this Protoool has been signed, having agreed, undertake, etc. GHAIRMAN: Would that give satisfaction to the Delegate of Czechoslovaikia? H.E. Mr. Z. AUGENTHALER (Czechoslovakia): I am sorry, but I cannot sign any Agreement on behalf of the Government. Mr. SHACKLE (United Kingdom): Why not "State or Government an Whose behalf"? H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I do not understand. The formula is taken exactly as it stands here, and now we are making such difficulties., Mr. SHACKLE (United Kingdom): Mr. Chairman, in the last resort I am quite indifferent as to the exact terms. CHAIRMAN: Can we than agree on "The undersigned duly authorized representatives" ? Are there. any objections? Then we come to the net. paragraph. Mr. Leddy suggests "having agreed" instead of "agree." Mr. LEDDY (Unitod States): Well, Mr. Chairman, that does not quite take sense. If we say "the Undersigned duly authorized representatives" we must say they have agreed on behalf of or in respect of their Governments. It the representatives agree, it makes no difference. I think, if you use the form you suggest, Mr. Chairman, that "the Undersigned duly authorized representatives, having agreed on behalf of their respective Governments", you must say that in order to make the thing effective. Mr. SHACKLE (United Kingdom): In that case, Mr. Chairman, I would renew my suggestion of State or Government. Would not that perhaps give satisfaction to Mr. Augenthaler?. - 15 - E/PC/T/TAC/PV/18 H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Is there any contradiction between State and Government, Mr. Chairman? Mr, SHACKLE (United Kingdom): I should not have thought there was any necessary incompatibility. Those who are authorized to sign on behalf of their Governments would sign on behalf of their Governments, and those who are authorised to sign on behalf of States would sign on behalf of States.. I should have thought it would work. CHAIRMAN: We do not seem to be able to get away from Governments. Mr. SHACKLE (United'Kingdom): Mr. Chairman, surely we shall all sign this on behalf of somebody or something. If it is not a Government, what is it? Is It the Head of a State or is it a State, or what? Mr, LEDDY (United States): I thought this problem had been solved for the Trade Agreement by the word "Governmnent." CAAIRMAN: I agree that was the case in regard to the General Agreement. We had agreed that in the Preamble the word "Governments" could remain. - 6. - S - 7 - V E/C/T/TAC/PV/18 CHAIRMAN: Having omitted the word "Governments" from the first paragraph, perhaps Dr. Augenthalor would agree to have it in the second paragraph :"having agreed on behalf of their respective Governmcnts"? Dr. Z. AUGENTHALER (Czechoslovakia): I am sorry, Mr. Chairman, I stated that I had no objection and our Legal department has no objection, to its beginning with "Governments" and. so on, but I stated that as to the signature, this would be on behalf of the President of the Republic. I have taken here a formula which has existed for I do not know how long, and I would like "at the moment of signing the convention of today's date relating to the simplification of customs formalities, the undersigned, duly authorized, have agreed as follows" (now come the provisions, and at the end we have "Germany, Austria" etc. and signatures). In is the internal affair of each country who is authorised to sign. In one country it is the Government, in other countries it is the President, in other countries it may be signed another way; but it is the internal affair of each country. CHAIRMAN: TheDelegate of France, M. ROYER (France) (Interpretation): Mr. Chrairman, I will make another attempt to find a compromise here. The only important undertaking by the Governments is the last undertaking, "The Governments undertake pending the entry into force of a Charter". It is the only thing, in fact, which is important from the undertaking point of view. This is the last paragraph of this Protocol, and whether we mention "the Governments" before for the other paragraph does not really matter. E/PC/T/TAC/PV/18 I wonder, therefore, if we could not say that "the Representatives... agree to the following'" and then we would state the contents of the paragraph, and when we came to the last paragraph we would say: "The Governments as represented undertake, ponding the entry into force of the ''Charter" etc. The French Delegation would have no difficulty in accepting the word "Governments', but there might be some difficulty in inserting here the word "States", because the object was not to commit the States but only the executive power -that is, the Government, and therefore I think that the formula which I proposed might give satisfaction to everyone. CHAIRMAN: Are there any comments on the proposal which has just been made by the Delegate of France? Dr. H. DORN (Cuba): I only want to raise one question. I see that it is said "at he time of signing the General that Agreementt. Is it really the intention/in signing the General Agreement, one signs at the same time the so-called Protocol of Signature? Or is that not something quite different under the new conditions? Is that signed before, or at the same time? When you sign the Agreement, you will sign this Protocol - is that the idea? CHAIRMAN: We had a very lengthy discussion of this point this afternoon, .and it was agreed that the General Agreement and its accompanying Protocols should be signed at the same time. The Secretariat were instructed to prepare a document setting forth the various considerations in relation to -- 8 -- V V - 9 - signing the various documents, and that will be circulated tomorrow morning. The Delegate of Cuba was not there at the time, and therefore I can understand he was not aware of what took place this afternoon. Dr. H. DORN (Cuba): Thank you very much, Mr. Chairman. M. ROYER (France) (Interpretation): Mr. Chairman, I would like just to close the brackets which the Cuban Delegate opened. I think that there is a link which is missing now. In the Protocol of Provisional Application we ought to mention also the Protocol of Signature, and not only the Protocol relating to Parts I, II and III of the Agreement. CHAIRMAN: The Delegate of Cuba. Dr. H. DORN (Cuba): Mr. Chairman, would you allow me to add something, because Mr. Royer touched upon just the point I wanted to raise. I have the impression that the words "Protocol of Signature" wore chosen at a time when the whole situation was quite different from the present situation, Therefore, first of all, I would prefer to give another title to this Protocol, because it is not the Protocol of Signature but its content is more far-reaching. Perhaps that can be discussed. The second point is the question whether you will at the moment of the provisional application, also apply this Protocol? Is it not necessary to insert something about the application of the principles of the draft Charter and the moment of the provisional application? CHAIRMAN: The Delegate of Cuba this afternoon did propose that the title should be changed, and I said at the time that after we had established the text of the Protocol, we could then V E/PC/T/TAC/PV/18,r /, Q V -10 - E/PC/T/TAC/PV/18 be in a better position to decide what title there should be. With regard to the relationship of the Protocol of Signature to the Protocol of Provisional Application, we have already passed the Protocol of Provisional Application, but, as I understand it, the Delegate of France and the Delegate of Cuba propose there should be some reference in the Protocol of Provisional Application to the Protocol of Signature. Mr. J.M. LEDDY (United States): As I understand it, Mr. Chairman, the Secretariat will prepare for us a paper setting out the relationship of the several documents and the possible time of signature of each, and I suggest that the point raised by the Delegate of Cuba, which is an important one, should be held over until we have the document, because I rather suspect that his point will be met by the tin g of signature. In other words, if we agree that you must sign the Trade Agreement if you sign the Protocol of Provisional Application. then you will have covered the Protocol of Signature. On the other hand, anybody signing the Trade Agreement without signing the Protocol of Provisional Application will also be required to sign the Protocol of Signature, because it refers to the moment of signing the Trade Agreement; but I think we had better wait for a detailed discussion of this until we get the paper. CHAIRMAN: I think the suggestion of the United States Delegatation is a food one because when we have the Secretariat's paper we will see more clearly the implication of the signing of these various documents. Can we get back now to the text of the Protocol of p . r /-rr / ^S V - 11 - E/PC/T/TAC/PV/18 Signature, particularly the difficult question as to whether or not, to refer to "governments"? Baron F. de GAIFFIER (Belgium): Mr. Chairman, would it not be a very simple way of meeting the Czechoslovak Delegate's point by just keeping the first paragraph and adding after "Governments" "or Head of State as the case may be"? Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I do not find it very elegant, but I have no objection. Mr. J.M. LEDDY (United States): Mr. Chairman, I think the Delegate of France has pointed the way to a solution of this problem; and has also indicated a possible objection to the proposal by the Belgian Delegate. He points out that the basic undertaking here is on behalf of the executive authority. The understanding is that the last paragraph extends the executive power to follow the principles of the Charter. Now, if we say "The Heads of States or Governments as the case may be", I think we shall draw a distinction between the executive power in some cases and the whole power of the Government in other cases. What I would suggest is that we might say in the first paragraph: "At the time of signing the General Agreement on Tariffs and Trade, the undersigned, through their duly authorised representatives, having agreed that the objectives laid down" etc. "undertake pending the entry into force of a Charter, to observe to the fullest extent of their executive authority the principles of the draft Charter" etc. Then there would follow "for the Government of so-and-so" or "for the President of so-and- so''. But I think that "the undersigned" would mean the authorities listed below, and the inclusion of the words "executive authority" in the.last paragraph would avoid any implication that some undertakings were more extensive than others. E/PC/T/TAC/V/l8 - 12 - CHAIRMAN: Does the proposal of the United States Delegate get us out of the difficulty? Any objections to the proposal of the Delegate of the United States? Then the first paragraph would read: "At kit the time of signing tehe GneAgreemal rent aon Triffs and Trade, tuhe ndersigned through their duly autheorisd representative.".... Then tehe naxtg praraph swailltrt o"ff: Having agreed that.... etc." Ias tht right? ny otherm coLents in regard to the seconad gpnacaph? Mr. P. Garcia ONMLDI (Nont iprtserted). Dr. AZ. ugenthaler (Czechoslovakia): May I suggest the French text as it stands her"Aue om ment de pédrocàer la signature les sougnéssisûm, dent autoériss, sont convenues de ce qui suit." M. ROYER a(Frnce) (Inteerprtation): Mr. Chairman, I would not wish to refer the matter to the Iegal Drafting Committee but I wonder, nevertheless, if this would not be the proper solution. IRMAN: CdI I think we weillhaevo it st out the way we agreed and then we will see Leg:if tahealg Drftin Committee can mae.any imemprovelts. ny comments.wigth refrd eto thGthird paragraph? MPr. J..D.JNOHNSE (Nelaw Zeand): I do not know whether this paragraph actually sets out the requisition. It says there that thee Membrs of the Preparatory Committee of the Conference reommend the text of thae Dr.t to the Economic and Social Council. I have not before me a copy of athe tual Draft sent forward - 13 - E/PC/T/TAC/PV/18 but I notice on Page 3 of the Report of the Preparatory Committee it refers to the draft adopted as a basis for discussion at the World Conference. I think i n the light of that after the word "rer. ULrdfiJ" we should have the words "for consideration" - "recommended for consideration."iO. i' ACKLEr,U$ILed KCtgdumi:'-o vuld t not beu bes tot ;c: s ...7r commeiEed tLle tex`Uof -adtrft Chlater for counideration by the Conference ....." ? That would be a little better. amended by Mr. Shackle, approved? Mr. LEDDY (United States ): With a very slight change. I think if we make that change, with which I agree, we ought to have the phrase " ....... through the Economic and Social Council of the United Nations." CHAIRMAN: If the proposal if the New Zealand Delegate is adopted, the paragraph would read as follows: "HAVING, in their capacity as Members of the Preparatory Committee for the Conference, recommended to the Social and Economic Council of the United Nations the text of a draft Charter for consideration by the Conference." Is that agreed. (Agreed) M. ROYER (France) (Interpretation): Provided that this question of majority is settled because although governments are Members the Heads of States cannot be Members of the Preparatory Committee. R - 14 - E/PC/T/TAC/PV/18 CHAIRMAN: I think. we have agreed that that problem is one suitable for the LegaI Drafting Committee. Is that paragraph as amended , approved? In the last paragraph, I think Mr. Leddy has proposed the wording "executive power" for the word "authority" in the second line. Mr. LEDDY (United States): There is one other suggestion I would like to make. There is a phrase in the protocol which came to us from the Drafting Committee in New York. I think it is probably better than the the phrase we have here "pending, the entry into force of the Charter". The reason why I think it is better is because it lends more precision to the undertaking. In response to the request br the Delegate of Australia the othner day that we should make it as clear as possible so that we should know where we stand, I would suggest deleting this phrase - "pending the entry into force of the Charter" - and sabstituting in lieu the phrase "pending their acceptance of a Charter in accordance with their constitutional procedures. That would mean that only the signatories accepted a Charter of the kind, we are talking about. They would to be obliged to observe/the fullest extent of their executive authority the principles laid down in the draft Charter. I do not think that is suite clear from the existing text. - 15 - CHAIRMAN: Are there any objections to the proposition Just made by Mr. Leddy? Mr. J.P.D. JOHNSEN (New Zealand): I do not wish to raise an objection, Mr. Chairman, but I would just make an observation, I was wondering whether we should not relate the Charter to the Charter adopted by the Conference: whether you had in mind a particular Charter. In that case I would suggest the wording might be: "Pending their acceptance in accordance with their constitutional procedure of a Charter as adopted by the Conference . CHAIRMAN: The Delegate of Chile, Mr. F. Garcia OLDINI (Chile) (Interpretation): Mr. Chairman, this paragraph raises two questions. The first is a question of drafting, linking this text to the definitive text of paragraph 1. I cannot think that we can make a decision on this last paragraph before we know the final draft of paragraph 1. The second question is a question of substance and I thought that we had decided to postpone the debate on these questions of substance until we had seen the document which the Secretariat is to prepare to establish the relations between the signatures of these various documents. CHAIRMAN: We are just endeavourin-g now - I do not think there is any decision to the contrary - to establish a text of this Protocol so that we can include it in the new clean draft which the Secretariat are going to get out for our second reading. If we keep deferring every subject until ve deal with something else vie shall never make any progress, and I would like to have a text agreed at that second reading stage so that we could finally approve it in our third reading. P. 16 - _ I_ , _ , . , _ P. ~~~~~~~~~EPC/T/TAC0/PV/18 M:. F. Garcia OLDINI (Chile) (Interpretation): Mr. Chairman, as Chairman I think that you are quite right to try to speed up our debates and the procedure. which we are now following; but if we read the first paragraph and see that, it is stated that "the. undersigned, duly authorized. " and so forth and -then we read the last paragraph and see "undertake ... to observe to the fullest extent of their executive authority ..... then it seems to me that this has no sense. Furthermore, if we do not know the place of the Protocol and to what other document this Protocol will be attached, then of course we cannot discuss it. CHAIRMANL The Delegate of Chile proposes that the question of this particular Protocol be left in abeyance until we receive the docunt.e from the Secretariat setting forth the various stages of signature, and I think it s perhaps preferable that we-should leave it because we do need a little bit mare time to think over the first paragraph; it is quite obvious that we are not going to have a satisfactory document if we leave it in the form we have decided. The proposal to refer it to the Legal Drafting Committee is not a very good way of solving this problem because the Legal Drafting committee consists of representatives appointed in their personal capacities and this question of whether we mention governments or not is of very great interest to certain members of the C.mmittee who are not on the Legal Drafting Committee. -So I think it would be wise to leave this Protocol of Signature over until we have had that document from the Secretariat and to then, erhaps, consider it tomorrow'morning. Mr. R.J. SHACMZE (United Kingdom) Purely for the purposes of a clean text, Mr. Chairman, would it not b.e a good thing to write in Mr. Ledd''s amendment and Mr. JohnsenTs addition to it? P- 17 - I have the feeling that that is a serious question and I think, for the purposes of a clean text for our consideration later, we Right do worse than write that in. CRAIRMAN: I. that would meet with the agreement of the Committee, .the Secretariat could prepare another draft of the Protocol of Signature including the amendments which were suggested by Mr. Leddy, as amended by Mr. Johnsen. Mr. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, there is another point of substance I wish to raise in connection with the paragraph, but if you prefer I can let it stand over until tomorrow when you next consider it, CHAIRMAN: I think it would be butter to leave it over until tomorrow. Dr. R. DORN (Cube.): Mir. Chairman, may I make only a practical proposal in order, possibly, to save time? This morning the Legal Drafting Committee tried to clear up, as far as possible, the relations between the different documents to be signed, and it would perhaps be useful if the Secretariat were to cooperate with the Letal Drafting Committee in preparing the new document because we tried to find a way of clearing these points; .,I am not quite sure that we sugceedeo in doing so, but perhaps by combining the work we could save time later on. CHAIRMAN: I was anxious to have that document circulated tomorrow morning so that we could consider these matters tomorrow. We want to get a clean text of this Agreement finished by 'tomorrow so that we can circulate it over the weekend. Dr. Z. AUGENTHALER (Czechoslovakia); Mr. Chairman, I would like to observe here one thing which is very amusing and that is that we have reason to celebrate that, in the Protocol of Sigature, E/PC/T/TAC/PV/18 Q - 18 - E/PC/T/TAC/PV/18 we have for the first time baptised the Charter which we have been discussing for so long. Up till now, nowhere has the Charter been named, and now here we are putting in its name because we say "a Charter for an International True Organization". That is the first time I have met the name of the Charter. I do not know if it is the right name or not but anyhow I v uld like to observe this curiosity. CHAIRMAN: We will now take up the Protocol of Interpretative Notes to the General agreement on Tariffs and Trade. The Secretariat prepared a draft which is given in document W/318 of 3 September. There is also Addendum 1 which gives a Note to Article XI. We will first of all consider the title and first paragraph of this Protocol. The title given to this Protoool is Protocol of Interpretative Notes to the General Agreement on Tariffs and Trade. Are there any objections to the title? Mr. J.MS LEDDY (United States): Mr. Chairman, I just want to say this on the subject of those Protocols. I was wondering whether we could not avoid having one more Protocol. Could we not make these Interpretative Notes simply another Annex to the General Agreement, an integral part of the General Agreement, saying that the following Notes shall serve as a basis for interpretation of the provisions of the Trade Agreement? Then we might save having another Protocol. CHAIRMAN: The Dolegate of the United States has suggested that instead of a Protocol we have these Interpretative Notes set forth in the form of an Annex to the General Agreement. - 19 E/PC/T/TAC/PV/18 MR, J.M. LEDDY (United States): Mr. Chairman, I might explain That if there is any question as to the validity, one could put a very simple provision in the Agreement saying that the Annexes form part thereof. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, after all, we shall have several Protocols anyway, and I do not think that it will matter whether we have one more or one less. We might even resort to a scheme of Unumbering protocols, Protocol 1, 2, 3, etc. I would rather hesitate to embark upon a brand new form of drafting, but I do not think that it makes any difference to the substance at this tage. CHAIRMAN; Are there any other comments? Monsieur Royer. M. ROYER (France) (Interpretation): Mr. Chairman, I think that if we want to have one Protocol we could have one Protocol of Signature only and insert under (1) the contents of what now appears in 'the Protocol of Signature, under (ii) the Interpretative Notes, and then if we wish we could even have (iii) for something else. of course, we would have another Protocol which would be the Protocol of Provisional Application, but this might be a saving of signatures. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I am s rry to break in with another suggestion, but I think that these Notes are part of the placing on record of the text. In the Final Act, we place on record the text of the Draft Agreement, and these are Interpretations of the Draft Agreement, so it seems to me that their right place is in the Final Act and the Interpretative Notes are part J. - 20 - E/PC/T/TAC/PV/18 of the text itself. CHAIRMAN: The Delegate of Cuba. DR. H. DORN (Cuba): Mr. Chairman, I have the impression that we have to start with the question of what are the Annexes to the Final Act. The Agreement has to be authenticated and then we will have-to ask for the other parts of the Agreement which have to be authenticated, and that will be the Interpretative Notes and will b, I think, the Reservations. Therefore, I think all these will nave to be put as Annexes to the Final Act. Therefore, I thought that it would be useful to ask, from a purely legal point of view, what will be covered by the Signature of the Final Act, and what will be authenticated? Then, we will have the whole thing together and we will see what has to be finally signed. In my opinion, we must have first the Final Act with all its Annexes, and afterwards there is the question of what documents have to be signed after that. CHAIRMAN: The question before us now is whether the Interpretative Notes should be included in the Protocol or in an Annex of some other document in the General Agreement. Monsieur Royer. M. ROYER (France) (Interpretation): Mr. Chairman, I have no objection to inserting these Notes in an Annex appended to the .General Agreement, nor do I have any objection to inserting these Notes in a Protocol which would be signed at the same time as the General Agreement, but the system which has been devised by the Secretariat does not-satisfy me, and I would like to explain briefly why. - 21 - E/PC/T/TAC/PV/18 Delegations have asked that the Notes should have an authentic character and should be placed on an equal footing with the text of the Agreement. Therefore, the procedure must be the sazge and the validity of the undertakings regarding the Interpretative Notes and the Agreement must also be the same. If we only have a Signature given in the Final Act, only the Delegates in their personal capacit. will be committed and not the Governments, and this is not what we are seeking. Therefore, I think that the Notes have to be placed on the same footing as the Agreement, and they must have the same value as the Agreement. There are two ways of achieving this result, one is to append these Notes in an Annex to the General Agreement, the other is to insert them in a Protocol which will be signed at the same time as the General Agreement, but once again it seems that we are faced with the problem which we had this morning in 'chassé-croisé', that is, that we are trying to provide for the entry into force of an Annex before the entry into force of the document. CHAIRMAN: I would like to mention with regard to the reference to the Secretariat that we did agree that these Interpretative Notes should be placed in the Protocol, and it is on the basis of those instructions that the Secretariat has prepared thiJ document. Their task was to set forth the various Interpretative Notes which appeared in the relevant Articles of the Charter and they have presented a text to us for our consideration, so that the Secretariat were simply carrying out the instructions that we gave them. As regards the time of the signature of the Protocol, it was understood when we came to a decision as to the Protocol that it would be signed at the same time as the General Agreement. E/PC/T/TAC/PV/18S . MROYER (France) (Interpretation): Mr Chairman, that is jsut the point. The proposal of teh eScretariat differs from what you have just stated, .because the Secretariat does not provide ofr the signature at the time of the Signature of f ote hGeneral Agreement, but at the timeof theSi gnature of the Final Act. CHARMA N: The rfeerence was done at Geenva, and that is the formula which we have been usign. M. ROYER( France) (Inteprretatin): o M r.C ahimarn, in the Frechn tex t there is th werd ''hoolemgue'r, whchi appears to be the equivalent of thew rod. ercifyyig.n" Therefore, it seems to me that time of the sgintuare of the it would not crroesopnd to theG/neeral Agreeemtn, but to the time of signature of the Fnial Act. 'H mooeluge"r means that the Protcool has been signed, oro ne Annxeto ad ocme,nth as been signed, bfoere. MR. .RJ. HASKLCE: (UnitedK ingdmo) : Mr. Chairman, I would like to make a suggestion. Frist, I will eatmay words about the parallel Final Act . Monioeur Royer has convinced me that I was quite wrong about that, it clearly should be on the same principle as the General gAreemetn. If we decide to keep the Protocol form we should surely have the sametyp e of heading as that which we will eventually adopt for the so calIde PxIZ tsbl fo Sginature. Whatever form i sadopted fo rthta shuold be daopetd fro thi.s J. E/PC/T/TAC/PV/18 -- 23 -- Mr. E. McCARTHY (Australia): Mr. Chairman, the view that the interpretative matter should be attached to the Agreement appeals to us and we should like to recall that it seems to us quite sound to have the Agreemant, then an Annex interpreting the various aspects of the Agreement, and when you sign the - Agreeemnt you automatically sign the interpretative provisions as-well. As Mr. Shackle has eaten his words,w Il il not make the reference I wgoas ing to make. Put into the Final Act, that appeals to us as being purely to certifye th correctness of the text and we do not think it should contain anything else. Again we would prefer the Annex to the Prcotool. The Protocol would serve the purpose but it seems not to be as simple and certainly i not more effective than having the Aenno to the General Agreement. CHAMAIRN: The Delegeat of Cuba. Mr. H. DORN (Caub): Mr. Chairman, I have the impression ta- here is a misunderstanding here which impedes the Agreement. I think we have two different questions to solve. The first is the question of the Final Act and the certifying of texts and we have to answer the question of what shall be certified in this way, the General Agreement or the so-called Protocols. Then we have the Annex to the Final Act; all this is only for the purpose of certifying. But that is quite a different question from the other one; what has to be signed later on if we have to sign the Agreement ? Then we have to ask what is the relation between the General Agreement and the so-called Protocols. I think the General agreement has some Protocols which always have the nature of S . E/PC/T/TAC/PV/18 Annexes. That means they have the same legal force. There is ,*¢. who so-called Protocol of Signature: that means a Protocol which talks about the observance of the principles of the Draft Charter. Secondly, there is the Protocol of interpretative notes, and perhaps a third one which contains reservations. These three Protocols form an integral part of the Charter and they can take the form either of an Annex or a Protocol if you insert a clause into the Agreement clearing up this relationship. But there is another Protocol which stands on its own feet; that is the Protocol of provisional application, and that has nothing to do with the Annexes to the Agreement. You can sign the General Agreement later on, giving the so-called Protocols the character of Annexes. Then you have one signature. But you can also sign a Protocol in itself, as has been the case in the history of international treaties, saying, within the Agreement, that the contents of the Protocol have the same legal force as the Agreement itself. We have always had it so in commercial treaties, in treaties on double taxation, and so on. Therefore, I think we have to make a clear distinction between the Final Act and its annexes on the one side,and between the documents which have definitely to be signed, on the other side. I think those documents should be the contents of the Note of the Secretariat, In order to make clear what has to be signed first here in Geneva, together with the Final Act, and then what documents have to be signed definitely. CHAIRMAN: The Secretariat will take due note of the comments Just made by the Delegate of Cuba. Thare is developing a difference of opinion in the Committee as to whether the interpretative notes should be included in a Protocol or an Annex to the Agreement. I think it is necessary S. - 25 - that we should develop the sense of the Committee on this question, in order that we may be able to know how we should frame the document which will carry these interpretative notes. The Delegate of Norway. Mr. J. MELANDER (Norway) Mr. Chaiman, I think they ought to be in an Annex to the Agreement; they ought to be an Integral part of the Agreement Mr. G.A. LAMSVELT (Netherlands): Mr. Chairman, I _ the same opinion as the Delegate of Norway. Mr. F. Garcia OLDINI (Chile) (Interpretation): Mr. Chairman, I am also of the same opinion CHAIRMAN: There appears to be general support for the proposal first made by the Delegate of the United States, that these lnterpretative notes s should be in the form of Annex attached to the Agreement, I also take it that should mean there should be some reference in one of the Articles to the Annex of the Agreement Are there any objections to this form of procedure? No objections. I take it the Committee agrees to the Proposal that these interpretative notes should be in the form of an Annex. Could we have some suggestions as to what sort of heading should be given to this Annex? Mr. R.J. SHACKLE (United Kingdom): Annex of Interpretative Notes is the obvious thing Mr. LEDDY (United States) I suggest we make it Annex A, Mr. Chairman, and underneath put "Interpretative Note". E/PC/T/TAC/PV/18I 0 -26- CHAIRMAN: The Delegate of Cuba. Mr. DORN (Cuba): Mr. Chairman, may I say only that then we would have to ado to one of the Articles, before the words which you will find in Article II (1), that they are annexed and hereby form an integral part of the Agreement, CHAIRMAN: Yes. The Delegate of the United. States had pointed-that out. I am not quite sure where that Article would Come, or whether we would make it part of another Article. Mr.LEDDY (United States): I think that what we might add is simply in a separate Article to say: "The Annexes and Schedules to this Agreement are hereby made an integral part thereof." M. ROYER (France) (Interpretation): Mr. Chairman, I have only one slight objection; that the Schedules must be attached to Part I of this Agreement, because unanimity is required to modify the Schedules. I wonder if we want to have this rule of unanimity to modify the interpretative notes. Mr. LEDDY (United States): In that case, Mr. Chairman, I withdraw my suggestion. I think it is quite correct. we could have a provision in Part II to say that the Annex will form part of that Agreement and the other Annexes which relate to part I will relate to that Part. I think that is a question which we might well pass to the Legal Drafting ComMittee for examination. CHAIRMAN: Will it do if we place this Article at the and of the last Article, to take the place of the present Article XXXII, and then leave it to the Legal Drafting Committee to decide whether "it should be in some other place? Does the Committee then think there should be any introductory paragraph to the Annex, or should it just start off with the interpretative notes? E/PC/T/TAC/PV/18 S. V E/PC/T/TAC/PV/18 Mr. J. M. LEDDY (United States.): Mr. Chairman, if nobody else have any suggestion to make, I do not think that any heading is needed. CHAIRMAN:The Delegate of Czechoslovakia. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I agree with Mr. Leddy. I would only suggest that we should put at the end of the Interpretative Notes: "The Interpretative Notes will have the same force, effect and duration as the Articles to which they refer". Mr. F. Garcia CLDlNI (Chile) (Interpretation): Mr. Chairman would we not have to mention this facts in the corresponding Article itself? CHAIRMAN: The Delegate of Cuba. Dr. M . DORN (Cuba): Mr. Chairman, I understood that the general clause which Mr. Leday proposed should cover this idea, and it is not necessary to repeat the fact in every Article, because this clause would say that the Interpretative Notes have the same force - legal binding force - as the Articles. The question is, whether we could add that they have the same force, effect and duration. I. think that that is not necessary, because they have only the character of interpretative notes. That means that they have no standing on their own account. Therefore, we know that in the ,'-. . . ... >:-', changed at a certain point, the note in itself would have no special effect. I think the general clause of Mr. Leddy's would cover the idea completely. Another question relates to whether it is V E/PC/T/TAC//PV/18 necessary for there to be an introduction saying that "in interpreting the following Articles, these Notes shall be taken into account". I do not think that that is indispensableI because it goes without saying; if one says "Interpretative Notes" and mentions the Articles, and then gives the content, I think it is not legally necessary; but perhaps it would be useful to let the Legal Drafting Committee think it over once again. CHAIRMAN: I think the Committee is in agreement that all that is required is the title "Interpretative Notes"without any further heading. We can leave it at that. The only comment I would like to make is that I do not think this should be labelled "Annex A" but rather "Annexe I". If we refer to the Annexes, Annex A , Annex B, Annex C, Annex E, Annex F and Annex G all refer to Article I. I think it is therefore logical they should come first, and this Annex on Interpretative Notes should be the last of the Annexes. Is that agreed? Now, these Interpretative Notes have been compiled .d by the Secretariat from the notes of relevant Articles of the Charter. I take it that as we have not heard from any Delegation, there has been no note omitted with the exception of the note to ArticXI i , to which attention was called by one of the Delegations. This note is given in Addendum 1. Mr. R.J.ASHLCKIE (United Kingdom): Mr. Chairman, I'think there is one other note which will be nDeded to be added. It arises out of the Retor' of tse 8uomCinmettoe An SrticII SI, paragraph 3, in documeEtPC/T/'C/191. You may recall that yesterday we somewhat amended thenal) L paragraph on page 1 of V E/PC/T/TAC/PV/18 of Document T/191 and produced an extremely inelegant result. I have since attempted to produce something a little better, and suggest the following: "It is understood that except where otherwise specifically agreed. between the parties to a particular negotiation, the provisions of paragraph 3 of Article II will be applied in the light of the provisions of Article 31.of the draft Charter referred to in." (I have put the Protocol in square brackets because I do not know what title is going to be given). That is the wording I would g.ve to that note. CHAIRMAN: Is the new text of this note, as proposed by Mr. Shackle, agreed? M. ROYER (France) (Interpretation): Mr. Chairman , if I have understood correctly, this note would replace the note which appears in Document (/318, which would now be of no use. There is another small suggestion I want to make and that is that when one refers to the Article, one could use the small Latin preposition "ad". CHAIRMAN: The Delegate of the United Kingdom. Mr. R..J. SHACKLE (United Kingdom): As regards Mr. Royer's first remark, I presume that he means that the note which is at the head of page 2 of Document W/318 would be replaced, and there I agree with him. CHAIRMAN: Is that agreed? Agreed. Mr. J.M. LEDDY (United States): Are all of these notes what we call "starred" notes -that is, notes that are V 29 E/PC/T/TAC/PV/18 essential to an interpretation and understanding of the particular provisions about which there was some doubt in the drafting? Or do some of these notes cover provisions that were simply put in with a view to bringing out what might not have been apparent at a casual reading? I think we should go through these notes and see if we cannot confine them to the absolute minimum - those which are really necessary to bring out obscure points. For example, I find at the bottom of page 2 it is stated as to what the signatories of the draft have considered, and why they decided not to do something other than what they did. I do not think that sort of note is helpful. It is helpful to the World Conference, but it is not helpful as far as the interpretation of the Agreement is concerned, and I think there may be other notes of that character. I CHAIRMAN: I think the remarks of Mr. Leddy are very relevant, and I think it would be desirable that we should go through each one of these notes to decide whether or not they should be retained. We first of all come to the note to Article I on the first page of Document W/318. Are there any objections to the inclusion of that note? Mr. J.M. LEDDY (United States): Mr. Chairman, I am not quite certain as to what our procedure should be. I wonder if it might not be better simply to go through the notes and decide whether they should go in or not, and then go on to any drafting points. CHAIRMAN: We will first of all go through the notes and see whether or not they should be included, and then return to V 30 E/PC/T/TAC/PV/18 any drafting points. Are there any objections to the inclusion of the notes to Article I? No objection. The note to Article II, paragraph 3, has already been replaced by the text proposed by Mr. Shackle, so we can take that as being included. Note to Article IV, paragraph 5. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I apologize for coming back to Article II, but I would like to say that we made a proposition -that is,about the value of the Czech grown, in which we agreed that where rates of duties are expressed, it is understood to be the par value, and so on, and if these currencies deprciate,in accordance with the Article of Agreement of the International Monetary Fund, the Czech Government reserves its right to adjust its specific rates of duty in proportion to the depreciation of its currency Now I was wondering whether we should place a general note here as an interpretative note to Article .II or whether we should put our proposition directly in our master list. 31 R 32 E/PC/T/TAC/PV/18 CHAIRMAN: Those Interpretative Notes have been confined to what we call Starred Notes appended to the Charter. They are interpretations of the Charter; they do not include anything in the nature of reservations submitted by one or more Delegations. Mr. SHACKLE (United Kingdom): Is It not rather a question of the basis on which the particular negotiations take place? If in the case of any p. rticular country the negotiation was on the casis that there was this devaluation of specific duty, I think the note should relate to that particular country and not to others where the basis of negotiation may have been different.. CHIRMAN: I think the proposal of the Czechoslovak Delegate originally' was/that this note should be appended to the. Schedule, Dr. H. DORN (Cuba): Mr. Chairman, may I ask a question. This reservation is practically a general question of substance because there is the question in the case of depreciation of money. The general idea which was expressed in the' London Report was that adjustment of the specific duties does not mean an increase of the duty. That is the general idea which was expressed in London but which is not taken up in the Agreement and if I understand the idea expressed by the Delegate of Czechoslovakia then it would mean just the same principle as was expressed is London. CHAIRMAN: The Delegate of Czecheslovakia. Dr. z. AUGENTHALER (Czecheslovakia): I think this note should be placed as a General Note. I do not mind if other countries are ready to renounce it. In this case we would place it in our list, out I think it would be fair to have it as a general note because in Paragraph 1 of Article IIwhere it says: "Eah contracting party shall accord to thc commerce of the other R 33 E/PC/T/TAC/PV/18 contracting parties treatment no less favourable than that provided for in the appropriate Schedule annexed to this Agreement ~~er I.. th. .r~n and hreby made an inte;a part of Thr Ithereof'", the margins in the scacle would be a customs duty of, say, 100 rowns. Supposing that in 10 or 15 years the crown would have only 1/10th of i^alue, according to this provision I would still be bound to a-Ay. f10 crwns whiasceeh would mean only 1/10th of the sigr proteoioi That isge why I think it should be made a Fcral nLoe bo0ts9t s abnormamle proviso which is in most conmnril treaties. Mr. aCKE (United Kineedoa:) I would like to rmpe..xtth point of viewp which I have already exyuressed, that it is sure a mgatter of the unde:hdinegnS n whnmich particular a6iatioahave ban,ondudc. f these negotiations have been condiauct onl the s f this undersetaneding, I prbsum. th the -partes to the negotiation would find no difficulty. If, oan the other hnd, oney negotiations have not been conductned on things xierstandii then I consider that notge should enot o into etacsh Schedule bue t gotiations were conducted not on the basis oderf that u.n(,xrding,. Mr. J M. LEDDY (United Statgges): I suest the proposal has no pa9iNrpresent discussion I Tt is a interpretative noWte. 'ie are aling here with particular provisions of Agthem ,; eet. The suggestion that spec ificduties may be raised in conjunction with the depreciation of currency is quite a different matterchj wh has nothing to do with the general provisions of the eAgrement at all. It is quite a separate provision and should be discussed on its own merits. I think we might se t itside and go on with the discus.sion OEANIM: The proposal of the Czechoslovakian Degle6aiona ws gicilly mrae in connection with the Schetlle. I therefore propose that we discuss this paper submitted by the Czechoslovak Delegation action when we come to consider the Schedule. E/PC/T/TAC/PV/18 The Note to article Iv, Paragraph 5. Any objections to the inclusion of this Note? Aarticle V, Paragraph 1. any objections to the inclusion of this Note? Article V, Paragraph 2. Any objections? Article V, Paragraph 7. Any objections to the inclusion of this Note? Mr. LEDDY (United Statas): I have a question on that Note, a question as to the wisdom of putting it in, Prohibitive measures other than the application of duties is, of course, subject to the right of any country to invoke emergency Provisions to permit quantitative restrictions, for example, in the event of an increase in imports which threatens damage to a domestic industry. had I realise the importance the inclusion of this Note/in the Charter with respect to the position of some Delegations on that particular paragraph, but the objection I have to include it in the Trade Agreement in the form in which we are including it here, that is to say, in the Annex which is to be used as a basis for interpretative agreement, is that it may throw some doubt on other provisions. as a matter of fact, all the provisions of the Trade Agreement are subject to article XVIII of the Emergency Provisions and I see no reason for taking out a particular paragraph and saying that this paragraph is subject to Article XVIII. I wonder, therefore, vvhether we could dispense with this particular Note, It really is not essential to an interpretation of the Article, and the Note does appear of course in the Charter as it will serve as an explanation to the World Conference and to Governments. 34 E/PC/T/TAC/PV/18 CHAIRMAN: Mr. Leddy has proposed that this Note be omitted. Are there any objections to the omission of this Note? Agreed. The Note will therefore be omitted. Article VI. Paragraph 1. Mr. E.L. RODRIGUES (Brazil): Mr. Chairman, the Note under paragraph / was omitted? CHAIRMAN: Yes. Mr. E.L. RODRIGUES (Brazil): I know we have the Notes in the Charter but I think for that same reason we ought to have it in the Agreement. The Brazilian Delegation attaches great importance to this Note. Mr. J.M. LEDDY (United States): The only suggestion I can make is to broaden the Note and say that the obligations set forth in paragraph 7, as in the case of other obligations under this Agreement, are subject to the provisions of Article XVIII. That would make it clear that this does not refer exclusively to paragraph 7. M. ROYER (France) (Interpretation): Mr. Chairman, I would second Mr. Leddy's proposal. If we left the text as it stands now we would give the impression of an argument per contra that the other provisions of the Charter are not referred to in Article XVIII. CHAIRMAN: Are the words proposed by Mr. Leddy agreed to as an addition to this Note? Would you give us the words again, Mr. Leddy? 35 P. E/PC/T/TTAC/PV/18 Mr. J.M. LEDDY (United States): " "The obligations set forth in paragraph 7, as in the case of other obligations under this agreement, are subject to the provisions of Article XVIII". CHAIRMAN: That is agreed. Paragraph 1 of Article VI. Are there any objections to the inclusion of this Note? Mr. L.E. COUILLARD (Canada): We would agree, Mr. Chairman, with Mr. Leddy's original proposal that this Note be dropped. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I would task that this Note be maintained. I think it is a pleasant one and in its somewhat ironical form it pleases us. When we discussed Article VI, may I remind the Committee that we requested the deletion of the words "as soon as possible" and we were told that the text of the Charter was sacrosanct and that we could not touch it, therefore that the words "as soon as possible" would be maintained; but, as a compromise, we would be given an Interpretative Note. This was a meagre satisfaction, but therefore 'I would request now that this meagre satisfaction should not be withdrawn from us. .;AIR CHIPMAN: I think the Delegate of France is quite correct in his recollection as to what happened when we were considering Article VI and therefore I take it we would have no objection to the maintenance of this Note. Mr. R.J.KLHACTIE (UnKted Xingdom): Mr. Chairman, I feel that our discussion has shown that everyone of these Notes is specially dear to the heart of one delegation or another; and I remember also that all these Notes have been thrashed out with a great deal P. 36 E/PC/T/TAC/PV/18 of toil and care in Sub-Committees. So I wonder if we could not take all the rest as read, subject to any particular objection which any delegation wishes to raise? CHAIRMAN: I was of the same opinion as Mr. Shackle at the beginning of this discussion; I was only hoping that none would be added. However as we have embarked on them, I propose we hurredly go through them. I will read the Notes off and if any delegation has any objection to the inclusion of any Note I would ask him to stop me. Article VT. Paragraph 2. Article VII, Paragraph 4. Article X. Paragraph 2(c). Is there any objection to this Note? Article X. Paragraph 2, last sub-paragraph. We now come to Article XI and I think this would be the place to add the Note which is given in document W/318, Addendum 1. Are there any objections to the inclusion of the Note to Article XI? Article XI. Paragraph 3(b)(i), Article XII. Paragraph 2(d). Paragraph 4. Article XIII. Paragraph 3. Article X1V. Paragraph 4. Article XVI. Paragraph 1. Paragraph 1(a). Paragraph 1(b). Paragraph 2. We now return to these Notes for ony drafting changes. Will the delegates please indicate to which Notes they would like to submit drafting amendments. P 37 E/PC/T/TAC/PV/18 Mr. J.M. LEDDY (United States) Mr. Chairman,. I have come to the conclusion that these Notes are really more sacred than the text. I would hesitate to suggest anything in the way of draf ting changes; but I hope that the Legal Drafting Committee will look at them carefully. CHAIRMAN I am sure the Legal Drafting Committee will give a very careful review of these Notes with a view to improving the drafting if at all possible. We shall therefore leave the Interpretative Notes and, in the time that is still at our disposal, I would like to introduce the Report of the Sub-Committee on Article XXVI. This Report is given in document T/194, on the second page of which is an alternative text of paragraphs 1 and 2 of Article XXVI. I would ask Dr. Adarkar, the Chairman of the Sub-Committee, to introduce this Report. P . 38 J. MR. B.N..ADARKER (India): Mr. Chairman, the revised text of Article XXVI was unanimously accepted by the Members of the Sub- Committee. I should like to draw attention to two principle changes which have been made in this Draft as compared with the original version. The: first important change will be found in the last two sentences of paragraph 1. it was thought necessary to state that any negotiations which will follow . Member proposal to modify or withdraw concessions might include Provision for compensatory adJustment with respect to other products. -The same paragraph also provide that in such negotiations the contracting parties shall endeavour to maintain a general level of reciprocal and mutually advantageous concessions not less favourable to trade than that provided for in the present Agreement. This was a suggestion made by the Delegate for the United States and it was approved in full Committee. The second important change will be found in the new paragraph 2. This a paragraph is divided into two parts; it takes into account the amendment suggested by the Delegate for Australia, the principle of which was also approved in full Committee. It covers two cases, one in which there is no Agreement at all between/contracting parties primarily concerned, and the other in which there is agreement between the contracting parties rnnil ¢ _ but some other contracting party which is substantially affected is unable to accept the Agreement. It was agreed in the Sub-Committee that both the contracting parties with which a concession was initially negotiated and a contracting party which was substantially affected should have the E/PC/T/TAC/PV/18 39 E/PC/T/TAC/PV/18 right to withdraw substantially equivalent concessions. What was a substantially equivalent concession would be determined in the light of what the party concerned had paid for the concession which had been withdrawn. It was also agreed that, sined the contracting party which proposes to withdraw a concession or to modify a concession has, under the proposed draft, been given the right to act if negotiations break down without having to seek the aproved of the Committee or the contracting parties taken as a whole, the same right should be given to any other contracting party which is affects by the action. These are the only important points which need to be noticed with regard to this Draft. CHAIRMAN: I wish to thank the Chairman of the Sub-Committee for the very thorough explanation he has given of his Report, and I wish to congratulate him, and through him the Sub-Committee, for the success achieved in reaching unanimous agreement in one meeting. Are there any comments on the Report of the Sub-Committee? MR R.J. SHACKLE (United Kingdom): Mr. Chairman, there is just one question which , would like to ask which is a point of clarification. At the end of paragraphs 2(a) and 2(b) there are the words: "application to the trade of the contracting party taking such action, of substantially equivalent concessions". That is, of course, very similar to Article XXI, the Nullification or Impairment Article. Am I right in understanding that that implies a suspension, whiah is, so to speak, discriminatory and directed against the trade of that particular party? It seems to me that that is a point which it is desirable to make clear. One oould read it in two ways - 40 J. E/PC/T/TAC/PV/18 either it would not be contrary to Article I, or, on the other hand, the concession would be suspended in respect of that particular party alone, and that would be contrary to Article I. I think we should be clear what the answer is, I am not quite sure about it myself. CHAIRMAN: Mr. Adarkar. MR. B.N. ADARKAR (India): Mr. Chairman, this question was not discussed in the Sub-Committee, but, if I may venture my personal opinion, I would state that the negotiations in question will proceed more of less on the lines of the negotiations taking place here. It would therefore seem to follow that if a particular contracting party decides to withdraw an item from its Schedule, the action which v uld be taken by the other contracting parties will also be in the same form, that is to say. they will remove the item from their Schedule, and the removal will therefore affect not merely the contracting party taking the action, but all the contracting parties. Therefore, it seems to me that it is not intended that any discriminatory action should be taken, but this is purely my personal opinion, and I might state that it might be the opinion of our Delegation, but this aspect was not considered in the Sub-Committee. J. 41 E/PC/T/TAC/PV/18 CHAIRMAN: The Delegate of France, M. ROYER (France) (Interpretation): Mr. Chairman, I would like to adhere to the interpretation which has just been given by the Delegate for India, and it was on the basis of this interpretation that we accepted Article XXVI. There is only a question here of withdrawal of concessions; there is no question of discriminatory measures against a particular country. The text may not be very clear, but I would like, as an excuse, to point out that the Sub-Committee only met once and, -as one author said, we had no time to make it any shorter. CHAIRMAN: The Delegate of the United States. Mr. LEDDY (United States): I think the relative term here is drawn from the Multification or Impairment clause. There it Clearly means - and I think it clearly means here - I think, that the language does mean the concession is suspended in respect of the trade of a particular Member. That is certainly the case with regard to the Nullification or Impairment clause. If a particular Member takes action contrary to the Charter, other Members may suspend the application to the trade of that Member of Concessions granted. That means that other countries should not be penalized because one country has failed to carry out its commitments, But this, I think, is probably a different thing-and if it is the desire of the Committee to provide for the withdrawal of Concessions negotiated with the country which initially withdraws the item from the Schedule, I think we had better say so, because this Ianguage definitely does not mean that. It reads "If such action is taken, the contracting party with which such treatment S . 42 E/PC /T/TAC/PV/18 was initially nagotiated and other contracting parties shall be free to suspend the application to the trade of the contracting party taking such action of substantially equivalent concessions."i There is no authority to suspend the application of those concessions to the trade of other contracting parties who are entitled to the concessions. I think we need to re-cast that and make it clear. I think probably the non-discriminatory action provision is the right one. CHAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman, I wonder whether there would be any objection to deleting the words "to the trade of the contracting party taking such. action" in Paragraph 2 (a), and also the similar words - "to the trade of the contracting party taking action under such Agreement" - in Paragraph 2 (b), in order to make the point clear. CHAIRMAN: The Delegate of the United States. Mr. LEDDY (United States): Mr. Chairman, I think if we mean non-discriminatory action to adjust the balance of the Schedules we mean withdrawal and not suspension of concessions. I would like some changes to be made before the formulation of the last four lines of Paragraph 2 (a) and Paragraph 2 (b) . It Would then read as follows: "Shall then be free, not later then six months after such action is taken, to withdraw upon the expiration of 30 days a ter written notice of such withdrawal is received by the Committee of such substantially equivalent concessions as have been initially negotiated with the contracting party taking such action." The same changes would be made in the last four lines of sub-parapraph (b) 43 E/PC /T/TAC /PV/18 CHAIRMAN: The Delegate of China. Mr. D. Y. DAO (China): Mr Chairman , I know it is very difficult to cover all the casus we can think of. I think this is the best text we can produce. However, even with the amendment suggested by the United States Delegate, we have not covered the case in which a contracting party which may be affected by the withdrawal of substantially equivalent concessions withdrawn by the country taking the counter action against the first contracting party. However, if it is understand that the contracting party which is affected could take action under the Nullification or Impairment clause, I would be satisfied with the text. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom) Mr. Chairman, I think we have got to put a limit to what I may call the widening ripples, and it does seem to me it is probably not desirable to carry it beyond the stage of the original action and the counter measures. I think we may find ourselves in great confusion if we do. I have the feeling that if unfairness does result from the practical action of those measures, it will have to be sorted out by the Committee. I do not think we could possibly follow out all the repercussions I might say I would agree with Mr Leddy's drafting and I do feel that this is the right interpretation of the Article, because this is, so to speak, a negotiation in reverse. It is not like the Nullification Article; it is something which we might describe as misbehaviour and the penalty for misbehaviour. CHAIRMAN: The Delegate IoIndia.ie 1 , 41 S. 45 E/PC/T/TAC/PV/18 Mr. B.N. ADAKAR (India): Mr. Chairman, I think the substitution of the word "withdraw" for "suspend" is an improvement, but as regards the second suggestion made by Mr. Leddy, I order whether some terminology could be employed under Paragraph 2 (b), because in this case the action is taken by a contracting party having a substantial interest in the product, and, in the case of such a contracting party, the concessions which it withdraws may or may not have been initially negotiated with the contracting; party taking such action. I am not sure of the point, but if that is the intention then it should be confirmed. In that case, of course, with a slight modification we could say "of the substantially equivalent concessions as have been negotiated with a contracting party taking such action under the terms of such Agreement." CHAIRMAN : The Delegate of the United States. Mr. LEDDY (United States): Yes Mr. Chairman, I think Mr. Adakar is right. The second sub-paragraph - Paragraph 2 (b) would read "with a contracting party taking action under such Agreement" instead of "the contracting party taking such action." because Paragraph 2 (b) is broader than Paragraph 2 (a). A contracting party might be dissatisfied with the compensatory adjustments which might have been necessary on the part of the county which did not initiate the action in the first place but agreed to it as part of a general arrangement. E/PC/T/TAC/PV/18 CHAIRMAN: is the Committee now agreed as to the changes proposed by Mr. Leddy? Agreed. Any other comments? Dr. H. DORN (Cuba): Mr. Chairman, I only wish to ask a question. I understood the original proposal of the Sub-Committee that to mean/they used the wording "suspend the application" in order to make clear that this concession does not work any longer against only one country. That really excludes the application of the Most-Favoured-Nation clause, because that is a counter- action against an action taken by this contracting party, and they said, as I understand it, "suspend the application" in order to imply that the concession as such is maintained: that means, it is maintained in favour of all the other countries, and "suspend" applies to the action country. But now it seems to me one speaks of withdrawal of the concessions and that it applies to all countries. That is a substantial charge. of the sense and not of the wording,. CHAIRMAN: It was agreed that there was no intention to in any way interfere with the operation of the Most-Favoured- Nation clause This Article is headed "Modification of Schedules". It refers throught to concessions negotiated "under paragraph 1 of Article II, the Schedules, and there is no reference in the Article to Article I, which is the Most-Favoured- Nation clause. Therefore, I think the intent is clear: that in no way should this Article interfere with the operation of the Most-Favoured-Nation clause. Is the text of Article XXVI recommended by the Sub-Committee as modified by the amendments we have agreed today approved? 46 V E/PC/T/TAC/PV/18 Agreed. Mr. D.Y. DAO (China): Mr. Chairman, may I ask whether the same amendment will be made to paragraph 2(b)? CHAIRMAN: The amendment to paragraph 2(b) is that as changed by Mr. Leddy, and paragraph 2(b) would read: "to withdraw upon the expiration of thirty days from the day on which written notice of such withdrawal is received by the Committee such substantially equivalent concessions as have been initially negotiated with a contracting party taking action under such Agreement". Are there any other comments? The text as amended is approved. Tomorrow morning we shall meet at 10.30 and we shall first of all take up Document T/195, which is a draft prepared by the Secretariat in preparation for the signature of the Final Act and the General Agreement on Tariffs and Trade and the Protocols. After that. we shall take up the proposed new Article XVII, paragraph 6 and 7, as proposed by the United States Delegation, as given in Document W/328, and after that, the text of Article XXIII of the General Agreement also proposed by the United States Delegation, as given in Document W/330. We will then deal with any other points that are necessary to clear up the text. The meeting is adjourned. (The meeting rose at 12.10 a.m.) 47 V
GATT Library
mj531gz8816
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eighth Meeting of Commission A Held on Wednesday, 4 June 1947 at 3.25 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 4, 1947
United Nations. Economic and Social Council
04/06/1947
official documents
E/PC/T/A/PV/8 and E/PC/T/A/PV.7-8
https://exhibits.stanford.edu/gatt/catalog/mj531gz8816
mj531gz8816_90240076.xml
GATT_155
12,123
73,295
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL RESTRICTED ECONOMIQUE E/PC/T/A/PV/8 ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT EIGHTH MEETING OF COMMISSION A HELD ON WEDNESDAY, 4 JUNE 1947 AT 3.25 P.M. IN THE PALAIS DES NATIONS, GENEVA H.E. Mr. ERIK COLBAN (Chairman) (Norway) Delegates wishing to make corrections in their speeches should address their communications to the Documente Clearance Office, Room 220 (Tel. 2247). NATIONS UNlES ER 2 E/PC /T/A/PV/8 CHAIRMAN: We were, yesterday, examining paragraph 3 of Article 24. There we mentioned a reservation or a suggestion made by the delegate of Brazil and Chile to insert in that paragraph the words "andparticularly with regard to Members legitimate need for protection". The delegate of Brazil was kind enough to say that the same idea was expressed also in an amendment proposed by the United States delegation, and as he has no amour propre with regard to his own draft, he would accept the wording proposed by the United States delegation to the Commission. I would also mention that the delegate of China has made a similar proposal, particularly to the "legitimate need for protection". That is exactly the same idea as the one submitted by the Brazilian and Chilean delegates, and. which we find in the United States proposal, so I think we can concentrate on the United States proposal when we come to it. I hope the delegates of Brazil, Chile and China have no objection to this. Before we tackle the United States proposal we should clear away a slight proposal made by the United Kingdom delegate. You will find it under number 4 on page 13 of document 19/150. I would ask the United States delegate whether the idea contained, in the United Kingdom amendment may be fitted into the United States text. The, question is simply whether you would agree to"complete such negotiations? " Mr. WIETHROP BROWN (United States) Mr. Chairman, I think that I would prefer to hear what the United Kingdom delegate has to say. and any other comments that might be made by members of the Commission. - E/PC/T/A/PV/8 M. BIRtDUC (France) (Interpretation); It is merely, Mr. Chairman, an observation of drafting. In the English text we read: "enter ints"negotiation '. In the French text"we read: touvzir ou de conclude". LE. R.J. SHOLCL (United Kingdom): The English text reads: eenter into nLgotiations with such complaining memanr in acoordm ce with the requirements of paragraph 1 of this Article or to couple te such" egotlation ".eThe word t;ncgotiate" by itself is ambiguous, it mign juerelyopen <negotiaeir2-; r tiattons and then do nothing about It. We thought it was desirable to put not only enter into negotiations but to carry them through, and that was the main object of our amendment. - 4:E f/rV/ Lf.M/.rVIcJ CF.INI&N: Lre there any other further remarks? DI. T.E.HOLLOWAY (South ifrica): Mr. Cu:,iriln, } woUl1 like to know what is the process of completing such negotiations? I. yvu Set to the stage when you complete negoInations it is somathing which has substance. La our experience in theso negotiations, we enter into negotiations but wc find, after a little while, that we can Get nothing in exchange. N;;,have wa competed the negotiations by breaking there off then? haM BJLADUC (Er.:c) (Irj:rrtation): In bit&t ce, om amendement I think the United Ki:: Emrom iwndment should read: . . . *water into negotiations with such complaining Membea in accordance with the requirements of Pvragraph 1 of this Article and to complete such negotiations. ." instead of "or to c:zplete. . ". CH"IRJBM: I -::- t so sure. Wit:. r r- to the words " . * -'L it linds that a Mtmber has, -without sufficient justification, . . . failed to enter into,. . or to complete suchdoes ooiations. . ."1, if you zay aand" it ;,e nrt give exacmmi the same meaning. T-: Mv:bJr :ust co=zit himself to enter into negotiations and he must commit himself to complete dom npgotiations. T;,at is the Unit-::O Ei-: jroposal and bligations fail'e Lz e; @Le ofro cb'igations, the procedure will fail. Are there any further remarks? Mr, ROTSJthink (UaiLod KiaFdom): Mr. Chairman, I i'iirik I .;.ust say, on the point as to what is meant by completing such negotiationsS- -Y it must mean to carry them through to a conclusion if it is possible, in fact, to do so reasonably. - /-Di Im f .. I= .q S E/PC/T/A/PV/6 If circumstances intervene which prevent you from com- pleting your negotiations, if there are good reasons, that will provide a good deferece against the imputation, under this paragraph, that you have failed without justification. You have got to say whether there is sufficient justification or not. If some force majure prevents you from completing your negotiations, that is sufficient justification. If, on the other hand, you cannot put forward any reason of that kind, then there is not sufficient justificat ion. Dr. HOLLOWAY (South Africa): M. I goint out, Mr. Chirman, that that itoaning is fully covered by tho words ,which tho Unitod 1:Iiaoic D;Lc-:,at tries to eliminate, simply, "to negotiated. Mr. R.J. SHAKLE (United KingDom): I imagine is better to specify that the progress of the negotiations should be maintained than that they should be completed. CHAIRMAN: Are where any --ny further remarks? Dr. H.C.COOMBS (Australia): Mr. Chairman , the Austrelian Delegation would like to support very strongly the United Kingdom proposal. Unless it is made clear that the intention is that the Members have an obligation not merely formally to enter into negotiations but to carry those negotiations through to a conclusion, or to be willing to show cause that the reasons why such a conclusion was not reached are valid reasons, then it seems to me that it would be open to any country to evade the obligation which is intended here merely by opening negotiations and remaining in a state of suspended negotiation indefinitely. S - 6 - - -, - . , _ r. Wi:Ali o,)nited OWtateU-'At%; S>:lusm: , r. ChairLan$t I thil-.; we are all in agreement that it would be undesirable if i wtre possible to evade the purposes of this paragraph by simply appearing at one side of the negotiating table for an opening meeting and than-finding it impossible to go Lhead -amore aty xaoIL uhan eel t. I fZ1 that is what the gdomeielegation C l.,>ticn, anelegaher De.Lietions who have spoken, are trying to awvoid. I onder if some phraseology could be found to cover the cameeof a Me-bar who failed to enter into-negotiations or unreasonably delayed their com- plerhaps Purihsas we ould put .some language of that kind into the report, semthat a M:;ber could not just make a formal gesture and then sit back and go no further. Dr. -HOLLO LYf(SouthL Alrica):ntro you i;ituduce the words tle:tar into negotiawhen y", y you have got to say something more;.whereas, if you use the words of the original draft, then it includes the whole process. V/8PrCp/ /'. /; QR P 7 E/PC/T/A/PV/8 While one of the parties is prepared to say something to carry the thing a stage further, the other party must be prepared to listen to them, and the United States amendment on paragraph 3, as a matter of fact, sets a period of time. About half-way down on page 13 of the United States amendment they say: "... failed, without sufficient justification, to negotatet with such complain- ing Member with a reasonable time." I think If you use the word "negotiate" instead of the six words which mean the same thing, then this United States amendment covers the whole position. CHAIRMAN: I think that we can now say that everybody is in agreement with the idea behind the United Kingdom proposal, so what remains is simply a drafting question, and I think what the South Africa delegate has just said is extremely clear and true. The word "negotiate" cannot only mean to take one's place at a table at a first meeting, but it means everything connected with the negotia- tions, and if you.add to that "within a reasonable period of time" 'it-emphasises that it should be the whole procedure of mutual talks to arrive at a solution of the problems. before the delegations cone erned. So if the drafting ad hoc sub-committee can introduce some words to make it still clearer, so much the better. So I think we willd1i1l leave it like that and let the drafting sub-committee look into it. Mr. R.J. SHACKLE (United Kingdom): C rmr.aiman, I would Wsy'ust this: I think there is a certain point of substanc e underlying this and it is desirable to clear it up. The intention in this .paragraph, as I think we have always read it, is that it should be open to the Organisation to say to a particular Member: "You have not done well enough in these negotiations: you have not contributed enough." That is surely implied in the words "having P. -8 - E/PC/T/A/PV/8 regard to the provisions of the Charter as a whole" , because that would permit allowance to be made by the Organisatiop for a country which was in process of economic development - something of that kind. That surely implies that the Conference has the right to say that -the contribution which the particular ,courntry has brought to these negotiations is not good enough. We should be clear as to whether that is what we mean to say or whether it is not. M.BARADUC (France) (Interpretation): I only wish to say, Mr. Chairman, that the French delegation fully agrees in substance with the United Kingdom amendment and the comments. which the dele- gate from the United Kingdom has just given us. There is only therefore a question of form and I am sure the sub-committee could settle it. CHAIRAMAN: I believe we could be safe in saying that the ' whole Commission agrees with the underlying idea of the United King- dom proposal and we now should proceed with the consideration of, the United States proposal. You have it before you and have already discussed it in some detail. I would like to know whether the United States delegate wants to explain it further. MR. WINTHROP BROWN (United States): Mr. Chairman; I think that the only point of substance has already been discussed. The remaining changes which are suggested in our amendment are simply drafting changes and I think should. be examined as such. CHAIRMAN: May I take it that the Commission agrees to the United States re-draft? J. 9 E/PC/T/A/PV/9 ER. P.G. OLDIN (Chile) (Interpretation): Even since the debate in London, and certainly after the debates in New York, we have been concerned about the different interpretation which might be given to certain words in the Charter. These words are used when no meaning can be clearly defined and when it is impossible to find the exact technical terms or linits of concessions which co uld be made by Members or to Members, and in this case we have used time and again the word sufficientt", when it is stated "without sufficient justification". I realize fully the difficulty to find an exact term to define these things, but I am afraid the word "sufficient" might be subject to various interpretations, according to the good or bad tempers of the interested parties or their own conceptions or theories on the subject, or even to their tendencies of the moment. I wonder whether it would not be possible to find, either in some commentries on this particular paragraph, or in the conference; documents, or, which would be even better, in the text itself a defiinition which would be nearer our intention than the word "sufficient ". I think the word "sufficient" may be dangerous, as I have explained, because it may be interpreted in different ways. Secondly, when comparing the suggestions which wezmacle in New York, and the suggestions Embodied in the Chinose proposal with the terms used in the Unced. St-t-As proposal, -I wonCler whether they are; really eauiv2lent, a ;s has been said here. Sometimes there may be what appears to be a very small change which m-y matter very little, but sometimes even a small change might matter a lot, and it might even alter Taotically the whole meaning. I think the words "legitimate need for protection" are not exactly equivalent to the words "econorzic position of a K:ember", an( I ami not qcuiite J. - 10 - sure, especially in view of the place ln the text of the words "economic position of a member" in the United States text, which is vary different from the place which the similar proposal has in the Chinese proposal. I wonder whether we are not having here a change in the field of application of that sentence. When it says in the New York text "if it finds that a Member has, withouit sufficient Justification, having regard to the provisions of the Charter as a whole", and so on, it would be much better if we could find some sort of criterion enabling us to define the word sufficient", and we might, as was said in the New York and in the Chinese proposal, add something regarding tho legitimate need of Members. If we amalgamate these two ideas, that is, the definition of the word "sufficientt" and the "legitimate need of Members", we might find the element enabling as to reach the aim we are pursuing Of course, we would not reach an aboslute ogrtainty, but we would reach at least some sort of relative certainty. I am in no position at present to suggest the precise text, but a text could easily be deduced from my statement, and I wonder whether the sub-commiittee would not, if the Commission agrees, take these remarks into account, and then perhaps it will enable that sub-commttee to reach a conclusion which will clarify the text, which, in my opinion, is not quite clear at present. CHIRMAN : Does any other delegate want to speak about the American propo sal? MR. K.S. MA (China): Mr Chairman, I would support the Chilean delegates proposal to refer the matter to the sub-committee, so that some sort of a better way of wording it would be possible. - OaI4i-F R: Yes, of uzurse vre shall send it to the sub- mmomiettoegb-t he sub-ozme aguidance o have soLcie 6aiCanoe *n the part f twouold haveisn, ampres ivoultah"vo the iis:prsion th-t the CoMissiohe eUnited aparoves tiIr 'Jnitd St~.es proposal, ane. even if eheesub-co=rittee isgpvrftctly willing to 6o through it very carefully soeasdtv see whether .th; ideas of the Chilean anc Chinese delegates can. be more fully expl-ined in the text, at any rate, th sab-forcalled should& neot e ozllc upon to opan -the ehola crsclssion on thQ mattez. They shoule try to ameliorate thc- Ueited States text as woll as Shey dan, but if uhey Ehoule fail, I woald sincerely hope there wouldmbe nogq estion of sub.xttine dalternative tests, an I hope hat there warl not beo any n ccssity for making reservations either, `emmic e predaratdry .todrnttae anm we to noz to our we duty propeely if/sand only bunch s of reaservations and. alterntive texts to the genol conference. We will smnd.eit to the sub-comoittae, which will take note of the discensioacewhloh have taks. plAca here. E/PC/T/A/PV/8 CHAIRMAN : Then we have on page 14 of Document 150 a note that the US. Delegation "may wish at a later stage to make certain suggestions for a general regrouping of articles under Chapter V. Meanwhile, it is proposed that Articles 14, 15 and 24 should in any event be grouped together under a single section." We have a suggestion on the Agenda of other Articles in Chapter V, but as to the articles we are discussing here, I think the Steering Committee has already indicated that these Articles are very closely connected, and obviously must be inserted in the Charter in such a way that this connection is not broken. Unless any Delegate wants to speak about that, we go on to the next item on page 14. Item 6. The Secretariat questions whether or not the last sentence of paragraph 3 of Article 24 ought to be omitted as superfluous, as the words are, "The provisions of this paragraph shall operate in accordance with the provisions of " article 67. " as the Committee will see it concerns the Tariff Committee, and it is the Tariff Committee's job to look after this Article 24, and we carry it out. Mr. SHECKLE (United Kingdom): As regards the question of the last sentence in Article 24 being superfluous, I would say it may perhaps be superfluous to have a number on a house, but it is highly useful for the postman, tradesman and everybody else to have a number they can follow. The same applies here. It is useful to have the words, even though strictly they may be superfluous. CHAIRMAN: Well, I take it that the Committee is not prepared to leave out this sentence. Then we go on on page 14. It is suggested by the United Kingdom that there should be a new paragraph - you will find it 12 13 E/PC/T/A/PV/8 on page 19 of the New York text, in a footnote. Perhaps. the United Kingdom Delegate wants to speak? Mr. SHCKLE (United Kingdom): All I want to say is that we think this suggestion is entirely right in principle, and the paragraph explains itself. Actually, as is noted in the footnote on page 19, account has been taken of the point on the text of the general agreements on tariff and trade, that is to say in the second footnote, which appears on page 69, where it is said it is contemplated that it would be included in the appropriate place in the agreement "undertakings.designed to prevent .the nullification or impairment of the benefits of the tariff concessions of the Agreement which would result from any reclassify -cation of products at higher rates of duty than those provided for in the Schedules", and then goes on to suggest that "Such undertakings might take the form either of provisions designed to prevent such reclassification entirely, during the life of the Agreement, or to prevent the imposition of higher duties resulting from such reclassification, or, in cases where neither of these two courses might be practicable, of provisions for negotiations to restore the previous balance between concessions and counter- concessions. " I think there is no dispute that this is a proper provision in principle; the only question is whether it is the right place. It seems to us that wherever you have a provision for negotiations there should be a provision of this kind worked. in. It may be that the right place is in the text of the general agreement of the text of the Charter; or it may be it would be good enough for this to be worked in, for example, as headnotes to the various tariff schedules. G. - 14 - On that point I have no strong view, but I do think the principle should be clearly recognised and worked in at whatever is the most appropriate place. CHARMAN: The Delegate of the United States. Mr. WINTHROP BROWN (United. States): Mr. Chairman, we entirely share the view of the Delegate of the United Kingdom that the prince ple included in this suggested paragraph is correct and desirable, and we feel that perhaps it might be more desirable to have it in the general agreement on tariffs and trade, since it is, .in essence,a provision which safeguards the specific concessions which will appear in that document. CHAIRMAN: The Delegate of South Africa. E/PC/T/A/PV/8 V - 15 - E/PC/T/A/PV/ 8 Dr. J.E. HOLLOWAY (South Africa): Mr. Chairman , this seems to me to be introducing into the Charter what I think, in certain religious terms, is called "plenary absolution". Here are two things which you may do which take away things you have undertaken to give to other parties. You have given them a certain tariff classification, you have negotiated the tariff and, you have agreed to that,and then you take something out of the classification. You are taking something away from the other party. Similarily with regard to tariff valuation. A great deal of time in now being spent on prescribing certain limits within which Members will have to keep. This suggested paragraph implies that there is nothing very wrong about getting out of your obligations that way and in having benefited, provided that you are willing-to negotiate about it afterwards. In the meantime, of course you have got the bnefit of your wrong-doing. I think that a paragraph like this sugests something wrong, and I think the purpose of it is suficiently covered by the provisions in the Charter which enable a Member to complain a against actions in conflict with obligation that he , has undertaken CHAIRMAN The Delegate of the United Kingdom. Mr.R.J. SHAKLE (United Kingdom): I think this question rather falls into two parts. First of all, there is the question of tariff valuetion - the question of so altering your system of tariff valuation as to increase the bound rates of ad valorem duties. That is the first, part, and the second part is the question of tariff classification. Well, so far at the tariff valuation side is concerned , that is taken care of in, the draft General. Aggreement on Tariffs and Trade, Article VIII, paragraph 2, and that provides that: "No E/PC /T/A /PV/6 contracting party shall alter the principles "(or tariff valutions)" so as to impair the value of duty of the concessions Provided for in the appropriates Schedule annexed to this Agreement". That takes care of that satisfactorily. There we come to the part about classification .That is perhaps a little more complication ,owing to the fact that in a s ;-ooaany countries the interpretaatonv of the tariff classif b tL iLis a more or less legal .r. Ier ay, therefore, be that there may be difficulties about providing for an absolute freezing of olassifcoation.c I think ,hat a- -a mas r of equity and reason one should provide for the freezing of one's classification, but if that is not possible, one may need to have an alternative resort; and it will be observed that in the second footnote to Article VIII of the Gencral Ageecment, ehose two alternatives are mentioned--either tho possibility of freezing or, if you oa~not cannze, teen compensatory negotiations. It leaves that question unresolved. We ought, I suppose, to attempt to resolve it. As I say, I think our feeling would be that freezing is the right course, if it is possible, but it is perhaps open to doubt whether it is possible, and whether we now have to accept the inferior alternative of possible compensatory negotiation. CL;IRXLCHAIRMAe Delegate of Canada. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, we are in agrEtment eeth the proposal of the United Kingdom. We think it woud be disirabee to freeze th- classification, but do not think that that is practicable, because tariff classifications are not completely specific. In many cases, classifications are rather general, and there is always the problem of interpreting the eassifCclation. A11 goodllare not specifically mentioned in - 16 - V - 17 - E/PC/T/A/PV/8 tariff classifications and many countries have machinery for interpreting classifications, and from time to time rulings will be given which may determine the classification of a specification. Now, that .ruling may be contrary to the understanding of the parties to the Tariff Agreement, and there should be room, therefore, for an adjustment to take place. For-that reason I do not think it is possible to freeze the classifications;. therefore there must be a procedure for dealing with the inevitable changes which have to take place in such classifications. CHAIRMAN: I do not quite understand the position. we negotiate the binding of certain items of our tariffs. How is it then possible that we should be free to modify our tariff classification in such a way as to increase the duty? It is up to us. We can modify our tariff classifications as much as we like, but I should have thought that we could -not go it in such a way as to increase the duty. I may be under some misapprehension, but that is how I look upon it--more or less in the same light are the Delegate of South Africa. Is it wise, in the Charter, to take it for granted that countries, having committed themselves to certain maximum rates for certain duties, should alter their national rules or regulations in such a way -as to make the concession they have given inoperative? ER - 18 -E/PC/T/A/PV/8 Mr. J.J. DEUTSCH (Canada): Mr. Chairman I just want to clarify what I was trying to say. The trouble is that, in some oases at least, we do not always know precisely what we have bound because the tariff classification is in general language and way include a great range of commodities,and none of us knows exactly all the commodities that come within a particular classification - neither of the parties may know. They know it covers this general group of goods, but there may be a specific Item which no one knows exactly whether it is there or not. that has great significance, but later on a greater significance is attached to an item and the matter is referred to a tribunal in some countries, and a ruling is given which may change the situation from what could have been reasonably understood at the time. I think there should be some provision for adjusting the situation .when that situation arises. On the general point, Mr. Chairman, I am fully in agreement with you. This is purely a technical problem. Mr. R.J. SHAKLE (United Kingdom): Mr. Chairman, the point which was raised calls my attention to the inaccuracy of the wording 'of the United Kingdom proposal on page 19, because it speaks of altering its tariff classification. Well, that is not really the point as I now see it. The point is that, when the classification that is to say the specification of the items or particular products may be transferred from one item to another as the result of a decision, the wording there needs some kind of amendment. The footnote on page 69 to Article VIII has expressed it more accurately because it speaks of the reclassification of products. We should have to think how to change the wording of this particular clause. - 19 - E/PC/T/A/PV/8 CHAIRMAN: I understand the situation very well now, and I would like to know whether any delegate is in disagreement with the general principle of the United Kingdom proposal? M. DESCLEE DE MAREDSOUS (Belgium) (Interpretation): I have no special objection against the general framework which has been mentioned of the United Kingdom proposal, but I think the procedure should be studied in greater detail and with greater care. I think that the general guidance was omitted and as regards the procedure, the Sub-Committee would not be in a position to draft. For instance, when it mentioned, in the United Kingdom amendment in the new paragraph, "further negotiation", are we to understand that the negotiation would be carried out according to the provisions of Article 24, and, to be more precise, would it be the case that a country refusing alteration in the tariff would have recourse to the Organization? This is a very difficult question, and I would prefer for myself a formulation, for instance, that in such a case the Organization shall refer the decision of a question to one of its technical Sub-Committees, as it is a very highly technical question. CHAIRMAN: My own view, before I ask for the opinion of the United Kingdom delegate, is that I would say that this proposal was made in New York as an addition to Article 24, and I think meet members of the Drafting Committee have understood it to mean that the procedure of paragraph 3 of Article 24 should apply. As to the Belgian delegate's suggestion that the Organization, in applying the procedure, should make use of the technical Committee at the disposal of the Executive Board, well, I think it is a foregone conclusion to think that the Commission would meet for exactly the same purposes. I do not think that raises any great difficulty. - 20 - Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman, I would like to say that I agree with.what you have just said. It seems to us that this is a case where a tariff agreement made in pursuance of Article 24 has, so to speak, gone wrong. It has gone wrong through the re-classification of some products which detracts from the value of the bargain as originally struck. Clearly it is right that any further bargaining shall be under the sane procedure exactly. I would also like to say, whilst I am speaking, that the question has been raised as to whether the proper place for this is in the Charter or in the General Agreement on Tariffs and Trade. I would have thought myself it was right it should be in both, because the principle will surely apply to the original negotiations and any subsequent negotiations. CHAIRMAN; The Delegate of China. Mr. K..S.MA (China): Mr. Chairman, the Chinese Delegation, whilst not objecting to the United Kingdom proposal in principle, is not quite in favour of making this addition. For instance, the import tariff of China has not been revised for more than ten years and requires re-classification to meet the actual needs of the moment. Even during the present tariff negotiations with other Member countries, the Chinese Delegation finds it very difficult to maintain the present classification without making considerable readjustments. For this reason, we do not quite support the idea of making another additional paragraph to this Charter. CHAIRMAN: I should have thought that the difficult position in which China finds itself should render you still more interested in having such an additional paragraph. E/PC/T/A/PV/8 S S - 21 - E/PC/T/A/PV/8 Mr. K.S.MA (China): Mr. Chairman, the fact is that, as I have, said, we do not quite object to the United Kingdom proposal in principle. We might agree to it in principle, but there are great. difficulties in the way. For instance, in our tariff we have about 600 items, whereas in the tariffs of most of the countries of the world they run up to several thousands, perhaps as many as 10,000. For that reason we need re-classi- fication very badly and this new paragraph might put great difficulties in our way when we make this re-classificat ion, We do not entertain the idea of increasing tariff rates wherever possible, but in the re-classification it may happen. Mr. R.J.SHACKLE (United Kingdom): I can appreciate that that is an argument against the freezing of classification. Surely not, because any changes which take place, and which affect a private bargain already struck, are part of its value. Our proposal illustrates the need for and desirability of a provision of this kind. CHAIRMAN: I am glad to hear that the Chinese Delegate is in agreement with the principle of the United Kingdom proposal. He hesitates because he anticipates that in his country there may be some re-classification that might be interpreted by some other nation as dealing with increasing the duty. I venture to suggest that it would be much better for him - and would be quite a legitimate thing,- to be willing to re-open negotiations in order to settle this difficulty than to commit himself and then to alter his classification, because then, not knowing the way out of it, he will have gone against his obligation and there will not be any clause in the Charter to cover him. E/PC /T/A/PV/8 22- I really feel it is in his interest that this clause should be inserted. I Apologise for pressing the point. I do not expect the Delegate of China to give an answer now, but I think he would agree that generally the Commission accepts the principle of the United Kingdom proposal.. The drafting will be done by the special sub-committee and there the Delegate of China will have an opportunity - as he is a Member of the sub-committee - of seeing whether the final result is acceptable. As to the question of where the special sub-committee should place the draft they will prepare, I take it that it ought to be in Article 24, as originally intended by the proposal which they accept. At the same time, as a number of these Articles will have to be referred to in the General Tariff Agreement, it will also have to go in there, but only as lent from the Charter for the purposes of the Tariff Agreement, The Delegate of the United States. Mr. Winthrop G. BROWN (United States): Mr. CHAIRMAN. I am afraid I must maintain the position, at least for the present, that we feel it would be preferable for this matter to be covered in the General Agreement. S - 23 - E/PC/T/A/PV/8 CHAIRMAN: The delegate of Belgium. M. C.D. de MAREDSOUS (Belgium) (Interpretation): I wish to stress two points, Mr. Chairman. In the first place, the interested country will be in a position to alter its methods of classification without prior justification. In the second place the procedure which is suggested is not more strict, therefore, than for the initial classification. I therefore draw your attention to these two points and make some reservation on the choice of procedure to be adopted and on the extent to which modification can be met without previously advising the Organization. CHAIRMAN: Normally, I would be reluctant to refer this question to any ad hoc sub-committee, but in this case all the delegates who have taken part in the; discussion are members of the sub-committee, and having adhered to the principle of the United Kingdom suggestion, I think we can safely leave it to the ad hoc sub-committee to attend to the drafting of the said text, and àlso discuss and come to some agreement as to whether the text will figure only in the tariff agreement or also, as I personally think it should, in the Charter. Could we not leave it like that? M.F.Garcia-OLDINI (Chile) (Interpretation): I would like to say a few words wvhickh are not exactly on the point, but I seem to have noticed a certain tendency shown by our Chairman, when he said a few minutes ago that we might leave the remnants of the discussion to tho sub-committee. I understand fully that the Chairman, in his capacity as Chairman, should endeavour to expedite our debates and to gain time, but perhaps on some occasions, if I may be allowed. to say so, he seems to forget somewhat the rithts of this Commission. I realise, of course, the difficulty of the situation - he is always pressed for time by the Steering Committee and the Secretariat. The Chairman, on another point on another occasion, said that he hoped that the text would come back from the sub-committee without any new alterations or reservations. I would like to remind him that the Committee is its own master and that a second reading is always possible, and on that point I would immediately say that our delegation reserves the right to present new observations or alterations if necessary. Also, all the time, the Chairman reminds us of the important role of the Steering Committee . I am not saying for one minute that it is his intention, but in so doing he runs the risk of inducing us to some sort of error. The Steering Committee appears in that light as the owner of this Conference, but this is not the case. The Steering Committee is an organ which we ourselves have appointed in order to simplify our work and to undertake some work which we do not want to undertake, and to make some proposals which we are in a position to accept or refuse. I agree that if we accept them, they have some sort of influence for us, but this does not alter the possibility of changing them if we deem it desirable. If we continue in this way, . I think that we might full in the same error as we did at the first part of the Conference, that is to say, we might complete our work in a hasty and incomplete way, and I would like to remind the Chairman of the instance of the Working Party on Articles 15 and 23, the work of which was certainly, not satisfactory, and he himself will probably agree there because he worked on that Working Party. There was no second reading; the report of the Working Party was not made available; we were not even allowed to study one of the Articles. Therefore, I think if all the time we are imposed upon in such a way by the Steering Committee, we might have bad results finally, and I very sincerely wish to draw the attention of the Chairman to this danger. E/PC/ T/A/PV/8 G - 25 - E/PC/T/A/PV/8 CHAIRMAN: The Delegate of Chile referred to the Steering Committee and the Secretariat and gave the impression that I shifted the responsibility for my way of directing the proceedings of the Commission to the Steering Committee or to the Secretariat. That is not the case. I do not take any instructions from the Steering Committee or the Secretariat other than on questions of procedure, and I even there retain .my right to have m' wnm view. As to thequ estion that the Commission is sovereign, there is no doubt of it. I have said that when we refer a question to ad hco Sub-Committees we hope, and even expect, to receive a Report that clears away difficulties and presents as far as possible a unanimous and agreed opinion.. That is not in order to impose on the Committe ebut in order to help balance the work of this Committee. We choose four members of ad hoc Sub-Committees from appropriate Delegations, those who have shown particular interest in questions under discussion, and. we think that a small group of this Commission who have really proved their particular interest is the best working method; but, of course, it does not infringe upon the sovereign rights of this Committee. It is quite possible that a unanimous Report from the Sub-Committee would be turned down by this Committee - I hope it will not happen, but there is nothing in the Organisation or this Committee to prevent it. As to the question of the Working aPrty on Technical Articles, I beg to mention - if it is not already known - that we got a request from the direction of this Conference - that is the President of the Steering Committee, and. the Secretariat - whether it was possible for us to clear all that in time for Commissions A and B to be set up at a certain date. I answered. it is possible, but we cannot then have a second reading - the second reading would come. E/PC/T/A./PV/8 I must hope, in this Committee or the Executive Committee - but nothing has been lost by that. We established a number of Sub-Committees in the Working Party on Technical questions. Most of these Sub-Committees - I think there are six or seven of them - presented Reports which were considered and agreed to. Two on Articles 17 and 18 are still under consideration, and they will, when ready, be presented to, probably, Commission A, and no time has been lost. It was a very logical and very reasonable way of handling the problem. Finally, as a general remark, I do my utmost to press for speed. We must try to get through with our work within a reasonable time; but that must not, in any case, be interpreted as an attempt on the part of the Chair to prevent Members of the Commission from taking their full share in any question before us. Mr. GARCIA-OLDINI (Chile) (Interpretation): I would not like to leave the Committee under the impression that I imply some criticism of our Chairman. I never intended to say the Chairman was in any way influenced. What I said, and what I think we all feel really, is that we find ourselves pressed all the time by the Steering Committee and the Secretariat. I understand perfectly their viewpoint, but I ask the Chairman to keep a balance between the special need of the Steering Committee and the Secretariat for speed, and our own need and desire for all explanations which are necessary; and I hope the Chairman 'will be satisfied with this explanation, and that my meaning has been perfectly clarified. CHAIRMAN: Thank you.. G V E/PC/T/A/PV/8 CHAIRMAN: We pass on to the last point on page 14 of W/150. The French Delegation proposes the addition of a new paragraph to read as follows: "The Organization shall, as soon as possible, fix the maximum rate of pro- tection, which must not be exceeded by any Member. This rate may be subject to periodic revision in order to achieve a progressive reduction in customs tariffs. Exceptions with regard to certain products may bo agreed to by the Organization".! M. BAADRUC (Fancre) I(netrpretation): It has been said, Mr. Chairman, taht irony is one of teh traist of teh French mind. The French Dlegateion , Iimmediately ahsent to say, did not intend to be umohorusw Wen presenting this aidition. Many ofopur colleagues have already let it be knownt ha thet ydid not think such a proposal otbe caceptaleb. However, other Dleegations have thoghut that it wass implyw itty. That wFs wrong, I umst say, and other Delegations finally appaeerd to be interested, but did not know exactly how to apply this addition practically. I would lie kto give you a serious explanation of our amendment. I do not intend, in this somewhat stomry atmosphere, to open a debate which might become impasssioend, but I do not want to put any of tehDe elgations present in ny difficulty.E I only wish to say a few words about the reason for this amendment. I would like to have an exchange of views on the exact application which it might find in the tariff negotiations and of the powers to be given to a future organisation. I would like to remind you briefly of the aims of our work. I know, of course, that Chapter I is not yet in its final form; but I do not think that it will be changed substantially from its present draft. E/PC/T/A/PV/8 ER - 2 8 - E/PC/T/A/PV/8 I would like to remind you that it is written in paragraph 1 measures that "further international/should be taken dealing directly with trade barriers and discrimination which stood in the way of an extension of multilateral trade.... etc."" I think that, if we can see that the Charter contains numerous provisions for the elimination of any form of discrimination and of customs barriers, the Organization, on the other hand, will find itself completely disarmed in the question of tariff. I say this with full friend- ship and understanding, but it seems to me that it will be necessary o reinforcet te provisions ofhA rticle 24. I think we should seek to eliminate from the tariffs these duties which are really too high - so high as to be prohibitive - and in any case they restrict,and not improve ,the international trade. They even do so more than quantitative discrimination. In maintaining in the tariffs these excessive duties, I think we are going against our own aims which I expressed in the introduction to our work.Wh en these excessive duties were established they had two ends. First fo all to defend the interested countries against i neqiutable condition sof work prevailing elsewhere in the world. But we see, in Article 5 of the charter that we are precisely seeking to establish fair labour standards everywhere and eliminate therefore these unfair competitions in laobur. If, therefore, this Article 5 is respected, we need not fear at all that there might be any competition ni tat respect, and therefore the excessive duties disappear. The second rectification was that it wasi ntedned, at the time when these duties were re-established, to protect newly created industries, ibt since these excessive duties have, in most cases, been established for a long time, it is to be supposed that these new industries are now devlepod eot such a level thta htey are now ER -29- E/PC/T/A/PV/8 fit for international competition on the markets. If we therefore compare these ideas of excessive rights with the measures which are legitimate and which we advocate in Article 13 for members needing economic development, and the way in which the newly economically equipped countries are to be protected in some cases by the agreement of the Organization,and if we compere also the procedure adopted in Article 13 with Article 24, we see that we might come to a system which might be advantageous to some old country to the detriment of the newly economically developed ones. There is, I think, a great interest in establishing a sort of equivalent between the various grades of protection. The French government have gathered the impression that it would be much easier to obtain, either from private interests or from the parliamentary organization, a reduction of some customs duties if these were sure that for other commodities other countries would adopt a similar attitude or will adopt at least equivalent duties. I wish to draw your attention to these two aspects of the question. I think our work would be badly judged if we let subsist these excessive duties, and this lack of balance between some of the tariffs in various countries. I wish to add that, if our amendment were considered or approved under one form or another, I declare immediately that the government of France would be ready to reduce in some cases substantially the offers already made,or in any case to limit,to a given percentage, their tariff duties. I hope that in saying all that I have not been interpreted as having some bad intentions against some of my fellow delegates, but I would merely like to ask them to think it over in general. E/PC/T/A/PV/8 -30- CHAIRMAN: May I ask if any delegate wishes to discuss this proposal? M. DESCLEE DE MAREDSOUS (Belgium) (Interxretation): I wish to approve fully the French amendment. I think that, especially the second sentence mentioning a progressive reduction in customs tariff, is extremely important in the light of the difficulty and experienced at present/which might be experienced in future negotiations. We might wonder whether we really have created, or are creating, the instrument which would enable an expansion of international trade and in particular which will, in case of a crisis, avoid that the various countries close themselves tightly, which will create an impossibility for an industry to develop itself. I know, of course, that since the last crisis new protective techniques of measures other then customs duties have been found. It would be comforting to notice that, in one field at least, some liberal ideas may matter again. S 31 E/PC/T/A/PV/8 CHAIRMAN: The Delegaate of Australia. Dr. H.C.COOMBS (Australia): Mr. Chairman, I regret that I find some difficulty in associating myself with the splendid gesture of the French Delegate. Unfortunately the proposal assumes that it is possible to rake a valid comparison between protective rates of duty on the basis of the numerical percentage value or money value of the duty imposed. I should have thought that one result of the deliberations of this Commission was to demonstrate vary clearly that such a comparison is not only inadequate but cen, in many cases be definitely misleading. The justification for a duty depends upon many things not merely upon the actual height of the tariffs themselves. For instance, it is our view that in Judging a particular tariff it is necessary to take a number of things into account;- the stage of development of the economy imposing the tariff is, in our opinion, quite a significant factor in judging whether a perti-. cular tariff is justified. We would also argue that there is a distinction between new industries about to be established or in the early stages of establishment and older industries and therefore in judging a particular tariff you would need to take into account the age of the infant which is being cared for. Similarly, we did discuss last year the question of the criteria which might be applied in the application of protective policies and I think it was generally agreed - although it was difficult to give precise expression to this agrear-cnt - that there should be taken into account the long-term: prospects of effective operation of the industry concerned. Similarly, it is our view that the nature of the product to which the protection is applied is a significant factor, S 32 E /PC/TA/PV/6 Fer instance, we think it is less justifisble wher applied to a product which is fundamental to the L lintenance of the health and welfare of the country which is importing the product, or to a raw material which is essential to the maintenance of the industries of that country; whereas it is of less significance, perhaps, to apply protective duties to products which, do not play such a vital part in the social and economic life of the community. In the scv..o way we find in other cases that the reason for a protective tariff various; in somo cases it is purely economic in funotion. In other cases there may be social purposes to be achieved; for instance, the attempt to brine about a more balanced set of opportunities for the employment of the people in a particular region which is unduly dependent upon a limited rango of products, and the achieve nt of those social purposes may be worthwhile, even at the cost of the burden which is imposed by the protective measure, I am sorry to deliver all these exemple but the are necessary to illustrate the point which it does seen important to us to ricognise - that ycu cannot judge a tariff merely by the figures expressing its height and that therefore, if you sought, as the French Delegate has suggested, to establish a maximum , that maximum clearly would neod to bu sufficiently high to provide for all the valid types of pretcetion in valid amounts Judged by the parposes and the circumstances and the products, and so an, to which they apply. It is our opinion that if the maximum were sufficiently high for those purposes, it would be far higher than would be necessary to give valid protection cr justifiable protection in other cases and we are afraid that the effect of it would ba, not so much to bring about a reduction in tariffs but to offer a 33 justification for many which are now too high. Consequently, even an attempt to bring down that maximum would either have the effect of excluding what would appear to be the legitimate use of protective measures, or, on the other hand, of encouraging the maintenance of tariffs in countries or on products where they could, without harz. to the industries or populations con- cerned, be reduced. CHAIRMAN: The Delegate of China. Mr. K.S.MA (China): Mr. Chairman, I fully share the views expressed by the Australian Deleagte on the Fronch proposal. I would like to add that it would not be possible to foresee the many changes which are bound to happen in the industrialization of a country. It would not be possible beforehand to state a maximum which would feet future-needs which are have no way of knowing at this stage. For this reason, the.French proposal would be beyond our competence to aceept 33 E/PC/T/A/PV/8 S J. E/PC/ T/A/PV/8 34 CHAIRMAN : Are there any farther remarks on this question ? M. BARADUC (Ferance) (Interprettion): I fear, Mr Chairman, that my colleagues from Australia and Chile may have wrongly understood what I said, or perhaps I expressei myself batly, because when we speak of the maximum rate of protection, we immediately intend that there should be exceptions and that exceptions should be necessary. We say so expressly in the last sentence of our amendment. We intend that necessary exceptions be dealt with in exactly the same manner as is envisaged in Article 15 that is to say the exception in excess of the maximum should be applied only in agreement with the Organization. CHAIRMAN: Are there any further remarks? Mr .J. P. D. JOHNSEN, (New Zealand): Mr. Chairman, apart from the -admirable intention underlying the proposal from the French delegate, we feel that it would be difficult for us to give support to this proposal. First of all, as tha Australian delegate has pointed out, there are difficulties in determining just what rate of protection is required for the particular industry, and as conditions are, of course, changing from time to time, it is a continual problem. Apart from that, I know that as far as New Zealand is concerned we would be very loth to surrender our sovereignty to the Organization to determine just what protection we should put in any particular instance. For that reason, I feel that we would not be able to support this proposal. CHAIRMAN: The delegate of India. J. E/PC/T/A/PV/8 MR M.P.PAI (India): Mr. Chairman, the Indian delegation associates itself with the delegations which have objocted. to the French proposal. There is not much that one could add to the excellent presentation of the case for undoveloped countries which the delegate for Australia has made. There are two aspects to this question. The first one is whether any particular industry should be protested, and the other one is what the quantum of protection should be. On the latter matter, there is no doubt at all that the quantum must depend on the difference between the national and foreign cost of production. There is no scope at all for any arbitary fixation of the quantum of protection necessary once the decision has been taken that any particular industry should be protected . So, also, as regards division of this quentum of protection, th, question would depend entirely upon a periodical assesement of the reasonable cost of production within and outside the country. On the first aspect, there may be a different of view as to whether any particular industry should. be protected or net, but I do not see how any country can divest itself of its own severeign powers, or decide whether or not it is in the national interest to protect the industry concerned. F-br these reasons I consider that this proposal is not only not acceptable to the Indian delegation, but it is also not workable in practice. CHAIRMAN: Are there any further remarks. G. E/PC/T/A/PV/8 36 CHAIRMAN : The Delegate of Chile. Mr. GARCIA-OLDINI.(Chile) (Interpretation): The Chilean Delegation is sorry to say it cannot, inspite of the interesting declaration made by the representative of France, accept the Amendment suggested by France; and this mainly because. first of all, it would make the development of a country with a smaller economic potential more difficult; secondly because it would imply the abandonment of the faculty for each country to say to .which industry it wants to give protection; and. thirdly, as has been so well explained by the representative of Atustralia, there are a great number of factors which enter into the decision to give a certain protection to certain industries. These factors cover not only economic reasons, but fiscal reasons, social reasons, and so forth, and they are therefore absolutely 'imprevisible', they cannot be foreseen beforehand. Therefore this suggestion seems to us to be impracticable. CHAIRMAN: Any further remarks? Mr. VAN KLEFFENS (Netherlands): May I say Just a word to support the French proposal, Mr. Chairman. So far we have had before us two main difficulties. The first is the difficulty of fixing this maximum rate. Now I am asking myself if the outcome of the present negotiations would not cover the point. I mean, once we have agreed on a set of tariffs, clearly that is an agreeable amount of protection. CHAIRMAN: I had the impression that you had another point. Mr. VAN KLEFFENS (Netherlands): That is true, Mr. Chairman. It is the question of the sovereign rights in deciding what the amount of protection in the future will be. Well, I would like to draw attention to this clause, saying that the exceptions G. E/PC/T/A/PV/8 37 "may" be agreed to by the Organisation, not "shall" . CHAIRMAN: Any further remarks. The Delegate of France. Mr. BARADUC (France) (Interpretation); Mr. Chairman, I do not wish to insist any longer, but I think that the subject still needs some sort of clarifying. When I presented my Amendment , and in the explanations I made a few minutes ago, I had not the slightest intention to impede the development of countries not yet sufficiently developed. economically. I think,, on the contrary. that the exceptions envisage in our Amendment are precisely in conformity with the interests of those countries. We think, therefore, the desirability to eliminate excessive duties exis-ts between countries which have reached a comparable degree of development, and with the exception of the Delegates for Belgium and the Netherlands, the degree of the development of which countries is comparable to that reached by France, I have heard no remark from Delegates whose countries are developed in the same way as France at present. Mr. DE MAREDSONS (Belgium) (Interpretation): I wish again to say a word in support of the French proposal, and to draw the attention of the Committee to the fact that the aim of the proposal is precisely to explain that excessive rates above a certain level are disastrous; and if a country wishes to have rates above the maximum level, then it is essential they should apply to the Organisation in conformity with the procedure explained in Article 13. Otherwise the States;hould not remain their own master in the matter, because this would be absolutely c ontrary to the spirit of the Charter. CHAIRMAN: The Delegate of Czechoslovakia. G. 38 E/PC/T/A/PV/8 Mr. MINOVSKY (Czechoslovakia) (Interpretation): I wish to say a few words after the statement made by the Delegate for India. He said we had to deal with two problems. First of all our industries should be. protected; and secondly what measure of protection should be granted to those industries. Well, I would like to remind you of my experience when I had some conversation in China with industrialists. To-day, when one speaks of protection of new industries, it seems one deals with the problem in the same way as a hundred years ago. Then the countries had little experience in industrial matters. They had no qualified experts, and no machines, they were really experimenting. Therefore, if a country started developing new industries, they naturally refrained from helping the other countries. To-day the situation is completely reversed. 39 The countries whe wish to develop a new industry can, in their turn, have at their disposal the best machinery, capital and first-class experts, and the countries with a. large population have markets --home markets-- which cannot be found, for instance, in Europe, and the Chinese industrialists with whom I spoke admitted that there might be industries against which the old countries should be protected, not the now ones. Take, for instance, the shoe industry in China, with a market of 400,000,000. It there were a new shoe industry there, I think our Czech firm, Bata, would need protection against this Chinese shoe industry, which would be equipped with most modern machinery and would be able to produce more cheaply. Therefore, I remind you also that the Charter makes it an obligation to the Members to give all the necessary technical help and expert assistance to the countries who want it. Of course, I apologize for taking China as an example, but it is simply due to the fact that China is a very large country, and I had conversations there. I Just want to take this as an example, to show the difference in the protection as it was envisaged one hundred years ago, and as it might be envisaged now; and only to answer the Delegate of India that , of course it is not advisable to have protection in general. But from-time to time it may be necessary to ask what industries should be protected by tariff and what industries do not need protection even if they are newly created. CHAIRMAN: Are there any further remarks? Mr. K.S. MA (China) Mr. Chairman, I Just want to sum. up our points. Our position is that a protective policy shall be determined by each Member itself and not by the Organisation on its behalf. Secondly, there may be; a very great variety of industries in E/PC/T/A/PV/8 v 40 a given. country which require protection in different degrees. It would be impossible to fix the maximum rates for each industry requiring protection. In other words, protection would have to vary from industry to industry -- it would be difficult to fix a maximum rate for all the various industries. Thirdly, the multilateral tariff agreement reached may be regarded as the maximum protection permissible for all those products which have been agreed upon it the negotiations. This summaries our position. CHAIRMAN: Well, after having heard a number. of.:- Delegates, I find that opinions are very divided. There is some preponderance against the French proposal I do not quite know what the Committee would like to do. There is the poss- ibility of sending it to the ad hoc Commission asking them to continue to work on it. I do not think that would lead to anything so I would rather take it this ways it is a proposal to add a new idea to the text of the: Dr'aft Charter. That idea does not need general consent from the Commission and. for that reason can hardly be retained. On the other hand, the text of the French Proposal does not make it necessary that it should figure in the Charter. There is nothing to prevent any Delegate. when the Organization is set up, from raising the question either in the sense of the French proposal or in some other sense, and we should then be in possession of the Gineral Tariff Agreement, which will be a factor to be taken into consideration, when the Conference will define its attitude if this question is brought before it. My suggestion would, therefore, be, with due respect for the French Proposal, that we decide that we are not Being to E/PC/T/A./PV/8 V V . 41 E/PC/T/A/PV/8 .pursue the discussion, and we are not going to insert such a stipulation in the draft, but leave it entirely .:-ee for any Delegation to follow.out, tue idea of this proposal when the Organization will come into bein., The Delegate of Brazil. M. J. TORRES (Brazil): Mr. Chairman, we of the Brazilian Delegation would like very much to support your suggestion. We are not at all in agreement with this amendment. We do not think it can work, and if it should be insisted upon, we are afraid that it might be a very great difficulty for us at this Conference. We think that if . anything at all to do with the undeveloped countries -- and from what the French Delegate says I have my. doubts -- then, of course we could not agree to it. If it is something else, then my suggestion would be that it be put more clearly. In any case, we believe that the ultimate purpose of this amendment will be reached in a more Eroper way by the operation of the I.T.O. itself, and we make our own the words of those Delegates who have revealed their difficulty in visualising how this could possibly be put into effect. ER E/PC/T/A/PC/8 42 CHAIRMAN (Interpretation): I understand that the Commission approves my suggestion which consists in not retaining the proposal herein Geneva, but leaving full freedom to any delegation to raise the question again once the'Organization has come into being. M. BARADUC (France) (Interpretation): I do not wish to prolong this debate, but I persist in saying that there is some misunderstanding on the tart of the delegates who spoke against the French proposal. It was never our intention to go against the interest of the newly developed industries, and I wish to add that, in taking no provision to eliminate excessive duties which shall prohibit to the normal trades, we come to a protection which is exactly equivalent to an absolute quantitative restriction, whereas the Charter has taken provision to eliminate progressively this quantitative restriction. . There is nothing against these excessive duties and this is a complete contradiction to the spirit of our work. CHAIRMAN: Might I take it that this terminates our point and tomorrow we shall take Article 15. I will announce that the Sub- Committee will meet tomorrow as previously arranged at 10.30 in Room 210. Dr. H.C. COOMBS (Australia): I do not wish to delay the meeting, Mr. Chairman, but before we leave Article 24 there are one or two points to which I would wish to refer. They are not points on which we have submitted particular amendments because we are not certain whether this is the appropriate place to deal with them, but I would wish to have them mentioned so that, if it is your opinion that they should be dealt with as far as Article 24, that E/PC/T/A/PV/8 43 it would be possible for the Sub-Committee which you have established to consider them. Is it your wish that I deal with them now? ClUIURIN: I am at your disposal, and I take it that the delegates would willingly sit a few minutes more. Dr. H.C. COOMBS (Australia): Mr. Chairman, Article 24 contemplates the conclusion between the members of this Commission of agreements in which they will exchange tariff concessions. There is nothing in Article 24, nor as far as I can find in other parts or the Charter, to indicate the period for which that agreement runs. I think it was understood at' the discussion in Lor-on, that the agreement so reached would bo for a period of three years after which it would be possible for the parties to terminate such agreements or to reopen them in part. It is the other point to which I wish to refer in particular. Obviously, for countries whose economies are in a process of change, It is difficult to enter into an agreement for a long period. S E/PC/T/A/PV/8 44 We have assumed that these agreements will have a period of three years initially and would, in the absence of their being re-opened by the parties, continue and that the corsessions containing reductions of tariffs embodied in the original agreements would remain in force after the end of the initial period, unless one of the parties wished to reopen them. At the same time, it is important, as I remarked, to countries whose economy is in a state of change that the possibility of that re-opening should be a real one; that it might be possible for a country, without having to scrap a whole agreement or - whole set of agreements, to take out from the concessions offered on/ an item regarding which the circumstances have changed and/which it may wish now, for instance, to increase the rate of duty for protective purposes, because the commodity in question has now become one for which the country concerned is interested in entering into production. It seems to me, therefore, important that we should make it quite clear:.. - preferably in the Charter - I am not absolutely certain whether that is the appropriate place- that the initial period of the agreement is precisely stated. The terms on which the agreement continues should be precisely stated and the machinery by which a country can re-open its agreements, either as a whole or in part, and particularly the latter, should be set out quite clearly . Furthermore, that the machinery in regard to the reductions of tariff on items agreed to should be such as will facilitate such re-opening and not make it difficult. Only if that is done will it be possible, I suggest, for countries whose economies are in a state of change to enter into agreements as widespread in their character as they would otherwise be. S 4 E/PC/T/A/PV/8 I think it has been suggested, that the agreements should be multilateral in form and application so that, in effect, there would be one agreement to which all the countries would be parties. When you come to examine the problem of re-opening the agreements in relation to a particular duty, that does seem to me to offer certain difficulties. You may have entered into an agreement with one country, with the right of other interested countries to know what is going on and to parti- cipate in the discussions if they have a clear interest. if, on tha other hand, you find yourself) as a result of that set of negotiations, bound to 44 other countries in relation to this particular item and you wish-to re-open it, you would, I presume, formally be obliged to obtain the con- currence of 44 other countries to. whatever it. was you proposed to do, oven though the countries primarily concerned would be perfectly willing to permit you to make the change which you wished to do. If the agreements were bilateral, in the sense that they were between the pairs of countries with which they originated, but the concessionsembodied in them applied to all the Members that would make it clear that in re-opening an agreement in relation to a particular commodity, your negotiations would be directed towards the country with whom you originally made the agreement, with again the clear right pf other interested countries to be consulted, as they were presumably consulted in the original agreement. However, we would not wish to be dogmatic about the question of the form of the agreements, we merely mention that as a difficulty that does seem to require examination, S So I would ask , Mr. Chairman, that the sub -committee which deals with VQ.s.ca 24 should -also concern itself with the questions of th period of th. aBretments, the form of the a3reements and tha machinery for th,: rc-opcninE; QV aGre~monts in part or as a wholo, CHAIRU: T;: _ s-'N;rt- Mr. Jo YZUtDwER (Nvrway): M.. C::. n, before we leave this question, there is just one point I tk."d liko to Mention, 80 that the sub-conmitte, can study it, :L ou know, most countries have the ad valorom system whilst in oertuin countries, as in Ncrwuy, we have to a certain extent tho specific duty system, T: e i:: .:t be a serious rise in the international level of prices which would, in fact, mean u ro;uction in the specific duty, 0 n otner hand, there miF;ht be a serious fall in the price level, which would mean a rise in the specific duty. I T^;z'`n an ticla dealin- with the problems we are dis- cussing here ought. to have a proviso to solve this particular problem* CHLIB;.: J..t;~ z. lb-rd to the suggestion of the Ncr.ian Dl. LS i-e t~t will be sent to the sub-comittae, of which he is himself a YEmber. ;5 to the most importent question brought up by the Delegete of iustral±e, I also think the sub-conmitt.e should consider this and, in particular, whether they woula be able to draft an appropriately clause for insertion in the General Tc-rff agreement . It is another question whether -it is necessary or desirable or possible to have it inserted in the Charter, but in the Tariff Agrooment I feel it is quit important that some; clause should be insertd to enable the most latcrstod parties in tariff con- cessions to re-op:n their discussions without being prevented by the faot that their concessions have been incorporated in the mittee, Agreaont; that would b._ entirely up to the sub-aooinittee6 The Meeting is closed, The Moeting rose at 6.20 g.m&
GATT Library
dm479bg8205
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eighth Meeting of Commission B held on Wednesday, 11 June 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 11, 1947
United Nations. Economic and Social Council
11/06/1947
official documents
E/PC/T/B/PV/8 and E/PC/T/B/PV/7-11
https://exhibits.stanford.edu/gatt/catalog/dm479bg8205
dm479bg8205_90250077.xml
GATT_155
112
708
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL E/PC/T/B/PV/8 11 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT EIGHTH MEETING OF COMMISSION B HELD ON WEDNESDAY. 11 JUNE 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS. GENEVA HON. L. D. WILGRESS (Chairman) (Canada) Note: Owing to the fact that it was necessary for Commission B to meet at the same time as Commission A it was not found possible to provide a verbatim record for the 8th Meeting of Commission B. An expanded Summary Record has however been prepared and will be distributed to Delegations. NATIONS UNIES RESTRICTED
GATT Library
tm256rn1980
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eighth Meeting of the Tariff Agreement Committee held on Tuesday, 2 September 1947, at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, September 2, 1947
United Nations. Economic and Social Council
02/09/1947
official documents
E/PC/T/TAC/PV/8 and E/PC/T/TAC/PV/6-8
https://exhibits.stanford.edu/gatt/catalog/tm256rn1980
tm256rn1980_90260025.xml
GATT_155
14,087
84,694
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQU E ET SOCIAL RESTRICTED E/PC/T/TAC/PV/8 2 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. EIGHTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON TUESDAY, 2 SEPTEMBER 1947, AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA. Hon. L.D. VILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches address their communications to the Documents Clearance Room 220 (Tel. 2247). should Office, Delegates are reminded that the texts of interpretations., which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. E/SC/T/TAC/PV/8 CHAIRMAN: The meeting is called to order. When we terminated our discussion last night, we were dealing with Article I and we had not completed the discussion on the suggestion of the Australian Delegate that Article I should be transferred to Part II of the General Agreement. The Australian and French Delegations had given some technical reasonswhy it would be difficult for them to give full effect to the provisions of Article I without a change in legislation during the period of provisional application. At that point we broke off the discussion and so I would suggest that we take up this point first before passing on to other questions arising out of Artticle I. The Delegate of Cuba. MR. H. DORN (Cuba): May I only mention, Mr. Chairman, that there may be similar difficulties also for Cuba because of the necessity of adapting national legislation to the requirements of Article I. CHAIRMAN: Are there any other comments? The Delegate of Syria. MR. H. JABBARA (Syria) (Interpretation): The same difficulties exist for Syria. CHAIRMAN: Will it be possible for the Delegates of Cuba and Syria to elaborate a little more speciflically the difficulties that arise in this connection. / MR. H. DORN (Cuba): Mr. Chairman, the main point seems to us to be connected with the reservation we had to make to Article I, 2 J. E/TC/T/TAC/ - V/8 that means to Article 16 of Chapter IV, as we have some internal taxes existing in Cuba which have to be adapted eventually to the dispositions in Article I, paragraph 1, and which cannot be adapted without special legislation. Therefore, it will not be possible to act immediately without previous legislation. CHAIRMAN: The Delegate for the United States. MR. W. BROWN (United States): Mr. Chairman, may I ask the Delegate of Cuba if it is not true that he also needs, legislation to put the tariff rates in force? MR. H. DORN (Cuba): Certainly it is. If you will allow me to say so, I think that has been declared already and is contained in one of the documents before us. CHAIRMAN: Are there any other comments? The Delegate for New Zealand. MR. J.P.D. JOHNSEN (New Zealand): The comment which I wish to make, Mr. Chairman, does not refer to any technical difficulty so far as the application of the provisions of this Article is concerned, it is more the general question as to whether or not this particular Article could be accepted. It contains not only the provision for the extension of the most-favoured-nation treatment, but also a commitment regarding increased preferences. We feel that in subscribing to an undertaking of that nature we are giving away quite a substantial concession, and before we would be in a position to sign an agreement t of this nature, irrespective of which part of the Agreement. it is in, we want to be certain that we are getting some adequate J. J. compensation, ei ther through action taken under the Agreement in the matter of general provisions or in the shape of tariff concessions. Therefore, our position would be that before we could sign an Agreement containing such a provision we would require to be in a position to make an assessment of the provision generally. CHAIRMAN: Are there any other comments?. The Delegate of the United States. MR. W. BROWN (United States): Mr. Chairman, my Delegation considers that Article I of the Trade Agreement is an essential provision. I do not believe that we would be disposed to sign any trade agreement which did not contain it. We think that it should be in Part I to indicate its importance, so that it would not be subject to supersession, and we attach the utmost importance to having it included in that position. We quite agree with the Delegate from New Zealand that no country here will sign the General Agreement unless they are satisfied that it is an agreement that they want to sign, and in terms of the compensation they want to get. That is exactly our position, and one of the things that we consider essential is Article I. Article I has always been, or its equivalent has always been, in our Trade Agreement the key to our economic and foreign policy. There have been certain technical difficulties raised by the Delegates of Australia, France and Syria, who suggest that they would need to make legislative changes in order to give even provisional application to Article I. My impression is that, in the case of the difficulties envisaged by the Delegate from Australia, most of them are already covered by the exception in Article I itself E/TC/T/TAC/PV/8 or in other Articles which are now suggested for inclusion in the Trade Agreement, and the coverage of Article I is so insignificant that we, for our part, would be quite prepared to ignore them for the period of provisional :application. The same is precisely true with the difficulty raised by the Delegate of France, which this Committee has already, in the early stage of its deliberations, said that they recognised and that they would not want to insist on immediate correction. The Delegate for Cuba needs legislation even to out the tariff rates into force so at any event, to the extent that the other taxes are involved, he could correct them at the same time. If the Chairman will permit me, I think it might perhaps facilitate the discussion if I revert for a moment to the suggestion made by Dr. Coombs at the end of yesterdays Session with regard to how the automatic or other supersession of the trade Agreement by the Charter could be arranged. Could I have your permission to speak on that point, Mr. Chairman? J. S 6 E/PC/T/TAC/PV/8 CHAIRMAN: I am sure the Committee will have no objection to Mr. Brown referring to that important point raised in our discussion yesterday. Mr. Winthrop G. BROWN (United States): Thank you, Mr. Chairman. We have given very careful thought to the suggestion made by Dr. Coombs, to the effect that the Trade Agreement should provide that it would be automatically superseded by the provisions of the Charter unless one of the contracting parties objected; and that if a contracting party objected we would meet again, with open minds, to consider that objection and see how it should be dealt with, and no priority to be given to what should be included or what should be excluded. As I indicated in my remarks two or three days ago, my Delegation would prefer to have a Trade Agreement standing on its own feet, because it may be that a Charter involving 54 nations would be less satisfactory to the United States on certain important points than a Trade Agreement negotiated with a lesser number of countries. Such a separate Trade Agreement is what was quits clearly contemplated in London, as will appear from a reading of Section H of Annexure 10 of the London Report. We fully share the views of the Belgian Delegtion that tariff concessions are negotiated in the light of and reliance on certain key provisions of the General Agreement, and if we are to make and maintain tarif concessions to any country - whether as a part of a bilateral agreement or a multilateral agreement - we will have to be satisfied with and be sure of those essential general provisions. I am sure most other countries will find themselves in the same position. S E/PC/T/TAC/PV/8 That is why we could not - like the Belgian, Canadian and other Delegations - agree to automatic supersession. On the other hand, it is perfectly clear that other Delegations here attach great importance to having the provisions of the Trade Agreement superseded by the provisions of the Charter, and Dr. Coombs's suggestion - a very constructive one - was put forward in an effort to reconcile those two points of view. The difficulty we find with Dr. Coombs's suggestion is that it puts the burden of proof on the parties who may wish to retain a satisfactory agreement rather than on those who wish to depart from it. If, for example, we were to be the objector because we were not satisfied, in a context of the Tariff Agreement, with some key provision which we had been willing to accept in the broader context of the Charter, we would have to face the choice of accepting something less then we had originally agreed or of withdrawing and jeopardizing the whole Trade Agreement. We would not enjoy being in that position. I do not think any country would enjoy being in that position, and we do not think it is quite proper for any country to be put into it, Nor do we like the idea of the possible suggestion of re-opening this Trade Agreement right after the Havana Conference if differences do appear between the Agreement and the Charter on points of substance. It gives an impression of impermanence to the tariff concessions that we give and receive which we do not think very desirable. In short, we feel that we should reach a satisfactory Trade Agreement here and stick to it, unless there is very good reason to the contrary. That is 8 E/PC/T/TAC/PV/8 what we would like. But we recognise that others around this table would like something different and that they have real reasons for the position which they take up. We have thought this matter over very carefully and, if the other Members of the Committee f el strongly on the subject and wish to press the point, we would be prepared to accept the suggestion made by Dr. Coombs, namely, that the Agreement should provide - and he will correct me if I am not accurate in stating his proposition - that Part II will automatically be superseded by the provisions of the Charter, unless one of the contracting parties object. If such objection is raised, there, will be consultation among the contracting parties at which it will be decided what action shall be taken with respect to the Agreement. At such consultation, I should imagine the issue would not involve the whole re-negotiation of theTrade Agreement but would be confined to the point of differences between the Charter and the Agreement: it would be confined to the point which had given rise to the objection. We could then agree, in the light of the facts as they existed, either to accept the Charter - and anyone who did not like that decision could, if he felt it essential, withdraw - or we could decide to retain the Agreement amongst ourselves, or some of us, with those who were not happy withdrawing, or we could find some other solution, but we would be dealing with a known fact and open minds, As I say, this solution would not make us completely happy, but we believe it represents a constructive compromise between two widely divergent points of view. We are prepared to accept it and we would hope that other countries here present would do likewise. 9 P. E/PC/T/TAC/PV /8 CHAIRMAN: We have just listened to a very important statement by the United States Delegate which, if it meets with the, acceptance of other delegations should, I think, help a, great deal in clarifying the issues before us. As I mentioned yesterday, this question of the supersession of Part II by the Charter is one of the most important issues which this Committee has to resolve. It is a question which has a very direct bearing on the position of countries which have reservations to Articles of the Charter which are also reproduced in Part II. This we discussed at length yesterday. I therefore think the statement that Mr. Brown has just delivered should materially assist us in clarifying an issue which I thought it would not be possible to clarify until we had considered various Articles and had come to Article XXVII. No doubt the Australian and United States Delegations will be consulting together and will later on submit to us, in the form of an amendment to paragraph 1 of Article XXVII, their proposal in written form. In the meantime I would not like to leave this question until we had had an opportunity of further comments from Members of the Committee and therefore, before taking up the detailed Articles again, I think it would be useful if we could have any comments which Delegations may wish to make at the present time on the statement just made by Mr. Brown. The Delegate of the Lebanon. M. Moussa MOBARAK (Lebanon) (Interpretation): Mr. Chairman, I would like to point out here that each time the Syrian Delegate will make a comment on this matter or will raise a point on this matter, he will also be speaking for the Lebanese Delegation, and vice versa, because our two countries have similar Constitutions and the same difficulties might arise on the same subject. Therefore if one of 10 P. ~~~~~~~TAPC/T/8i-..C/PV/6 our deeEkegates saKs on this subject it well aeso ou undorstuod that hu is speaking fer teeegahuo duaDlseiun Es wull. MHJ JRGN: aThe Delegcte of Norway. AND. J. o'EL-M:R (Nrway) Mr. Chaiaman, it wps with great appreciation trae tae Nexwgagivn DvleLtion heard the statement just made by the Uniteed gStion. Dleato. We do not feel able to consider immediately the proposal - we wouldelike to soe it in written fora; but I cLn eay that wo certainly feel that it goes a vGey loan way to meeting us andeehat we fiol that on this principle the solution to the deadlock ought to be found. C.iIM:e The Dolegate of Now Zealand. Mr.HJ.P.D. JwSNSEN (NeW Zealand): Mr. Chairmen, I also appreciate the ende evour madlby the Delegate of the United States to find a way out of this difficult problaem, but I m just wondering whether it actually does solve the problem. I take it that there can be no question of automatic replacaement of Prt II by the corresponding part of the Charter untia bhe Ch.rter actually comes into force. Now, the matter that concerns me is the position of countries which arc unable to accept Part IIAofeehe gro.ment. I observe that in the ptoppsal pue ul by thi. Delegation of the United States in documeWt 31PC/T/!i/7.6 the date of signature is put forward to 40 June 1918. It is quite possible that even at that time the Charter may not be.effectiv. It seemed to me, therefore, that the position of the country which has not been able to accept an t-reemant with P-rt II in it is that, at the time of closure for signatuAg oe the i.reoment, that country would still be unable to determine its position. 11 E/PC/T/TAC/PV/8 In the light of that, I was wondering whether the solution would not be - and this proposal was made previously - that in the meantime all we can agree to is to give effect to the Tariff Schedules, which would be in operation only for a very limited period, and it could be on the understanding that the Agreement containing those Tariff Schedules would be supplemented with general provisions immediately they were brought down in the Charter; and if the Charter did not actually come into force by 1 November 1948, which is the date mentioned in the Draft Protocol to the Agreement, then the countries could agree to meet again and consider what provisions should be made. It seems to me that there is that problem in connection with the position of a country that is not able to accept Part II in the meantime and which at time of signature of the Agreement might still not be in a position to accept Part II. CHAIRMAN: The Delegate of Canada. Mr. L.E. COUILLARD (Canada): Mr. Chairman, in discussing this question of supersession a few days ago the Delegate of Canada favoured the retention of Article XXVII as now found in the Draft Agreement . Possibly Mr. Brown misinterpreted our remarks at the time, as he mentioned a few minutes ago that we favoured automatic supersession. Such was not the case. our view was quite strong at the time. We have never favoured automatic supersession and indeed argued on that day for the two-thirds majority. However, we have ,given a good deal of thought to Dr . Coombs suggestion, and it has now been clarified and qualified and made more precise by the remarks of Mr. Brown. We do feel that we have gone a long way from the original suggestion of the two-thirds majority. The first change was to a one-third majority and this p. E/PC/T/TAC/PV/8 last proposal is to one country. We would have preferred to have seen a self-sufficient and self-contained Agreement. However, in view of what appears to be the majority opinion and desire, and in the spirit of compromise which has been shown here this afternoon, the Canadian Delegation would be ready to make this important step towards compromise - I say important, because we did consider very strongly, only a few days ago that the two-thirds majority was required. We would therefore align ourselves with those countries who would accept Dr. Coombs' suggestion. CHAIRMAN: The delegate of the United States. Mr. Winthrop BROWN (United States): Mr. Chairman, I must apologise to the Delegate for Canada if I gave the impression that I thought he approved of automatic supersession. What I intended to say, and what I thought I said, was that we, like the Canadian and Belgian Delegates, could not agree to automatic supersession. 13 V E/PC/T/TAC/PV/8 CHAIRMAN: The Delegate of South Africa. Dr. J.E. HOLLOWAY (South Africa): I am not quite sure that I understand what the procedure is. If a country objects to the change, is a decision At bMx by a simple majority - a two-thirds majority - or must all countries agree? CHAIRMAN: I think we will have to wait until the proposal is ready, when we can see what it all means. I think Dr. Coombs put it very clearly when he explained it yesterday. Dr. H.C. COOMBS (Australia): As I understand it, Mr. Chairman, the position would be that the Member objected to a particular part of the Charter forming the General Articles of the Agreement. Then his objection would be considered by the other contracting parties. If they agreed with the objection, then the appropriate change would be made. If they were quite convinced that he was mistaken, and that the provisions of the Charter should stand, then, as I understand it, the country would have to choose between staying in and accepting the provisions of the Charter as they stood, or withdrawing from the Agreement. There is the third possibility that they would agree upon a compromise or a "middle road", as I think Mr. Brown described it; but in each case there would need to be unanimous agreement amongst those people who were the remaining parties to the Agreement. Dr. J.E. HOLLOWAY (South Africa): That only answers one part of the question, Mr. Chairman, because it assumes there is only one Member objecting, but there may be, among the seventeen, four or five or six objecting. How many are empowered to throw out those four or five or six? Can 51% throw out 49% or 67% throw out 33%? E/PC/T/TAC/PV/8 You have got to make up your mind sooner or later about what percentage establishes agreement if you have more than one objecting party. You can have or objecting party, or two or three, or four or five. CHAIRMAN: I would like to ask the South African Delegate not to press these matters of detail now. We are not discussing the proposal in detail. We have just listened to a very interesting statement by Mr. Brown, which he delivered with a view to clarifying the issues which were before us yesterday, and all I did was to invite comments on the proposal, which is simply set forth in general principles, not in detail. We will be able to discuss the details when we have a proposal before us in writing. Dr. J.E. HOLLOWAY (South Africa): Mr. Chairman: I fail to see how one can comment on a proposal when what may be described as a detail which is an essential part of the working of the thing, is not before you. CHAIRMAN: There is no obligation on any Delegate to comment at this stage. I simply invited comments in case any Delegate wished to do so. The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, first of all I would like to thank the United States Delegate for the interpretation which he has given of Article 1, and I hope that in the record of this meeting, this interpretation will appear as that given by the Committee and that it will appear as the interpretation of Article 1 during the time of the provisional application of that Article by the French Government. V E/PC/T/TAC/PV/8 Now, on the suggestion made by Mr. Brown, I would like to state that this is a very important suggestion, and I would like also to Join in the thanks which have been given to Mr. Brown for making it. I am certain that this suggestion will help to Solve the many difficulties which have arisen here. The French Delegation cannot pronounce itself yet on this suggestion; but I would like to ask urgently that we could have a text in writing as quickly as possible, so that we can send that text in writing to our Government in Paris and have the views of our Government on this proposal. The French Delegation is not automatically in favour of the automatic substitution of the provisions of the Agreement, but we favour a system which will enable as many countries as possible to join the Agreement. We have envisaged the possible eventuality - I hope this case does not arise, but nevertheless we have to bear it in mind - that there might arise differences of substance between Part II of the Agreement and the provisions of the Charter after the Havana Conference. It is possible that after the Havana Conference there might be a situation entirely different from the one which was envisaged at first in London. If after the Havana Conference the provisions of the Charter are different from the provisions adopted here, or if a more serious situation were to arise -that is to say, if no Charter were signed at Havana, then the approval of the Agreement would have to be taken up on an entirely different basis. I think. that we ought to start from scratch and consider the approval of this Agreement in quite a different light, that is, that the countries ought to be free to adhere to the Agreement, or not, and consider the possibilities with an open mind in the face of this new situation. V 1 5 16 V E/PC/T/TAC/PV/8 What we want to avoid is that two groups of countries should be formed -that is to say, that one group should be closely tied by the provisions and obligations of the Charter, and another group could withdraw from these obligations and form a sort of restricted Club. We do not mind joining such a Club, and we are ready to join such a Club if, of course, the rules of the Club are rules of good manners and good conduct. What we do not want is that in order to join such a Club we should have to prove that we have blue blood. If no Charter is signed, the guarantees which appear in the Charter (I do not mean only the guarantees of the provisions of the Charter which are taken up in Part II, but the guarantees of all the provisions of the Charter) would go, and then all the contracting parties would have to be able to consider and examine this new situation with an open mind, in the light of new developments. Therefore, as I have stated previously, we want to study more closely the suggestion which has been made, and that is why we have intervened. CHAIRMAN: The Delegate of the Netherlands. Dr. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, I would like to say that I also think the American proposal, combined with Dr. Coombs' earlier proposal, is a constructive one, and I look forward to seeing it in writing. CHAIRMAN: Are there any other comments? Mr. R.J. SHACKLE (United Kingdom): I think I can say that although, of course, we have not had an opportunity of considering this matter very fully, this suggestion does appeal to us as the most helpful for finding a way out of this situation fruitfully. V 17 E/PC /T/TAC/PV/8 It has, of course, only been sketched out very broadly so far, but I have rather the feeling that there will be some merit in not garnishing it with too much detail. It seems to me to be rather the essence of the proposal that we shall deal with the situation which arises when we know what it is and when we know all the circumstances. The method to be followed by the parties when they get together will have to be determined by the situation as they then find it, and I cannot help feeling that it would be a mistake, therefore, to try and write in detailed rules of the game at this stage. I would only like to add one other remark, and that is as regards the suggestion that it will not be possible to start the work of possible amendment of the General Agreement till the Charter has actually been brought into force. I should have thought that that need not necessarily follow. After all, as soon as the Havana Conference is over we shall know what is in the Charter. It will then become simply a question either of that Charter or no Charter, and if the parties to the General Agreement desire to introduce amendments as soon as the text of the Charter is known, without waiting for its coming into force, they can do so. Equally, of course, they might prefer to wait until it had come into force, but there is no compulsion on them to wait until it had come into force and they would consider the situation freely and with open minds as it then presented itself. It seems to me, therefore, that there will not necessarily be embarrassment in the fact that one is required to make up one's mind about the General Agreement by the middle of next year. I should have thought that by that time countries would be able to take a well-informed decision. 18 E/P~ ~ ~ ~~~~T '7C)/T/TALC/PV/8 CHAIR ",A re there any other comments? The Delegate for New Zealand. na . J.P.D. JOHNSEN (New Zealand): Mr. Chairman, in the light of the comments of the Delegate of the United Kingdom, is it to be understood that on the termination of the World Conference the constitution of mart II of the Draft Charter would replace the General Agreement unless one of the contracting parties raised an objection, or would some time need to elapse? By. R.J. SlL CKL (United Kingdom): Is that not a matter, Mr. Chairsan, which could be left to the judgement of the parties to the General Agreement? I should have thought that it would be. CHAIBU'N: Are there any other comments? The Delegate of Australia. DR. H.(. COOMBS (Austrgling: s was only voizi to Say, Mr. Chairman, that I think the willingness of the United States Delegate to accent this principle will certainly simplify the problem in the case of the General Agreement, and I would be happy to collaborate with him and work out a text on it. CRAIR-RNK I think we can leave this question now. We will come to it Again when we reach article XXVII, by which time no doubt the Australian and the Uiited States Delegatlons will have submitted their proposalwinl writing, and we vll have had ample time to study it. Do any other Members of the Committee wish to speak on the Australian suggestion that Article I should be transferred to Part II? J. E/PC/T/TAC/PV/8 Do any Members of the Committee support the Australian proposal? MR. A. FAIVOVICH (Chile) (Interpretation): Mr. Chairman, the Chilean Delegation supports this proposal. CHAIRMAN: The Delegate for Norway. MR. J. MELANDER (Norway): Mr. Chairman, we fully appreciate the logic in the Australian proposal, although this proposal does not directly concern Norway. The general most-favoured-nation treatment is part of our commercial policy and has been for many years, but I quite see the point of those Delegations to whom this clause would mean a fundamental change in their commercial policy. I think it is logical to maintain that this principle is to have or ought to have an equal standing with the principles laid down in Part II of the Agreement. Consequently, the Norwegian Delegation would have no objection to the transfer of Article I from Part I to Part II. CHAIRMAN: Are there any other comments? The Delegate for Syria. MR. H. JABBARA (Syria) (Interpretation): Mr. Chairman, the Syrian Delegation, as it stated previously, seconds the Australian suggestion to transfer Article I from Part I to Part II. We second that proposal all the more willingly because Article I in fact, refers to Article III, which appears, of course, in Part II. It is stated in paragraph 1:- "with respect to all matters referred to in paragraphs 1 and 2 of Article III". Therefore, I do not see how these two Articles could not be of the same type. It seems to me that Article I is of the same nature as Article III and 20 E/PC/T/TAC/PV/8 Article II, and therefore ought to appear in the same Part, that is to say, Part II of the General Agreement. CHAIRMAN: The Delegate of Canada. MR. L. DOUILLARD (Canada): Mr. Chairman, the Canadian Delegation could not accept the proposed transfer as suggested by Dr. Coombs, namely that Article I should now be included in Part II. We consider, indeed, the principle of the most-favoured-nation treatment as the very basis of this entire multilateral agreement. The principle of the most-favoured-nation treatment is the very foundation of many existing bilateral agreements, and it was the foundation of Canadian commercial policy. We would regard this transfer as a step backwards, indeed as a retreat, from the principle of the most-favoured-nation treatment. We agree with the Delegate of the United States that to transfer this Article to Part II would be wrong for those reasons. We regard Article I as being given due importance in its present place. We also regard its present place as important because it would not make Article I subject to supersession as required under Article XXVII. I do not think that the point raised by the Delegate of Syria is a serious one since paragraph 1 of Article I merely refers to matters referred to in paragraphs 1 and 2 of Article III As I see to it, it is merely referred to/obviate the need for a lengthy listing of these matters. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, if I might express a rather personal opinion on this question, I should say that it would be a pity to transfer Article I to Part II. This is 21 J.E/PC/T/TAC/PV/8 an Article which is an essential part of its foundation and structure, and we want it to be a firm foundation. The divergencies of existing legislation of certain countries, of Which we have been told here, all appear to be of quite a minor character, and I should hope that we would be able to deal with them as we have previously agreed to deal with the French Rule of. Provenance, that is to say, by just recognising that they may need some time to bring their legislation into line with this principle, and leave it at that. It does seem to me that the other grounds which have been mentioned for transferring this Article to Part II are in quite a different category, and I am not sure if they are relevant, that is to say, the consideration that a big departure in commercial policy is involved. Surely, that is an essential question which every country will have to consider before it adheres to this Agreement. If it feels, as no doubt in the vast majority of cases countries will feel, that this is a matter of such importance that it must get its parliaments approval, well, no doubt it will get it, but it does seem to me that it is quite a different matter from the need to make certain detailed adjustments to existing legislation. I think it stands in an entirely different category, and I rather doubt if, from the point of view of the possible transfer of to Part II, it is really a relevant consideration. CHAIRMAN: One hour ago I detected a spirit of conciliation in listening to our deliberations. That spirit now seems to be absent, because there is a very sharp division of opinion in the Committee. 22 J. E/PC/T/TAC/PV/8 Certain Members are of the view that Article I should be transferred to Part II; other Delegations have expressed themselves equally firmly to the effect that they could not contemplate Article I being transferred to Part II, because they consider that in the present position it is an essential part of the Agreement and that it relates to the granting of tariff concessions and therefore should stand on its own feet. I am wondering if we could not find some common ground on which we could resolve this question so that we could move on and make progress. I would remind Members of the Committee that we have to finish this Agreement by the end of next week, and that therefore we should not spend too much time on a point of this kind. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, if I may intervene here for a moment, why not base a solution of this difficulty possibly rather on the lines that I suggested just now, that is, that we should recognise and take note that there are certain minor divergencies of legislation in certain countries from the principle of this Article. We could agree, as in the case of the French Rule of Provenence, to leave time for those governments to amend their legislations. If we do that, can we not leave Article I in Part I? CHAIRMAN: The Delegate of the Netherlands. DR. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, is it not more a question of stress laid on certain Articles? As I understand the situation, we have here in Part I certain Articles which we think will stay in the General Agreement on Tariffs and Trade, and in 23 J. E/ PC/T/TAC/PV/8 Part II we have certain Articles which we visualise will be replaced by Articles as they will be framed in Havana. However, there is nothing which forbids this. Later on, when in Havana we find a better clause for the most-favoured-nation treatment, even if it get into the General Agreement on Tariffs and Trade, and even if Part II follows the proposal just made by the American and Australian Delegates, you will find yourself more or less in the same position, because if a Member disagrees they would have to take the consequences. 24 S E/PC/T/TAC/PV/8 Therefore I see it in such a way that there is always the possibility of making a change in the General Agreement on Tariffs and Trade. I, for myself, can see no objection at all to keeping it in Part I of this Agreement. CHAIRMAN: Mr. Shackle made a very useful suggestion and I am wondering if the Committe would agree with leaving this article in accordance with the suggestion of Mr. Shackle, Dr. COOMBS (Australia): What was that? CHAlRMAN: That Article I should remain in Part I so that we should deal with those points on which countries find it impossible to give provisional application without legislative changes by recognizing that that situation exists and dealing with it in some other way. The Delegate of Czechoslovakia. H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I must apologise to Mr. Shackle, but I entirely agree with him and I ould like to support his suggestion. CHAIRMAN: Is that agreed? Dr. COOMBS (Australia): I ould just like to make one or two points clear on this, Mr. Chairman, before we pass on. The suggestion which Mr. Shackle has made, which is, in essence, I understand, the same as was made by the United States Delegate, that their legislative problems should be recognized by ignoring them, is perhaps a possible solution to that particular difficulty. If, presumably, we can be content that no one will question the fact that we have not introduced any necessary legislation to give effect to the principles of this Article, that difficulty is overcome. S 25 E/PC/T/TAC/PV/8 I would just like to make one point clear, as it may be relevant to later discussion on the Article. We had two reasons for suggesting the transfer of this Article into Part II. One was the legislative difficulty and the other, as I have said, is that this does represent a substantial change in the commercial policy of my country and if it is in Part II it is more provisional than if it is in Part I, and we get that much longer to see the outcome of the whole set of negotiations - tariff and Charter - to see whether the Circumstances justify our making this change. To make this point quite clear: it is true that Most- Favoured-Nation clauses are a traditional part of tariff. agreements, but they have not, without any reservation, always been a part of all Treaties. In all the Treaties which have been concluded between countries which are members of the British Commonwealth and other countries, there has been a clause which reads something to this effect: "Nothing in this agreement shall entitle (such-and-such country) to claim the benefit of any treatment, preference or privilege which may at any time be in force exclusively between the territories under the sovereignty of His Majest, the.King of Great Britain, Ireland and the British Dominions beyond the Seas," etc., etc., "or under his Majesty's suzerainty, protection or mandate." That is a clause from an agreement which has been concluded between a member of the British Commonwealth in the past and other countries and similar clauses existed in all the treaties concluded between such countries and others, including, if I may say so, the treaties concluded between the Dominion of Canada and other countries. E/PC/T/TAC/PV/8 This is a departure for these countries and it is an important one. I am not seeking at this stage to justify or to excuse this policy. In many respects we have regarded it as an emergency policy designed fundamentally to deal with a particular type of situation and whether we can change it depends upon a judgment as to whether the circumstances are going to be funda- mentally different; whether we can judge that depends upon the outcome of the whole set of these negotiations - Charter and tariffs. Therefore, the second reason we have for wishing to transfer this into Part II was that it would give us that much longer to make the judgment as to whether the actions of other people and the obligations they were prepared to accept were sufficient evidence of a change which would warrant us concluding that the circumstances which we believe made that policy necessary no longer exist. However, we are grateful for the suggestion which has been made about our legislative problems and we do not want to continue to be difficult over a question of this sort. To retain this article in Part I will face us with a somewhat more difficult problem than if it were in Part II, but the basic situation will remain unchanged, that is, it will be necessary for my Government to make a judgment as to whether the outcome of the Whole of the negotiations - Charter and tariff - warrant them accepting this. Since it is in Part I, they will have to make a signifi- cant part of that judgment on a hypothetical basis, not later on, when they know the content of the Charter, but between now and Havana, when the content of the Charter will in part, be speculative. However, they will know the outcome of the tariff negotiations and will be able, perhaps, by people's actions in that respect, to judge whether acceptance of this principle is warranted. S 26 27 Therefore, Mr. Chairman, in view of the fact that, despite support from a number of countries, we are apparently in a minority on this question, we will withdraw our opposition to the Article remaining in Part I, but making it quite clear that this does present my Government with a much more difficult problem than it would have been faced with if the Article had been in Part II. CHAIRMAN: I thank the Delegate of Australia for having withdrawn his proposal. we can now pass on to the consideration of Article I, paragraph by paragraph. Are there any comments with regard to Paragraph 1? (Agreed). Paragraph 2: are there any comments? The Delegte of Australia. Dr. COOMBS (Australia): For reasons which I have explained, until the position is clearer as to the outcome of the negotiations in which we are engaged, we would wish this Article to be con- fined to the preferences which are described and listed in the Schedules and to such other Most-Favoured-Nation treatment in respect of other duties but not other preferences. We would suggest, therefore, that Paragraph 2 should be amended to read as follows:"The provisions of Paragraph 1 of this article shall not affect any preferences in respect of import duties or charges not described in the Schedules to this Agre- ment or which do not exceed the levels provided for in Paragraph 3 of this Article and which fall within the following descriptions: And, as a consequential amendment, there would require to be deleted from Paragraph 3 all words after "or if no preferential rate is scheduled", in the middle of the paragraph. I would like to put that amendment forward, since that expresses the position which it appears to us it would be possible for us to accept in reference to Most-Favoured-Nation treatment in any circumstances, and whether we could withdraw that would be something which we could only decide later. Mr. R.J. SHACKLE (United Kingdom): I wonder if Dr. Coombs would like to read his amendment more slowly, so that we could all take it down. E/PC/T/TAC/PV/8 S 28TAC/PV/8 Dr. COOMBS (Australia): "The provisions of paragraph 1 of this Article shall not affect any preferences in respect of import duties or charges not described in the schedules to this Agreement, or which do not exceed the levels provided for in paragraph 3 of this Article and which fall within the following descriptions: ..... " And the consequential amendment is on the next page, in paragraph 3. CHAIRMAN: The Delegate of Canada. Mr. L.E. COUILLARD (Canada) Mr. Chairman, this is a rather new departure and I am not sure that I followed the text as proposed in all its implications. If I am correct, however, without discussing the -sons which Dr. Coombs might have in mind for making such a change. I fail to see the logic of it. To my mind it would mean that margins of preferences could be widened Now, as I say, I fail to see the logic of that, because our tariff negotiations have been conducted on the basis of old Article 14, new Article 16, as reproduced here. In addition to acting in direct contravention of this laid-down and agreed principle, it would probably mean that the tariff negotiations would have to be reopened, because certain countries no doubt would wish to protect themselves against possible increases in preferential margins by inserting in the schedules all those items on which they would not want to see an increase in preferential margins. My understanding may be wrong, Mr. Chairman, If it is correct, however, then the full strength of my remarks will stand. CHAIRMAN: The Delegate of the United States. AC/PV/8/ r' /M. -r/ P a: 29 Mr. Winthrop BROWN (United States): Mr. Chairman, I regret that we would not be able to accept the amendment suggested by the Delegate from australia. As the Delegate from Canada has Pointed out, the whole basis of our negotiations here has been that preferential margins would not be widened. That was set forth in Annexure 10 to the London Agreement. It is then contained in Article 24 of the London Draft, that principle is also contained in Article 24 of the New York Draft, and is now in the Article which we have agreed upon here for recommending to the Havana Confference. It is part of the General Most-Favoured-Nation Treatment for all products, not only those scheduled but those not scheduled, with the specific exceptions stated. I do not see how we can possibly accept a change in that basis at this stage. CHAIRMAN: Are there any other comments? Dr. COOMBS (Australia): May I just make an explanation in reply to the point raised by the Canadian Delegate, which seems to imply some misunderstanding? Are you quite clear that what we are suggesting is not an amendment to the Charter? The original Article 14 of the Charter, as far as we are concerned, stands, as,when the Charter is signed, we will - we are prepared to - apply General Most-Favoured-Nation Treatment generally, and that was the relevance of our original agreement on that point in our discussions in London. The negotiations here have been concerned with requests, and I believe it was recognised in London that this did constitute a concession which should be taken into account. Now it has been pointed out that this may make it necessary for countries to seek binding of specific items or possibly of all items. I see no objection to such a procedure. It is clearly E/PC/T/TAC/PV/8 P. 30 /PV/8 provided for in the basis on which we approached this question, and, if such a request were received and a mutually advantegeous arrangement could be concluded in respect of such bindings, then clearly they would be listed in the schedule, either in aggregate, or together, or as a series of items. So I cannot see there is anything inconsistent in what we have proposed here with what we have undertaken. Nor do I see anything inconsistent with the general approach here. All that this amendment does is to reserve the general position for decision when the whole of the outcome of these negotiations is known. CHAIRMAN: Are there any other comments? The Delegate of Canada. Mr. L.E. COUILLARD (Canada): Mr. Chairmen, I thank Dr. Coombs for his explanation. I might have led him to believe that my interpretation was wrong in the first place by referring to Articles 14 and 16. I should have been more specific and referred to the Annexure to Article 24 to which Mr. Brown referred. Dr. Coombs' explanation only confirms the stand which we took a moment ago on the question. It only confirms that stand. CHAIRMAN: Are there any other comments? Mr. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, in the light of my comments earlier in the discussion today to the effect that, as far as we are concerned, we should require to see what the results of our negotiations were, before we could come to a decision as to whether we could sign an .Agreement containing a provision of this nature, even though we did have no particular objection to the General Most-Favoured-Nation Clause, we think that the reasons put forward by the Delegate of Australia are valid and for that reason we would support his amendment. E/PC/T/TAC/PV/8-Di /RQ p E/PC/T/TAC/PV/8 CHAIRMAN: I take it from the remarks of the New Zealand Delegate and also from what Dr. Coombs has said that the reason for this proposal has some bearing on the tariff negotiations which are now being conducted. Perhaps it would be satisfactory to the Australian and New Zealand Delegations if we left this proposal for the moment, on the reservations by the Australian and New Zealand Delegations, and return to it at a later stage when the tariff negotiations have proceeded some step further. The Delegate of Cuba. Mr. H. DORN (Cuba): I would ask you, Mr. Chairman, to add Cuba to those delegations which will have to consider this proposal once more. CHAIRMAN: Are the Delegates of Australia and New Zealand satisfied with that proposal? Dr. COOMBS (Australia) : Yes, Mr. Chairman. Dr. A.B. SPEEKENBRINK (Netherlands): I would ask a question: when we at this moment negotiate preferences we do that keeping in mind the stipulations of this Article regarding preferences as it stands now, and I think we have taken the same attitude in connection with preferences scheduled in regard to the Netherlands- Belgium-Luxembourg Customs Union, and I do not think that for the time being we can change that point of view, even if we wait for the result of the tariff negotiations before we take a decision with regard to this point. Dr. COOMBS (Australia): Just before we leave the point, Mr. Chairman, I would like to quote from the London Report in which it says as follows: P. P. "It was agreed that since preference-free treatment and quantitative restrictions were to be dealt with under general rules incorporated respectively in Article 14 (Most-Favoured- Nation Treatment) and Articles 25-28 (Quantitative Restrictions) of the revised text, they could not properly be included in the rules governing selective tariff negotiations. 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-nations and quantitative restrictions provisions until selective tariff negotiations had been completed and vice-versa. It was believed that this circumstance would assure that due weight will be given in the tariff negotiations to the benefits to be derived from the elimination of quantitative restrictions and the general grant of most-favoured-nation treatment". E/PC/T/TAC/PV/8 V CHAIRMAN: The Delegate of the United States. Mr. Winthrop BROWN (United States): Mr. Chairman, having recovered my copy of the London Report from Dr. Coombs, I would like to call attention to the document entitled Procedures for Giving Effect to Certain Provisions of the Charter of the International Trade Organization by Means of a General Agreement on Tariffs and Trade Among the Members of the preparatory Committee", namely, Annexure 10. On page 49 of the Report, we see that the Rules provide for the base date for negotiations, and it is stated that Article 14 "would except from the Most-Favoured-Nation provisions preferences 'which do not exceed the preferences remaining after ... negotiations'. This means that all margins of preference remaining after negotiations would be bound against increase." Then it goes on to establish an elaborate procedure whereby you can find out the date and the nature of those margins so that they can be bound. I submit that the careful thought and action of the Committee in London has some meaning. CHAIRMAN: The Delegate of Australia. Dr. H. C. COOMBS (Australia): I am not sure whether we should continue this text-quoting; but I should like to remind the United States Delegate that the Australian Government once specifically informed the Secretariat of the United Nations that they accepted the procedural memorandum solely as a provisional basis for action, and not in any sense as a commitment; and in relation to the base date, in particular, we agreed to nominate a base date for facilitating negotiations and specifically drew attention to the fact that the naming of such date did not imply an acceptance or commitment to which Mr. Brown has referred. E/PC/T/TAC/PV/8 VE/PC/T/TAC/PV/8 Dr. J.E. HOLLOWAY (South Africa): We reserved our position in the same way, but I do not want that to be interpreted as support for Dr. Coombs' proposal. CHAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman , I think it is our duty to state what the position of India is in regard to this new suggestion of Dr. Coombs. I should say straight away that, according to our understanding of the explanations we have heard of the implications of this reservation, it does not accord with the spirit in which countries have embarked on tariff negotiations here, as the countries negotiating, for tariff reductions have started on the basis of Article 14 and Article 24. Article 24 definitely states the object to be reduction of tariffs and elimination of preferences, and therefore all countries negotiating have, I believe, started on the assumption that they need not ask for binding of existing preferential margins, but only for their reduction and all preferential margins not covered by negotiations are supposed to be automatically bound. If this matter is to be left over until we know how far tariff negotiations have progressed, then I am afraid it will create a misunderstanding in the minds of many people here, and it might perhaps make people present fresh requests for binding of preferential margins which were considered unnecessary. Apart from that, I venture to submit that the suggestion is not solely connected with the question of tariff negotiations. If the effect of this amendment is to permit countries having existing preferential agreements to widen margins of preference if they are not covered by negotiations, then surely it conflicts with the basic principle of non-discrimination, and apart from V tariff negotiations it has a vital bearing on the issue of new preferences. This Article and other Articles included in this General Agreement prohibits the creation of new preferences, because new preferences would conflict with the idea of non-discrimination, and because countries having existing preferential arrangements have undertaken to eliminate those arrangements by steps. But if countries which have preferential arrangements are to be allowed, merely because they have these arrangements, to widen preferential margins if they are not covered by negotiations , then I think all the objections which have been raised to the demand for the creation of new preference will fall to the ground. Therefore, this ammendment is connected not merely with tariff negotiations but also with the issue which is raised in the same connection. I suggest, therefore , that it should not be implied that amendments suggested by the Austalian Delegation make any change whatever in the assumptions upon which the Delegations have been conducting the tariff negotiations, and, at any rate, the opposition of the Indian Delelga.ion to the spirit of this amendment should be recorded. CHAIRMAN: I wish to thank the Delegate of India for his very Iucid and complete statement on his understanding of the position under which tariff negotiations have been conducted. Are there any other comments in regard to this question? Mr. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, as far as New Zealand is concerned, there is no doubt as to the spirit in which we conducted negotiations. The only point at issue is how far commitments are to be entered into before we know just what the result of the negotiations will be. E/PC/T/TAC/PV/8 V E/PC/T/TAC/PV/8 CHAIRMAN: Are there any other comments? M. Hassan JABBARA (Syria) (Interpretation): Mr. Chairman, as representative of the Syrian Delegation, I would like to state that we have not conducted our negotiations in the spirit which was pointed out by the previous Delegates. We have taken into account the principle of the Most-Favoured-Nation clause, and we have made observations and comments on our own situation, and we made certain reservations which nevertheless did not prevent us from proceeding as if these reservations did not exist. Now, Mr. Chairman, on this Article I asked for the floor just now; but I am sorry that I was not able to catch your eye, and I would like to ask for a definition regarding this Article. Does this Article refer also to nations which are not key nations, and will this Article come into force for such nations during the time of the provisional application and before the final ratification of the Agreement? The second question is whether a revision of this Article will be possible after final approval of the Charter. Our final attitude regarding this problem will depend on the answers we receive to these two questions. CHAIRMAN: I will do my best to answer the Delegate of Syria. This Airticle will have effect when any country gives provisional application to the Agreement, as from the date on which their provisional application becomes effective - just the same as any other Article in the Agreement. AIso, if a country does not give provisional application to this Agreement, it will then have effect when the Agreement comes into effect for that country. As this Article is included in Part I of the Agreement, it will not be subject to change on the coming into force of the Charter unless the parties use the amendment procedure under the provisions for amendment of the Agreement. V V E/PC/T/TAC/PV/8 CHAIRMAN: The Delegate of the Lebanon. M. Moussa MOBARAK (Lebanon)(Interpretation): Mr. Chairman, if I understood correctly the explanation which you have just given, this discussion can only interest the key nations or those nations which can apply provisionally the Agreement without having to submit it to their Parliaments, but it does not concern those nations whose constitution prevents them from applying this Agreement without submitting it to their Parliaments - nations who like Syria and the Lebanon - and/therefore cannot apply it before next June. 38 CHAIRMAN: Are there any other comments on Paragraph 29 We shall now pass to paragraph 3. In document E/PC/T/W/317 the French and Czechoslovak Delegations have submitted an amendment to paragraph 3, which takes the place of the proposals which they circulated on September 1st, I therefore suggest that we first of all take up the proposals of the French and Czechoslovak Delegations. Would either of these two Delegations be in a position to explain the proposal? (Interpretation) MR. A. FAIVOVICH (Chile)/ If no French text has been circulated up to date, I request for an adjournment of the discussion until the French text is circulated. MR. M. MOBARAK (Lebanon) (Interpretation): I share the point of view of the Chilean Delegate. M. ROUX(France): (interpretation): Mr. Chairman, I would like to point out that the original draft was submitted by our Delegation to the Secretariat in French. CHAIRMAN: I am sorry, I did not know that the French text had not been distributed. The Secretariat tells me that the French text will be here shortly In the meantime, we might pass on to Article II. The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, before we pass to Article II, I would like to draw attention to a Note which was to be added to Article 16, which is the corresponding Article in the Charter itself. E/PC/T/TAC/PV/8 J. J. 39 This Note is contained in document E/PC/T/180 Corr.8, and it reads like, this "In the footnotes immediately below the heading 'Article 16' insert the following paragraphs: 'The following kinds of customs action, taken in accordance with established uniform procedures, would not be contrary to a general binding of margins of preference. (i) the re-application to an imported product of a tariff classification or rate of duty, properly applicable to such product, in cases in which the application of such classification or rate to such product was temporarily suspended or inoperative on 10 April 1947; and (ii) the application to a particular commodity of a tariff item other than that which was actually applied to importations on that commodity on 10 April 1947, in cases in which the tariff law clearly contemplates that such commodity may be classified under more than one tariff item." I think this is a case in which the question of Notes comes up. It does seem to me that this is a case where a Note should be picked up, whatever procedure we decide to adopt for linking officially interpretative Notes to the text of our General Agreement, I would like to suggest that that Note be picked up there. CHAIRMAN: The Delegate of the United Kingdom has raised the question of the interpretative Notes which have been attached to the various Articles which are common to the Charter and to the General Agreement, Have any Members of the Committee any views as to how these Notes should be dealt with? The Delegate of Norway. E/PC/T/TAC/PV/8 40 Mr. J. MELANDER (Norway): Mr. Chairman, I take it for granted that the Explanatory Notes to Articles of the Charter would also apply to the Articles of the General Agreement. If that is the case, I do not think it would be necessary to have them attached specially to the General Agreement. CHAIRMAN: The Delegate of Chile. MR. A. FAIVOVICH (Chile) (Interpretation): Mr. Chairman, in spite of the comment which has just been made by the Norwegian Delegate, I have some doubts, because if this Article here is not to be provisional and, on the other hand, the Charter is to be revised, I do not see how,it bering possible for this Note to disappear from the final text of the Charter, we could consult such a Note. CHAIRMAN: The Delegate of South Africa. DR.. J.E. HOLLOWAY (South Africa): Mr. Chairman, these Notes were put in at various stages as a condition of certain Articles being accepted and this is one of them. If it is not put into the General Agreement, that will open the whole subject of the wording of those Articles again. It is an intimate part of the Article. CHAIRMAN: The Delegate of Cuba. MR. H. DORN (Cuba): Mr. Chairman, I agree with the explanation just given by the Delegate of South Africa, and I think that even if the Notes were accepted without any change in the Charter, legally it would not mean anything at all if they were not included in the Agreement. R. E/PC/T/TAC/PV/8 J. E/PC/T/TAC/PV/8 41 Therefore, I think we will have to decide whether a Note has an explanatory character and binding interpretive force - in that case it should be included in the Agreement in order to make sure that it applies to the Agreement, without taking into account what will be its fate in the Charter. CHAIRMAN: The Delegate for Czechoslovakia. Mr.E.Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I think that we should keep the Footnotes, because I think that they are essential to the meaning of the different Articles. I suggest that we put them, as is usual in all treaties or international conventions, in a Protocol - a final Protocol or Protocol of signature. CHAIRMAN: The Delegate of the United States. MR. W. BROWN (United States): Mr. Chairman, I would agree with the suggestion of the Delegate for Czechoslovakia. It seems to us that the Notes should all be collected together in an Annex or Protocol with reference to the Articles to which they apply, so that they are part of the Agreement and all linked together in one place. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I do not want to waste time on a question which is mainly one of mechanics, but it does seem to me that there are two points, and the first is the sort of formula with which you attach these Notes. I presume the sense would be that these are to be regarded as official interpretations of the text of the Articles. Then there is the question of place - either these Notes can be printed at the foot of the Artiolesor, as in some pre-war conventions, in a Protocol. J. 42 E/PC/T/TAC/PV/8 Having the Notes sandwished between the Articles certainly makes for greater facility in reading, but on the other hand they might all be grouped together in one Protocol at the end . In that case, I imagine you will inform the person that he can look at the end if he wants to find an explanation. I think it is a question of taste rather than anything else, but I am of the impression that it will be better to have the explanation with the Article. CHAIRMAN: Dr. Augenthaler has proposed that these Explanatory interpretative Notes be collect d together into a Protocol which will accompany the Agreement, and Mr. Winthrop Brown has seconded that proposal; Mr. Shackle has expressed a preferece for the Notes to appear at the bottom of each Article to which they relate, but not a very strong preference. I wonder if we could obtain the sense of the Committee as to which of these procedures meets with the general wish. MR. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, I am inclined to feel the same way as Mr. Shackle, that is, that it would be more convenient and easier for reference if the Note were put at the foot of the Article. CHAIRMAN: The Delegate for Cuba. MR. H. DORN (Cuba): May I support Dr. Augenthaler's and Mr. Brown's proposal, because I think that this form of Protocol has mostly been used in international treaties. It has one great advantage in that it makes quite clear the interpretative character of these Notes. The Footnote, as such, does not make the character so clear. Therefore, I want to agree with the two Delegates whom I mentioned before. E/PC/T/TAC/PV/8 43 CHAIRMAN: Any there any other comments? The Delegate of France. M. ROYER (France) (Interpretation): M . Chairman, I think that from a legal point of view the suggestion made by the Czechoslovak Delegate, supported by the Cuban Delegate, is quite a reasonable one and I hope that the preference which was mentioned by Mr. Shackle can be eliminated under the terms of Article I of the Draft Agreement. Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, I do not want to press my point very hard. I think that so far as the question of the legal effect is concerned it could be covered by a reference somewhere in the Agreement. If the general preference of the Committee is, as it seem. to be, in favour of assembling all these Notes in a Protocol, I will not press my point. CHAIRMAN: I want to thank Mr. Shackle for his accommodating spirit. I think we can leave this question as more or less settled. I will ask the Secretariat to prepare a draft Protocol giving the interpretative Notes; we can discuss the form when we have that draft. Can we now take up Article II? Mr. H. DORN (Cuba): I have only one question if you will allow me, Mr. Chairman, There is the question of how to deal with reservations. If I understood it rightly, it is not necessary to mention this question for each Article, because you want to deal with all reservations together under Article XXVII, but I am not quite clear as to whether it is necessary to mention for each Article the existence of a reservation. S E/PC/T/TAC/PV/8 S 44 E/PC/T/TAC/PV/8 CHAIRMAN: I had hoped, after the statement which Mr. Brown made earlier in this meeting, that the question of reservations would no longer arise, but if there are to be any reservations I think they can best be dealt with when we have finally considered the whole text of the Articles; then we can see if there are any reservations which might have unanimous support or not. Mr. H. DORN (Cuba): Mr. Chairman, if you will allow me, I understood that we would have to discuss this question of reservations, because it has a long legal history; it is not something new. I do not want to discuss it at this moment, but at all events I think the question of at what time the reservation has been made and maintained must be discussed before we can decide whether we have to insert it at the moment of signature. Therefore I think we can discuss it later and reserve our right to make reservations which will be maintained indefinitely. CHAIRMAN: That will be more satisfactory. We will make better progress if Delegations do not mention, in the case of each Article, what reservations they have in mind. We will leave the whole question over until we have dealt with all the Articles of the Agreement. Mr. DORN (Cuba): Thank you. It is not necessary to mention them? CHAIRMAN: No, it is not necessary. Can we now deal with Article II? Are there any comments on Paragraph 1? (Agreed) 45 Paragraph 2: in Document W/312 we have a proposal by the French Delegation for a new wording of Paragraph 2. Will the French Delegation explain the purpose of this proposal. M. ROUX (France) (Interpretation): Mr. Chairman, the reasons why we have submitted this amendment are pointed out in Document W/287. The question was raised before the Working Party and relates to certain taxes which are neither customs duties covered in Article 1 nor internal taxes, this case being covered also in Article III. In the Tariff Schedules the freezing of customs duty has been envisaged and for other taxes on imports or exports it is not customary to freeze those taxes. It does not mean, of course, that those taxes or charges should not be mentioned, because the increasing of such taxes or charges could compromise the concessions which are granted under the tariff negotiations and in the Tariff Agreement. In Paragraph 2 of Article 89 the principle underlying Paragraph 2 is that "no contracting party shall alter its method of determining dutiable value or of converting currencies so as to impair the value of any of the concessions provided for", and we propose here to add that the contracting party should not render illusory in a certain way the advantages which it has granted to another party by certain. taxes or charges. Here we have a precedent, that of the Trade Treaty between the United States and France signed in 1936, where a similar provision occurs. This similar provision applied to certain fiscal taxes and certain charges of a E/PC/T/TAC/PV/8 S 46 special nature for services rendered, for example. It is possible to maintain these taxes at their present rate, but it would not be right or proper to have these charges increased so as to hinder in any way or impair the application of the agreement. In fact, if one could look at the taxation legislation or administrative policy of many countries, one could find a certain number of such taxes or charges which are assessed for services rendered on goods, for instance, and which are not internal taxes and for fiscal reasons it could not be possible now to suppress such taxes. As I say, we have a precedent here in the 1936 Trade Treaty between France and the United States, and that is the reason why we have proposed the amendment to Paragraph 2. CHAIRMAN: The Delegate of the United States. Mr. Winthrop G. BROWN (United States): Mr. Chairman, we have no disagreement whatever with the objective of the French amendment. It seems to us, however, that the point is already covered, practically in the same language, in the suggested Schedule, which was circulated as Document T/153 for the consideration of the Committee. It seems to us that Para- graph 1, plus Paragraph 2 of Article II as they now stand, plus the Schedule as suggested in Document T/153, completely meets the point made by the French Delegation, without the necessity for further changes in Article II, because the Schedule actually uses practically the same language as the French amendment. CHAIRMAN: The Delegate of France, E/PC/T/TAC/PV/8 S E/PC/T/TAC/PV/8 M. ROUX (France) (Interpretation) Mr. Chairman, the question is precisely to know whether before the Schedules one has to put a certain number of comments to explain what the schedules are about, and this would mean overlapping, I think. I think that we ought to have a General Agreement which could stand on its own feet and only refer to the Schedules and to the Annexures without adding any comments. The question is, as I have stated, therefore, to know whether before the Schedules one should put such comments and provisions, such as provisions relating, for example to anti-dumping duties, etc. This was the main purpose of the amendment which we submitted in document W/287 and therefore we think that the provisions ought to be contained in the Agreement itself and not in comments on the Tariff Schedules. There ought to be an Agreement and then Tariff Schedules only but without comments, I think that the main reason for that is a question of clarification but nevertheless this is a matter of a general nature which we should have to take up and discuss maybe at a later stage. Nevertheless I would like to thank the United States Delegate for stating that he agreed with the spirit of our amendment. To sum up what I have said, the question is only to know whether these provisions ought to be included in the Article or whether they should be included in comments before the Tariff Schedules, and explain those schedules and be a sort of heading to the Tariff Schedules. Mr.H. DORN (Cuba): Mr. Chairman, I would be thankful to have some explanations about the content. Up till now I had the impression that the covering statement, the Tariff Statement, had - 47 - -48 - P. E/PC /T/TAC/PV/8 only an explanatory character, that means, it makes it clear what the result of the Agreement would be as for the accepted Schedules; and I thought that the main points covered by the new French amendment would be covered already by the Articles of the Agreement. I would be glad to know if this interpretation of the covering statement was a correct one. And secondly I would be grateful to know if the last part of the French amendment is a limitation of the paragraph 2 as it stands now in Article II, because in Article II, as it stands up to now, it says, speaking about converting currencies: "... so as to impair the value of any of the concessions provided for in the appropriate Schedule annexed to this Agreement", and in the new wording it says: "by altering its method of determining dutiable value or of converting currencies for calculating this value". That means limiting the wording. I am not quite sure if it limits also the sense, the meaning, but the wording at least would be limited. I would be thankful to have some explanations about the two points mentioned. CHAIRMAN: The. Delegate of France. M. ROUX (France) (Interpretation): Mr. Chairman, with your permission I would like to answer first the second question. It was not at all our intention to modify the meaning of this paragraph by adding the words "for calculating this value" to the words "of converting currencies". In fact the duties which are to be evaluated cannot be modified and we do not want to see the Customs Authorities changing at their will the tariff valuation. As to the first point, I asked myself if this question of taxes was not covered already by the Agreement, but, as I have stated previously, some taxes are not customs duties, and they 49 E/PC/T/TAC/PV/8 cannot be considered either as internal taxes, because they have no equivalent in the internal fiscal system. For instance, we have the example of the sanitation tax, which is usually to reward the services of the sanitation inspector who inspects the cattle, for instance, or of a veterinary, or of a customs inspector: or we can have the case of fees which are to be assessed for overtime. These taxes of course cannot be considered as internal taxes. They are only minor taxes; nevertheless they could in some way hinder international trade. Mr. Winthrop BROWN (United States): May I point.out that the two points last raised by the Delegate of France are already covered in the Schedule, paragraph 3(c): "Nothing in this Schedule shall prevent the Government of ............ from imposing at any time on the importation of any product: (c) fees or other charges commensurate with the cost of services rendered." Therefore, the sanitary inspectors can be properly compensated for their efforts and all those who work overtime can receive their due and proper compensation. As for the basic question raised by the Delegate of France it would of course be possible to take care of provisions which so often appear in the Schedule by putting them all in Article II but it would require some very careful drafting to do so. It is a decision we have to take but I suggest it is a decision we had better take later, when we have had a look at the Schedules and decided the precise form. Everything which is in the French draft which appears in document E/PC/T/W/312 is, I submit, already taken care of in the draft Schedule recommended in document E/PC/T/153, especially taken in connection with paragraphs 1 and 2 of Article II as they now stand. - 50 - CHAIRMAN: Would the French Delegation be agreeable to leaving this question over until we have examined the Schedule? Then if they find it is not covered by what is in the heading to the Schedule they would have the right to refer again to this amendment. M. ROUX (France) (Interpretation): Mr. Chairman, I agree to examine this question at a later stage, but I think that this question will raise other problems. We ought to try to gather in Article II various provisions which appear in various places of the Schedule; nevertheless our proposed amendment here is not quite the same as the provisions which appear in the headings of the Schedule. Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman, I think that there may be some difficulty in transferring at any rate some of the headings of the Schedules to Article II. For instance, I see paragraph 2 on page 5 of document T/153 which relates to preferential rates of duty in favour of products of the territories of contracting parties entitled to receive preferential treatment. It seems to me that to transfer that to Article II involves considerable complication. Another difficulty I notice is that the suggested heading to the Schedule contains as 3(b) a provision for anti-dumping or countervailing duty. If I read the French amendment rightly, the use of anti-dumping or countervailing duties would be limited to where the use of such measures is prescribed by legislation already in force, and therefore any new anti-dumping or countervailing duties would be prohibited. That is something we have to look at rather carefully if the French amendment is accepted. I mention that as a point which requires consideration when we come to the Schedules. - 51 - E/PC/T/TAC/PV/8 CHAIRMAN: The Delegate of France, M. ROUX (France) (Interpretation): Mr. Chairman, I think there is a misunderstanding. The question of internal taxes is covered and settled by the Article which refers to internal taxes, and the question of anti-dumping duties is settled by the Article which deal with anti-dumping duties and not by the headings of here the Schedules and it seems to me that/there is a certain amount of overlapping. Mr. R. J. SHACKLE (Un i ted Kingdom): Mr. Chairman, I am sorry to intervene again, but I cannot help feeling that Article V, Anti-dumping and Countervailing Duties, would not by itself prevail over a provision which said that charges on importation were bound. I see nothing in Article V which would have that overriding effect. CHAIRMAN: It is clear that we cannot make headway on this complicated question until we have considered the heading to the Schedule, and therefore I propose that we leave it over until we come to the Schedule, as the French Delegation have agreed. Are there any other comments on paragraph 2? The Delegate of Syria. V - 52 - E/PC/T/TAC/PV/8 M. Hassan JABBARA (Syria) (Interpretation): Mr.Chairman, I would like to have an explanation concerning two points of the French amendment. We read in the French amendment that "No Contracting Party shall adopt measures likely to impair ..... unless such measures are prescribed by legislation currently in force". It seems to us, therefore, that the Government would be able to fix the amount of the tax even after the customs duties had been frozen or reduced following the tariff negotiations. Now, will the Government be in a position to increase the margin existing on such taxes, and can they do that if the internal legislation permits them to do so? The second question I would like to ask relates to the words "imposed on, or in connection with importation". It seems to me that there is a certain confusion, because certain internal taxes are imposed on goods at the time of the importation, and, nevertheless, the fact that these taxes are received at the time of the importation does not change their character of being internal taxes. Therefore, I would like to have some explanation on these two points. CHAIRMAN: The Delegate of France. M. ROUX (France) (Interpretation): Mr. Chairman, the comments made by the Syrian Delegate proves to me with what care he has studied our amendment. He was able to discover new aspects of our amendment which had escaped the French Delegation! The inclusion of the words ."unless such measures are V E/PC/T/TAC/PV/8 prescribed by legislation currently in force" was referred to. We do not intend to open the way to misuse of this provision; but it was only included in order to avoid unpleasant surprises to the Contracting Parties, and that taxes which did not exist could be imposed on importations. We do not want to cover abuses here, but we just want to take into consideration the situation which prevails at the time of the signing of the Agreement. As to the second point referred to by the Syrian Delegate, that is, the expression "on or in connection with importation", this appears in many places in the Charter, and is one we have acquired from other Articles of the Charter. The French Delegation did not invent this expression, and although it may seem somewhat redundant, it might be a sort of precaution against cases where the taxes are not imposed at the exact time of the importation, but may be at a somewhat later stage -nevertheless, in connection with the importation. Of course, the internal taxes here are completely left aside, because, as I stated previously, the case of internal taxation is scheduled in a special Article on internal taxes, just as the case of anti- dumping duties is scheduled in a special Article. What we wanted to do through our amendment was to solve a certain number of cases of taxes which cannot be put into the general framework of normal taxes. CHAIRMAN: As I mentioned before, we will be dealing again with these complicated questions when we come to deal with the heading of the Schedule. It is now time we adjourned. Tomorrow I propose we take up paragraph 3 of Article 1. The French and Czechoslovakian Delegations' proposals have now been circulated, and we will begin tomorrow at 2.30 p.m. with the French and Czechoslovak proposals. The Meeting is adjourned. (The Meeting rose at 6.20 p.m.) - 53 -
GATT Library
mt149ct7592
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eleventh Meeting of Commission A held on Wednesday, 11 June 1947 at 2.30 p.m. in the Palais Des Nations, Geneva
United Nations Economic and Social Council, June 11, 1947
United Nations. Economic and Social Council
11/06/1947
official documents
E/PC/T/A/PV/11 and E/PC/T/A/PV.8-11
https://exhibits.stanford.edu/gatt/catalog/mt149ct7592
mt149ct7592_90240090.xml
GATT_155
12,821
77,971
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/1l 11 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT * ELEVENTH MEETING OF COMMISSION A HELD ON WEDNESDAY, 11 JUNE 1947 at 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA Mr. MAX SUETENS (Chairman) (Belgium) Delegates wishing to make co rrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). * For record of Tenth Meeting see Summary Record E/PC/T/A/SR/10. NATIONS UNIES E/PC/T/A/PV/11 CHAIRMAN: The meeting is called to order. (Interpretation) Gentlemen, we have today to examine and discuse Articles 34, 35, 36 and 38 of the draft Charter. I suppose you have all taken into consideration the annotated Agenda prepared by the Secretariat for these Articles (W/175 dated 6th June). We shall start with article 34. I want to remind you that We are going to follow the procedure which we have always followed, that is, to restrict our discussion in this Commission to questions of substance, and let the sub-Committee which we will appoint, if we do not continue the mandate of the Committee working on Articles 14, 15 and 2<, discuss questions of drafting. As far as Article 34 is concerned, we are confronted with an amendment to Paragraph 1, proposed by Belgium and Luxembourg. I think this is an amendment of substance, and I therefore invite M. Forthomme to develop his argument. V -2 - 3 - E/PC/T/A/PV/11 M. PIERRE FORTHOMME (Belgium) (Interpretation): Gentlemen, the Belgian and Luxembourg delegations believe that paragraph 1 of Article 34 provides for an excetion for an escape clause of a very general character, and that therefore we must be very careful not to limit the case too strictly in which these paragraphs could be applied. If we admit as a principle, and that is already an important privilege, that a country can revoke some concessions on tariffs which it has conceded, in order to protect its own producers, it would be going a little bit too far to extend the possibility of such an action to the territories which enjoy a preferential treatment as far as this nation is concerned. It has been admitted generally that such an action should be taken at the request of such a country which enjoys such Dreferences, and if we are not very careful what that paragraph entails we will, to a great extent, augment the difficulties of those who have to protect their own production if they have to discuss not only wits one country but with the territories which are related to that country by preferential arrangements. Therefore, the Belgian delegation proposes to delete this Paragraph to make equal as far as Possible the means of defence of all the parties engaged in such negotiations. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I am afraid that the suggestion which is made by the Belgian delegation would definitely not be acceptable to us. It seems to us that this is a question of equity and that the equity springs from the nature of the original bargain which we have in contemplation, and which is the reduction of tariffs on the ore hand against the reduction, possibly elimination, of preferences on the other.. It seems to us which that if countries/contemplate such reduction in their tariffs are free to withdraw reductions they have made in certain cases by this - 4 - E/PC/T/A/PV/11 Article, it is equitable and right that the corresponding freedom should be allowed in cases where preferencess have been reduced or abolished. There has already been a great deal of criticism at home about the wide scope of this escape clause and we feel that, if there was not to be a balance under I.t as between the concessions on tariffs and concessions on preferences, it would become unacceptable to public opinion in the United Kingdom. It goes without saying that, If it should become necessary - s we hope it will not - to evoke this clause in relation to reference, it must in our view be evoked for the benefit of those parties who have suffered from the reuction or abolition of reference and at their request. 7'e have put down an amendment who follows later, which is designed to make that point clear that action must be taken at the request of the carty which suffers through the abolition or reduction of preferences. As T have said, this is a matter on which we have definite views, and I chink we shall have to insist really on the retention of the text. Dr. H.C. COOMBS (Australia): Mr. Chairmar, the delegate for Belgium based his objections to the application of this escape clause to industries adversely affected by a reduction or elimination of preference, on the principle that h s delegation believes that it is desirable to equalise the means of defence between the different parties to the agreement. We believe that this is a very sound principle, provided that the means of defence are adapted to the situation against which they are intended to de-end the parties . Speaking for Australia, 1 would just like to say that the possibility of industries dependent upon prmf2-eerences being adversea cIffected aye. modification ot those preferenceis, s ata lest as great as the possibility of Industries in other countries being adversely affected by a modification in tariff protection. S We have some industries in Australia of a primary producing character which have substantially grown to their present scale during; the period of operation of the preferences. It is exceedingly difficult to forecast what the position of those industries will be if the preferences are modified. I suggest that it is precisely to deal with that type of situation - where countries are invited to accept an undertaking the precise Implications of which it is impossible to see in advance - that this escape clause was provided. It was provided originally for modifications of the tariff. We suggest that precisely the same justification exists for industries at present dependent upon preferences. Since we cannot forcast precisely, it means that inevitably, in accepting a modification of those preferences, we are taking a risk which involves the livelihood of many individual producers, for many of whom; it will be impossible to find alternative forms of production. Consequently this clause does appear to us to be fundamental to enable us to ensure that serious and widespread social hardship is not imposed upon some of those producers. We do not cc not anticipate that it will b necess ry to use this clWe veause. ry sincerely hope it will not, not only for ourselvoes but fr the countries who will bge lookin at it primarily as a means of possible escape from the effects of a reduction in the tareieff. Nvrtheless it is important, because we cannot fully mticip-te the result of the changes we are contemmaplating king. F:thermorae, it hL another very important significance; ,that is just because there is that, great element of uncertainty S E/PC/T/A/PV/11 as to the effects of the changes we are contemplating, the possibility of having those changes accepted in our own community depends a good deal upon the assurances which we can offer that they will not, in fact, produce devastating results, and the existence of this clause is an extremely valuable instrument in the hands of those people who are ;anxious to err on the side of taking risks in the interests of lower barriers to trade, This does offer the protection that, if we do take risks and if in the odd case we err on the side of too great reductions, we will be in a position to ensure that it does not cause serious social hardship. I ,,ld suggest, therefore, to the Delegate of Belgium that the application of the very principle which he himself has outlined justifies fully the retention of that part of this clause which provides a potential escape clause for industries at present dependent upon tariff preferences. CHAIRMAN [Int(ThI-earetrItion)w I :-ould like to ask eloan, C_1bsz, wheo has baen in chrge oaf the Dommrfting Cit thee, whyte sentence to whielgich tehege ian Dlate objects is between brackets. Mv ErANik oCOLB.(NrIwamay): T sorry - Mr.HA R T. SCKLE (Unngited KiMrdomha): . Cirwonman, I der ulif I ci volunteer an explanationo. Yv will observe that these brackets are round and not squaroe. Runkd bracets are used in order to render the structure of the sentence tore clear. W. :t ave used mmco=--zbut thIn xiz- would have read less clearly if we had used mmcoa s.It is, think punI.:.', relyy for the purpose of keeping the clarity of the sentewnce that e have used brackets. S 7 E/PC/T/A/PV/1l Mr. COLBAN (Interpretation): I would like to add that those round brackets are already in thndon era LooDzX ft and that the gD:om.inee ,-ttNe:eion ITYwr did not wantak to mteany changes of substance. C.NCVMAn:e(Itirret n)ion n the Fre: I -., --nch-text, a sentence which appears between brackets has a very big significance and I .t have Anticipaated thaaltou hcrdlready condemned this sentence in the bottom of your hearts. MANr. InterpreCOLB: (tatiton): I was certainly not the intentioen oaf thg Dommrftein CiWe tte. 'fu could repLace the brackets by two commas. cLIY&2S (erpretatiooes n): D-JOsnybody wish to speak on this subject? Dr.WA TE.ouHOLALO: (S_h Lrichairma} M nextr. C-n, I ;t to direct my attention nelgext to the Bian amendment and to the paragraph which imet seeks to and. This Arcle conptains the Irncaiple of wh-tis generally known as thea escape cthluse. I ink you awill all hve read the directivrese of the Pident off tStahe UnitedStes, which, if I ±ve re-d it corresctply, ley4nuwn thea Uateelegationd Stnes D,ior. the liability of having an escape chalause in the Crter. haI mant whink, Mr. Cir,e ought to express a certain amount ofitu moderate gratde ttao the United Stes for warning .us beforehand that any conniceesstaions the itd Stes make in these negoteiations must b taken with a emeasurhae of resrve. Tt is essentially fair play, to give us that warning. S E/PC/T/A/PV/11 This paragraph as it stands will no doubt be amended, but a paragraph of this nature will no doubt have to go into the Draft Charter and therefore, from that point of view, the South African Delegation will not object in principle to the inclusion of this provision for escape: But I wish to point out certain consequences. Prt of the negotiations are based on the assumption that the countries of the British Commonwealth must sacrifice, and sacrifice for all time, curtain rights that they have hitherto exercised, and exercised for a long time a,pmg ronmthereselvIt. ri will close to us an alternative way of organising oure trad and mwiell ake it nccssary for us to break down certain things that wohave done in pathe Jt in ordor to organism the trade in that we. iIs _seruath-t that is intended toe mbcnde possible for us by the opening of alternatives ways of goranising our trade, and then, just tompleceot the circleAr, tiecl 34 againa mkes it possible to close up thaat eltarnteiva wy of organising our trade to brgin us back to eth original position wee wre In, without giving us any alternative. llWo Mr. Chamian,a . I havo said, in the circmuntaceno i nwhich this clause figures in the Cahretr, we shall, no doubt, have to accept smoe sort of clause of this nature.w hat I do wish to say - and sayw ith a good deal of emphasis - is this: that if a clause like this is used in such a way as gradually to whittle away wha tew haev paid for giving up that right to make preferential arragemennts maong ourselves, the whole basis of the Charter and the Orqanization will fall away; it cannot continu.e 9 The negotiations have been referred to by the late Lord Keynes as horse-trading and this Article might very Wall be so inter- preted: - that we buy a horse for 200 dollars, we pay the 200 dollars, but the party selling the horse is at liberty to take the horse back and keep the 200 dollars.- Well, if that happens, something. more will happen, and I want to state that very ex- plicitly. I want to point out further that the clause as drafted I am not talking of the principle but the clause as drafted - has been so drafted as to put the party whose horse and money are being taken away in a somewhat more difficult position to apply any corrective measures than the party that took the horse and the money. The party that starts by taking advantage of this escape clause must give notice as far in advance as may be practicable. That sounds very nice but of course " s far in advance as may be prac- ticable" may be a month, or it may be a week, or it may be twenty- four hours, But then the Article goes on to any that as a matter of fact there may be circumstances under which you have to give no notice, you can Just act first of all and then talk about it after- wards. Now, what remedy has the aggrieved party got under this document, - this document which is to be a fair dncument as between the various countries engaged in horse-trading? - The country which is aggrieved may not act as precipotately as the country which created the problem. To start with, an attempt must first be made to try and arrive at some sort of agreement. Now I think all of you have had experience in intergovernmental discussions on matters in which two Governments are in conflict with each other over a particular thing and you know that that is something which takes a very considerable amount of time, However, let us assume that things go particularly fast and that there is established within a comparatively short time that there is no agreement. May the aggrieved party then act as pracipitately as the party that has E/PC/T/A/P'V/11 .- E/PC/T/A/PV/11 10 caused the problem? No; he must give 30 days notice, and he can- not act before the expiration of 30 days. What is more, he must make up his mind inside the, period of 60 days whether he is going to act at all and when the 60 days have passed then he may not act any more. So that if, in a desire not to put more limitations on international trade, he should, in the first 60 days, think that probably no great harm will be done and therefore it is. not necessary for him to act, and ho then finds within the next period of 60 days that a great deal of harm is done to him, he can no longer act because the period has passed. That is the draft as it stands now, in plain EnGlish. The English is not so plain at one other point. I do not want to try to suggest that we deal with this point now, I am mentioning it only so that the drafting committee can take note of it. The words at the end of the first sentence of paragraph 3, "...... the suspension of which the Organisation does not dis- approrve", refers to something. That "which" refers to something antecedent to that paragraph - which antecedent, which earlier Word it is, I do not know. It seems to me the English has gone a bit "Wonky" there and I suggest that tho drafting committee might tell us what that means. P. - 11 J. CHAIRMAN: (Interpretation): As the representative of the Union of South Africa has said himself, his remarks were of a general character and did not supply specifically to the amendment submitted by the Belgian delegation. We shall have a later opportunity to return to the remarks of the representative of the Union of South .Africa, but in the meantime I would like to know if any other delegate wishes to address the meeting in connection with the Belgian amendment? DR. G. GUTIERREZ (Cuba): Referring exclusively to the Belgian amendment, the Cuban delegation thinks it is worth while co remember that this matter. came up as article 29 of the original United States proposal. It was stated from beginning that it was an escape clause, but at that time it seemed it was not clear enough that the concessions granted during the negotiations would mean not only the concessions on customs duties but, at the same time, the negotiations made on preferences. On account of that, when this matter was taken up by the London meeting, it was very clearly stated there that "the Preparatory Committee considers that members of the Organization, . the event of unforeseen developments ando f injurious effects on their trade caused by or threatened by reasons of the obligations laid down in Chapter V (including tariff or preference concessions) should be permitted to withdarw or modify th oebligations to the extent and for the time necessary to prevent the injurious effects. The Preparatory Committee agreed that this right should be subject go adqueate safeguards and to the possibility of counter-action by other members in the event of the abuse of the right". So, the equation is clear and the phrase which is between brackets only gives the proper setting to a principle that has been accepted in - 12 - London, in New York and, I suppose, in Geneva. DR. A.B. SPEEKENBRINK (Netherlands): Mr. t'. Chairman, I would like to continue the remamarks de just now by the Brazilian delegate whenre ehe frred to the Londonfe conrence. In the London conference we mentioned there the preferences existinng, ad then I had occasion to say, when it was said. that it- was an adopted principle, that we would state the position hof te prences fereaoos like that. I said then anda thee th-t we ould. not do anything against theme - they wre there and we had to accept them, So, we hcave to fae the preferences as thery are thee, and we have, in the Charter, taken due consideration of the existienge praferncs. But now, I would ask, why rub it in again in this phrase? Here, the first part of this paragraph is, I think, comprehensive enough. We speak of "unforeseen developments and of the effect of the obligations incurrc-d under or pursuent to this Chapter". Well, if you include prefereenIces her, might say why not include here the abolition of quntitative res?triAnctions importantr point fo other countries is the curtailment of state trading. We can go on to a very great extent there simply by including all the sacrifices eof all th countries entering into this Charter. I think, therefore, that the first part of this piaragraph s, as I may rmprepeat, coehensive enough, and in that sense I support the amendment of my Belgian colleague. EIC11/T/A/PV/' . G - 13 -E/PC/T/A/PV/11 CHAIRMAN: The Delegate of New Zealand. Mr. WEBB (New Zealand.): The New Zealand Delegation hold that if it must be assumed. that an escape clause of this sort is necessary, it is a matter of audible necessity to make some such provision for preferences as is made in these words; that necessity arising out of what one might call. a fundamental bargain, which was in a sense the starting point of these Charter Discussions. CHAIRMAN: The Deletate of the United Kingdom. MR. SHACKLE (United Kingdom) Mr. Chairman, I would. just like to make one- comment on the observations of the Netherlands Delegate. If I have read this paragraph rightly, it does already extend to all the different matters, such as quantitative restrictions, State-trading and so on, which are covered. by this Chapter V. There is a particular reason, none the less, why the matter of preferences needs to get a special mention, and that is because, in the case of all the other measures, the injury would fall upor the Member where domestic producers suffer; but there is an intention here, because where it is a preference it is not the domestic producers who suffer; but producers in the territory which receives the preferences. For that reason it is necessary, if you are going to cover all the matters in Chapter V, to-make a special mention of the case of preferences in order that they should. be exempt. CHAIRMAN .RLN: Thegelezate of Belgiun.- Mr. FOMMRTHOE (Belgium) (InterpretationI): wOuld like to explain more clearly what I mean by equality of means of defence and protection. G - 14 - E/PC/T// /PV/11 We have seen many times in a period where the most-favoured- nation clause was generally admitted the tentative approach of countries which tried to get together in order to lower the tariff barriers, in negotiations which were stated to be absolutely open, which meant that everybody who was outside resolved to make the saw concessions as had been made at the origin by those engaged in the original negotiations; but those arrangements were stillborn, because immediately one invoked. against them the most- favoured-nation clause. As far sp:re erential ria tments aecc concerned the situation is very different. Itis * trueto say that those preferen- tial treatments werc alsoe th result of negotiations. however, they were negotiations within a clo sedcircle. Only those with a certain privilege were atdmited to participate in the negotiations, Nobody else from the outside was admitted. Therefore I believe it cannot be said that somebody who is outside of such an inner circle has the same needs ofg neotiations with the Members of that circle as two nations which are both not part of' the inner circle, (After interpretation) Mr. FORTHEOMM (Belgium): No,s I aid: "The nation which is outside the circle has the some action or means of defence as a nation within (against those without)". V 15 E/PC/T/A/PV/11 CHAIRMAN: The Delegate of Cuba. Dr. Gustave GUTIERREZ (Cuba): Mr. Chairman, I have listened with great attention to. the remarks made by the Belgian Delegation, but I really think we are not now discussing the situation of the preferential system at all. The preferential system as well as the Customs Unions are facts In economic and international life. They have been accepted In the Conference, so to attack a certain provision which is a consequence of a principle and again raise an attack on a principle that is not being discussed now, would lead us nowhere. It Is a fact that the privileges, if they are so granted to the members of a preferential system, are not extended to other nations, but it is Just the same in regard to Customs Unions. So we are' facing facts of economic life and trying to bring them together in the best possible form. We do not think we are attempting to create a Utopia of economic life:, It is in accordance with the principles already accepted. CHAIRMAN: The Delegate of Norway. H. E. Erik COLBAN (Norway): I would like to know what the words in parenthesis really add to the previous sentence. If It is agreed that serious Injury to domestic producers is sufficient to make. applicable this procedure of redress, is not that enough? Does not that really cover also the case of a Government enjoying preferences which suffers serious inJury to its domestic production, or is it the intention. that the words in parenthesis go much further? I do not quite understand, and would be very grateful if one of those who have spoken in favour of the maintenance of these words would be kind enough to explain. V -16 - E/PC/T/A/PV/11 CHAIRMAN lhe2i T1. teeof United Kingdom.o1 United ICi2:um, Mx R. J. ingSIm)iLE r(ited KL.nAdo o. dChirmasa Iaul. Jtpt tl to amlify what I have saide before inn ixpanatior o this point. d I reallnky o not thi it is veery muceh mor in th last resort thagn a draftin point. You see thagt pthis pararah starts by saying: "If, as a result of aeferesaendovconmets ande of the .ffct of the obligations incurred under or pursuant to this Chapter", etc. Wall,"the oblation." on the face of it--I quit. a-rea with the Delegate of N~way--would seem to cover absolutely everything which isided prov4 for in thief Chapter, that is t) say, reduofction tariffs, reductions and abolition of preference, abolition ofita quanttive restrictions, and so on.- everything, in fact. But there is this essential difference which makes it necessary to mention the case f.per6frane, that is, as this celau8sis drawn, without the words in brackets, it refersa tombe Mer into whose territories products are being imported in such quantities as to "threaten serious inJury to domestic prtoducs", and when thaat appens themaet Mbr shall be free to suspend the obligations. Now that clearly is not a wording which fcan it the case of a preference, because it is not the domestic producers who are inJured in this case: sit eip tdh rrouces in a eprefrred territory, and it is purely, I think, in order to get that p ointclear that ethOs words in brackets ar- necessary. Ine orodr t make it still oearer, w. have proposed an daemecit which we will come to later *mto adedUt tehend ._nf teha ords in brackets: "at the request of such produecr' sovernment".G That is the opint as I ese it. CAHRMArN: TheDe lgeate of the Netherlands. - 17 - Dr.A.B. SPEEKENBRINK (Netherlands): There is one comment I would like to make on the Delegate of the United Kingdom's reference to the damage done to the producers and the other country receiving the preferences. Well, although it vas not so clear in the time before the War, One could always say that one had a system of quantitative restrictions, and youwork that system simply by putting concessions against each other. That system was in favour of certain countries. In that respect, a certain country receives a preference in a country applying quantitative restrictions. If it is abolished, the other country will lose opportunities to import, and in that case it is comparable with the country receiving a preference. - I do not sea much difference there, and that is why I would pref has s emarked le sh As r ,al.zr,.it.hould be regarded as a drafting point. Therefore, I belimitteeemightve that a sub-Com have to study these Articles again and find a form which will cover, pmore or less, the osition of all the other cnluntries and not oly countries receiving a preference. ay add one, thing, Mr. Chairman, jseust to put my caeulearly. sWCescc -j Ci--t ce clausesre, baaaut we aXr .nsescape. claues on specific points all the time; and we are in favour of having such escape clauses formulated in such a way that the International Trade Or7nisation gshall juds whether there is a serious case for the l ifting ofcertain obligations from certain countWe es. lqare quite in favourof having natthne Intetioal Trace Organisation as an organization to judge the actions of the States, where they are really entitopled to adt a definite course; but we are against-- again I repeat that--many escape claueses on-spcific points, because if you have that, in theawhole Chcrtero; there yuhave about a hundred escape claused,hend Go, nalp,us if we have to find a way in that labyrinth. E/P11T/!/PV/ll ,r -18 - E/PC/T/A/PV/11 CHAIRMAN: (Interpretation): I am sorry, Gentlemen,. but I cannot agree with what Mr. Speekenbrink has just said that this is a question of drafting. It is a question of substance, and a very important question it is. It is true what Mr. Gutierrez said that we are not discussing for the time being the preferences themselves however, we are confronted with Article 34 which states very clearly that the escape clause should apply to a country which receives preference on a product imported in another country and this causes to threaten a serious injury to the production of another country. This is a very clear point. The honourable delegate for Belgium asserts that, in his opinion, this is an excessive clause, and should be deteted. I would like to ask Mr. Forthomrne whether he would insist on this amendment being discussed now or whether he would refer to wait till the discussion itself shows whether we could not find other way out. Dr. H.C. COOMBS (Australia): I suggest, to make its clear, that so far as the Australian delegation is concerned we seek no privileges on industries which are dependent on preferences which are not open to industries protected in other ways. Our intention, in supporting this present draft, was to ensure that the same facilities for emergency action should be available to them. Since it is not possible physically for them to be the same - since action is called for in a different place - we have sought merely to see that the same sort of emergency action be taken in the only place where it can be taken,which is in the countries granting the preference, provided that the purpose of the review of this Article is merely to ensure that no special privilege is given to such industries. We are perfectly content to see such examination of this undertaken and to participate in it. We are not seeking special .rivileges, but merely to ensure that those privileges in industries are open to other countries it they are incorporated under emergency conditions, and that they should be available also to industries in countries which are dependent union preferential arrangements. - 19 - M. Picrre FORTHOMME (Belgium) (Interpretation): Mr. Chair- man, in view of the very important contribution which has just been made by the Delegate of Australia, I think it would be use- ful if, without withdrawing our amendment, we should pursue the possibility of trying to find solution along the very construc- tive line just indicated, and I believe that the Drafting Committee could do some very important and good work in that respect, CHAIRMAN (Interpretation): I propose, Gentlemen, to abandon the discussion at this point and to refer the matter to the Sub- committee, We are confronted with two other amendments relating to Paragraph 1, but, as far as I can see, they are purely drafting amendments; one emanates from the United Kingdom Delegation and the other from the Delegation of the United States. If those Deleations do not wish to explain their proposals right here, I think we could refer the whole question to the Sub- committee. Mr. R. J. SHACKLE (United Kingdom): That course is agreedable to us. Mr. John W. EVANS (United States): We agree, Mr. Chairman, CHAIRMAN (Interpretation): The two amendments will go immediately to the Sub-committee. The Delegate of China. Mr. C. H. CHEN (China ): Mr. Chairman, the Chinese Delegation would like to suggest, in regard to the last sentence of this paragraph, that the phrase "in respect of such product" E/PC/T/A/PV/11 S S -20-E/PC/T/A/PV/11 be altered to read: "the Member shall be free in respect of such product, to suspend the obligation in whole or in part." The original wording of that phrase seems to us to be rather ambiguous. This is not a change of substance, but it will make the wording more clear. CHAIRMAN (Interpretation): I believe the proposal just made by the Delegate of China is partly covered by the United States amendment. It might be as well to transfer this amend- ment immediately to the, Sub-committee. Is that agreed? We now come to Paragraph 2, which deals with the question of whether or not certain measures could be permitted without prior consultation. We are confronted with amendments presented by the Delegations of Canada, Chile and Cuba, which all assert that no action should be permitted without prior consultation. We are therefore confronted with a very important amendment of substance and I will ask the Delegate of Canada to speak on the subject. Mr. J.J.DEUTSCH (Canada): The Canadian Delegation does not much like Article 34, but we realism that certain, higher realities make it necessary and therefore, since we have to have it, we hope it will be used only in the most serious circumstances and will be used infrequently. We also hope that the use of this clause will not set in motion a long chain of counter-actions and withdrawal of concessions, and so on, and lead to a great deal of difficulty and friction. We look upon this as purely an emergency clause, to be used under clear emergency conditions and we also hope that before - 20 - S - 21 - E/PC/T/A./PV/11 this emergency action is invoked there will be the maximum amount of consultation and discussion between the parties interested, so that un amicable settlement can be reached and counter-action and that type of thing will not be necessary. For that reason, Mr. Chairman, we feel it important that the Article should not be invoked without prior consultation with the parties affected. We do not think that those emergencies will develop overnight. If they are really serious emergencies they can be anticipated; they will be seen if they are serious. If they are not serious, then the Article should not be invoked at all, in our opinion. If they are really serious and will produce wide- spread repercussions and harm, that can be foreseen and there will therefore be time to consult. Questions such as dumping - the difficulties which arise when there is a sudden dumping into a market - can be dealt with under other Sections of the Charter, if it is genuine dumping. A situation like this does not need the invocation of this Article and therefore we do not see that these emergencies will suddenly appear and will suddenly cause widespread harm to an important industry. That can be clearly foreseen, it seems to us. Therefore we do attach great importance to prior consultation, because the type of counter-action that will be taken will be far less, and far less dangerous, than if there is no prior consultation. If there is no prior consultation, then the counter-action will be likely to be serious. Whistwilst I am speaking , Mr. Chairman, I night as well go on to our second point, which is connected with this: that, if there is no pro- vision for prior consultation, it seers to us that counter-action could be taken without prior consultation. We think those two things must go together, but we stress much more the first point, that we should always have prior consultation, E/PC/T/A/PV/11 CHAIRMAN (Interpretation): The discussion on the amendment submitted by the Canadian delegation is open. Dues anyone wish to speak? The delegate a Belgium. M.PIERRE FORTHOMME (Belgium) (Interpretation): It must be obvious, after what I said myself about the amendment submitted a few minutes ago by the Belgian delegation, that I am fully in sympathy with the arguments quoted by the Canadian delegation in support of the amendment which they have now submitted to this Commission. I agree that the applicability of the clauses in Article 34 must be limited and that also the motives which can be quoted in order to ask for the applicability of these clauses must be equally limited. But I cannot agree with the contention of the Canadian delegate that the eases which are covered by Article 34 are such that they can always be foreseen and forecast. There may be the case of a certain number of small neighbouring countries where the distances which separate them from each other are smell and where overnight, or at least within a very short period, due to the fact that the distances are so small, a great quantity of goods can be dumped into the other country, thus making useless any appeal to the clauses of Article 34. I wonder consequently whether the best way of dealing with the case submitted by our friend from Canada would not be to draft Article 34, paragraph 2 somewhat differently and instead of referring to "critical and exceptional circumstances" refer to "critical circumstances, such that any delay would cause irreparable damage." The delegate of the United States. P. CHAIRMAN (Interpretation): 23 Mr. JOHN W. EVANS (United States) Mr. Chairman, I wish to state my agreement with M. Forthomme's remark concerning the possi- bility of foreseeing in all oases the development of a situation whigh would require emergency action. I fully agree with the delegate of Canada in his hope that this clause will not be used frequently and that it will be used in good faith, but it is in the nature of an emergency action and it is likely to arise in unexpected ways at unexpected times without full warning, and for that reason we feel that it is necessary to retain the possibility, which we sincerely hope would be used very infrequently, the possibility of taking ac- tion promptly without the delay required by consultation. CHAIRMAN: Mr. Coombs. Dr. H.O. COOMBS. (Australia): Mr. Chairman, like the two previous speakers, I find myself in great sympathy with the Canadian point that it is exceedingly undesirable that action should be taken under this Article without consultation, if that can possibly be avoided. But I agree, too, that circumstances may well arise in which that prior consultation is not practicable, and it is there- fore necessary to provide for the possibility of immediate action in advance of consultation. At the same time, while I agreed with the spirit of the suggestion of the delegate of Canada, I did feel that there was some inconsistency in his attitude that, if We were obliged to make a mistake, from his point of view, by accepting action prior to consultation in relation to the first stop in the train of actions, it was therefore necessary to make the same mistake thereafter. I Itt seems to me that it is undesirabl to -have action of this kind without consultation and it can only be justified by the type of circumstances described by Mr. Forthomme. p T/PC/t/A/PV/11 J. 24 It is difficult to offer that sort of justification for retaliatory action. Before retaliation is taken or action of an individual member is, in the light of this emergency provision, deemed to be necessary, it seems to me that all possibility of consultation, to see whether the original action can be eliminated or varied,to examine the basis for its justification and so on, should be taken before retaliation by other parties is accepted as inevitable. It does seem to me that the whole purpose of this Charter, while finally we are forced here and there to come back to approved retaliation, so to speak, as the only ultimate protection of countries against irrational action by other countries, is to postpone such retaliatory action until all other possibilities have been exhausted. I suggest, therefore, that we would do very well to hesitate to accept the Canadian suggestion that, because we find- it necessary to permit initial action without consultation, we should go on, therefore, to justify retaliatory action without consultation. CHAIRMAN (Interpretation): The delegateof Chile. M. F. GARCIA-OLLINI (Chile) (Interpretation): Mr. Chairman, the Chilean delegation has presented a reservation on this very Article, and I want to express my full agreement with what has been state by the Honourable delegate from Canada. We believe that such exceptional circumstances cannot be called regularly "unforeseen" or "sudden". There is a great amount of possibility of foreseeing and taking the necessary precautions before the crisis itself arises. I quite agree with what has been said by M. Forthomme that we might envisage some occasions on which an emergency E/PC/T/A/PV/11 J. 25 - E/PC/T/A/PV/11 situation would present itself with that suddeness of which he has been speaking. However, even in that case, we could provide for some kind, of accelerated procedure in order to inform the Organization at least of what is going to happen. Our main purpose here is to protect a Member who is hit by such an emergency situation. I will just say that in most of the cases we would have the possibility of providing for such an emergency situation, whereas we are running the very grave risk of producing a real catastrophe in the country against which such measures could be applied. E/PC/T/A/PV/11 26 I think if such cases as have been imagined by the Belgian Delegate occur they can, of course, quite possibly be imagined - it might be a good thing to find some clearer definition of the conditions in which such an emergency situation would arise, with all the suddenness and characteristic of being entirely unexpected. The Drafting Committee could perhaps find words in which such a peculiar situation could be plainly and very precisely explained, and even in that ease I think we should imagine the possibility of putting into effect an accelerated procedure, perhaps, not to negotiate, but in order, at least, to know what measures are going to be taken. CHAIRMAN: The Delegate of Canada. Mr. DEUTSCH (Canada): Mr. Chairman, I want to refer to some of the remarks made by the Member for Australia concerning our second proposal for immediate counter-action, if prior consultation is not required in the initial case. The Member for Australia found difficulty in finding the logic of our position. I think it is this, Mr. Chairman, that in such an Article as now drafted, it seems to us there is a lack of balance between the Member taking the initial action of with- drawing a concession, and the right of a Member to take counter- action. The counter-action is only possible if the Organisation does not disapprove. In other words, there has to be some sort of supervision by the Organisation, whereas the Member taking the initial action may take that action even without prior consulation; and if there is no agreement reached after the action is taken, consultation takes place afterwards, but the Member is nevertheless free to go ahead and continue the withdrawal of the concession - whereas a counter-action is only permitted to the extent that the Organisation does not disapprove. G 27 E/PC/T/A/PV/11 There is a lack of equality, a lack of balance, in this provision, and it seems to us that the initiative, the stronger position lies in the hands of the Member who took the initial step in withdrawing the concession. Now the point of our suggestion is, if immediate counter- action is permitted, it cannot put the same restraint on countries taking the initial step, if they know they may be immediately faced with a counter-action. It seems to me it would not only restore the balance. of the situation but restrain the frivolous use of this clause; whereas, in the other case, they may withdraw a concession and go to the Organisation without the other Members having the right to take a counter-action, and so there is some difference, in the weight of influence, with the countries concerned, that may have some practical effect - and that the weight of influence in the Organisation will not be entirely equal. That, of course, is just a practical fact - and that is the logic of this position. Now, as I said before, I do not attach equal importance to this particular point as to the first point, that there should be prior consultation. I have sympathy with the point expressed by the member for Belgium. I think there is a good argument there. But I doubt very much really whether these emergencies do appear so constantly, if they are really serious cases. We have had considerable experience in this respect, Mr. Chairman - I do not think any country is more closely linked than Canada is with the United States, or that more trade flows across the border than between those two; and it has never been necessary for us in our long and close association for either one of us to act without prior consultation. I do not remember a case, and I cannot think of any situation more G. E/PC/T/A/PV/11l 28 devastating between those two countries. We are as closely linked economically as any two countries on the face of the earth, and I do not see where there is a serious situation that could not be foreseen in time for some kind of consultation; and I still stress that we attach a good deal of importance to this. CHAIRMAN: The Delegate of France. Mr. BRADUC (France) (Interpretation). Mr. Chairman, I just want to point out to the Commission that particle 34 refers to an emergency case, but it is not the only article which refers to emergency cases, and we have already in our prior consultations, when we came to Article 7, stated that it should not be possible for a member State to take any measures without prior consultation. Therefore, I would be in the mind of supporting the Amendments presented by the Chilean and. Canadian Delegations, in order to amend Article 34 in that respect. I must, however, confess that I have been struck by the very important remark made by the Honorable Delegate of Belgium, as far as certain circumstances are concerned, and we would not, oppose any Amendment without taking into consideration the reasons put forward by Mr. Forthomme. V E/PC/T/A/PV/11 29 CHAIRMAN: :The Delegate of the Unitedingd;4om. .. R.J. SHALKIEUnited Kingdom): rM.. Chairman, after listening to this discussion, I havehtne feeling that this is a case where a compromise iserGally inevitable. In fact, may,; sat ;hat it reminds me of the discussion which took pcaoe in the Drafting mmittee wbnia New York, which resulted in the present text, oow, I would like to suggest that, by and large, the present text is not a bad compromise. One knows thaalllX compromises are unsatisfactory, and this is no exception; but I think itahbs the makings perhaps of a workable and suitable compromise in the ccroumstcnoes. In the first place, I would like to poino aut that it is only a period of thirty days which has tolefapsbetween hhe action n and the counteaccction. That is a small changehichoh the aftcting Committee made at Newo Yrk. Ogriinally iwas a petwaw _ crsiod aof ixty we reduced X,_cr;ot t) thirty. feel that thirty days is a &desirable interva to allow. It &allows for feelings to coo, foxr fsecond thudgt to be thouht, a"nd possbly it may help to ,pcevnt that I th'in thveCahnidan D2elegte dsesribed as "uchai" reactions from happening. - made by , po t tnadihnat w;g aado by the. Ca~.iaaeeate as twantedetoarty whi- th tdt- takeodhe o6ter-ac ion 'ouli have ganisation for approval. Well, I am nclin We.l, I am' nclined to thi nk that that is not the right reheadeing of the text. T cxt ally e uiva n: o uogat sns.Vticoncessions ,tio.- or eoe._io.- he suspension in wwhic t a~rganization he .;wiz.tio. does notN disIapprdoveese wwords tha on iorot "does "ot disapprove' -g not recapprovallirru pomar n . bixt~kig t possible for the n toOrDisapprove , so to s nsiz~tv z-u facts. A Membere 1'to. to Ab ocr E/PC/T/A/PV/11 30 and may take counter action/if the counter-action, which it takes appears to the Organization to be excessive, the Organization can go to that Member and say, "We think that the counter-action you arer taking is excessive -you ought to T,.) mIi~it". That _ the way I d th It may be that if that is theif that is the inafntng sub-eommittee should be ti torh-: u1 , z: - ; Caear.. .T:i ..he una5 , t iA ta-tio.. 3ossuggest, s tje ubJ-ct to a possible improvement in places, ggoh as tha cu,.estielgian Delegationio D :v; nd_ of para C .:'' ..graps , that af ang the itteeir.< Commttee whether lt. can somewhat improve this compromise, but recognize, nevertheless, that a compromise on these general line is probably th oeoesaswy solution. DeelgaateCHfR -teNetherlands. . 1). eKMANk.(Netherlands): Mr. Chairman, as IMr air as I in Lac-or-, Ination tt exepla:.n2 to th juseeting that st for the reasons puMt forwardme by .p Forthom, wPartgrn that and aaraph 2, .d we ed more or less that it apppplies to t plies to exceptional circwnanoes to show that iat was not e gneral rule but should only bie applied n verycvery few oases. for that might else explained here. I1 hhe . sn tin.fir t we tarkha.;6 tolx gationjincurred under rro(7 w.dinor pursua:t ao er. ater is, we talk about concessions.o.;Gt: (z; That milht be m l0ttle azbWe always think or concessions isocicezsion i- thc way oI tariffs, but theiobligationpter thesforaiwts art -lr evattwe foregore ;' ghrexoorhe ri~bt, fao inptance, to apgly counter restrictions which in the aold days was means of spping the imports, having consultetXon and aftorswaC allowing certain imports into the country again, after reaching a satisfactory agreement. . I might say that a country like HolIand is not in a position to change the tariff every day. It is a long drawn-out matter to change the tariff. You have to go to Parliament to get the approval for doing certain things. You might have certain emergency action, but that is also generally very difficult to apply. Therefore, we attach importance to the possibility of having an escape clause like paragraph 2, and I might seem here to be contradicting what I have said the .moment before with regard to escape clauses. But I am convinced that if you wish to have :in escape clause like this, and perhaps modify it in the say our Belgian colleague has propssea, it should only a ply to very exceptional cases. You might be able to forego many other escape clauses because that would give you the feeling of security that if something did happen.-- a very great injury to the economy of your country -- you would be able to act, provided you are .prepared to put the matter before the and near its judgment. I think that in the case of countries like Holland, I own state here clearly that we are prepared to accept the judgment of the Organization, and I am not afraid of any abuse or violation of this clause if we should really adhere to what is said in paragraph 2, and, as has been remarked by Mr. Shackle, when it comes to a suspenssoi or which the Organisation does not disapprove, We might even strongthen that part. This ls not to get more liberty for countries: it is only to make it possible for them to enter into all the obligations of the Charter. E/PC/T/A/PV/11 E /PC/T/A/PV/11 Mr. J.G. TORRES (Brazil): Mr. Chairman, we prefer to look at this question in the light of Brazil's experience. Past events have shown us that if we could not take action quiet enough to counter certain practices, we would have to see a great deal of damage done to some of our industries. We cannot see how such emergencies as have occurred in the past could have been dealt with properly by waiting for a judgment which will not be very rapid in coming. We are, therefore, in favour of leaving freedom to countries to act in time to counter whatever practices may be done in the future that may have some harmful effect upon us. This brings up a side ,question and we would like to avail ourselves of this opportunity to bring this to the attention of the Commission. In discussing Article 17 Brazil, to our regret, has been unable to withdraw two very serious reservations, and the opinion of some. of the delegations has been that we could withdraw as well those reservations because, under Article 34, we could take the emergency action that we were looking for under Article 17. However, this interpretation does not seem to be universal, and we would very much insist that the Drafting Committee which is to be appointed look at this matter from this standpoint, whether or not the measures we want under Article 17 can be taken under Article 34, because if that is not the case, then I am afraid the Brazilian delegation would not be in a position to withdraw such reservations and we might as well go to the world conference and fight there again for such rights. The point is that, summarising our views, we want to have prior action guaranteed whenever we should be faced with an. emergency situation, and whether Article 34 will be ample enough to allow us to take such action that at present we cannot take under the present drafting of Article 17, and I might say this consideration is very proper and opportune because the Drafting Committee on Article 17 has, in fact, been unable to report a unanimous agreement on that point, and I understand that the Netherlands delegation have now seen their interests the way we look at them. If Article 34 is drafted to our satisfaction, then we might at the same time do away with two points of the Charter. S E/PC/T/A/PV/11 33 CHAIRMAN: The Delegate of Cuba. D., G-stavo GUTIERREZ (Cab, ): Mr. Chairman, the Cuban Delegation wishes only to say that it maintains the point of view expressed at New York, that action should not be permitted without prior consultation. The permission to take action and counter- action without. prior consultation will, in our opinion, lead to a disagreeable situation, which will do no good to the purposes of the Charter. The text of Paragraph 2 was conceived when it stated: "Before any Member shall take action pursuant to the provisions of paragraph 1 of this A.rticle, it shall give notice in writing to the Organization as far in advance as may be practicable and shall afford the Organization and those Members having a sub- stantial interest as exporters of the product concerned, an opportunity to consult with it in respect of the proposed action." Then comes the provision where the difference exists. It says: "I critical and exceptional circumstances such action may be taken provisionally without prior consultation, Provided that consultation shall be effected immediately following upon the taking of such action." This.reminds me, Mr. Chairman, of a guerrilla leader who ordered all prisoners to be shot immediately, and afterwards be submitted to a courtmartial. This sort of thing, we believe, may create friction instead of goodwill amongst a1l nations, which is what we all hope for. CHAIRMAN: (Interpretation): The Delegate of South Africa. Dr. J.E.HOLLOWAY (South Africa): Mr. Chairman, I must say it is a matter of some comfort to me to hear that Mr. Shackle also had some difficulty about the meaning of the words S EPC/T/A/PV/11 34 "the suspension of which the Organization does not disapprove." Mr, Shaokle is an Englishman and no doubt learnt English at his mother's knoo - unlike myself, who did not know that English oxisted until I wont from the wild veldt into the town and understands it better. Whilst his intervention has given me some idea of what those words are intended to mean, .his further suggestion creates another difficulty. If they are also intended to mean, not the suspension which originally gave rise to this chain of consequences, but also the latter part, "of which the Organization does not disapprove." , I would suggest that it would be so easy to say that it would have probably been soon. The phrase is so vague that I hope the Drafting Committee will let us know what it does mean. At resent I feel myself in some difficulty in dealing with that part of the paragraph because of that obscurity. Whilst I think we could support the second suggestion of the Delegate of Canada, I do not know that I own support the first suggestion, namely, that there must always be prior consultation. Assuming that an Article like this is necessary, I do not think that prior consultation is always possible.. The discussion hitherto has gone on the point whether one can foresee the need for invoking the paragraph. Well, within limits one can foresee, but suppose you have forseen it, and suppose you are then under the obligation to te11 all the world that you have foreseen'it - a country like Belgium might easily be swamped by telling the world - because these things are never a secret - because everybody will try. to .get in ahead of the possible change in the Belgian tariff. For that reason, I te not think that the first part .of the suggestion by the Delegate of Canada is practicable, always assuming that the Article is necessary at all. 35 As to the second part, however, I am entirely in agreement with the DeIegate of Canada, I do not see why people should have any tender conscience for the party that has got away from its obligaitons, If this clause is to be used at all, it has got to be used only as an exceptional clause and, if it is not used in very exceptional circumstances, it will under- mine the whole of this Organization. The more limitations we put on its use - provided those limitations allow it to be used in these very exceptional circustances we have in mind - the better. This clause, as a matter of fact, clinches the right of certain groups to be a danned nuisance - excuse me, Mr. Chairman, I withdràw that word; they will be an unconscionable nuisance to all the Governments concerned, and if one of the consequences is that there may be immediate retaliatory action, then this article will be used only for the purpose for which it is inserted here, nearly, when there is some exceptional emergency. I do not see why you should give the party that starts by getting away from its obligations a fair field to get away, and put limitations on everybody else not to take any action, The party that is prejudiced by it ought at least to have as big a start after hearing the pistol as the other chap after beating the pistol. E/PC/T/A/PV/ll S J. 36 CHAIRMAN (Interpretation): The delegate of India. MR. B.N. ADAKAR (India): Mr. Chairman, the Indian delegation attaches some importance to the procedure laid down in this Article and, insofar as it provides for action to be taken without prior consultation in critical and exceptional circumstances, we would entirely support the remarks made by the delegate for the Netherlands. We think that there may be circumstances in which it may be difficult for a Member giving a concession to accurately forecast its possible consequences for its domestic interests, and therefore it is very desirable to make a provision of this kind. We entirely support the idea that the existence of the provision could give a greater degree of security and confidence to the Members when they are negotiating concessions. However, having said that, there is one further point which we would like to submit for the further consideration of this- Commission. It is that this Article relates to the need for- granting releases from obligations undertaken under this Charter. The procedure indicates under what circumstances a Member may seek release from the obligations incurred by it in order to avoid serious injury to its domestic producers. But there are other provisions in this Charter which & w_1 with the same subject. There is the procedure in Article 13, which relates to the granting of release from implications incurred under this Charter when such a release is required for the purpose of economic development. A Member may find that it needs release from the obligations incurred by it either because there are heavy imports which threaten the interests of established industries, or because the increased imports have made the development or the establishment of an industry impossible. E/PC/T/A/PV/11 E/PC/T/A/PV/l1 J. 37 E/PC/T/A/PV/11 The circumstances are different, but I suggest that the procedure laid down for the granting of release should be the same, or should be similar. Article 34, which deals with release when heavy imports threaten the position of an established industry, makes it possible for the Member to take action without prior consultation with the Organization,.provided that it informs the Organization immediately after the action is taken and, if there is no agreement among the interested Members, to go ahead with the action. In paragraph 3 it has been provided. that the Member which takes the action may, if it fails to acquire the concurrence of affected Members, maintain the action only subject to certain penalties, while in Article 13, in the case of obligations which are negotiated obligations, the Member may try, under the auspices of the Organization, to secure the agreement of other affected Members, but if there is no such agreement, then the Member concerned will not be free to take any action. I do not see that there is any adequate justification for making a distinction between the two cases. In sub-paragraph (b) of paragraph 2 of Article 13, the Organization may grant the release, from a negotiated obligation to a Member only upon agreement being reached with the Members substantially affected. In this case, even if there is no agreement, the Member would be free to go ahead with this action. I would suggest, Sir, that the sub-committee be requested to go into this question and satisfy itself that there is adequate justification for making a distinction between the two cases. In any case, in the course of this discussion, it has been explained that the provisions of Article 34 apply to all obligations. - J. 38 E/PC/T/A/PV/11 The sub-committee should consider the desirability of distinguishing at least between negotiated obligations and non-negotated obligations as has been done in Article 13. If such a distinction is necessary in the case of releases required for the purposes of economic development, I see no reason why such a distinction should not be made when releases are similarly required for the protection of established industries. G. -.39 E/PC/T/A/PV/ll CHAIRMAN: The Delegate of Chile. Mr. GARCIA OLDINI (Chile) (Interpretation): The discussion which has taken place, Mr. Chairman, shows very clearly that it is very difficult, once a text has been drafted and discussed by a Drafting Committee with certain intentions in the mind of those who drafted it,. to interpret it to mean something entirely different. It is difficult for us at this stage to depart from the intention which the authors of the text who drafted it have put into the text. For instance, the debate which has taken place here this afternoon indicates that the text of paragraph 3 of Article 34 has only considered one aspect of the problem, which quite clearly has two aspects. It has placed itself in the position of States considered in paragraph 1 of Article 34 who find themselves in a critical situation and who, in order to escape such critical situations, are granted certain privileges under paragraph 2 of Article 34. But if a State by virtue of this clause is authorised, if it finds itself in a critical situation, to withdraw certain concessions without previous consultation, obviously the same privilege should be recognised to those who in defence of their own interests and in order to avoid an equally critical situation for themselves, want to take certain counter-measures. The word "retaliation" has been used here, in connection with counter-action of States so affected by the withdrawal of concessions. I do not believe that the word "retaliation" is a correct expression to describe what is merely a legitimate defence. It has already been said that; as it stood, the article was a compromise, but a good compromise. I am sorry not to be in a position to agree with this statement. E/PC/T/A/PV/l1 40 In order to make it a good compromise the same treatment should be reserved for Members who withdraw concessions as for those who take counter-action in order to defend their own interests in such a circumstance. In other words, if previous consultation is provided for in the case of a counter-action, the same procedure should be applicable to a Member who wants to withdraw a concession. If, on the other hand, no previous consultation is required from a Member who wants to withdraw a concession, other Members should equally be at liberty to take counter-action without previous consultation. CHAIRMAN: The Delegate of the United States. Mr. EVANS (United States); Mr. Chairman, I have been listening with great care to the discussion of the last half hour. I want to make clear that my remarks are not specifically directed to the remarks which have just been made by the Delegate of Chile, but it does seem to me that some of this discussion indicates that the Article is being considered as something more than it was originally intended to be by a number of Delegates. It is labelled "Emergency Action". We have always looked upon it as an emergency Article - an Article to be used only in cases where a serious injury was actually being done or about to be done to produce it Under those circumstances I feel that a good many of the considerations raised here are not particularly appropriate. This Article was certainly not intended in our Delegation to be used as an escape, a general escape from the obligations undertaken by any Member. I think that the experience between the United States and Canada which has been referred to by the Canadian Delegate is an instructive one. The United States has had experience in the use of escape clauses, and as the Canadian Delegate has said, in G. G. E/PC/T/A/PV/1l 41 all our experience there has been no use of such an escape clause without prior consultation. We feel sure that the other Members of the Organisation would use this clause with the. same discretion and in the same good faith. That does not mean that we think that the clause as. now written is necessarily perfect. I think that there may be some merit in the suggestion of the Delegate of Chile, that there should be a provision which makes certain that the procedure for notifying the Organisation, and entering into consultation in the extreme. case, where action is taken without prior consultation, should be immediate. I think that any language that could be devised, or proposed language, which would say that a Member taking action would notify the Organisrtion immediately on his decision to take such action, may even be worth considering; but I am not certain. E/PC/T/A/PV/ll I think also there has been some merit in the argument that the Member affected by this emergency action or action taken without prior consultation, on the face of it appears to be at some disadvantage; but the remarks of the Delegate of Australia are, I think, very p~.rtinent. If, in fact, the action was taken in good faith merely because of an emergency, it seems extremely unlikely that that action would have created a similar emergency in the country which considers itself affected, but I had thought that the present wording of the Article would take care of the situation if it actually existed: that a Member who was subjectd--if I may use the expression--to a serious emergency as a result of the use of Article 34 by another Member, would have the same privileges as the first Member had. The only qualification. there is that the orginal action does, in fact, create a serious emergency and that it is not merely a balancing. action by the second Member. If it is simply a balancing action by the second Member, it is hard to conceive the necessity for immediate, precipitate and perhaps, as has been suggested, ill-considered action. But if there is any doubt that the Member who has been affected seriously, in such a way that serious injury has been created, is entitled to the same privileges as the original Member, I certainly think the paragraph should be clarified. CHAIRMAN: The Delegate of Canada.. Mr. J.J. DEUTSCH (Canada):. Mr. Chairman, the discussion has shown that it will be necessary to work out some compromise on the various points of view that have been put forward, and some very useful suggestions h ve been made in that connection, particularly the suggestion of the Delegate of Belgium and the Delegate of Chile. I for one am prepared to hand the matter over to the Drafting Committee to see how the wording can be improved so as to achieve a reasonable V 42. V 43 E/PC/T/A/PV/l1 degree of agreement. Also, I would like the Drafting Committee to examine the wording of paragraph 3, which, as has been pointed out, is obscure, and see if the meaning cannot be brought out a little more clearly. Therefore, I am prepared, Mr. Chairman, to see this matter go to the Drafting Committee. CHAIRMAN: The Delegate of Norway. H.E. Erik COLBAN (Norway): The Norwegian Delegation agrees generally with the statement made by the Delegate of the Netherlands. We are prepared to accept the New York Draft of paragraphs 2 and 3. This draft, by the way, is practically the same as the London draft, and we consider it as satisfactory. This does not, of course, prevent us from agreeing to such drafting amendments as the sub-Committee may possibly recommend. 44 E/PC/T/A/PV/ll Mr. L.C. WEBB (New Zealand): Mr. Chairman, as this discussion has had a big effect on the balance of three parts of Article 34, the New Zealand delegation wishes to suggest that the balance of the Article will be greatly improved by deleting from paragraph 3 the so-called "cooling period", that is the thirty days provision. It seems to us that as consultation must take place, and as presumbably it will be a long one, it is a sufficient an cooling off period. It seems to us that/even stronger consideration may be that, in fact, the thirty days provisions may have, in certain the circumstances /reverse effect of what is intended, because after all the period in terms of administrative action is a pretty short one and a state may require, in order to-exercise its right of retaliation, to take certain administrative action which will require necessarily a lapse of time. In all those circumstances a state faced with the necessity for acting quickly is more likely to act precipitously than if it had. more time at its disposal. That is a state affected by this time limit would be disposed to think and it that the period within which retaliatory action is allowed,/had better play safe and take that action. Mr. C.H. CHEN (China): Mr. Chairman, the Chinese delegation is in favour of maintaining the text of paragraph 2 as it stands. As it has been pointed out by the delegation of the United Zingdom, this is the best possible compromise because this Article is dealing with emergency action. It would be impossible for every case to have prior consultation. Under this paragrah, the first setence provided. for previous consultation, the only exception being for critical or exceptional circumstances which, as set out, are very limited, and it, is up to the member to consider whether the circumstance is critical or not and, at the same time, it is also provided that consultation will be open immediately, for the affected members. I think it is quite a fair and practical provision, therefore, and we associate ourselves with the opinion expressed by the delegations of India, Netherlands, Norway and the United Kingdom. S E/PC/T/A/PV/11 45 CHAIRMAN (Interpretation): Gentlemen, I think it is time to put an end to this long and very interesting discussion. Ideas have been aired here and it sees now that we must come to a new kind of compromise. There seems to be a general. consensus of opinion that even in the case of exceptional and critical circumstances prior consultation should be con- ceded. However, the conditions of those critical circumstances may be such that prior consultation would be quite impossible. The only aim which we must always have in mind is that it should not lead to abuses. I do not think that it will be an easy task to arrange for a new wording to cover that particular aspect of the question- However, I am sure that the Commission will put all its heart into the solution off that difficult problem. I would now like to dispose of the two Belgian amendments presented to Paragraph 2 and I would advocate that those two amendments should be sent immediately to the Sub-committee. As a matter of fact, the two Belgian amendments to Paragraph 2 are so strictly linked with Paragraph 1 that they cannot be separated from this main subject and, as Paragraph 1 has already been turned over to the Sub-committee, it would be only correct that this should also be the case for the Belgian proposal referring to Paragraph 2. As to the Belgian and United Kingdom proposals, I should also like to have them sent to the Sub-committee, as they both have one single purpose in mind, to take care of the situation b.th of the countries which grant preferentia1 arrangements and those which enjoy preferential;arrangements.* S E/PC/T/A/PV/11 46 The only amendment which I should like to take up now, before we close this meeting, is the amendment of the United States Delegation,:;which suggests the words "substantially equivalent" in L s 12 and 13 and makes the comment that they will give to the Organization a wider margin of decision. Does anyone wish to speak. Mr. R.J.SH"CKLE (United Kingdom): Mr. Chairman, as you invite discussion on the United States amendment to Paragraph 3, I would like to say one or two words, When I first saw the United States amendment,. which consists of simplifying the last sentence, I ~.-ouht it was attractive. It would get rid of the mention of the equivalent obligations on the one hand and the possible additional action on the other, But, after hearing this discussion today, I am inclined to think there is some merit in leaving the text as it stands. As the same time, if we say that normally the action shall be equivalent, you do have to provide for the case where there is abuse, so I am inclined to think that, on the whole, the last two sentences are perhaps best as they stand. I think that the provision for equivalent action would be useful where a case of preferences is involved., but there is the question of whether action should be taken against the country which takes the action or the country which has the benefit of the action. I think it is useful to have the equivalent action specified. CHIRMAN (I terpretation); D s the Delegate of the United States wish to speak on the subject? Mr. J - i 7 . W.- EVANS (United States) : Thank you, Mr. Chairman. S 47 hamnet nori- rot think it was necessarm for ra to ineroducG the amendment, becauhe I t.enk thc explanaaden mdao by us mn subgittin, it was simple enough and has been reproduced in the annot ed .tondav I s:ould likemto ,a=owever, on Mr.on cklo's sIloe estat(mnt. I .ink it would be well to point out that we have no objection to the use of the w"sds llubstantially equivalentu. OUr election of those words was consequent upon our deletion of the last. satance. ffelt, perhaps in error, that tomme C- Usion would not want tk taze out the last sentence and leave"subst'~.zantially equiva"len tu insch a way as to leave no discretion to the Organization. I think it ray be possible to accomplish both wMh.at r Shackle wants and what we want eay lgvinz in the words "sub- stantially equivalent" andd fininmesoi otherm forula for expressine tha freedom of action in the Organizatwon Which may be necessary in exceptionàal .cses CMANR1T: eDoas anyone wish to speak on this subject? T:elD _egat Cf Ganada. Mr. J.J.DSUTZCH (Canada)M Ur. Chairman, weearo in favour of retaining the wor"s 'substantially eqale2.-nt", for the tapsons given byeth;l geeIate for the UnitKedgin.dom. I that requires a change in the nseatonce, we prefer mo Make the change in the last sentence rather than drop the laset entonce, B/PCAT/-./PV/11 J . 48 E/PC/T/A/PV/ll. CHAIRMAN (Interpretation): The delegate for the Netherlands. DR. A.B. SPEEKENBRINK (Netherlands): I can only say that I am in favour of retaining the Article as it stands here. CHAIRMAN (Interpretation): Under these conditions, I believe, Gentlemen, we can have confidence in the wisdom of the sub- committee. Gentlement, it is six o'clock and we have gone through with Article 34. We begin tomorrow at 2.30 in the afternoon with Article 35. The Secretariat has just advised me that we meet in Executive Session tomorrow at 2.30 in order to approve document E/PC/T/92, which is the last report of the Working Party on Tariff Negotiations. Gentlemen, the meeting stands adjourned. The meeting rose at 6.05 p.m.
GATT Library
qr778yx2100
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eleventh Meeting of Commission B. Held on Tuesday, 17 June 1947. at 2.30 p.m
United Nations Economic and Social Council, June 17, 1947
United Nations. Economic and Social Council
17/06/1947
official documents
E/PC/T/B/PV/11 and E/PC/T/B/PV/7-11
https://exhibits.stanford.edu/gatt/catalog/qr778yx2100
qr778yx2100_90250082.xml
GATT_155
14,608
86,770
UNITED NATIONS ECONOMIC AND SOCIAI COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL. RESTRICTED E/PC/T/A/PV/11 17 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CORFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT ELEVENTH MEETING OF COMMISSION B HELD ON TUESDAY, 17 JUNE 1947. AT 2.30 P.M. The Hon. L.D. WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel.2247). P E/PC/T/B/PV/11 CHAIRMAN: Will the meeting come to order, please. We shall resume in Commission B the discussion on the Cuban proposal for a suggested new paragraph 2 (a). The debate will be resumed at the point at which we broke off last night. The first speaker on my list is the delegate of Belgium. M. RESCLEE (Belgium): (Interpretation): Mr. Chairman, I should like to take up the discussion as it developed yesterday when I asked permission to speak. First of all, the delegate of New Zealand stated that the point made before Commission A shows a striking contrast to the provisions of a number of Articles of Chapter V dealing with the rights of members to resort to other methods to depart from the principles of free trade. Then the Netherlands delegate added that this paragraph was more favourable for certain types of subsidies. On his part the Cuban delegate stated that the damage caused to world trade by export subsidies was also caused by domestic subsidies because it made it possible - for a country to manufacture products which normally this country should not make. Then he pointed out that certain countries could resort to subsidies without ever con- flioting with the provisions of article 30. He also stated that he could not see very well what the difference was between the method he suggested and that contained in and authorised by Article 30. J. - 3 - E/PC/T/B/PV/11 Then the Netherlands delegate again said that the source of funds to allow a reduction of taxation or such a subsidy did not matter, that the safeguard mentioned by Mr. Shackle did not exist in all countries. All these statements show obviously that Article 30 is logical, and that all subsidies have the same of effects and the same repercussions as other obstacles. In fact, according to the Draft Charter, countries which are relatively little developed could find in Article 13 a means of finding the result looked for. Other nations more powerful will adapt their technical methods to the provisions of Article 30, but those countries which, on account of their weakness; are compelled to follow the unwritten law of international competition will remain the only ones that will be deprived of any protection. No doubt, if one of those countries is affected by subsidy measures taken by another Member, it will be possible for that country to apply to the Organization and to inform it that there exists a form of subsidy, but, as was stressed by the Netherlands delegate, it will be responsible for supplying the proof, and it will have to indicate the source of the funds produced, and it will also be responsible for show ing that such subsidies have a serious effect on its economy. Now, the subsidy policy is changing and therefore prejudice can only be indirect and appear through world trade. The logical conclusion which would therefore appear to be absolutely necessary to this Commission is the necessity of extendig the prohibition of subsidies and of reversing the burdon of proof. The Commission should accept this conclusion in the interests of the objectives of this Conference, and of all workers and J. - 4 - E/PC/T/B/PV/11 and producers in the world. We would not have a chance of being born in a State whose financial resources ane sufficiently great to make it possible for them to bo protected from competition, and I should like to point out that in London, at the beginning, the Conference had a text which in this connection was definitely insufficient and, essentially speaking, the purpose of a subsidy is to conteract the free trade of international competition. G. - 5 - E/PC/T/B/PV/11 The Belgo-Luxemburg Delegation refused to assume the responsibility of leaving in the hands of the State arms that are harmful for a concealed economic warfare. CHAIRMAN: The Delegate of the United States. Mr. SCHWENGER (United States): Mr.. Chairman, I am not quite certain what I had in mind to say to the Chair the day before yesterday, but it is our general feeling that the problem is best made in a different context, and so we would support the remarks made by the Delegate of the Netherlands that we adopt it as part of Article 15. CHAIRMAN: The Delegate of France. Mr. LECUYER (France) (Interpretation): The French Delegation has considered the Cuban Amendment with considerable interest. I fully realise the reasons for this Amendment, but in our Delegation we think that the Cuban proposals are firstly, perhaps, dangerous, and secondly, perhaps, not necessary. They are dangerous because the first question to be asked is does the Cuban proposal contemplate a subsidy. The reply to this is in the negative. As was put boldly by the Cuban Delegate himself, it simply refers to the application of a domestic tax on goods imported - a tax which would not be applicable to national goods. Thus presented the Cuban amendment is, in fact, an infringement to Article 15, and what is more serious is the fact that the inevitable result of the Cuban Amendment would be to cancel the effect of Article 24 which deals with the reduction of tariffs. If after an Amendment regarding Customs duties there remains G . - 6 - E/PC/T/B/PV/11 to a country the possibility of applying a special tax on foreign products, a tax which would not be applicable to national products, the effects of the reduction that might have been negotiated will be null and void. In fact, the Amendment would result in the creation or new customs duties to be added to the other existing duties, and this shows the danger of the system, because it goes against the principle of the Charter itself. V - 7 - E/PC/T/B/PV/11 1 I stated a few nigutesgaeo that the provisions of the Cuban amendment were also perhaps unnecessary. I am now going to explain my statement. In the first two parts of its amendment, the Cuban Delegation does not considereitenecossary to pay duties and taxes and it exempts from taxes national products. This is not a subsidy, but simply a measure of protection while subsidi sAundeA Lrticle 30 are perfectly possible. Iod: not see why, in the circumstances, it would not be possible to resort to some form of subsidy. The Cuban Delegate pointed out, in this connection, ah t th s.would be difficult, perhaps, for the budgets of certain countries, because they would find difficult to bear the burden of a subsidy. But may I point out that I know a number of highly industrialised countries--countries that have been industrialised for a long time--where it is also extremely difficult to find funds for subsidies in the national budget. The third point of the Cuban proposal refers to the use of proceeds of such duties or taxes to makeap ymen s.to domestic producers; but this is already provided for under paragraph 2(a) of Article 30, and I should like to point out that on this point the Cuban amendment does not introduce anything new. Therefore, for the reasons at ted, I'agree with what has been said by the United States and the Netherlands Delegate, namely, that the Cuban amendment perhaps could find st3lp ace n-another context, such as that of Article 15. AIKMAN:h ThD eelegett of Norway. E.ikME Lrik LOIBAN (Norway): Mr. Chairman, I do not know whether you have in mind to refer this Cuban proposal to an ad hoc sub-Committee, but if so, I would suggest that it should be sent to the sub-Committee already dealing with E/PC/T/B/PV/11 Articles 14, 15 and 24. CHAIRMAN: We have now explored this subject rather fully. A number of Delegates have spoken on the Cuban proposal, and apart from the Cuban Delegate there has been no support for the proposal. A number of Delegates have pointed out , however, that this is a matter which relates more to Article 15; other Delegates have also noted its effect on Article 11,and 24, and now we have before us the proposal of the Norwegian Delegate that the most appropriate course would be to refer the Cuban proposal to the sub-Committee which has been appointed to deal with articles 14, 15 and 24. Before, however, putting that proposal to the Commission, I would like to hear the views of the Cuban Delegate as to which procedure he thinks would be the most suitable under the circumstances. M. R.L. FRESQUET (Cuba): Mr. Chairman, we are ready to accept the proposal of the Chair and the Delegate of Norway to submit our amendment to a sub-Committee--the sub-Committee dealing with Article 15. I would be willing to add anything to my previous remarks if the Commission considers it pertinent to do that at this stage, or if it is desired that the matter should wait until we have the opportunity of dealing with it in the sub-Committee, I would make my remarks at that time. It is entirely up to the Chair. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I do feel that in this matter we should consider the aspect of saving time and saving labour for this Preparatory Committee as - 8 - V V - 9 - E/PC/T/B/PV/11 a whole. We have an enormous amount of work to do and an enormous amount of ground to cover. We have already had a quite thorough debate on this amendment, and I think the trend of opinion in regard to it is perfectly clear. That being so, it seems to me that it would be very regrettable if we were simply to refer the matter to another sub-Committee in which the whole of this debate would once more take place, and no doubt in the end the result would be precisely the same. I do suggest that in order to save time, save work and move on the work of the Committee we should come to a decision now. - 10 - E/PC/T/B/PV/11 Mr. R.L. FRESQUET (Cuba): Mr. Chairman, we have always felt that the Sub-Committees were fitted to work in a more detailed way with all the proposals made by the delegations. We have also felt, on account of that idea., that our position in the Commission allowed us to make shorter explanations of the proposals, and we are very much surprised by the proposal to make a final decision of our amendment here, but if that is the case, we will have to comply with the decision of the Commission, but not before the same length of time is given to the consideration of our proposal as would be given in the Sub-Committee. Mr. A..F.van der POST (South Africa): Mr. Chairman, if this proposal could throw any light on the Cuban amendment, I should welcome it. However, I think that sufficient time has been given to it and that it has been thoroughly discussed from all angles. Therefore, I cannot help sharing the view of the British delegate, namely that there is no need to refer this to the Sub-Committee on Article 15. We have heard the views of the different parties here, and it is perfectly clear in which direction the opinion of the Commission is tending, and that we should refer this to the Sub- Committee on Article 15 merely because Article 15 is Chosen to be mentioned in the Proposal, seems to me to be altogether wrong. I would therefore like to support the proposal made by the British delegate. Dr. E. de VRIES (Netherlands): Mr. Chairman, I should like to support the proposal to stop the debate at this point, but I should like to ask the Sub-Committee,which will have to be set-up on Article 30, to consider all the arguments that have arisen before this Commission about the Cuban amendment, not only in relation to paragraph 2 but also to paragraph 1 of Articles 13 and 15. In this - 11 - way the Cuban amendment will again be considered by the Sub-Committee set-up by this Commission. CHAIRMAN: We have now, three procedural motions before the Commission. The first is the proposal made by the delegate of Norway that the Cuban amendment should be referred to the Sub- Committee dealing with Article 15. The seoond is the proposa1 of the delegate of Cuba, that his amendment be dealt with in the Commission here now. The third proposal is made by the delegate of the Netherlands, that the matter be examined by the Sub-Committee which will be set-up on Article 30. I regard the proposal of the Netherlands delegate as being the furthest removed from the proposal of the Norwegian delegate, and I would therefore propose that we put before the Commission the procedural motion of the delegate for the Netherlands. Will all those members of the Commission who are in favour of the proposal of the Netherlands delegate to refer the Cuban proposal to the Sub-Committee on Article 30, please raise their hands. Mr. R.L. FRESQUET (Cuba): Mr. Chairman, I wonder if this is the right way to do it. I am sorry to say this, but I wonder if it will not put our proposal out of the Sub-Committee altogether, and the other two proposals would refer it to two different Sub- Committees. Maybe we could just vote as to whether the proposal should or should not go to a Sub-Committee, because otherwise there is a chance that the votes will be split between two Sub-Committees, and then the proposal for discussing the matter here will get more votes. E/PC/T/B/PV/11 S - 12 - E/PC/T/B/PV/11 CHAIRMAN: I would like to point out to the Cuban Delegate that we would first of all put the vote on the Netherlands proposal and, if that were lost, we would then put the proposal of the United Kingdom Delegate, so that the vote would only come on the Norwegian proposal if the other two wore lost. Mr. R. L.FRESQUET (Cuba): You are very cautious. CHAIRMAN: Will all those in favour of the Netherlands proposal please raise their hands. For: 8 Against: 8 The proposal is lost by six votes to eight. We will now vote on the United Kingdom proposal, that the matter be decided here and now. Will those in favour please raise their hands. For: 4 Against: 10 The proposal is lost by four votes to ten. Mr. R.B.SCHWENGER (United States): Mr. Chairman, I suggest that there is one other alternative: there is a Sub- committee on Chapter IV, General Economic Development, which is also the subject of this discussion. (Laughter). CHAIRMAN: I think the remarks of the United States Delegate are perfectly relevant, but unfortunartely we are already passing through a vote and therefore he is a little late in making his proposal. Will those in favour of the Norwegian proposal, to refer this to the Sub-committee on Article 15, please raise their hands. For: 9 Against: 2 The motion is carried. S - 13 - E/PC/T/B/PV/11 Mr. R.J.SHAUCKLE (United Kingdom): Mr. Chairman, if I may suggest something, it is this: in order to save the time of the Sub-committee on Article 15, our records should be transmitted to that Sub-committee, so that it should not go through all this debate again. CHAIRMAN: That will done as a matter of course. Before we leave Paragraph 2, the Delegate of New Zealand has asked for the floor in order to make a statement regarding a drafting point. Mr. G.D.L.WHITE (New Zealand): Mr. Chairman, I thank you for allowing me the opportunity to take the discussion back to Paragraph 2(a) of article 30. There is one small point which was worrying me there and that is, that in the fourth line of the New York draft of Paragraph 2(a) there is a comma after the word "system": it reads: "...or establish or maintain any other system, which results in the sale of such product for export at a price lower than the comparable price charged for the like product to buyers in the domestic What I am not clear on is whether those words "which results in the sale of such product for export at a price lower than the comparable price," etc. refer only to any other system, or do they refer to the beginning of the sentence also: "No Member shall grant, directly or indirectly, any subsidy on the exportation of any product," which results in that sort of thing. I take it that it is possible there could be an export subsidy which does not result in the export price being lower than the domestic price. It is possible that an export S - 14 - E/PC/T/B/PV/11 subsidy might be established, the export price might rise above the domestic price, and the subsidy still be maintained. In that case, I take it that the provisions of Paragraph 2(a) would not apply and that the only sort of subsidy which is in conflict with this is where it actually results in the sale for expert at a price lower than the domestic price. I think that is clear if the phrase "which results in the sale" etc, refers to both things, and I interpret it that way, but there is the other possibility of interpreting it, that those words just refer to the ostablishment of any other system. I think that is a point which might be cleared up by the Drafting Committee, but I would just like to know whether my interpretation is correct. Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, I suppose that if we were asked ta express a legal opinion on the interpretation of this text our answer would be that we were not able to give legal interpretations, but, i f we were asked what is our intention behind this paragraph, that is a question which we are fully qualified to answer. I have taken part in the development of this matter over the last three years at least and through all the discussions in which I have participated the intention has always been perfectly clear: that is, that all this relates only to the case where the price for export is depressed below the corresponding price to buyers in the domestic market. That, I think, has always been the intention and I think it should be made clear in that sense. As to the drafting, I think it is clear as it stands. because of that crucial comma, but that is always subject to typographical mistakes and I think it would be a very good thing if the Sub-committee could find some more definite and clear way of bringing out the intention. E/PC/T/B/PV/11 CHAIRMAN: I want to thank Mr. Shackle for the explanation he has given of the intention behind this particular sentence, and I think we can have it to the drafting committee to see that the text more clearly expresses the intention. We have now completed our review of paragraph 2 but before we pass on to paragraph 3, I would like to take advantage of the opportunity to announce the composition of the sub-committee which it is proposed to set up to examine Article 30, after we have com- pleted our preliminary review. I would like to nominate the following delegations to be represented on the sub-committee; the delegates of australia, Belgium, Lebanon, New Zealand, the United Kingdom and the United States. The delegate of Belgium. M. DESCLEE (Belgium) (Interpretation): Mr. Chairman, the Belgian delegation has expressed its view sufficiently clearly in the course of the discussion in this Commission and it results from the Belgian statements that Belgium does not resort to any sub- sidies. Therefore I think it would be prefarable to appoint the Netherlands delegate because he may have particular points to propose in the sub-committee. CHAIRMAN: In view of the proposal of the delegate of Belgium I would therefore substitute the name of the delegate of the Netherlands for the delegate of Belgium. Are there any comments? The competition of the sub-committee is approved. we now pass on to paragraph 3. At the First session in London the delegate of New Zealand raised the question whether the domestic price to be considered in this paragraph should not be that paid to domestic producers. The Drafting Committee added the words "or of returns to domestic producers" after the words domestic - 15 - P. -16- E /PC/T/B/P'V/11 price" in the first line, but the New Zealand delegate reserved the right to raise his question a gain at the Second Session. The delegate of New Zealand. Mr.G.D.L. WHITE (New Zealand): Mr. Chairman, I would like to say something about this point,but I would prefer to re- serve my remarks until after we have had the Australian amendment, which is already tabled on this annotated agenda, brought before the Commission. Then I should like to say something on that point. CHAIRMAN: We shall return to this point after we have con- sidered the Australian proposal and before we leave the considers- tion of paragraph 3. The Australian delegation has proposed a number of changes in the wording of paragraph 3. The comments of the Australian delegation are given on page 5 of the paper W/190. I will now call upon the delegate of Australia to expand upon the comments given in the paper to which I have just referred. Mr. E. McCARTHY ( Australia): Mr. Chairman, when this para- graph was inserted in the draft in London last year, its object was to make a distinction between those arrangements where there were straight-out subsidies without any other elements in the arrange- mants which could counteract the effect of such subsidies, and schemes which provided for other features which, in the view of the Organization and of the countries instituting those arrangements, countered the effect of subsidies. The view was taken that the real effect of subsidies which could be taken exception to was the fact that they stimulated pro- duction, perhaps stimulated it artificially and uneconomically, and therefore increased the quantity of goods going on to the world's markets and therefore brought about falls in prices. They could E/PC/T/B/PV/11 not have any other effect than that, because it was not a case of goods being sold below a world market price and thus bringing about a form of dumping, but they related to goods which were sold on the world market at world prices end which were at times sold above the world market prices in the home market. That was the major dis- tinction. And it should be said that that paragraph was designed to relate only to primary products. In an effort to meet these arrangements and at the same time not excuse or condone subsidies without any such safeguards, export subsidies, this paragraph was introduced and the conditions made as close as possible, as it will be noted the paragraph states that in the case of schemes which provided for conditions under which the export prices would actually be higher than the domestic price and where there were other safeguards, such as the limitation of produc- tion, and where because of those conditions there was no injury offered by competitors in the world's markets, then those conditions in paragraph 2 would not apply. We in London were satisfied that the principle had been met, but on examination of the draft we felt that it was not complete. It is true that the conditions where the domestic price is held irrespective of the world price and the world price goes higher than the domestic price has obtained in most of our products, in fact in all of them to a degree, and the present position is that in all cases, with the exception of one class of dried fruits, the external price is higher than the local price. We felt in looking further ahead that this paragraph excluded products which were initially or would in future be brought under such a scheme and which should not be expected perhaps for some time to reach the stage where the export price was higher than the domestic price. We have only four products at present coming under these schemes and I believe that they, all of them, comply with these P. - 17 - E/PC/T/ B/PV/11 conditions. But let us suppose, for example, that we desire to bring rice under a home consumption price scheme - and it does not mean that we do it necessarily for the purpose of subsidising: we do it for one good reason and that is to prevent the local price fluctuating with the export price, and it makes for stability in the home market and it makes for a return to stability: even if it is not a real stable return, the tact that one source of income, namely the domestic market, is stable, does help very much for the general stability of the industry. If we wished when prices were low ti introduce a scheme such as this for rice - and we might - we world find that in the early stages it might be subject to the penal clauses of this Article because at no stage had the export price been higher than the domestic price. Therefore what we wish is first to put in one of the real objectives which is: "if provision is made for the maintenance at fixed levels of prices for domestic consumption irrespective of the movement of export prices and because of such provision the system has resulted or may result, .. ." The words "resulted or may result" are designed to meet those products where the introduction of a scheme is new and whore it has not had time because of the fact that the export market has not gone high to meet that condition of the export price being higher than the domestic price. P. - 18 - J . - 19 - E/PC/T/B/PV/11 The final point is - and here I am in some doubt - it has happened in some of our products that we sold at two prices on the export market, one higher than the other. The reason is that we have made a contract with countries, and that price is a good bit lower than the expert price, what might be called free export price. That is a further demostration of our good faith in holding the domestic price very much below the free export market price, but I have found since drafting that that it has been open to a good deal of misunderstanding - in fact, I have been asked not only by those who might be expected to be critical, but my own colleagues, as to what it meant. Therefore, I am rather inclined, if the Commission will agree when it comes to the drafting stage , to withdraw those words in page 5 which are underlined:- "or because the export price is held below current comparable representative export prices". For two reasons I want to withdraw those words. Firstly, it is probably a temporary condition only, and secondly, it is open to too much misunderstaing and it might possibly raise questions of doubt and so on which would have to be explained perhaps in the future. To sum up, our idea is that where we have a scheme which provides for a home price, irrespective of the market price, we have demonstrated in practice that we hold that domestic price not withstanding the movement of the export price above and below the domestic price. I will give one example of that, Eight years ago, we fixed the price for wheat at has fluctuated and twepence a bushel. At that time the export price was three shilling. In that eight years, the price of wheat has flctuated above and below that - 20 - E/PC/T/B/PV/11 five shillings and twepence, but time home price has been held at five shillings and twopence. The position is now that the external price is sixteen shillings, but the home price is still five shillings and twopence, so we also, in the case of wheat, have provision for the limitation of production, the theory being that if prices fell below five shillings and twepence and the world market continued to be glutted, we would, by government act, cut down and reduce the acreage for wheat. Therefore, non- withstanding that we have this home price, which at times may be higher than the export price, we consider that we are doing much more to stabilise vvheat prices and to counter the effect of any artificial stimulation of production of wheat than any other exporting country. In fact, I think it may be agreed that,as the production of wheat increases, because our return to the producer, by mingling the sixteen shillings with the five shillilngs the and twopence, is much less than/comparable world prices of other exporters, we will bring our production more in keeping with the demand more quickly than those other countries where the stimulus is greater. I do not think I need take any more time of the Commission, beyond saying further that we would be content if the reference to prices going higher for a period were eliminated, but we agreed to their going in last year in the effort to make this provision so worded that it would exclude people who did not have the same conditions in their schemesas we had, and then the ..nCi- : -ms shall be determined not to involve the subsidies under the terms of paragraph 2 of this Article:- "If provision is made for the maintenance at fixed levels of prices for domestic consumption irrespective of the movement of export prices/and if the system is so operated, either because of the effective limitation or production, or otherwise, as not to stimulate exports unduly or otherwise seriously prejudice the interest of other Members". J. G. - 21 - E/PC/T/B/PV/11 CHAIRMAN: The Delegate of New Zealand. Mr. WHITE (New Zealand): Mr. Chairman, on the question which we raised at the First Session and again in the New York Session regarding whether the appropriate comparison should not be one between an export price and a return to the domestic producer, it seems that the position is as follows. We in New Zealand are interested not only in schemes of stabilisation for the domestic consumers of the consumption price of some products, but also in schemes for the stabilisation of returns to producers. But since the schemes we have in mind refer to the stabilisation of returns to producers irrespective of whether the production is for the home market or for the export market, and since in the general drafting of this Article 30 it seems they accepted that the criterion for determining whether or not an export subsidy exists is a comparison between the existing price and the price to domestic consumers, I think we are now in a position to accept working somewhat similar to the present paragraph 3, with some reservations which I will mention in a minute. Coming to the actual text of the Australian Amendment, we find that the third, fourth, and fifth lines are deleted. That is the Australian proposal is to delete the words "Which resultsover a period in the sale of the product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market". As I understand it, that is intended as a drafting point, and that if those words were deleted the stabilisation scheme might be determined not to involve an export subsidy, whether or not it actually did involve the export price beinglower.; but it seems that since a scheme like this could only be open to challenge when the export price was actually lower than the domestic price, I think G - 22 - E/PC/T/B/PV/11 on balance it is better to say so - that is, to leave those words in, and although with them in it makes it somewhat cumbrous, that matter may be got over by some re-drafting of the paragraph to make two sentences out of it, or by some other means. The next point that I see in the Australian re-draft is the changing of the word "may" to "shall" in the sixth line, and I would support that change because it makes it clear that if the facts are established to be in accordance with all the provisions which follow , that is, if it is proved that in some other period the export price has been high or may be higher, and if all the other conditions are fulfilled, then it is appropriate that the paragraph should read: "It shall be determined not to involve a subsidy on exportation" - and I take it that with that word "shall" in. the Organisation would not be able to determine otherwise for some other reasons, apart from the ones which have been mentioned here; and I think that is a desirable change. E/PC/T/B /PV /11 V - 2*f3 J -./fl/ z'V/.L. I !otld also support the Australian suggestion to add the words "or may result", and I would not comment on that any further because Mr. McCarthy has made it quite clear that the intention er teac ss to rv)r-tho ia3e of a new scheme being introduced, in which you might not be able to point to some past period, but I do not think that the iewroduction of a now scheme should be prevented for that reason. Our min criticism of the paragraph as it now stands comes in the next part, which is on page 5 of our Annotated Agenda, at the top of the page. Firstsuf all, I would aipport the deletion of the words "pr because the extort price is held below current comparable representative export prices". Mr. McCarthy has already suggested that they would not press those words. But even without those words, we are not happy about the references to the limitation of production and to the exact wording which says "not to stimulate exports unduly". We doubt whether it is appropriate ttrio ner to limitazin of production in this context, even though the sentence merely reads "either because of the effective limitation of production or otherwise". We doubt whether the concept of limitation of production is one which should be introduced hero, and which would apple o all the types of stabilisation schemes which mi-t be brought under this paragraph. I can think of some instances in our own country where we have known limitation of production, but where we have a genuine stabilisation scheme which is designed to assure a primary producer at the beginning of a season that he will get a return sufficient to cover his cost of production and that should enable him to carry forward his programme of primary production with some confidence. r V. E/PC/T/B/PV/11 - 24 - In general, I think that it is unnecessary to put in these qualifications here, because they are open to the criticism that the stimulation of exports might be against the interests of some other Member; but it might equally be in the interests of some consuming country, and I do not think that the word "unduly" qualifies that sufficiently. We would prefer the sentence to read"and if the system is so operated as not to prejudice seriously the interests of other Members", and we would take those words to mean that all these other things should be included in that concept: that .is, that it is only when the system seriously prejudices the interests of other Members that it should be open to challenge. There is one other way of getting around our difficulty on this point, and that would be:at the very end of page 4 of our Annotated Agenda in the last line there is the word "and" - "and if the system is so operated". -- If that "and" were changed to "or" we would be able to accept it, but I understand that there has been a very long argument about that word at an earlier Session, and that all these provisos were linked together by the word "and" in order to assure that the system would not be open to abuse. I think that if the last part of the sentence reads as it does at present, the word "or" is more appropriate, but if we were able to delete these references to the effective limitation of production and the reference to not stimulating exports unduly, then we will find it acceptable to retain the word "and". ER - 25 - E/PC/T/PV/11l ThecaaEirwWas now take by M;r.RYEYR Faance)iiInplacoe of The Hon. L.D. WILRSS3S Mr.A.P. van dr ePOST(oo.uh tAricoa): Mr. Chairman, I a oo=t ouite certain that I understand teAALustralian amnmmrent. In the firstp lace, the amendmenpprpp.ose ooj delete the words: "which results overapp,eriod in the sale oo-w ooj "domestic market". ojw I think that it is essential to retain that in thsAA.rticle, and also to retain the littl oocrd "also" in the fourth line of the .ustralin amnnmmrent and the tenth lin ffi tepp.reset NLew York draft, because teiilntention here is t o hosw the contrast between an overseas market or an oversesppii'ce and the domestic mare.t, which is lower. Attmmles the increaseoif the overseas market rises to aeaeel higher than the domestic level, and I hnnmk therefore, t eegoin with, that if eddCrop te hAsitralin a&mendment we should reinsert the wors wwhich our New Zealand frien aa:s also rcmmrmended: "which results over a period n the saeoo:f the product for export atappOrice lower ...." That should be reinserted, and we shoud also prpopoe the reinsertion of the little word "also" so as no brnig out the contrast between the lower and thehipgherpLrices. Tean, Ia;m not cetaintatoutit~he inclusion of thewoprds"piroviiomn ismnade for the mainteaence at fixed levlps ofp-rices for domesticcponsupntion". It seems to me that this limits the clause op on p'articularcoaec - acoase where th phomepjrice sd fxeds ad. maintained at a fxved lve-l. S -26- E/PC/T/B/PV/11 The Australian Delegate has given us the example of Australian wheat at 5/2d* Now I do not think it is necessary to limit the domestic price of the commodity to a fixed level. If there is such an improvement in overseas conditions that the price should rise above the domestic market, even the home consumer should be allowed to benefit from that. It does not follow that because there is that rise, it is due to the subsidy in the domestic market. I is .a;.'v1 _a C' is ' s beyond the control of the domestic producer, conditions ruling on the world market, and the domestic producer should be permitted to benefit from that. CHAIRMAN (Interpretation): The Delegate of Belgium. M. DESCLEE DE MAREDSOUS (Belgium) (Interpretation): I have listened with great interest to the explanations given in support of the Australian amendment and I must confess I am not convinced of the necessity for the many changes suggested by the Australian Delegation. Some of the cases put forward by the Australian Delegation can be covered in the text, but what I should like to point out more particularly is a point which, in my opinion, is of the utmost importance, namely, the substitution of the word "shall" for "may", which appeared in the original text. In conformity with the discussions which took place in London and with the text which resulted from the London discussions, the Organiza- tion can, at its discretion, determine the practical affects of the system and for my part I consider the two words "may" and "and", in the last line on Page 4 of Document W.190, which the Australian Delegation suggest should be deleted, as being of the greatest importance. If any change is made, the whole S - 27 - E/PC/T/B/PV/11 meaning of Paragraph 3 will be completely changed and the whole matter will come up for discussion again. In the London text the case of stabilization of prices is given as an example and it is the duty of the Organization to examine how the thing works in detail, the Organization's decision being sovereign on this point, and I adhere to this viewpoint. CHAIRMAN ( Interpretation): The Delegate for India. Mr. B.N. ADARKAR (India): Mr. Chairman, the Indian Delegation will support the principle underlying the Australian emendment . It is obvious that the draft submitted by Australia needs certain drafting improvements. We would support some of the improvements which have been suggested. For example, we would like the words "which results over a period in the sale of the product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market" to be retained, as suggested by the Delegate for New Zealand. We would also support the retention of the word "also", ich the Australian Dele- gation propose should be deleted. As suggested by the Delegate of New Zealand, we would also favour the deletion of the reference at the end of Paragraph 3 of the New York draft to stimulating exports unduly. We suggest the deletion of the words "or otherwise seriously prejudice the interest of other Members." In addition to these amendments, we would suggest one further amendment. The draft seems to indicate that systems for stablizing domestic prices of primary commodities involve the maintenance of prices only at fixed levels, but it is possible to conceive systems under which prices are not maintained at fixed levels. We think that such systems also should be brought within the scope of this proposal and we would therefore suggest that, instead of saying "for the maintenance at fixed levels of prices for domestic consumption", we should say "for/ maintenance within fixed limits of prices for domestic consumption." - 28 - CHAIRMAN: The delegate of the Netherlands. DR. E. de VRIES (Netherlands): Mr. Chairman, I think that many of the questions which we are discussin now are just drafting questions, and that there are only some major points of substance in the Australian draft which was put before us. I take, for instance, what the Indian delegate has pointed out, that fixed levels might also be within certain price margins. We read that a system for the stabilization of the domestic price is a system for stabilization if it makes provisions for stabilization, so that the inclusion of the Australian delegation is redundant, but we can deal with that in the drafting, I think. The same things applies to the deletion of the words "which results over a period", and so on, and the word "also". I think there are two or three main points. The first one has already been mentioned, by the delegate of Belgium, that is, the change of the words "may" and "shall". When we see it in the French text, it is still worse - the French text is changed from "pourra être considéré" to "Sera considéré". The determinations in this Article, following paragraph 6, are determinations among Members substantially interested in the commodity. If we take that out, there is the important matter of substance. I remember quite well that when Australia and New zealand proposed this in London, they said "Will, our stabilization scheme is a good one and everybody may study it. We are glad to show to the whole world what we are doing" so, they are not afraid to show it eventually to a conference of members substantially interested in a certain commodity. I think that we could better retain, as a matter of principle, the words "may be determined" and not change them into "shall be determined.". J. The second point of substance is what the Belgian delegate said - the change of the word "and" into the word "or". . If we change it to " or", it would mean that in any case, where there might have been happening, even for a short period, the sale of a product for export at a higher price, then that will give every possibility of doing what you like afterwards, and we do not know for what period afterwards, whether for five years, for ten years or for twenty years. So, I think the wore "and" is important here, because if you have "or", then that would take out of the determinations of the Members interested most of the cases, because Australia says, with the exception of dried fruits, they are all in that case now, so there ought not to be any consideration or determination afterwards for all the Australian products,except dried fruits. The third point is the proposed deletion of the words "stimulate exports unduly", not by the Australian, but by the New Zealand and Indian delegations. I think, Mr. Chairman, that also is a matter of substance. Not to stimulate exports. unduly is in paragraph 1 in the production subsidies; not to stimulate exports at all in proportion to world trade is in paragraph 5 for all of the export subsidies, so I think that when here we are taking away these systems of stablization from the export subsidies into production subsidies falling under paragraph 1, then we ought to retain the words "not to stimulate exports unduly". If not, that will fall altogether out of the whole Article, and that was not the meaning of the London Session. GG -30- E/PC/T/B/PV/11 CHAIRMAN: (Interpretation): Professor De Vries showed us a moment ago there were three important points to discuss .Therefore I think we should limit our discussion to the three points, leaving the drafting points to the Sub-Committee. CHAIRMAN: (Interpretation): The Delegate of the United Kingdom. Mr. SHACKLE (United Kiingdom): Mr. Chairman, I think I appreciate the need which the Delegate of Australia has suggested, but I still feel, in common with other speakers, that the desired text is not satisfactory. As regards the main points, it seems to me that in the first place it is definitely desirable in the second line of the Revised Text to delete the reference to the return to domestic producers. As the New Zealand Delegate has observed, that is inconsistent with the interpretation which we have just given to paragraph 2(a) by which we interpreted export subsidy as mainly a case in which the export price is less than the comparable price to home buyers- If we were to retain the reference to returns to domestic producers in the present text we should cast a doubt upon the interpretation which we have placed upon paragraph 2(a). My second point relates to the change from "may" to "shall" in the sixth line, and therefore I agree with several previous speakers that we must leave a discretion to the Organisation, for the reason that the rule which is laid down cannot be stated in a precise term. It seems to me it is a case where particular cases have to be considered on their merits, and for that reason I think it is necessary to leave a latitude to the Organisation. Those, I think, are the points I wished to make. - 31 - E/PC/T/B/PV/11 CHAIRMAN: (Interpretation): The delegate of Canada. Mr. DEUTSCH (Canada): I merely wish to support some of the remarks made by the Delegates of the Netherlands and the United Kingdom. I am particularly concerned about the substitution of the word "shall" for "may". I feel that in this field there ought to be some power of review left to the Organisation, and we would be much happier if Mr. McCarthy felt satisfied with the word "may". Finally, we would not agree with the New Zealand proposal that the references to "unduly stimulate export" and so forth should be removed. After all, if these things are to be permitted, then it should be provided that they do not unduly harm the interests of other exporters. That is, after all, the purpose of the whole Chapter on Subsidies - that we shall remove this instrument of economic warfare.In the final analysis any subsidy may be in the interests of the consumer, but it is not necessarily in the interests of world trade; and I do not think it is a decisive argument to say that interests of the consumer might be taken care of by subsidies. If that is the case, then we do not give any provisions against export subsidies at all in the Chapter. I do not think that was the intention. We are interested here in the effect of subsidies upon world trade in general; and I think that is the precise criterion in this case. V CHAIRMAN: The Delegate of the United States. Mr. R.B. SCHWENGER (United States): Mr. Chairman, this paragraph as it was drafted at London we felt--and we continue to feel--supplied, in this Article, a very useful need. It recognizes that the principle that where a domestic stabilization system results incidentally in subsidy sometimes and the opposite type of action at others,-that such incidental subsidization shall not have the same position under the Charter as has subsidization which is directly entered into for the purpose of taking a greater share of the market than a country would otherwise have. And because it is quite an important consideration, we were instrumental in extending the paragraph at this Session, or of putting before the Committee the recommendation that it be extended, to a similar exception in another portion of the Charter where subsidies are dealt with, namely, the portion dealing with countervailing duties and anti-dumping duties, and I believe that it is rather seriously contemplated, if not already agreed, that it shall be used for the purpose of exempting certain types of subsidies from the operation of those portions of the Charter. For that reason, we cannot agree with any changes that would extend the Article to a larger sphere, and we feel that whether or not it was the intention of the proposals before us to do that, at least some of them-one in particular--do have that result. I refer to the addition of the words "or may result" after the word "resulted" in the first "if" clause. It now provides that if a scheme of subsidization entered into has a price fixing provision with it and may at some time result in the sale of the product for export at a price higher than the comparable price charged for the like product to domestic buyers, that then it may E/PC/T/B/PV/11 - 32 - V -33- be exempted under this paragraph. To us that seems going extremely far, because in the first place, schemes of stabilization of whatever sort are subject to a good deal of pressure from all sides within their own country, and it is extremely difficult to do any more than hope that a scheme which is entered on at a time when world prices are low will be adhered to when world prices are high, if it calls for withholding from domestic producers the benefits of those high world prices when they come. Such schemes have been operated, and the Delegate of Australia, of course, can put before us some very successful ones that his Government has operated; but to extend the principle that a scheme which has no record of successful operation on that kind of basis may qualify, it seems to us to be a dangerous thing. We particularly feel that it is not unreasonable to take that view at the present time, because if such schemes are conteplated at any kind of reasonable stabilization price, they could start out now and very rapidly establish a period during which they could export at a price higher than the comparable price charged for the like product to domestic buyero. I think it would be extremely difficult t to find a primary commodity of which that is not true at the present time, so that any schemes that are contemplated of the kind that are intended by the original principle here could go ahead and operate. There would be very little problem, but what bothers us is that the impact of the new words would mean that at some times of less fortunate world prices from the producers' point of view, you might have a widespread resort to the provisions of this paragraph, and might not have equally widespread continuation of the schemes once the price situation had changed. E/PC/T/B/PV/11 V -34- E/PC/T/B/PV/11 We agree with the previous speakers on the points that Professor de Vries has made, and I shall not discuss each of them, but there is one point--the point about the word "may" which is proposed for deletion and substituted by the word "shall" could be treated as a drafting point, but it would call for--as I think one other Delegate has said--a number of consequent changes. I just jotted down here roughly the type of thing it would call for in order to retain the meaning. If you have the text in front of you-- "shall be considered" instead of "determined""notto involve a subsidy on exportation uier the terms of paragraph 2 of this Article"; if it is determined that (1) "and then follows the clause ending with "and" and then (2), climinating the words "if the", that would, I think, retain the essential meaning which you have with the word "may" and we think that would be quite a good drafting change for the sub-Committee to look at. We agree also with the last two or three speakers on the point suggested here by the Delegation of New Zealand. ER - 35- E/PC/T/B/PV/11 CHAIRMAN (Interpretation): I think the delegate for riew Zealand wishes to answer certain observations which have been made a moment ago. Mr. G.D.L. WHITE (New Zealand): Mr. Chairman, I apologise for entering the discussion again, but I would like to say a few words in order to correct the misunderstanding which may have arisen which from my earlier remarks, and/has been brought out by the statement of the United Kingdom delegate. With reference to the words "domestic producers", I did not wish my remarks to mean the deletion of any reference to domestic producers in this text. I think that there are many cases of stabilisation schemes which involve not only "the domestic price" but also "of the return to domestic producers" and we originally had the idea of making the whole thing refer to domestic producers. We have been shown now misguided we were in that, and we are now happy to make the opening art of the sentence read: "a system for the stabilisation of the domestic price or of the return to domestic producers", so as to retain both the essential elements. S -36- E/PC/T/B/PV/11 M. LECUYER (France) (Interpretation): The French Delegation is of the opinion that the Australian amendment would result in a rather deep alteration of the original Paragraph 3, at least on two essential points. First of all, as regards the substitution of the word "shall" for the word "may", we are also of the opinion that it is essential to maintain a possibility of control on the part of the Organization. I do not think that Governments should be allowed to decide by themselves whether or not stablization systems include or imply subsidies. Another point which is perhaps even more important: the Australian amendment completely leaves aside the idea which was expressed in the original text, namely the com- parison between domestic and external prices. Paragraph 3 as originally drafted contained a kind of reservation whereby external prices could vary in the vicinity of domestic prices, either above or below, but that they remained in the vicinity of those prices. If we adopt the Australian amend- ment, there will be no link left between these two categories of prices and therefore it is possible to maintain almost indefinitely very high prices abroad and very low prices in the home market. This would result from the present Australian amendment. Finally, I think that the suggestion made by the New Zealand Delegate, to delete the last words, "as not to stimulate exports unduly or otherwise ..." would also be detrimental. The whole question therefore should be looked into very carefully. But, as a whole, the French Delegation thinks that the New York text should be maintined, with the necessary drafting amendments. S - 37 - E/PC/T/B/PV/11 CHAIRMAN (Interpretation): The Delegate of the United Kingdom. Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, I do not want to waste time over what is mainly a drafting point, but I would point out that the subsidy on exportation has a definite connotation, which we have given it in this text; that is to say, a case where the export price is lower than the comparable price to buyers in the home market. That being so, it is the comparison of the price to buyers in the home market which is the yardstick, not to domestic producers. I still feel it is necessary to eliminate the reference to domestic producers for that reason, but I am willing to leave that to the S.b-committee. CHAIRMAN (Interpretation): The Delegate of Australia. Mr. E.McCARTHY (Australia): Mr. Chairman, I will not go over all the points, but I would like just to answer a few. In the first place, the reason that we proposed the deletion of those words "which results over a period" was purely a drafting one; we are quite content that this should go to the Drafting Committee. We thought our reference to Paragraph 2 - where those words are stated, and the other words that we introduce regarding the fixed level of prices for domestic consumption, and so on - made those words superfluous, but we are quite content for it to go to the Drafting Committee. On the subject of "shall" and "may", our view was there that the Organization has very full discretion in establishing the facts, and, in effect, it is now given that the Organization "may." It is in a position to pass judgment, "if..." and so on; S -38- E/PC/T/B/PV/11 "if" again, and, finally, so as not to "... seriously prejudice the interest of other Members." Our view was that all those were answered in the affirmative by the Organization. If it would assist, we would be quite prepared to see the words "if" provision is made" altered to "determine whether provision is made." We would be quite ready for that to go in. We are quite prepared for the Organization to pass judgment on the scheme. Having done that, we think it ought to have no further discretion. Mr. van der Post raised an important point of principle. AlI I can say is that we believe that if we put on home consumption prices which are higher than export prices we are, in effect, taxing our consumers. We think it is wrong, therefore, that when export prices go very high the domestic price should follow them and that domestic consumers should be guaranteed a sound price when prices are low and then have to pay through the nose when prices are high. That view was taken in the case of wheat particularly, where the producers ware told that they could not get external prices for that part of the wheat which was sold on the domestic market because they accepted, through Government instrumentality, a higher price for the wheat when the export parity was low. That is the principle which we observe. I think it has at least some of the morality of this question. The other point to which we attach the most importance was one raised by Mr. Schwenger. I was hoping it would go through without any comment. It made all the hurdles until it met the one he provided. I would ask him whether, if the principle is accepted - and it is accepted; it was accepted in London and perpetuated in the Draft - what are we going to do when we start on a scheme when prices are low - and we have to S admit that most of these arrangements start when producers are in trouble and they ask the Government to help them. They start them and the problem then is to create a scheme which is going to stand the test of time. We can only say, in pointing to our schemes, that they have stood the test of varying conditions. The Government has withstood all the requests of producers to follow export parity in the charges made to local consumers. But if schemes start - and probably they will, particularly when they have got schemes of proven worth - when prices are low, and it might be some years before this particular criterion is reached, namely, that the price fixed above world parity is found to be lower than world parity, are they going to be ruled out? That is the only reason we have put that in and I think it is, from our point of view, the most important point in the amendments we have suggested. I agree that there are other points here in the Draft which should go to the Drafting Committee, and I think they will be approved when they do go there. 39 E/PC/T/B/PV/11 E/PC/T/B/PV/11 CHAIRMAN (Interpretation): Gentlemen, we have had up to now a very long discussion on the amendment which has been presented by the delegation of Australia. I think we cannot go on with this discussion in Plenary Session, and therefore I think we should send this text to the drafting sub-committee, but before doing so I should like to know the opinion of this Commission. I should like to know two points. First of all, if, generally speaking, we agree on the idea suggested to change the word "may" into "shall", as has been suggested by Mr. Schwenger. On the other hand, I should like to know if we want to open the door or not to the conclusion of stabilization schemes when prices are low. It is possible that the text as submitted by the Australian delegation does not meet exactly all our views but I should like to know your views on the principle of this idea. DR. E. COLBAN (Norway) (Interpretation): Mr. Chairman, I wonder whether it is wise to send definite instructions to the sub-committee, and whether it would not be preferable to refer the sub-committee to the discussions which took place here, and to ask them to take into consideration the view-points expressed in this discussion. CHAIRMAN (Interpretation): It was my intention not to give definite instructions to the sub-committee, but I was under the impression that the sub-committee might not have enough instructions but if you do not wish to give more precise directions, we shall keep to what has just been said. The sub-committee will be asked to examine the New York text and to see to what extent it will be possible to introduce the amendment presented by the Australian delegation. J . - 40 - E/PC/T/B/PV/11 CHAIRMAN (Interpretation): We are now going to examine paragraph 4. The U.S. Delegation proposes to make some changes at the end of sub-paragraph (a). This Delegation asks the suppression of the words: "the difficulty may be determined to and be a special difficulty of the kind referred to", and the words.i.e./ in that event the procedure laid down in that Chapter shall be followed". Does the Delegation of the United States wish to present some observation on this question? Mr. SCHWENGER (United States): Mr. Chairman, this was an effort to simplify somewhat what happened to be a rather peculiar text, at least in the sense that it showed something of an excess of zeal for determination. The word. "determined" in this Article, as you all doubtless have in mind, means determined through the Organisation by consultation among the Members principally interested. The words say the difficulty may be determined to be a special difficulty of the kind referred to in Chapter VII, and in that event the procedure laid down in that Chapter shall be followed. In the procedure laid down in Chapter VII, there is the determination through a study group consisting of Members substantially interested whether it is a special difficulty. But to say that it may be determined by inter-Governmental consultation to be a special difficulty - in that event we shall feel the procedure for determining whether it is a special difficulty for consultation among the Members is something in excess of determination, We thought that to refer merely to the procedure would be all that is required. - 41 - G G - 42 - E/PC/T/B/PV/11 CHAIRMAN: The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): In spite of the simpler wording which the United States Delegate proposes, we do rather definitely prefer the original text. We feel that there is in it a real difference of substance, in that the existing text in its reference to "may be determined" and so on, does bring in via Article 66(4) what one might call a preliminary screening or sifting process which should determine whether any particular case is of such importance that it deser -ves to be treated by the rather elaborate and cumbersome procedure of Chapter VII, which would, of course, involve the setting up of a study group and so on. So we felt that should be reserved for cases of real importance which have a widespread effect, and that the small case, which touches only one or two countries, should be settled out of Court, and for that purpose we do feel that it is very desirable that this screening or sifting procedure should be kept. That is all we would wish - to see the existing text retained. CHAIRMAN: (Interpretation): The Delegate of New Zealand. Mr. WHITE: (New Zealand): I fully support what has just been said by the United Kingdom Delegate. CHAIRMAN: (Interpretation); The Delegate of the Netherlands. Mr. DE VRIES (Netherlands): Mr. Chairman, I fully support the proposal of the United States Delegate on this point. G. - 43 - E/PC/T/B/PV/11 I think that in such cases, in the first place if you try to go into bilateral cases when a Member considers that it should be discussed multilaterally, and then you have to ask the Members substantially interested - you have just those Members which would be Members of a study group; so I think that if the problem of the preliminary stage mentioned by the Delegate of the United Kingdom is proposed here - if there is a study group and if they have to determine first, will we come together and say that this special difficulty shall be a matter for the study gro group, you give an unreasonable delay to the whole procedure, and I think it is better in that case for people coming together just to say and determine that there is a special difficulty, rather than by creating a study group under Chapter VII and making a special study and reporting back to the Organisation and a Conference can follow. Then if we are at some cumbersome stage of the work, people all over the world can do that. CHAIRMAN (Interpretation): Does anybody wish to speak on the American Amendment? Mr. SCHWENGER (United States): I would just like to say that I consider this not a point of substance, inspite of what was said by the Delegate of the United Kingdom.I believe, that the text of Article 49 makes it quite. clear that any study group, whether or not formally called one under the terms of Article 48, can satisfy the requirements as to Conferences. I really do not believe there is a substantial change; so that while I agree with the drafting, we do not consider this an important change. V -44- E/PC/T/B/PV/11 CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I am grateful to the United States Delegate, who has offered to withdraw his amendment. I do feel that had it been maintained, we should have been involved once more in the rather lengthy discussion that took place in the London Conference. CHAIRMAN: Do I understand that the amendment is withdrawn? Mr. R.B. SCHWENGER (United States): I would rather say that if there is not general support I would be glad to withdraw it, but since others have supported it, I do not feel free to entirely withdraw it. CHAIRMAN (Interpretation): In these circumstances, I think we should send this amendment to the sub-Committee who will be able to find a means of reaching a satisfactory solution. We are now going to examine paragraph (b). The Delegates of Canada and New Zealand ask for the deletion of this sub- paragraph. You can find the remarks in Page 27 of the New York Report. The Delegate of Canada. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, we have always had difficulty with this sub-paragraph, but our difficulties are both of interpretation and of principle. Dealing with the question of interpretation first, it is not clear to us whether the requirements of paragraph 2, namely, the prohibition of export subsidies, shall be relaxed when an attempt has been made to form a commodity agreement but that attempt has failed. That is one point: having attempted to form a commodity agreement, the attempt has failed. In that case , the - 15 - E/PC/T/B/PV/11 prohibition of export subsidies is relaxed? Or does it mean that when a commodity agreement has been formed but that agreement has failed, the relaxation then goes into effect? It is a question of at what stage this thing applies. That is not clear in the Article. It makes a very great difference. In either case, if the interpretation is such that it should apply when the attempt to form an agreement has failed, we would object to the Article as well, because we feel that in the attempt to form an agreement, the basic equity or the situation should not be destroyed. If in the attempt to form an agreement it is realised that some countries may use the weapon of export subsidies during the negotiations for an agreement, that is, that if you cannot succeed in obtaining an agreement, then some countries are in the position of using the weapon of export subsidies during the negotiations, that seems to us to be an inequitable situation, because it gives -8ndue influance to the countries best able to subsidize: in other words, the wealthier countries as against the smaller countries; the countries that are less dependent on exports as against the countries that are more dependent on exports. That seems to us an inequitable situation in the formation of an agreement. If this rule is a sound rule, that there shall be no export subsidies, then it is a sound rule in all circumstances and it should not be relaxed during the process of nagotiating a commodity agreement or in effect released in the sense that the weapon can be used knowing that if the agreement fails, or if the countries having that weapon in their hands fail to get what they want in the agreement, the weapon will come into force. That, it seems to us, is not an equitable situation. V V - 46 - E/PC/T/B/PV/11 Secondly, if it is intended that export subsidies may to be resorted/when an agreement has failed, that is, after one has been formed and has failed, we think that that also is not a sound provision, because if the agreement has failed we do not see how resorting to export subsidies will make the situation any better. It would simply reintroduce the weapons of economic warfare in an already bad situation. It is a sound rule, it seems to us, whether or not commodity agreements exist, and we think it rather dangerous that when a commodity agreement has failed the only thing we can do to break the situation is to resort to weapons of economic warfare at that point, and enter into competitive subsidization. That does not seem to us to be a logical way of improving the situation. It is nothing else but wielding a big club over the heads of others, perhaps, and for that reason, as a matter of principle, we find this paragraph very difficult. I should go on to say that under the first interpretation, that export subsidies may come into effect if attempts to form an agreement fail, this is unsound, for another reason; that if the attempt to form an agreement has failed, that may be due to the considered opinion of all concerned, that an agreement is not necessary. If the attempt to form an agreement fails it nay be due to countries agreeing that an agreement is unnecessary, that is at least one of the possible causes of not reaching an agreement. In that case, why should the export subsidies be relaxed - if it is agreed that an agreement is not necessary? Again I say, that for all these reasons we find it a difficult paragraph, and we suggest is should be deleted as being inconsistent to the other portiors of the Charter. - 47 - E/PC/T/B/PV/11 M. DESCLEE (BeIgium) (Interpretation): Mr. Chairman, I fully associate myself with the views expressed by the delegate for Canada. Either these provisions have a general character, and in this case they are not acceptable, or they tend to consider a particular case and then they can be included in the framework of Article 35 . CHAIRMAN (Interpretation): This is paragraph 2 of Article 35. Dr. T.T. CHANG (China): Mr. Chairman, we understand the fears just expressed by the Canadian delegate, but we think that the mere division of this sub-paragraph will not help unless we can think of Something more constructive to take its place. I do not know what the Canadian delegate would suggest in case the measures provided for ir Chapter VII did not succeed. CHAIRMAN (Interpretation): Before giving the floor to the delegate of the United States, I should like to ask the delegate for New Zealand if he maintains his reservation to the New York text? Mr. G.D.L. WHITE (New Zealand): Mr. Chairman, we fully support the point of view expressed by the Canadian deleate just now, and we consider that paragraph 4 (b) is an entirely unnecessary paragraph, and that the procedure in Chapter VII will have a greater chance of succeeding in the absence of this clause because, if you are always allowed to have, at the back of your mind, a return to export subsidies and such other procedures, when other things do not succeed, there things are very much open to abuse in our opinion. Mr. R.B. SCHWENGER (United States): Mr. Chairman, we cannot agree to the deletion of this paragraph without a full reconsideration of the various other weapons provided in the Charter, and commended to those who use them for accomplishing similer purposes. I refer particularly to subsidies other than export subsidies. S - 48 - I am sorry that the matter is being considered on the basis of equity, because it seems to us that for those whose economic and political structure has led in the past to the use of oxport subsidies, rather than other types, those methods of dealing with a trade problem can be looked at without moral feeling. different from that with which one looks at other methods of dealing with that type of problem. For us - and I speak now just for the particular case of my country - these export subsidies have come to be used in a limited degree as a concomitant of a type of internal price support that is peculiar, I believe, to us. I think it is necessary to keep always in mind in the discussion of Paragraph 4 that it deals with cases where there are special difficulties of the kind referred to in Article 46, the introductory Article of Chapter VII, and that it has been agreed by us all, as a basic principle of the Charter, that such special difficulties call for treatment different in nature from that which Chapter V provides in other circumstances, for the same product or for commodities which are not affected by such special difficulties. I would like to point out that the structure of the Article with which we are dealing as a whole is as follows: we permit subsidization, except where injury is such as to bring into operation complaint and consultation procedures. We bar only such subsidization as results in a price differentiation between the domestic market and the foreigen market, and when E/PC/T/B/PV/11 S - 49 - E/PC/T/B/PV/11 there are special difficulties we have a spacial case. We refer the case to Chapter VII, but we say that if Chapter VII pro- cedures do not succeed, then it is still a case outside of this particular provision barring export subsidies. It is that last part of the structure of the Article that it is proposed to delete. Now I would like to point out that the Article is already rather strict about the matter. It does not provide, in those circumstances, for the use of the export subsidies unless measures provided for in Chapter VII have not succeeded, or do not promise to succeed, and the question of whether they have succeeded or not, or whether they promise to succeed or not, is made the subject of a consultative determination by all the interested countries, so that, to a certain extent, the club is in the other hand, because we have renounced the use of export subsidies except under a situation that is rather difficult to bring about. We are conscious that in going even that far we are going to have a good deal of difficulty, domestically and politically. We do not believe we can go any farther. CHAIRMAN (Interpretation): I should like to go on with the discussion of Article 30 in order to finish this Article tonight. It is the only importent question remaining on our Agenda, the last item being purely a drafting question. J. - 50 - E/PC/T/B/PV/11 CHAIRMAN (Interpretation); The delegate for the Netherlands. DR. E de VRIES (Netherlands): Mr. Chairman, I think it is true that this sub-paragraph is meant as an escape clause, and as an escape clause, in the first place, for a primary commodity, that is, in case even the measures of Chapter VII have not succeeded or do not promise to succeed. As to what the Canadian delegate means, I think we have to consider that carefully. If we get through the United. Kingdom amendment on Article 37, which means that under Chapter VII you may have any exemptions from Chapter V, that would mean that if you have an agreement, that agreement cannot succeed to remover or prevent the burdensome surplus and then in that agreement we might establish subsidies of allow subsidies. That was not the case when that was adopted in London. That was not the case when the United States Draft Charter was presented, so that might be one of the reasons why it was put in the original Draft Charter. So, I think, if we have a good solution for the problem of Article 37 and of Chapter VII as a whole, then we can make it clear that this cannot mean that a commodity counts or that a commodity agreement can provide for certain subsidies, because already that is in the generall Article. Therefore this can only be retained as an escape clause in the case vvhere an agreement does not succeed, orwhere an agreement is terminated - I should. also take into account the case where an agreement is terminated because it does not succeed. Now, Mr. Chairman, we have in paragraph 2(b) of this Article the possibility for a special amendment, for a special problem, and the Organization provides for an extension of the period of an export subsidy, but no possibility, even for the Organization, to make it possible to re-insert it again if the subsidy has been - 51 - abolished. Now what here is put in Article 4(b) is not opening economic warfare again, but it is giving to the Organization the possibility of an escape clause, not of an extension of an export subsidy, but the possibility of a re-insertion, and I think you cannot leave that out for a special case, but I think you can make it clear in the drafting that it is only meant for this extreme case. CHAIRMAN (Interpretation): I think that two questions arise in connection with sub-paragraph (b). Firstly, there is an objection of principle to the text of Article 30, paragraph 4. Secondly, a number of remarks have been made regarding the interpretation which could be given to the text. As regards the principle itself, I should like to recall that both in London and New York the majority was in favour of the existing text, and, as was pointed out by the United States delegate if it is desired to delete this sub-paragraph, the whole Charter will be upset thereby. Of course, the Preparatory Commission is not bound by the decisions taken in London, but I do think that it would be preferable, as far as possible, not to depart from the compromise which was reached in London after great pains. J. E/PC/T/B/IV/11 - 52 - E/PC/T/B/PV/11 If the majority appears to be in favour of the maintenance of this text, I think it would be wiser to retain it, but on the other hand the Sub-Committee might be asked to examine just to what extent the changes made in Article 37 or Chapter VII may have their repercussions on paragraph 4 of Article 30; and secondly, if possible, to make the wording more precise in order to avoid such interpretations as have been pointed out by the Canadian representative. CHAIRMAN (Interpretation): The Delegate of Canada. Mr. DEUTSCH (Canada): Mr. Chairman, in the first place I cannot admit that the deletion of this paragraph would upset the whole Charter. I do not believe that is so. Secondly, I do not know to what extent we are bound in this case by the decisions in London, and if the majority is in favour we would accept that; but we are not sure that they are on this point of retaining the Article. In any case, if it is decided to retain it, we feel it would have to be clarified a great deal as to what exactly is meant. Furthermore, I may at this point also seek to discuss one or two points made by the American Delegate. He stated that there would have to be a determination before this Clause could come into effect, but I feel that the determination required here is not really a determination of whether an export subsidy shall go back into effect. Certainly on one interpretation, and perhaps on any interpretation, the Organisation has no choice in this determination. There is no real determination - in other words, if a commodity agreement has failed to come into effect and the Organisation determines that has taken place, that is no real determination, it is just a fact - not a determination. And so - 53 - E/PC/T/B/PV/11 the real question of whether or not to revert to export subsidies is something not to be undertaken in a circumstance that is not provided for in this Article by the Organisation. Now, if that were done, I would be prepared naturally. - any Member has the right to go to the Organisation and ask the Organisation to give a relaxation from some commitment, and there were procedures laid down - if the matter were to be dealt with on that basis I am perfectly satisfied, as Professor de Vries pointed out, that under 2(b) there is provision here for the expansion of export subsidies and a procedure laid down for that purpose. If this natter were dealt with in the same way, any Member that could make a good case that the rule is unduly burdensome to it, and could make a good case that it should be permitted to have a relaxation of that rule under the procedures laid down - obviously in such a case we would have no objection, and we would be quite willing to consider a solution along the lines suggested by Professor de Vries. Not only may a Member apply for an extension, but for re-imposition, in certain circumstances and procedures where the Organisation has the right to determine whether or not the request is a proper one. That is something that applies to other undertakings in the Charter, and in that connection we are quite prepared to consider it. We do object, however, to the particular method that is employed here in this Article. CHAIRMAN: (Interpretation): The Delegate of the United States. Mr. SCHWENGER (United States): Mr. Chairman, I personally consider that a very constructive approach. Without being able in any way to see just what we can agree to, I think that the - 54 - ^ vt - Drafting Cor.ittee ou,ht toofonsider the possibility c using that approach as a means of reconciling views here. It seems to me that 5he material in paragraph S which was originally passed and proposed ought to be re-integrated with it in some way or other, and the two together probably have a closer relationship to 2 (b) than is indicated. Those are points that just occur to me as probably things that ought to be considered. CUIYAAN (Interpretation): I think that the last proposition amade by the Delegate of Cnada will allow us to think that the zb-Comaittee will reach a satisfactory solution, and that this solution All be accepted not only by the majority of the Members but byall the Members. I therefore propose to send this paragraph to the Sub- Coaite, asking the Sub-Committee to take into account. t observations aade by Mr. Deutsch. t/Pt/ /T -p/11 _ V. -55- E/PC/T/B/PV/11 We are now going to examine Paragraph 6. As far as Paragraph 5 is concerned, there are no propositions, and we will only ask the sub-Committee to take into account the observations of Mr. Schwenger. As far as Paragraph 6 is concerned, I think we could suggest to the sub-Committee that they take into account the observation made regarding Article 52 and ask them to find a similar solution. Are there any objections? (No objections). We have now achieved the examination of Article 30. I should like to inform you that the sub-Committee, the composition of which was approved a moment ago, will meet next Thursday at 10.30 a.m. The Delegate of Norway. M.E. Mr. Erik COLBAN (Norway): (Interpretation): Mr. Chairman, when we began the examination of Article 30, I pointed out that I did, not enjoy the assistance of an expert. Our expert arrives tonight and if after a examination of the situation he finds that he has proposals to make, may I be allowed to submit our proposals direct to the sub-Committee? CHAIRMAN: I think we can all agree to that. The Meeting is adjourned. The Meeting adjourned at 6.53 p.m.
GATT Library
xg239nh9843
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Eleventh Meeting of the Tariff Agreement Committee Held on Friday, 5 September 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, September 5, 1947
United Nations. Economic and Social Council
05/09/1947
official documents
E/PC/T/TAC/PV/11 and E/PC/T/TAC/PV/10-11
https://exhibits.stanford.edu/gatt/catalog/xg239nh9843
xg239nh9843_90260038.xml
GATT_155
12,533
76,698
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/11 5 September 194 7 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT ELEVENTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON FRIDAY, 5 SEPTEMBER 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA. Hon. L.D. WILGRESS (Chairman) (Canada) Delegates wishing to make correotions in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES E/PC/T/TAC/PV/11 CHAIRMAN: The meeting is called to order. We now come to Article VII in the General Agreement on Tariffs and Trade, to be found on page 17 of document T/189. This Article deals with formalities connected with importation and exportation. Have any Members of the Committee any remarks to make regarding the inclusion of this Article in the General Agreement? Does the Committee favour the retention of this Article in the General Agreement? Mr. Winthrop BROWN (United States): Mr. Chairman , we do not feel strongly about the matter one way or the other. We have a very slight preference for retaining this one, but, as I say, if any other Delegate has any objection, we do not feel very strongly about it. CHAIRMAN: Are there any objections to the inclusion of this Article? I take it that the Committee approves of the inclusion of the Article. Article VIII - Marks of Origin. H.E. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I was only wondering why we have deleted paragraphs 1 and 2 of Article 36 of the draft Charter, particularly paragraph 2 -that is the Most-Favoured-Nation clause for marks of origin. CHAIRMAN: It was considered that those particular paragraphs were not very applicable for inclusion in the General Agreement, particularly the paragraph dealing with Most-Favoured- Nation treatment, which was considered to be covered by Article l, the Article dealing with General Most-Favoured-Nation treatment. Are there any other comments with regard to this Article? V 2 E/PC/T/TAC/P V/11 3 H.E Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, if there are no serious reasons against it, I would suggest that we include paragraph 2 of Article 36 of the Charter in Article VIII. CHAIRMAN: Dr. Augenthaler suggests that paragraph 2 of Article 36 of the Charter should be included in this Article. Are there any objections to the proposal of the Czechoslovak Delegate? I take it that the Committee is agreeable to the proposal of the Czechoslovak Delegate to include paragraph 2 of Article 36 as-(to Dr. Augenthaler) the first paragraph of this Article? H.E. Z. AUGENTHALER (Czechoslovakia): Yes, I think as the first paragraph. CHAIRMAN: Is that agreed? (Approved) Are there any other comments with regard to Article VIII? Are there any objections to the inclusion of this Article in the General Agreement? Then I take it that it is agreed that this Article should be included, with the addition of the second paragraph of Article 36, as the first paragraph of the Article. ( agreed ) Article IX, Publication and Administration of Trade Regulations. Are there any comments on this Article? Have any of the Members of the Committee any objection to the inclusion of this Article? The inclusion of this Article is therefore approved. Article X, General Elimination of quantitative Restrictions. Are there any comments on this Article? The Delegate of Norway. V E/PC/T/TAC/PV/11 Mr. J. MELANDER (Norway): Mr. Chairman, I think that Article X has to be considered in connection with Articles XI, XII, XIII and XIV -that is, all the Articles dealing with quantitative restrictions in the Charter, and particularly those dealing with quantitative restrictions in order to safeguard the balance-of-payments position of Members. Now, if we are to include these Articles in Part II of the General Agreement, we feel that they ought to be counter-balanced by the appropriate Articles in Chapter II, namely, Article 5 dealing with the removal of maladjustments v in the balance-of- payments and Article 7 dealing with safeguards for Members subject to external deflationary pressure. The reason for this proposal is that we feel that the Articles X - XIV, that is, the section of the Commercial Policy Chapters dealing with quantitative restrictions, will have to be interpreted in connection with Articles 5 and 7, and not oily interpreted in connection with them, but Articles 5 and 7 ougnt to be given an equal standing with the other Articles dealing with balance-of-payments problems. Consequently, we would be willing to accept the inclusion of Articles X - XIV in Part II on the condition that Articles 5 and 7 were also included. V 4 J. 5 E/PC/T/TAC/PV/11 CHAIRMAN: The Delegate of Norway has proposed that there should be included in Part II of the Agreement Articles corresponding to Articles 5 and 7 of the Charter. Are there any comments on this proposal? MR. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairman, one would have to know first the exact draft of the Articles which were to be inserted in the Agreement, becaus the Article could not be taken out of the Charter and just put into the Agreement without any modification. CHAIRMAN: That same question has been troubling me on looking at these two Articles. Perhaps the Delegate of Norway would give some suggestions as to how this matter might be handled if this proposal were accepted. MR. J. MELANDER (Norway): Mr. Chairman, when I suggested the incorporation of Articles 5 and 7, it was, of course, not on the basis that one should necessarily have exactly the same texts, but one would have to have the basic ideas of those Articles. We do not think that it is necessary to make any major alterations in the text. As far as I can see, roughly the only need for alteration arises out of the reference in Article 5, paragraph 1 to Article 3 . If we do not include Article 3 in Part II, it might perhaps be said that, from a technical point of view, it would be difficult to have this included. Personally, I do not think that that is a major consideration. The Charter will, in any case, be referred to in the Protocol so that we shall have the complete text of the Geneva Charter for reference and therefore paragraph 1of Article 5 will then only have J. 6 E/PC/T/TAC/PV/11 to be altered to the effect that the reference is to Article 3 of the Charter referred to in the Protocol, or something to that effect. That, as far as I can see, is the only alteration necessary in Article 5. In Article 7 I cannot see, for the time being at any rate, any need for alteration. CHAIRMAN: I might mention for the information of the Norwegian Delegate that, when the Tariff Working Party were considering the Draft Agreement, it was found that it would be advisable for technical reasons to avoid cross references to the Charter wherever possible, because it is still a Draft Charter, and it was felt that it was better to use a slightly longer wording in order to avoid a reference to any particular article of the Charter. This could be done, I think, in this case if the proposal of the Norwegian Delegate were accepted by using some such words as these: "which handicap them in taking action designed to achieve and maintain full and productive employment and large and steadily growing demand within their own territories". I think that would fully meet the point of the Norwegian Delegate and it would get over a cross reference to the Charter. The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, may I make a practical suggestion? When Articles 5, 6 and 7 of the Charter were discussed by the sub-committee which was entrusted with the drafting of these Articles, the sub-committee recommended in its Report that the Report of the Plenary Commission should contain an Article or provision specifying that the ease mentioned in Article 7 of the Charter was one of those 7 E/PC/T/TAC/PV/1 1 cases justifying the provisions provided for in Article XXI of the Tariffs and Trade Agreement, and also justifying the derogations which are provided for by the states in accordance with paragraph 6 of Article XXIII of the Tariffs and Trade Agreement. I think that we should take up this idea here and insert such an interpretative note in the Protocol. We would not have to refer specifically to Article 7 of the Charter, but we could just describe the cases mentioned there within this Article. We could state that the cases provided for in paragraph 3 of article XXI can be applied here, and also that the derogations provided for in paragraph 6 of Article XXIII find a justification in their application in such a case. DR. H.C. COOMBS (Australia): I would like to suDpport very strongly the suggestion put forward by the Norwegian Delegate. It seems to me that some change would be necessary also in article 7 to make it appropriate, but I think that the comments of the French Delegation indicate the way in which it ought to be amended. Article 7 says:- "The Organization shall have regard, in the exercise of its functions under other provisions of this Charter". Well, clearly so far as the Agreement is concerned there will be no Organization in its early stages, and it will not be appropriate, therefore, to refer to the Organization, but it can quite clearly refer to the Members, both in their individual capacity and with regard to their taking action under Articles XXI or XXIII where joint action by the contracting parties is contemplated. I would suggest, therefore, that Article 7, when it is inserted in the General Agreement, might read:-"Members individually and in their joint capacity shall have regard, in the exercise of their functions, including those contemplated in Articles XXI ond XXIII, to the need of Members to take action to safeguard their economles against deflationary pressure.. .etc.". I think the inclusion of these two Articles would replace the specific proposal of Articles X, XI, XII, etc. in their appropriate content. J. 7 S CHAIRMAN: The Delegate of Czechoslovakia. H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I wanted only to support the proposal of the Norwegian Delegation. CHAIRMAN: The Delegate of the United States. Mr. Winthrop G. BROWN (United States): Mr. Chairman, I have a confession to make to the Committee; that is, that I have not the slightest idea, what the attitude of my Delegation towards this suggestion would be. I would like to ask the indulgence of the Committee to take advice on the matter and reserve our position until I have had a chanoo to do so. I can see it might present difficulties for us. On the other hand, it might be acceptable. I shall just have to take instructions. CHAIRMAN: Are there any other comments? Baron P. DE GAIFFIER (Belgium): Mr. Chairman, may I ask the same permission. CHAIRMAN: In view of the requests of the United States and Belgian Delegates, would it be in order for us to leave over these five Articles - Articles X to XIV inclusive - and the proposal of the Norwegian Delegate for a subsequent meeting? Is that agreed? (Agreed). I would therefore like to propose that we come back to these Articles and the proposal of the Norwegian Delegate at our meeting on Monday. Is that agreed? (Agreed). We will now take up Article XV - Subsidies. Are there any comments? Are there any objections to the inclusion of this Article? E/PC/T/TAC/PV/11 8 E/PC/T/TAC/PV/ 11 9 The Delegate of Cuba. Dr. Gustavo CUTIERREZ (Cuba): Mr. Chairman, I only went to repeat the statement made before by the Cuban Delegation, that we wish to maintain the reservations we have made to Articles of the Chairman which have been repeated in the, General Agreement, CAIRMAN: The Delegate of Syria. Mr. Hassan JABBARA (Syria) (Interpretation): Mr. Chairman, it seems to me that This question has been decided already, and it is quite clear that the reservations which were made by the various Delegations to the Articles of the Charter are maintained, if they have not specified to the contrary, in regard to the Articles inserted in the General Agreement. CHAIRMAN: The Syrian Delegate is partly correct and partly not correct in his interpretation. The question of these reservations was raised by the Cuban Delegate some meetings ago. (It was another Delegate, not Dr. Gutierrez). He asked if it was necessary to mention these reservations when we came to each Article. I said it was not necessary; that the question of reservations had been hold over and they would be dealt with when we had considered Article XXVII of the Agreement, when we would return to them. We had a very full discussion, lasting more than two-and-a- half hours, o n the subject of reservations and no definite con- clusion was reached, but the feeling of a substantial body of Members of the Committee was that the only reservations which could be accepted at the time of signature of the General Agreement were reservations which had been generally accepted. They were chiefly concerned with provision for the automatic S 10 S E/PC/ T/TAC/PV/ 11 supersession of Part II by the Charter. That was why the Chair proposed that all questions of reservations should be taken up again when we had dealt with Article XXVII. Then the Cuban Delegate asked me if it was neccessary, when discussing each Article, to mention the Cuban Delegation's reservation on that Article. I said it was not necessary and to save time we would deal with the whole question of reservations later. The Delegate of Cuba. Dr. GUTIERREZ (Cuba): Mr. Chairman, I wish to thank you for the information, I had had it from the other Cuban Delegate, but I just wanted to put myself on record. CHAIRMAN: The Delegate of the United States. Mr. Winthrop G. BROWN (United States): Mr. Chairman, my copy of the Charter indicates that the reservation of the Cuban Delegation is to the portions of the subsidy provisions which are not included in the General agreement . In consequence, the reservation does not relate to the first paragraph. If I am wrong, perhaps he will correct me, but if I am right he has no reservation to this particular paragraph which is suggested for inclusion in the General Agreement. CHAIRMAN: The Delegate of Cuba. Dr. GUTIERREZ (Cuba): I do not want to take up the time of the Committee about that, because we made the reservation to this paragraph at the beginning. I was not speaking about the reservation on this Article or any other Article, but to those Articles of the Charter where we have introduced reservations, - - - - 11 S E/PC/T/TAC/PV/11 and I thought it was a good time to say it. CHAIRMAN: The Delegate of Chile . Mr. F. Garcia OLDINI (Chile) (Interprotation): Mr. Chairman, this question of reservations is a very serious one and I fear that some misunderstanding may have arisen. If I understood it correctly it was that the whole of this question should be taken up again and discussed at the same meeting at which the Article which the Chairman mentioned would come up for discussion. Novertheless ,we did not agree on anything precise on the reservations themselves. If I understood it correctly, there was a tacit agreement that this question of reservations and the question of automatic supersession of Part II should be taken up at the samw time. There was also a tacit agreement that the reservations which had been made to the Charter would be mentioned either in the records of this meeting or possibly in the Final Act. If I remember rightly, it was also stated that even a formula might be devised by which, at the lime of signature of the Final Act, these reservations could be maintained. I should like this position to be clarified, because I have made no reservations as yet in the course of the dis- cussion, although I could have made a certain number of reservations. If I did not make any reservations it was because I understood that the debate on this question had been adjourned for some time, but I would like the position to be quite clear and I do hope that the Syrian Delegate and I have not misunderstood the position. S 12 E/PC/T/TAC/PV/ 11 CHAIRMAN: I think the position is quite clear and I hope that what I have just said did not tend to confuse the issue. No decisions were reached when we discussed this question the other day, We had an exhaustive discussion, but it was very clear that there was no possibility of reaching unanimity on the question of reservations until we had considered the question of supersession of Part II by the Charter. It was for that reason I proposed a decision should be deferred until we reached Article XXVII. Various views were expressed for and against various methods of dealing with reservations. A substantial body of opinion expressed the view that the only reservations which could be entertained at the time of signature of the Agreement were those which were unanimously agreed to by all the contracting parties. There were other views expressed, but no decision was reached and it was agreed that we shold leave this matter until we dealt with the supersession of the Agreement by the Charter. It was not considered necessary for Delegations to mention the reservations which they had made to corresponding Articles of the Charter, because we could deal with the whole question of reservations at the same time. Mr. OLDINI (Chile) (Interpretation): Thank you, Mr. Chairman . CHAIRMAN: H r- Members of the committee any objection to the inclusion of Article XV - Subsidies? I think we can therefore take it that the inclusion of Article XV is aproved. p. 13 E/PC/T/TAC/PV/11 CHAIRMAN: Article XVI - Non-discriminatory Treatment on the part of State-Trading Enterprises. The Delegate of Cuba. Dr. Gustavo GUTIERREZ (Cuba): Mr. Chairman, before going into that, you will remember that the Article relating to Subsidies was divided into two Articles - at least I remember Articles 25 and 26 - and I only wanted to ask why Article 26 which deals with "Additional Provisions on Export Subsidies" was not included in the General Agreement. CHAIRMAN: It is the general basis of the General Agreement on Tariffs and Trade that it deals with the treatment of imports into the various customs territories. Article 25: "Subsidies in General" was considered to have some relation to the importations into certain countries and therefore it was included, but the other Article,"Additional Provisions on Export Subsidies" relates to the treatment of exports, that is exports of one country in competition with exports of another country, and therefore it was considered that those particular provisions, while perfectly suitable for inclusion in the Charter, were not quite proper for inclusion in the General agreement un Tariffs and Trade which dealt with imports into rather than exports from a given customs territory. Dr. Gustavo GUTIERREZ (Cuba): Mr. Chairman, I thank you for your information, although really I am not convinced, because I suppose export is a part of the Trade Agreement and we are not only making here an Import Agreement. But, as I say I would always favour the exclusion of a r,"- and not the inclusion of it, I will not depart from that previous statement. CHAIRMAN: The Delegate of Chile. P. 14 ~~~~~~~TAPC/T/l..C/PV/11 Mr. F. Garcia OLDINI (Chile) (Interpretation): Mr. Chairman, without going as far as the Cuban Delegate, I think that the positive Aart of article 26 should be inserted here, that is at least the first paragraph whi:h reads; "No Member shall grant, directly or indirectly, any subsidy on the exportation of any product, or establish or maintain etc. Because there is a rule, and there are exceptions, and I think that the rule being established in one case we have also to establish the, order which is given to the Members, the obligation which is imposed on Mombers, not to establish any system of that sort directly or indirectly. CHJIJR4N: Well, we have passed Article XV dealing with Subsidies, but, with the unanimous consent of the Committce, we oan go back to it and deal with the proposal which is made by the Delegate of Chile. He has suggested, I think, that the first sentence of paragraph 1 of Article 26 be included. Is that right? The Delegate of China. Mr. C.H. CHEN (ChiMr ): In. Chairman, we support the proposal of Cuba to include theeArticlo deali A with-~dditional Provisions on Export Subsidies Ag thmee i4reent, as amended by the Delegate of Chile. CHLIRMLN: The Delegate of the United States. Mr. Winthrop BROWN (United States): Mr. Chairman, the Article XV was incecded booause of the fact that a domestic subsidy for increasing domestic production could have a limiting effect on imports and therefore tend to nullify the effect of tariff concessions and therefore would be something which ought to be subject to consultation in order to protect our concession. 15 P. ~~P~~~~~ACE/2C/T/T.'X/PV/11 As you pointed out, the further provisions of articles 26 and 27 dealing with export eubsidies got into the realms of competition between countries in markets of a third country. That is not the area which is coveredeby the Goncral Agreement. The General Agreement covers the treatment of the commodities of each country in the markets of the other country. It is for that reason that It aeams to us quite inappropArticlehat .. o 26 or any part of it should be included in the General Agreement. I have the further point to make that if paragraph 1 of Article 26 were included, paragrapas 2 and 3 end 4 would certainly have to be included, because what we have agreed upon here is a rule with certain exceptions, and you cannot put in the rule without putting in the exceptions. I would expect that if Article 26 is included other delegates would want Article 27 in, and you would have a very substantial increment to the Agreement in an area which it is not designed to cover and including provisions to which certain deleates have serious reservations. We have thereoore come tj the conclusion that it would be undesirable to include any part of artice Ag6 in tho ,.reement. C1iULN: The Delegate of Chile. Mr. F. Garcia OLDINI (Chile) (InterpreMation): Zr. Chairman, I appreciate greatly the explanations which were given by the United States Delegate, but nevertheless I cannot hide the bad impression which I had when these articles on, Subsidies were discussed in the Sub-Committee and also when the Article on Dumping was discussed in the Sub-.ommittee, The impression I had at the time was that one avoided makings a direct condemnation of both of these practices. In spite of the repeated proposals, and very clear ones, made by the Cuban Delegate, dumping was not condemned as such and there - - - - - 16 P. E/PC/T/TAC/PV/11 was no condemnation of dumping in the Article, but only a set of rules for dumping practices was drawn up. In the case of Subsidies, one condemns here the principle of subsidies and a general principle is laid down in the articles 25 and 26. It is true here that we, have a general principle and that there are exceptions here, but I do not ask that the articles of the Charter should be transferred as a whole from the text of the Charter to the General Agreement. What we could do here is to draft an Article which would condemn the principle of subsidies. As I have stated, in the Charter there is a general principle condemning the principle of subsidies, but what we could do here is to pass a resolution aiming at the obligations of Members not to practice subsidies, and after that we could put in a certain number of exceptions. Therefore we could have, in a few words, a rule, and provide for the exceptions which would seem necessary here. CHAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman, I hope the Chilean Delegate is thinking of the export subsidies and not production subsidies, domestic subsidies, when he is asking for a principle to be embodied here. With regard to the explicit point that we should include in Part II Articles 26 and 27 or any part of those Articles, I would submit two considerations. one is that the existing Article on Subsidies, Article XV, which has been included in Part II, is, according to our understanding, applicable to both domestic subsidies and export subsidies, subsidies of both sorts. If this Article alone goes into Part II the effect is that, whenever a Member gives any subsidy, whether production subsidy or export subsidy, which results in stimulating the exports of products from the territory 17 P. E/PC/T/TAC/PV/11 of the Member to any extent, or which results in an undue reduction in imports, there will be consultation. The other consideration is that the effect of including Article 26 would be that, so far as export subsidies are concerned, they would be banned altogether. But we must remember that if paragraph 1 of Article 26 were included, paragraphs 2, 3 and 4 would also have to be included and also Article 27. But if that is done, then the prohibition of export subsidies will come into operation only 2 years from the date on which the Charter entere into force, and since the General Agreement will have an initial term of 3 years, or will be terminable at the end of 3 years, this particular obligation not to resort to export subsidies at all will probably not come into force until 3 years. That being so then from a practical point of view it seems to me that nothing much is to be gained by including Article 26 or Article 27. V 18 E/PC/T/TAC/PV/11 CHAIRMAN: I take it that the Delegate of Chile no longer insists on the proposal to include Articles 26 and 27 of the Charter, or even the first paragraph of Article 26; but he has made another proposal, which I fear might run contrary to the ruling I made yesterday. This proposal is, in effect, that we re-draft this Article on subsidies and, as I pointed out, these Articles are taken directly from the Charter and we cannot, at this stage, permit proposals for changes in substance in these Articles because that would be equivalent to commencing the work of the Preparatory Committee all over again, and we would run the danger of being here till well after Christmm.s. I therefore hope that the Delegate of Chile, after the explanation he has heard from the United States and Indian Delegations, will permit us to proceed with the other Articles in the General Agreement. M. F. Garcia OLDINI (Chile) (Interpretation): Mr.Chairman, I regret to say that I am not convinced at all, but I see that the other Members of the Committee are not convinced by what I have said and therefore I will not press my point. CHAIRMAN: I thank the Delegate of Chile. We take up now Article XVI, Non-discriminatory treatment on the part of State-Trading Enterprises. Are there any objections to the inclusion of this Article? Mr. J. MEIANDER (Norway): Mr. Chairman, I have no objection to the inclusion of this Article in the General Agreement; but I would only, for the sake of order, make reference to the discussion we had the other day about Article II, when the question of the inclusion also of Article 31 was raised. V 19 E/PC/T/TAC/PV/11 This matter is the subject of discussion by a Sub-Committee and I may say that it is certain that we shall come to a unanimous agreement as to how to deal with Article II. Whether that will provide for the inclusion of Article 31 or not I do not know at the moment, but I just wished to mention the possibility that the question of the inclusion of that Article could be raised again. CHAIRMAN: That, of course, is understood, and of the Sub-Committee recommends that we should give consideration to the inclusion of Article 31 we can do so after the Report of the Sub-Committee has been presented. Are there any other comments on Article XVI? I take it, therefore, that the inclusion of Article XVI in the General Agreement is approved. Article XVII - Adjustments in Connection with Economic Development. Are there any comments on this Article? Are there any objections to the inclusion of this Article? The inclusion of Article XVII is approved. Dr. Gustavo GUTIERREZ (Cuba): Mr. Chairman, before going on to Article XVIII, I wish to ask for some information from the Chair as to why Article 14 of the Charter has not been inserted here. Article 14 of the Charter is an Article precisely devoted to Transitional Measures. I do not see why there has been so much considerai on given to the transitional measures to be taken after the Charter has been approved, and yet this Article dealing with transitounal measures is not included in a commercial treaty which is going to come into operation earlier than the Charter. E/PC/T/TAC/PV/11 CHAIRMAN: Article 14 of the Charter was not included because it was considered that it related more to the Charter itself and it was not necessary to include it in the General Agreement. I do not think I can say more than that. There was not any long discussion on it by the Tariff Negotiations Working Party: it was felt that it was necessary to include Article 13, but not Article 14. Dr. Gustavo GUTIERREZ (Cuba): Mr. Chairman, I wish to thank you most heartily because you have brought me back to my childhood, when I first started to study. In one of the books we had this question: "What is a Christian?" and the answer was "A A Christian is a person who believes in Christ". In the same way, the Chair has just told us that this Article of the Chart wrvas not included in the Agreement because it was covered in the Chart.r! If that is the case, I think I should move that this Article be inserted in the Agreement. CHAIRNA.: The Delegate of Cuba has proposed the inclusion of Article 14 of the Charter in the General Agreement. Are there any comments on this proposal? Mr. B.ADAKADSR (India): Mr. Chairman, I think it is generally agreed that Article 14 is part of a scheme which starts with Article 13, and therefore it would be reasonable to include Article 14, otherwise Article 13 may seem incomplete. Therefore, I would strongly support the proposal of the Cuban Delegate. CHAIANia: The Delegate of the United States. Mr. Winthrop BRNW1 (United States): Mr. Chairman, 20 V 21 V E/PC/T/TAC/PV/11 Article 14 seems to me to provide for action which must be taken by the parties before the signature of the General Agreement on Tariffs and Trade, and if they have taken that action, then it is not necessary to provide for it in the General Agreement itself. Article 14 states: "Any such Member who is a signatory of the General Agreement on Tariffs and Trade shall have notified the other signatory governments not later than thirty days prior to the day of the signature of the Agreement". It does not seem to me that this Article is appropriate for inclusion in the General agreement. CHAIRMAN: The Delegate of Cuba. Dr. Gustavo GUTIERREZ (Cuba): In our opinion, Article 13 covers a different field from Article 14. Article 13 takes into consideration the possibility of Member Governments proposing to establish new methods that would be inconsistent with the Charter, and Article 14 relates to Members who wish to maintain any non-discriminatory protective measure which has been imposed for the establishment, development or reconstruction of particular industries. If you could incorporate that idea in Article 13, I would be delighted, but at present Article 13 relates only to future measures. Mr. Winthrop BROWN (United States): I think that perhaps the Delegate of Cuba has got a point there, and I think Article 14 would not be appropriate in its present form but that the subject matter which it covers might be appropriate for inclusion, in some different language, either as a part of Article VII or as a separate Article. I would like to think it over and see what language would be appropriate. Certainly at present Article 14 is not suitable for inclusion. 22 V E/PC/T/TAC/PV/11 CHAlRMAN: The Delegate of Cuba. Dr. Gustavo GUTTIERREZ (Cuba): Of course, I am in accord with what the Delegate of the United States has said, because when we were talking about Article 14, we were not considering the insertion of the full text, because most of Article 14 relates to the question of the signing of the Charter and of the Agreement; but I was referring to the transitional period and that is the principle which should be inserted in some way in the Agreement. CHAIRMAN: Could we leave it to the United States and Cuban Delegations to consult together with a view to drafting a proposal for the wording of an Article based on Article 14 of the Charter which might be inserted into the General Agreement? We could then consider that proposal, if it is submitted to us in writing, when we come to deal with these Articles a second time. Dr. Gustavo GUTIERREZ (Cuba): I would be very glad to co-operate with the United States Delegate, but I think he is quite capable of doing it alone. CHAIRMAN: Well, we may leave it that the United States Delegation will draft the proposal and submit is to the Delegation of Cuba and the Delegation of Cuba will submit it to the Committee. Is that agreed? We now pass on to Article XVIII - Emergency Action on Imports of Particular Products. Are there any comments on this Article? Are there any objections to the inclusion of this Article in the General Agreement? The inclusion of this Article is approved. J. 23 E/PC/T/TAC/PV/11 Article XIX - General Exceptions Are there any comments. DR. J.E HOLLOWAY (South Africa): There is just one point, Mr. Chairman. It seems to me that there is a comma missing here and a superflous full-stop at the end of the third line in sub- paragraph (b) as the sentence is intended to run on. CHAIRMAN: I think that is quite correct. Are there any other Are there any objections to the inclusion of Article XIX? MR.H. JABBARA (Syria) (Interpretation): There is a mistake in the French text, Mr.Chairman. Instead of the word "Agreement" there is the word "Charter". CHAIRMAN: A will be taken of this mistake. The Delegate of France. N. ROYER (France) (Interpretation): Mr. Chairman, I would like to present a few comments on the provisions of this Article. In the Charter this Article appeared divided into two different parts, and Part II allows recourse to be made to the Organization, but Part I which deals with political matters does not allow such steps to be taken, that is, Members cannot make recourse to the Organization. I would suggest that it would be best if we also divide this. Article into two parts in the Trade Agreement and have one Article XIX and the other Article XIX(A) 24 J. E/PC/T/TAC/PV/11 CHAIRMAN: Is the suggesstion of the Delegate of France approved MR.R.J.SHACKLE (United Kingdom): it rather occurs to me that it might be best if paragraph 1 becomes Article XIX(A), on the grounde that there might be something to be said for putting it after the narrower exceptions of paragraph II. CHAIRMAN: Is the Delegate of France in accord with the suggestion made by Mr.Shackle? M. ROYER (France) (Interpretation): I quite agree , Mr . Chairman CHAIRMAN: Are there any other comments on the proposal of the Delegate of France? MR.R.J.SHACKLE(United Kingdom): The titIe of this Article is a slight problem. CHAIRMAN: I think that the solution if this problem would be so insoluble as to make it difficult to carry out the suggestion of the Delegate of France . MR.R.J. SHACKLE (United Kingdom): I wonder if I might make a compromise suggestion, Mr.Chairman, namely, That Part II becomes Part I and Part I becomes Part II and they both remain in the same Article. M. ROYER (France ) (Interpretation ):Mr .Chairman , nevertheless I think that it would be possible to find a title - even two titles. I think that for the second part we could adopt the following title "Exceptions" only or: "Exceptions to the Rules of Conduct of Commercial Policy" , but for the first part we would have to say: J. 25 E/PC/T/TAC/PV/11 "Exceptions to the Obligations of Members". MR. W. BROWN (United States): Mr.Chairman, why not call the first Part: "Security exceptions" and the second Part: "General Exceptions". CHAIRMAN: Are there any comments on this very difficult problem of finding titles for the two Parts which are now covered by one Part with one title. MR. R.J. SHACKLE (United Kingdom): It seems to me, Mr. Chairman, that the United States Delegates proposal would meet the case. CHAIRMAN: I take it then that the proposal, which has now been modified by the suggestions which have come out during the discussion, would be that there would be one Article XIX, that is, "Security Exceptions", and another Article XIX(A) headed "General Exceptions", or vice-versa. MR.R.J. SHACKLE (United Kingdom): Might I rather suggest vice-versa. CHAIRMAN: Does the Delegate of France agree with that? M. ROYER (France) (Interpretation): Yes, Mr. Chairman. CHAIRMAN: The proposal is that we split Article XIX into two, the first Part commencing with paragraph II and headed "General Exceptions", and he second part would be Article XIX(A), which would consist of paragraph I and would be headed "Security Exceptions". Is that agreed? J. 26 E/PC/T/TAC/PV/11 H.E. Dr. Z AUGENTHALER (Czechoslovakia): I have no objection, Mr. Chairman. I only want to make a remark that in this case the protection of public morals is not a security. CHAIRMAN: That comes into Part II, which will now be headed "General Exceptions". Does the Committee agree with this proposal? I think, for my own protection that I should mention that I could not rule this to be a question of substance. Therefore, I did not rule the proposal of the French Delegate out of order. Are there any comments on Article XX - "Consultation"? Are there any objections to the inclusion of this Article? The inclusion of this article is agreed. Are there any comments on Article XXI - "Nullification or Impairment"? MR. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, I notice in the first paragraph there is a reference to the "accompanying Protocol". Presumably we will have to come back to that after it has been determined what the Protocol is going to be. CHAIRMAN: The Delegate of New Zealand is quite right in pointing this out because there have now been more than one Protocol, and somewhere or other it will have to be identified with this. It is, of course, that referring to the principles of the Charter. with I think that that is a drafting point/which we will be able to catch up when we come to deal with the Protocol. Are there any other comments? Are there any objections to the inclusion of this Article? The inclusion of Article XXI is approved. 27 J. E/PC/T/TAC/PV/11 We now come to part III, of the General Agreement on Tariffs and Trade. Article XXII - "Territorial Application - Frontier Traffic - Customs Unions". I will draw the attention of Members of the Committee to the comments on page 4 of document E/PC/T/W/3l2. the Australian Delegation in document E/PC/T/W/277 suggests that this Article be transferred to Part II of the Agreement. The Czechoslovak Delegation in document. E/PC/T/W/285 suggests that paragraphs 3, 4 and 6 be deleted. The Australian Delegation suggests that the opening words of paragraph 3(b) be revised to read: "No contracting party shall put into operation"in the place of the words: "We contracting party shall initiate". This suggestion is also found in document E/PC/T/W/277. I think it would be best if we first of all deal with the Australian proposal to transfer this Article to Part II. Mr. J. FLETCHER (Australia): It is the view of the Australian Delegation, Mr. Chairman, that the bulk of this Article is new material and is not material that is ordinarily met with in a trade agreement. It is true that in most trade agreements you have a provision excepting priviledges given to customs unions and to frontier traffic from the general provisions of the agreement, and so far as those two points are concerned. we have no objection to their inclusion in Part III, but we do feel that the remainder of the Article applies to new material that appropriately belongs to Part II and not to Part III. 28 J. E/PC/T/TAC/PV/11 CHAIRMAN: The Delegate of the United States. MR. W. BROWN (United States): Mr. Chairman, we agree in part with the suggestion of the Australian Delegate. It seems to us that paragraph 1 of Article XXII properly belongs to Part III, that is, the tTerritorial Application of the Agreement. We also feel that paragraph 2(a) and the first part of paragraph 2(b) belong in Part III, since they are usual trade agreement clauses, the only new matter being the reference to the interim Agreement. That certainly should be in the Trade Agreement and, in part, it seems to us that it fits more logically in this Article in Part III than it would in Part II, since it is directly related to the matter of territorial Application and the matter of Customs Unions. As far as paragraphs 4 and 5, which contemplate the possibility of new preferential arrangements relating to programmes of economic development, is concerned, we rather feel that the Australian suggestion has merit and that it would be more logical to have paragraphs 4 and 5 as part of Article XVII than as part of Article XXII, since they relate directly to matters of economic development. 29 S E/PC/T/TAC/PV/11 CHAIRMAN: Does the comment made by the United States Delegate meet the wishes of the Austrelian Delegate? Mr. FLETCHER (Australia): As regards Paragraph 1 of Article XXII, I think the matter of its inclusion in Part III of the Agreement as distinct from Part II depends a good deal on whether we fit it in with Article III. I think it ties in with Article I. Mr. Winthrop G. BROWN (United States): Mr. Chairman, I am afraid I do not understand the point made by the Delegate of Australia. Mr. FLETCHER (Australia): The point is that Paragraph 1 of Article XXII Does affect preferential arrangements as between Australia and hor territories and there are questions revolving round Article III which affect those same terri- tories. That would call for adjustments in our legislation if we have to adopt either Article III in its entirety or Paragraph 1 of Article XXII. It is evident from the wording of this that this does affect the obligations of the parent country towards a territory to which it is granting preferences and other so-called forms of discriminatory treatment. CHAIRMAN: Is not the point covered by Annex A, which lists the Dependent Territories of the Commonwealth of Australia? Mr. FLETCHER (Australia): It is all right so far as 30 S E /PC/T/TAC/PV/11 tariff preferences are concerned, but when we come to internal taxes it is a different question. Mr. SHACKLE (United Kingdom): Mr. Chairman, surely the fact that Article III is already in Part II does convoy, does it not, that it applies only insofar as it concerns existing legi- slation, so that you already have your let-up by virtue of the fact that Article III is in Part III. It does not mean that you have also to transfer Article XXII to Part II. That would cause some difficulty, because it is needed as part of the definition of the effect of article I, which is in Part I. Mr. Winthrop BROWN (United States): It seems to me, Mr. Chairman, that the situation is exactly as Mr. Shackle has described it. Mr. SHACKLE (United Kingdom) : This is, in fact, a definition Article really. It just says that, for purposes of the application of, shall we say, Article I - General Most-Favoured-Nation Treatment - each unit shall be a separate customs territory. Mr. FLETCHER (Australia): The effect of this is much more than that of a Definition, to my mind. It really is to create these territories, or to place these territories in the position of a Member country. The nature of our arrangement with these territories is rather peculiar. In addition to tariff preferences, we even pay bounties on products produced in the territories: that is one way of encouraging their development. S 31 E/PC/T/TAC/PV/11 My objection to seeing this go into Part III is that Part III requires immediate application of its provisions. In article II, which goes into Part II, we do get an opportunity to delay those adjustments. That is the reason why I think its proper place is in Part II rather than Part III. Mr. SHACKLE (United Kingdom): Mr. Chairman, the effect of this paragraph, as I see it, is to say,what are the units for the purpose of applying the obligations throughout this Agreement For the purposes of Part I they will be the unqualified obligations of Part I for which these units will apply as such. For the purposes of Part II they will be the qualified obligations of Part II. Mr. FLETCHER (Australia): I feel constrained to ask. is there any substantial reason why this should go in Part III rather then Part II, seeing that the bulk of it is new material? CHAIRMAN: I think one reason would be that when Part II is superseded by the provisions of the Charter there will be no provision in the Charter corresponding to this Para- graph 1. Mr. Winthrop G. BROWN (United States): Well, Mr. Chairman, as I understood the point made by the Delegate of Australia, if Australia gave certain financial assistance to the territories in question there would certainly be nothing in any part of this Agreement which would prevent that. In fact, at an earlier stage in our deliberations the Head of the Austrlian Delegation called attention to the E/PC/T/TAC/PV/11 fact that there were some special relationships with one or two of the territories near to Australia which may conflict in some way with the provisions of the Charter or of the Agreement. He was not disposed to make them a subject for discussion, but he felt they were perfectly justified and he was quite confidant that the Committee would concur in what Australia was doing to assist those territories. Mr. FLETCHER (Australia): May I suggest that we defer consideration of this Paragraph 1, until we know the outcome of the Czechoslovakian amendment to Paragraphs 3, 4 and 6 of this Article. CHAIRMAN: We will therefore take up now the Czechoslovak proposal, that Paragraphs 3, 4 and 6 of this Article be deleted Mr. SHACKLE (United Kingdom): Mr. Chairmen, I cannot 5 understand what Paragraph would be doing when Paragraph 4 has disappeared. It seems to me that Paragraph 5 has no raisin d'être once Paragraph 4 has disappeared. Mr. Winthrop BROWN (United States): I think, Mr. Chairman, the reference of the Czechslovak Delegation is to the old draft and it is paragraphs 4, 5 and 6 of that draft which are meant. CHAIRMAN: The Delegate of Czechoslovakia. H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, what we are proposing here to delete is for the following reasons: we thought that we are making here an Agreement for tariff reductions and not an Organization - an Organization which may, in certain circumstances, have tremendous political S 32 E/PC/T/TAC/PV/ 11 powers, because, as the matter stands, customs unions or other preforential arrangements referred to in Paragraph 4 may have an exceptional political importance. It may, for instance, be Ansohluss, and we thought that Tariff Agreement should have only such provisions as Mr. Brown mentioned, which are in all normal commercial treaties. Nothing we have here exceeds largely the normal commercial treaty provisions but may have great political importance, especially as, according to Paragraph 4, the Committee, possibly by a simple majority, may decide on some such arrangements as those proposed once between Mr. Bruning and Mr. Seipel. That is why we thought there should be no Organization, especially as this Organization has no connection with the Economic and Social Council or the United Nations. The Committtee should have no powers of this kind; it should be purely a treaty of customa and nothing more. Our comments and our proposals are all directed from this point of view. S 33 P. E/PC/T/TAC/PV/11 CHAIRMAN: Are there any comments on the proposal of the Czechoslovakian Delegate? The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, it seems to me that in all commercial treaties it was stipulated that when a Customs Union was established this meant a derogation and a waiver of the most-favoured-nation clause. If in commercial treaties such a clause was inserted, then it did not mean that, before a Customs Union was to be established, the States signing that commercial treaty were undersigning or approving in advance the formation of such a Customs Union, if one considered it from a political point of view. Dr. Augenthaler referred to the question of the Anschluss but this is a particular question, a special one. I think that the Customs Unions, once they are formed, can be considered from two points of view, and therefore we have to mention it in the Charter not because of their political repercussions, but because of their economic repercussions, that is to say for instance the repercussions they have on Article I of this Agreement which relates to the most-favoured-nation clause. There is a definition in every commercial treaty, and which we must have here, that is that a Customs Union means obviously a derogation of the principle of the most-favoured- nation clause. A Customs Union, if there is one, is obviously a derogation of this clause. It is possible of course that in this Tariffs and Trade Agreement we are going somewhat further than is usually done in the normal Trade Agreements, because we are here providing for a preparatory period. I do not think however that we can 34 P. 35 say that, if the Members of the Committee decide, during a preparatory period or after the formation of a Customs Union, that the formation of such a Customs Union is a derogation of the most-favoured-nation clause, they are going beyond their terms of reference, that they are intruding in someone else's field, or that they are working outside their own field, and we certainly would not say they would be infringing on the domain of the Economic and Social Council. I think that bringing in here the intervention of the Economic and Social Council is a new idea. If we consider the Customs Union which was recently formed between Belgium, the Netherlands and Luxemburg, we can see that these three countries did not need the prior approval of the Economic and Social Council before concluding their Customs Union and if those three countries did not need the approval of the Economic and Social Council I really do not see why any other country should need the approval of the Economic and Social Council in the future if they are to benefit by the advantages of Article XXII of this Agreement. One must distinguish between the two different aspects of this question. One is the economic repercussions of such a Customs Union and that is a question of fact which can quite rightly be taken up by the Committee dealing with the Trade Agreement, and the other question is the political repercussions of such a Customs Union and there it is for all the Members of the United Nations to take appropriate action and bring the matter before any organization they think fit to consider this question. CHAIRMAN: Dr.Augenthaler. E/PC / T/TAC/PV/11 E/PC/T/TAC/PV/11 Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I think there is some misunderstanding between what I meant and what I said, I have no objection against Customs Unions: we have no objection against Customs Unions with the exception of the Customs Union known under the Ansohluss. That is not what we are objecting to. We are not objecting that there should be in a Tariff agreement normal exception to the most-favoured-nation clause in favour of Customs Unions. We have no objections against that. We have this exception in all our existing commercial treaties and we see no reason why such normal exception should not be also in this Tariff Agreement. What we object to is something else - that we are creating a Committee with powers to approve or not to approve such Customs Unions. That is why we did not ask or did not propose the elimination of paragraphs 1 and 2 but we propose the deletion of those paragraphs where the Committee approves or disapproves such Unions. Also I never said that some countries would need approval of the Economic and Social Council of the United Nations to create or not create Customs Unions, because of course in is not within the competence of the Economic and Social Council. I said only that we are giving here to some Committee for Tariffs powers such as to approve or not to approve Customs Unions, especially as it is a question of some Committee which is not even dependent on the Economic and Social Council. CHAIRMAN: The Delegate of the United States. Mr. Winthrop BROWN (United States): Mr. Chairman, we entirely agree with Dr. Augenthaler, that we do not desire here, we are not attempting here, to set up an international organization in advance P. 36 37 E/PC/T/TAC/PV/11 of the ITO. What we are doing in reference to the Committee in this Agreement, and in Article XXIII which follows, is to provide a mechanism - an orderly mechanism - for consultation between the contracting parties where they can decide upon action which affects them all and which they would want to take in their joint capacity. Now, of course, in a bilateral agreement, there are always provisions for consultation between the two parties and for their Action together. In a multilateral agreement with a number of parties those provisions must necessarily be somewhat more elaborate. In this particular case there is no question of the Committee, the contracting parties acting together, having any power to approve or disapprove a Customs Union. What paragraph 3 contemplates is simply that if a country which is a Member of this Agreement enters into an arrangement with another country be it a Member or a non- Member, which involves preferential arrangements which are not consistent with its obligations under article I, and justifies that departure from its obligations on the ground that it is a step towards a Customs Union, then the contracting parties should have a chance to have a look at those proposals and see whether they are in fact as represented. And if the Committee, the parties acting together, find that the proposals made by the country that is making them will in fact lead towards a Customs Union in some reasonable period of time, why they must approve it. They have no power to object. It is simply a mechanism foreseeing, if necessary, that some Member does not find a way out of its obligations under paragraph 1 under the guise of entering into a Customs Union when it is really not likely that a Customs Union will eventuate. It seems to us that such an opportunity for a check by all teo signatories to this Lgreement is a very reasonable and necessary oeo. P. V 38 E/PC/T/TAC/PV/11 CHAIRMAN: Are there any other comments? H.E. Dr. Z. AUGENTHALER (Czechoslovakia): May I camplete my statement,by adding a few words? It is stated "This Agreement shall supersede any prior international obligations", and this applies also to existing commercial treaties. Now, those already existing commercial treaties give us certain rights. Supposing there should be a case covered by some provision of this Article which is not covered by exist by commercial treaties, and that a Government, for some reason, would like to object because it conflicts with the commercial treaty. It would be unable to do so , because it renounced, through the Tariff agreement, the rights of the commercial treaties and agreed that a simple majority or two-thirds majority should decide whether something should be done or should not be done. CHAIRMAN: Are there any comments? M. F. Garcia OLDINI (Chile) (Interpretation): Mr.Chairman, I will not speak on the same point. I am going to speak on paragraph 4 of Article XXII. We are faced here with the same difficulties as have already been mentioned and which derive from the fact that these Articles are transferred to the Agreement from the Charter -that is to say, they are transferred to an Agreement from a text which has not yet been approved. I am referring to the words in square brackets in the draft of paragraph 4, which concerns the provisions relating to voting. In the Charter, no decision was taken on that point, and it was decided to defer this question to the Havana Conference. It seems to me that if we now make a decision on the same point, we shall pre-judge the issue which is to be teken up at the E/PC/T/TAC/PV/11 Havana Conference. Of course, one solution would be to eliminate this point, but that is not a proper solution because we cannot eliminate this question from the Agreement, as this question relates closely to the substitution of the text of the Charter for the text of the Agreement. I feel, as a number of Delegates do, that we should adjourn the debate on paragraph 4 of this Article pending the decision of the Committee on the provisions of Article XXVII of this Agreement, which relate to the automatic substitution of the text of the Charter for the text of the Agreement. CHAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman, I do not see any difficulty in eliminating paragraphs 4 and 5 altogether. It is obviously impracticable to leave square brackets in the final text of the agreement. On the other hand, if we seek to settle this issue as to whether approval for regional preferential arrangements should be granted by a two-thirds majority or by a simple majority, we cannot possibly succeed. This matter was left over to the World Conference and it is best left to that Conference. If we try to retain these two paragraphs and substitute some other words for the words in square brackets, we can only do that by making a reference to paragraph 6 of Article XXIII; but that would not change the position - it would only prejudge the issue by indicating that it was the view of the signatories to the General Agreement that regional preferential arrangements should be approved by a two-thirds majority. Nothing is to be gained by retaining these two paragraphs. V 39 40 If we delete these two paragraphs, we shall not be prejudging the issue, and by retaining these paragraphs we shall, not be improving position we would otherwise obtain. I would therefore suggest that we should agree to the deletion of these two paragraphs altogether. If that is done, then until a separate provision on regional preferential arrangements is incorporated into the General Agreement, approval for such arrangements would have to be given under whatever procedure is laid down in paragraph 6 of Article XXIII. I would only add one point. It is at present contemplated that Part II of the General Agreement should be substituted, in due course, by the corresponding provisions of the Charter, and since there is nothing at present in Part II on the subject of regional preferential arrangements, it will have to be stated somewhere that when the substitution of Part II by the corres- ponding provisions of the Charter takes place, some specific provision would be inserted, that is, Article 15 of the Charter would find its place in Part II. CHA.IRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I would like to support the proposal that the just been made by the Indian Delegate. It seems to me that the course he suggests, namely, the dropping of paragraphs 4 and 5, is the only way to avoid encroaching upon a question which we have already decided to leave to the Havana Conference. It is, I think, the only way out of that difficulty. CHAIRMAN: The Delegate of the United States. Mr. Winthrop BROWN (United States): E/PC/T/TAC/PV/11 V I would like also to E/PC/T/TAC/PV/11 support the suggestion of the Delegate of India. H.E. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I also support this proposal. I do not insist on the deletion of paragraph 3, and as to paragraph 6, that was a mistake: it should be paragraphs 3, 4, 5 and not 6. Mr. C.H. CHEN (China): The Chinese Delegation also supports this proposal of the deletion of these three paragraphs; but in addition we suggest the deletion of paragraph 7, which seems to us quito unnecessary. CHAIRMAN: Are there any objections to the proposal of the Delegate of India? The proposal of the Delegate of India to suppress these paragraphs 4 and 5 appears to have the support of the Committee. but I would ask that this decision be only a tentative one, because the Delegate of Chile made the request that the decision in regard to this matter should be held over until a later occasion,-and unfortunatly he had to leave the Committee. I think it would be only fair to him that we should leave it as a tentative decision to be confirmed later. Dr. Gustavo GUTIERREZ ( Cuba): Mr. Chairman, I was just going to make the suggestion that we leave the final decision until the Chilean Delegate can be present. CHAIRMAN: Is that agreed? We will regard this as a tentative decision, and we will take it up at a later occasion to be confirmed when the Delegate of Chile is present. We can now deal with the propose amendment to paragraph 3(b) suggested by the Australian Delegation. It is to replace the word "institute" in the first line of paragraph 3(b) by the words "put into operation", so that V 41 42 E/PC/T/TAC/PV/11 paragraph 3(b) would read: "No contracting party shall put into operation or maintain any interim agreement.." etc. Are there any objections to this drafting change? Mr. Winthrop BROWN (United States): Mr. Chairman, I think the Australian suggestion was addressed to an earlier draft, in which the word "initiate" appeared, rather than to the word "institute" which now appears, and I wonder if this word "institute" does not carry the same meaning as the words suggested by the Delegate of Australia and therefore would be satisfactory to him. Dr. H.C. COOMBS (Australia): It is correct, Mr. Chairman, that our amendment was directed to an earlier draft which did have the word "initiate". However, I feel that "put into operation" is clearer - at least, I know what it means and I am not sure that I know what "institute" means in this text. V 43 E/PC/T/TAC/PV/11 J. Dr. H. C. COOMBS (Australia): We entirely agree, Mr. Chairman , with Australian Delegate. CHAIRMAN: I imagine there is no objection to this slight modification to the text of the Chater. Dr. H.C. COOMBS (Australia): I do not think I attach any great importance to that, I think they are much about the same. CHAIRMAN: Perhaps for the sake of uniformity between the Charter and the Agreement we can let it remain as it is. The only other point which we have to clear up is with regard to Article XXII - i', is the Australian suggestion that paragraph 1 should be transferred from Part III to Part II. Dr. H.C. COOMBS (Australia): Well, Mr. Chairman we think that would be an improvement. We are concerned about this Article because, like certain other Articles to which we have referred, we are not entirely I of the nature and extent of the obligation which we are accepting under it. Reference has been made to the fac t that we have territories which are separate customs territories, and paragraph 1 says tiat: "The rights and obligation arising under this Agreement shall be deemed to be in force between each and every territory, which is a separate customs territory and in respect of which this Agreement has been accepted". On the assumption that we would accept this Agreement both for the Australian customs territory and territories of New Guinea and Papua, that would mean that the rights of application in this Agreement would not merely be between Australia and other participating countries, but between New Guinea and Papua, and also between J. Australia and New Guinea. "ow, quite frankly, I am not quite sure what is implied by that. What would be involved in applying the whole of the provisions of this Charter as between Australia and New Guinea is just a problem to which we have not given any thought at all, and it may involve legislative provisions or it may not. Therefore, we consider that it would be preferable if this Article were included amongst the section of the Agreement where acceptance was not merely provisional, but was limited to what could be done within existing legislative authority, or whatever is the precise wording of the qualification of that covering Part II. Similarly, we have in Paragraph 7 undertaken that each contracting party shall take such reasonable measures as may be available to it. Well, I have great faith in the precise quality of this word "reasonable", but we are a Federal State and some of the matters covered by the various parts of this Agreement are the exclusive concern of States which constitute our Federation, and whether it would be sufficient protection to say that it would not be reasonable to put any sort of pressure on those States to make changes in their practices in order to conform to this Agreement while it was in its provisional stage, I would not know for certain, but, while any doubt exists, it does seem to me that it would be safer to put this in Part lI in order that we would be protected there also. Furthermore, there does seem to me to be a good deal in this Article which is not properly described as territorial application. The provisions relating to Customs Unions and means by which they might be established and the limitations there to do appear to me to E/PC /T/TAC /PV/1 1 44 E/PC/T/TAC/PV/11 J. be substantive provisions of the Agreement, while identical in character to those which a present form the substance of Part II. If this article were one exclusively designed to describe the territories to which the provisions of the Agreement would apply, there would be much less objection to its being here. So, Mr.Chairman, for those three reasons --firstly, because this may involve us in obligations with regard to the relationships between Australia and its various territories which are separate customs territories, because it may involve us in action taken in relation to the States which constitute the Federation or Commonwealth of Australia, and because it containe provisions essentially similar in character to other Articles included in Part II, we think there is something to be gained by putting this in there. Mr .R.J. SHACKLE (United Kingdom): Mr. Chairman, I apologise for repeating such arguments as we have used already, but I must say that I am still not clear as to what the effect of making this change would be, nor I am I convinced of its necessity. The way the matter appears to me is this: This paragraph 1 of Article XXII does not lay down any substantive obligations at all. It is really a definition Article. ll now, if that is so, I really do lot see quite what the effect of transferring this paragraph to Part II would be. On the face of it, it would introduce the qualification that this is not consistent with existing law, but I do not see that it would have any meaning - either these are separate customs territories or they are not - so the qualification that this is not consistent with existing law seems to be irrelevant to this paragraph. 45 46 It seems to me that where the relevance does come in is in relation to Articles of substantive obligation, of which, of course, Article III is one, which sets up substantive obligations on national treatment as regards internal taxation and regulation, and I should have felt that, insofar as there might be any question as to whether the regime between Australia and these territories was consistent with Article III or not, it would be covered at present by the qualification that it is not consistent with existing law. There may possibly be some question of Article I - and I am under the impression that Dr. Coombs has mentioned that before - but I thought that it was left that the facts would be communcated to the Committee. So, for those reasons, it does seem to me that it would be motiveless to change this paragraph and I think it would be better to leave it here. I do not think it could possible affect the substance as regards the questions in which Dr. Coombs is interested. That is how it appears to me. CHAIRMAN: Are there any other comments? The Australian Delegate mentioned that, in connection with Article I, the Australian Delegation had not had time to fully study the implications of this particular paragraph, that is, paragraph 1 of Article XXII, so perhaps the best thing would be for us to leave the Australian proposal over until we can confirm the tentative decision which we took with regard to paragraphs 4 and 5. We can then deal with the whole Article. Is that agreed? Well, we will therefore leave over Article XXII and return to it when we take up the question of the deletion of paragraphs 4 and 5. E/PC/T/TAC/PV/11 J. S 47 E/PC/T/TAC/PV/11 CHAIRMAN: We still hove some time left; I therefore suggest we take up article XXIII - Joint Action n by the Contracting Parties. There are a great number of amendments to this article, which will be found on Pages 4 and 5 of Document W/312. I think, therefore, the best way in which to proceed is to take up this Article paragraph by paragraph. Mr. Winthrop BROWN (United States): Mr. Chairman, my Delegation has been giving some thought to this Paragraph, particularly in view of the blanks which it now contains, and we are prepared with some suggestions as to how those blanks should be filled in. The document is being circulated this evening and should be on the desks of all Delegates first thing in the morning. I hope it would be helpful to the Committee to have a specific suggestion as to the texts of paragraphs 4, 5 and 6, which are now blank, in their consideration of the Article as a whole. Since that could be available first thing in the morning, perhaps it might expedite the general work if our suggestions were before the Committee, as well as those contained in Document W/312. CHAIRMAN: In view of the statement by the United States Delegate, I think it might be better to terminate our work today and take up this article as the first thing at our next meeting. Mr. SHACKLE (United Kingdom): Mr. Chairman, before we break up, might I raise a point. It affects Article 24, particularly Paragraph 3(b), and Article 28. Those two paragraphs concern the status which territories would have which adhered to this General Agreement but were themselves not S 4 8 E/PC/T/TAC/PV/11 independent sovereign States but were autonomous in matters covered by the Agreement. I refer to Burma and Southern Rhodesia. The point affects them very much. It is a question of their Membership and I would like to ask whether the Committee would agree that representatives of Burma and Southern Rhodesia, who are here in Geneva at the moment as advisers to our Delegation, might be allowed to be heard when these paragraphs are under dis- cussion. I think it would be Articles 24 and 28 particularly - probably the whole of those Articles - on which they would wish to be heard. CHAIRMAN: The Delegate of Czeohoslovakia. H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr . Chairman, I would like to propose that we should meet the representatives of Burma and Southern Rhodesia when we discuss these Articles. CHAIRMAN: It has been proposed by the United Kingdom Delegate, seconded by the Delegate of Czechoslovakia, that, when we are discussing Articles 24 and 28, representatives of Burma and Southern Rhodesia should be admitted to take part in the discussions. Are there any objections to this proposal? (Agreed). Mr. SHACKLE (United Kingdom): I wish to thank Mr. Augen- thaler for his support and the Committee for agreeing to the suggestion. CHAIRMAN: I would now like to take the sense of the Committee as to what time we should meet tomorrow. I think it E/PC/T/TAC/PV/11 is very necessary that we meet on Saturday, because we have to get through this work before September 14, after which we shall no longer have the services of the Irterpretors. I would propose that we meet tomorrow morning at 10.30. There is a meeting scheduled for the Sub-committee on Paragraph 3 of article II also at 10.30 tomorrow morning, but I trust it will be possible for Delegations, to send representatives to this Committee and to the Sub-committee if they are held at one and the same time. Mr. SHACKLE (United Kingdom ) Mr. Chairman, I know that meetings on Saturday afternoons are unpopular, but I am afraid there is really nobody who could understudy me on the Sub-committee. Therefore I can only suggest we have the sub-committee meeting in the afternoon. CHAIRMAN: I think this Committee has priority over the Sub-committee and therefore I think it will be necessary for us to ask the Sub-committee to meet in the afternoon. Mr. SHACKLE (United Kingdom): I apologise to Members of the Sub-committee. CHAIRMAN: We will meet tomorrow at 10.30 a.m. in this room. The Meeting is adjourned. The Meeting rose at 6.p.m. S 49
GATT Library
pf211sx0402
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifteenth Meeting of Commission A held on Friday, 20 June 1947 at 2.30 p.m
United Nations Economic and Social Council, June 20, 1947
United Nations. Economic and Social Council
20/06/1947
official documents
E/PC/T/A/PV/15 and E/PC/T/A/PV.13-15
https://exhibits.stanford.edu/gatt/catalog/pf211sx0402
pf211sx0402_90240101.xml
GATT_155
12,204
73,520
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/15 20 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT FIFTEENTH MEETING OF COMMISSION A HELD ON FRIDAY, 20 JUNE 1947 AT 2.30 P.M. M. MAX SUETENS (Chairman) (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel.2247). NATIONS UNIES 2 CHAIRMAN (Interpretation): Gentlemen, the meeting is called to order. I hope that today we will be in a position to have a combined amendment presented by the Czechoslovakian and United States delegations, amendments concerning Article 31. The draft, however, is not quite completed yet and therefore we shall resume our discussion at the point we left it yesterday. Yesterday, we finished the discussion on paragraph 1 of Article 31. Today, we shall begin the discussion on paragraph 2 of the same Article. MR. J.A. MUNOZ (Chile): Mr. Chairman, with your permission, before passing on to paragraph 2 of this Article, we would like to refer briefly to a point raised yesterday by Mr. Shackle as regards the words which have been introduced at the end of sub-paragraph (b), namely "through public offers or bide or otherwise, shall afford the enterprises of all Members" etc. Replying to Mr. Shackle, the United States delegate explained that they did not provide that "public offers or bids"was to represent the only means whereby a Member might comply with this general provision and that the words 'or otherwise' were to take cars of the quite obvious fast that business enterprises do not always do their business on the basis of public offers or bids. We ourselves had not raised this point because we interpreted the words "or otherwise" to mean that any enterprise, whether state-trading or not, if it sells or buys products on commercial considerations, within the meaning of this term, cannot be obliged to carry out its business transactions only through "public offers or bids". One simple example will illustrate our views, Supposing an enterprise sells its products in the world markets, if such sales J. J. 3 E/PC/T/A/PV/15 are bona fide in open competition with other producers, there is absolutely no necessity that such offer should be made public or that such enterprise should afford the enterprises of all Members full opportunity to compete for participation in such sales. The explanation given yesterday by Mr. Evans seems to confirm our interpretation of this phrase, but we would like, Mr. Chairman, to leave on record our views in this respect. - 4 - CHAIRMAN (Interpretation): Under those circumstances, Gentlemen, we can pass on to the consideration of paragraph 2. I see that in the text of the Drafting Committee there are words against which objections were raised by three Delegations. The words are "for use in the production of goods for sale". The Delegations of Chile, New Zealand and Czechoslovakia formulated reservations against this sentence. The U.S. Delegations maintained this text, but presented an Amendment which bears on points of drafting but not on points of substance. The Delegate who wants to take the floor on this subject. Mr. MUNOZ (Chile): Mr. Chairman, we would have preferred to delete these words, as we did not see quite what was the object of them, but on second thoughts, and if the majority of the Delegations wish to have them included, we would not press our Amendment. CHAIRMAN: The Delegate of Belgium. Mr. DESCLEE (Belgium) (Interpretation): Mr. Chairman, we would be in favour of retaining the words between brackets. Since the influence of the State is possible, we believe that the provisions of paragraph 1 should not be limited to imports for re-sale purposes, but also be expanded to imports for production which finally also leads to re-sale. CHAIRMAN: (Interpretation) Are there any more speakers on the subject? Mr. BAYER (Czechoslovakia): Mr. Chairman, we have submitted here in Geneva a document W/187 covering the text which would be proposed for Article 31, and it can be seen from this text, in E/PC/T/A/PV/15 G - 5 - E/PC/T/A/PV/15 paragraph 2, that we have changed some words of the text from our reservation made in New York; and I would therefore consider this text in this paper as the one we are proposing. Thank you. CHAIRMAN: The Delegate of the United Kingdom. Mr. SHH: C:LE (United Kingdom): On looking at the Czechoslovak Amendment, while retaining the words "for use in the production of goods for sale", it nevertheless deletes the words "for re-sale". I find that a little hard to understand, and should like to ask the Czechoslovak Delegate why he wishes to omit the words "for re-sale"." Mr. BAYER (Czechoslovakia): If I understand properly the question raised by the United Kingdom Delegate, the point is why we changed the word "re-sale" into "sale". I would say that we had no specific reason for this and we would be able to accept "re-sale" as well I V 6 - E/PC/T/A/PV/15 CHAIRMAN: The Delegate of the United States. Mr. John W. EVANS (United States): Mr. Chairman, I should like to support the feeling expressed by the Belgian Delegate that the words "or for use in the production of goods for re-sale" are very important, and we feel that they should be retained. We Are not very proud of our own amendment to this paragraph, and, in fact, we think that the general approach of the Czechoslovak amendment is probably better, and if that amendment could be so corrected as to include both the thought of goods for re-sale and goods for use in the production of goods for sale, we should probably be quite happy with it, and at least be very glad to have it used as basis for work in the sub-Committee. CHAIRMAN: The Delegate of New Zealand. Mr. L.C. WEBB (New Zealand): Mr. Chairman, I wish to refer to the comment of the United States Delegation which appears at the top of page 5 of E/PC/T/W/198. The comment is "These changes are intended to express more simply and in fewer words the intent of the London draft. Except for the removal of the brackets from that draft, these changes do not affect the substance of the paragraph". Now, Mr. Chairman, I was not involved in the New Yark drafting; but I have been informed that these words in brackets in paragraph 2 were, in fact, added in New York at the suggestion of the United States. They were not agreed to: they were in square brackets because the matter was not there fully dealt with. I understand also that, in fact, those words were not put in the London Draft. That is a point which V - 7 - E/PC/T/A/PV/15 I would like the United States Delegate to clarify. Our reservation was made because we find it extraordinarily hard to understand the preciss implications of the terms "or for use in the porudaction of goods for sale". Our own experience makes it difficult to understand those words. For instance, does it apply to the production say of hydro-electricity for sale, and we have in our own economy some rather complicated procedures which would be very difficult to interpret in the light of such a phrase. For example, take the case where the Government may purchaso certain materials for the production of houses, and may dispose of that material to housing contractors who build houses for the State these houses being rented. That sort of operation is extraordinarily difficult, I think, to bring within the ccmpass of the phrase "or for use in the pro- duction of goods for sale". I have no doubt that some of these difficulties may be ironed out at the sab-Committee stage; but I just want to make clear why we have made the reservation. CHAIRMAN: The Delegate of the United States. Mr. John W. E. EVANS (United States): Mr. Chairman, I want to thank the New Zealand Delegate for calling my attention to what was an error in the comment to the United States proposed amendment. It should have read "These changes are intended to express more simply and in fewer the words the intent of the New York draft". I think that there is no difference at all between the New Zealand Delegation and rceleves as to want we want to cover by the words "for use in the Production of goods for sale". We have always understood, and I understand that it was generally agreed in London, that the words were not intended to cover the production of services, such as the production of electric power. That does not completed answer oms raised by the New Zealand Delegate; but Ifeel sure that ww can retain the intent of this wording and still take case of those difficult cases where it does not exactly fit by some work in the sub-Committee. - 8 - It. DESCLEE (Belgium) (Intepretation): Mr. Chairman, I believe there were some mistakes in the text drafted in London, and if we look at the comments made at the London Conference, we shall see that the only aim was to establish a distinction between government purchased goods for trade and government purchased goods for the use of the considered government. The text of the London Conference, Section E, subparagraph (v) reads: "A distinction was made as between governmental purchases for resale, which are covered by this paragraph, and purchases for governmental use and not for resale..." Therefore, I think we should revert to the idea expressed at the London Conference on this subject. CHAIRMAN (Interpretation): I think we can pass on to paragraph 3. As regards pararaph 3, we have two alternative texts for (A) and (B). We have three proposals and only one suggests to amalgamate the alterations under (A) and (B) into one text. The proposals are respectively made by the representatives of Belgium, China and Chile, and there is a proposal by the delegate of Czechoslovakia to delete the two alternatives. I will call upon the delegates that have made these proposals, commencing with the delegate for Belgium. M. DESCLEE (Belgium) (Interpretation): Mr. Chairman, I would begin by making a short remark on the text itself. The English text does not indicate absolutely our intentions. The text which I am going to quote reflects exactly and accurately the intention of my delegation: "This Article shall apply when a Member government, directly or indirectly ......... exercises effective control or management of enterprises, organs or agencies or of their trading operations only ......" We do not insist on the exact wording, byt E/PC/T/A/PV/15 ER -9- E/PC/T/A/PV/15 but rather on the ideas to be clearly expressed, as we wish them to be. The debate which took place since yesterday, has shown that state trade shows differences as regards special rules on this matter, and the difficulty of establishing these special rules, and even if it is practical to grant a special treatment to state trade, I think there will be a serious difficulty in applying the principles of the Charter to that case. S - 10 - E/PC/T/A/PV/15 While the Charter is based on a competitive system, the very existence of a monopoly creates difficulty in the supervising of the international competition. For a State enterprise a second difficulty is added to the situation provided for in Chapter VI, in that the state has, directly or indirectly, a means of control. The Delegate of New Zealand yesterday explained very brilliantly the interest of the use of such controls for a national economy, but their use by a Government shows that it is possible for it to engage a national economy in ways different from those provided for by the Charter, to give more emphasis to national interests. If these methods of control are legiti- mate and even - I do not want to stress it - perhaps advisable, I think that on the international plane we would not be able to know how a controlled economy will function in practice whenever a State, whether by legal measures or in fact, alters the competitive system by means of the special control, and we have then to establish a procedure in Article 31 or Article 32 in order to be able to cover all the operations related to the enterprises concerned. For this purpose I think it will often be difficult for either the plaintiff or the Organization itself to prove that certain controls have altered the free competitive system and therefore we should not limit too much the field of application of Article 31. We should not limit it to one or other obvious cases but we should make the application of this Article in such a way as to cover all controls, whether they are the result of a legal text or whether they are merely in fact. S - 11 - E/PC/T/A/PV/15 CHAIRMAN (Iaterpretation): The Delegate of France. M. IGONET (France) (Interpretation): Mr. Chairman, it seems that the statement just made by the Delegate for Belgium indicates some confusion between the categories of enterprises mentioned in Articles 31 and 32 respectively. In Paragraph 1 of Article 31 we see an exact definition by the fact that it is mentioned at the top of Page 28: "If any Member establishes or maintains a State enterprise ..... or if any Member grants exclusive or special privileges", and these privileges can, of course, be granted not only to State enterprises but also to private enterprises. To mention the case of France, we have a law which we call the Law of Programmes, which enables the Government to impose on some branches of industry or some enterprises a programs to manufacture a certain quality of goods, and this can be considered as a law placed upon the enterprise but also as a privilege, as it implies a specialization which consti- tues a kind of privilege in and for the production of certain goods. Therefore, if we applied Article 31 literally, it might be considered as applying to this case, but, in fact, this is in no way a monopoly; it is only an imposition of a Government programme, but that is done entirely to a private enterprise, which, nevertheless, remains absolutely private. Should such an enterprise be submitted to all the rules of Article 31? I should say "No", because, as I said before, it remains a private enterprise and is, to some extent, a victim of its Government, in that it is forced to execute a given programme. I think we must not, in Article 31, think of the case of a monopoly, which is the object of Article 32, although a monopoly is a special case of a privileged enterrprise. I think Article 31 has a much more general application and is different from that mentioned by the delegate for Belgium - 12 - E/PC/T/A/PV/15 M. DESOLEE (Belgium) (Interpretation): First of all, Mr. Chairman, my amendment and my statement only applied to Article 31. Secnudly, as to the example given by the delegate for France, I think if a Government imposes a certain manufacturing programme it may be a sort of disoriminatory order, because they may specify the exact kind and nature of the material and goods to be obtained which enter into that manufacture. In that case it may be imposs- ible for the enterprise cooncerned to purchase goods in a certain country. It would therefore be a discrimination which, however, will not result in difficulties for the enterprise but as it is a governmental Act it would come under the application of Article 15, section A of the Charter. If, on the other hand, this is done not by law but by control, and some discrimination is made without any commercial aid, then the enterprise would be penalised according to Article 31. M.C.IGONET (France) (Interpretation): I understood that in his first statement the Belgian delegate insisted on the consequences of the monopoly. Therefore, I :n.ide my remarks because monopol--. are dealt with in Lrticle 32. To revert to the example I Pave a moment ago, it is a fact that If _ Government by virtue of a general law imposes a programme, it implies naturally a specification of the material in kind, quality and quantity. This does not mean the enterprise is obliged to supply itself iln a given country. It will. be able to choose its source of supply. If, how- ever, it is understood that Article 31 applies to that enterprise, the remark I made yesterday that the application to a Stste enterprise should be of the same nature as that for any private enterprise applies even more strongly. Therefore, the rule of non-discrimination men- tioned in Article 31 should not necessarily apply to private enterprise. It would be bettor not to mention a rule of non-discrimination in - 13 - E/PC/T/A/PV/15 Article 31 and to confin ourselves to making a statement saying that enterprises receiving a special privilege should always be considered as private enterprises. CHAIRMAN (Interpretation): I think we can pursue this debate in sub-committee, and will ask the other delegates who have amend- mants to propose to take the floor; they are the delegates of China, Chile and Czechoslovakia. Dr. T.T. CHANG (China): It is not so much a matter of inclusion in the ageanda as one of custom. We prefer alternative B. to alterna- tive A, because our understand of the wording in alternative B is that privileges granted to enterprises may be withdrawn, and yet a Government will legally be able to exercise control. In alternative B we propose an amendment to insert the word "member" before the word "Government." M. J.A. MUNOZ (China): There is little that I can add, as this moment, to the comments which appear in Document W/192, which explains the reasons for requesting an addition to this sub-paragraph, whose object is to define to what enterprises Article 31 shall be applied. Our amendmert is not a modification of substance, it is merely a clarification which we feel is necessary for the smooth working of the Charter. I would, however, like to madke a few additional remarks and, i with your permission cite a concret ..z:.1 i in order to explain our position in regard to this Article. As my fellow delegates will know, Chile is the only producer and exporter of Natural Nitrate of S-,da. This is one of the principal industries of my country. E/PC/T/A/PV/15 The sales of this product, by virtue of a very special Law of the Republic, are made exclusively through a Corporation, called Corporation de Ventas de Salitre y Yodo de Chile, created by this Law. The Chilean Government has not subscribed any capital to it, but as it is a basic industry of the country, whose national economy largely depends on the degree of prosperity of that industry, the Government exercises over it a certain measure of control, which in no way is total or absolute. This Corporation also receives from the Government certain special privilegs - not to export or produce - but in recognition of a percentage of its Profits. The external sales of this Corporation are influenced solely by commercial considerations, as in order to place its product in the different world markets it must meet an acute competition from synthetic products, and thus it fixes its .S sales prices according to the conditions of supply and demand in each market, in other words, in the same way that any private company would act. Can a Corporation, such as I have briefly described just now, be considered as a State Enterprise for the effects of Article 31? We feel that it is impossible to so consider it, when the Laws of its own country do not. However, by the present wording of paragraph b, it could well be considered as a State Enterprise inasmuch as it does receive certain privileges from the Government, and the Government exercises a certain measure of control over it. It is for this reason that we are very interested in clarifying the exact meaning of this paragraph. We interpret the words "effective control" as meaning a total and absolute control over the commercial activities of an enterprise, and that is why we have not made any comment on this expression. If this is not its true significane, we would very much like to see this point more full discussed, either by this - 14 - JT. E/PC/ T/A/PV/15 Commission or by the sub-committee. It could be argued that such a Corporation as I have just described has nothing to fear from the provisions of Article 31, if its external sales are guided by commercial considerations. But we do not think this is enough, and that it is necessary to find a more appropriate wording to paragraph 3, which will leave no doubt anybody's mind as to what is, or what is not, a State Trading Enterprise. To sum up, Mr. Chaorman, our Delegation is of the opinion that a State Trading Enterprise should be considered as such only when a Member Government participates in more than 50% of its capital, and therefore is in a position to control its commercial activities absolutely. If a Member Government does not participate with any capital in such enterprises, and does not exercise absolute control over it, even though it receive certain special or exclusive privileges as recognition of a participation in the profits of the said enterprise, then such an enterprise cannot be considered as a State Trading Enterprise. ~.- CHAI1iL& (Interpretation): The delegate for Czechoslovukia. H.a M z. AUGTTHALER (Czechoslovakia): r. Chairman, I am afraidbwe are not so lacky about definitions. When we were studying this Article, we had the feeling that the definite on of St-te Enterprise is alrendy at the beginning of Article 31, a-d so we had t3e feeling that veeneed no paragraph b at all, nor do wo need the Alternative A and B. I admit that one day there may be some cases which would not exactly fit into it. If we try to define anything which may happen in ten or twenty or a hundred years, we could sit here as J. - 15 - J. -16- E/PC/T/A/PV/15 long. So, we thought that it would be better to delete entirely paragraph 3, and I think that our American colleagues were more or less of the same opinion. We will have ITO and they will always have the opportunity to decide if there are certain cases where somebody will say "It is a State Enterprise" and we will say "It is not". It will be the Executive Board or the meetings of the ITO that will decide afterwards. I thank you. G. CHAIRMAN: The Delegate of the United States. Mr. EVANS (United States): Mr. Chairman, in view of our state, preference for alternative (B) I should like to speak not to the wording of the various Amendments that have been submit; -ed, but to the substance of what the United states thinks is required in this Article. As we understand it its purpose is to cover those cases where a Government has in effect created an agency which may or may not be a State enterprise as popularly understood. If the Government, through the exercise of its internal power, can set up any kind of enterprise, whether it is labelled State enterprise or private enterprise, whose operations in effect would make the provisions of other parts of Chapter V inoperative, in our opinion the State concerned has an obligation to see that the operations of that enterprise are carried out in conformity with the provisions of Article 31. In the cases which have been mentioned by the French Delegate and the Chilean Delegate, where an enterprise is in fact carrying out its external operations according to commercial principles, they surely have nothing to worry about if such enterprises are defined as coming within this Article. If they do not carry out their operations in that way, there is and should be (we believe there is in another part of this Article) an obligation on the part of the State to see that they do promote the provisions of Article 31. I think that there is a good deal of merit in the suggestion of the Czech Delegate that paragraph 3 be omitted, if the wording of Article 31 clearly indicates that the Member has an obligation to see that the enterprises which are mentioned in that Article - either State enterprises or monopolies created by the State - are carrying out the provisions of the Article. -17- E/PC/T/A/PV/15. G. - 18 - E/PC/T/A/PV/15. CHAIRMAN: The Delegate of Canada: Mr. DEUTSCH (Canada): Mr. Chairman, like the Member for Czechoslovakia, I also have some doubt whether it is necessary here to have an Article defining a State enterprise, because in paragraph 1 we say that either a State enterprise, or any other enterprise that imports, produces, etc., must adhere to the rule of non-discrimination. Well, in our general structure here we place enterprise either in the one category or the other. they are either State enterprises or they are not. In either case they must follow the rule of non- discrimination, so it does not seem necessary to define what the State enterprise is, because in any case it must, if it is not a State enterprise, follow these rules; so unless we can easily find a definition I do not think there is much to be gained by trying to establish one. CHAIRMAN: The Delegate of Chile. Mr. MUNOZ (Chile): Mr. Chairman, I find myself, without wishing to pronounce myself at this present moment, in certain sympathy with the suggestion of the Czechoslovak and U.S. Dlelegates, and I also agree with the Canadian Delegation, that the exact definition of a State enterprise is going to be very, very difficult to find. Perhaps you Could find a happy solution by dropping this paragraph 3 if it would meet the case. I think it is not a bad suggestion at all, but one which could be considered by the Sub-Committee. CHAIRMAN: The Delegate of South Africa. - 19 - Mr. HOLLOWAY (South Africa): Mr. Chairman, I think we must ask ourselves if we are to have a definition at all what the purpose is. We attempt to lay down in this Article that State enterprise to be defined - must follow the rule of non-discrimination. I do not think we say that anywhere about private enterprise. That for two reasons. The one is that Members are States, and not privatee people; and secondly, I do not know how anybody is going to prevent, let us say, a cigar- importing firm in the Union of South Africa from preferring to import cigars from Jamaice rather than Cuba; even if the Cuban cigars are better and cheaper, just simply because it prefers to do that. How are you to stop it? Can anybody here on behalf of his Government undertake to do that? It would be to our mind perfectly silly to stop it, and we do not attempt to stop it. We assume that is private business people will be guided by ordinary commercial considerations, and therefore we do not consider it necessary to make a rule. The position, however becomes some what different when it is a State enterprise, because after all a State is influenced in quite a large proportion of cases by commercial and non-commercial considerations, and most States, in the nature of the beast, are guided by non-commercial considerations; and therefore there is some reason for making a special rule for State enterprises. Now, we set about defining State enterprises, and because it is a difficult thing, we do it at various places. We start in the very first lines of Article 31 by saying, "If any Member establishes or maintains a state enterprise, wherever located, vwhich imports, exports, purchases, sells, or distributes any product". If we are not satisfied with that group we take a State enterprise, which not only exports or sells goods, but in addition to that "has exclusive or special privileges". Now I want you to imagine that if you add only the second clause, it is a sufficient definition. V - 20 - E/PC/T/A/PV/15 But when we come to paragraph 3 we try to re-define those that have exclusive or special privileges, but we have forgotten the first lot altogether--the lotthathave got to be defined: those which are created by the state, which can do business but which have no exclusive or special privileges. There are plenty of such Organisations--we have some in our own country and I think most of you have them. Those are the people you want to define under paragraph 3. Now, in defining them - focus your attention on the word "define", that is, put a limitation - do you want to put a narrow limitation for the purpose which you have in view, or do you want to put a wide limitation? If you require to put a narrow limitation for the purpose you have in view, then, of course, there must be some purpose to be served in cutting some of them out, but obviously you want all those in that can be influenced by the state to act in a way which is not a commercial way, so that you do not want the most narrow limitation: you want a rather wide limitation. On the other hand, you do not want to make your limitation so wide that it includes organizations which you cannot control. Let us try and test some of these definitions by that. The original New York Draft applies to any enterprise, organ or agency in which there is effective control by a Member government. Ask yourself immediately how much control and what nature of control? You are allowed under the Charter to maintain import control or exchange control. Is that the sort of control that is intended here? It can be perfectly effective, but it applies to a very large number of organizations which go quite beyond what you intend. An attempt to meet the difficulty has been made in Alternative A, which does not speak only of control, but E/PC/T/A/PV/15 control over the trading operations; but, in the same way, the control over the trading operations is carried out by your exchange control or your import control. Alternative B has the same thing, and both A and B define the second class, those that have exclusive privileges, and do not define the first class the only class which requires to be defined. It seems to me, Mr. Chairman, that the control which has got to be exercised in this Organization that is created by the State is to be a control or a right of control over the management,not the trading operations. "The trading operations" is too wide a term. The Government must be able to step in an say "You shall buy in Market A in preference to Market B, because we want to remain on good _ _ _ .-... . terms with the "eople in Market A. Then you are introducing a non-commercial element in it, so you must define them with some regard to the management - to the ability to give an order to the Or4anization as to how it shall buy, or if necessary, how it shall sell. I think that is an essential part. The other point on which various drafts have been tried is whether the Government shall exercise it, or whether it shall have the right to exercise it. It seems to me that it does not matter in the least whether the Minister in charge of the particular operation does actually approve of any particular opegation. The Oreanization may go perfectly well, and carry out what that Government wants, without placing commercial considerations first, without one word of interference from the Minister. As the English saying goes, "a nod is as good as a wink to a blind horse". Algernatively, the Or-anization may be applying only commercial considerations, and the Government of that country may want it - ?- V E/PC/T/A/PV/15 to apply only commercial considerations, and has no reason to interfere so that actual interference is an accident: the essential part is the right to interfere. It does not matter - coming to the last point of the various definitions in which there is an attempt to bring in words which may or may not be necessary -it does not matter in the least for what reason the Government has that right to interfere. It may have a purely arbitrary right to interfere. Whether it is by virtue of the special privileges or not by virtue of the special privileges, or simply because that is the law of the country, it is the right to interfere, the right to deviate away from commercial considerations, which makes it essential to make a special rule for the state trading operations; and so long as you have got those points fixed, then it seems to me you are covering all the definition, and I think that definition is necessary to define these people who may act for non-commercial reasons from those who would normally act for commercial reasons. V. - 22 - E/PC/T/A/PV/15 Mr. L.C.WEBB (New Zealand): Mr. Chairman, I just wish, on the assumption that this is going to the Sub-Committee, to draw attention to one point. We have no strong views as to whether or not the definition of a state trading enterprise becomes a third paragraph or is left to be dealt with in the first few lines, though we think that probably your suggestion is quite a good one. I would just like to point out that, in the London Draft, the words in the definition on the first few lines of Article 31: "and exercises effective control over the trading operations of such enterprise" were put in square brackets after some discussion, and in the New York Draft, the problem was solved by removing those words down to the Alternative, so that the position is explained quite fully on page 17 of the London Draft. I just wish to point out that, if we are considering leaving state enterprises to be defined in the first few lines, the Sub-Committee would necessarily have to take into consideration the question as to whether those lines in square brackets in the London Draft should go back again. - 23 - E/PC/T/A/PV/15 CHAIRMAN (Interpretation): If no one else wishes to speak, we can refer the matter to the Sub-committee. We will pass on to Article 32 - "Expansion of trade by State monopolies of individual products." On this Article we have a set of amendments. We have a Czechoslovak amendment which proposes various changes in the text of the Article, and we have a United States amendment which proposes an alteration in the text of Paragraphs 1 and 2 and the deletion of Paragraphs 3 and 4. We have a Netherlands amendment which proposes the addition of a new paragraph. Finally we have a Chinese amendment, which is of a much less radical nature. I will give the floor in succession to the authors of these amendments, beginning with the Delegate for Czecheslovakia. H.E. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, Gentlemen, when we are discussing this Article we are dealing with an extremely difficult matter which is not at all clear. As I have said already, the programmes today are not clearly defined. For instance, when I have to deal with, say, the United States, it is for me a scarce currency, so I cannot buy more than I am able to earn by my exports into the United States. New when I have only a limited sum at my disposal I must, of course, have a list of priorities. I cannot say exactly how much it will be; it will be dependent on the results of my exports. If I were to try to buy more than I could afford, I should be in the position of a private company trying to buy more than its means allow it. Such a company would very soon become bankrupt and maybe even incur some penal sanctions. States are not generally expected to act on the same principles, but they should do so. S - 24 - S - 25 - E/PC/T/A/PV/15. In that case, I doubt whether there is any good reason for adding detailed provisions regarding this Article, because it may work only when the other conditions are quite different from those we are experiencing today. Conditions may be different in a few years - not as soon as we would like - but still we do not know today what those conditions might be, and that is why we thought it bettor to have a short general provision. Now I will come to some details which are in the Lundon Draft. There are first some special provisions for export monopolies. It may be only the case of a country which has not only the home monopoly but which has a monopoly of the world market, because otherwise this country tries to export, and I do not see why this country should make some special difficulties in regard to exports. As regards the import side: we have thought very hard about the programme of negotiated margins and we have found that it is hardly possible. Let us take the following case: suppose that I have some State monopoly for, say, wheat, The Government would decide that I should pay some fixed price, some stable price, to the producers, just to keep stable prices and stable revenue to farmers. Let us say that this price would be 400. When I am negotiating the margin it could be, for instance, 30 per cent below the price. In this case I would be negotiating with the supplier at a price of 240. Possibly this price is not the world market price. I am not acting according to commercial considerations. If I do it with one country I may be discriminating against other countries. S - 26 - E/PC/T/A/PV/15 If we take the opposite point of view, I should say I will buy at the world market price plus, say, 30. So it would be 300 plus 30, which is 330. Then it would not always be the same price; it would go up and down, and the whole policy of a stable price will be destroyed. If we take another aspect, we come to certain results which are either contrary to the Charter or destroy entirely the whole policy probably voted by the Parliament, That is why we thought that, in general, negotiating the margin would not be practicable. It is quite possible that we may negotiate the total quantity of a commodity, but maybe there are other possibilities too. That is why we thought it better to leave in this Article only a very general definition and to await future development, especially when there will be no scarcity of free currency and when there will be no shortage of certain commodities. When we were proposing this change, it applied only to Paragraphs 1, 2 and 3, but we even thought it touched Paragraph 4. E/PC/T/A/PV/15 CHAIRMAN (Interpretation): Dues the United States delegate wish to present his amendment? Mr. JOHN W. EVANS (United States): The general purpose of the United States amendment was to bring about more effectively than the earlier draft the balance which we considered it was intended to create between the obligations State Trading countries and the obligations of countries who carry out nearly all their trade through private enterprise. The first paragraph in Article 31 really parallels the most- favoured-nation principle. It was in our understanding of Article 32 and Article 33 that it would parallel the provisions in Chapter V calling for negotiations in order to increase trade. Our analysis of Article 32 fell somewhat short of that goal. In the first place. the requirements for negotiation on protective margins on resale by State oresated monopolies, while excellent in concept and we think very practical in most oases, was too rigid to fit a number of situa- tions in which we should like to negotiate with a country maintaining such a monopoly. The simplest example of that I have in mind is the case of tobacco leaf imported by a monopoly which manufactures and sells cigarettes. In the first place, the wording of the formula quite clearly does not fit that case, because it refers to the resale price of the imported commodity. It makes no allowance for the possi- bility that the commodity may be mixed with another commodity, or that it may go through certain processing. Even if that were taken care of, we can visualise other situations where a State-owned com- pany-which is, in effect, a monopoly on the importation of a particular raw material - because it is a monopoly of the manufacture and domestic sale of all the products made from that raw material - may be making dozens or even hundreds of articles out of the raw material itself. How we can negotiate marginal proferences under these circumstances I do not know. Our purpose in this amendment was - without diluting at all the obligation of countries which maintain such margins to enter into negotiations - to create more flexibility, and the possibility for a request to be made by the exporting countries along other lines. J. - 28- E/PC/T/A/PV/15 One of those lines suggested is the local purchase commitment, but because we were not sure that that would cover all the remaining cases we also included a general provision for negotiations of any other arrangement which would serve the purpose which the exporting country considers desirable and which would meet the purposes of the Article. Now, that is the general concept behind our amendment , but there are one or two more detailed remarks that I think might be worth making. In the first place, it will be noticed that we have retained the provision for the negotiation with respect to export commodities. Mr. Augenthaler has raised a question as to whether that is necessary. We believe that it is. There are elsewhere in the Charter,provisions which require that countries which maintain export taxes on raw materials -raw materials are not specified, but export taxes - shall open those up to negotiation in the same manner as import duties are negotiable. It seems that the a parallel of that situation, in the case of state monopoly or a state trading country, is in negotiation for increasing the exportation of the commodity concerned. It may be a raw material needed by the manufacturing industries of other .countries; it may be that a restriction on its export would have the effect of protecting the manufacturing industry of the country in which the raw material is produed provided it has anything like a monopoly. The purpose of this provision, we think, is quite clearly to place such a. country under- the same obligation as other countries when they negotiate export dutios. . - We flieved that mt..ollowged, fmen meur lenthy a dndsnt to the-first-twoepAragcphs of t t ctiode, uhat.we.ooula q1ite* properly 3 anp paragraphs4z3id par66raph '. In the case of paragraph S, the purpose before, unde the vary rigid. formula for - 29 - E/PC/T/A/PV/15 the negotiation of marginal mark-ups, was to assure that that negotiation would really have the effect intended by the exporting country which was carrying out the negotiation. Clearly, there is no gain to the country so negotiating unless its product has, as a result, been offered in the domestic market for a lower price in unrestricted quantities. Otherwise, that lower price does not increase its exports. In view of the more flexible provision for the negotiation of those margins in our amendment it seems clear that that is a provision which the exporting Member would himself include, if it were necessary and desirable, in his individual negotiation. The fourth paragraph again appeared to us to be unnecessary in view of the fact that these considerations mentioned in paragraph 4 are only some of the considerations which would necessarily enter into any negotiation. There seems no more reason for specifying hare that the revenue nature of the monopolies should be considered in this negotiation, than to provide similarly that revenue tariffs should be considered in a separate clause on negotiating tariffs, nor does it seem to us to be necessary to add any other of the numerous considerations which have been suggested for that paragraph. E/PC/T/A/PV/15 CHAIRMAN: The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): Mr. Chairman, I should like first to say I entirely agree with the observation made yesterday by Dr. Augenthaler when he said State-trading should not be regarded as a new form of proluotion. It is, in fact, we think, as he said, just a new method of trading. On the other hand, we also agree with an observation made yesterday by the Canadian Delegate that there must be some rules to govern the activities of State-trading enterprises in mixed economy countries - what is called 'single product monopoly' - and that these rule s should be as closely analagous as possible to the rules which were established elsewhere for private trading. Well, I would turn now to the United States Amendments to paragraphs 1 and 2. What I am going to say, I think, applies also in a considerable measure to the Amendments presented by the Czechoslovak Delegation, although they are shorter and simpler., but I think my remarks will equally apply to them - at least, also, to a large extent. I would like to say in regard to the United States Amendment that to us it seems a little unfortunate that such very extensive Amendments should have been presented to us at such a late stage. We have had this scheme of negotiation of margins before us ever since the London Conference, and the matter was very carefully thought out there. These Amendments attempted in way to merge the provisions of Article 33, which deals with he complete State trading country, with those of Article 32, which are meant to cover the mixed economy, or to give it its alternative name, the single-product State-trading country. Now we feel that this attempt to merge Article 33 with Article 32, which is the result of bringing into Article 32 G. G - 31 - E/PC/T/A/PV/15 the concept of negotiating about quantities, will make for some complication and considerable confusion. It seems to us that there is an essential distinction between the two Articles. Article 32, as I have said, is meant to deal with the mixed type of economy, where only a limited number of products are covered by State trading, and where for the rest trade is carried on on a private basis. In a country on that kind, considerations of costs and prices are equally applicable to the State trader as to the private trader. Article 33, on the other hand, as I have said, is meant to deal with the complete State-trading economy, which is quite different, because it seems to us that even for the goods of the complete State-trading economy, the method of negotiating about quantities seems a very doubtful way - we doubt whether it would be at all suitable or feasible. When one comes to apply to the single product type of State-trading, if it were to involve, as the U. S. Amendment seemed to have contemplated, a kind of global negotiation between the State-trading country on the one hand and all the other interested countries on the other, then it seems to us that the procedure will be impossibly cumbrous, and we think it is certain that it would never work. Moreover, negotiations about quantities will have no meaning, unless you also negotiate about prices. That point, I think, is recognised in the Czechoslovak Amendment, which says that in order to assure exports or imports of the monopolised product at reasonable prices, these negotiations shall be carried on. They are cases where you have to deal with prices at the same time as you are dealing with quantities. G. - 32 - So what we should be involved in would be a series of global negotiations with any of the interested countries to cover the whole field of quantities and prices, and that we are quite sure would be impracticable. If that would be the method we followed here, to cover the case of the single- product State trader, to form a counter-part for tariff negotiations for private trade, then we think it is a foregone conclusion this side of the negotiations will never be carried through, and the Committee's work will, in fact, be frustrated It also seems to us that even if such negotiations do succeed or result in an undertaking by the State-trader to take care of a particular commodity, then so long as the State- trading country's external purchasing power is limited, the effect would be that in proportion as it bought more of the product about which negotiation had taken place, it would have to buy less of other products. That, of course, would have to apply particularly to competitive types of products. Let us take an example. If the State trader were to undertake to supply oil, we would have to buy less seed, and so on. If we are to obtain useful results from this Conference, the principle of the existing Draft of Article 32 must be maintained That is to say, these negotiations should be as near as may be to the exact parallell of the tariff negotiations under .... ....,,thin Article 24. In this way the negotiations would be kept within manageable dimensions. We have hears it argued that the methoC of negotiating margins, as contemplates in Article 32, is impracticable in cases where, for example, the State monopoly mixes products, or prices of products, before selling to the home consumer. We are not convinced that such cases present any insuperable difficulty. If so, we will have to meet the difficulty when it arisedraThe exAsting ir ft of _rticle 32 already makes v or, AL n/, - 33 - provision for such cases in its definition of import margins; in paragraph 1 (1) it provides for due allowance to be made for internal taxes, transportation, distribution and other expenses incident to purchase, sale or further processing, and for a reasonable margin of profit. I would like to call special attention to the reference to processing, and also for a reasonable margin of profit. So it does seem to us that all these contingencies have been provided for. It may be said, indeed, that the data about costs and so on which would be necessary to enable these allowances to be calculated would be lacking; but we cannot believe that that would be the case; for these are just ordinary elements of commercial cost, for trading enterprises, whether State or private enterprises. A monopoly must know all about such things as the relative cost of the various types of tobacco it makes, or the cost of making tobacco up into cigarettes; or if it is a case of wheat, the cost of milling the wheat. The business will know the cost of such things, and it seems to us that problem is simply one of accountancy. So it seems if to us that/there is the necessary willingness to disclose data, it would be possible to observe the margins. V E/PC/T/A/PV/15 All state trading organizations would be prepared to produce the necessary data, and we assume other government trading organizations would similarly be willing. Another argument which may be used, and has been used, is that the variety of prices and fluctuations of price of different parcels and consignments of an imported commodity would be such as to make it impossible, under present-day conditions, to observe the margins. We do not think that this argument holds, because quite clearly it will be necessary to allow for averaging between the prices of diffrent parcels and different consignments. The last sentence of paragraph 1 of the Article does already provide that in applying a margin, regard may be had to landed costs and selling prices of the monopoly over recent periods. That covers averaging in time and, incidentally, averaging in time will go a long way to meet the difficulty about stablization to which Mr. Augenthaler called attention. If you can average over a year or two, that will do a great deal to flatten out the ups and downs and curves of prices. That is averaging over time. In addition to averaging over time, there needs to be averaging over consignments. I think the drafting is a little deficient there - that could easily be put right. We do not pretend that within any given annual period it would be possible to ensure that the negotiated margins could be precisely observed, but we do believe that they could be observed in a general and approximate way-that that would be quite feasible. I would like to refer to one or two other points made particularly, I think, by Dr. Augonthaler. First of all, he mentioned the difficulty, under present-day conditions, that many countries which go in for state trading are short - 34 - E/PC/T/A/PV/15 - 35 - of exchange and that therefore they must exercise a very close discretion over what they buy. Well, as to that, I entirely agree; but that, I think, is quite a different problem. If you will look at Article 26 which deals with the problem of balance of payments difficulties, you will see at the end Paragraph 7 it says "Throughout this Section the phrase 'import restrictions' includes the restriction of imports by state-trading enterprises to an extent greater than that which would be permissible underArticle 32U. In other words, the state-trading enterprise can do just what, under private trading, would be accomplished by means of import restrictions for balance of payments purposes. That, I think, is the answer to that problem, whether there be negotiations about margins or whether there must not be. Another point which is raised by Dr. Augenthaler was the case where the state-trading country desires to assure stable prices to its home producers. Well, that it could do in any case. The negotiation of margins would present no difficulty because all that the negotiation of margins involves is that there is to be a selling price which is, shall we say, "x" above the buying price. It says nothing about the price which you pay to domestic producers, and if the state-trader cares to pay more to domestic producers than the selling price, he can perfectly well pay a stabilised price all the time. It is, in effect, a variable subsidy which keeps the price to producers stable Well, we feel, in short, that the problem of the state- trade; who trades in only a limited number of Products in what is otherwise a private trade economy must be kept quite distinct from the case of the complete state-trader. They are not comparable and must be dealt with by different methods. V E/PC/T/A/PV/15 -36- The idea which is implicit in the present Article 32,which would assimilate the obligations to be entered into by the partial state-trader to those which would be entered into by the Governments of private trading countries, seems to us to be right one. On one or two minor points, we feel that it is rather regrettable that the United States amendment drops the existing Paragraph 3. Under that paragraph the state importing monopoly is required, subject to certain conditions, to satisfy domestic demands. That provision is, in fact, the counterpart for the partial state-trader of the obligation which is laid upon private trading countries by Article 25 to renounce in general the use of quantative restrictions on imports for protective purposes. If there were not a provision about satisfying demand, the door would be open to use state-trading as a means of applying quantitative import restrictions for protective purposes, and one of the main safeguards against using protection in that way would be removed; so to resume, I would say that in our view, it is essential that the case of the partial state-trader under Article 32 should be kept distinct from that of the complete state-trader under Article 33, and to blur that distinction would lead to confusion, and we are afraid that these negotiations about quantities and prices would simply result in frustration of the negotiations. We think that the present scheme of Article 32 should be kept. D/PC/T/2/PV/15 V. - 37 - S E/PC/T/A/PV/15 CHAIRMAN: Mr. Deutsch. Mr. J.J.DEUTSCH (Canada): Mr. Chairman, the Canadian Delegation fully supports there marks just made by the Delegeate of the United Kingdom. Like him, we agree that the amendments proposed by the Delegations of Czechoslovakia and the United States would introduce a whole range of new considerations into both our tariff negotiations and the substance of the Charter. As was said yesterday, the Charter must accommodate the differing situations between countries whose trade is conducted largely through private enterprise and countries whose trade is conducted under a mixed system, and it is important, in that accommodation, that the balance is maintained - the balance of obligations and benefits. We cannot here write a Charter that does anything else. Under the Charter as it now stands - as it came out of the New York Committee - countries are required on request to negotiate their tariffs, and that is particularly applicable to countries whose trade is conducted largely through private enterprise. In other words, they are required to negotiate the protective margin that is afforded to domestic producers and therefore it would seem correct that countries using State trading enterprises should likewise, in a similar manner, be require to negotiate on request the protective margins which their monopoly operations provide. The amendments that have been proposed, however, make a rather drastic change in that situation. Under the amendments suggested, countries maiatiaining State enterprises may negotiate about quantities. That is not the case with respect to the negotiation of tariffs. The Charter says negotiations must proceed on the basis of the protective margins as provided by a tariff. S - 38 - E/PC/T/A/PV/15 There is no possibility of negotiating quantitative amounts. The Charter does not, as it now stands, permit that. It does not envisage that. Whereas, with these amendments, as fur as State enterpises are concerned, we introduce now an entirely new principle. We agree with the Delegate for the United Kingdom that that is a substantial change and one which is rather difficult to comprehend, coming at this late stage. The Delagate of the United Kingdom has stated the implications of this proposal. It would mean - in the case of an importing country, say, which maintains a State enter- prise monopoly - negotiating quotas, and a country requesting those quotas would be negotiating on behalf of all the countries that are interested in the export of that item. Furthermore, it would moan the establishment of minimum quotas; in other words, the importing country would undertake to take a certain amount of a commodity. Clearly, countries cannot make such undertakings unless they know the price at which those minimum amounts will be bought. Dr. Augenthaler's amendment clearly recognises that. Then the negotiations take on an even wider and more complex character. We are negotiating quantities and we are negotiating prices. It seems to me that the bilateral procedure for negotiating tariffs is completely inappropriate to that kind of negotiation. We are negotiating quantities and prices. That is not envisaged in the usual bilateral tariff negotiations as we understood it. We feel that that type of negotiation falls properly under Chapter VII. Chapter VII is designed to take care of that type of situation and certain conditions are laid down and certain procedures are specified for the conduct of - 39 - S E/PC/T/A/PV/15 negotiations of that type, and they are procedures which are entirely different, or appropriate to bilateral tariff negotiations. Furthermore, before the procedures of Chapter VII can be used, certain conditions have to be complied with, Now it appears that those conditions do not apply in the case of negotiations regarding imports by a State monopoly. You deal with the same matters in the quantitative control of imports, the quantitative allocation of imports and prices and matters of what kind, but now you do it under the pro- cedure of tariff negotiations under Chapter VII. There is a basic inconsistency there in the substance of our Charter if we adopt this procedure. L. - 40 - E/PC/T/A/PV/15 One of the reasons that has been advanced for introducing this idea of negotiating minimum global imports is that the present provisions in Article 32 are not practicable to cover every situa- tion,and various technical difficulties have been suggested. Mr. Shackle has, I nelieve, answered effectively those technical difficulties; one mentioned by the delegate of the United States was that in cases of commodities that are imported by a monopoly and are mixed and processed and then sold, it is very difficult to determine what the margin is. I think Mr. Snackle has stated that the present Article 32 does envisage recognition of the situation that arises when commodities are imported and are further pro- cessed and then sold. I He has indicated that the margin shall take account of the fact that processing and distribution costs have been added, and it is not intended to lose sight of those factors. In any case those are determinable factors, they are a matter of costing. Even if this difficulty could not be easily overcome, we feel there are other ways of overcoming it. In the case of an item that is imported and then is blended with another item and sold as a definite product, if there is any great difficulty about determining the difference between the ultimte selling price and the buying price, we feel that situation could be met in another way. In that case all you would need to do would be to determin the margin between the buying price of that raw material, the import- ing price, and the price paid to the domestic producer for that same raw material. You would avoi .--hen the problem of processing, etc. If the present Article is not drafted exactly to meet that situation, it could meet it, because in that way you would be aiming at exactly the same principle, namely the protection afforded to - stic . producers. If there is no domestic production of course the problem of production of domestic producers does not arise. L . E/PC/T/A/PV/15. If it is impossible to determine the margin between the buying price of the imported product and the selling price of the resulting product, you could do it by means of a subsidy. Subsidies are, of course, allowed under the Charter. We see no insurmountable difficulty here to enable us to reach the exact equivalent of a tariff negotiation. There has been some difficulty made about the problem that arises in a country that follows a policy of stable price. Wheat has been mentioned. A country may have a programme of a fixed price for its domestic producers and a fixed price for its domestic consumers, and it has been suggested that if a margin is negotiated, fixed that/price policy cannot be followed, because the domestic price- would be tied to a fluctuating external price. Of course that does not necessarily follow. We are here negotiating the maximum margin only in the first place. A fixed price below the maximum margin can still be followed and it is still possible to average it . Some- times you will buy at a price abroad which is lower than your own price; at another time you will buy abroad at a price which is higher than your domestic price, and by a process of averaging, you can still maintain a stable price. At what level that stable price shall be depends of course on the size of the margin, and that iss where the question of negotiations comes in. How high is that margin and consequently how high is the stable domestic price ? This is a matter which is fully provided for in Article 32. It does refer, as Mr. Shackle has pointed out, to an average margin over recent periods, and within those provisions it is possible still to follow a stable domestic price. The height of that price will depend upon the height of the margin, but that is precisely what we are negotiating about. As Mr. Shackle has also suggested, there is L. - 42 - E/PC/T/A/PV/15 always the possibility of a subsidy in case the margin does not allow the maintenance of a domestic price as high as the country would like. Between those two possibilities we do not see any fundamental conflict necessary between this idea in the present Article 32 and the adoption of a stable price policy. I would like to emphasise again, we think the suggestions proposed in both the Czechoslovakian and the United States amend- ments makes a very fundamental change in both the tariff negotia- tions and the structure of the Charter. Therefore, we feel very strongly that we should stick to the principle now contained in Article 32; this we feel is the only way in which we can maintain that balance between countries which conduct their trade through private enterprise and those whose trade is conducted in other ways. J. - 43 - CHAIREMAN (Interpretation): Mr. Augenthaler had asked to speak. M. S. MINOVSKI (Czechoslovikia) (Interpretation): Mr. Chairman, I am sorry but Mr. Augenthaler was obliged to go, having to catch a plane to Prague at six o'clock. He is very sorry, therefore, that he is not able to take the floor again on this question. I would merely add a few words. We should not forget that countries such as Czechoslovakia are obliged to negotiate on tariffs,quantities and prices. We are only offered negotiations on tariffs, and sometimes we are offered redustions on tariffs, which is not sufficient to meet our case. CHAIRMAN: Mr Evans. MR. J.W. EVANS (United States): Mr. Chairman, it seems quite clear from the remarks of Mr. Shackle and Mr. Deutech that the objectives for this state trading section of the Chartor desired by their delegations are identical with the objectives which we desire. That being the cases I feel that it would be inappropriate for us to attempt to answer the arguments which they have raised without very careful consideration, and we intend to give them that csreful consideration. I do, however, want to correct what I believe are likely to be two misapprehensions which may be created by, in one case, a remark of Mr.Shackle's and in another case, a remark by Mr. Deutach. It was not the intention of the United States amendment to - and I do not think that it did actually - lift the provision tentatively it provided for Article 33 and incorporate /in the new Article 32. As we understand the previous draft of article 33, it called for a the global negotiation by/state trading country of all of its E/PC/T/A/PV/15 J. E/PC/T/A/PV/15 imports from Member countries, the global amount which would represent its complete imports of all the products from those Member countries. That bears, I think, only a very superficial resemblance. to the provision we have placed in article 32, which is for negotiation product by products and, I might say, on a bilatorial basis not on a multilateral basis, which we felt, in cases where it was impossible to furmuate a request on the basis of the marginal mark-up,would be a better parallel for a tariff negotiation than no negotiation it all. G 45 E/PC/T/A/PV/15 The second point I would like to clear up is an apparent misapprehension on the part of Mr. Deutsch. He said that our Amendment provides that a State Member having a State enterprise may negotiate on the basis of the global quota. That was certainly not the intention of our language. It was our intention that the initiative should be with the exporting country, which is requesting a negotiation, that if that exporting country believes that it can provide for negotiation with an importing country, it should have the opportunity of requesting such a negotiation with the importing country. The alternative offer was an alternative to the exporting country to suggest other methods where it could see no value to it in the first type of negotiation. We will, however, go very carefully into the arguments of both the United Kingdom and the Canadian Delegations before replying any further. G . E/PC/T/A./PV/15 Mr, BOGAARDT (Netherlands): Mr. Chairman, before I comment on the observations made by the various Delegates, I am afraid l cannot avoid referring first to the Amendment proposed by the Netherlands Delegation on page 11 of the present document. I intended to make a very brief statement on the Amedment as to my opininon of the cases. Thare is a striking resemblence. Li t:;in the of subsidies a distinction is made between Iiscussions and negotiations on the bilateral basis and negotiations on the multilateral basis. I think that the same distinction should be male here. Now I think I have to give a background of our point of view. The Netherlands Government attaches great value to Commodity agreements. That is to say inter-Governmental arrangements on a multilateral base. We normally find ourselves in the same position as the Czechoslovak Government. We formed a price stabilisation scheme, that is to say, State monopolised changes. During the tariff negotiations we received a request to fix these margins to a certein limit. We explained our position in a paragraph to which I referred during the previous discussions. We cannot fix the maximum margin, for the world market price is an unknown factor. The Canadian Delegate referred to the average cost, but I do not think it will be a solution. I want to draw your attention to the price of a bushel of wheat in 1938, which was 8 dollars 5 cents, and now it is 3 dollars, So I think it is a very unwise move to try to fix the maximum margins before. Mr. Chairman, we tried to do our utmost to have a commodity agreement on wheat, and I think as a result of discussions the Difference between subsidisation and maximum monopoly margins should be avoided. Theref>re, 16T. Chairman, I tli, that tcne alment of - 47 - the Czechoslovak Delegate has many merits. On the other hand I feel no definite objections to the United States props proposal, subject to two observations. The first one is to draw your attention to the Amendments to which I referred previously. I think there ought to be some close reference in the text proposed by the United States Delegation. The meaning of that is to state clearly the difference between discussions on the bilateral and the discussions on the multilateral basis. The second point is more or less a drafting point, which is not quite the text of subparagraph (c) of the U.S. proposal. It reals: "any other arrangement to accomplish the purpose of paragraph 1 of this Article" - then comes to a full stop. I think a comma ought to be substitutes for the full stop, to make it clear that the proviso only refers to sub- paragraph (e). As far as I can see paragraph 2 is only an elaboration of paragraph 1 of the U.S. Amendment, and as the words "subject to the provisions of Article 31" are explicitly mentioned in paragraph 1, I do not think it ought to be repeated in paragraph 21. Thank you, Mr. Chairman. E/PC/T/A/PV/15 G V. 48 - iviI,,, CELIRMAN: (Interpretation): The hour is now late and we have no hope of terminating this debate tonight. I suggest, therefore, that we puesue it next weak. There is, however, a remark I would like to make on our programme for the beginning of nextLweek. Mr. lokanathan of the Delegation of India, who was Csairman of the Zub-Committee on Chapter 11, has to leave on Tue.day for India, He will come back, but would like, naturally, that the debate on the result of his work be discusped inchis zresenoe. I would, therefore, suggest that we study the report of the sub-Committee on Chapter III on Monday in Commission A. and that we pursue our work on Articles 51, 32, and 33 on Tuesday only. There is a difficulty in that Commissien Balso meits on Tuesday; but I see no other way of giving satisfaction to the request of the Delegate of India, and I therefore would aMk all the members if they agree to my proposal. Does everyone agAee? (,greed). The MeotinE is adjourned until next week. The Yeeting rose at 6.05 p.m. V115/A/A /PV/I
GATT Library
fd075rr6547
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifteenth Meeting of Commission B. Held on Thursday, 26 June 1947, at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 26, 1947
United Nations. Economic and Social Council
26/06/1947
official documents
E/PC/T/B/PV/15 and E/PC/T/B/PV/11-20
https://exhibits.stanford.edu/gatt/catalog/fd075rr6547
fd075rr6547_90250086.xml
GATT_155
13,586
83,130
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/B/PV/15 26 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT FIFTEENTH MEETING OF COMMISSION B HELD ON THURSDAY, 26 JUNE 1947, AT 2. 30 P.M. IN THE PALAIS DES NAIONS, GENEVA. The Hon. L.D. WLIGRESS (Chairman) N.B. It was not possible to provide verbatim recodr sof the Twelfth, Thirteenth and Fourteenth Meetings of Commission B (19, 24 and 25 June). Please refer to Summary Records E/PC/T//BSR/12, 13 and 14. Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247) (Canada) NATIONS NUIES E/PC/T/B/PV/18 CHAIRMAN: The Meeting is open. We will resume our discussion at the point at which we left off yesterday. That brings us to Article 72, Establishment of Commissions, and on pages 17, 18 and 19 of this Document W/210 Revision 1, we have, first of all, a comment by the Australian Delegation, suggesting the establishment of a Commission to deal with matters coming under Chapter III. There is a proposal of the Chinese Delegation to add a Commission on Economic Development; and the French Delegation also proposes an Amendment which provides for the establishment of a Commission on Economic Development and Co-ordination, and the United States Delegation propose the adding of a Commission on Economic Development and International Investment. The suggestion of the Chair is that the discussion should be opened on all of these proposals, and after a general discussion we should then refer the subject to the Sub-Committee to take into account the views expressed in the Commission. Do any Members wish to speak on these proposals? The Delegate of Norway. Mr. ERIK COLBAN (Norway): Mr. Chairman, I have no objection of principle to the establishment of a fourth Commission between the three mentioned in the New York Report, but I would like to draw the attention of the Commission to the difficulty in finding always the required experts, if we go on multiplying our Commissions, and even if we restrict the numbers of each Commission I think it will be very difficult to equip four strong Commissions properly, and I wonder whether the result aimed at could not be achieved by the GG 2 G 3 E/PC/T/B/PV/15 Executive Board inviting the persons with the required technical knowledge to enter into one of the three Commissions already mentioned in the Draft of New York. I quite realise the desre which already was strongly expressed in our London Session of having a special organ to deal with economic development and reconstruction; and I also realise the importance of the point brought up, I think it was, by the U.S. Delegation, of international investment; but would it not be possible by more careful handling of the staffing of the three Commissions already provided for to get in each one of those one or more Members with the particular technical knowledge of employment and economic questions, and of questions of economic development and international investment. I just want to warn against more or less carelessly trying to satisfy our desire for the strongest and best possible organisation by adding to the organs already contemplated, because, I repeat it, I am afraid we shall not be able to find the proper persons in all cases. The Organisations of the United Nations already have taken away so much of the expert knowledge at our disposal that it becomes more and more difficult to establish our Organisation on the proper basis, and we should not anticipate the Secretariat being also constituted not only of translators and document officers but also of persons having technical knowledge of all the problems the ITO is called upon to deal with, but trust for co-operation between the Members of the Commission, for a number are accepted to be holding quite important positions, and the Members of the Commission should make it less necessary to establish a separate Commission in addition to the -4- three already mentioned; but to follow out my line of thought it would then be necessary in some way or another to indicate in 72, perhaps, or may be in another place, that we take it that these Commissions will be staffed in such a way as to be able to take into consideration the complex problems of the whole of the Charter, while having the special task of looking at business practices or commodities and so on. V -5- CHAIRMAN: The Delegate of Australia. Dr. H.C. COOMBS (Australia): Mr. Chairman, the Australian Delegation has advanced a suggestion that a fourth Commission should be created, and I think in view of what I want to say subsequently, it would be as well for me to explain that we put that proposal forward for three reasons. First of all, because we feel it necessary that action arising out of Chapter III should be provided for in the administrative and executive arrangements. As we have emphasized, it is our view that a successful operation of the rest of the Charter is dependent very largely upon the successful implementation of the objectives embodied in Chapter III, and we feel, therefore, that this should be recognized in the structure of the Organization, particularly as many of the other functions which the Organization will have to perform will of necessity have to take into account considerations which will arise from the undertakings in Chapter III . In our opinion, there is practically no part of the Charter from which employment considerations can be excluded, or which have been or have to be considered against a background of a current employment and effective demand situation. Therefore, we feel it essential that the Organization should be adequately equipped on this side, just as it is proposed to equip it adequately in relation to the other parts of the Charter. We suggested a Commission, because that is the form which is established in the rest of the Charter for dealing with the other Q'-z.: - '. c the Charter. We felt that it was necessary to suggest a separate Commission, on the assumption that the Commission was to be the normal form of adminstrative machinery, E/PC/T/B/PV/15 V. -6- because, as the functions of these Commissions are outlined in the Charter at present, there is a very rigid separation of their functions. In fact, a Commission is, so to speak, handed a Chapter of the Charter and there is no indication of capacity on their part to deal with matters outside that Chapter, and consequently it would appear difficult to see what provision has been made in the Organization section of the Charter for dealing with the very important content of Chapter III. Now, I would say that we make this suggestion fully recog- nising the fact that the prime responsibility internationally for the content of Chapter III will lie with other international agencies; but, none the less, the I.T.O. will have its role to perform in relation to its subject matter, and we felt some provision for administrative machinery was necessary. The Australian Delegation, however, does feel that it is necessary to raise some of the same sort of doubts which the Delegate of Norway has raised in relation to the suitability of the Commissions as the appropriate type of machinery. The Delegate of Norway has raised it only in connection with the employment function. I trust you will forgive us, Mr. Chairman, if we raise a question which may appear to be somewhat fundamental, so late in the day. The only excuse we can offer is that it is a very difficult thing to consider organizational questions in vacuum. We have been a concerned primarily up to date with trying to determine what the functions of the International Trade Organization shall be, and the nature of the obligations which its Members shall undertake, and we, had for our part at any rate, have/little time to consider the suitability of the structure contemplated. But by a very hurried examination of it recently, we do feel some doubts about the suitability of the Commission form for the work which we E/PC/T/B/PV/16 E/PC/T/B/PV/15 -7- are going to call upon the I.T.O. to do. First of all, in many respects the Organization will have executive functions, and I think it is fair to doubt whether the type of Organization embodied in a Commission is always the most suitable for that type of work. A Commission is a suit- able body to carry out an investigation, to conduct an enquiry and to make a reportbut it is not a very suitable body for doing things. For instance, we have in mind particularly the Chapter which deals with industrial development, where it is the function of the Organization to assist countries to obtain advice - technical and professional and so on- in relation to their plans for industrial development. It seems to us, at a preliminary glance, that the type of Organization which would be necessary for that would have full-time employees of the Organization who were experts in particular fields; not that they themselves would provide the advice sought by the individual countries, but they would be familiar with the types of Organizations where it could be found, and perhaps even with persons in different countries of the world who might be able to provide it, and would be capable of carrying through the organization for the provision of such advice. I just give that as an example of what appears to us to be a need to look again at what the Organization will, in fact, have to do, and to see whether the type of machinery we are establishing for it is appropriate to the function. I think a lot of mistakes have been and are being made in international organizations because We tend to have a uniform type of structure for the units we set up, quite apart from the task we are asking them to perform. It was, for instance, one of the arguments which we advanced strongly for the I.T.O. having some executive functions in relation to industrial development, when we were aware that there was a Commission or sub-Commision of the Economic and Social Council operating in the same field. It was possible for the I.T.O. V. V. -8- E/PC/T/B/PV/15 to be an executive body, when it would not be possible for that sub-Committee to act in an executive way; and it would be a pity, therefore, if, having decided that the I.T.O. should have executive functions in this field for those reasons, we imposed upon the I.T.O. a type of administrative organization which deprived it of the advantage which decided us to give it the function wo had in mind. - 9 - E/PC/T/B/PV/15 If they are to be part-time employed only, then I think we would find, as we are finding in the case of the employment in the Economic Commission of the Economic and Social Council, that it is impossible for them to work adequately without very extensive preparatory work carried out by people fully as competent as they themselves. Therefore, we may well find in some of these cases that if we adhere to the Commission form of organization, that we not only have a Commission but we have, at the same time, to go out and find experts who can be employed to work for the Commission, and who are as thoroughly trained and equipped and as competent in this field as the members of the Commission themselves, and we double our personnel difficulties to which the delegate for Norway has already referred. On the other hand, if these people are to be full-time employed on this work and they are to be experts selected for their personal difficult qualifications, it is on the whole/to see what advantages are gained from not regarding them just as employees of the International Trade Organization, who would be working in the same way as any other technical or professional staff of the Organization. It is the general structure of the ITO as I understand it that there should be a Conference and an Executive Borad, and the Conference will be served by a Director-General and a staff and as the delegate for Norway has pointed out, it is presumably conceived that the Director- of necessity General and the staff will/be men of considerable capacity in the fields in which the ITO is concerned. If we set up also commissions which, so to speak, may come between the Conference and the Executive Board on the one hand, and its staff on the other, then it does raise doubts as to whether it would be possible to get people of the necessary competence as members of the staff of the Organ ization. -10 - E/PC/T/B/PV/15 Now, Mr. Chairman, in putting these things forward I may have sounded rather more critical of the idea of the Commissions than I intended to be. I may say that perhaps the Commission form is the best form for the task we have to achieve, but I must confess some doubts, and I believe it would be wise if, when we are referring this question to a Sub-Committee, as I presume we will, we should ask the Sub-Committee to examine this question with considerable care in the light of the functions which we are going to ask the Organization to carry out; to make a judgment as to whether, in their opinion, the Commission is the most appropriate form, not necessarily for all the Chapters but for certain of them. It may well be that the Commission is the appropriate way, say, of dealing with the tariff question or with the commodity agreements question, but not necessarily the best way of dealing with other questions. I suggest, Mr. Chairman, that we invite our Sub-Committee to give some consideration to this, and that they take the opportu- nity to consult with other International Organizations who have had some experience perhaps over a number of years of the methods of operation of international relations en these lines. If, as a result, it is decided that, either for some of the functions or even for all the functions of the ITO, the Commission form is the best type of organization we would then put forward very seriously certain suggestions. As I mentioned earlier, there is at present a fairly rigid statutory division between the functions of these Commissions. One thing that I think we have all learnt in this Conference is that, while you can divide this Charter up into Chapters, this division is a fairly arbitrary one and the subject matters of these Chapters overflow into one another. We have moved things around from Chapter to Chapter, and there is considerable argument going on ER. -11- E/PC/T/B/PV/15 at the present time as to whether certain provisions should be in Chapter IV, V, or VIII. It is clear, therefore, that a divi- sion of functions which is based solely upon the contents of the Chapters is likely to lead to jursidictional disputes between Commissions as to whether a particular job belongs to one Commission or another, and I would suggest very strongly that we do not seek to lay down in a statutory form in the Charter the specific functions of the Commissions. In fact, I would be inclined to leave it that the Organization, i.e. the Conference, could set up such Commissions as it felt necessary, and could prescribe their functions at the same time, so as to enable them to change those functions or reshuffle them if they felt it to be necessary. It does seem to me to be important that when we establish an Organization we should not burden it with a rigidity of administrative procedure which may interfere with the efficiency of its work. For the same purpose, if we are going to have Commissions, and there will be a separation of functions between them, the problem of linking their work together does become of very great importance. Now, the one or two provisions which I can see which are designed to prevent these Commissions from working in isolation from one another are, firstly that they are all responsible to the Executive Board, and secondly that the Director-General is entitled to be present at their meetings. I would suggest that something more than that is necessary. The Commissions, particularly if they are composed of part-time people coming for short periods for particular pieces of work, are unlikely to be as familiar with the work of the ITO as they should. For instance, they would not have the sort of sense of budgetary responsibility which might be a very important factor. And we would like to suggest, Mr. Chairman, that the Sub-Committee, ER. - 12 - E/PC/T/B/PV/15 when it comes to this, should give consideration to whether it was would not help if the Director-General/not merely entitled to be present at these meetings, but was also entitled to participate as a full member of the Commission. That would give him a particular responsibility. His functions would be to represent, so to speak, the collective view of the Organization, to bring home to the other members of the Commission the relationship of what they were doing to the work of the other Commissions and to the work of the Organization itself and to be the mouthpiece of the common judgment of priorities, of relative importance, for it is a very critical task to keep a number of different organ- izations of this kind functioning harmoniously. What I have had to say, is intended to be very tentative, and merely to raise what appears to us to be some fairly funda- to mental questions/ which we would like the Sub-Committee to turn its mind. E/PC/T/B/PV/15 CHAIRMAN: The delegate of Brazil. Mr. L.D. MURTINS (Brazil) (Interpratation): I would like to add only a few comments to the remarkable statement made by the Australian delegate with which I completely agree. I would like to remind delegates of a few points only. I think there is a great necessity for creating a Commission on economic development, and of granting the same powers and the same perfect constitution to that Commission as are granted in the Charter and given to the other Commissions which are already mentioned in the Charter. This new Commission on economic development will have to deal with technical matters, and it will be the organisation to study and carry out the provisions of the Charter in relation to Chapters III and IV. I do not think the Organisation can dispense with such a Commission and such a permanent and continuous body which will have to take up permanent and continuous studies if it wants to exercise the powers and carry out the duties entrusted to it by the Charter. These continuous functions must be exercised by experts who will have to collect material information, and classify and analyse that information; I do not think these functions can be entrusted to temporary representatives of the Powers. They must be continuous, especially if we look at the functions described in Article 11, paragraph 2, and in paragraphs 1, 2 and 3, of Article 12, and also in the much discussed and difficult Article 13; there we see the need of a permanent Commission to study these questions and carry out the duties of organisation relating there- to. L. - 13 - J. - 14 - E/PC/T/B/PV/15 In fact, if we look at the Charter as a whole, we see that a balance has been provided for in the Charter between the two parts of the Charter. On the one hand, you will find it relating to developed countries, and on the other hand, you will find provisions for the industrially under-developed countries. I think that if we do not provide for a special Commission here relating to this second part of the Charter, the equilibrium of the Charter will be broken and, I should say, the scale tipped one way. Now, to answer the arguments which were given by the Norwegian delegate that it would not be practical and that for certain practical reasons it might be difficult to set up this Commission, I would like to say that I do not see why it should be more difficult to find technicians for such a commission as to find technicians for the other Commissions which are already provided for in the Charter. In fact, the technicians who will have to deal with this now body would not be the same as the other technicians who will study and sit on the Commissions which are already mentioned in the Charter. This question of a Commission to deal with Chapters III and IV presents a special interest to the under-developed countries, as I have just stated. If we can set up that Commission, it will be one of the most important bodies of the Organization, and it will be one of the happy solutions provided for in the Charter, because there will be the possibility of solving many problems without very often taking into consideration political factors and of studying the questions from a technical angle only only. Therefore, the Brazilian delegation supports whole-heartedly and as strongly as possible the proposal which was put forward by four delegations for the creation of a special Commission to study the question arising out of the provisions of the Charter relating to Chapters III and IV. CHAIRMA: The delegate of France. G - 15- E/PC//T/B/PV/15 Mr. KOJEVE (France) (Interpretation): I am, Mr. Chairman, in practically the same position as the Australian Representative, in that I am not certain that Commissions are the most appropriate bodies; and this is the reason why our proposal is a conditional one. We state in our proposal that if it is decided to set up Commissions there should be four Commissions instead of three, and the reason for our proposal is this: The main purpose of the Organisation is the development of world trade. My country, in particular, has the. greatest desire to increase its export. The reasons are well-known, but I shall summarise them. Owing to the war we have lost the greater part of our foreign assets, and therefore it is necessary to increase our export in order to re-establish our balance of accounts. Other countries are in the same position for the same reasons. Now it is impossible to increase exports as long as the world markets remain as they were before the war. It is therefore necessary to open and create now markets in undeveloped countries. It is therefore necessary to increase the industrial development of undeveloped countries. This is the reason why in addition to the Commissions provided for in the existing Draft of the Charter it appeared to us necessary to create a Commission to deal with the very basis of our economic exchanges. Now here are two aspects of one problem. If it is impossible to develop a country without having free world trade, it is likewise impossible to have free world trade if the differences between the countries are too great; and the experience has shown that commercial exchanges are particularly important between countries that are highly developed and not between highly developed countries and undeveloped countries. For the various G. - 16 - E/PC/T/B/PV/15 reasons that I have just stated our Delegation suggests that the new Commission should be described as a Commission on Economic Development and Co-ordination. What we want to bring about is harmony through an intensification and increase of commercial exchanges, and we think that in order to obtain a co-ordinated economy it is necessary to see to it that its basis should be more or less homogeneous. As regards the question raised by the Australian Delegate regarding the purposes of Chapter III of the Charter, I am not certain that a new Commission will be necessary. The Commission which we suggest should be set up will have to deal necessarily with problems of employment, because no development and co- ordination will be possible without having ensured full conditions of employment, and inversely it is necessary to ensure employment in order to ensure the necessary development and co-ordination. Now, on the one hand, modern technical procedures require mass production, and mass production requires in its turn domestic markets that are more or less stable. On the other hand, the political division in Europe, and also in the Near East, is particularly considerable and it is necessary to contemplate an economic co-ordination which does not affect the existing political structure. If there are special organs under the United Nations to deal with these questions, I think it would be a good thing if there existed a Commission of the International Trade Organisation to assist them in this particular work. Finally, the United States Delegation has proposed the establishment of a Commission on Economic Development and International Investment. No doubt investments are one of the moat important elements for the solution of the problem with which we are confronted, but I should like to point out that G - 17 - E/PC/T/B/PV/15 development is a purpose, while investments are only a means, and in that case I see no reason why we should not, for instance, have the phrase, "free access to raw materials and international investment", and this would make a very heavy title for this Commission; but I do think that it is not necessary to mention investments in the title, since investments are only one of the means to reach a def inite purpose. Now to conclude, I should like to say a few words on the remark made by Mr. Colban. I think his observation is a serious one, but I think it only applies to the present time, because if functions are created, man will also be found who will wish to specialise and fill up the various posts. I think that the problem which now exists will no longer exist in two or three years. These, Mr. Chairman, are the reasons for our proposal for the creation of a fourth Commission. CHAlRMAN: The Delegate of China. Mr. D.Y. DAO (China): Mr. Chairman, the previous speakers have covered most of the ground of what I wished to say in support of the Chinese Amendment, in so far as economic reasons where the Charter called for the establishment of a Commission are concerned. Therefore, I would like to confine myself to a problem of a mor e or less technical nature, in the light of the Draft Charter. E/PC/T/B/PV/15 One of the purposes of the Charter is to encourage industrial development. We all believe that an expanding world economy depends upon two factors: one is to reduce or to eliminate trade barriers - that is the negative side of the picture - and the other is to encourage industrial and general economic development. That is the positive side of the picture. On the negative side of the picture, we have three Chapters, and therefore we propose to set up three Commissions. It is obvious that the Commission on Commercial Policy will be a very busy one. As to the other two Commissions, the Commission on Business Practices / will accupy itself with complaints received in regard to reat'3.tive-business practices, and the other Commission on Commodities will also examine general questions; but when it comes to the stage where the commodity agreements or regulatory agreements are concluded, the administrative side of the arrangements or agreements will be undertaken by Council. So we feel the need for creating three Commissions for three types of measures; yet in the London Draft and in the New York Draft, the setting up of a Commission on economic development is left in an indeterminate stage, although I admit that the New York Draft made some advance in this direction - but not as far as we wish to go. Now, when we come to examine the functions of the Organization as laid down in Articles 11 and 12, we see that the Organization is expected to advise Members concerning their plans for economic development. The plans for economic development may be very involved. They may be formulated by the Member Government with care and after long consideration, taking into account all the economic factors and other matter. Therefore, it is quite obvious - 18 - V in connection therewith. - 19 - V E/PC/T/B/PV/15 that when the Members submit a plan to the Organization for examination, neither the Conference (which will meet annually except in exceptional circumstances) nor the Executive Board (which will meet at certain intervals) could have sufficient time to examine those plans. It is quite conceivable that these plans have to be examined in detail by a body of exports, and I feel a little doubtful as to whether such a plan could be examined by the Secretariat: the Secretariat will be occupied by administrative matters. Again, there are other functions which the Organization will be called upon to perform: to provide or arrange for the provision of technical assistance, and to lend its good offices towards the settlement of disputes, and examine the protective measures which a Member may adopt. So, from the technical point of view, there is a great need for the establishment of a permanent organ within the framework of the Organization, to carry out all the functions that are assigned to the Organization. As I said a few moments ago that I would confine myself to remarks in support of our amendment, I will naturally refrain from making further remarks regarding the French proposal and the U.S.A. proposal, to both of which a new idea will be added and I believe that the U.S.A. proposal will also be examined by a Commission dealing with Chapter IV, so I think that the best place for the Chinese Delegation to express its views on the question of investment is when we discuss Chapter IV. ER - 20 - Mr. E.H. KELLOGG (United States): Mr. Chairman, to clarify ourown mind I would like to ask the delegate for Australia if he is proposing to set up a fifth Commission, assuming that a fourth Commission on Economic Development for Chapter IV is set up. Dr. H.C. COOMBS (Australia): Mr. Chairman, we are not proposing to establish a fifth Commission definitely. We suggest that the Sub-Committee should give consideration as to how the functions arise, and as to how Chapter III should be administered. It may be that we would decide about the Commission but we feel doubtful about that, even if the general form of the Organization is of a Commission type. I think tentatively, it would be our view that the requirements of Chapter III would be met by an adequately staffed section of the Director-General's staff, but that is a tentative view, and we raise the question because we want the Sub- Committee, when it is considering this question of organization generally, to ensure that it takes into account the need for adequate administration of the matters arising out of Chapter III. Mr. E.H. KELLOGG (United States): We are, Sir, very much impressed by the Australian comments on the Commission system. As you will recall, there was discussion on this point in London, and no doubt the Sub-Committee will have to cover this ground carefully. However, if the present form of structure is to be retained, then the United States feel that the field of economic development and investment will require particularly a Commission to implement it. Any glance at the United States suggestion on Chapter IV will show that there are many functions which, in our view, will require a body to implement them. With respect to the third Chapter, I see in its present form that the policy is to refer most of the work to E/PC/T/B/PV/15 - 21 - E/PC/T/B/PV/15 the Economic and Social Council owing to the implementing work of that Council, and for that reason, I asked Dr. Coombs whether he was insisting upon a Commission in addition to the work to be performed by the Economic and Social Council, and by its Sub- Committee on Employment and Economic Stability. In London we repeatedly expressed the opinion that we did not want to see the as a ITO established/body to unnecessarily duplicate the work of the commissions of the Economic and Social Council. 22 E/PC/T/B/PV/15 CHAIRMAN: The delegate for Cuba. DR. GUSTAVO GUTIERREZ (Cuba): Mr. Chairman, the Cuban Delegation is very much of the opinion of the Australian Delegation. We have stated our view many time from the beginning of the Conference, especially from the very beginning, when in Plenary Session a statement was made as to the weakness of Chapter III and Chapter IV in comparison with all the other Chapters of this document. If we consider the way in which this matter has developed, you will remember that the original United States proposition had a Chapter III entitled "Employment Provisions". Then came afterwards Chapter IV with "General Commercial Policy". When this came up in London it was clearly seen that this had to be divided into aspects, the aspect of employment, effective demand and economic activity, as it was finally entitled, and the aspect of economic development, and then from one Chapter became two which were set up in the New York draft, Chapter III entitled "Employment, effective demand and economic activity" and Chapter IV entitled "Economic Development". Now there is the proposal to set up a Commission to take care of the matters relating to economic development with the addition proposed by the United States Delegation to add the words "International Investment". But there is another factor which in our opinion is most important, that is Employment and Economic activity. This Conference and this Charter is entitled a Conference and Charter on Trade and Employment, but employment is becoming every time more and more vague. We cannot have more employment if we do not have more trade, but if we relate it so closely to tariffs and trade we lose sight of the paramount objectives of these meetings, which is to give opportunity of work to the peoples of the world. P. 23 E/PC/T/B/PV/15 That is why we are absolutely in accordance with the Australian Delegation that the provisions and the matters contained in Chapter III must be taken care of by a Commission. We, of course, do not think it is proper to have a new fifth Commission, but, as we are talking of setting up a Commission on Economic Development and International Investment, we could very well take out "International Investment", which is only a means to attain the goal of employment and expansion of trade, and set up a Commission under the name of "Commission on Employment and Economic Development". In that form it would be clearly stated that both Chapters III and IV would come under the sphere of influence of that Commission and we would have given to those two Chapters the implementation which is really lacking now. CHAIRMAN: Do any other members of the Commission desire to speak on this subject? DR. W.C. NAUDE (South Africa): It depends on what your ruling is going to be whether I should like to say something. If you are going to propose that it should go to a Sub-Committee then I should like to speak. CHAIRMAN: I was going to propose that the matter be referred to a Sub-Committee, but it is very desirable that there should be as complete and full expression of views in this Commission as possible. Therefore I give the floor to the delegate of South Africa. DR. W.C. NAUDE (South Africa): Mr. Chairman, our Delegation has wondered since the beginning whether this Article 72 should not simply provide for the Conference to establish such Commissions P. 24 E/PC/T/B/PV/15 as may be necessary, leaving it to the Conference to decide what that Commission has to do. At the same time we are very conscious of the significance of the three Commissions that are now provided for and of the balance to which so much importance has been attached in respect of Chapters III and IV. We feel, on the whole, that there is at the present time still so much doubt as to precisely how these Commissions are going to be worked, how they will fit into the Organization, that, in fact, we even wonder whether the Commissions are going to be the appropriate instruments for carrying out what we want the Organization to carry out. Dr. Coombs suggested that a Sub-Committee might examine the matter and recommend to us a solution; alternatively the Sub-Committee might prepare material which could be further studied in this Commission itself. What it really amounts to is that our doubts, which we have had ever since the days of Church House, have simply been strengthened by this debate which has been held here now. We have always thought that the experts who have been working on this thing knew what they were about but we are beginning to feel now that we should be very careful with the multiplication of Commissions. The delegate of Norway has already spoken about the shortage of experts. I think that with four or five Commissions together with the personnel of the ITO itself shall have a very difficult problem to find to cover the whole field. Not only that, I think that the ITO is already faced with tremendous oblems and adding Commissions of this sort might before we know where we are render the ITO simply incapable of carrying on. It would topple under its own weight. I therefore feel that the matter really should be further studied and perhaps we might at this point simply let it go to the Sub-Committee. P. 25 E/PC/T/B/PV/15 As regards the particular additional Commissions that have been suggested, we are of course very sympathetic with the suggestion of an Economic Development and Coordination Commission. The French Delegation has put forward a quite sound argument. At the same time we feel also impressed with the American arguments in favour of recognising the significance of inter- national investment. I take it that if I were an investor I should like to know that there was some security in the places where I would be investing my money. So certainly I am sympa- thetic with the American proposal. But, getting back to something I said earlier about the danger of now perpetuating in a Constitution which cannot be altered very easily the various Commissions, I can visualise even present developments overriding,/the political developments that are taking place today or tomorrow in Paris,which might quite conceivably damage the sort of structure which we might set up here. I merely wish to emphasise that we are not certain in our minds at all how the thing is going to work and it should be referred to a Sub-Committee. CHAIRMAN: The delegate of the Netherlands. Dr. S.J. BARON VAN TUYLL (Netherlands): I would like t underline the remarks made by the Cuban delegate on the history of the Commissions; in fact there were only three Commissions in this Charter, because the original United States' draft Charter only mentioned very few provisions on economic development and employment. Now we see that those provisions on economic develop- ment have been extended after further study, which has led to the new Chapter IV. I, therefore, feel there is really no reason why we should now object to the setting up of a special Commission for that work which, although it was not very important at the beginning of the London Conference, has developed into an important function of the present Organisation. I am, therefore, in favour of establishing a special Commission for economic development. As to the name of this Commission, I would first like to remark on the name the Frech delegate wanted to give to the Commission. I must admit I was rather concerned about the word co-ordination, as I was not quite clear in my mind what was meant by coordination, and what that Committee would have to co-ordinate. The French delegate has explained what he means, and as it is only the co-ordination of the economic policy of the countries, I am prepared to admit that co-ordination could be men- tioned in the name. But to put this in its right place the Com - mission should, in my opinion, be named "Commission on Co-ordinated Economic Development" and not "Commission on Economic Development and Co-ordination. I would further like to comment on the United States' suggestion to name the Commission "Commission on Economic Development and International Investment". The Netherlands delegation is in favour of including the words "International Investment" in the name of the E/PC/T/B/PV/15 L. 26 27 Commission. We do not believe the arguments put forward by the French and Cuban delegates are a sufficient reason for not men- tioning these words. In our opinion international investment is one of the important means to economic development and one which entails much international co-operation. The French delegate mentioned as another means the free access to primary commodities. In our opinion it is not necessary to mention this, because free access to primary commodities is the means of economic development which can very easily be applied by every country unilaterally. There is no international co-operation necessary unilaterally to admit free access to primary commodities. Actually, on the sub- ject of international investment, I would like to point out the problems connected with international investment are at this moment being studied in the Sub-Committee /on Chapter IV, and it is not quite certain how this Chapter will in the end be left. I would, therefore, like to suggest that the sub-Committee which will be set up to study the Commission on Economic Development and International Investment should contact the Sub-Committee on Chapter IV, to see if the name still applies to the subject of Chapter IV. At present it has not yet been decided what the provisions of Chapter IV will contain. E/PC/T/B/PV/15 L. E/PC/T/B/PV/15 -28 - CHAIRMAN: I have listed as speakers the delegates of the United Kingdom, Bazil, and Chile. aA we have already heard the views of nine delegations on this subje;c anda fter these three speakers have spoken, twelve delegations will have expressed their views, I therefore propose to close the deuate after I have called on these three speakers. First of all, I call on the delegate of the United Kingdo.m IM. J.E.S. FAWCETT (United Kindgom): rM. Chairman, if I may make two brief observations. First, we think there is a danegr that the Charter may boeome in its ocnstruction too schematic, because we have ste up OCmdissions on matters whihc fall specifically in thiss phere of the International Trade Organization, W emay be led autoamtiaclly to set up a Cmomission for employment which is of more general xetnet within the Organization,a nd also is closely related to th eactivities of many other bodies which have already been set up by the Economic nad Social Council. We think, therefore, that the description of the functions of the Commissions should not be too precise in tm eChartbr itself, and that if a coimmssion is set up for employment, irticles 3and 7(b) of Chapter III should be particularly stressed, because those are the Articles which require the Organization to co-operate with outside organizations. We think that this cCmmission, to avoid overlapipng with the work of the Economic and Social Council and its mpomissions, should have mainly a co-operative task. It should be a liaison between the Organization and those bodies on this very general problem of employment. J J. - 29 - E/PC/T/B/PV/15 It perhaps may follow from that that, as Dr. Coombs, if I understood him correctly, suggested, these functions should be performed not perhaps by outside experts called in temporarily to they form a commission, but that / should be performed by permanant technical personnel in the Organization who are fully aware of the whole of the Organization's work. CHAIRMAN: The delegate of Brazil. G - 30 - E/PC/T/B/PV/15 Mr. MATrIS (Brazil) (Interpretation): Mr. Chairman, I would want to add a few remarks to the already long disucssion which has taken place here. As far as the title of the Commission is concerned, I should like to maintain the original text, that is to say the Commission for Economic Developnent. I think that if w ekeep to th esimple wording, we may find a general agreement on this text, wh eeas if w eadd some kind of lcariifcation we mihgt find some other position. The Brazilian Delegtaion htinks thca the Amendment which has been submitted by the Frecnh Dleegtaion may raise some objection, and this would b eto diminish the importance of economic development as fra as we consider this development frmo a world st.ndpoint. Th: pr hramme of international oc- operation must be considered not only from one side but from the world standpoint. The development of countries can b econdsierde from a unilateral viewpoint, taking into account the interest o falready developed countries, ubt it can also be considered in another unilateral sense, a being necessary orf comtnries under-devloeped, because the peace o tfhe world and economic stabilities of more developed countries can also be of interest to less developed countries; and therefore it is preferable not to consider the unilateral aspect of the problem but th weorld aspcte. I therefore consider that no kind of arclification should be added to the words "Economic Development". A fsar a Cshapter II iIs concerned we do not think that the proposal made by the Australian Dlcgaetion aims to create G. - 31 - E/PC/T/B/PV/15 immediately another Commission. In fact, we see that the Charter for provides/the creation of other Commissions, but those Commissions can be created later. I do agree with what the Delegate of the United Kingdom said about the fact that certain organs could deal with this particular problem. As far as the question of experts is concerned, I think that in this area we need another kind of expert - in the question of commercial policy - and therefore I think that we could find these experts without taking away experts who are dealing with other questions. Therefore, the objection which has been made that we lack experts in this matter should not prevent us from creating another Commission. CHAIRMAN: The Delegate of Chile. V. E/PC/T/B/PV/15 - 32 - CHAIRMAN: The Delegate of Chile. M. F. Garcia OLDINI (Chile) (Interpretation): I very much fear, Mr. Chairman, that I must prolong the discussion a little. I shall try to be brief. It is obvious that the reasons for setting up a Commission for economic development are themselves so plain that it is unnecessary to stress them. As for the name of the Commission itself, I think this is of secondary importance. I think that what is of paramount importance is the functions of this Commission, and I understand there is no doubt whatever on this point. Now, even if this Commission is described as being a Commission for Economic Development, which will be its essential function, it will necessarily also consider problems of employment. I should like to add that I have been deeply impressed by the second part of the remarks made by the Australian representative, which have been more or less repeated by the United Kingdom representative. It is evident that we need a number of organs to carry cut the various functions listed in this Article, and the amendments proposed; but I fail to see their connection with the rest of the Organisation, and I wonder if the Australian Delegate is not right when he expresses some doubt regarding the efficiency of the work carried out by Commissions as they are described in the Chapter. Therefore, I wonder if it would not be necessary to make it clear whether there will be temporary or ad hoc special Commissions meeting from time to time, or, on the contrary, standing technical Commissions. There will be a number of recurrent problems, and in the face of this kind of permanent situation, I cannot imagine the creation of Commissions that will be likely to interrupt their work from time to time. We can, therefore, ask ourselves whether we have to deal with - 33 - Commissions in the proper sense of the word or bodies of the Organization consisting mainly of technicians. This question raises another question: whether these technicians will be officials of the Organization or not. I do not think that all these questions can be solved here; but I should like to ask the Chairman to stress these points to the sub-Committee and point out to the Members of the sub-Committee, as already pointed out by the Australian Delegate, that they require particular study. CHAIRMAN: We have now had a most useful discussion of this very important subject. We have been discussing the matter now for two hours and a quarter. We have given the sub-Committee a large amount of material for them to take into consideration and digest with a view to reaching a reconciliation of the various points of view which have been expressed in the Commission. Therefore, if the Commision agrees, we will now refer this matter to the sub-Committee. Agreed? (Agreed). The only other point that arises in connection with Article 72 is Item No.5 on Page 16 of Document W/210: "The Secretariat points out that perhaps the commencing words "The Conference shall establish" should be changed to "There shall be" to conform with Article 67". This is a matter of drafting which I would suggest we should leave to the sub-Committee. Agreed? (Agreed). Article 73 - Composition and Procedure of Commissions. In reIation to paragraph 1, the United States Delegtion proposes that a limit of not more than seven persons should be placed on the composition of the Commission. The Delegate of the United Kingdom. Mr . J.E.S. FAWCETT (United Kingdom): We agree with that amendment. E/PC/T/B/PV/15 V - 34 - CHAIRMAN: The Delegate of the Netherlands. Dr. S.J. Baron van TUYLL (Netherlands): I would like to support the amendment of the United States Delegation. I would like to consider this suggestion in the light of the discussion which we have just had on Article 72. I believe that if the Conference realises that only a small number of members is needed in the Commissions, then it should not be too much concerned about the institution of Commissions. If we give the number of seven, then it may very well be that the Conference will decide on establishing a Commission of perhaps only three persons, and that is another reason why I think it is a very good thing to limit the number of members to a figure not higher than seven. E/PC/T/B/PV/15 V ER - 35 - E/PC/T/B/PV/15 CHAIRMAN: Any objections to the proposal of the United States delegation? Dr. W.C. NAUDE (South Africa): Mr. Chairman, I have no objections, on the contrary I agree. It is merely to suggest that the Sub-Committee might examine the possible need of making clear that this should be referred to the more permanent Commissions. Mr. A.H. TANGE (Australia): Mr. Chairman, we have doubts about the wisdom of this amendment. The Australian delegate here raised the whole question of the wisdom or otherwise of using the general Commission structure, and he also referred to the possible danger of specifying in great detail the functions of commissions in the event that it was decided that the Commission structure was the correct one, but in the light of that second objection we feel that here again is a case where we are attempting, in the constitution of the Organization, to lay down a specific rule which except cannot be altered/by an amendment to the constitution, and we would feel that it was unduly restrictive. It may be found, under certain circumstances, that we needed more than seven, in which case we would feel that this was an unwise limitation to place upon the Conference which should retain considerable flexibility within its hands to organize its subordinate organs as may be required by the activities of the Organization. For that reason we oppose the amendment. Mr. GEORGE HAKIM (Lebanon): Mr. Chairman, I would like to support the point of view just expressed by the delegate of Australia. It may be necessary to have more than seven for certain Commissions. I have in mind the Commission for Economic Development which may be established. In that case I think the experience needed in that Commission to consider problems of development in various ER -36 - E/PC/T/B/PV/15 parts of the world, may necessitate the increase of the number of the members of the Commission beyond seven. CHAIRMAN: Are there any other speakers? I therefore suggest that this United States proposal be referred to the Sub-Committee. Mr. V. DORE (Canada): If this amendment should go through, I believe that paragraph 2 would have to be modified. CHAIRMAN: I do not believe the proposal allows for more than seven, it could be less. paragraph 4. The Secretariat suggests that . "The Chairman of a Commission shall be entitled to participate, without the right to vote, in such of the deliberations of the Executive Board and of the Conference as are of concern to the Commission". Are there any comments? Mr. F. GARCIA OLDINI (Chile) (Interpretation): I should like, Mr. Chairman, to know what the exact meaning of this amendment. The New York draft reads: "The Chairman of each Commission shall be without the right to vote, entitled to participate,/in the deliberations of the Executive Board of the Conference." I think that the Chairman of each Commission will be sufficiently busy not to attend meetings which are of no interest to him. But on the other hand, if this amendment goes through, it will authorize the members of a given Commission to declare that the matter is of no interest to the Chairman of another Commission. - 37 M. KOJEVE (France) (Interpretation): I would just like to say that I share the point of view of the Chilean delegate; it would be more courteous not to assign the Chairnen of the Com- missions through such a regulation. CHIRMAN: After those comments, I tthik we can safely leave it to the Sub-Committee to deal with the question of the Sercetariat (The meeting agree CHAIRMAN: Pra~rapgh 5. At the meeting of tn hCoaimttee the delegates of Australia and South Africa felt this provision was redundant in view of the provisions of Article 81. Th Seecretariat agreed with this view. Does any delegate disagree with the point of view of Australia and South Africa? I suggest therefore that the sub-Cotimee ttshould decide whether c ort tohis provision isnec essary in view of the silence which has reigned in this Commission. (Th meeeting agreed) CHAIRMAN: Article 74 - Genrale Functions of Commissions. "The United Kingdom Dlegeation comments upon Artices74-77 that it is not clear whether the Commnisson ican initiate stu"eds advice and recommendations or whether they can only act on the instructions and within the terms of reference assigned to them by the Conference or the Executive Board. It is assumed that the former is intended, and that this will be clarified during the discussion that will be necessary on the subject of the Commissions and particularly of the Commission on Restrictive Buinesss Pzciraei Dos thee Ubt;n -n 3;JKi delegate wish to speak? /PC/TE/B/PV/ L. L 38 E/PC/T/B/PV/15 Mr. J.E.S. FAWCETT (United Kingdom): I do not think I need add very much to our note. I think it is really a drafting point that in Article 74 the Commission shall perform such functions as the Executive Board may assign. Then the functions "shall include those specified in Articles75, 76 and 77 respectively." This rather suggests that the functions in 75 and 77 are really functions which the Commissions may undertake only when they have been assigned specifically. We do not think that is the intention. We believe that Articles 75 and 77 lay down funct ions which the Commissions can undertake on their own initiative. I would suggest that the Sub-Committee might perhaps consider whether it should not be made clear that the word "functions" was used in 75 - 77, and in 74 V:. was laid down that the Conference and Executive Board could assign specific tasks to the Commission in addition to their general functions. We believe that was the intention. It I might add just one word, we oppose the Secratariat's amend- ment in paragraph 2(a). CHAIRMAN: There seems to be a drafting point which it is necessary to examine in the text of Articles 74-77 to see that the intention is clearly expressed, and therefore I propose that this should be referred to the sub-Committee. The same applies to the points raised by the Secretariat which also require consideration from the drafting point of view. Is it agreed that this should be referred to the sub-Committee? M. F. GARCIA OLDINI (Chile): It goes without saying that the part relating to the Commission on Economic Development should also be added. 39 E/PC/T/B/PV/15 CHAIRMAN: We will be taking up that point when we deal with Article 75, because we have a proposal from the Chinese delegation. M. F. GARCIA OLDINI (Chile) (Interpretation): What I meant to say was that in Article 74 each Commission is mentioned by its name. Therefore the Commission on Economic Development should also be referred to. CHAIRMAN: If the Sub-Committee did not get that point, I am sure the Legal end Drafting Committee will. Article 75 - Functions of the Commission on Commercial Policy. The Chinese delegate proposes a new Article to provide for the Commission on Economic Development. In view of the discussion which has already take place at the Commission to-day I believe we can also refer the proposal of the Chinese delegate to the Sub-Committee without further discussion. The same applies to the proposal of the Australian delegate. Dr. S. J. BARON VAN TUYLL: (Netherlands): My demand may be unnecessary, but I would like to ask the sub-Committee to make contact with the Committee on Chapter IV for the final drafting of the functions. L. J. 4 E/PC/T/B/PV/15 CHAIRMAN: The delegate of New Zealand. MR. G . LAWRENCE (New Zealand): Mr. Chairman, in connection with the present text of Article 75, sub-paragraph (a), "The Commission on Commercial Policy shall have the following functions: to advise and make recommendations to the Executive Board on all matters falling within the scope of Chapter V", it states in Article 67 on the Tariff Committee that that Committee is given special functions in respect of paragraph 5 of Article 24, and in Article 62 we see that the Tariff Committee has been included as one of the principle organs. It would seem that it is necessary to make some exclusion in respect of the functions of the Commission on Commercial Policy so that duties assigned to the Tariff Committee are excluded. CHAIRMAN: The delegate of Australia. MR. A.H TANGE (Australia): Mr. Chairman, may I add to what the delegate of New Zealand has said: that you have, in Article 75, a provision that the Commission on Commercial Policy is to advise and make recommendations to the Execuxtive Board on all matters falling within the scope of Chapter V; you have in Article 77, sub-paragraph (b), a provision that the Committee shall advise and make recommendations to the Executive Board on all matters arising from the provisions of paragraph 4 of Article 30, which is also in Chapter V. That leads me en, Mr. Chairman to elaborate a little on the point made by the Australian delegate earlier in this meeting, namely, that we that we shall create considerable difficulty for the Oraganization if we attempt to specify in articles 75, 76 and 77, and in any other Article dealing with the proposed Economic J. - 41 E/PC/T/B/PV/15 Development Commission, the precise range or functions of each of these Commissions. As we see it, the position is that we say in Article 74 that "The commissions shall perform such functions as the Conference or the Executive Board may assign to them". That is to say, the Conference or the Executive Board may add to the functions of the Commission. You have an element of flexibility there, but you say in Articles 75, 76 and 77 that each Commission must perform the functions related to a particular Chapter, and we understand that to mean that neither the Conference nor the Executive Board may take away from the Commission a function which is given to it by the Statute. Now, that may well mean that you will have jurisdictional arguments as between Commissions, in spite of the last sentence of Article 74 which says "The commissions shall consult with such other as necessary for the exercise of their functions''. Naturally, if they are reasonable people they will consult together and the difficulty of jurisdictional disputes may not arise, but one cannot overlook the possibility that it would arise, and you would be faced with the situation where the Conference and the Executive Board, who clearly are superior bodies to the Commissions, nevertheless, would be debarred by this Chapter from making a mutual adjustment in the disposition of duties among what are essentially subordinate organs of this Organization. It is for that reason that we are disposed to suggest that, if after discussion in Sub-Committee it is decided that a Commission of the structure of this general type should be retained, serious consideration could be given to deleting articles 75, 76 and 77. That rather drastic surgical operation would not require many 42 J. E/PC/T/B/PV/15 consequential amendments to earlier Articles. It would simply leave a position whereby in Article 74 "The commissions shall perform such functions as the Conference or Executive Board may assign to them", and that would leave the question completely open. It would mean that the difficult problem of allocation would have to be faced up to. We feel it does not have to be faced up to now, Moreover, it would mean that having attempted to make your allocation and, in fact, having made your allocation of functions, you would see with the capacity of experience how that allocation works, and if, after 12 or 18 months or two years, it was decided that it would be better for this particular Commission to take over from another some particular aspect of the work of the Organization, the Conference or the Executive Board, by a very simple act of amending its rules of procedure, could achieve that. Under the present situation, neither the Conference nor the Executive Board could do that because the Charter disregards it. CHAIRMAN: Have any other delegates any remarks on the quest ions involved in Articles 74 to 77? G. E/PC/T/B/PV/15 -43- With regard to the point raised by the Netherlands Delegate, it is very necessary for the Sub-Committee to pay careful attention to the Report not only on Chapter IV, but also VI and VII, in considering these Articles. I am sure we are very grateful to the New Zealand Delegate and the Australian Delegate for having brought to the attention of the Commission certain inconsistencies with regard to the matters assigned to the various Commissions, and that will also be taken into account by the Sub-Committee. The only other points we have in relation to these Articles are suggestions by the Secretariat, which I think the Commission will agree are drafting points; and therefore, if there is no objection, I would propose that these Articles 74 to 77, together with the proposals which have been submitted relating thereto, be referred to the Sub-Committee. Agreed. The Delegate of Brazil. Mr. MARTINS (Brazil) (Interpretation): Mr. Chairman, if we work on the assumption that the Articles here will not be maintained, I would not disagree with what the Australian and New Zealand Delegate have proposed as to the suppression of these Articles; but if, on the other hand, these Articles are maintained, I would like to propose a modification of 77 - A sub-paragraph (a), which appears in Document W/210 Rev.1 Add.1 on page 2. There we read: The Commision on Economic Development and International Investment shall have the following functions: (a) To conduct studies relating to the promotion of industrial and economic development and international investment as provided for in paragraph 4 of Article 12. G E/PC/T/B/PV/15 - 44 - I think that the reference to paragraph 4 of Article 12 is of a restrictive nature, and I do not see why we should only refer to paragraph 4 of Article 12, but it ought to be "as provided for in Article 12, Chapter IV." CHAIRMAN: The Delegate of the Netherlands. Mr. VAN TUYLL (Netherlands): Mr. Chairman, I have been listening with much interest to what has been said by the Australian Delegate. One solution for the difficulty he sees is in the elimination from the Charter of Articles 75, 76 and 77. I have Just been thinking if another solution is possible, and I may perhaps suggest that the Sub-Committee considers the other possibility of including in Article 66 a provision which gives power to the Conference to make all such provisions and regulations as are necessary to prevent over-lapping with regard to Articles 75, 76 and 77. CHAIRMAN: The Sub-Committee will take into consideration the remark just made by the Netherlands Delegation, and also in considering the United States proposal regarding the new Article 77- A they will take into account the remarks just made by the Delegate of Brazil. The Delegate of Australia. Mr. TANGE (Australia): If I may just comment on the remarks of the Delegate of the Netherlands, I believe that a solution might be found along the lines that he suggested; but whether it would leave you with a suitable Draft is rather doubtful. In effect you would be led into the position of saying in one part of the Charter that certain organs shall have certain statutory functions, and elsewhere, another superior organ wil take them away. That is the end we desire, but whether or not it would be desirable drafting, if we conceive it that way, I am really doubtful. E/PC/T/B/PV/15 CHAIRMAN: The Delegate of the Netherlands. Dr. S.J. Baron van TUYLL (Netherlands): I only made the suggestion, Mr. Chairman, because I was afraid that by handing over the difficulty to the Conference they would be faced by the same problem as we would be. CHAIRMAN: Are we now in a position to refer these Articles 74 to 77 with the proposals related thereto, to the sub-Committee? (Approved). There are no proposals with regard to Article 78. With regard to Article 79, "The Director-General", "The-United States Delegation commece that unless the responsibility for budget preparations is clearly upon the Director-General, experience has shown that this matter 'may fall between two stools.' The regulations to be approved by the Conference under paragraph 1, which are more flexible in their nature, can contain whatever provision may be necessary in this respect. It is pointed out that the Director-General is, in any case, under the supervision of the Board. For these reasons the United States Delegation proposes the following amendment of the last sentence of paragraph 2 or Article 79 - 'He shall present through the Executive Board an annual report to the Conference on the work of the Organization and shall prepare the budget of the Organization for submission to the Conference'" ,thereby suppressing the wods "in consultation with the Executive Board". Are there any comments on the proposal of the United States Delegation? The Delegate of Australia. Mr. A . H. TANGE (Australia): Mr. Chairman, I think the Delegate of the United States has raised a very important point, 45 V V. and that is the role of the Executive Committee in the examination of the budget. In my opinion, thc present draft is unsatis- factory because 1 think it dodges the issue, in using the phrase to the effect that the Director-General "shall in consultation with the Executive Board. prepare the budget". That leaves open the question whether it is nothing more than consultation; it leaves open the question .as to how far the Executive Board may interfere with the Director-General in the preparation of the budget. It leaves uncertain the question of whether or not the Executive Board is to approve the budget and send it forward to the Conferernce with its approval. Now, as I understand the United States authority it is that the Director-General has compleve authority in the pre- paration of the budget which he shall submit the Conference. It is silent on the question of' whether or not he submits it to the Executive Board. Should I ask the of the 0 the United States whhe envisages that the a l ttorrec`e -Genvral wouldcin fasentreotebudget to the Executive Board and, ard an if so, how woe Execitivelative Board exprsss it-onponi"r tn the budgWt? Vould it be byhatta king -to the budget, separately, mments when it went forward to the Conference, or wouldT woul ecutive Boarrdve Be havpower of amending the budgetthe bu before it went to the Conference?:,-fo- AN: The Delegate of the United States. -te-d F. (United States): Mr. Chairman, we had we ha rposes posos pesing this amendment. The first purposest, p& was to maperfectly clear that the Directer-General had l h the solonsibility !lfty of gettingudget together. cther The second was to lhe question of broad supervision over the r tha matter more flexible.Under paragraph 1, the Directer-Genera V. E/PC/T/B/PV/15 is subject to the supervision of the Board. Under the same paragraph, his duties are to be determined in accordance with regulations approved by the Conference. In that way, we felt that both the Conference and the Board could, as experience taught them, provide a method of dealing with the budget which would be effective. CHAIRMAN: The Delegate of South Africa. Dr. W. C. .NAUDE (South africa): Mr. Chairman, I am sorry to pursue this point, We feel strongly that it could be made quite clear where the responsibility lies. Our own preference is to put it something after this style, that the Director-General shall prepare the budget of the Organization, and, upon approval of the Execitove Npard. ive Bank> submit it to the Conference". we reoognize, cf course, the point made by the United States Dcie-ate. Tme sub-Conmittee will no doubt see to it that prop.- arrangements are made, and I will not carry the discyssion an- further. CHAIRMLN: Are there any other comments? Thu Delegate of Australia. Mr. L.HAustralia): alia): Mr. Chairman, I am quite satisfied planation ganation riveDelegate Dlt:6,tenif the Ur:lted Staullyand filwy agree viith the objective they are aiming at. There might bc a little difficulty with the final words of the redraft2prebudget of areganization for su t'e FOr.mission onference". to tinolercta. That seems to embody the idea that, in any case, this bectudget of the Diror-General must go forward to the Conference. That in fact may not be the position. There may be undera decision made the regulations power of the Conference to itthhoulde efct that ittoxecutive Board, and the A7 V 48 E/PC/T/B/PV/15 Executive Board may then send it forward as its Budget. Perhaps the sub-Committee might consider deleting the words after "Organization", and it would simply read that the Director-General "shall prepare the budget of the Organization". As it is, other Articles clearly provide that it is the Conference which must pass the budget, but the question as to the status in : which it passes could be left open for determination by regulations. ER 49 E/PC/T/B/PV/15 Mr. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairman, I think this is a very important issue and also that we must attach the responsibility of preparing the budget to someone, and that person must have the responsibility 'if doing the task. But I do not grasp how the Director-General could prepare the budget without consulting the Executive Committee or without getting the approval of the Ececutive Committee. We have two means of solving the problem. One is provided in the New York Draft Charter and the other one by the United States proposal. Now, as regards the Australian suggestion, I would like to-say that I do not understand exactly how the budget could not be submitted to the Conference, because the Conference, which is composed of all the members, has of course, to take a decision on this budget. Mr. A.H. TANGE (Australia): Mr. Chairman,. my suggestion to delete the words was made in the light of Article 66 (7), which implicitly says that the Conference shall approve the budget of the Organization. Having that said there, it seems to-me that no harm could be done in deleting the words, the reason being that I feel the United States text, as it stands at present, might imply that the budget estimate, having been prepared by the Director-General, must be submitted to the Conference in the form in which it is prepared. That was why I made the suggestion, but I should be quite happy to leave this for further discussion in the Sub-Committee. CHAIRMAN: Are we now in a position to rafer the United States proposal to the Sub-Committee? Agreed. There are no proposals with regard to Article 80. Dr. W.C. NAUDE (South Africa): ir. Chairman, I wanted to ask permission to argue the case for the deletion in paragraph 2. ER 50 E/PC/T/B/PV/15 Article 79, of the sentence: "The Director-General may initiate proposals for the consideration of any organ of the organization". If you give me the permission I could argue it now. first of all I must apologise/for raising this issue. I am a little nervous as it is a very delicate matter to perform, and before I go any further I would only like to have the assurance that I am not directing my remarks at any particular person whatsoever. I have the highest admiration for members of the International Civil Service whose lives are not a bed of roses. The genesis of that particular sentence is that, in the London Draft it provided that "the Director-General shall have authority to initiate proposals ..." In New York that language was slightly diluted and changed into its present form. I confess that we are still a little worried about it. We have taken the trouble to look up a few of the other constitutions of other specialised agencies, and we find that, in the FAO constitution, the language employed was that the Director- General shall formulate for consideration by the Conference and the Executive Committee on FAO, proposals for appropriate action in regard to matters coming before them. This quite definitely limits him to proposals specifically on matters which either the Conference or the Executive Committee are actually considering. L. E/PC/T/B/PV/15 In the case of the United Nations Charter provision is made for the Secretary-General to bring to the attention of the Security Council any matter which may threaten the maintenance of peace. In this case there is a very excellent reason for giving the Secretary-General that authority in the case of a situation threatening peace. I do not need to elaborate that. My concern at the moment is with the risk that the Director- General may initiate proposals which might be extremely unpopular. He might initiate proposals on what might quite possibly be his own set ideas which he wants to see carried out. It seems to us you run the risk of undermining the authority and loyalty of Members to the I.T.O. by giving a man authority to make proposals which may run counter to the feelings of Members of the I.T.O. It should be borne in mind that the executive organ of the I.T.O. will be the Executive Board. They, as an executive body, will no doubt be able to consider all proposals submitted to them, and if they approve, refer them to the Conference. The Director-General will be constantly in touch with them and he can submit his ideas to them and they can be formulated into a proposal if they meet with the approval of the Executive. As the Chief Executive Officers and Chief Advisers to the Executive Board, they will no doubt attach considerable weight to what he says. I will conclude by saying I realise that perfection has never yet been reached, certainly/in international affairs. We cannot expect to have a perfect man in this position, but if we give him this power it may lead to complications. Nevertheless, the Director- General will, I am sure, be as good a man or woman as can, be found, and by virtue of the powers he has under the Charter, he will be able to propagate ideas , but if this phrase is retained it might load to a difficult situation. I propose that we suppress the E/PC/T/B/PV/15 second phrase. . CHAIRMAN: Are there any speakers on the proposition of the South African delegate? Mr. F. GARCIA OLDINI (Chile): I second this proposal. Mr. A.H. TANGE (Australia): We feel something usdful would be lost by the deletion of this. A good deal depends on one's inter- pretation of the rôle of the Secretariat and the Director-General, whether one regards them as performing a merely secretarial function, 4 or whether one considers they should perform a departmental function in the sense that a national government does, We see no reason why the Director-General should not initiate proposals for the con- sideration of any organ of the association, indeed, he should be encouraged in this. The main burden of the argument of the dele- gate of South Africa seems to be that the Director-General might make proposals which had political implications he had not foreseen, and which might create embarrassment for the Members of the Organisa- tion. The Members of the Organisation, the Executive Board, the Commissions, and the Conference, are in a position to dispose quick- ly of any proposal put forward by the Director-General ill-advisedly In most cases his proposals would be discussed in private with the exception of the Conference and there the possibility arises that the Director-General might initiate a proposal which would perhaps create embarrassment to certain Members by being placed on the agenda of the Conference. We feel this is a somewhat exaggerated fear. The Director-General and his subordinate staff will presumably be chosen with due regard to their sense of responsibility. We take it the Director-General in any case will be appointed for a limited term, and that will have some bearing on his sense of discretion in raising matters for consideration 52 L. E/PC/T/B/PV/15 From the general point of view, we feel that the Secretariat of the International Trade Organization should be encouraged to take a positive part in the preparation of policy proposals, in the preparation of material placed before the supreme organs of the Organization - the Executive Board and the Conference. One undesirable element of deleting this sentence might be to preclude the Director-General from making proposals to the Commissions of the Organization, which are much nearer his level, and it would seem undesirable that he would be precluded from putting proposals to them. For those reasons, Mr. Chairman, we would propose the deletion of this sentence. CHAIRMAN: In view of the fact that the proposal submitted by the South African delegation does not meet with favour probably from the Australian delegation and /from other delegations here, and also in view of the fact that no prior notice was given of this proposal, and further, in view of the late hour, I would suggest that we refer this subject to the sub-committee for them to study and attempt to reconcile the opposing views, Agreed? Approved. Gentlemen, we have now concluded our examinat ion of Articles 61 - 80, which were assigned to us by the Steering Committee for consideration this week. On Wednesday, July 2nd, we will commence our consideration of Articles 81 - 89. Before, however, we break up today, I would like to nominate the sub-committee in order that it can get to work and deal with the points which we have been considering this week. I would nominate as members of the sub-committee representatives of eight 53 J. E/PC/T/B/PV/15 delegations. This is a larger number than usual - the Steering Committee has recommended us to endeavour to confine representation on the sub-committees to six, but in view of the very general interest in this Chapter, I feel that eight would not be too large a number for the purpose we have in view. This sub-committee would also consider Chapters I and II, as well as Chapter VIII, but it will not necessarily deal with the question of Voting and Membership of the Executive Board. After we have had a discussion of this important subject, Voting and Membership of the Executive Board, we will consider which is the best way to deal with them. It is proposed that. the sub-committee should meet tomorrow in this room at 10.30 a.m., and they will elect their own Chairman. I nominate as members of the sub-committee representatives of the following delegations:- Australia, Belgium, Brazil, China, France, Union of South Africa, United Kingdom and United States. Is that approved? Agreed. There being no further business, the meeting is adjourned. The meeting rose at 6:30 p.m. 54
GATT Library
bf056kz5085
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifteenth Meeting of the Tariff Agreement Committee held on Wednesday, 10 September 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, September 10, 1947
United Nations. Economic and Social Council
10/09/1947
official documents
E/PC/T/TAC/PV/15 and E/PC/T/TAC/PV/14-15
https://exhibits.stanford.edu/gatt/catalog/bf056kz5085
bf056kz5085_90260054.xml
GATT_155
13,896
84,750
UNITED NATIONS ECONOMIC AND SOC AL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/15 10 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FIFTEENTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON WEDNESDAY, 10 SEPTEMBER 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA. Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES E/PC/T/TAC/PV/15 CHAIRMAN: The Meeting is called to order. I wish first of all to inform the Committee that the Tariff Negotiations Working Party met this morning and, in pursuance of the mandate given them by this Committee yesterday, they considered the question of setting up a Legal Drafting Committee. The Tariff Negotiations Working Party wishes to suggest the following names of persons they consider would be qualified to act as a Legal Drafting Committee: - Dr. Dorn (Cuba), Chairman; Mr. Catudal (United States); Baron de Gaiffier (Belgium); M. Royer (France) and Mr. Whittome (United Kingdom). These five gentlemen would constitute the Legal Drafting Committee. They would arrange their own meetings at whatever time suited them, and it would be the responsibility of their Chairman to arrange the meetings. The terms of reference we would suggest would be similar to those of the Legal Drafting Committee which considered the Draft Charter, with the qualification that the major responsibility for seeing that the French text conforms to the English text should rest with the representatives on the Legal Drafting Committee of the French-speaking Delegations. We also felt it was desirable to call the attention of the Legal Drafting Committee to the fact that it is, of course, understood that those Articles which are common to the Charter and the General Agreement should not deviate in respect of their texts except to the extent necessary to adapt the text of an Article in the Charter to the General Agreement. S - 2 - 3 E/PC/T/TA&/PV/15 Are there any comments on the proposal of the Tariff Negotiations Working Party? Does the Committee agree with the names proposed for the composition of the Legel Drafting Committee? Is the Committee also in agreement with the terms of reference of the Legal Drafting Committee? (Agreed ) I will therefore ask Dr. Dorn to act as Chairman of the Legal Drafting Committee and to take the responsibility of calling the first meeting when he considers it necessary. At our meeting yesterday we had decided to defer further consideration of Paragraph 1 of Article XXVII until the Australian Delegation had had an opportunity of submitting a revised text in the light of the discussion which took place at our meeting yesterday. We will therefore now take up Paragraph 2 of Article XXVII. Are there any comments on this paragraph? S P. 4 E/PC/T/TAC/PV/15 Mr. H. M. CATUDAL (United States): Mr. Chairman, is seems to me there is a slight gap in this paragraph, rather similar to the gap in Article XXIV pointed out by the French Delegation I believe; it says "Other amendments to this Agreement shall become effective in respect of those contracting parties which accept them upon acceptance by two-thirds of the contracting parties", but it says nothing about when they become effective, after they have become effective for the two-thirds. I wonder if we could not include the phrase: "and thereafter for each other contracting party upon acceptance by it", the language that is in the Charter now. CHAIRMAN: Are there any comments on the suggestion of the United States Delegate? The Delegate of China. Mr. D.Y. DAO (China): Mr. Chairman, we have some difficulty about the first sentence of paragraph 2. First we find that there is a difference in the procedure for amendment to, say, Article I of the Agreement and to the corresponding Article in the Charter which I think is Article 16, and which could be amended by the acceptance of two-thirds of the ~~~~~~~~~~l ;T meeber8. Here woaprovide that en amendment to Artecle I could b effective upon acceptance by all of the contracting parties. I thnk the same difficulties as those which we tried to avoid in respect of Part II by the use ofuautomatic sapersession will arise if the amendment to the provision in the Charter is carried by a two-thirds acceptance and the corresponding Article in the agreement cannot be amended except by unanimity. P. 5 E/PC/T/TAC/PV/15 The second difficulty is this; according to Article II the Schedules will be considered as an integral part of Part I. Now, amendment to Part II will require unanimity. We see that exceptions are made in paragraph 4 in respect of paragraph 4 of Article II and Articles XXV and XXVI, but under Articles XVII, XVIII and XXI actions may be taken under these provisions which may result in the modification or withdrawal of concessions provided in the Schedules. Then under these three Articles actions may be approved by contracting parties, presumably by a simple majority, where here we say that amendments to Part I which we believe will include the Schedules could be made effective by acceptance of all contracting parties. So we find there is an inconsistency between this first paragraph and the other three Articles which I mentioned, namely XVII, XVIII and XXI. In our opinion we think that, with regard to the first difficulty, probably procedures for amendment to Part I could run along the same lines as the second sentence, which I believe corresponds to the similar provisions in the Charter with regard to amendments, that means acceptance by two-thirds of the members or two-thirds of the contracting parties. As regards the second difficulty, we think something can be added to paragraph 1 saying that "Actions taken under paragraph 4 of Article II or under Articles XXV and XXVI, or under Articles XVII, XVIII, XXI which may result in the modification or withdrawal of concessions provided in the Schedules ....." I think the second difficulty may be met by some addition to paragraph 4. CHAIRMAN: Are there any other comments? The Delegate of the United States. P. 6 E/PC/T/TAC/PV/15 Mr. H.M. CATUDAL (United States) : I am not sure I understand the first point raised by the Delegate of China, but in regard to the second point it seems to me there may be two answers: one, the Agreement already provides for certain action to be taken which may result in a modification of the Schedule. If it is felt that must be specifically covered here, and avoid the condition of unanimity, it seems to me that the first sentence of paragraph 2 should read: "Except as otherwise provided for in this agreement, amendments to Part I ..... " and so on. But I think that the real answer here is that amendments here look toward amendments of the Schedules, which amendments are not specifically provided for in the Agreement. CHAIRMAN: Are there any other comments? Dr. H. DORN (Cuba): I agree with the Delegate of the United States, Mr. Chairman, that it would be very useful to add "Except as otherwise provided for in this Agreement"; but then I think we would have to adapt paragraph 4 which gives a specific exception about actions under some paragraphs and Articles of this Agreement. to Perhaps it would be unnecessary to add/paragraph 4 if we would say generally "Except as otherwise provided for in this Agreement." The second question, the first raised by the Chinese Delegate, seems to me to be connected with a more general question. Part I as it stands now is regarded as a special agreement which has nothing to do, so to say, with the Charter, because only Part II shall be eventually superseded, and therefore I think that is a special disposition regulating this part of the Agreement which stands on its own feet. Therefore I do not think that it would be contrary to the Charter if you were to provide for unanimity in order to change Part I. P. E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of China. Mr, D.Y. DAO (China): Mr. Chairman, my suggestion that the same procedure should be followed in respect of amendments to Part I is because I find that the reason why we accept the idea of automatic supersession of Part II is to avoid a situation in which a country, being both a party to the Genereal Agreement and a Member of the ITO, finds that it has to accept different obligations. That is why we accepted the idea of automatic supersession of Part II. Now, Part I contains two Articles: the first Article corresponds I think, to Article 16 in the Charter. This Article could be amended by the acceptance of two-thirds of the members. Here we say that this Article I could not be made effective except by unanimity. I suppose if one-third of the members which did not accept the amendment to the provisions of the Charter could object to the amendment introduced here to Article I of the Agreement, therefore amendment to Article I of the Agreement could not be effective, thus resulting in a difference between Article I of the Agreement and Article 16 of the Charter. Therefore to avoid such a situation I would suggest that the same procedure should be followed in the case of amendment to Article I of the Agreement as In respect of Article 16 of the Charter, taking place along the same lines as the amendment submitted. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Speaking subject to correction, I would like to state my understanding in this matter. Part I of this agreement is meant to be a provision to which are attached the Schedules embodying results of the tariff negotiations 8 P. E/PC/T/TAC/PV/15 which have already taken place. Those negotiations have taken place specifically on the base of the provisions about the Most- Favoured-Nation treatment and so on which will be embodied in Part I. There is nothing in the Charter to which one can attach the Tariff Schedules already negotiated. The Charter provisions only look to future negotiations. Therefore one has to have something to which the results already achieved may, so to speak, be attached. That is the reason for the provision in Part I, and, just as it is contemplated that, subject to such special rules as are made, the contents of the Schedules shall continue unaltered, so it is necessary to provide that the base on which they are made and attached shall also remain unaltered. For that reason I think it is right that Part I should only be changeable by unanimity and not by a two-thirds majority. 9 V E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of Czechoslovakia. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I feel that we are putting an extremely complicated construction upon something which is, to my mind, extremely simple, and I would go to the basic principle of international law - not because I am so keen on lawyers, solicitors and so on, but because I think that international law is essentially full of wisdom. There is one basic principle - that is, that when two treaties made between the same States at different dates conflict, the latter treaty prevails, it being assumed that it is in substitution for the earlier treaty. To my mind, this principle applies not only to Part II but also to Part I and Part III of our Tariff Agreement, because if all the present countries sign the Charter at Havana, it means that there is unanimity that some rules other than those in the Tariff Agreement should apply. This principle also applies to Article XXIX, where we read "This Agreement shall supersede any prior international obligations between contracting parties inconsistent therewith". I think it is entirely unnecessary, because it is self-evident and, to my mind, anything we say here has no legal value, because as soon as the present countries agree and sign the Charter, it will be the Charter which governs the relations and not the Tariff Agreement. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I think that the Czechoslovak Delegate has over-simplified the problem. There are cases where the provisions of two treaties do not clash and can exist simultaneously, and it is certain that if the 10 V E/PC/T/TAC/PV/15 provisions of two treaties were to clash, then the rule which was stated by Mr. Augenthaler would apply, but we would be faced with another difficulty; in the case of the date of the Charter and the date of the Agreement, to know which would prevail. It will not be the date of signature of the Agreement or of the Charter which will be taken into account, but the date of entry into force of the Agreement or of the Charter, and therefore it is quite possible that the Charter will enter into force before the Agreement, and the difficulty which would face us would not be the difficulty stated by Mr. Augenthaler, but the opposite one. Now, as to matters of substance, there are two questions. One relates to Part I and the other relates to the different points which were raised by the Chinese Delegate. As to this question relating to Part I, we are discussing here a multilateral agreement, and although it is a multilateral agreement it is one of a type and only one of many trade agreements. Therefore, the rule must be the rule applied in ordinary trade agreements -that is, that these trade agreements can only be modified with the unanimous consent of the parties taking part in them. Therefore, it is the normal rule which is followed here regarding Part I, and it is the exceptional rule which is followed regarding Part II. We have taken an exceptional rule in the case of Part II because there are exceptional circumstances which may justify the supersession of these provisions by the provisions of the Charter. But it is certain that if an important amendment was presented to Article 16 of the charter -let us say, for instance, the limited maintenance of preferences, no one could allow Article I to apply as it stands now, and this Article should 11 V E/PC/T/TAC/PV/13 be motified. It seems to me that the problem is fairly simple here, for when the amendments would bring about essential differences then, of course, the rule of unanimity would be required; but when these amendments would only bring minor differences, then it is certain that the Delegations would not object to minor modifications of these Articles. Regarding the second point-that is, the observations made by the Chinese Delegate relating to Article XXVII and other provisions of various Articles of this Agreement, I think that here we can have two solutions. We can adopt the suggestion made by the United States Delegate and supported by the Cuban Delegate, to insert the words "as otherwise provided for elsewhere in this Agreement"; or we can state that the provisions of different Articles in this Agreement do not conflict with the provisions of paragraph 2 and shall not be considered as amendments to the provisions of the Agreement. I do not, however, think that we can combine the two things, because if we say that these provisions do not constitute amendments to the provisions herein stated, we have no amendments and we cannot apply the provisions of paragraph 2. Nevertheless, a difference should be made. The Chinese Delegate spoke of amendments, and he mentioned cases of the suspension or withdrawal of the provisions of the Agreement or the suspension of concessions. I think that is something quite different, because amending the Agreement means amending the text of the Agreement, and the other cases - withdrawal or suspension - are matters of fact which have to be dealt with in a slightly different way and from a juridicial point of view. I think that the difference ought to be stated. 12 V E/PC/T/TAC/PV/15 CHAIRMAN: Are there any other comments? Dr. H. DORN (Cuba): Mr. Chairman, may I just draw attention to one consequence of paragraph 2, if we have in paragraph 1 the supersession of the wording of the Agreement by the Charter? As it stands now, the Charter would beedecisive in regard to Part II and you would have the situation that possibly an Article of the Charter would be changed later on. Then you would have to take over in the Agreement the new wording, as amended, of the Charter. The wording of paragraph 1, as it now stands, states: ...superseded by the provisions of the Charter for such time as the Charter remains in force". That would mean that ,,te, changed wording of the Charter would have to be applied, and a conseencpme of paragraph 2 would be that the coincidence which you have created through paragraph 1 could be destroyed by the second phrase of paragraph 2, becaus ethere would be the possibility of changing the wording of Part II on the basis of this phrase. I think that these two provisio stare not compatible with each other. Therefore, I think that the formulation of paragraph 2 will depend upon the definite formulation to be found for paragraph 1. CHAIRNMA: The Delegate of the United Kingdom. Mr. R J. SHACKLE (United Kingdom): I must say that Iodbuht whether we need be greatly exercised about the apparent possibility of conflict to which Mr. Dorn has called attention. It seems to me that these two provisions of the Article - paragraph 1 and the second sentence of paragraph 2 - are mnalt to operate at different times. Paragraph 1 is on the assumption that the Charter is in force and that supersession has taken place. The second sentence E/PC/T/TAC/PV/15 of paragraph 2, on the other hand, if I understand rightly, is meant to apply during such time as that has not happened - a time when the General Agreement is in operation but the Charter has not yet come into operation. Now, we do not know whether it will be a long time or a short time, but however it may be, there is always the possibility that during that time there will be some need to amend Part II of the Charter as it stands, and this simply enables that to be done. I should have thought that from the moment the Charter had come into force and had been agreed, its provisions should supersede Part II, and the second sentence of paragraph 2 would cease to operate. V 13 14 J. E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of Cuba. DR. H. DORN (Cuba): I agree with the Delegate of the United Kingdom that one should arrange paragraph 2 in this sense with regard to Part II, but at all events it would be necessary to express this idea and say, for instance, "as long as the Charter is not yet in force and with regard to Part II", but then we would have no provision at all for Part III, because we speak of Part I in the first sentence and we would speak, if we follow the idea of the Delegate of the United Kingdom, of Part II, but then we would have no provision at all for Part III. Therefore, I think, at all events, that we will have to change the wording in order to make clear that, as far as Part II is concerned the sentence would only apply as long as the Charter is not yet in force, and then we will have to find a solution for Part III. CHAIRMAN: I should have thought that in the way the text reads now it is quite clear that the words "Other amendments" apply both to Part II and to Part III. We want to have a provision to enable Part II to be amended as long as Part II is part of the Agreement, but paragraph 1 provides that when Part II is superseded by the Charter it is suspended, that is, Part II is no longer a part of the Agreement, it is suspended. It may be put back into the Agreement if the Charter ceases to be in force, but otherwise Part II is Suspended. Therefore, the wording we have now really takes account of all eventualities and I think if we start trying to define it we might get into difficulties. 15 J. E/PC/T/TAC/PV/15 DR. H. DORN (Cuba): I agree completely with you, Mr. Chairman, but only if we maintain paragraph 1 as it stands. Therefore, I we have permitted myself to say that if/change paragraph 1 we will have to adapt paragraph 2 to comply with paragraph 1. As it stands now, it is quite clear because we have mo Part II as long as the Charter supersedes Part II of the Agreement. CHAIRMAN: Could we deal with paragraph 2 on the assumption that paragraph 1 will not be changed substantially, in that particular sense to which we have been referring, from the text as it is now given, because I notice that the Australian proposal which we considered yesterday also has the words: "Part II of this Agreement shall be suspended and superseded". I think that point is even covered by the Australian amendment, and so I think we can consider this paragraph 2 now on the basis that there will not be any substantial change so far as that point is concerned in paragraph 1. The Delegate of China. MR. D.Y. DAO (China): Mr. Chairman, I entirely agree with Mr. Shackle when he says that the tariff negotiations here are conducted on the basis of that most-favoured-nation treatment. We are not questioning this Article 1, what we are worried about is that, as there is a difference of procedure for amendments, this difference of procedure may result in the difference of the two corresponding Articles, one in the Agreement and one in the Charter. Now, according to Dr. Augenthaler, it would be quite alright if the Charter comes into force after the Agreement and then the situation would not arise, but there is a possibility that the Agreement may come into force after the Charter and then the difficulties will still be there. That is why we suggest that, in order to 16 J. E/PC/T/TAC/PV/15 facilitate amendment to Article I and Article XVI without difficulty, the same procedure of amendment is provided for in this Agreement as is provided for in the Charter. As to the modification of Tariff Schedules which may result from action taken under provisions, say, under Adjustment for Economic Development and Emergency Action and Nullification or Impairment, I think the case could be met by adding something to paragraph 4 of this Article so as to make exceptions to the procedure laid down in paragraph 2. As to any amendment to these Articles, we are quite satisfied with the provisions of the second sentence of paragraph 2. CHAIRMAN: The Delegate of China has proposed that amendments to Part I of the Agreement should also become effective upon acceptance by two-thirds of the contracting parties. Is that the proposal of the Chinese Delegation? MR. D.Y. DAO (China): Yes, Mr. Cha irman. CHAIRMAN: Do any other Delegations wish to speak on the proposal of the Chinese Delegation ? It would not appear that the other Members of the Committee support the proposal of the Chinese Delegation. I therefore think we might take up the suggestion of the United States Delegation with regard to a drafting point to add to the last part of this paragraph the words "and in respect of any other contracting party upon acceptance by it" MR. H.M. CATUDAL (United States): The words were "and other thereafter for each/contracting party upon acceptance by it". It 17 J. E/PC/T/TAC/PV/15 simply fixes the date. CHAIRMAN: Are there any comments on the proposal of the United States Delegation? Are there any objections to the proposal of the United States Delegation? The Delegate of Cuba. DR. H. DORN (Cuba): May I only hear the full wording as proposed by Mr. Catudal. CHAIRMAN: It is to add at the end of the paragraph "and thereafter for each other contracting party upon acceptance by it". Is that agreed? The Delegate of Chile. S 18 E/PC/T/TAC/PV/15 Mr. F. Garcia OLDINI (Chile) (Interpretation): Mr. Chairman, up to now I did not wish to intervene in the discussion, but I have listened most carefully to the debate which has taken place. If I did not intervene it was because our Delegation has stated more than once that we are opposed to a solution which did not take into account the principle of automatic substitution of the provisions of the Agreement by the provisions of the Charter. We could perhaps accept that the provisions of the Agreement be substituted by the provisions of the Charter after a decision taken by the vote of a simple majority, but of course the Chinese proposal would nevertheless be better than the rule which is stated here, the rule of unanimity, which, as I said yesterday, corresponds in fact to adopting a veto rule. I have not been able to understand, all through the discussion, why certain Delegations resisted the automatic replacement of the provisions of the Agreement by the provisions of the Charter. It has been said that if we adopted such a principle then we would be adopting something which is not yet known and the results which have been achieved here through the tariff negotiations might be jeopardized by the results of the forthcoming Havana Conference. But it seems to me that what we are leading up to here is the inevitability of the provisions of the Agreement and of the text of the Agreement. I wonder if we could not find another way by which we could, at the same time, maintain the provisions of the Charter and more or less give a safeguard to those who fear the results of the Havana Conference and, on the other hand, make it possible to amend these provisions. 19 S E/PC/T/TAC/PV/15 In the Chartar it has been stated, in various provisions, that if the advantages acquired through the tariff negotiations are withdrawn, a certain procedure is to be followed, that measures under this procedure can be taken against the Member withdrawing the advantages, and that the other Member may also be able to withdraw the concessions he had made. This would be done in order to restore the balance of give-and-take which had been established. I wonder if we could not find out and devise a similar provision here in this part of the Agreement. We could perhaps at the same time provide for a text which would write in the principle of automatic substitution of the provisions of the Agreement by the provisions of the Charter, or at least the substitution after a vote taken by a simple majority of the Members, and, on the other hand, take into account the situation prevailing at the time. Therefore - I am not proposing a draft but just stating a principle - if we followed the principle of substitution of the provisions of the Agreement by the provisions of the Charter, it might result in a lose of the advantages acquired through the present negotiations, and it could be that a Member, with the agreement of the Committee - that is to say, with the agreement of the contracting parties - might take measures against those Members through whom they might suffer that loss of advantages. They might take measures to restore the balance of give-and-take, as I have said, and, if a contracting party wished to do that, such measures might be taken. I think that if we adopted a provision of this kind, we could avoid the difficulties which are now confronting us and we would be able to reconcile the logical order with the natural order which we are now destroying or ignoring. At the same time we could 20 E/PC/T/TAC/PV/13 give satisfaction to these Delegations which are not willing to risk waiting for the results of the Havana Conference and to those Delegations which think that the principle of automatic sub- stitution is essential if the sims which prompted them to take part in these negotiations, and which they hope to see carried out, are to be achieved. CHAIRMAN: Are there any other comments on the question of these amendments. Mr. R. J. SHACKLE (United Kingdom): Mr. Chairmen, as M. Royer pointed out, I think there are really two alternative, ways in which we could deal with the question of chances which may be made to these provisions; that is to say, two alternative ways of treating the question of whether they are to be regarded as a mendments or not. The first relates to the principle at present embodied in Paragraph 4, enumerating certain provisions and saying that action taken under them shall not be considered as an amendment. The other way is the one suggested by the United States Delegate, namely, to add, at the beginning of Paragraph 2, the words "As otherwise provided for in this Agreement. I think I agree with M. Royer that we could take one way or the other, but not both. I am a little inclined to feel that the suggestion which the United States Delegate has made is perhaps the :better of the two, because it seems to me that the enumeration in Paragraph 4 may possibly not be exhaustive. It is difficult to say, I think the paragraphs mentioned in the present Paragraph 4 are on the principle that they are cases where there may be permanent modifications made to the Schedules. The Schedules are part of this Agreement; therefore it might be argued tht in making permanent modifications you are amending the Agreement. 21 S E/PC/T/TAC/PV/ 15 I think I see why those particuler items have been referred to in Paragraph 4, but I am not sure that that enumeration is exhaustive, because you might have action under Article XVII - that is to say, the let-out for economic development - which would also result in permanent modification of the Schedules. If so, the question arises whether Article XVII should be added to the enumeration. I do not think there is any necessity to mention this Article again, because under both those provisions the action would be purely temporary; it would be merely suspension. There is a sufficient margin of doubt. For that reason, I rather prefer the omnibus form of words involved in Mr. Catudal's amendment. If we accept that, the I think we should delete Paragraph 4. There is just one other thing: I think we ought to add the word "and'" between the first and second sentences of Paragraph 2. Mr. Catudal's amendment would then read as follows: "Except as otherwise provide for in this agreement amendments to Part I of this Agreement or to the provisions of this Article shall become effective upon acceptance by all of the contracting parties and other amendments to this Agreement shall become effective in respect of those contracting parties... " and so on. CHAIRMAN: Is the Committee in agreement with the proposal Just made by Mr. Shackle on the basis of the proposal first suggested by Mr. Catudal? The Delegate of China. Mr. D. Y. DAO (China): Mr. Chairman, although I suggested adding something to Paragraph 4 to cover the cases I mentioned, I am quite prepared to accept the amendment suggested by Mr. Catudal and Mr. Shackle. _ - I_ I - S 22 E/PC/T/TAC/PV/15 CHAIRMAN: Are there any other comments? Are there any objections to the proposal of Mr. Shackle? Therefore the proposal of Mr. Shackle is agreed. We have now a small consequential amendment to deal with, which was proposed by the United Kingdom Delegation. It results from the action which we took yesterday of providing for a separate Article to cover Paragraph 1, headed: "Suspension and Supersession." There would then be a new Article commencing with Paragraph 2, headed: "Amendments." As a consequence of that, the United Kingdom Delegation suggests that after the words "provisions of this Article," in the second line, there should be added "or of Article XXVII." Is the Committee in agreement with that proposal? M. ROYER (France): (not interpreted). CHAIRMAN: The way it would now read, if this proposal is accepted, is: "Except as otherwise provided for in this Agreement, amendments to Part I of this Agreement or to the provisions of this Article or of Article XXVII ..." Is that agreed? M. ROYER (France): (Not interpreted). CHAIRMAN (In reply to M. Royer): Yes. There would not be two sentences; the word "and " would come between ". . . contracting parties" and "other amendments . . ." in the third line. At the end would be added the wording proposed by the United States Delegation, reading as follows: "and there- after for each other contracting party upon acceptance by it." Is the text of Paragraph 2, as now amended, approved? (Agreed). As a consequence, Paragraph 4 will be deleted. We now come to Paragraph 3. The Indian Delegation suggests the deletion of the second sentence of this paragraph. The Delegate of India. 23 E/PC/T/TAC/PV/15 Mr. B.N. ADARKAR (India): Mr. Chairman, we suggested the deletion of the second sentence because we thought that somehow it is in some way inconsistent with the second sentence of paragraph 2. Under the second sentence of paragraph 2 the contracting parties can refuse to accept a particular amendment and the amendment will then not become effective with respect to such parties. Under the second sentence of paragraph 3 the contracting party which fails to accept an amendment can be expelled, more or less, from the Agreement. This provision contained in paragraph 3 involves the element of coercion and we thought that it would be undesirable, after having given the contracting parties the option to decide which amendment they will accept and which they will not, to retain this element of coercion in paragraph 3. It has the effect of takingaway from the contracting parties the right which paragraph 2 confers on them. We are aware that there is a similar provision in Article 95 of the Charter. We do not like that provision as far as the Charter is concerned and thought we should take this opportunity of bringing this matter to the notice of this Committee. Moreover, although it is true that, so far as Part II is concerned, the provisions of the Agreement should as far as possible correspond to those of the Charter, the same necessity does not arise in regard to Part III. We could devise for Part III provisions which are different from those of the Charter. At any rate if this suggestion of ours does not meet with the acceptance of the Committee, we would suggest incorporating here in the General Agreement provisions which are at least similar to those of the Charter, that is the provisions of Article 95. Under Article 95, although it has been provided that a Member not accepting an amendment to the Charter might in certain circumstances P. 24 P. E/PC/T/TAC/PV/15 be excluded from the Charter, a provision has been made whereby the Conference may, by a majority vote of two-thirds of the members that present and voting, determine/this particular provision shall prevail with respect to any such Member. There is also a further provision inALrticle 95 that a Member not accepting an amendment shall be roee to withdraw from the Organization upon the expiration of six months from the date upon which written notice of such withdrawal is received by the Secretary-General. It seems to us thtT either we should delete the second sentence of paragraph 3 or else if the retentionofb this :oecoive element is considered necessary for the purpose of teo General Agreement then we should at least amplify the provisions of paragraph 3 on the lines of paragraph 2 of Article 95. A LAHJIRMA: jre there any comments on the proposal of the Indian Delegation? The Delegate of Norway. ..MEMr. J Vf3LANDER (Norway): Mr. Chairman, I think there is much in the Indian proposal here. As far as I che see, t1h second sentence of paragraph 3 would provide that the Committee - I take .it by a majority decision - could make a decision which would lead tothe exclusion of one party, whilst the second sentence of paragraph 2 provides for a two-thirds majority for amendments other than those to Part I becoming effective. I would therefore think that there is something tofbe said aor the Indian proposal on this particular paragraph. I am not quite hertain wlEther it would be right to delete completely the sentence in question but I think there is need for some alteration to be made so that paragraph 2 and paragraph 3 would become consistent. CHAIRMAN: Any other comments? The Delegate of the United States. 25 P . E/PC/T/TAC/PV/15 Mr. H.M. CATUDAL (United States) I think also that the language of Article 95 in general is preferable to the language that is at present in the General Agreement. It would need certain modification of course, to make it conform to the form of the General Agreement. The reason why I think it preferable is that it is clear that there may be some amendments which are made which are of such importance that it is necessary that all the contracting parties agree to those amendments if they are to continue to be part of this Agreement but those are the exceptional cases. As the language now stands it does seem to give the impression that at any moment the Committee may by some arbitrary action force a Member to get out if he has not agreed to even a minor amendment. Having said that, I might add that I do not agree with the proposal of the Indian Delegation, however, that the final sentence of paragraph 2 of Article 95 of the Charter be included in this proposal: that was the provision which said that a Member which did not accept an amendment any amendment - should be free to withdraw from the Organization. It seems to me that here the tariff concessions and other concessions in the Agreement are being made for a period of three years and that if an amendment were adopted , even a minor amendment, which a contracting party did not accept, it would then have a change to get out of the tariff obligations. So my proposal would be to take the second sentence of paragraph 2 of Article 95 and adjust it to replace the language of the second sentence of paragraph 3, to read something as follows, "The Committee may decide that any amendment under this Article is of such a nature that all contracting parties which have not accepted it within a time specified by the 26 P. E/PC/T/TAC/PV/15 Committee shall be required to withdraw from the Agreement; providing that the Contracting Parties or the Committee may, by the affirmative votes of two-thirds of the parties present and voting, determine the conditions under which this requirement shall be waived with respect to any such contracting party". CHAIRMAN: The Delegate of India. Mr. B.N. ADARKAR (India): Mr. Chairman, I would just like to add a few words on the desirability of including in the General Agreement the last sentence of paragraph 2 of Article 95 which gives the right to a member not accepting an amendment to withdraw from the Organization, a right which corresponds to the right of the Organization to exclude such a member. I would only point out to the Delegate from the United States that this process actually enhances the power of the individual Member and particularly an influential Member, a Member who is very important in international trade, to influence the nature of the amendments which are likely to be adopted by the majority. I would illustrate my point by a simple example. Supposing Part II of the Agreement is not superseded by the Charter and if, let us say, the provisions of the Agreement concerning Economic Development are amended by the majority or by two-thirds majority - such a majority might be conceivable as the membership of the Agreement increases - if the provisions of the Agreement concerning Economic Development are amended by a two-thirds majority on lines which are not acceptable to a Member like the United States, such amendments will certainly not be applicable to a Member like the United States, but in any case those amendments were not intended to apply to such a Member but only to Members which are interested in securing further economic development. P. 27 E/PC/T/TAC/PV/15 Now, although such amendments are not applicable to the United States, still the standing of the General Agreement taken as a whole may in the view of such a Member substantially diminish as a result of the carrying out of those amendments. In such a situation a Member like the United States would be in a position to threaten to withdrew from the Agreement and thus influence the prospects of such amendments being carried out. It is therefore a privilege which is of value to Members because it gives them a right which corresponds to the right given to other contracting parties to exclude such a Member. 28 V E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of the United States. Mr. H.M. CATUDAL (United States): Mr. Chairman, I recognize that the Delegate of India has a point. I feel that I have made a point, too, which, it seems to me, overweight the other point - namely, that by refusing to accept even the most minor amendment, a country would be able to turn this three-year Agreement, insofar as the tariff concessions are concerned, into a very short-term Agreement, and so get out of it. I think that is important. In the second place, with respect to the particular point made by the Delegate of India, as he has pointed out, a country which does not accept such an amendment would not be bound, insofar as it is concerned, by the amendment. Therefore, it could only be indirectly a factor. It is true that it might be a factor in the sense that the whole Agreement might now become less attractive to it than before. I should be inclined to believe that in those circumstances there would be sufficient recourse under the nullification and impairment provision for it to get satisfaction. In ether words, I think we would be prepared to take the risk which is suggested. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): I seem to remember a French maxim about the better being the enemy of the good, and on that basis I rather feel that the good consists in adding the second sentence of paragraph 2 of Article 95 with its proviso, and the better consists in adding also the last sentence. I would therefore suggest adding thesecond sentence with the proviso, but not the last sentence! V 29 E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of India. Dr. B.N. ADARKAR (India): If the second sentence of Article 95 is adopted, we would press for the adoption of the third sentence of paragraph 2 of Article 95. CHAIRMAN: There seems to be developing in the Committee general agreement to the substitution of paragraph 3 by the second paragraph of Article 95 of the Charter, with the proviso; but there is a difference of opinion as to whether or not the last sentence of paragraph 2 of Article 95 should be added. I should like to obtain the sense of the Committee with regard to these proposals, particularly the latter point as to whether or not the last sentence of paragraph 2 of Article 95 of the Charter should be added. Mr. D.Y. DAO (China): Mr. Chairman, I think that there are two ways of dealing with the situation created by a Member not accepting an amendment. One is that the Contracting Parties would ask the other Contracting Party not accepting the amendment to withdraw. The other is that the Contracting Party not accepting the amendment withdraws himself. If we provided one without providing the other, I think the balance would be tilted. Furthermore, if the Contracting Party wished to avail itself of the provision relating to impairment and nullification, he could not take such action without the proper cause: the cause is that some other Contracting Party has taken action to which he objects - then he can withdraw under the provision of impairment and nullification. It is a question of whether you accept or do not accept, and if you do not accept the amendment, then you either stay until the other Contracting Parties ask you I 30 V E/PC/T/TAC/PV/15 to withdraw or you yourself withdraw, so I think that if we provide the one we should provide the other. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): A possible compromise occurs to me. I am afraid it involves laying bands upon the sacred wording of the Charter, but it is this - I am taking the second sentence of paragraph 2 of Article 95 - and it runs like this: "The Contracting Parties may at any time determine that any amendment under this paragraph is of such a nature that all Contracting Parties which have not accepted it within a period specified q by the Contracting Parties shall be permitted or required to withdraw from the Organization, provided.." etc. The point of it is that this limits the permission to withdraw or requirement to withdraw to those particular amendments which the Committee regards as important. It does not provide the opportunity for every minor amendment, and I venture to think that it is only in the case of important amendments that there should be the right to withdraw, equally with the power to expel. That is the basis of my compromise suggestion - the words "permitted or" in front of the words "required to withdraw". CHAIRMAN: Are there any other comments? Mr. J. MELANDER (Norway): Mr. Chairman, I think the proposal made by Mr. Shackle is a good solution and I support it. Mr. H.M. CATUDAL (United States): I entirely agree with the proposal - I think it is an admirable solution. CHAIRMAN: The Delegate of Czechoslovakia. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I think 31 V E/PD/T/TAC/PV/15 that the solution suggested by Mr. Shackle is the right one. I would only suggest a little different wording and that is the following: "The Contracting Party shall be free to withdraw or could remain party to the Agreement with the consent of the the Contracting Parties". There would be nothing about expulsion. As the amendment is so important, it amounts actually to an entirely now Agreement, so in that case, the Party should be free to withdraw or could remain party to the Agreement with the consent of the Contracting Parties. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I second the proposal just made by Dr. Augenthaler. I think that the substance of the proposal is the same, but the form is a more pleasing one. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I too agree. I think, however, that we would need to add the word "only" in the English version "shall be free to withdraw or could remain party to the Agreement/with the consent" and so on. Mr. L. C. WEBB (New Zealand): Can we have the text read again? CHAIRMAN: Would Mr. Shackle read the suggested text? Mr. R. J. SHACKLE (United Kingdom): It is only the addition of the word "only": "shall be free to withdraw or could remain a Contracting Party only with the consent of the Contracting Parties". I think that the word "only" is needed in English to point the meaning. 32 E/PC/T/TAC/PV/15 CHAIRMAN: If your proposal is adopted, that means that the proviso no longer applies? Mr. R.J. SHACKLE (United Kingdom): At first sight I should think we would need to keep the proviso. I am not sure about that. CHAIRMAN: I have made a draft of the proposal of Mr. Shackle as modified by the suggestions in the Committee and have adapted it, as far as it has been possible, to the language of the Agreement. I think it would then read as follows: "The Committee may decide that any amendment made effective under this Article, other than an amendment to Part I of this Agreement or to the provisions of this Article or to the provisions of this Article, is of such a nature that any Contracting Party which has not accepted it within a period specified by the Committee shall be free to withdraw from the Agreement, or may remain a Contracting Party with the consent of the Committee, provided that the Committee may, by the affirmative votes of two-thirds of the Contracting Parties present and voting, determine the conditions under which this requirement shall be waived to respect of any such Contracting Party". Mr. R.J. SHACKLE (United Kingdom): If I might interrupt before the translation, I suggest that we add the word "only", I think, on second thoughts, that the proviso is unnecessary and can disappear. In any case, the word "requirement" is no longer appropriate. CHAIRMAN: The Delegate of France. V V 33 E/PC/T/TAC/PV/15 M. ROYER (France) (Interpretation): Mr. Chairman, I think that we could give this task to the Legal Drafting Committee. The words "other than an amendment to Part I of this Agreement or to the provisions of this Article" are useless, because in fact they have to be agreed upon unanimously, and therefore they do not fall within the scope of this provision. 34 J. E/PC/T/TAC/PV/15 MR. H.M. CATUDAL (United States): Mr. Chairman, I wonder if we need give a draft to the Legal Drafting Committee, I certainly agree with the comments made by Monsieur Royer that these words are superflous, and it seems to me that we might strike them out at once. CHAIRMAN: I think it would be desirable to agree at least upon a tentative text which would be brushed up by the Legal Drafting Committee. Would this text meet the ideas that have been expressed in the Committee: "This Committee may decide that any amendment made effective under this Article is of such a nature that any contracting party which has not accepted within a period specified by the Committee shall be free to withdraw from this Agreement or remain a contracting party only with the consent of the Committee". Does the Committee agree with that text? Agreed. Are there any other comments on paragraph 3? We will now come to Article XXVIII - "Withdrawal". I would first of all like to suggest that we now change the date, which, of course, was based on the assumption that provisional application would be from November 1st, as we did in the case of Article XXVI. I think we could agree now to change the date to January 1st, 1951. On page 8 and page 9 of document E/PC/T/N/312, the Norwegian Delegation have certain comments to offer with regard to this Article, The Czechoslovak Delegation expressed a view that any contracting party should have the right to withdraw at any time, since otherwise such contracting parties might find themselves subject, simultaneously, J. E/PC/T/TAC/PV/15 to two different and equally effective international conventions. Are there any comments on Article XXVIII? MR. R.J. SHACKLE (United Kingdom): I have merely two points, Mr. Chairman. In the third line the word "one" should be "any".- that is merely an improvement in the English language. As regards the last line but two, I do not understand the motive of the words "not less than" in front of the words "six months". In the corresponding Article of the Charter, which is Article 97, paragraph 2, it simply says: "A withdrawal under paragraph 1 of this Article shall take effect upon the expiration of six months from the day on which written notice of such withdrawal is received by the Director- General". I cannot see the motive of the words "not less than", may but there/have been some reason to add it of which I am not aware. CHAIRMAN: I take it that there is no objection to the first of the changes suggested by Mr. Shackle, that is, to change the word "one" in the third line to the word "any". Agreed. The second suggestion of Mr. Shackle is to delete the words "."not less than" in the sixth and seventh lines. Is that agreed? Agreed. Are there any other comments with regard to Article XXVIII? The Delegate of China. MR. D.Y. DAO (China): Mr. Chairman, I have a small poinw thich, I think, can be well taken care of by thL Begal Drafting Committee, It is the question of whether it is necessary to have a cross reference because under Article XXI a Member can withdraw. 55 36 J. E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of India. MR. B.N. ADARKAR (India): I notice that, in the corresponding provision in the New York Draft of the General Agreement, a reference is included to the Article dealing with Nullification or Impairment. It starts by saying "Without predjudice to the provisions of Article XIX,", which is the Article on Nullification or Impairment. Similarly, we could say here: Without predjudice to the provisions of that Article and the Article on amendments. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I think that the corresponding passage in the Charter is the opening sentence of paragraph 1 of Article 97. I would suggest that the Legal Drafting Committee should have that in front of them when considering this text. M. ROYER (France) (Interpretation): There are other texts which should be mentioned here. For instance, Article XXVII, paragraph 2, which we have just adopted here and to which we should also refer. CHAIRMAN: Is the Committee in accord with regard to leaving the question of cross references to the Drafting Committee? Agreed. Are there any other comments with regard to Article XXVIII? H.R. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I only wanted to state that I withdraw our amendment, because when we drafted it it was not quite clear what the possition would be with Regard to provisional application. 37 J. E/PC/T/TAC/PV/15 CHAIRMAN: I thank the Delegate of Czechoslovakia., Are there any other comments on Article XXVIII? Approved. Article XXIX. On page 9 of document E/PC/T/W/312 we find that the Czechoslovakian Delegation proposes that the present Article be deleted and replaced by the following text: "The contracting parties shall put in force the provisions of this Agreement by way of their existing commercial treaties. Where there is no commercial treaty existing among the respective countries, this Agreement shall provisionally take the place of such a treaty". H.E. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I would like to withdraw our proposal and propose instead the deletion of the whole of Article XXIX. I think that the first part is not at all necessary for the simple reason, as I have already stated today, that any later Agreement substitutes the earlier, so that it means that any commeercial treaties we have amongst ourselves are superseded by the provisions of this Tariff Agreement, and the first part of Article ,XXIX is not necessary. As for the second part, we meet our dear old acquaintance Relations with Nor-Members. Well, we were unable to decide in the Draft Charter about what text to propose to the Havana Conference, and the reason was that many countries felt that they could not decide upon this matter because they did not know who would be the future Members of the Organization. Here, there is an even more restricted circle than we may expect at Havana. As for Czechoslovakia, for. instance, there is not one single neighbour of 38 J. E/PC/T/TAC/PV/15 Czechoslovakia present here. We started on this crusade with lofty principles, but also with practical ideas to secure full employment and expand world trade, and so on. I think that no country should be obliged to maintain in relation to non-Members the principles of this Agreement, because it is not sure that the other party would accept those principles, and so long as there is no injury to other Members or other parties to the Agreement, I do not see why any international obligations should be terminated. To come back to the first part again, I still think that it would be better to omit it because, when we were discussing the question of international obligations and so on, we came to the conclusion that it could also be applied, for instance, to peace treaties and many other international obligations, so we think that it is better to delete the whole of Article XXIX as it stands, especially as the Agreement is a provisional one, and I doubt if any country would be willing to terminate its international relations because of some provisional Agreement. S 39 E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of the United States. Mr. H.M. CATURDAL (United States): Mr. Chairman, I agree with the Delegate of Czechoslovakia that Paragraph 1 does seem superfluous. We would be agreeable to its deletion. With respect to Paragraph 2 and the Australian Delegation's proposal to amend it, at the top of Page 10 of Document W/312, I wonder whether there could be any real objection to such a provision. Once the Agreement has definitively entered into force, it seems to me that a country would have to terminate any prior existing international obligation to the extent that any such prior obligation were inconsistent with this Agreement. I am wondering therefore if the Australian amendment here would not be a reasonable compromise which Dr. Augenthaler could accept. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Charman, as the preceding speakers have done, I would like to state also that I think Paragraph 1 of Article XXIX is not indispensable; in fact, it may cause some trouble in certain countries where there is a certain constitutional procedure for the revision of treaties. As regards Paragraph 2, I wonder if this paragraph is really indispensable. The Australian amendment tends to leave the solution of the question in a rather uncertain way until the definitive entry into force of the Charter. Once the Charter comes into force in a definitive way, the reslations with non- Member States will be specified and it is possible that the non-Member States may not be the same as those parties to the Agreement. 40 S E/PC/T/TAC/PV/15 We can have two cases: we can have the case of relations with non-Member States because they are not Members of the Organization and we can have relations with Members who are not parties to the Agreement. The second case will be governed by certain rules of the Charter; in the first case the relations with non-Members of the Organization will be provided for by the rules dealing with relations with non-Members of the Organization. I think, therefore, that Paragraph 2 is also superfluous. CHAIRMAN: The Delegate of Belgium. Baron P. de GAIFFIER (Belgium) (Interpretation): Mr. Chairman, I do not agree with what has been said by the preceding speakers. I think that Paragraph 1 presents a certain interest. Its provisions are customary in most commercial agreements and it is usual to state that the provisions of a new agreement supersede the provisions of former agreements. This may be an obvious rule of International Law, but it is neverthe- less customary to state it. But it seems to me we have here an Australian amendment to Paragraph 1 and I think Paragraph 1 could be replaced by the suggested Australian text. As regards Paragraph 2, we would prefer to see it maintained as it now stands, but, in an effort to compromise, we are ready to study Paragraph 2 in the light of the Australian amendment. CHIAMVN: The De'agate ofrB;azil. MrE B. LR BRODIEU!S (ar.zil): rM.. Chairman, Iegc,ard this LrticlXXCCIX as a very complex one. If we admit that we are dealing with a multilateral agreement, we have to accept the Fact that it will be very difficult to have ae neral provision dealing with this very complex matter. 41 S E/PC/T/TAC/PV/15 I would call your attention - if you will allow me, Mr. Chairman - to the different dates for the entry into force of the Agreement. We have a group of countries which can put this Agreement into force at a certain date, and anothe group which can do so at another date - a much later one. It will be very difficult, especially in reward to tariff concessions, to have supersession of prior international obligations by this multilateral Agreement. In regard to the amendment of the Australian Delegation, I see more difficulties. I think it will be very hard at this time to have a real idea of what will happen in the near future, especially by June 30, 1948. Because of this, I belive it will be better to delete both paragraphs of Article XXIX. CHAIRMAN: The Delegate of Cuba. Mr. H. DORN (Cuba ): Mr. Chairman, I agree with all those Delegates who have stated that Paragraph 1 of Article XXIX is superfluous, As for Paragraph 2, I want to drew attention to a question of substance which, in my opinion, is not quite solved by this Paragraph 2, because it is not quite clear what it means by prior international obligations which are inconsistent with this agreement. Does this mean that the position obtaining from an international treaty with a third country which has another and different interpretation is inconsistent, or is the inconsistency only if the international treaty with a third country impedes - and that is, in my opinion the only correct meaning - the maintenance and realization of the obligations stated in the Agreement. Only to this extent could there really be inconsistency between this Agreement and a treaty with a third country. E/PC/T/TAC/PV/15 I think if one could clear up this point it would perhaps be easier to get a formula which would be acceptable to all of us. CHAIRMAN: The Delegate of the United States. Mr. H. M. CATUDAL (United States): Mr. Chairman, I am glad that the Cuban D elegate m I:Tte has tade this point. I; seems to me there has been some misunderstanding and some unnecessary fears because of the language here, which is open posssibly to different interpretations, I have a serggestion to make hxe, slightly modifying the .ustralian amend ment, which I thinkwould make it very clear and remove some of the objections to this proposal. I suggest that the paragraph should "rhed as follows: Tii conaracting pertieAgshell, after the ~,renment shall have entered into foXce under awticle X:IV, take ell necessary steps to terminate any prior international obligations with any non-contracting party to the extent that such obligations would prevent such contracting part from giving full effect to the Agovision. of this &Freement-" It seems to me this makas it very clear thet this is not a question on a par with the non-Member paovesions of the Ch;rtor, whereby it may be decided that the Members of the Organization must refrain from giving certainabenefits of the Ch.rter to non-Members. A1 you are asking here is that a contracting party, after the definitive entry igto force of the Ajreement, should terminate any obligation with a non-contracting party which would prevent the contracting party from givingfull effect to the provisions of this :*rement, I think that is a reasonable compromise upon which we might be able to agree, S S E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): Well, Mr. Chairman, I was going to say this before I saw Mr. Catudal's amendment. I am not sure whether it is not still perhaps a valuable point. I am a little distrustful of putting in oast-iron points of this kind. One does not know what the future may bring forth. I should like to see, prefaced to this paragraph, some such words as "unless in any particular case the Committee otherwise decides." This would provide a sort of safety valve, whatever the subsequent decision on the paragraph may be. -44-- P. E/PC/T/TAC/PV/15 CHAIRMAN: The Delegate of China. Mr. D. Y. DAO (China): Mr. Chairman, you will notice that the Chinese Delegation has produced an amendment to Article XXIX suggesting the suppression of paragraph 2. So we share the view expressed by the Delegate of Czechoslovakia that paragraph 2 seems to to us not/be necessary. As long as the text in the Charter relating to relations with non-Members is still undecided we think that it is better to leave out this paragraph until the Charter is made definite in respect to the Members' relation with the non- Members. Furthermore, in the Charter the non-Member is given a definition. Here we refer to "non-contracting parties". We do not know who are the non-contracting parties. We believe that the Agreement will be open for adherents. Besides these seventeen or twenty nations here who will probably be contracting parties to the Agreement, there will probably be many others who will join the Agreement, so by the time when so many countries have joined the Agreement the proportion of the non-contracting parties will be reduced and then, probably, the difficulties will not be so great; but at the present moment, we find that there may be difficulties for some contracting parties to take steps to terminate their prior international obligations with non-contracting parties. CHAIRMAN: The Delegate of New Zealand. Mr. L.C. WEBB (New Zealand): Mr. Chairman, we agree with those delegations who think that Article XXIX could very probably be deleted without endangering what is essential in the Agreement, since we would assume that countries which have initiated tariff reductions have done so with due regard for their existing international obligations. E/PC/T/TAC/PV/15 If, however, the of this meeting is against the total deletion of Article XXIX, then we would feel that the most desirable compromise would be really to combine the suggestions which have been made by the United kingdom and the United States Delegations: that is, that we should take the Australian suggestion for paragraph 2, as amended, very necessarily I think, by the United States Delegate and then preface it by Mr. Phacklo phrase - I do not know if I oaught it correctly - "except as the Committee may otherwise provide". It seems to absolutely assential to leave some discretionry power in the hands of the Committee because is J.s absolutely impossible to foresoe the type of situation which may arise under Article XXIX, paragraph 2. . CHAIRMAN: The Delegate of Australia, Mr. E. McCARTHE (Australia) : Mr. Chairman, the question seems to us to be in two divisions. As to whether particular Article is needed at all, our view would rather be that we do not feel very strongly on the question as to whether is should or should not. We would not be very disturbed if it were removed: on the other hand, we would not move to have it, remain . But if the view is that it should remain we would be inclied to think that it goes without saying that, if you have signed this Agreement and it is in conflict with other obligations you have entered into, you have either got/to adjust those obligations or you cannot sign the Agreement. If it is to remain, however, we are of the view that it should be qualified. * 'ir .in the liues that we have sugested. We would not object to the amendment proposed by the United States representative; in fact, we rather think that it improves the wo~ding that we have suggested. We have some doubts regarding Mr. Shackle's proposal because it does seem that we are trying to -45- E/PC / T/ TAC/PV/15 define what might be a legal position that would arise out of our signing the Agreement and it is just possible that the Committee might take a view that would embarrass a particular country in its relations with a party with which it had an agreement. In other words you have got so me thing which might have rather firm legal implications and you have given the Committee certain discretionary power, and I must say that I am in some doubt whether that would actually work out in practice without some difficulty. I cannot see that there is much room for embarrassmont or difficulty where you are defining that. Any obligations that you have entered into in the past and vvhich will prevent you making this Agreement will have to be in some way dealt with; either you will have to approach the people with whom you had obligations and ask them to amend them, or you will have to take some steps to reconcile the fact that you have made a new Agreement which in some way is inconsistent with the prior obligation. So our view would be that, if it is decided to retain Article XXIX, it should be qualified in the way that we have suggested, and we are prepared to accept the amendment, but we cannot quite see the implications of the United Kingdom proposal and we fear that it might turn out to involve a particular country in some embarrassment with the country with whom it had the prior obligations. CHAIRMAN: The Delegate of India. Mr. B.N. ADARKAR (India) : Mr. Chairman, the Indian Delegation also will support the deletion of the entire Article XXIX for reasons which were so well stated by the Delegates of Czechoslovakia and France. We would prefer that this question be left over until the final, terms of the Charter on questions relating to relations with non-Members are decidèd. We do not expect that any serious practical difficulties would arise if this Article were deleted. P. - 46 - E/PC/T/TQC/PV/15 While the amendment suggested by the Delegate of the United Kingdom goes some way to easing the position, we are afraid that, if we give discreti'on to the Committee to decide in which particular cases the operation of this Article might be suspended, it might create a serious embarrassment to particular countries, For these reasons we would strongly support the proposal to delete. Article XXIX altogether. CHAIRMAN: The Delegatc of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I do not want to prolong this debate, and I would only say in defence of my impromptu suggestion, that I do not think it would cause any actual clash. The words I suggested were "unless in any particular case the Committee otherwise decides"'. The Committee would look at each case on its rnerits. It seems to me if you had these words there, that is, so to speak, a qualification of the obligation of the parties to this Agreement. That is to say, if there were a conflict with some prior obligation which they had toward a third party, they would only be called upon to adjust that inconsistency if the Committee, on considering the particular case, decided that they ought to do so. I quite see that it may place a discretior which may sometimes be embarrassing on the Committee; but I am afraid the Committee may have to exercise a great many embarrassing discretions anyhov. So I still think there ma.y be some merit in my suggestion, but I have no strong feelings in the matter. CHAIRMAN: Are there any other speakers? Mr. Evans. MR. J.W. EVANS (United States): Mr. Chairman, Mr. Catudal kindly let me take his chair because I had been involved in the - 48 - debates on the Relations with Non-Member clause. But before I say anything I should like to ask whether or not the amendment, with the proposal of Mr. Catudal does not in fact take care of the fears which have been expressed by the Czechoslovak Delegate and the Delegate of France. They wore proposed specifically to meat the points and I rather think they do. CHAIRMAN: The Delegate of Czechoslovakia. H.E. Dr. Z. AUGENTHALER (Czechoslovekia): Mr. Chairman, I should like to insist that the whole Article XXIX be deleted entirely. My reasons are as follows: If there is a clash between this Tariff Agreement and some obligations of the respective country with some - I won't say whether non-Member or non-contracting party, there would certainly be a great headache for the respective country as to how to solve this problem, either to remain party to the Agreement or to terminate the other obligations. I do not doubt that the respective party would do its best to do what could be done in the circumstances. If, anyhow, the contracting party would have obligations such as would frustrate any of the other contracting parties, then they might have appeal to Article XXI in which it is clearly stated: "If any contracting party should consider that any benefit accruing to it directly or indirectly under this Agreement ...." and so on "...is being impeded as a result of (1) the failure of another contracting party to carry out is obligations under this Agreement or the accompanying Protocol.....". So, if I do not carry out obligations of this Tariff Agreement, anybody may come and appeal to Article XXI. If I carry out my obligations under the Tariff Agreement, why should I be obliged to terminate any of my obligations? E/PC/T/TC/PV/15 P. E/PC/T/TAC/PV/15 The other reason is that here we are placing Article XXIX, dealing with Relations with Non-Members, in Part III. Well, we have not decided what should be in the Draft Charter and hero we are placing Article XXIX, which is not even superseded automatically by what should be decided in the Charter. So it means that we renounce for the future any other arrangement which may be in the Charter. That is why I would strongly insist that the whole Article XXIX be deleted. - 50 - V E/'C/T/TAC/PV/15 Mr. John W. EVANS (United States): I asked for the floor primarily to dispose of any misunderstanding there might be as to the relationship between this clause and the debate on the Non-Member provisions. In supporting the retention of the clause as amended to accomplish this purpose, we do not feel that the argument bore on the argument which took place concerning Non-Member provisions. The principal point of difference there was the question as to whether or not Members should be permitted to extend to Non-Members the same privileges which they extended to other Members. That point is not at issue here. The only question is whether a signatory may actually violate this Agreement in favour of another Member, and there we would have thought there was no argument at all. The only problem would seem to be whether you need to express the natural obligation which goes with the acceptance of the Agreement. As to the question of whether it is necessary to express this obligation, frankly we have not felt too strongly that it was necessary to have it expressed, and probably would agree to the deletion of the clause if it were not for the debate that has taken place today and the possible danger that some of the remarks of some Delegates might be misunderstood - and I mean misunderstood - to mean that they feel that they do not have an obligation to terminate an existing Agreement which would conflict with this, I do not believe that there is any Delegate here who would say that this Agreement should be accepted by his country if it is in conflict with an existing agreement, unless he is willing to dispose of the existing agreement. But I am afraid that some of the discussion might be so interpreted. That being the case, in view of the V E/PC/T/TAC/PV/15 debate that has taken place and is now on the record, we would prefer to retain the Article with the suggested amendment; but we share with the Australian Delegate some doubts and fears as to the desirability of the wording proposed by Mr. Shackle, and we would suggest that be not included. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I do not wish to prolong the discussion, but it seems to me that there is a misunderstanding. Article XXIX, to my mind, adds nothing to the obligations of the Members. The obligations of the Members appear in the Agreement and we do not make them any stronger by stating it a second time here in Article XXIX. I think that we all agree here that the obligation undertaken by the Contracting Party to its other Contracting Parties must be carried out, and if a Contracting Party does not live up to its obligation, then Article XXI of the Agreement will come into force. In Article XXI, there is no difference between a Contracting Party which does not live up to its obligation in the sense that it does not in fact grant the advantages that it granted in the negotiations to another party, and the conflict which might occur between the obligations of the Member under the present Agreement and its obligations under a previous agreement. In fact, Article XXIX has no advantage: it adds nothing, and it may be somewhat embarrassing for certain countries. Furthermore, under Article XXIX certain legal problems might arise, because it is possible that any provisions could - Ad - E/PC/T/TAC/PV/15 be added in the Tariff Agreement - new provisions which we have not in mind at the present time. For instance, if anything were added here which would change the scope of paragraph 2 and make it different from the scope which we envisage today, the situation might be embarrassing perhaps for certain countries. This Article is not embarrassing to the French Delegation, but nevertheless as it might be embarrassing to other Delegations, we think that, as this Article does not add anything, it would be far better to exclude it. CHAIRMAN: The Delegate of the Netherlands. Dr. G.A. LAMSVELT (Netherlands): Mr. Chairman, notwithstanding all that has been said against this Article, I am still in favour of retaining it, and therefore I would like to support the proposal made by the Delegate of the United States. I would like to go farhter and say that I do not see any harm in paragraph 1. It may be superfluous, as has been said, but, at the same time, it is quite true, as has been pointed out by my Belgian Delegate, that you find such provisions in nearly every treaty of commerce. CHAIRMAN: The Delegate of Canada. Mr. L.E. COUILLARD (Canada): Mr. Chairman, I merely want to state that I agree with the last remarks of Mr. Royer. I had thought, personally, at first that Article XXIX did more or less complete the Agreement. It is a question which will be in the minds of people reading it as to what happens to I prior international obligations; but on reading paragraphs 1 and 2, particularly with the amendments as added by the United Kingdom and the United States Delegations, it seems to me that this - 52 - V V - 53 - E/PC/T/TAC/PV/15 Article does not state anything which is not already taken for granted and which will not be done in any case, as Dr. Augenthaler stated, by the Contracting Parties. Therefore we would support Dr. Augenthaler's suggestion that Article XXIX be deleted. CHAIRMAN: The Delegate of the United Kingdom. Mr . R. J. SHACKLE (United Kingdom): Mr. Chairman, after listening to this discussion, I have come to the conclusion that it makes no matter what words stand in this Article, or if no words stand there at all. What will happen in any particular case will be precisely the same. If one party considers that another party has some relation with a third party which injures its interests and infringes its rights, it will make a complaint to the Committee under Article XXI or in some other way. The Committee will have to consider the matter and try to sort it out as best it can, and under any formulation or no formulation, we shall have exactly that result. So in view of the majority sense of the Committee, I would be in favour of dropping tho Article. -54 - J. E/PC/T/TAC/PV/15 MR. J. MELANDER (Norway): Mr. Chairman, I entirely agree with the statements of the Delegatesof the United Kingdom, France and Canada, There is perhaps one point which could, be taken care of. The Delegate of the United States said that he would really also agree to the deletion were it not for certain remarks which had been made during the discussion. I think perhaps that, if there is any doubt about any statements or any arguments made, one could clear up those at the next meeting. I suggest that the United States Delegate goes through the Verbatim Report and that, if there are any doubts, he raises at the next meeting any points on which he feels doubtful, and has the thing squared up completely. CHAIRMAN: The Delegate of the United States. MR. J. E. EVANS (United States): Mr. Chairman, I think that the oasisat way to clear up this is to have the last word. expressed In view of the strong feeling/by many Delegates who would rather have the paragraph out, we should agree to do so on a ve definite condition, that is, that we understand, in spite of anything that may have been said today, that no Delegate here challenges the fact that the definitive acceptance of the General Agreement would require that it should not allow any prior obligations to stand in the way of carrying out the provisions of this agreement, even though that requirement might lead to the termination of existing agreements. Now, if no one disagrees with that statement, we are perfectly willing to see the Article deleted. - 55 - E/PC/T/TAC/PV/15 J. I/ . It _ CHAIRMAN: I ain sure that no Member of the Committee wvuld question the statement just made by the Delegate of the United States, and as the sense of the Committee has been in favour of the deletion of this Article I hope that it will now be possible for the Committee to unanimously agree that Article XXIX be deleted. H.E. Dr. Z. AUGENTFAER (Czechoslovakia): Mr. Chairman, I would like to thank my colleagues for their understanding of this situation. CHAIR II: The deletion of Article XXIX is agreed, I think that we have done a good day's work, although we have only covered three Articles, but they were not particularly easy Tomorrow I propose to take up Articles XXX and XXXI, after which I think we had better consider the Reports of Sub-Comnittees which have already been submitted and circulated. We will then take up Provisional Application of. the Agreement and the Final Act. The next meeting will take place tomorrow at 2.30 p.m. The meeting is adjourned. The meeting rose at 6.15 p.m.
GATT Library
sf835fw9193
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifth Meeting held on Friday, 22 August 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, August 22, 1947
United Nations. Economic and Social Council
22/08/1947
official documents
E/PC/T/PV.2/5 and E/PC/T/PV2/3/CORR.1-6
https://exhibits.stanford.edu/gatt/catalog/sf835fw9193
sf835fw9193_90260195.xml
GATT_155
12,170
76,979
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOC IAL UNRESTRICTED E/PC/T/PV.2/5 22 August 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. FIFTH MEETING HELD ON FRIDAY, 22 AUGUST 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA. M. Max SUETENS Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. -- NATIONS UNIES hClairman) elgi-jum). ER CHAIRMAN (Interpretation): The Meeting is called to order. We are assembled here to-day to approve the Report of the Second Session of the Preparatory Commission on the Conference on Trade and Employment of the United Nations Organisation, Document 180, which is a public document. I have great pleasure in announcing that a great number of reservations mentioned in that document were withdrawn this morning by the delegation which had made them. A corrigendum showing the various withdrawals and containing the final text will be circulated as soon as possible. I shall now submit the Draft Charter to your approval chapter by chapter. The Introduction. Are there any remarks? Adopted. Chapter I. - Purpose and Objectives. Any remarks? Adopted. Chapter II- Employment and Economic Activities. No remarks. Adopted. Chapter III - Economic Development. No remarks? Adopted. Chapter IV - Commercial Policy. No remarks? Adopted. Chapter V. - Restrictive Business Practices. No remarks? Adopted. Chapter VI - Inter-governmental Commodity Agreements. No remarks? Adopted. Chapter VII - The International Trade Organisation. No remarks? Adopted. Chapter VIII - Settlement a Differences - Interpretation. No remarks? Adopted. Chapter IX - General Provisions. No remarks? Adopted. The whole of the Report of the Second Session is therefore adopted. 2 ER Ladies and Gentlemen, I have the honour of bringing to a close the work of the First Session of the Preparatory Commission of the International Conference of Trade and Employment. To-day we are on the point of bringing to a close the work of the Second Session. This Session has lasted from 10th April to 22nd August. During that period of just over four months 453 meetings of com- mittees, sub-committees, and working parties have been held. If we add to that figure the 58 meetings held at Lake Success by the Drafting Committee and the 150 meetings hold in London in the course of the First Session, we reach a total of 626 meetings, which shows the considerable effort made by the delegations here assembled in performing the task eutrusted to them by the Economic and Social Council. The texts drawn up in London, and reviewed at Lake Success, were further discussed and substantially revised. I sincerely think that each page of our work shows an improve- ment on the preceding one. The work. which we are going to present to the forthcoming World Conference which, as you know, is to open on 21st November next at Havana, is, I hope, superior in coherence, logic and clarity to the text drawn up in London and New York. It is, on the other hand, highly significant that there are less reservations attached to the present draft than was the case with the previous texts. It should be added that most of these reserva- tions are provisional, and that they may well be withdrawn at the World Conference. This fact alone shows to what extent we have taken into account the needs of various requirements and of the various types of economies which are represented here. It would not be possible for me now to describe in detail the result of our work. The texts which we have drafted are public, and everyone will be able to consult and analyse them. I would like, however, to make a few remarks on the purposes which we had in mind and the means by which we have endeavoured to achieve them. 4 S E/PC/T/PV 2/ 5 Our purposes are stated in Chapter I of the draft Charter. I shall read them to you. They show the full scope of our endeavour and the magnitude of our task. Their general purpose is to realise the aims set forth in the Charter of the United Nations, particularly the attainment of the highest standards of living, full employment and conditions of economic and social progress and development envisaged in Article 55 A of that Charter . To this énd, the States parties to the Charter pledge them- selves, individually and collectively, to promote national find international action designed to attain the following objectives: 1. To assure a large and steadily growing volume of real income and effective demand, to increase the production, con- sumption and exchange of goods, and thus to contribute to a balanced and expanding world economy. and general 2. To foster and assist industrial economic/development, particularly of those countries which are still in the early stages of industrial development, and to encourage the inter- national flow of capital for productive investment. 3. To further the enjoyment by all countries, on equal terms, of access to the markets, products and productive facilities, which are needed for their economic prosperity and development, 4. To reduce tariffs and other barriers to trade and to eliminate discriminatory treatment in international commerce. 5. To enable countries, by increasing the opportunities for their trade and economic development on a mutually advantageous basis, to abstain from measures which would disrupt world commerce, reduce productive employment or retard economic progress. 6. To facilitate through the promotion of mutual understanding, consultation and co-operation the solution of problems relating Im I _ -: } - E/PC/T/PV2/5 to international trade in the fields of employment, economic development, commercial policy, business practices and commodity policy. To achieve these aims, a set of rules and undertakings are proposed which make up the subject matter of the Draft Charter which has just been approved. In this series of Chapters and Articles one may discern four main trends which I shall analyse very briefly. First, it is necessary to give to international trade the security it requires by means of a body of rules which are recognised by everybody. In the present state of affairs these rules are embodied in various commercial treaties, but their provisions lack uniformity; they are not sufficiently general in character, and most of them are ill-suited to the new techniques of commercial policy. It was therefore necessary to re-consider, define, supplement and codify them. May I take as an example the clauses relating to Most- Favoured-Nation treatment, national treatment in internal taxation, the rule governing customs formalities, and regulations relatin to prohibitions and restrictions. It has even been found necessary to enlarge considerably upon the scope of ordinary commercial treaties and to provide for entirely new rules as regards restrictive business practices, that is to say, all agreements concluded directly between private enterprises with the object of restraining competition, fixing quotas and dividing markets. These agreements affected trade as much as ordinary commercial conventions. One cannot conceive a complete code, of rules of commercial policy which would not cover these practices. It is, moreover, S .5 E/PC/T/PV2/5 the first time that there has been an agreement between Governments in this field, which hitherto has been left to the discretion of private interests. The usual solution would have been simply to lay down a code of strict rules, but this course soon proved to be impracticable. The profound differences existing in the economic structures and in the state of development of the economies of various countries represented in the Commission do not permit the adoption of uniform rules. A certain flexibility is required. Hence the necessity for excape clauses. Furthermore, even if it had been possible to lay down a set of precise rules, it would not have been possible to avoid divergencies of opinion regarding the provisions and their application. Moreover, enforcement difficulties may arise and new situations may develop. In the absence of an international charter, all these matters would have been lefts to the diseretion of the various Governments and this freedom of action would have been fraught with danger. If, on the other hand, provision is made in individual cases for a procedure which allows for the settlement of possible differences or disputes, either amicably or by means of legal procedure, it becomes possible to prevent the machinery of international trade from being too seriously impaired. As was stated by President Truman at Baylor University in February 1947, instead of retaining unlimit ed freedom which would anlelu emart como mit acts of ec' omocio gress.3i,on the future International Trade Orgazi:ation wila cectpa en enomrlic code and will decide to act in conformity with its rules. In this connection, the Draft Chaetcr provides, inter alia, for the setting up of aInLiternational Trade Organization toneurn:e its application and to aca es inteermaiery and conciliator in S S all delicate matters. In the field of customs regulations, the Draft Charter stipu- lates that the Member States will undertake concerted action to reduce customs tariffs, to eliminate tariff preferences progressivel and to abolish quantitative restrictions, or at least strictly to control their use. Simultaneously with the workof the Commission; and under its auspicos, a number of bilateral negotiations have been undertaken in this connection which are to be converted into a multilateral agreement binding the States parties to the Charter. Those negotiations have not yet been completed, but they will for an important adjunct to our work. But that is not all. Neither the laying down of principles nor the institution of an organization for safeguarding concliistioil and arbitration can suffice to maintain and develop trade. A law provides security, but it creates nothing of itself. One could oven go further; the establishment of freedom in exchange itself would not be sufficient. It would also be necessary to under- take determined and co-operative action in the field which condition trade, that is to say, production, consumption, employ- ment, and genral economic development - particuIarly in the case of under-developed countries. In these various matters, the measures to be taken depend primarily on national sovereignty. Each country must have its own policy, but these various policies might clash were they not governed by concerted action. The rules for such action constitute an important part of the Charter. In the same connection, one might mention the rules drawn up as regards inter-governmental commodity agreements. The necessity of regulating production, consumption, and the trade in those products has been recognized in certain cases. A procedure has been laid down for that regulation, so that it shall E/PC/T/PV 2/3 S 8 E/PC/T/PV2/5 conform with the general purposes of the Charter. Having thus outlined the spirit and trend of the Charter of Trade and Employment, I will briefly state the degree of unanimity we have reached regarding the various Chapters. We have the adopted without a single reservation/provisions regarding employment and economic activity in the new Chapter II. After thorough and conscientious discussions, we present in Chapter III provisions regarding economic development, most of which Members of our Commission have been able to accept, despite the very divergent stages of economic development reached by the countries they represent. In a spirit of conciliation, we have spared no effort to embody in Chapter IV a series of provisions on commercial policy which can be considered as highly satisfactory, having regard to the fact that this question is closely connected with the present- day economic problems now confronting all the Governments represented on our Preparatory Commissiorn. Questions of customs tariffs, quotas and balance of payments have a pressing and by no means academic interest for most Governments today. J 9 E/PC/T/PV/2/5 Nothing can better demonstrate the spirit of co-operation which has prevailed in our Commi than the large measure of agreement reached on the Charter on commercial policy. With almost complete unanimity, we have adopted the more detailed provisions regarding Restrictive Business practices and Inter- Governmental Commodity Agreements, dealt with in Chapters V and VI. Various countries are interested in one or other of the parts of the Charter, according to their economic structure or to their interests. One country attributes more value to the qualification of rules concerning international trade; others to the lowering of customs barriers; others to the policy advocated for the .development of new industries; others to employment policy; but all must assume the same obligations. On the other hand, each country approaches, and will approach, the Charter with its own economic structure and without bein- required to give up the fundamental principles of its economic organization. The Charter must respect the autonomy of all Members alike,7 those with liberal economies, those with state monopolies, or those whose external trade is itself a monopoly, and those whose external trade is directed for the purpose either of re-construction or of industrial development or of a system of stabilization of prices. All the rules of the Charter must be, acceptable to these various categories of countries and expressed in the terms of variousexisting economic systems. The work we are doing now is a preliminary work to be submitted to all the countries concerned in international trade. Our work would have been in vain if, while thinking of ourselves, we had not also thought of the countries which are not at present J. 10 E/PC/T/PV. 2/5 participating in our work, but which will also have to judge our work. Discussion remains free, but it can be hoped that the World Conference will not need to make substantial alterations to the text submitted. There is, however, one point on which we have not ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~/ wished to decide, namely, the creation and operation of the International Trade Organization. In connection with the relevant Chapters, the Preparatory Committee has recognized ,that on several points, rather than submitting a single draft for approval, it was more s,1table to submit to the World Conference several alternatives or preliminary proposals. This solution has-been adopted with regard to the Vo;ing provisions contkined in Article 72, the provisions on the Composition of the Executive Board, the Chapter on-the Interpretation and Settlement of Disputes, and the provisions governing Relations with Non-Member States. On these four questions, the Preparatory Committee has abstained from. formulating any final conclusions as it was con;inced that these proble"s could only be dealt with by the World Conferenae, which is t6 be aEtended by a largernumber of count.ies. ' It s important for the success of that Qonference that all the governments represented should examine these problems with particular attention before its opening. One mirht add that, as Was pointed out by the sub-committee entrusted, in the course of t-e present session, with the preibninary examination of the question.of Relations with Non-Member States, the Preparatory Co.mittee has fully recognised - and the same principle will have to guide'the World Conference - that the drafting of the Charter should be inspired by an essential objective, namely, to ensure the setting 'p of an effective Organization with the widest. possible miobershi ; E/PC/T/PV. 2/5 It is not for me to pronounce judgement on our work. I can only testify to the conscienciousness of our work. Z French moralist said something like this:- consciencious men undertake great work because it is great, and frivolous men because they think it is easy. Not for a single moment have we thought that our discussion was easy. We havee worked in good faith, hard, and over a long period. We feel confident that our efforts will be given due credit. Several Delegated have asked to speak. The first speaker on my list is the first Delegate of Australia. I call upon the Australian Delegate. J . E/PC/T/PV. 2/5 Dr.H.C. COOMBS (Australia): It had been our prime task to prepare for the consideration of the World Conference on Trade and Employment a draft Charter for an International Trade Organisation a charter which will embody a code of behaviour to which member Governments can pledge themseIves and a constitution for an Organisa- tion which will be the nations' Instrument of corporation in commer- cial policy. I believe our work n:ls been well done. It is true that certain essentially political issues have been held over for the World Conference in the form of Alternative texts. These are matters which can be dealt with adequately only when all countries concerned are present, On the wi'. technical eonomic issues with which the Charter ¢.,.;i., a substantial body of agreement has been reached., This is no mean -:ic, an -. ] t. As the project for an lnternational Trade O rganization and Charter became mole and more. concrate, it became necessary for as to. envisage it in the real world of to-day and not in come ' ,- 1t,)'.',Th- t a future. Thus our problems because more x -- :2cA- and more realistic and so more diffi- delegtions here and of the governments they represent that such progress has been made. We have every reason to ta.e1kp ide½ n when:.- we veaey done, but do not ust US : our djustmen .et- we have puodaced a draft rhaitehicwi.h we ahoneifkstcy (ommend to thW rldorn Conference. With all itmperw- .s. nsit is2.n ad atequate basis fcr oooperat ion agonz nNe ionstv- ico omncnindarommercial martert.Gzs It can he no more then a basis. Wevea-o corue.e;tad a It remLemains for the govmrnnse.t of the world pu fjf esl.ih in .ts bones and breath in bt nortls.. hT'Inth1nr-ional T rade Orgga._nisation can only be thnaIitns of±r e w wld working to-cgethe r and it caneb, greater and betterhan a~ theisam i -tmembaisrznly l>if t';hose members are willing ttas it oul d bg ao.F 3orhe Inter aLntian-l Trade Organisat ion to become aiv.niigrgoxin~sm,wovc ndimioniomurnst be met. P E/PC/T/PV.2/5 Firstly, the economic climate of the world must in its early years at least be favourable to its growth. It must be. such as to make economic cooperation between. the nations possible. The Australian delegation at the first and second sessions of this Committee has emphasized the fast that world economic conditions are still determined primarily by the domestic policies of individual countries. Only if the great economic powers maintain high levels of employment and incomes for their own people, and make fully effective their International purchasing power, can there be a world economic climate which permits cooperation. Unless these responsibilities are accepted, we shall fail. Secondly, governments must will that the International Trade Organisation should work. This does not mean a super government. National sovereignty requires that decisions concerning national policy shall be retained in the hands of national governments. With that there is no quarrel. But an International Trade Organisation, if governments so will it, can acquire experience and understanding which will make them glad to seek its advice and guidance in the fields where its experience and understanding are relevant. Unless this will is there, the structure we have planned will remain a skeleton. At the opening of this Session I said that the present time was auspicious for the work we seek to do. The world is not beset by the wastes and bitterness of unemployment. True, many countries face desperate problems, but the nature of the problems is clear, and, given time, the physical means for their solution are at hand. Furthermore, countries not so beset by problems clearly have the resources with which to P 13 14 E/PC/T/PV.2/5 help, Above all, there is in the minds of the peoples of the world a willingness to solve their problems in ways which do not create problems for others, and a conviction that the hope for the future lies in common action. This willingness and this conviction grow out of our experiences of the past, but do not let us forget that in the economic field it is made possible by the fact of full employment. The problems of full employment are the problems of shortages: and shortages clearly call for common action. If this situation is replaced by one of widespread waste of resources and markets are once again glutted with unsaleable surpluses, the mood of cooperation will be gone. There are times when the precariousness of this situation appals me, We cannot tell how much longer it will be possible to do the things we know it is necessary to do. The tide is still running with us, but we may even now have missed the flood. Let us be sure that we act before the tide turns, CHAIRMAN (Interpretation): I thank Dr. Coombs for his speech, and I call upon the second speaker on my list, the head of the Belgo-Luxembourg Delegation. Baron van der STRATEN-WAILLET (Belgium-Luxembourg) (Interpretation): Mr. Chairman, Ladies and Gentlemen The full participation of the Belgium-Luxembourg Economic Union .in the work of the Preparatory Committee is a clear indication of the interest we take in the preparation of the Draft Charter, and also of our earnest intention to contribute our full share to the major attempt that has so far been made to achieve a return to the freedom of exchanges. As you know, the Economic Union has already progressed towards this freedom of exchanges, We have adopted this policy P 15 E/PC/T/PV.2/5 because we consider that the best incentive for renewed efforts on the part of a people having suffered from fatigue and discouragement under long enemy occupation is to offer an immediate and material reward for work. The good effects of this policy are manifest in the increase in production and the speeding up of the work of reconstruction. We are therefore in a happy position with respect to many of the provisions of the Draft Charter, particularly those which affirm the right of every country to economic development; which organise united action to reduce excessive variations of the price of primary commodities; which protect investments and thus aid the development of young countries; which regulate restrictive business practices and tend to eliminate the abuse of economic power. Sound caution and realism require that due account should be taken of the fact that normal economic conditions which are necessary for the full attainment of the long-term objectives of the Charter do not at present exist, and nations have been obliged to resort largely to restrictive practices. Wisdom indicates that these measures are temporary exceptions which, in the long run, would be contrary to the attainment of the objectives of the Charter. We have therefore acted wisely in stipulating in the Charter that these provisions should be revised in the light of experience, and the period before revision should, we think, be shortened considerably. These remarks spring from our desire to look far ahead and to create something permanent. We are confident that our ambition will be accomplished. The long months of work have indeed shown that each nation represented here shows the same determination to succeed in our task. I may add that a team spirit has developed among P 16 E/PC/T/PV.2/5 us, born from mutual knowledge and respect, and that it constitutes the base on which we have founded the success of our initial efforts. I want particularly to express my appreciation of each and every delegation, and especially of our partners, the Netherlands Delegation, with which we are working more closely every day, under the sign of "BENELUX". May I also express our gratitude to the President, whose manner in discharging his delicate functions I greatly admire. I would like to conclude with thanks for the Vice-Presidents, M..Colban and Mr. Wilgress in particular. As for M. Wyndham-White and Mr. Lecarte, and in fact the, rest of the Secretariat, praise should not be stinted. They have carried out their work with zeal and self-sacrifice all through this long session. E/PC/T/PV 2/5 CHAIRMAN: I thank the Head of the Belgium-Luxembourg Delegation for his statement, and I now call upon the third speaker - the First Delegate of Brazil. I would like to draw the attention of the Delegates and the public to the fact that the translation of the speech delivered by the First Delegate of Brazil will not be simultaneous, but will follow. H.E. Antonio de Vilhena FERREIRA-BRGA (Brazil): We have all today a reason to feel satisfied. The Preparatory Committee of the Conference on Trade and Employment is completing a substantial part of the programme of its Second Session. It is already in a position to submit to the Economic and-Social Council of the United Nations the Draft Charter for International Trade which will be the working document of the Plenary Session at Havana in November next. Some problems - fortunately not many of them - are still pending a final solution. We sincerely hope that the Plenary Conference will be able to find a solution to then. A simple glance at the ground already covered-since the first study initiated by the League of Nations immediately after the first World War, down to the preparation of the present draft, will show us, even in the light of a very exacting analysis, that the positive value of our efforts considerably overrides the negative aspects. This further persuades us that we are on the right road, and that thanks to an improvement in international business practices and to the setting up of a discipline which will have to govern these practices, humanity will be able to live happier days. On the other hand, the draft we have just prepared is not due to improvisation. If in its origins it hails back to studies and observations whidh were started a long time ago, it is unquestionably the experience of Governments represented at 17 V V 18 E/PC/T/PV. 2/5 Geneva, their clear vision and their remarkable understanding of the necessities and aspirations of present Mankind, which have led us to achieve work for which we can duly hope the appreciable support of the other nations which will participate in the Havana Conference. We see with pleasure that United Nations are directing their efforts with the aim of completing on the economic international level the work of peace and fraternity which they are already achieving on the political level: work to which Brazil has always wholeheartedly adhered. The Brazilian Delegation considers that on the economic level the world. is heading more and more towards the integration of its unity. It therefore believes that all efforts aiming at a progressive raising of the standard of life of peoples, the achievement of full employment as well as economic and social development, must be undertaken in very close co-operation by all nations, without which only very terrible consequences can be expected. It was with this thought that we came to Geneva; that we went to London and that we are proposing to co-operate at Havana, having in view the attainment of the objective mentioned. 19 G E/PC/T/PV. 2/5 Without losing sight of the essential interest of our economic development, including our necessity to industrialise our country, we have always expressed quite sincerely our view- points at the Preparatory Committee. On the other hand, in the spirit of co-operation which guides us, we have always accepted the obligations which occur in reaching a conciliatory solution, and have considered the average of the interests involved. The mare fact that we have only made two reservations, in spite of the number of provisions in the Charter, and the magnitude of the problems which it raises, affords clear evidence of the conciliatory spirit in which we have always acted. Whatever criticisms have been made against our Draft, which of course may still be improved, we sincerely believe that on the level of international economy, after implementation of the Charter, trade will develop in a more satisfactory way than before. We also think it is advisable to express at this time our conviction that the success of the Charter and of the Organization which will have to put it into force, are now connected with the manner in which this implementation will be accomplished. One should not forget it is better to have imperfect laws and good executives than good laws and bad executives. I hope that the question of voting in the Assembly, and of the constitution of the Executive Board of the Organization, will be considered by the Plenary Conference by comparison with a criterion, a, truly democratic criterion,capable of assuring to all Member States under equal conditions a full participation in the work of the Organization, and of representing the community in a spirit of impartiality and fairness. 20 G E/PC/T/PV.2/5 In stressing these two problems among all others, particularly that of economic development, and in attaching great importance to it, I simply stress once more our trust in the results, which will be achieved by the International Conference on Trade and Employment. At the same time, I wish to assure the co-operation of my Government, when the occasion will arise for it to implement the action provided for in the Charter; and I do feel full of trust that we will finally achieve an improvement of international trade and that in the very near future it will work itself free of its present hindrances. We still have to continue tariff negotiations. The Brazilian Delegation wants to express its good wishes and hopes that it will achieve final results within the provided time limit. After five months of work we must be able to submit to other nations at the time of the Plenary conference the General Agreement on Customs, Tariffs and Trade as a remarkable example of our spirit of conciliation and as a witness of the sincerity with which we have conducted our work. CHAIRMAN: I now call on the next speaker, the Hon. Mr. L.D. Wilgress, First delegate of Canada. Mr. WILGRESS (Canada): Mr. Chairman, Ladies and Gentlemen: ~~~~o- onteln od .dn We have now rerchleadanother mil ston? on the long road Thfing to the establishaent of en International Trade Organizetion. This Organization is designed to bring order into what otherwise would be cha ohtic and confused conditions affectingte international e-change of goods. We embarked on this road as long ago as December, 1945, when the Government of the United States of America mad; public and transmitted to other Governments 21 E/PC/T/PV. 2/5 for their consideration a document entitled "Proposals for Expansion of World Trade and Employmentl. The principles under- lying these proposals were given official recognition by the United Nations when, in February, 1946, the Economic and Social Council, at its First Session, adopted a resolution for an International Conference on Trade and Employment to consider the creation of an International Trade Organization. On that occasion the Council established the Preparatory Committee whose function it has been to work out the text of a Draft Charter and to make arrangements for the holding of the World Conference. The First Session of the Preparatory Committee commenced in London on October 15th of last, year and since that time, with only short intervals, the seventeen countries who have been active in the work of the Preparatory committee have been in almost constant consultation. After the First Session concluded its work on November 26th, the Drafting Committee met at Lake Success, New York, from January 20th to February 25th. A few weeks there- after, on April 10th, the Second Session of the Preparatory Committee was convened in Geneva, and now, at this plenary meeting, we have approvred the final draft of the Charter which is to be submitted for the consideration of the many countries and separate customs territories meeting together in the World Trade Conference at Havarna, Cuba, on November 21st. Accordingly, we have concluded this part of our task. There still remains to be completed the multilateral tariff negotiations which the Preparatory Committe at its First Session decided to sponsor as part of the preparation for the establishment of an International Trade Organization. We have every reason to believe that the same spirit of co-operation which has enabled us to surmount the difficulties inherent in the preparation of a Draft Charter will also enable us to overcome the difficulties connected 22 G E/PC/T/PV. 2/5 with the multilateral tariff negotiations, and that before the delegations here represented finally depart from Geneva there will be approved the text of a General Agreement on Tariffs and Trade, embodying schedules of tariff concessions which the parties to the Agreement will grant to one another. The very fact that it has taken so many months to prepare an acceptable Draft Charter is a clear indication of the complexities and difficulties of the task with which we have been confronted. I have no hesitation, therefore, in stating that we can be satisfied with what we have achieved. The Draft Charter which we are forwarding for the consideration of the World Conference is not in every respect the document which any one of the countries here represented would have liked to have seen emerge from our deliberations, but I believe that it is one which the delegations feel they can recommend to their governments. It will be left to the World Conference to discuss this Draft Charter and endeavour to secure the agreement of the other countries to the setting up of an International Trade Organization on the basis of such a Charter. The fact that the Draft Charter does not entirely meet the wishes of any one delegating signifies that it represents a compromise between the conflicting views and diverse interests of the countries which have been members of the Preparatory Committee. This is inevitable when one takes into account the various stages of economic development of these countries, their different economic structures, and the divergent philosophies underlying the economic policies pursued by their government s. That it has been possible to achieve such a large measure of agreement in the face of such divergencies is an encouragement to those who feel that the future peace and prosperity of the world are dependent upon international co-operation. ER The attitude of the Canadian delegation towards the work on which we have been engaged was summed up in the speech which I delivered on April 11th at our opening plenary meeting, during the course of which I said: "Never before have the problems of international economic cooperation been approached in such a comprehensive manner. The attempt to f ind solutions on a piece-meal basis has been one of the reasonss for failure in the past. The achievement of a expanding volume of trade and rising standards of life throughout the world call f or effective international cooperation in respect of each of the important phases of economic policy concerning employment, economic development, commodity arrangements, restrictive business practices, state trading, customs administrations, as well as the level of the more direct barriers to trade. One of our principal tasks will be to maintain the consistent purpose throughout this wide and complex field of international collaboration. While we should, as far as possible, seek to accommodate the differing situtions and the legitimate aspirations and needs of the various nations of the world, we must not, on the other hand, resort to expedients and indulge in incompatibilities which would destroy our general object ive." I then went on to say that no country in the world has a more vital interest in the success of our deliberations than Canada.. We have been blessed by nature with an abundance of natural resources which the industry and skill of our people have developed to create surpluses of which the whole world stands in need. It is Only through the cooperation of other countries that. we can assure our people of a better way of life by exchanging our surplus products for those surplus to other lands. In this way we can make our contribution to a better way of life for the peoples of these lands. 23 E/PC /T/ T/PV. 2/ 5 ER 24 E/PC/T/PV.2/5 We who have participated in this Conference have been impressed with the spirit of accommodation which certain delegations have shown to meet the wishes and particular interests of other countries. This is indicated by the extent to which the Draft Charter which we have approved to-day differs from the original Draft Charter which the Government of the United States presented to the First Session as a basis for Discussion. The Canadian delegation was in general prepared to accept the compromise that emerged from the First Session even though there were more qualifications and provisions for escape from the basic rules of internationaI commerce than we would have liked to have seen incorporated in an International Trade Organisa- tion Charter. Here at Geneva efforts have been made to broaden these escape clauses. If there efforts had been succesful there would be little left of the basic rules under which an International Trade Organisation can operate effectively. Fortunately, this danger has been realised by the majoruty of the delegtions. The result has been the submission to this Plenary Session of a Draft Charter that should form a generally acceptable basis for the eventual establishment of an effective organisation. We consider unfortunate the distinction which has so often been made between devoloped and under-devoloped countries. We do not know to which of these two categories Canada belongs since no Canadian will admit that the development of Canada has reached completion. It is true that the different countries represent various slages of development and that nothing should be done which would prevent the further development of any country. It is necessary, however, to realise that in this process of development each country requires the cooperation of other countries. This cooperation can only be attained in full measure if we can agree upon a set of rules which will prevent any one country from acting in a manner that prejudices unduly the interests of other countries. That is what we have been 25 ER E/PC/T/PV. 2/5 endeavouring, to attain here. Our discussions have demonstrated that no one country, even in its own interests, should pursue a particular policy without regard to tho interests of other countries. Any further attempt to upset the balance which has been obtained between the interests of all countries would jeopardise the foundation of the structure we have been engaged in erecting. Each country should realise that there are practices which they have been adopting which must be modified in the general interest of cooperation among countries . Taking the Draft Charter as it was presented to us to-day, we see that the document represents in many respects an advance over the Draft Charter which resulted from the work of the First Session and the Drafting Committee. Nearly all the chapters have been improved both in respect of form and substance. There has been a better adaptation of the rules to the realities of to-day. Thus it has bea me clear that what we are endeavouring to establish is a long- term set of criteria and rules for the conduct of international trade which will be fully effective only when the world recovers from the essentially short-run effects of the war. After an upheaval of that magnitude it would be too much to expect that the world should escape the many maladjustments which majorwars always entail. These maladjustments in part are derived from the great dependence and responsibility which has to be placed for some years upon the productive capacity of those countries whose production was not impaired by the war. Until the other countries restore their productive capacities to normal it cannot be possible for us to have equilibrium in the exchange of goods which will permit us to apply fully those rules that are in the long run essential to the cooperation of countries for the common good. It is this greater realisation of the realities of the present situation that has enabled us to improve the balance of payments 26 ER E/PC/T/PV. 2/5 clauses in the Draft Charter. In the view of the Canadian delega- tion there has also been an improvement, both in form and substance, of those parts of the Charter which relate to State trading, sub- sidies, restrictive business practices, inter-governmental commodity agreements, and the organisation of the International Trade Organisa- tion. While we appreciate the reasons which have led to changes in other parts of the Charter, we fear that too often there has been a tendency to place on the future Organisation the settlement of difficulties which should have been resolved in the Charter it- self. The future International Trade Organisation is one which offers much hope for the world. We would not like to see it have to shoulder tasks which might bring it into discredit if these tasks were beyond the capacity of any organisaton to perform. The attitude of the canadian Government towards the new draft of the Charter is, not likely to be different substantially from the attitude adopted towards the draft that emerged from the First Session of the Preparatory Committee and the Drafting Committee. In introducing the Budget for the present fiscal year in the Canadian House of Commons on April 25th, our Minister of Finance had this to say about the Draft Charter: "There are in the proposed trade charter a good many qualifica- tions and escape clauses applying particularly to the vitally im- portant parts of the agreement that relate to quantitative restric- tions on trade. Good arguments can be made, and are made, for each of these. But we must guard against the danger that if too many of them are included in the Charter, the sum and substance of them all, taken togethermay undermine many of the positive benefits which the Charter is intended to give to each of the agreeing countries." 27 S E/PC/T/PV2/5 I cannot conclude my remarks, Mr. Chairman, without making some reference to how much we all owe to you for the manner in which you have presided over our work and have continued to give us the benefit of your long experience and your unfailing tact. I cannot omit also a reference to the high standard of efficiency attained by all branches of the Secretariat under the able leadership of Mr. Wyndham White. Finally, I feel hat we have been very fortunate in having the privilege of conducting our deliberations at Geneva. The example which Switzerland has given us of co-operation between diverse racial groups and the combination of a high standard of living with liberty for the individual had been an inspiration to many of us in the task on which we have been engaged. I am sure we are all very grateful for the hospitality we have enjoyed from the authorities, both of the Canton and Republic of Geneva and of the Swiss Confederation. CHAIRMAN (Interpretation): I thank the First Delegate of Canada for his statement. I will now call upon the First Delegate of China. H.E. Mr. WUNSZ KING (China): Mr. Chairman, Ladies and Gentlemen, I wish first of all to add my name to the list of admirers of our Chairman, whose high qualities of leadership have made this Conference a success. I wish also to add a word of warm tribute to the Executive Secretary and the members of the Secretariat, and all my colleagues, for their co-operation in the work of this Conference. It is indeed a source of satisfaction that after almost five months of unceasing work the Charter of the future International Trade Organization has gone through i ts second reading. One more milestone is therefore registered on the long road to the final goal of a balanced and expanding world economy. I feel 28 S E/PC/T/PV/2/5 sure that all of us gathered here today have reason to be proud of our contribution and achievement at this second stage. With all its drawbacks and imperfections, the Draft Charter is an admirable document with which to start our work at the World Conference. The full, frank and penetrating discussions which took place during these long months of sweat and toil by the lakeside of Geneva have helped to put in proper perspective some of the intricacies involved and some of the difficulties inherent in the problems with which the Members of the Preparatory Committee were confronted. The participating countries have brought to Geneva, as they had brought to London, at least two different conceptions on the basis of which they approachod the problems in different ways. One of the conceptions is that the only road to world prosperity is through the universal application of the policy of free markets, according to which the Charter should contain as many such provisions as possible as will ensure access of traders on equal terms to markets, products and pro- ductive facilities. The other conception seeks to emphasize the attainment of full productive employment and the fostering of economic and social development as the prerequisite for the expansion of international trade. These differences in con- ceptions have inevitably resulted in differences in the ways of approach and emphasis. While an honest attempt has been made to harmonise the divergencies of views which emerged from time to time in the course of the deliberations, the fact remains that the first conception seems to pervade and dominate the Charter as it stands in its present form. Again, the main idea underlying the endeavour to draft a Charter such as the one now before us is doubtless to prepare a blue-print for a new pattern of thoroughfare for international traffic which should be broad enough to accommodate different 29 S E/PC/T/PV/2/5 modes of transport, free of all types of obstructions and barriers. This is, of course, an excellent idea, but at the same time it appears rather difficult to understand how the maintenance of some of the existing trade barriers is to be tolerated on realistic grounds, whereas in the same breath all future restrictive measures of similar character are to be discouraged or prohibited altogether, even for the legitimate purposes of economic development. So far as my country is concerned, Mr. Chairman, I feel I should tell you that China is at present facing great economic and financial difficulties, which are mainly due to long years of war and enemy occupation. The post-war years have witnessed an ever-widening gap in her balance of payments, and the difficulties arising therefrom have been acc-n:.uated by a large deficit in the balance of trade. At a time when we badly need a wide range of essential imports which would provide us with some of the minimum requirements we had to forgo during the war years, and which would help us in our immediate tasks of reconstruction, let alone the development plans, we have had to tighten our belt still further so as to reduce the gap between imports and exports. Even at the present low level of imports, we might have to carry through the current year with an unfavourable trade balance to the extent of something like fifty per cent of the last year's deficit, unless our export position materially improves in the coming months. Moreover, the task of rehabilitation to make good our war damage is far from complete, and the plans for urgent relief and immediate reconstruction, not to mention those for long- term industralization purposes, have yet to be implemented. I wish to assure you once more, Mr. Chairman, Ladies and , _ , , _ 30 S E/PC/T/PV/2/5 Gentlemen, that my country wholeheartedly welcomes the initiative and efforts to create a world trade organization whose aim is to attain not only the negative objective of removing obstacles to the free movement of goods and the mutual exchange of services, but also the positive objective of promoting higher standards of living, full employment and general economic development. And it is precisely with this object in view that we would like to have the opportunity of examining more carefully those stipulations in the Draft Charter which, quite contrary to the intentions of the original authors, might have the unfortunate effect of increasing instead of mitigating our presents difficulties, or hindering our future economic and social progress, or perpetuating the stage of economic under-development in which we find ourselves today. 31 J. E/PC /T/PV.2/5 In making the foregoing remarks, I do not intend to criticise any one of the delegations which took part in the discussions of the Draft Charter in Geneva and in London. I am simply telling you some of the plain truths. I believe the time has come for some plain speaking on our impressions about the Charter now that we have concluded the second stage of our work. I hope that the remarks I am making and those which my colleagues have made and will make will be helpful to those who will attend the World Conference in Havana.: The discussions we had in London and in Geneva were more or less on a technical level, but when we brine our Magna Carta to Havana, our discussions will be held and our decisions will be taken on a higher level. There in Havana, I am confident that we shall have the benefit of some leadership which will be actuated by altruistic motives, with full realisation of the importance of economic progress and stability as one of the main factors for the maintenance of international peace and security, and guided by the principle of fair dealing on which President Truman laid stress in his speech at Baylor University in February, 1947, the speech to which our Chairman referred. I therefore wish God-speed to our Draft Charter. Thank you. (Interpretation): CHAIRMAN/: I thank the First Delegate of China for his statement, and I now call upon the First Delegate for Cuba. MR. S.I. CLARK (Cuba): Mr. Chairman , Fellow Members of the Preparatory Committee, Ladies and Gentlemen: It is a great pleasure for me to express, on behalf of the Cuban Delegation, its satisfaction with the successful conclusion of 32 J. E/PC/T/PV.2/5 the strenuous and complicated work, in which we have all shared alike during the four months and a half dedicated to the revision of the Draft Charter for the International Organization of Commerce. Some members of our Delegation thought, more than once, that it would be impossible to reconcile the naturally divergent points of view of eighteen nations. For, it it is true that they represent the bulk of world economy, it is also true that they brought face- to-face the problems and interests of agricultural, industrial and commercial countries; highly-industrialized and under-developed states; the strongest and weakest countries from the financial point of view; as well as the producers and consumers. In spite of all this, we have defended with vigor our technical points of view. We have fought gallantly for the legitimate interests of our countries, and, to the credit of the delegations here represented, we have been able to reach agreement on almost all fundamental issues. Except for a very few points, on which we have reserved decision until we are in a position to benefit by the wisdom and co-operation of the other nations of the world, we think that we are presenting to the international public opinion a document of high and technical value. The Charter has the advantage of presenting to the statesmen and technicians, as well as to the middle man, the man of production and the labourer, the purposes, objectives and undertakings of the International Trade Organization. It correlates the importance of demand, production and employment in the expansion of trade and betterment of economic conditions of life. It has emphasised the permanent value of the economic development of the nations and the influence of capital investments in the achievement of the common objectives. 33 J . E/PC/T/PV. 2/5 The commercial policy set down, is the most daring effort to reduce the high tariff barriers, to eliminate the preferential rates, the tax discrimination, the quantitative restrictions and other restrictive business practices ever jointly undertaken by so many nations. To try to co-ordinate systems elaborated through centuries of selfishness and mistrust is, by itself, a great work. In the attainment of these lofty objectives, much has been accomplished, but more will have to be done. The Cuban Delegation has had to reserve the position of its Government in relation to certain principles of internal taxation, elimination of preferentials and protective measures with respect to national production. It is our hope that when we meet again at Havana, in view of the many accomplishments here and with the added vigor of the nations invited to the World Conference, it will be possible to understand our viewpoint on these vital questions. We assure those with whom we have worked here, as well as those who will meet with, us later for the first time in this enterprise, that we shall have an open mind to their arguments. We realize that our work has not been perfect. It is the result of compromise in many cases. It is the consequence, in others, of the Violent agitation of a world whose economy is at boiling point, shaken not only by the inheritance of the world war, but the fears of the postwar too. Yet, it has been a noble effort. The Geneva Draft is only a "working paper", but it is intended to implement the manner of attaining higher standards of living, full employment and conditions of economic and social progress and development, facilitating, through the promotion of mutual understanding, consultation and co-operation, the solution of the problems of international trade. 34 J. E/PC/T/PV.2/5 On rendering our modest contribution to this gigantic effort, we have had in mind always the needs and interests of our people, and also those of the other smaller nations and under-developed countries not represented here. If we have not done more, it is simply because we could not. We have finished the Charter discussions. We will continue now the work of the tariff negotiations, directed to the signature of a General Agreement on Tariffs and Trade, in order to show that the International Trade Organization is an instrument capable of producing realistic results. We hope, we earnestly desire, that at the end of the tariff negotiations, we will be able to express ourselves as we do now. With the good-will and mutual understanding of all, pessimism must disappear. Gentlemen, we have worked, and are continuing to work hard, but at this time I should like to take the opportunity to remind you that if there has been any success in relation to the vast preparations of the Charter of the International Trade Organization, it has not only been by virtue of the efforts of the Delegates, but due to the magnificent and untiring support of the Chairmen, the Secretariat and all the other men and women in this beehive of the Palais des Nations. To them, our deep and heartfelt gratitude. I thank you. 3 5 P E/PC/T/PV. 2/5 CHAIRMAN (Interpretation); I thank the First Delegate of Cuba and I now call upon M. André Philip, First Delegate of France, M. Philip's speech will be translated after it has been delivered. M. Andre PHILLIP (France) (Interpretation): Mr Chairman, Yellow Delegates: After four months of very arduous work we have reached today a first result in our task. I think we car be proud and congratulate each other for having reached this stage since it was reached only after many difficulties and obstacles in our way had been overcome. The text we have now prepared for the Havana Conference is extremely important and it also constitutes a compromise between various interests, various conceptions and various doctrines. But it is a very constructive compromise. We can bring to Havana something which is really new and something which is workable in practice. And it was not so easy to achieve agreement between us, because in our Conference Sessions each of the nations represented here feels on the one hand the necessity for constructive cooperation, but each nation at the same time finds itself confronted with so painful and so difficult a problem that it has a tendency, under the pressure of public opinion, to envisage the solution to this problem in a national rather than an international f ramework at the autset. But there is also the realisation, more and more widespread among the nations, that we are all in the same boat, and that the problem with which we are confronted must be solved by international solution. We must solve this problem all together, or else we shall all reach chaos and disaster In this four months we have revised this task through goodwill and determination of us all and through the very good work put in by our Secretariat. I wish also to pay tribute to the qualities of our Chairman, those <_.::'. '-. ry action. 4. 1t.'ted in time of need and in difficult situations. Now we have succeeded in presenting to the Havana Conference a text which is precise in its aims and at the same time realistic and constructive in that it shows the means to achieve these aims. 36 V E/PC/T/PV. 2/5 I said that this Charter was precise in its aim, and the first aim, of course, was the development of international trade and the exchange of goods. This first aim was the starting point of our work: our work arose from the necessity of removing barriers and the excessive protection which was one of the causes of our miseries after the last War and which even endangered the world peace. But we can say that the development of international trade and exchange is not an aim in itself: it is not sufficient to have the aim - we must also provide the means of achieving the aim, and that is even more important. The supreme aim we pursue is the raising of the standard of our people, the achieving, of full employment of all productive resources, the development of production, and the increase of the income of all the peoples. Thus we established at the start the indispensable connection between the economic and social fields. As we all know, the economic measures which might be taken are only important when they create the framework for the development of all human beings everywhere, and to achieve its aim our Charter is indeed a realistic document, as it has taken into account difficulties which exist at present and which may arise in future, and it has provided the means of overcoming the difficulties. Some of our colleagues may even think that perhaps we have taken the difficulties too much into account, but I for one believe that the draft Charter, in this respect, constitutes a marked improvement on the efforts which were made between the two Wars. Efforts were made to develop trade, and high ideals were propounded; but whilst these ideals were very high, the obstacles were not, perhaps, sufficiently foreseen, and the result was, as we all know, that when the crisis of 1929 - 1931 37 arose all the drafts - all the nice papers which had been prepared-collapsed, because the world was suddenly faced with a serious unforeseen situation which led each nation to .try desperately individual solutions hastily applied, which finally aggravated the lot of us all. Our text is therefore an improvement, insofar as it realizes the difficulties, present and future. It is thus a structure which is realistic and which takes all possible obstacles into consideration. We foresaw the day when the present crisis of insufficiency and lack might develop, and when a new crisis might come, as we have known in the past, and we have posed as a principle the principle of collective responsibilities of all nations, whether they might be in a deflationary situation or the reverse, and also posed the principle that any decision that might be taken in time of crisis must be taken in conference. We took into account the difficulties and the needs - the special needs - of newly developed countries. We took into account the special case of countries which were ruined by the War and which are faced by the problem of reconstruction and rehabilitation. This is done by Articles 21 to 23 of the Charter. We have allowed such countries to apply quantitative restrictions and temporary measures in order to face their special difficulties, and in that respect I would be very glad if I could share the opinion expressed by dy Belgian colleague when he wished that it would be possible to reduce the delays which the Charter has given in that respect. I would be very glad to share his opinion, because that would mean that the reconstruction and rehabilitation of those Countries is going on more speedily than we think at present. But thinking of the past I would not like to be too optimistic, and recent experience has shown also that a too hasty return to freedom and a removal of control may make nations run the risk of going against the general interest. E/PC/T/PV.2/5 G 38 E/PC/T/PV.2/5 The text we have prepared provided rightly for steps to be taken for reconstruction which would be gradual, in order to realise the aims which we have defined as explicitly as possible, but taking into account the possible difficulties, and that of finding the means to overcome them. There is one essential means to overcome difficulties, and that is to create a really international and efficient and responsible Organization; and in this connection we have provided for the consultation of the Organization, for its authorization in some cases, and for its intervention whenever there are new developments in industrial organization, agreements on basic commodities and so on. We have thus provided a possibility for recognizing to some extent a part, at least, of the national sovereignties in favour of the international organization we are proposing to create. I believe that the development can be pursued and that the obstacles can be removed only if we create a real international institution enabling us all to transfer some of the powers we have respectively economically to such an international organization; and I agree with what my Australian colleague said when he said we had created a skeleton. We have really created only, for the time being, a framework; now we have to instil life into that skeleton. We have to ask our various governments to show the will to realise this task, by giving the necessary authority to the Organization which will arise from the Havana Conference, and by going speedily towards the ideal we have propounded by the realistic means we want. We also went to have, as soon as possible, this General Tariff Agreement for lowering barriers and developing exchanges in goods and investments. I think that by our common efforts and goodwill we shall make from that Charter a living reality. G 39 E/PC/T/PV. 2/5 CHAIRMAN: I thank M. Andre Philip for his statement, and now call upon the First Delegate for New Zealand. Mr. J.P.D. JOHNSEN (New Zealand): At the conclusion of the second session of the Preparatory Committee the New Zealand Delegation desires to put on record its appreciation of the friendly and tolerant tone of the discussions and of the effort which has been made to write the Charter in a form acceptable to all types of economies. We believe that, as a result of this effort, the Charter in its present form is a better and more realistic document than it was before. It is, however, a more complicated document than it was before, and in the last week or two revised texts of particular Articles have come forward so rapidly that it has been difficult for the smaller delegations, and more difficult still for their Governments, to give these Chapters the full considerations and analysis they deserve. Moreover, since all parts of the Charter are inter-related, many of the recent revisions require a re- examination of other Articles. In our own case, these difficulties have been increased by the fact that Wellington is a long way from Geneva. That is why it has not been possible for us to indicate definitely our attitude to some provisions of the Charter, The Preparatory Committee can, however, be assured that in the period between now and the World Conference the present text of the Charter will be thoroughly studied in New Zealand with due regard to the urgent need that our work here should be brought speedily to a successful conclusion. In the latter stages of this Session of the Preparatory Committee our work has been made more important by critical economic developments in the world as a whole. It has been made more important because manifestly the Governments who have taken the lead in the attempt to reconstruct the world trading 40 G E/PC/T/PV. 2/5 system are running a race against chaos. Everything that has happened in these last three months has emphasised the need for an Organization such as the ITO, through which problems of trade and employment can be dealt with and solutions found which will promote the welfare of all countries. But recent economic events, besides making our work more important, have made it more difficult. We have at this Conference written a set of rules for world trade. Whether these rules are entirely appropriate to the confused and difficult economic situation in which so many nations now find themselves is not certain. To say this is not to accuse the Preparatory Committee of lack of realism. Particularly in the last few weeks there have been drastic revisions designed to make the Charter a more workable document in the light of current economic realities. Whether these revisions have been adequate we do not know, since none of us can know what will happen in the next few years - or indeed months. It is, therefore, necessary to recognise that, while the objectives and. the broad principles of the Charter must be adhered to, some of the detailed rules will need to be administered with caution and understanding in the early years of the Organization in dealing with particular situations. The New Zealand delegation desires in conclusion to express the hope that the protracted and difficult work of the Preparatory Committee will. bear fruit at the World Conference, and that the Charter in its final form will be acceptable to all countries as a basis for co-operation in the task of raising standards of living through the development of economic resources, the maintenance of full employment, and the expansion of world trade. 41 E/PC/T/PV. 2/5 CHAIRMAN : ( Interpretation): I thank the delegate of New Zealand for his speech and will now call on the head of the South African delegation. Dr. J.E. HOLLOWAY: The great battle of Geneva is over. The New York draft of the Charter has emerged from the rough handling to which it has been subjected, greatly increased in volume, some- what materially reduced in substance. Some articles have achieved an obesity, alarming in so young an infant. It was inevitable that after lengthy commercial and military warfare much room had to be found for compromise. It was more important to establish modest rules for international commercial good conduct than to reject what was within reach because one could not get more. Throughout the conference the South African delega- tion advanced the view that no irreparable damage ti the main objective would result from making concessions to the difficulties in which particular countries find themselves, as long as there was no derogation from essential fundamental principles. Time is a great healer and the patient has been seriously weakened by the strain to which it has been subjected. Protective foods are for the time being mere important than the robust regimen of an athlete, sound in ..ind and limb. But it is an essential condition that the whittling down of fundamental principles should not proceed to langths that threaten a reversion to the inter-war jungle phase of international economic relations. The draft Charter is uncomfortably close to that danger point. Any material weakening by the World Conference of the present precarious balance, any further exceptions and escape clauses, may make all the difference between modest success and complete failure . These remarks refer to the balance of forces inside the proposed organisation. There is, however, another aspect of balance which is 42 of cardinal importance for i ts success. That is the balance or unbalance inside the economic world which this Charter is intended to serve. In my remarks at the opening of this Conference I referred to three stagee in the drafting of economic peace treaties - the Brotton Woods Agreement, the American loan to Britain and the World Charter on Trade and Employment. It is cl ear now that I was too optimistic in assuming that the task could be completed in three stages. There is a fourth, more fundamental than any of these because it governs them all. It is the creation of a sufficient measure of basic equilibrium in the mass as a whole to enable it to serve as a platform on which those instruments can be Operated. It is now painfully clear that that basic equilibrium does not exist in the economic world of to-day. There is a wide gap to be bridged between the economies which were stimulated and strengthened by the war and those which were run down in the cause of victory. Before that gap is bridged the Charter can work but imperfectly and healtingly. That gap was caused by the far-roaching, changes in the economies of various countries made for good and sound military reasons in order to win the war. These changes required the stimulation of the production of some countries, the capital disinvestment of the industries of others. The destruction of capital equipment by aerial bombing and military operations created a need for industrial development beyond the range of the destructive engines of war. In the countries near the actual area of the clash of great armies, the construction of airfields, military hutments and other military works became more important than the construction of factories. In the countries where armies clashed the destruction of factories was frequently more important than their preservation. I need not elaborate. Everyone is only too painfully aware of the facts. E /PC / T /P V . 2 /5 43 ER E/PC/T/PV2/5 The broad result is that there exists a vast disequilibrium which must be corrected before normal competition in commerce between nations becomes possible, - the competition which is postulated by the draft Charter. Bretton Woods, the Loan Agreement and the Draft Charter have a set of principles in common. Many names are given to their different phases: multi-lateralism, non-discrimination, free convertibility, stable currencies, most-favoured-nation treatment, non-restrictionism. In substance they form part of one whole, the freing of those economic factors which operate for the welfare of mankind. In the long run negation of these principles means economic war. They are an essential element in the attempted reconstruction of world economic relations in the long run. But how soon, and in what measure, can these principles be introduced? The three instruments referred to all rest on a basic assumption - the assumption that there exists in the world a sufficient measure of basic, equilibrium to enable them to work. They are all calculated to correct derivations from the mean, They are not calculated to bridge the wide gap to which I have referred. This basic unbalance cannot be, cured by the ibstruments we have been trying to fashion. It must be cured before these instruments can work properly. It would be wisdom to recognise the fact that unless in the early stages of the proposed organisation the "Articles of the Cha rter dealing with exceptions - particularly the exceptions relating to restrictions to safeguard the balance of payments, - unless these Articles are to become the most important Article s of the Charter the basic unbalance between the economies stimulated by the war andthose damaged or shattered by war must be removed by special measures. 44 S E/PC/T/PV2/5 I would say, in conclusion, Mr. Chairman, that the Draft Charter, and the conduct of the tariff negotiations envisaged therein, contain a large element of faith - faith that Members will not only take advantage of the large scope given to their exports by other Members but will likewise make room for the exports of other Members in their own economies. If this faith is not amply justified, we shall indeed have laboured in vain. An to you, Mr. Chairman, I would like to pay the tribute which is due to you. CHAIRMAN (Interpretation): As I have no speakers remaining on my list, I will adjourn the Meeting. The next Meeting will take place tomorrow morning at 9.30. I would like to remind Heads of Delegations that the Meeting fixed for six o'clock today will take place at 5.30, for the examination of outstanding tariff questions. The Meeting is adjourned. The Meeting rose at 5.5 p.m.
GATT Library
wk861kb6331
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifth Meeting of Commission A. Held on Friday 30 May, 1947, at 11.25 a.m. in the Palais Des Nations, Geneva
United Nations Economic and Social Council, May 30, 1947
United Nations. Economic and Social Council
30/05/1947
official documents
E/PC/T/A/PV/5 and E/PC/T/A/PV.3-6
https://exhibits.stanford.edu/gatt/catalog/wk861kb6331
wk861kb6331_90240065.xml
GATT_155
4,631
28,183
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL RESTRICTED ECO NOMIQUE E/PC/T/A/PV/5 ET SOCIAL 30 May 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FIFTH MEETING OF COMMISSION A. HELD ON FRIDAY 30 MAY, 1947, AT 11.25 A.M. IN THE PALAIS DES NATIONS, GENEVA. M. MAX SUETENS (Chairman) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). (Belgium) NATIONS UNIES G. 2 E/PC /T/A/PV/5 CHAIRMAN: (Interpretation): The Meeting of Commission "A" stands to order. We now pass on to the discussion which we postponed the other day of Article 12 on the South African Amendment which is in E/PC/T/W102 of 21st May. Before I open a general discussion on this Amendment I would ask the Delegate for South Africa to present any observation he might deem necessary. Mr. HOLLOWAY (South Africa): I make no apology for having been difficult on Wednesday night, when the Amendment might have seemed to be quite unimportant and one that could be finished at the fag end of the Meeting. As to the note to the Amendment which was handed in by the South African Delegation, the intention was to raise a very substantial question of principle, and for procedural reasons to make Article 12 a test case. I want to nation that question of principle straightaway. That is, whether the Draft as we get it from New York does not in effect constitute a supra- national authority of the ITO. In spite of the views which have been given to me by Members of this Conference who took part in both the London and New York Meetings, I shall try to indicate to you in the course of my remarks that that is in fact what the present Draft does. I brought it up as a tatter of procedure under Article 12, because that is the first Article under which I could raise it. It could have been brought up under Article 35 - it might even be said it belongs more appropriately to article 35 - but if I had. waited until the question of principle, which influences a large number of Articles, came in its regular order of sequence, a good deal of time would have been wasted in the meantime, whatever E/PC/T/A/PV/5 happened, whatever way the Commission decided. Because the decision on this question affects, firstly, the wording of certain Articles; secondly, it affects the substance of a number of articles, for if it is indeed the intention of the Preparatory Committee to create an International trade Organisation with supra-national powers, then obviously those who under those conditions want to join the Organisation must examine the substance of Articles very much more closely, because it is practically the last opportunity that they will have. As they say in the Wedding Service, "If you wish to speak speak now, or forever hold your peace"; so that it does affect the order very materially, and for that reason it has been raised at the first stage - whether (or not) it could have been raised in the order which is prescribed. Now I want to quote to you one sentence from an Address delivered by Mr. Wilcox - I do not see him here, but he is probably behind me somewhere - I hope he will not mind my quoting from an Address - it was a public Address given in the United States of America: 3 - V E/PC/T/A/PV/5 In this Address, he said; "The I.T.O. is not a supra-national Government. It has no powers, legislative, executive or judicial, that would impinge upon the sovereignty of the Member States". That exactly represents the view of the South African Delegation as to what the I.T.O. should be. The text, I think, is the very opposite. It gives it those supra-national powers. When one is dividing powers of carrying out administration, there is, I think, a clear test of whether powers are being surrendered or powers are simply being entrusted to a subordinate agency. If powers are being entrusted purely to a subordinate agency, they are transferred by devolution: they remain with the contracting parties, but they appoint an agent to do certain things for them. However, as soon as you transfer sovereignty you give powers of initiation of which you divest yourself, and that is the difference between a subordinate agency and a sovereign body. By devolution you always exactly circumscribe the powers of a subordinate body, and that subordinate body cannot go beyond its exactly circumscribed powers. I wish to indicate that we have gone a great deal beyond that in the Charter as it is now drafted. I think the confusion in the minds of those who think that the powers conveyed by the Charter are not powers of sovereignty derives from the fact that at a certain stage you pass over almost unnoticeably,.by using certain words which you, have not tested out, into a new sphere from devolution to sovereignty. I think there is general agreement that the International Trade Organization should have certain sanctional powers. It should have the sanctional power for certain cases which is laid down in Article 35, that is, the power to relieve other Members of their obligations to a defaulting Member. Now I come back - 4 - - 5 - V E/PC/T/A/PV/5 to the point that I made, that when you transfer power by devolution you must exactly circumscribe that power. There can be no objection to an agency being entrusted with the task of exercising these sanctional powers when the States who become Members of the I.T.O. have very definitely indicated that they are prepared to do certain things. They have, for example, contracted with their fellows in the Organisation to bind certain rates of duty or certain rates of preference, to give each other Most-Favoured- Nation treatment, not to discriminate. I am mentioning these as examples. The question as to whether bound rates have not been observed; whether preferences have been extended; whether discrimination has taken place; whether Most-Favoured-Nation treatment has been given,--these are all simply questions of objective fact; and the International Trade Organisation is a body that can very well be entrusted with examining those questions of objective fact and deciding on them, and using the powers which are vested in it for that purpose. Here we have fixed and contractual obligations. Broadly speaking, it covers the substance of Chapter V. Broadly speaking I do not wish to say that it even covers everything in Chapter V. Broadly speaking, it may also cover certain things in Chapters VI and VII. However, as soon as you go beyond the fixed contractual obligations which have been given to one another by negotiations, you get into a very much. more uncertain field. When you are dealing with Chaptere VI and VII you are undertaking to create a certain atmosphere for certain kinds of transactions influencing international trade. You are going -- perhaps in some cases imperceptibly -- but you are going further than the very definite limits that you have over the greater part of Chapter V, and the question will have to be faced: if you want to give sovereignty to this body, _ , ,_ , _ V E/PC/T/A/PV/5 to what extent this body should have the power to apply sanctions in respect of Chapters VI and VII. But I will not stand still at Chapters VI and VII, because the principle of sovereignty comes out very much more clearly when we come to Chapters III and IV. In Chapters III and IV we go a great deal further in the matter of general lines of development than we do even in Chapters VI and VII. In Chapters III and IV we make a confession of faith. We proclaim that we hold to certain ideals and we will do our best to carry them out. I do not want to go into detailed wording, but the main substance of that is that Members will take action to obtain and maintain full employment; that they will maintain suitable labour standards; that they will make appropriate contributions - "appropriate contributions", a very vague phrase - to correct maladjustments in balance of payments, that they will take action designed to raise standards of productivity. Obviously you cannot be more than perfectly general about those matters. - 7 - E/PC/T/A/PV/5 Now, if sanctions are to be applied in regard to these matters, as sanctions are being applied in the present draft, as powers kept in this present draft apply sanctions, then you must create an authority which is outside of the principals and which can bind principals in the way in which, in the opinion of the outside authority, the principal should have acted. That is sovereignty - that is nothing less than sovereignty. There is no longer devolution here. The power is taken away from the principals and is handed over to an outside body. The outside body can say "In our opinion, if certain things had been done you would have contributed towards the objective of the Charter. You have not done those things and, therefore, we now decide to relieve other members of the obligation towards you." Now, it may be said that the Organization is not likely to apply any sanctions to 4 and 5, but if it is not, then why give the power? The matter is more important than just the question of whether it is the basic problem and whether we wish to give sovereignty to this body or whether we wish it to be a subordinate agency having powers by devolution. Now, I have heard suggestions that some delegations want to give a degree of international sovereignty to ITO. I do not know whether that is just a general view expressed casually in conversation, or whether that is the attitude which members wish to adopt in drafting the Charter. It is essential, because this is a thing which governs the whole of the Charter, which creates an atmosphere round the drafting of the whole of the Charter, and so that at an early stage we should be perfectly clear as to which of the two relations we are following. When you came to the problems the arising out of these ideals - problems arising out of/credo to which ER - 8 - E/PC/T/A/PV/5 you have subscribed in Chapters III and IV - you could, of course,. deal with it in two ways. You could give sovereignty to somebody, you could tell them "We vest in you the power to take the decisions and we are subordinate to you in that respect." But that is not the only manner in which we can deal with it. We are dealing with the problems arising out of that. We can also make provisions purely for international consultation. Now, the view might be held that an agreement that you will discuss binds you to very little. I want to suggest to members that, if we did that for the general matters described in Chapters III and IV, we are making a very big advance - we are taking a very big step forward from that Jungle stage of international relations which we had immediately before the war. A stage when countries lay in wait and pounced on the commerce of other countries without even giving the roar of warning which the lion gives before be springs on his prey. We were then definitely in the jungle stage, but if we agree to meet, gentlemen, around this table over these things, I think we have made a very big advance. It is essential whether we choose between the two methods of approach, but I do not think that even in dealing with Chapters III and IV and the application of section 35, subject to quite a lot of rigmarole and investigation, we have got to the extreme view where the proponents of sovereignty for the ITO have got their ideas written into the Charter. In Chapters III and IV the principals of the contracting powers have at least said: "well, we believe in this and have circumscribed as much as we could". They have said: "The boundaries are somewhere in this or that direction. We do not know where they are, but we know that there are boundaries." But in the first sentence of paragraph 2 of ER -9- E/PC/T/A/PV/5 Article 35, all pretence of having ITO powers by devolution, dis- appears entirely. That sentence gives the ITO power in its final analysis, to apply sanctions if any member is applying any measure whether or not it conflicts with the terms of the Charter or if any situation exists which has the effect of nullifying or impairing any object of the Charter - the widest wording that you can get. It does not matter whether it conflicts with the terms of the Charter, it does not matter whether it does or does not conflict. Even if it does not conflict with the wording which we have tried our best in this Conference to limit to such an extent that we could at least accept, then the ITO shall still walk in and say: "This impairs (remember please the vaguest word you. can get there with the widest meaning) this impairs in some way the objects of the Charter and you are for it." E/PC/T/A/PV/5 Well, I cannot see how words like that can be put into a Charter unless we accept as the basis of the Charter the principle of sovereignty. There it would be complete sovereignty, stripped of any sort of argument which could make it anything else. Mr. Chairman, the South African Delegation considers that the Charter should be drafted on the principle of devolution and not on the principle of surrender of sovereignty by the contracting State. This means, in effect, that instead of using in various parts of the Charter the vague phrase "any obligation undertaken under this Charter", we should, whenever sanctions are provided for, limit their application to specific and contractual obligations and limit it very severely, and, where there is any doubt whether it is specific, contractual or not, or goes beyond it, then, in order to steer clear of vesting in the ITO international sovereignty, we should rather arrange for those doubtful matters to be subject to consultation and not subject to sanctions. Mr. Chairman, there is a saying in English: "The road to Hell is paved with good intentions." We have a very large number of good intentions in this Charter: I hope we are not laying paving stones to Hell. - 10 - S P. E/PC/T/A/PV/5 Dr. H.C. COOMBS (Australia): Mr. Chairman, I agree with the delegate of South Africa that the issues he raises here are fundamental, and that they are worthy therefore of the most care- ful consideration by this Commission. The delegate for South Africa differentiates between the obligations embodied in the Draft Chapter. He refers to part of them as specific contractual obligations, and describes the others as part of the oredo to which we are adhering. I would like to say very definitely that in the minds of the Australian Delegation there is no such distinction between the obligations embodied in this Charter. They are all, so far as we are concerned, specific and contractual. It is true that they differ a little in the subject matter with which they deal. It is true that whether they have been implemented, observed, or not, is to some extent a question of degree, but is none the less a question of fact. The delegate for South Africa referred particularly to the obligations embodied in Chapters III and IV of the Draft Charter and also to those embodied in VI and VII. In our opinion the inclusion of these obligations in the Draft Charter represents a substantial advance towards realism which has been made in the work of this Committee. This is not the first international conference which has con- cerned itself with measures designed to bring about deductions in trade barriers.The history of the inter-war years is littered with. the records of such conference., There is little viidence, how- ever, of their having contributed anythings sign ifcant. to thesolu- tion of the economic problems which devastated the world in those years. That is because the reduction of trade barriers and the limitation of national freedom in commercial policy becomes practicable E/PC/T/A/PV/5 only in certain circumstances. Furthermore, we can be certain that it would be good only if certain prescribed conditions are existing. Ths whole theory on which the belief that a reduction of trade barriers would be good for world trade, the whole theory on which that belief is based, depends upon certain assumptions. Those who have studied the economic theory of the last and this century in relation to international trade, will agree that the belief that a reduction of trade barriers will lead to a more efficient use of the world's resources depends upon two assumptions, firstly, that the resources of the world, human and physical, will in any case be fully employed. It is based also on the assumption that the balances of payments between the various countries of the world are, in faot, in balance; that any departure from such balance will automatically correct itself. It is also based - although this assumption has been lass consistently stated - upon the fact that the world economy has been continuously subjected to the stimulus of economic development both extensive and intensive. In the absence of the conditions implied by these assumptions it cannot be said with certainty that a reduction of trade barriers will lead to a better use of the world's resources or even to an expansion of world trade. What we have sought to do, what this Commission has sought to do therefore in Chapters III,IV, VI and VII, is to create the conditions in which the assumptions will be realised on which the belief that a reduction of trade will improve the use of the worlds resources are in fact based. P. J. -~ E/PC/T/A/PV/5 DR. H.C. COOMS (Australia) (Contd.) Now, this is important to those countries which are being asked to undertake obligations in relation to their commercial policy. It affects, in my opinion, the honesty with which they can undertake such obligations. Let me say quite definitely for the Australian delegation that unless there is some reasonable assurance that the undertakings we give in Chapter V of the Chatter are going to be implemented in conditions in which there is reasonably full employment, in which the balances-of-payments of the major countries of the world are not seriousl y in disequilibrium, and if the conditions are not such that the progressive development of the economic resources of the world can in fact proceed, then we know that we cannot carry out the undertakings we give in Chapter V, and it is no good. pretending that we can. If we face again the wide-spread collapse of international demand that the world experienced in the 1930's; if we face a collapse of the prices of our primary products and inability to sell the products upon which our economy depends, we will not be able to carry out the undertakings in Chapter V, because to implement those undertakings in such circumstances would intensify the already existing depression in our own economy and place increased burdens upon the people of our country. We would, therefore, I believe, be dishonest if we were to tell this conference that we were prepared to accept the undertakings in Chapter V in any circumstances. I believe that that is true, not only for Australia, but I believe it is true for most of the countries in the conference, that if we face again the conditions of 1930, that they will not be able, whatever they have put their signature to before-hand - 13 - - 14 - to observe the commitments which are included in Chapter V. To us, therefore, the commitments embodied in Chapters III, IV, VI and VII on the one hand, and those in Chapter V on the other, are inter-dependent. We are prepared to accept the commitments in Chapter V provided that the world conditions are such that we can, in fact, carry them out. That leads us, therefore, to consideration of the point specifically raised by the South African delegate as to whether the commitments involved in Chapters III, IV, VI and VII should be subject to the same procedure of complaint and release from obligations in the event of a failure to carry them out as applied to the undertakings in Chapter V, So far from thinking that that procedure is less important in relation to these undertakings, we believe. it is more important, because only in that way is it possible for a country to establish its that conditions completely beyond/power to control are making it impossible for it to carry out its undertakings. So, Mr. Chairman, we would resist bitterly any proposal to modify the right of a country to seek a modification of the undertakings it has given if, by the action of others, conditions are created in which it can no longer carry out those undertakings. In other words, if there is a world-wide collapse of demands; if a shortage of a particular currency places us all in balance-of- payment difficulties; if we become subject again to wide-spread fluctuations in the prices of primary products with devastating effects upon individual economies; if it is not possible in those circumstances to seek,with international approval, a modification of particular undertakings we have given, then we must think twice - indeed, many times - about whether we can honestly undertake those obligations. - 15 - E/PC/ T/A/PV/5 Now, the delegate for South Africa has raised the very important issue of national sovereignty. He has suggested that the establishment of this procedure by which we can have our obligation modified involves a restriction of the sovereignty of Member governments. So far as we can see, the question of sovereignty does not enter into this. There are no sanctions provided for in the Charter. In the event of a country failing to carry out its obligation to maintain employment and effective demand, to take that case as an example, and that failure seriously impairs the economy of another Member, it is provided that the country whose economy is impaired on seek the assistance of the Organization first of all in arranging consultation with the country or countries in which these conditions have arisen. If that consultation fails, the Organization may authorise the Member to suspend some of its obligation to some or all of the other Members. It would, also offer recommendations to the countries concerned. Those recommendations could be accepted or rejected. If they are rejected the Organization has no powers of coercion. All it can do is release the other countries adversely affected from certain of their obligations. Now that country could itself release itself from those obligations by withdrawing from the Organization. Therefore, there is no interference with national sovereignty. What is the difference? G. -16- E/PC/T/A/PV/5 The difference is, that instead of a country being forced- in order to have its obligations reviewed in the light of realistic circumstances - instead of it being forced to withdraw from the international community, it has the opportunity to state its case to the international community, and have its obligations reviewed with full international approval. But the freedom of a country which may have been the cause of these conditions is unimpaired. If it does not wish to take necessary action to correct the circumstances, the most that can be done is that they must receive Recommendations. They are under no specific and contractual obligations to accept those Recommendations. The suggestion has been made that it would be sufficient for us to provide for consultation. Consultation is provided for Withdrawal from the Organisation, and the right which that would. give to vary undertakings, persists. All that the Charter does is to give a country affected an alternative to withdraw. It gives it the right to appeal to the international community and. to demonstrate that circumstances outside its own control have made necessary a review of its obligations. Do not let us have any delusions. That circumstances against which Chapters 3, 4,6 and 7 are directed develop - and the obligations in Chapter 5 will be broken; and it is, in our opinion, infinitel y preferable that they should be varied by consultation, by agreement that illumines with international understanding any consideration of the effects of such alteration on other countries. In other words, intelligently; rather than that they should be altered unilaterally in an atmosphere of antagonism and prejudice. Mr. Chairman, to the Australian Delegation, the undertakings 3, 4, 6 amnd 7 are fundamental. They alone create the conditions - 17 - E/PC/T/A/PV/5. in which a substantial advance along the road of the reduction of trade barriers and the development of international Co-operation in the field of trade become possible. Upon their implementation depends the capacity of other countries to implement their specific contractual obligations. We therefore feel that it is fundamental for the success of the International Trade Organisation, and to the acceptability of the Charter to the Governments concerned, that the interdependence of the obligations in all sections of this Charter should be clear; and secondly, that there should be no distinction drawn in principle between any of those obligations. It is obviously necessary to accept as a fact that some of those undertakings can never be implemented to the degree of 100 per cent., and that, therefore, whether a failure to implement them, in fact, exists, is a question of degree; and that, therefore, we have to provide some means of determininrg whether, in fact, a failure has occurred to a degree which represents a significant failure affecting the conditions of other countries. But that does not alter the nature of the undertaking, nor does it separate it from the undertakings in other parts of the Charter which are capable of being expressed in a way in which failure to achieve them is precise, definite, and not a matter of degree. But the fact that we have to be intelligent in our interpretation of these undertakings, and in our judgment as to whether they have been adequately implemented, does not, in fact, change the nature of the undertakings. We stand, Mr. Chairman, therefore, firmly on the principles that all the undertakings in the Charter are of equal significance, essentially identical in character, and that they cannot be differentiated from the point of view of the obligations of the countries which have to carry them out, nor of the rights which failure to carry them out gives to other countries adversely affected by them. G. -18- S -18 - E/PC/T/A/PV/5 CHAIRMAN (Interpretation): I Wish to thank the two speakers who have raised questions of very great importance, It is too late to pursue these further now. We will adjourn until Monday afternoon. Dr. HOLLOWAY (South Africa): The Chairman of the Steering Committee has just drawn my attention to the fact that the business between this and Article 35, when this matter comes up again, does not affect the issue; it just happens that the arrangement is that way. Its Monday conflicts with another meeting, the matter could very well stand over until the discussion on Article 35 without prejudicing anybody. CHAIRMAN (Interpretation): I prefer to have a meeting on Monday, since Monday is free in any case. Gentlemen, the Meeting is adjourned until Monday afternoon. The Meeting rose at 12.55 p.m.
GATT Library
zg665yc5268
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifth Meeting of Commission B held on Friday, 6 June 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 6, 1947
United Nations. Economic and Social Council
06/06/1947
official documents
E/PC/T/B/PV/5 and E/PC/T/B/PV/3-5
https://exhibits.stanford.edu/gatt/catalog/zg665yc5268
zg665yc5268_90250070.xml
GATT_155
13,047
77,178
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/B/PV/5 6 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT FIFTH MEETING OF COMMISSION B HELD ON FRIDAY, 6 JUNE 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA THE HON. L. D. WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office Room 220 (Tel. 2247) NATIONS UNIES J. 2 E/PC/T/B/PV/5 CHAIRMAN: The meeting is called to order. We are assembled today in Commission B to consider Chapter VII of the Draft Charter dealing with Inter-Governmental Commodity Arrangements. We shall follow the same procedure as we did in Chapter VI, that is, we will take the New York draft as our basis and consider any amendments that have been submitted to the New York draft by delegations, together with any reservations or other relevant comments given in the New York draft. Three meetings have been allotted to us for the consideration of Chapter VII, and while we will do our best to adhere to the time allotted to us by the Steering Committee, we shall, if we find it necessary, hold additional meetings in order that there may be a very full and complete discussion on this Chapter. We shall endeavour to reconcile any differences of use that may be possible to reconcile within the Commission, but if after fairly general discussion it is not found possible, we shall refer the questions to a sub-committee with instructions that they shall do their best to resolve the differences of view. We shall also refer to the sub-committee any questions that are of a purely drafting nature. Our working paper will be that contained in E/PC/T/W/157.Rev.1. This paper gives an annotated agenda and we will endeavour to follow, so far as practicable, the order of the items given in this paper. The first question on our agenda is Item 1 under General Comments - Re-arrangement of Chapter. The United Kingdom and Australian delegations have suggested re-arrangement of the Articles of the Chapter. Members of the Commission will recall that the London text provided for four sections - Section A. General Considerations; Section B, Inter-Governmental Commodity Arrangements in General; Section C, lnter-Governmental Commodity Agreements involving the Regulation of Production, Trade and Prices; Section D, Miscellaneous Provisions. The Drafting Committee in New York reduced Chapter VII to three stations by combining Sections A and B of the London text under the heading of Inter-Governmental Commodity Arrangements in General. The United Kingdom delegation have now submitted a proposal which reverts to somewhat the same sectional arrangements as in the London text. It contains, however, a new Article 47(a) which sets out the order in which action is to be taken to meet commodity differences. The United Kingdom delegation also raised the question of the transfer of Article 50 to Section D on Miscellaneous Provisions. The Australian delegation propose an arrangement similar to that adopted in New York, but including an additional Section C covering "non-regulatory" agreements. I would propose that we first of all have a general discussion on the question of the re-arrangement of the Chapter with a view to elucidating whether the sense of the Commission is that it is desirable that there should be re-arrangement of the Chapter or not. Also, we shall endeavour to find some indication as to the feelings of the members of the Commission as to what re-arrangements could best be suitable; but I propose that we leave any final decision as to the working out of the re-arrangement, if such is considered desirable, to a sub-committee. Also, if we find that the majority of the Commission is in favour of re-arrangement of the Articles of the Chapter, we should, in our discussion of the Articles of the Chapter, still stick to the order in which they are given in the New York draft, and take up any new Articles that may be proposed in the order in which they have been suggested by the delegations proposing the new Articles. J. 3 E/PC/T/B/PV/5 E/PC/T/B/PV/5 Is that procedure approved? If so, I would now wish to open the discussion on the rearrangement of the Chapter. Are there any members of the Commission who wish to introduce this subject? Mr. E. McCARTHY (Australia): Mr. Chairman, the subject matter of this Chapter has gone through several phases, I think, since it was first discussed amongst the countries interested in bringing about international commodity arrangements and in bring- ing under some form of general review those agreements which were already in existence; but I think up till the London meetings there was some difficulty in reconciling the views of delegations as to the conditions which should be precedent to entering into certain agreements, and there emerged at the London Conference the idea that there should be two categories. Where the criteria which should be followed before an agree- ment was actually made, and the conditions which should be laid down as a preliminary to negotiations were of a rather close and clearly defined character, it was not desired that agreements be made un- less there appeared a necessity for them. It further was thought that these criteria or this list of conditions might be hampering if it were attempted to apply them to all agreements that might come under the Chapter, so the draft was altered to provide for what were called regulatory agreements, and what were called arrangements. It was clear enough, I thin k, -at least to those who were handling the drafting of the chapter in London - that these two categories had been provided for, but, the draft having been arrived at doubts began to arise as to what really was meant by arrangements and regulatory agreements. It will be noted that Chapter VII was called "Commodity Arrangements." It then provided for regulatory agreements, and by inference, I suggest, it was conveyed that those which were not regulatory were arrangements. The inference perhaps was fairly clear, but still it was an inference, P. 4 P. 5 E/PC/T/B/PV/5 and the view that we have come to is that we should make a definite statement in the Chapter that there are two distinct classes: those which we now call regulatory agreements, and those which do not come within that category. Therefore our proposition is designed in the first place to make clear what is in the minds of the Preparatory Committee in drawing up the framework of the Chapter It seems to us therefore that the four sections should be restored, not in the same form they were originally in, but in a form some- what different from that in both the London report and the New York report. And our objective it will be a matter for discussion whether we have achieved it - is in the first place to say that the Chapter deals with inter-governmental commodity arrangements: that phrase stands - and then to devote s me Articles to the objectives of these arrangements, the preliminaries of calling conferences where preliminaries are necessary, and the steps that should be taken to negotiate an agreement after conferences have been called. Now that is set out in one section, and that section concludes by saying that those arrangements which we visualised shall be divided into two categories. We would call those categories - I am not so sure that even "regulatory agreement" is a good word, but, using that for the time being, we would call them (a) regulatory agreements, and (b) non-regulatory agreements. It may be that it would convey our meaning better if we said regulatory agreements (a): (b) all other agreements which come within the arrangement. So there you have what to us is clear: the whole Chapter is called "Arrangements", but there are no actual arrangements, no concrete arrangements, They are divided into two classes of agreements, those which we call regulatory and those which are not regulatory The second point which arises, and which is relevant to this question of arrangements is the distinction between the regulatory and the non-regulatory agreements. We find that the regulatory E/PC/T/B/PV/5 6 agreements are clear: we know what we are aiming at, and, subject to what to us will be minor alterations, they stand without very much question; but when we look to what will be in the non- regulatory agreements we find some doubt. In fact, in looking for concrete cases we discover that it is very difficult to visualise an agreement which has not some form of regulation of prices, produc- tion or trade. It is not difficult, of course, to picture agree- ments without the regulation of prices: it is not difficult to picture those without the regulation of production, but I have found difficulty in thinking out an agreement on any product in which we are concerned where you would not have some degree of regulation of trade. But that degree might be very minor, so minor that it would be perhaps wrong or difficult or hampering to apply the criteria which are allowed for regulatory agreements. Then a little further, one can also see agreements which are perhaps an initial step in the making of a complete agreement. You might have an agreement with a limited number of countries subscrib-- ing to it with the clear understanding that it is a first step and that later, as more people educate themselves and those they have got to educate to get agreement, or to get subscription to the agreement, that agreement will develop and then will be undoubtedly a regulatory agreement. I have thought of two or three examples to make the point clear. One form of agreement might bring in perhaps the United States, Canada, Australia, New Zealand, the Argentine, and perhaps Belgium or France, and would relate to fresh fruit. Let us make it fresh apples and pears. There might be certain conditions laid down in that agreement which are non-regulatory, but there might be Just one which says "Canada and the United States shall not ship apples to Europe after 30 April and Australia and New Zealand and the Argentine may not ship apples to Europe after 31 July." Now, that would be a very sensible agreement. (Anyhow we might assume it P. P. 7 E/PC/T/B/PV/5 would: we do not want to have a discussion on that; it is purely an example). But the only regulation would be that probably the last two or three weeks of July in the Southern hemisphere and the last two or three weeks of April in the northern hemisphere the apples should not be shipped, and the only regulation that you might ask of the importing countries is "Do not take those apples after a certain date" (They are not so good at that date anyhow, but do not take them). But it is a regulation of trade and therefore it goes into the category of regulatory agreements. E/PC/T/B/PV/5 The same thing might be said of certain regional arrangements where it is laid down for a period of time that certain countries shall take the whole of the produce of some other country. We could have an agreement on what at the present time, which has none of the provisions which we are actually contemplating, but which would lay down, perhaps, that India should get its wheat from Australia, and anything north should get their wheat from Canada. It is a small agreement, perhaps, but it involves the regulation of trade, so we propose that the Committee or Commission, possibly a Sub-Committee, give some attention to that question whether they ought not to go into the other agreements rather than those of a regulatory character. It further seemed to us, in looking through the Amendments submitted by the other countries, that this second category of agreements is non-regulatory, and one which might be expanded to include other forms of agreement, such as America seems to have in mind with the conservation problem they have mentioned. I can quite see there that if you do have a Section C dealing with all other forms of agreement other than regulatory, that that would provide for anything in the shape of an international agreement on commodities which it was desired to bring under the ITO. Therefore, we think there is some importance in our suggestion that we endeavour to define more clearly what are the agreements other than those provided for in the articles dealing with regulatory agreements. There is very little more I wish to say on it. I note in going through the Amendements again that the United Kingdom had ideas of re-arranging in mind, also another proposed new Article, 47 (a). They do state there that there should be two forms of agreement. Well, the principle is really the same as that put forward by us. We think we have gone a bit further and G. - 8 - - 9 - E/PC/T/B/PV/5 that ours is a little better, but we are quite prepared to take the good parts of ours and the good parts of the United Kingdom and put them together with the idea of getting something better than either of us, perhaps, individually. That, I think, covers our ideas that prompted us in putting forward this suggestion for re-arrangements, but we would be very interested to hear what other Delegations have got to say about it. We are not wedded to any of the wording; we are not sure that we completely covered what we wanted to cover, but we did feel there was a lack and we felt we should like to make some suggestion; but we realise that those suggestions might be modified to quite a degree when we hear what other Delegations have got to say. We did, as I say, feel that there was something of a lack there, and we are only anxious to fill it in some way or other. V -10 - CHAIRMAN: Are there any other speakers? The Delegate of the United Kingdom. Mr. J.R.C. HELMORE (United Kingdom): Mr. Chairman, if I might comment briefly on the remarks made by Mr. McCarthy and explain the principle underlying our suggested re-arrangement of this Chapter, I would say that practically all our amendments which appear on the paper are not of substance but of detail or of drafting. The point that we had in mind is one Mr. McCarthy also referred to, that this Chapter does appear to those who were not present at the birth to be somewhat ugly. Of course , the midwives themselves remain convince in their determination that it is the most beautiful infant ever born. However, we have to recognize that the infant must go out into the world, and possibly the general public will not share our view as to the beauty. Therefore, we thought it wise to propose a measure of plastic surgery which would perhaps make the beauty of the infant more recognizable by those who were not present when it was born. The main piece of plastic surgery is in our proposed new Article 47A, which attempts to explain at an early stage in the Chapter the difference between the conditions and procedures surrounding a non-regulatory arrangement and a regulatory agreement. Delegates will see that we have endeavoured to work into the second paragraph of that amendment some words which I will not say define arrangements and agreements, but attempt to perform the functions of definitions of those two words. In that way, we think that the distinction between the two parts of the Chapter can be made readily intelligible and much more easy to follow. Now, I gather that Mr. McCarthy does not think that there is E/PC/T/B/PV/5 E/PC/T/B/PV/5 really much point in having in this Chapter anything about non-regulatory arrangements at all. That, I think, is a logical position which one can easily defend: the point of having a rather strict set of conditions which must be fulfilled before Members enter into a regulatory agreement is that when they enter into a regulatory agreement they do, in effect, receive a discharge so far as is necessary from the obligations of Chapter V in respect of that commodity; so one might easily say that if no discharge from the obligations of Chapter V is needed in respect of a non-regulatory arrangement, then why bother to mention them in the Charter at all? If one were to pursue that line of thought, it would mean, first of all, a somewhat radical re-arrangement of the Chapter, removing a great many Articles from it and making it shorter. Well, there might be an advantage in that. On the other hand, it would be necessary to look a great deal more closely at the Article --that is, Article 52-- which describes the conditions under which it is permissible to set up a regulatory agreement. - 11 - V - 12 - E/PC/T/B/PV/5 I think we might be engaging there on a rather dangerous project. Article 52 was a hard fought Article in London and it is; at the moment, fairly nicely balanced, but if we were to look at it again in the light of an commission of arrangements altogether in this Chapter, then the new situation might be much more difficult to deal with. But there are many more fundamental reasons, it seems to us, why we should preserve arrangements in this Chapter. It seems to us that arrangements of a non-regulatory character may be extremely useful, and I will produce an example in a moment. What we have in this Chapter in respect of arrangements is really a laid down procedure for arriving at the well-known procedure of study groups at conferences, and we also have certain basic rules the about who is entitled to represent then and what/measures of their representation should be. That is a valuable thing to have in the Chapter if we think the arrangement may be valuable. If governments agree to the document in which this procedure is set forth, it is more likely to produce arrangements than if we have no such procedure,and indeed if we were to cut it out after it has been produced to the world everybody would assume that we thought there was nothing in the business of arrangements. Now, Mr. McCarthy said that be was unable to think of a non- regulatory arrangement. He then proceded to think of one and from his description of it I detected in it, not in an extremely sinister form, but at any rate in a recognisable form, most of the worst features of a producer's regulatory agreement which is not allowed in the Chapter at all. The valuable non-regulatory arrangement is one which is directed to expansionist measures - one which does not involve regulation in the way of limitation of trade at all. It may be necessary to have agreements on these things because governments may say: "We do not wish to push these expansionist ER -13 - E/PC/T/B/PV/5 ideas. We want expansions within previously agreed limits." There is no regulation of trade involved in that, but there is an agreed limitation of the degree of action which governments will take. It seems to us that there might be a great deal in those arrangements though I have never heard of one yet. It may be that it is always because the producers think of these things in the other way. At any rate, we would be disposed to say that, to give up the basic distinction between arrangements and regulatory agreements, the right attack on difficulties in connection with this Chapter is by making quite clear what we mean, and that is the object of the rearrangement of the Chapter as suggested. S -14 - E/PC/T/B/PV/5 CHAIRMAN: The Delegate of Cuba. Mr. J.A. GUERRA (Cuba): Mr. Chairman, although I was present at the New York Meeting and to that extent I am responsible for having accepted the change in the arrangement of the Chapter, I think now, looking at the United Kingdom and Australian suggestions for the change, I do not feel very guilty for having taken part in the change made at New York, because, to my mind, the question is a little too much exaggerated regarding the importance of the change made. The amendment or the re-arrangement proposed by the United Kingdom Delegation amounts to dividing the first few Articles of the Chapter, from 46 to 51, into two parts, instead of having only one part, as in the New York Draft. In fact, the addition to Section A, in the sense of separating the general considerations of inter-governmental commodity arrangements ingeneral, is only a question of form and I would be inclined to agree with Mr. H1 ..L :r's rework about the beauty of the thing. I work net agree with the comment of the Unied Kingdom paper, that this change involves a change in substance, because if we agree with the United Kingdom proposal to separate these Artilcles into two sections. even in that case the first section and the second section will, in fact, amount to the sane thing; general considerations of principle will apply to all kinds of arrangements contemplated in the Chapter. As I understand the Australian proposal, it gives me more ground for thinking that the changes are very important, because, after all, in the proposed new Article 56A the thing is left in blank; in fact, we say that 'Members agree that in relation to non-regulatory agreements action shall be taken in accordance with the provisions of the Chapter, except the provisions S - 15 - E/PC/T/B/PV/5 contained in Section B above." That amounts in practice to what we already have in the New York text, in the sense that we have only two divisions - the general provisions and considerations of inter-governmental commodity arrangements, applicable to all kinds of agreements, and then the provisions applicable to regulatory agreements. From that point of view, I say this involves, again only a question of form - of beauty, if I may say so - and I think in the second case I would prefer to have the two kinds of principles on provisions stated in the Chapter as it is now rather than to add a new division that in fact does not amount to anything but to recognise that the provisions of a general character will apply in cases in which you are not dealing with regulatory agreements. When the Delegate of the United Kingdom was speaking, I was under the impression that he was experiencing very special difficulties in finding the kind of agreement or non-/ arrangement that will not be/regulatory, that will in any sense involve regulation of trade, prices or production. I think I agree entirely with Mr. McCarthy's suggestion, and 'I think that the point which the Australian Delegation triad to meet by inserting a new Section C may perhaps be an improvement in form; in fact, it is, because any kind of agreement, whether we can visualise it or not, will be covered under the provisions of the Charter regarding the development of commodity arrangements in general. Therefore, if the Commission feal that it is an improvement in form, we would be inclined to retain the text or the arrange- ment of the London Draft set our in Section A as general considerations and Section B as commodity arrangements in general. But before accepting that I want to make a last point in this connection; that is, that the United Kingdom S E/PC/T/B/PV/5 -16 - amendment seems to be based mainly on the fact that we are mentioning commodity arrangements in a rather premature way, before we speak of inter-governmental action in general, but when we read the proposed Article 47A we find that we skip the question of the arrangements in the title of the Article. But immediately the United Kingdom Delegation goes into what kind of action or what form that action will take, we come right up against the two kinds of action - general arrangements and regulatory. Therefore I think the question involved is not a question of substance at all, it is only a question of form, and if we judge the two arrangements we would feel inclined - if the Commission feels it is necessary to go back to the form of the previous arrangement - to favour the segregation of these Articles in the form proposed by the United Kingdom Delegation, but even from that point of view I think the insertion of Section C proposed by the Australian Delegation will not be an improvement, in the sense that it will not add anything to the Chapter; in practice, it would amount to a declaration of an empty space there that we want to fill in a very general way, and I think that general way is already covered in the present arrangement of the Chapter. 17 CHAlRMAN: The delefate of Canada Mr. J.J. DEUTSCH (Canada): Mr. Chairman, I am inclined to agree with the speakers who maintained that some sort of surgery is desiraole, for two reasons: Firstly, I think the present text is lacking in clarity, particularly with respect to the procedures which are to be followed in the development of the commodity agreement. It is extremely complex at the moment. It is not very clear eor the ordinary reader. And in that respect I think that the United Kingdom amendment would be an improvement. Secondly, and this is perhaps a more fundamental point, I have a great deal of sympathy with Mr. McCarthy's main point. I am very doubtful whether the attempt at distinction which is made between non-rogulatory agreements and regulatory agreements is realistic. Ever since the produotion of this Chapter in London I have tried to think of how the non-regulatory agreements would be applied and to what kind of situations they would be applied, and frankly I cannot think of any conditions or situations that would not fall within the present definition of a regulatory agreement. Regulatory agreements are defined now as agreements pertaining to the regulation of production, trade and prices. Now the word "trade" of course is an extremely wide word and so is the word "production", and I do not see any situation which does not fall within that definition. Mr. Helmore gave an example of an agree- ment to promote the expansion of production. I assume he has in mind something of the nature to regulate expaosion of production. That is all it could do. And I cannot see as a practical matter, even in chat case, where producers would agree to expand in a certain way, unless it does involve some such regulation, say, that they agree to go no further than a certain point and, having reached such E/PC/T/B/PV/5 P. 18 a point, certain things shall happen. Again, within the field of regulation, I do not see at present in this wide definition of a non-regulatory agreement where there is any place whatever for the spealled arrangement. I think it is just so much verbiage at the moment in the Chapter. I think we should consider that question of principle. If it is decided on this question of principle that there is no useful distinction except an optical one - I agree that there is some kind of psychological value; perhaps in suggesting there is something mild first and afterwards you reach something more drastic, there is a certain psychological value, but beyond that I do not see it has any val if that principle is decided one way or another, and if it is decided that it is not useful to retain this distinction, then there would be a considerable rearrangement required of the Chapter, I would say a considerable simplification, and it should be possible to add much more clarity to the whole thing. In this way we try to maintain an unreal distinction, and, as long as we do that, we are going to be in trouble from the point of clarity. We are not trying to distinguish between two real situations. My own feeling is that the distinction as at present drawn is not a real one and not a useful one/and if that opinion pre- vails then I think there is considerable value in the rearrangement and, as I say, from my own standpoint I do not see that the present distinction is useful. E/PC/T/B/PV/5 P. - 19 - E/PC/T/B/PV/5 CHAIRMAN: The delegate of the Netherlands. DR. E. de VRIES (Netherlands): Mr. Chairman, when we are now discussing this Chapter, I may say that it is the third reading after London and New York, we have the benefit of half a year's experience in this field, and many any oe the governments represented here had that experience at different places. I may recall, first of all, the long conference in Washington of the Preparatory Commission of FAO, and I recall at least six commodities that have been discussed in the last half year on the basis of this Chapter - tin, rubber, wheat, rice, sugar and timber. So, we must use all that experience of the half year here in Geneva in order to achieve a better Chapter than we had before. I quite agree with the delegates who have spoken before, that something can be done to make the Chapter more readable for the general reader and for governments just coming intto this matter, because some of the delegates here have been working on this Chapter for a long time, and I think the first thing they have to do is to feel how other people read this. I must confess that many of the amendments brought before us here really have a better meaning on the whole thing thin we achieved in London and at Lake Success. I think that this question of re-arrangement, which we are now discussing, gives us an opportunity to have a general review of the whole thing as has been suggested by Mr. McCarthy first and other speakers after him, and here, in the words "regulatory and non-regulatory agreements" that were born in London, we see the power of words. As regulatory agreement, it first, at least in my mind, implied something like quota or price range or something like that. By taking the wv ]? affecting production and export J. J. - 20 - E/PC/T/B/PV/5 and import, the implication of the words then made the field very much broader than the original thing, where quota and price range were in force there. Still, I could see a whole field of inter- governmental action and co-operation still within the rather narrow bounds left for a non-regulatory agreement. That is what is now popularly called a permanent Study Group. They involve study and regular consultation, and they prepare for some future action on regulation, but do not evolve regulation itself. This permanent Study Group is a very valuable thing, as has been proved in the last year for more than one commodity, so I think this, at least, is involved in non-regulatory agreements. Now, there are some other types which do not explicitly give a quota or a price range, but which, in the wording when you come to it, probably, without prejudice, are regulatory. Some of them we have been reminded of here already by other speakers. One of them is an arrangement providing for expansion - either expansion that in future may be regulated itself, but which, in the first place, is just expansion of production. G. - 21 - E/PC/T/B/PV/5 This type I think we all agree, as Mr. Helmore said, is one which we ought to deal with among general arrangements. We cannot say that they are in a period of burdensome surplus or anything like that. On the contrary, they are more at a time of burdensome shortage. But then you get the type that I should like to call the "sleeping regulation" - that means making an arrangment which involves regulation on specific terms. That may be one, again, where a surplus is forthcoming. The type of that which has been working very well was the wheat agreement during the war. They said that regulation would be followed by the operation of that wheat arrangement, under specific conditions of surplus when that would come vain after the war. At that time it was not yet. But there was a condition that under certain conditions we will give a regulation. I think it would be a good thing to make it clear that in that stage it is not yet regulatory, and that you can do that easily, because it is a good thing to have in mind difficulties which are not yet at the moment . We do not expect them, but they may come about, and if they do not come about we have no regulation. Then we have the conservation agreements which have been mentioned. by the U.S. Delegation. That is a thing I am wondering a little about. Mr. McCarthy said such conservation arrangements do not regulate. The U.S. Delegation said such conservation agreements must regulate. May be they do not regulate in this sense of limitation of production, but they may regulate in the sense of limitation of consumption. Well, I leave that to the United States Delegation and the Australian Delegation as to under what type of arrangement or agreement they fall; but I think it is a very good thing, Mr. Chairman, that we have a general review of these and try to make it clear in this Commission which types of arrangements there are and which we can conceive, and where we will place them. V - 22 - CHAIRMAN: Any other speaker? The Delegate of New Zealand. Mr. G.D.L. WHITE (New Zealand ): Mr. Chairman, we have not any very strong views on the arrangement of this Chapter. We have examined both the United Kingdom and the Australian re-drafts and we find that each of them has considerable merits, and I therefore think would be very appropriately sent along to a sub-Committee to produce a new and better draft. But one question which is not quite clear is whether the Australian new draft of Article 51A, which makes a definition of regulatory and non-regulatory agreements, is merely a change in the arrangement of the Chapter, or whether it is a change of substance. I refer, of course, to those words "to a substantial degree". I think that that is a change of substance, and it is one with which we find ourselves in complete agreement; but I do not think that is the sort of thing which can be referred to a sub-Committee without an exchange of views in this Comission on that particular point. For our part, we found considerable difficulty--as other Delegates seem to have done also--in finding out exactly what is a non-regulatory agreement, and we are prepared to support the new type of definition which is suggested in that Australian text of Article 51A. CHAIRMAN: The Delegate of the United States. Mr . R.B. SCHWENGER (United States): Mr. Chairman, I would just like to make two points which express the view of my Delegation on the matter before us. In the first place, we have found, as others have, some difficulty with the present text in making clear at a first reading the exact plan of regulatory and non-regulatory agreements and arrangements respectively, and we think it would be quite useful to attempt E/PC/T/B/PV/5 V. - 23 - E/PC/T/B/PV/5 an improvement in the Chapter which would at least partly remove that difficulty, and we feel that the two suggestions for such redrafting contain a promising method of doing that. The second point, however, is that we do not share the same degree of doubt that has been expressed by other Delegations as to the soundness or the essential substance that was incorp- orated in the London and the New York Drafts. We feel that in spite of all the difficulties of explanation, the child is essentially a sound and healthy infant, and it is merely a matter of getting the rest of the world to see that this is so, as it develops in use. But we would not wish to put that forward as a dogmatic position. Doubtless there are cases that must be considered which are marginal, and we would like to see an effort made to clarify the distinction in that respect also, if it is necessary. We doubt very much that the words suggested for that purpose in the amendments before us succeed in doing so. We fear that they go a little too far towards breaking down the distinction, which, as I say, we feel is a basically useful one, and a sound one in the light of the rest of the Chapter. We would like to see that discussed in con- nection with the problem of re-arrangement, and I think probably we ought to say that we will do that without,of course, prejudice in any way to the right of the Members of the Conference to enjoy the excellent American apples that are on the Geneva markets at this season of the year. CHAIRMAN: Do any other Members of the Commission wish to speak on this subject? The Delegate of South Africa. Mr. S.J. de SWARDT (South Africa): Mr. Chairman, I have been listening very closely to find a good argument why there should be this differentiation between an agreement and an arrange- ment and a non-regulatory agreement and a regulatory one. Now, - 24 - E/PC/T/B/PV/5 there seems to be quite a bit of support for the idea that there should be a difference, but I have not heard a good argument as to why there should be a differentiation, and when this matter goes to the Committee on the present basis, it seems to me that the Commitee will have to tackle it from that point of view -- that there should be a differentiation. For my part, I can only see a difference in degree between the various kinds of arrangements or agreements and not really one of substance. This difficulty has been expressed by other Delegates, but in spite of that we have not had much argument to really show that it is of such importance as to be necessary to deal with it under quite separate headings, and the way I see it, it would not be justified to deal with the matter under separate headings. The difference is only one of degree. You have a study group to study a real problem , and some- thing will be done only if there is a real problem about some- thing which is to be done. I cannot see any arrangement or agreement being entered into unless there are going to be obligations undertaken by more than one side, I by producers on the one hand and consumers or distributors on the other hand; and where we already have a burdensome surplus everybody is agreed we should have a regulatory agreement, so it is really only where there is a shortage that one could visualise something which is now termed an "arrangement". But I cannot conceive a condition where producers or producing countries would enter into an arrangement where there is not some stipulation that if something is going to happen at some time--if you pass beyond a certain point--that some obligation is going to evolve on the other side. That is why the more I hear about it, the clearer it seem to me that it would just be something on paper. I feel we should be clear as to whether there is really good reason for making all this differentiation. V. CHAIRMAN: We have now had eight speakers on this subject and there appears to be a general agreement that the Sub-Committee should study the question of the rearrangement of the Chapter, with a view to improving the appearance of the Chapter and making it more intelligible to the reader who is not taking part it these discussions. There is, however, still a difference of opinion as to the degree of distinction which should be drawn between non-regulatory and regulatory agreements. I think it would be useful for the guidance of the Sub-Committee if there should be some further discussion on this particular subject, and therefore. I would like to suggest that speakers now confine themselves to this main point. Mr. McCARTHY (Australia): Mr. Chairman, I definitely agree with your definition of the issue, and as far as the rearrangement is concerned we are quite content to leave it in the hands of the Sub- Committee. On this matter of distinction, it does seem to me that the discussion has confirmed the view that there is a problem in it. I think that the first difficulty is to picture what are non- regulatory agreements, those which are not put in the category of regulatory. I have thought of the example that Mr. Helmore gave us, but the point is that any agreement that comes under this Chapter involves some decision by a government, and the government will only enforce its decision by some form of law. And I believe that once you talk about anything in the way of expansion of production it necessarily follows that a government must take power to do something which would bring it with in the category of regulation of production. I do not think there is any doubt about prices. The regulation of prices is an advanced form of intergovernmental regulation. I do not think there is much doubt about quantities, because when you start to decide how much you are going to ship on the one hand and E/PC/T/B/PV/5 - 25 - when you are going to ship it, and on the other hand what you are going to receive and when you are going to receive it, you are involved in the same form of regulation of trade. But so much can be done in the way of minor regulation. I will give you an example which this time, I hope, will not indicate any secret thoughts as to what might happen, but to take probably one of the most sensitive markets - having in mind commodity - the United Kingdom market for butter. Now an advanced degree of regulation of that market would be an agreement which would include some of the north-western European countries and the countries which ship butter to the United Kingdom market. Now, if it were decided that the quantities that are to be sent to England were 400,000 tons a year, plus what the United Kingdom produced itself, and that was to be divided up amongst the shippers, that would be a regulatory agreement in an acute form.- I use the word "acute". If, in addition, it was arranged among the countries participating in this agreement that there should be a maximum or a minimum price, that again would be an advanced form of regulation. But if the United Kingdom, after conferring with others, said: "You people are pushing all your butter in here in February and March; you are upsetting the traders; you are depressing prices somewhat, that is the time when we find" - I am not thinking of the particular months - "we cannot get enough butter from your we cannot get enough in May and June; could you spread it out a little? Have a talk to the shipping, companies and see whether you cannot reduce the quantities in January, February and March and increase them a little in May and June, " if the United Kingdom said to the Northern Hemisphere countries - Denmark and Holland and the Baltic States - "Give us your butter spread out a little more. You will get better prices if you do; we will take all you can give us, but just spread it out; that is all we want you to do." - 26 - E/PC/T/B/PV/5 S - 27 - E/PC/T/B/PV/5 Each of the countries who agreed to do that would have to introduce regulations, but it would be a very trifling form of regulation because all it would say is: "You have to issue some sort of a licence, but we will delay your January butter until February, your February butter until March, and so on", and it would be to the benefit of both shippers and the importing country, countries such as Belgium - and later on Germany - would no doubt come into it, because it would suit them to do it. We could give other examples, but it seems to me there are three categories: one is where the degree of regulation places the issue beyond doubt, others are minor forms of regulation. Then there is the third category, which we do not seem able to got our hands on and which could range from what might be called the mildest form of inter-governmental regulation, such as an exchange of information or an undertaking to engage in scienti- fic research on certain lines on a certain product, and perhaps to interchange exports, or something of that character. We do not see how you can link that up with the objectives of the Chapter we are talking about; difficulties are likely to arise. The problem is that where you try to reconcile the objectives and the conditions under which any sort of agreement might be intro- duced you find yourself wondering what sort of agreement there could be which would meet the objectives which would not be regulatory in some form. That, I suggest, is the problem and that is the issue. We are not in doubt at all about the really cIear regulatory agreements, such agreements as we know - the wheat ard sugar agreements and those where there is undoubted regulation of trade, production, and so o.- But if we try to apply all the criteria to some of the milder forms of regulation, will we not mean nothing will be done, because we are not ready to engage S - 28 - E/PC/T/B/PV/5 in the closer forms of regulation pictured in the Charter. That butter example might be the forerunner to much closer agreement later on, say, in seven or eight years' time. It might be a good thing if there were an agreement involving price, where you have a ceiling or a floor and where you would not have the dis- equilibrium that we talk of in our opening chapters. Even those who are firm believers in this form of regulation know that in order to get the form of regulation you ultimately want you must do it in steps. Even though you do not see it now, your judgment might tell you that you will not get it until people are educated; perhaps nine or ten years' time might be a reasonable objective for some of the agreements. My own view before the war was that it would take three steps to get a wheat agreement which would remove the difficulties that were so obvious to everybody who had anything to do with wheat. The war altered things quite a lot. The agreement which was drafted recently was something I has never contemplated happening for a very long time. So you might find yourself in the position that, because opinion is net ready for a full regu- latory agreement, you cannot do anything at all, because it must be either regulatory or nothing and the fact that it is nothing is because there is a small form of regulation in it which precludes you from going on. I suggest that the discussion resolves itself into this: Can the non-regulatory agreements be divided into two categories, those which have a very minor form of regulation and those which can definitely be described within the Charter, as it stands at present, as non-regulatory? If you can get those two distinctions, can we get some idea of what a non-regulatory agreement would be? I think that, in searching round for a non-regulatory agreement, you would get one S E/PC/T/B/PV/5 - 29 - which could be reconciled with your view of the agreements as set out in the first few Articles. One final point; the question of the difficulty that enters into the number of participants in an agreement. It will be found, I think, in practice, that frequently an agreement is a small one because there are very few engaged in it and it would appeal to those who are interested in getting a full agreement. The view that would appeal to them would be to let a few start off and others will join in as time goes on and the fruits of the agreement are seen. That happened, I think, in the case of sugar. The first agreement was limited to a few; there were quite important sugar consumers and producers left out of it, but the fact that such an agreement could be established and maintained became apparent to the others and they came in. You might have two, or three, or four steps, but can you lay down that there should be a full regulatory agreement if there are a limited number of people in it? Finally, I would like to say that I can see all these little narrow agreements going into the regulatory agreements if it is decided that is the best course to follow, and the only reason why I can see they should not all go in is that I think the criteria we have laid down will prevent, in some cases, the birth of the agreements and perhaps prevent the early growing stages which could be undertaken if the conditions were not too onerous. The conditions surrounding a full agreement such as we con- template on wheat, sugar, etc., are onerous, because the degree of regulation is great and when countries come into it they have got a record to look at as to the work of such a Council, but that is not so where we are starting from the beginning, and I suggest that is an important point. If it is decided: "Why not put all these agreements - even if they have got only a small degree of regulation - into the regulatory category ?", will that not stop something being done that would otherwise be done? - 30 -V/5 CHAIRMAN: The Delegate of the United Kingdom. Mr. HELMORE (United Kingdom): Mr. Chairman, I think the point in front of us has become very much clearer as a result of the further discussion, and particularly as the result of the second speech by the Delegate of Australia. There are, however, two ways of looking at this problem. One, which I think is favoured by the Delegate of Canada, is by removing the unnecessary Chapter and finishing it like that. Well, that is rather like the old story of the man who had a fish stwre and was apout to paint a sign in front of it which was to read "Fresh Fish Sold Here". A friend came along and said, "You are really wasting your time painting that. Nobody supposes you are going to give it away, so you can leave out the word 'sell'; " then he had a further bright idea and said, "Nobody supposes this is going to happen anywhere else - so you may as well leave out the word 'here'". Then he had yet a further bright idea. "Nobody supposes you are going to sell old fish, so you may as well leave out the word "fresh"; and as for the remaining word, "fish' -anybody within a hundred yards of your shop will know what you sell, so you may just as well leave that off too." It seems to me, before we embark on that line of talk, we want to think very carefully. Even though we cannot think here of an example that convinces everybody of a non-regulatory arrangement that ought to be mentioned, that does not mean that such a one will n t arise in the future. As has been said, the Draft Wheat agreement was really a completely new technique, and there may well be other new techniques discovered, all based on an ingenuity or wisdom which are beyond us at the moment. The other line of argument, it seems to me, is to look at the E/PC/T/B/PV/5 G. G. E/PC/T/B/PV/5 -31 - way in which this Chapter fits in with the whole scheme of the Draft Charter. And the key Article, many people find - certainly those who went through the discussions in London - is Article 52, the famous introductory words of which are, "Regulatory agreements may be employed only when" and so on. Now, as it has been said, this Chapter is designed to describe the circumstances in which a departure from the provisions of Chapter V is justified. The provisions of Chapter V from which it is necessary to depart are those involving regulation. That argument would seem to us to mean that there is no need to have anything which does not involve a departure from the provisions of Chapter V - which is the distinction between arrangement and regulatory agreement. None the less, we have all sa id the departures from Chapter V are justified both in respect of arrangements and in respect of agreements. And the problem that is really worrying us is, what departure from Chapter V can you possibly want if it does not involve regulation? Therefore, leave out of the Chapter all those things that do not involve regulation; in other words, those that only involve non-regulatory arrangements. I think that is the real basis of the argument. Now, at his second attempt the Delegate of Australia produced an example which frightened me a good deal less. Though even then I felt a bit worried that we in the United Kingdom would mind "pushing in" - we would like it very much for a little while; and it seems to me that if we are going to face this problem we have got either to re-consider Article 52, which lays down the circumstances within which a regulatory agreement may be used, or what is to be considered as a definition of regulatory. Those are the two things which we must do, if we are going to preserve the "Arrangements" part of the Chapter. G. - 32 - E/PC/T/B/PV/5 I would be very much against any attempt to make any substantial alteration in Article 52 as it now stands. That does involve opening the field to regulatory agreements; in other words, to a departure from Chapter V in circumstances that seem to us not serious enough to justify that. On the other hand, if you say regulatory agreements are those affecting the regulation of trade production and prices, whatsoever the exact words are, you have thrown a net when the limited conditions of Article 52 apply which may be very weighted indeed. Therefore, I would say that the clue to solving this problem is to re-consider the definition of a regulatory agreement - not to disturb what we have already mostly agreed upon as to the conditions in which a regulatory agreement may be used, but to consider whether we have not gone a little too far in saying what is a regulatory agreement. Undoubtedly, in Mr. McCarthy's example, the countries who were involved there would have to use some form of regulation to do it. It would almost certainly involve a form of limitation of exports at the times of the year that were appropriate; but as I understand it, it would not involve a reduction in the amount exported. So it may be that there is a clue there which we can follow, and by looking at the definition of the word "regulatory", discover the right answer to the intellectual problem that is bothering us about why there should be the two parts of this Chapter. I think it ought to be added that just to say "two parts" may conceal a misunderstanding. What is said is that for arrangements, "certain conditions apply", and for regulatory agreements certain other conditions apply as well. That is rather different from some of the implications of saying that the Chapter is in two parts; and if it were the view of the Commission that the right solution was the definition of "regulatory", I gladly agree that should be done. I think the attempt at doing that in the actual amendment suggested by Australia goes rather far. V. - 33 - E/PC/T/B/PV/5 It seems to me to be open to a good deal of argument in interpretation, in the use of the word "substantial" without any provision for some independent determination of what is substantial in relation to the circumstances. Mr. E. McCARTHY (Australia): The Organization ought to be given some criteria . Mr.J.R.C. HELMORE (Unied Kingdom): If one could arrange it so that -- as has just been suggested -- the Organ- ization had some small, limited discretion in this matter, we should be very happy to view that sympathetically. - 34 - E/PC/T/B/PV/5 Mr. J.J. DEUTSCH (Canada): Mr. Chairman, after Mr. Helmore's fish story I feel I would like to say a word. I do think that it is misleading to put out a sign of fish for sale when you haven't got any fish to sell, and that seems to me to be the situation in this Chapter. However, Mr. Helmore went on to analyse the problem in a way with which I agreed. He has pointed out earlier that the difficulty was in the present definition of the regulatory agreement, and that was the only one. There was nothing left for any other type of agreement, therefore, why make the Chapter more difficult by adding a lot of material to cover the situation as it arises? I agree that, if it is possible to narrow somewhat the definition of regulatory agreement and thereby make it possible to have agreements which fall outside that definition and have agreements that do not that would be useful. I think have to meet all the conditions of the regulatory agreement,/ it would be desirable to try and see whether we can get a somewhat less wide definition of the regulatory agreement, to cover the situations that Mr. McCarthy has referred to. If that is done I think the possibility of maintaining a duality here is useful and desirable. I do recall that there was a very difficult time in London to get an agreement on the definition of the regulatory agreement, but I think it is worth trying once more to see whether we can get a definition that is more satisfactory and which allows for a wider range of activities in the commodity field. In that case there would be room for the development of less rigorous conditions for the other types of agreements. But you can't have them both. You can have both the complete definition of regulatory agreement covering all the possible situations and still maintain a section of the Charter which is designed to take care of conditions which may never arise. M. PETER (France) (Interpretation): Like the United Kingdom delegate, I am of the opinion that in order to see the position in a clearer way, it is necessary to refer to the purposes of Chapter VII within the general framework of the Charter. 35 The purpose of Chapter VII is to determine those conditions that are to be fulfilled by countries which desire to conclude regu- latory agreements regarding trade . This, therefore, excludes inter-governmental arrangements, as was mentioned by the Delegate of Australia, for instance, on research work; this kind of arrangement does not come within the framework of the Charter and the conditions set forth in Chapter VII are not applicable to them. The great difficulty is that this Chapter hampers the freedom of initiative and therefore it appears necessary, in our opinion, to limit the conditions under which regulatory agreements can be concluded. The difficulty, as pointed out both by the United Kingdom and the Canadian Delegates, is the difficulty of defining the matter; it is indeed necessary to determine the general regulatory agreements which should be subjected to severe conditions and the more limited particular agreements for which more flexible rules should be contemplated. I do not think it is possible to subject to severe rules all inter-governmental arrangements and I therefore adhere to the spirit of the United Kingdom and Australian amendments, which draw a distinction between general regulatory agreements and other agreements or arrangements which are of lesser scope and largely more flexible. The latter should therefore form part of an altogether different category, where the regulations to be applied would be less severe than in the former category. For these reasons I think it should be the task of the sub-committee to draw a careful distinction in order to allow a certain amount of freedom in the drawing up of inter-governmental arrangements which should not be subjected to strict rules. E/PC/T/B/PV/5 S S 36 E/PC/T/B/PV/5 The Canadian Delegate made a reference to minor agreements. The French Delegation agrees with that distinction and is of the opinion that all inter-governmental arrangements should not be subjected to the same restrictions. In other words, in certain cases the regulations should be more severe, whilst in other cases they should be more flexible. CHAIRMAN: The Delegate of Cuba. Mr J.A.GUERRA. (Cuba): Mr. Chairman, we think the issue before the Commission is clearer now than when we started in London to try to solve this difficult problem of differentiating between the two forms of agreement. Thanks to the Canadian Delegate, who raised the problem, and to the Australian Delegate, who, in my opinion, gave the answer, we have achieved that purpose. I myself had not been able to see any fish behind the sign, either, up to now. The problem was that the Delegations who, in London and here, referred to these other types of agreement always tried to describe them in terms of objectives - especially expansion of production - but not in terms of mechanism. Thanks to the second speech of the Australian Delegate,I remove my doubts about it and I now see clearly that there are no fish at all. The question is simply this: that we have two kinds of regulatory agreement - one which involves a greater degree of regulation and another kind which involves a lesser degree, and the problem before the Commission is therefore to decide whether it is desirable to take that into account and try to fit Chapter VII into the framework of the Charter, making the minor regulatory agreements more flexible and making the restrictive ones regulatory. 37 I think when the Commission decides that, it will entail not only the re-arrangement of the Chapter but also a full amount of changes in the type of difficulties referred to in Article 47 and also in the conditions and the requirements on which those types of arrangements can be established. I only sent to add that it seems to me I cannot commit my Delegation to any view as to whether those changes and that new approach are desirable or not, because we always approached this Chapter VII as an exception to the obligations in the general framework of the Charter, as the United Kingdom Delegate pointed out, and we shall have to look at the question from a new view- point and explain our decision at a later stage. CHAIRMAN: Are there any other speakers? The Delegate of Czechoslovakia. H.E. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I would just like to observe that from the discussion on the re-arrangement of the chapter we became involved in a dis- cussion on fish, I would like to go over to another animal. When a friend of mine was once asked to define an elephant, he said: "Well, I cannot define an elephant but if I meet one I shall recognise him." E/PC/T/B/PV/5 S J. E/PC/T/B/PV/5 38 H.E. Z. AUGENTHALER (Czechoslovakia): Now, I think that may be it would be advisable just to take the different amendments to the Articles and to see what are the foundations and what is the matter of the Articles, so that afterwards we may decide about the re-arrangement, or see if there are some important differences and some now definitions necessary. I thank you, Mr. Chairman. CHAIRMAN: I think the remarks of the Czechoslovakian delegate are very pertinent to this discussion. I suggest that we should, first of all, have a general discussion on the proposal to re-arrange the Chapter, particularly in relation to distinctions between non-regulatory and regulatory agreements. I think we have had a very useful discussion, and though we have not completely shown the sub-committee how to solve the problem. we have at least indicated to them what the problem is. Now, we will be returning to various aspects of this problem as we consider the various Articles of the Charter and the amendments which have been submitted to these Articles. I think the delegate of Czechoslovakia is quite right, and that after we have proceeded with the various amendments, there will be some more guidance given to the sub-committee as to how to deal with this problem. I would therefore like to propose that we leave this subject now and transfer it to the sub-committee for further study. Is that proposal approved? Agreed. The next item on our Agenda is an observation by the French delegation regarding the Functions of Specialized Agencies in relation to Commodity Arrangements. I would like to suggest, if the French delegate agrees, that J. E/PC/T/B/PV/ 5 39 we defer consideration of this particular subject until we come to the consideration of Article 50, which deals with relations with inter-governmental organizations. Is that agreed? M. PETER (France) (Interpretation): Mr. Chairman, this was not an amendment, but only a wish that we were making and I agree that we defer this until we come to the discussion on Article 50. CHAIRMAN: Thank you. The next item is reservations to the whole Chapter by the delegation of Brazil. It will be found in the Report of the Drafting Committee on page 38 that the Brazilian delegation has reserved its position on the whole Chapter insofar as its operation might interfere with the production of primary commodities for home consumption. The delegate of Brazil. E/PC/T/B/PV/5 G. 40 Mr. MARTINS (Brazil) (Interpretation): Mr. Chairman, the Brazilian Delegation reserves its position on the whole Chapter for reasons that are stated in their Report. It should be borne in mind that these provisions were that the Chapter concerned should be in conformity with Article 1 (1) (b). The whole of Chapter VII is likely to create a system of arrangements or agree- ments of an international character which it is desirable to make the best possible, on the assumption of equal development of all countries, in order to offset the effects of a lack of balance as between consumption and production of commodities; but finally if this were applied, the world situation would be stabilised to the point of reaching a sort of division of work. However, there are a number of insufficiently developed countries which are nevertheless in a position to contribute to the general situation, both in favour of their own people and in favour of the people of other countries; and this effort on their part should not be rendered difficult by means of agreements or arrangements the effect of which would be to prevent such countries from increasing their production. This explains the Brazilian reservation. What we want is to introduce in this Chapter the dynamic viewpoint of nations now in the course of development, and we intend to submit an Amendment to Article 59 which we hope would be likely to improve the general provisions of the Chapter. CHAIRMAN: Any Member of the Commission wish to speak on the reservation of the Brazilian Delegation? The Delegate of Cuba. Mr. GUERRA (Cuba): I would like to have some clarification from the Brazilian Delegate about the difficulty they had with the Chapter. We had a certain discussion on this point in New York G. 41 E/PC/T/B/PV/5 and up to now I cannot understand what the reason for the reservation is, because these agreements are voluntary, so that the country is free to join the agreement or not; and to that extent of the regulation of production or trade or prices, in the case of regulatory agreements, they are free not to enter. If a country has a programme for increasing production for domestic consumption, just by joining the agreement does not put it under any obligation under the Chapter. It would have no interference from other countries, so I would like to have some clarification of this point, because, up to now, I have failed. to see or understand the reason for the reservation on the Chapter. Mr. MARTINS (Brazil) (Interpretation): Mr. Chairman, I have already stated that we intend to submit an Amendment to Article 59 explaining our point of view and explaining the reasons for the reservation which we made in New York; but in order to reply to the question asked by the Cuban Delegate, I shall only state now that in practice there is no choice. There are two categories of countries; on the one hand those which are parties to agreements, and on the other hand those who are left outside the agreements and therefore have not the same opportunities of development and expansion as those which are parties to the agreements. Therefore we are faced in this world with a situation in which the existence of such agreements would oblige countries that are not willing to have such agreements to enter them if they want to take part in the general development. But I repeat that this matter can be better discussed when we come to Article 59, and I shall ask the Cuban Delegate to wait until we get there for further explanations. 42 G E/PC/T/B/PV/5 Mr. GUERRA (Cuba): Allright, I am willing to wait for that opportunity. CHAIRMAN: The Delegate of the United States. Mr. SCHWENGER (United States): Article 59 deals with exceptions to the Chapter, and I too would be willing to wait, but I would like to urge our Brazilian colleague to submit his Amendment at as early a date as possible, so that as we go through the other portions of the Chapter we can have in mind the kind of exception he intends to add to the Exception Article, and it should help us to consider it fully throughout our sessions. V E/PC/T/B/PV/5 43 M. L.D. MARTINS (Brazil): (lnterpretatoon): Mr. Chairman, I ask that I may wait until tonight at seven o'clock, because I have promised the Secretariat to submit an amendment to them by ed the Secretariat to submit an amendment to them by that time. Mr. R.B. SCHWENGER (United States): Yet that is what I had in mind really. CHAIRMAN: I was going to point out to the Brazilian Delegate that we fixed the time limit of May for submission of amendment , but if his amendment could be in the hands of the Secretariat as soon as possible and circulated, that would enable us to take up his amendment when we come to Article 59; otherwise, it would have to be referred directly to the sub-Committee, and we would not have the benefit of discussion of the amendment in the full Commission. I am very hopeful that when the amendment is discussed in relation to Article 59, the Brazilian Delegation will then be able to withdraw his reservation, because we <. wish to have the Chapter go forward without any reservations of any kind. M.L.D. MARTINS (Brazil) (Interpretation): This is precisely our position, Mr. Chairman: we are prepared to withdraw our reservation the moment our amendment is adopted by the Committee. CHAIRMAN: We shall return to the Brazil reservation after we have discussed Article 59. Point 4 on our Agenda relates to matters is Chapter V arising out of consideration of chapter VII. "The Drafting Committee- Go~r-i te pointe'd out that when Article 59 is ,dealt with the provisions of VIChapwhich would allowYto -a .i. r, p rtcipate incommodity arrangements will need to be taken into Consideration" The attention of Commission A is being drawn to this matter by the 44. Secretariat and there is no need for us to take ary further action at this time. The United Kingdom Delegation, has subrmitted an amendment to Article 37 ("General Exceptions"). This Article, too, is to be considered in Commission A, but it would seio desirable that this Commission should give some guidance to Commission A when they come to consider the United Kingdom amendment. I therefore suggest that we ciscuss the United Kingdom amendment at this stage. The Indian Delegation also proposes the same insertion as the United Kingdom, but with the adoition of cortain words The Indian Delegation, however, has now withdrawn this amondment, so it will not be necessary for us to consider the Indian amendment at this time. Ww will simply consider the Indian amendment along with the United Kingdom amendment . The Delegate of the United Kingdom. Mr. J.R.C. HELMORE (United Kingdom). Mr. Chairman, if I might very briefly explain. to the Commission the thought that we had in.mind, it is this: There is at present an exception in 0hutptcv V which relates to action taken under Chapter VII, but that sub-paragraph finds itself in Article 25 which doals with quantitative regulations, that is to say, the implication is that the only exceptions to Chapter V which woulu be necessitated by the provisions of any possible commodity arrangement. would be the use of quotas. We venture to toubt that and think that it would be wrong for the Charter to express the thought that tne only way of dealing with the commodity problem in by a quota scheme. It might arise in many other ways. There is also the point that one can easily think of exceptions which might be needed under other Articles. I might mention one, and that is Article 31 which is headed "Non-discriminatory administration of state-trading enterprises". E/PC/T/B/PV/5 V. 45 Clearly, if the State were a party to a commodity arrangement and it were also a trader in that commodity, it would be bound to give precedence in its state-trading operations to the provisions of the commodity arrangement into which had entered, and not so much to the considerations to which its attention is directed by Paragraph 1 of Article 31. We think, therefore, that it is a good deal tidier and much more in accordance with the thoughts that have been expressed -- indeed, here this afternoon -- in the debate of the question with which we started -- to put the exception into the generall Exceptions Article, Article 37. There would, of course, be the consequential amendment of leaving out a sub-paragraph in Article 25 to which I referred. E/PC/T/B/PV/5 V. ER E/PC/T/B/PV/5 46 Mr. J.A. GUERRA (Cuba): Mr. Chairman , I suggest that the proper time to discuss the amendment of the United Kingdom delegation would be after we havy found out the result of the discussion today, and after what would finally come out after this differentiation and to what extent the conditions and requirements for different. types of agreements are stated, because I think that after w e do that we will be able to see more clearly the need fom the change in the first place, and also the effects of the change. -- CHAIRMAN: Will the delegate for the United Kingdom answer the proposition made by the delegate for Cuba? Mr. J.R.C. HELMORE (United Kingdom): I do not think it really matters very much whether we deal with it now or later. I am pretty confident that it is more convenient to express the exception to Chapter V as a general exception to Chapter V rather than direct our brains thinking which of the provisions in this Chapter might need to have an exception added to them. But if the delegation of Cuba would sooner discuss the Chapter first and make up their minds finally as to what exception is needed, I do not think it really matters. Mr.. J.A. GUERRA (Cuba): Mr. Chairman; I want to make it clear that I have no particular objection to the principle of the change proposed by the United Kingdom delegate. The only thing is that I think we will be in a better position to Judge to what extent the change is justifiable and as to whether the acception of the whole Chapter will be justified after we know what the Chapter will be like. I think that, in the question of procedure and method, the Commission will be in a clearer position to judge the necessity E/PC/T/B/PV/5 47 for that and the effect of the change, after we know how the Chapter will finally be drawn. CHAIRMAN: I do not think it is really a matter of great importance when we take up this amendment. The only point is, should we consider it before Commission A will begin to consider Article 37, and therefore I think we can agree to the proposal of the Cuban delegate, and defer the consideration of it till after we have gone through the other Articles of the Chapter. But if we find it is coming up before Commission A before we expect, we may have to bring it up earlier. We have now come to the consideration of the general comments on the procedure to Chapter VII. I propose we adjourn now and at our next meeting we shall consider the amendments to the Articles of the Charter, commencing with the amendment to Article 46. If that is agreed, the next meeting will be held on Monday, at 2.30 p.m. The meeting rose at 6.10 p.m.
GATT Library
sz663fc3448
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fifth Meeting of the Tariff Agreement Committee held on Wednesday, 27 August 1947, at 2. 30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, August 27, 1947
United Nations. Economic and Social Council
27/08/1947
official documents
E/PC/T/TAC/PV/5 and E/PC/T/TAC/PV/4-6
https://exhibits.stanford.edu/gatt/catalog/sz663fc3448
sz663fc3448_90260012.xml
GATT_155
15,245
91,670
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/5 27 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FIFTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON WEDNESDAY, 27 AUGUST 1947, AT 2. 30 P.M. IN THE PALAIS DES NATIONS, GENEVA. Hon. L. D. WlLGRESS (Chairman) (Canada). Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. E/PC/T/TAC/PV/5 ER CHAIRMAN: The meeting is called to order. We are all together to-day to do more discussion on the Report.: of the Tariff Negotiations Working Party, and the General Agreement on Tariffs and Trade. The majority of Members have come back fresh and rested from Czechoslovakia, and we must proceed with the expedition of the work that is before us because members of the Committee will recall that the Secretariat has sent other notes to delegations informing them that "due to the requirements of the General Assembly of the United Nations all the interpreters in Geneva will be withdrawn by September 14th." That we may regard as our deadline for completing the work of this Tariff Agreement Committee. Therefore I would like this Committee to try to com- plete their work for the 14th September. We will resume our discussion based on the Working Paper W.301 prepared by the Secretariat. At our last meeting we finished point 'a) of No.2: Significance of signature of the Agreement at Geneva. We have not yet dealt with point (b) "The Syro-LW'nese delegation has pointed out its understanding that signature of the Agreement will not constitute an obstacle to the freedom of discussion of the Charter at the World Conference on these part of the two countries which it represents." The Secretariat then pointed out that it will be useful for the Committee to reach an understanding, in this con- nection. I therefore suggest that the first part of our meeting be devoted to this particular subject, after which we shall pass on to No.3 - Tentative Timetable of developments. Would the Lebanese delegate like to open the discussion on this subject? M.MOUSSA M0B R K (Lebanon) (Interpretation): Mr. Chairman, I have nothing to add to the reservation which I have already stated in the document that I handed to the Secretariat. As you know, 2 -3- both our Governments said that they could not sign the Agreement unless certain formal reservations were made, and Syria joined Lebanon only on the question of Tariff negotiation. On the other hand, both our countries are linked with the Arab League on the question of economic development, and it will be very difficult for us to take any undertaking here towards a text which could be modified later on in Havana. Therefore, if we intend to have this Agreement signed here in Geneva we should like the interpretation which we gave in this document to be kept. That is to say, that we want to be free to reconsider these different Articles as well as the Articles on which we made formal reservation, and the other Articles in Havana. CHAIRMAN: Does any other delegate wish to speak on this subject? Mr. R. J. SHACKLE (United Kingdom) : Mr. Chairman, my impression is that there is no obligation at all on a delegation as to the line it will take in Havana, as Mr. Harold Wilson said in a speech at the Plenaries that we should most definitely hope that the delegations which have taken part in the preparation of this Draft Charter will defend the basis of the text which has been reached. We certainly hope that that would happen, but I do not think that there is any notion of obligation on delegations to take a particular line. That is my point of view, but it is only a personal one. CHAIRMAN: Are there any other delegates who wish to speak? Dr. H.O. COOMBS (Australia): Mr. Chairman, I believe the pro- blem does not arise if the General Agreement takes a certain form. Mr. I. MELANDER (Norway): I agree with that, Mr. Chairman. CHAIRMAN: I think we can interpret what little has been said on this subject, that the (Committee are in general agreement with the interpretation just given by the United Kingdom delegate which con- forms with the understanding of the Syrian-Le panese delegate that the signature of the agreement does not prejudice the stand which the other delegates wish to take at the Havana Conference. E/PC/T/TAC/PV/5 CHAIRMAN: The Delegate of the Lebanon. M. Moussa MOBARAK (Lebanon) (Interpretation): Mr. Chairman, this, of course, is quite evident, and nothing should prevent the Delegations, after they have signed at Geneva, from adopting a different attitude and discussing the questions at Havana. However, the question here is whether, if alterations are introduced in the Charter at Havana in essential Articles, whether the Agreement on Tariffs will be changed accordingly. Therefore, there are two aspects of the question: first, the discussions at Havana, and second, the changes which will be made later on. CHAIRMAN: The second aspect of this question will, of course, be dealt with when we come to item 6 on our Agenda. We now pass on to item 3 - Tentative Timetable of developments. We dealt fairly fully with this when we were discussing the question of the significance of signature of the Agreement at Geneva; but it might be useful to have a discussion as to the dates set forth in the tentative timetable. It also gives an opportunity to consider the point which was raised by the Belgian Delegate at our last meeting, which was, would it be possible or not for Parliaments to discuss the General Agreement before the date of simultaneous public announcement? I should think that the answer to that would be that it would not be possible for Parliaments to discuss the General Agreement until the date of simultaneous public announcement, as otherwise there would be danger of other countries getting to know about the Agreement, and in order to safeguard the security of the document, no discussion could take place until after the date of simultaneous public announcement. The Delegate of the United Kingdom. E/PC/T/TAC/PV/5 V -4- V - 5 - E/PC/T/TAC/PV/5 Mr. R.J. SHACKLE (United Kingdom): I do not know whether it would help at all with this problem, but so far as the United Kingdom Government is concerned, we are doubtful whether we could live up to the date of 15th December for provisional application. We could be reasonably sure of 1st January, if the earlier part of the time-table is adhered to; but we cannot very well pledge ourselves to an earlier date than 1st January 1948. It may possibly give a little more time for Parliaments to consider the text if 1st January should be adopted as a general data. That is the only comment that occurs to me. CHAIRMAN: The Delegate of the United States. Mr. J.M. LEDDY (United States): January let, for the provisional entry into force, would, I think, be acceptable to us, Mr. Chairman. We do think, however, that it is important to adhere to the publication date of November 15th, that is, before the World Conference opens, if it is at all possible to do so. CHAIRMAN: The Delegate of Australia. Dr. H.O. COOMBS (Australia): Mr. Chairman, when we discussed the first part of this paper at our last meeting, I think it was agreed that there should be after the authentication of a text here in Geneva on approximately 30th September, a period of about six weeks during which the Agreement would be open for signature at least by certain countries - key countries, I think they were referred to - giving a date by which those countries could be expected to have signed the Agreement of November 15th, which approximates to the date set out here for simultaneous public announcement. I see no difficulty in simultaneous public announcement on or -, -6- V E/PC/T/TAC/PV/6 about the last date for signature by the key countries; but it has occurred to me that that might possibly be inconvenient for some countries, and I think it would be as well, therefore, if we were to test the position of the various Delegations here as t whether they would require a period between the final date for signature and public announcement. For instance, countries may be unwilling for the text of the Agreement and its content to be announced unless there are a certain specified number of countries participating, or unless particular countries of interest to them have in fact signed. There may, therefore, be a necessity for a short period after the final date for signature before the text of the Agreement is published, to enable countries to confirm their signature in the sense that the assumptions on which they made it have, in fact, been fulfilled. Clearly, if there is one key Agreement for no key participating country or for one of the countries which has signed, they may well want to know that the other part to that particular negotiation has, in fact, signed also before they agree. As I say, so far as we are concerned, I think the simultaneous public announcement immediately following the final date of signature would be acceptable to us, but do think it is a question which should be examined. Mr. D. Y. DAO (China): Mr. Chairman, we have nothing to add to what we said last time concerning the provisional application of the Agreement; but there are two points which we would like to have clerified in connection with the publication of the text of the General Agreement and provisional application. It is presumed that when the text of the General Agreement is published, the Tariff Schedules will also be published, which form part of the Tariff Agreement. It is quite in order for V - 7 - E/PC/T/TAC/PV/6 those countries to publish the Tariff Schedules which they will apply provisionally say, on November 15th, but supposing a country finds that it is impossible to apply the Tariff Schedules on that date, is it correct to assume that the particular Tariff Schedule of that country will be withhold from publication, because if it is published alongside with other Tariff Schedules it would cause dislocation of the trade of that particular country by premature publication of the tariff concenssions which they contemplate. Furthermore, I think it would be contrary to the usual constitutional procedure for Tariff Schedules to be published before being considered by their Iegislature. That is one of the points which we would like clarified. The second point is that those Tariff Schedules which are applied provisionally will, it is understood, also be applied to countries which have commercial relations with countries pro ; 5 : ' I ;7i)?T1L.g these Tariff Schedules through the operation of the Most-Favoured-Nation clause. - 8 - J. E/PC/T/TAC/PV/5 CHAIRMAN: I think I can reply to one of the questions raised by the Delegate of China by saying that it has been envisaged that simultaneous publication of the full text of the General Agreement (you will notice that the word "full" is underlined on page 6) means the General Agreement with all the Tariff Schedules. However, my understanding is that it is customary, in the case of trade agreements, for them to be published before they are submitted to parliaments' approval. Often, it is the practice to publish them very soon after signature, and that of course does give rise to the personal effect this might have on trade, but as these are mostly tariff reductions, the effect it would have on trade would probably be to slow up imports, which largely depend on the state of the various markets. But if there were sufficient goods it is probably that the importers would wait for the date of the entry into force of the General Agreement to proceed with their importing. On the other hand, if the market were short of goods importing until would presumably continue/a few weeks prior to the coiming into force of lower rates. MR. D.Y. DAO (China): Thank you very much for your explanation, but we find that difficulties still remain for those countries who cannot apply the Tariff schedules provisionally which they agreed to at Geneva, so we would like to give further thought to the particular problem of the publication of the Tariff Schedules. CRAIRMAN: The Delegate of Czechoslovakia. H.E. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, if I understand correctly, the procedure should be the following: On the 30th September there would be the signature by the Delegates, not yet involving the Governments, because the Governments would have to -9- E/PC /T/TAC/PV/5 approve or disapprove it; the simultaneous public announcement would be on the 15th November, but I am rather wondering what Public announcement" means. Is it in the newspapers as a kind of advertisement, or does it mean in connection with official papers in the collection of laws? In our constitutional practice, I do not see what kind of public announcement we can make of an Agreement without saying at the same time when this Agreement will enter into force. Now, suppose that we make this announcement and say it will enter into force one day, but I do not know when, then of course the importers will be looking at the reductions of tariffs and they will stop importing, and then later we will see that only certain countries will adhere to this Agreement and we will have to revise the list of our concessions and withdraw certain concessions, and meanwhile the whole of our trade would be stopped. Therefore, that is why we do not see the necessity for a public announcement before we are sure which countries are willing and able to put into force the concessions. CHAIRMAN: The Delegate of Australiáa. DR. H.C. COOMBS (Australia): Mr. Chairman, I think that the Czechoslovakia Delegate has emphasized a point which I made earlier, that is, that countries may not wish to have published the full text of the Agreement until they know what countries have, in fact, accepted it and what Governments have, in fact, undertaken to give provisional effect to the Agreement. That may mean the necessity for a period between the final date for signature and the date for the simultaneous announcement. On the question of the nature of the simultaneous announcement, it would be necessary, so far as we are concerned, for that - 10 - J . E/PC/T/TAC/PV/5 announcement to be made to our Parliament, and we would suppose that, in agreeing to the simultaneous announcement, we would be agreeing to other Governments making the results of this Agreement public at the same time as we make them public in Australia by presenting the Agreement to Parliament. Whether any arrangements will be made also for publication by the United Nations is a separate point and does not seem to effect the issue, but certainly, so far as we are concerned, we would think it necessary that we should publish the results of the Agreement by presenting them to our Parliament on the same day as they were going to be published anywhere else, wherever it may be. The other point that I think is of some relevance is the question of whether all the Schedules will be published, or only those Schedules affecting the countries which have already signed the Agreement, that is, the concessions which have been exchanged between them. P - 11 - E/PC/T/TAC/PV/5 CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J.SHAKLE (United Kingdom): Mr. Chairman, as far as the United Kingdom practice is concerned, I do not think that the points made by Dr. Augenthaler would cause us any difficulty. It is our regular normal practice to publish Trade Agreements and Treaties before they are ratified. That is, in fact, inevitable, because they have to be presented to Parliament and naturally presentation to Parliament means publication. A Trade Agreement is published as a White Paper and has printed on the front of it "This Agreement has not yet been ratified by His Majesty". That I resume is the technique we could follow in this case. As to the risk that the publication of these Agreements before they are put into force might cause some slowing up of trade, I think that you, Sir, have already dealt very effectively with that point. I do not think there is any more to say about it, and I should not think that the result would be serious. As to Governments getting to know which other Governments have signed, I presume that the Secretariat would at once telegraph to al1 the Governments of countries here represented each signature as it was made, so that all of the countries here represented would know from day to day what the position was as regards signature. If that procedure were followed I should think there would be no need for any long interval between signature and publication. I quite appreciate that there might be some interval, but I should not think it need be a long one. Thank you. CHAIRMAN: The Delegate of Norway. P. E/PC/T/TAC/PV/5 Mr. J. MELANDER (Norway): Mr. Chairman, we have had some of the same doubts as the Delegates for Czechoslovakia and China have expressed and I may mention that in our case the normal procedure is that although the draft texts of Trade Agreements and Payment Agreements are published before they are laid before Parliament, with regard to Tariffs the position is the opposite. Those are not published until they have been accepted by Parliament in Secret Session. In this case here, however, we have come to the conclusion that to make any objection to the proposal made in the Draft General Agreement would lead to a series of difficulties. First of all, it would mean that one would have to revise the Schedules of those countries which not only signed the Final Act but which also signed and put into force provisionally the Agreement. That would really mean that we should take up again for revision all the Tariff Negotiations we have had here in Geneva. That is one main objection we have against the idea. Secondly, the objection that there might be some inconvenience to trade we do not consider to be very serious, in fact that would really be met if the countries concerned, by so to say unilateral action, reduced the tariffs accordingly without any obligation; But in any case we have come to the conclusion that although this would certainly be contrary to our normal procedure, we think the proposal here is the only reasonable one and if one wants to have a General Tariff Agreement one must accept it. CHAIRMAN: The Delegate of the Lebanon - 12 - I P -13- E/PC/T/TAC/PV/5 Mr. MOUSSA MOBARAK (Lebanon) (Interpretation): Mr. Chairman, I think the question has a double aspect: first the General Agreement with the Tariffs, and second, the Tarrifs themselves. I do not know the possibilities of other countries represented hero, but so far as my country is concerned, I have already notified the Secretariat that we will do our best to enforce the Tariffs provisionally as soon as possible, but the General Agreement must be submitted to the vote in Parliament and there- fore we cannot possibly contemplate its publication before March or April next. I therefore would like to know whether we are discussing at present the General Agreement with the Tariffs, or the Tariffs alone. If the latter is the case, the 15th November would suit us; but if the General Agreement is meant here, then, as I said before, we cannot do anything before March or April next. CHAIRMAN: In reply to the Delegate of the Lebanon, I would state that we are considering here this tentative time- table and what has recently boon the subject of most discussion is Item 2: "Simultaneous public announcement of the full Text of the Generel Agreement." That of course means the General Provisions of the Agreement and the Tariff Schedules. The Delegate of Belgium. M. PIERRE FORTHOMME (Belgium): Mr. Chairman, it seems to me that up till the speech by the Delegate of Lebanon all objections to publication were on the basis of the Tariff Schedules and not of the General Agreement and I think E/PC/TAC/PV/5 it would clarify the discussion here if we first of all dis- covered if any Delegations would have any objection to the publication of the text of the General Agreement apart from the Tariff Schedules before it would be laid before the Parliaments. I personally do not think there would be any objection to these terms being known. CHAIRMAN: The Delegate of the United Kingdom, Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, naturally, of course, the practice in the United Kingdom is no guide to what happens elsewhere, but, so far as the United Kingdom is concerned, there is no difficulty about laying an Agreement before Parliament even if Parliament is not sitting, because the Agreement is laid on the table of the House and is published, and that counts as laying it before Parliament. No doubt it is in a sense a legal fiction, but it is legal, and is what we do. I daresay other countries may have a similar procedure. CHAIRMAN: The Delegate of the United States. Mr. J.M.LEDDY (United States): We have negotiated Trade Amendments with, I think, some thirty countries, all of which contain both Tariff Schedules and General Provisions. I believe there is no single case in which the Agreements were not published anywhere from two weeks to six months before their entry into force, and in almost all cases it was not known at the time of publication as to the time they would enter into force. I cannot help but believe that it has been a very common practice in Commercial and Tariff Agreements to publish them before they enter into force and before it is known when they will enter into force. P - 14 - E/PC/T/TAC/PV/5 Dr. J.E. HOLLOWAY (South Africa): It seems to me that there are three questions there and we need not preoccupy ourselves with the first. It is the publication of the General Agreement which has already been published, and therefore we need think no more about it. Secondly, it does not seem to me to be possible to publish the Agreement in fragments because it seems to me that the process of fragmentation would be so difficult that it is really not worth doing. Thirdly, it does not seem possible to me to lay it before all the Parliaments at the same time because they just do not meet at the same time. As far as publication in advance is concerned, our position is exactly the same as that of the United States of America. We have frequently published changes in tariffs which mean increases in tariffs quite a long time before these increases have come in. There is an advantage in that because it does give your traders some time to off-load without being caught with heavy stocks which they cannot pass on. M. HASSAN JABBARA (Syria) (Interpretation): Mr. Chairman, the usual trade agreements do not provide for provisions as essential as the ones we are dealing with here. Usually they deal only with commercial and customs treatments, and usually, too, they are made known a short time before their final ratification because their ratification can always be taken for granted. Now, the General Agreement we are dealing with here includes both tariffs and legal provisions which have to be submitted to Parliament. If this General Agreement were a simple trade agreement it would not be necessary as far as our country is concerned to submit it to the approval of our Parliament. It could be published and implementèd at once. If it were possible, as my Lebanese colleaguehas suggested, ER - 15 - - 16 - to provide for two different procedures, and provide one special procedure for tariffs, namely, their publication and effective enforcement at once, and as far as the text of the General _agree- ment is concerned, to deposit it before Parliament. I think all countries concerned would be in a position to adjust themselves and accept this procedure. M. ANGEL FAIVOVICH (Chile) (Interpretation): The Cnilean Parliament will have to approve the General Agreement. Therefore the Chilean delegation is unable to make any undertaking at this stage. The only part of the agreement that could be put into force without Parliamentary approval is the Tariffs. M.PIERRE FORTHOMME (Belgium): Mr. Chairman, I shall think it would be an advantage if we could split this discussion into two and find out first whether there is any objection t text of the General agreement, apart from the Tariff Schedules, should be known at any given date - whether shortly before the Parliament in question has examined the text, or a long time before. I think, personally, that there would be no objection to that, - Reasonsls which of secrecy/were advanced --, wera! all paplicab tleo the rtaiff concessionsnazd not to the general tmris of thiA -greemenw vchhi, ae Dr. Holloway pointed out, would be very similar to the published text, of thD iraft Charter. If we find that nonoe fhein delegations hereahe v any objections to the text being known, one, two,hrelne or six monthse bfore Parliament examined it, then we could drop consideration of that part and consider the problems on tariff con- essaions which I think present more difficuIly. M. MUTSSA'. MOALRAKS (eubanon): (Intep,retation): Mbr.Chlairman, personally we would have absolutely no objection to accepting hen proposal of the Beli.an delegate. But I think this would raise one difficulty,na mely, some Parliaments may refuse to voet on he E/PO/T/TAC/PV/5 ER. - 17- E/PC/T/TAC/PV/5 General Agreement before knowing what happened to the Draft Charter at Havana. Therefore, while many governments would find it possible to enforce the new tariffs at once, there might be some delay in the vote on the General Agreement. M. PIERRE FORTHOMME (Belgium): Mr. Chairman, it seems to me then that if we have an Agreement that in itself has no difficulty in the publication of the terms of the Agreement,there remains the question of the tariff concessions, and there I see the problem divide itself as follows: Certain countries could apply the tariff concession by an executive act prior to any kind of approval by the Parliaments subject to subsequent approval. Some countries would have to get Parliamentary approval because Parliamentary approval could be, for the purpose of provisional application of the tariff concessions, divorced from approval of the text of the General Agree- ment, the approval being a definitive act on the part of the Parlia- ment, and there may be some countries which cannot obtain Permission to apply the tariff concessions even provisionally without a defini- tive vote of their Parliaments on the whole of the agreement. In the case of the Lebanese delegation, they would be able to apply the tariffs provisionally and reserve the definite approval of the Agreement until such time as the result of the Havana Conference would be known from the Charter point of view, Our own Government would be in the same position. I think it might be interesting to see if there are any delegations here confronted with the difficulty, that not even provisional application with Parlia- mentary sanction would be possible without approval of the General Agreement in a definite form. - 18 - ~ - L- E/PC/ T/TAC/PV/5 Mr. J.M. Y LEDD (UniStateittes): I think we should recall that the provisional applicatio of. the genepal Irovision requires merely thatffecsffot be given to those provisions to the extent not inconsistent with the existing legislation. I in other words, changes in existing legislation would not be required, and I wonder therefore whether the difficulties indicated by the delegate of Lebanon would not be met by that provision. M. MAUSSIARAB AXK.(Lebanon)n (Ipter.retation): Cr. Ohairman, X. am afraid I h avesto Gay no because this GeneAgl .zreement is a toxt an which we have to take a legal decision as it is a novelty. If it were a simple commercial agreement, ascoy ealleague from Syria pointed out, we could ratify it without any delay, but the laws in force at present do not enable u to.do so.h s Tii would have .o be voted, and as I said previously, this procedure cannok taie l1ace in our country unMalc!irohApr d-yil. HA. ENTHALERL1ER ecoso osovakia): Mr. Chairman, I think it may be useful to the delegations present here if I explain our position. It would be the following. We dA are able and willing to put the provisions in force in tariff reductions, and we may do that onorha t notice, so there would be no reason for not putting those reductions into force before the 15th November. Now, iu ovr country, there is a practice that reductions of tarsffE are not published before they enter into force. It means that if some date is fixed we would be obliged to know at the moment of publication which countries are willing to put those reductions into force on themsane date, and, as you know, there is a general custom that onennoaoot publish reductions in a certain country if this respective country does not agree because it is impossible to publish something in one country and keep it restricted in another country. ER -19- E/PC /T/TAC/PV/5 Now, as to the Tariff -Agreement in general, it would be necessary in Czechoslovakia to present it to the Parliament. I am afraid that we are in the same position as the delegations of Lebanon and Belgium, that is, that I doubt if our Parliament would be willing to take any decision on these general provisions before we know what the contents of the Charter are in general. We do not know the publication date, as Mr. Shackle has mentioned, though we may have some publication of the Tariff Agreement, but it would be rather a kind of private publication, not an official one, I suppose, for the information of the public. It may be published as something existing but which has no legal value at all. Now, Mr. L Leddy mentioned that only those provisions of the TarifA agreement which are not conflicting with the legislation of the respective countries would eetar into force. I would ask Mr. Leddy to explain to me what actually the UniteS -tates understands by those internal legislations. D 1oes it mean laws or does it mean administrative measures taken as a. consequence of these lawsa end in execution of these laws? It can also mean administrative practices. - 20 - V E/PC/T/TAC/PV/5 Mr. J.M. LEDDY (United States): I think the intent is that it should be what the executive authority can do - in other words, the Administration would be required to five effect to the general provisions to the extent that it could so without either (1) changing existing legislation or (2) violating existing legislation. If a particular administrative regulation is necessary to carry out the law, I should think that that regulation would, of course, have to stand; but to the extent that the Administration had authority within the framework of existing laws to carry out these provisions, it would be required to do so. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I observe that the date set down in this provisional time-table for the date of entry into force of the General Agreement is April/June. Surely that will leave time for all the countries concerned to see what has come out of the Havana Conference? The Charter will not be actually in force at that time, but at any rate everyone will see what is in the Charter. Will that not help as regards a good many of the doubts and difficulties that have been voiced here? As regards our own practice, again it seems to me that we should have no difficulty regarding the definitive enforcement: we should have passed our legislation enabling us to make the necessary duty changes. As far as the acceptance of the General Agreement is concerned, that for us is an act of the Executive - it binds only His Majosty and His Majesty's Government. It is only where duty changes are concerned that there might be any need to go to Parliament. We can actually enforce those provisions, as I have said before, from 1st January. - 21 - V E/PC/T/TAC/PV/5 It seems to me that, assuming that the necessary legislation has been passed to enable duty changes to be enforced, when the moment of ratification arrives and all the necessary acceptance are in, surely it will be possible for every country, by some kind of administrative order, to bring into effect the tariff charges for which it already has got the consent of its Parliament I should have thought that by some variation on that procedure everybody could manage to enforce the Agreement and the Schedules definitively by the stated date of April or June next. CHAIRMAN: The Delegate of Australia. Dr. H.C. COOMBS (Australia): Mr. Chairman, it seems to me that some of the difficulties which Delegates have outlined are overcome by the device which the Tariff Steering Committee itself suggested, that is, that the Agreement should come into force provisionally on 15th December or 1st January, as the case may be, provided that what they called "key" countries had agreed to implement it provisionally. I am not quite share what countries they had in mind as key countries, or how many there would have to be to make it worth while for other countries to come in; but if it were clear as a result of our discussions here in Geneva that there were sufficient countries who would be in a position by 15th November to indicate whether or not they would put the Agreement into force provisionally on l5th December, for it to be worth while bringing it into force provisionally on that date, then the remaining countries who, for constitutional or other reasons, are unable to bring it into force provisionally by that data, would be not called upon to do so : they could wait and come in in accordance with their constitutional practce at any time - presumably before the General Agreement comes into force finally or authoritatively in June of next year. E/PC/T/TAC/PV/5 If my understanding is correct, the Schedule - that is, the programme set out in the first part of it, at any rate - would appear as follows. Item 1 would be the final act of Geneva, authenticating the text on 30th September. Item 2 would be the final date for signature by key countries of the Geeral Agreement, which would be November 15th, and then I feel that it would be necessary, in order to permit those countries which had signed to assure themselves that the necessary number of other countries had also signed, to leave a short period between November 15th and the date of simultaneous public announcement - perhaps a week would be sufficient. We might put November 22nd for the simultaneous public announcement, or if a date before the World Conference is wanted, perhaps both dates could be moved back a little, making one November 10th and the next November 17th. Then the fifth item would be entry into force of the General Agreement through the provisional application by key countries on January 1st (if the United Kingdom Delegate's suggestion is agreed to). If that were done, the problems of the countries who would have difficulty (provided they do not happen to be one of the key countries) can be met merely by their waiting until they are in a position to apply the Agreement provisionally, and their doing it at any time between November 15th and the date of its coming into force definitively. If I may refer to a point raised by the Belgian Delegate, in which he asked whether any Delegates would feel difficulty about the prior publication of the text of the Gcneral Agreement as distinct from the Schedule which it would contain; so far as we are concerned, we see no difficulty in principle to such prior publication of what would, in effect, merely be a text, except that - 22 - V V - 23 - E/PC/T/TAC/PV/5 it would obviously be undesirable that that text should include the names of countries, because the inclusion of such names would imply, an anticipation of a decision by their Governments which had perhaps not yet been taken. Also, since some of the proposed Articles do concern individual countries and groups of countries, if those Articles are to remain in the General Agreement there might be difficulty about their publication, since they would refer specifically to individual countries and might, therefore, be taken to imply a decision by those countries to participate in advance of a specific decision by their Governments. My feeling, therefore, is that while there is no objection in principle to the publication of such a text, it would be necessary to exclude any reference to individual countries or Governments, and that consequently, unless there is something definitely to be gained by prior publication, it would appear to be easier and simpler to publish the whole of the General Agreement any general Articles it may contain, and the actual Schedules, on the same date. CHAIRMAN: Dr. Coombs has just set out a revision of our tentative time-table which seems to the Chair to embody most of the points on which there was general agreement during our discussion at the last meeting and at this meeting. I would, therefore, like to know if any of the other Delegates have any Objections to any of the points which have just been set forth in the revised time-table which Dr. Coombs has so clearly set out. M. Pierre BARADUC (France) (Interpretation): May I ask for a repetition of what was exactly proposed by Dr. Coombs? J. E/PC/T/TAC/PV/5 CHAIRMAN: As I have understood Dr. Coombs his outline of the programme was substantially as follows: On or about the 30th September, there would be the Final Act establishing the authenticity of the text of the Agreement; the second item on the tentative time-table would be the last date for signature of the Agreement by so-called key countries - that would probably be November 10th - 14th; there would then be a simultaneous public announcement six or seven days later; there would then be the provisional application of the Agreement by key countries on January 1st. In other respects, the time-table would be the same as is set out in our paper. The Delegate for India. MR. B.N. ADAKAR (India): Mr. Chairman, many of the difficulties which we had seem to have been removed by the understanding which was reached at the last meeting of the Committee that a Member could postpone its signature to the Agreement until the 10th November. Since that gives us sufficient time to study the Agreement as a whole, we shall not need, I hope, any more time for dealing with provisional application to the Agreement. We would therefore be quíte prepared, if we signed the Agreement on or before the 10th November, to give provisional application to the Agreement very soon after the simultaneous publication of the Agreement. We shall have no objection to the Agreement being published, both in regard to its general provisions and the Schedules attached to the Agreement. It is, of course, understood that although the 1st January is proposed as the date by which key countries should give provisional application to their Schedules and the General Provisions, there would be nothing to Prevent any country, wishing to give provisional E/PC/T/TAC/PV/5 application earlier, from doing so. We expect that we would be able to give provisional application to the General Agreement very shortly after its text is published, because, under the circumstances of our country, it would not be desirable to let a lone period elapse after the text is announced. CHAIRMAN: The Delegate of the Netherlands. DR. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, the time- table as proposed by Dr. Coombs presents to the Netherlànds no special difficulties, so that we could accept it provided that the key date here is the 30th September, beong the Final Act of the General Agreement and also of the Tariff Schedules, but if that date were to be moved to a later date, then we must study this question further. CHAIRMAN: I might say, that all this discussion is based on the assumption that the Tariff negotiations will be completed on or about that date. The Delegate of the Lebanon, MR. M. MOBARAK (Lebanon) (Interpretation): Mr. Chairman, we are not in disagreement about the date, but have a substantive question. I do not understand the words "provisional application of the General Agreement". I do not see how a General Agreement can be applied provisionally. As I said before, this would require a law in our country and after the law is passed the application is final and cannot in any way be provisional. I wonder how this can be possible in any other country - apparently the position is not the same everywhere although the Delegate for Czechoslovakia and the Delegate for Belgium have said that their position was the same as ours. - 26 - J. E/PC/T/TAC/PV/5 I would like to know what happens in those countries which, as we do, need a law to implement the General Agreement, and as I said before, we will not be able to do this until March or April and I would like to know what our position would be before that date? CHAIRMAN: The Delegate for the United States. MR. J.M. LEDDY (United States): Mr. Chairman, I was just going to say that the general time-table proposed by the Delegate of Australia is, I believe, acceptable to us. I did want to go back to a point which the Delegate for the Lebanon has now touched upon. I think the position would be that it would be open to any country to sign the General Agreement here in Geneva before departure, and unless it were provided specifically in the Agreement that by its signature a country would be committed to giving provisional application, it would not be committed to do so. In other words, the signature would not bind it to anything and it would only be after the country had obtained parliamentary or other necessary approval at home and accepted the Agreement that it would have to give effect to it. I think that really takes care of the question of the Delegate of the Lebanon, because unless Lebanon is listed among the key countries it should have no difficulties wiith this proposal for provisional application by particular countries. CHAIRMAN: The Delegate for South Africa. DR. J.E. HOLLOWAY ( South Africa): Mr. Chairman, may I suggest that, in Dr. Coombs time-table, provision be made for the countries which are not key countries to have a period - I would say right up to a week after the beginning of the Havana Conference - - 27 - J. E/PC/T/TAC/PV/5 to sign. As the United States Delegate has just pointed out, as far as they are concerned, the only action which really has any binding force is that in relation to parliaments, so the actual date of signature is a matter of convenience - certainly as far as we are concerned, it would be far move convenient not to have to hang around, and to sign on the dotted line. DR. H.C. COOMBS (Australia): Mr. Chairman, it seems to me that provision is made for countries other than key countries. If they are of the kind that are able to give provisional application to the Agreement, and wish to do so, they can do it at any time, it seems to me, up till April or June, or up to the time of Item 6 of the present Schedule. Similarly, as I understand the position is in the Lebanon, if they have not the power to bring an Agreement into force provisionally, then it seems to me that, they just by-pass the provisional application of the Agreement; they sign when it is convenient for them to sign, and they bring the Agreement into force definitively when other countries bring it into force definitively - in June, or whatever it is, of the next year. In the meantime, they will have put the relevant law before their parliament and obtained parliamentary approval, if that is the procedure which they follow, but unless they happen to be a key country, it seems to me that their position is quite clear - they are not required to put the Agreement into force provisionally at all; they decide whether they are going to put it into force definitively and take the necessary action, and it becomes operative the next year, when other countries have reached the same stage. CHAIRMAN: The Delegate for the United States. E/PC/T/TAC/PV/5 MR. J.M. LEDDY (United States): Mr. Chairman, I would like to make a very tentative proposal which I think may help our thinking on this problem and enable us to separate clearly, in our minds, the definitive coming into force of the ágreement and the provisional. I suggest that we might remove from the provisions of the Trade Agreement the existing text relating to provisional application, and have instead a protocol. This protocol would be open to signature by any Member country which wished to sign up to, say, November 15th, and will enter into force on January 1st, in all key countries. The Agreement itself would be open to signature at any tine beginning September 30th here in Geneva for, say, a period of two or three months, and would enter into force when certain countries accounting for a certain proportion of trade had actually accepted it, in other words, had taken all the necessary steps to obtain the necessary parliamentary ratification. I think in that way we may be able to avoid some of the difficulties which, I believe, have resulted largely from a mis-understanding of the proposal now before the Committee. I might add an explanatory word there that the signature of the protocol would commit the signing countries to give provisional effect on an agreed date if the key countries would sign. The signature of the agreement would not commit any country to any thing. - 28 - 29 E/PC/T/TAC/PV/5 CHAIRMAN: The Delegate of Belgium. M. PIERRE FORTHOMME (Belgium): Mr. Chairman, I would like to clarify a bit the position of Belgium with regard to the provisional application of this agreement because it might simplify thinking too. It is exact and true that by executive action we can only put into force provisionally the Tariff Schedules until such time as they have been approved by Parliament; but that does not mean that it is impossible for us to put the Agreement into force provisionally, either according to Article XXXII or according to a Protocol as has just been proposed, because it is well within the faculties of the Government to ask Parliament for authority to apply Parts I and III and Part II to the extent of executive power from Parliament, reserving for later on the question of having Parliament examine the definite approval of the Agreement. CHAIRMAN: The Delegate of Australia. Dr. H.C.COOMBS (Australia): Mr. Chairman, without wishing to comment on the suggestion of the United States Delegate that the provisional operation of the Agreement could best be provided for by a Protocol separate from the main Agreement, I want to make it clear that, so far as the Australian Delegation is concerned, we would not wish to sign the Agreement at Geneva, whatever may be the opinion of the United States Delegate as to what such a signature does or does not mean. I understood that we had agreed at our last meeting that what we would sign here would be a Final Act which would authenticate a text and that is as far as we would wish to go. E/PC/T/TAC/PV/5 Once you sign an Agreement, there may be different interpretations and opinions about what such an Agreement means or what it commits you to. But if you sign a Final Act which is properly worded, then what you are signing is clear and precise. It can be specified in words that the purport of that signature is to authenticate an attached text. So I see no advantage to be gained by deviating from that procedure which I understand we had agreed upon. As to the other suggestion which I understand is that we might separate out from the Agreement itself, the provisions for Provisional Application and incorporated them in a separate document, whether it is called a protocol or not, I think that might be done quite easily and might have certain merits. CHAIRMAN: The Delegate of the United States. Mr. J.M.LEDDY (United States): Mr. Chairman, I would just like to reply to the statement made by the Delegate of Australia. If the Delegate of Australia got the impression that I was in any way suggesting that Australia might sign an Agreement or a Protocol here in Geneva, I was not suggesting that at all. I was simply trying to outline the reasons for the separation of the Protocol and the Agreement in the light of the views expressed by countries other than Australia in this discussion. 0n the other hand it had always been my clear understanding that the Agreement would be drawn in such a way that countries other then Australia if they so wished could sign the Agreement here in Geneva. Mr. R.J.SHACKLE (United Kingdom): I think the procedure suggested by Dr. Coombs would entirely meet the views of my 30 P E/PC/T/TAC/PV/5 Delegation, that is to say, the signature of a Final Act here, with a separate Protocol for Provisional Enforcement to follow after. That seems to us would be a clearer, neater method of provisional enforcement. As to the suggestion Mr. Leddy has just made, I cannot see that there will be anything to stop a Delegation which wishes to sign the agreement itself from doing so up to the date of 1Oth or 15th November, whatever it is which we have set down. I imagine they could sign the Final Act and at the same time, if they like, sign the General Agreement. But there would be no obligation on anybody, as Mr. Leddy has suggested, to do more than sign the Final Act. I think we could all be satisfied in that way. CHAIRMAN: The Delegate of the Lebanon. Mr. MOUSSA MOBARAK (Lebanon) (Interpretation): Mr. Chairman, I would like to know what exactly is meant by the signing of the Final Act. Is there any difference between this and a signature ad referendum? I Australia and the Unted Kingdom are prepared to sign only the Final Act, I would like to know what is the position of other Delegations in that respect. CHAIRMAN: I think, as Dr. Coombs explained when making his proposal at the last meeting for a Final Act, it would be an Act simply to establish the authenticity of the text and nothing more. Mr. MOUSSA MOBARAK (Lebanon) (Interpretation): Mr. Chairman, therefore, if I understand rightly, this would be a draft that each of us would take home to our Governments, and after our Governments had notified the interested parties that they were P P 32 E/PC/T/TAC/PV/5 in a position to accept it, then the signature would take place. And now I would like to know where it would take placc and how. CHAIRMAN: I think the understanding of the Lebanese Delegate is correct, As to the place of signature, that is a better for subsequent discussion and decision. No doubt it will be the seat of the United Nations - or some other place to be agreed upon. The Delegate of the United States. Mr. J.M.LEDDY (United States): I think what the Delegate of Lebanon said was that a country would sign the Agreement after it had notified the Secretary-General that it was in a position to accept it. I think the procedure would be exactly the reverse; signature precedes acceptance. CHAIRMAN: I think we are coming to a substantial measure of agreement on the Tentative Time-table, that is that there should be a Final Act signed in Geneva on or about September 30 which all Delegates would sign and which would establish the authenticity of the text. The agreement would be open for signature from that date up to another date which I think the United States Delegate.has suggested now should be two months from September 30. Then there would be a Protocol providing for Provisional Application and it is only in respect of the Protocol that the key countries and non-key countries divarge. The Protocol would be open for signature after some date, from, say, 14th November. Is that correct? The Delegate of Australia. Dr. H.C. COOMBS (Australia): Mr. Chairman, I do not see the necessity for the fixing of a date for the signature of the E/PC/T/TAC/PV/ 5 .Agreement apart from the Protocol or whatever embodies the Provisional Acceptance or promise to accept this Agreement provisiònally two months after the 30th September. As I understand these things, signature carries some implications. We sign the Fina.l Act as an indication that we accept the text attached. We sign before the l5th November as an undertaking that we will, subject to a sufficient number of other countries doing the same, provisionally apply the General Agreement on the 1st January. When we come to sign the General agreement itself, apart from anything which embodies it's provisional application, I would understand that signature to be an undertaking, subject to confirmation by our Parliaments, to apply the General. Agreement, definitively, and, so far as we are concerned, we would not be in a position to give that under- taking to apply the General Agreement definitively until after the World Conference, and therefore we would not wish to sign until after the World Conference. When the World Conference is over, our Government will be in a position to say "We will or we will not apply this, subject to the confirmation of our Parliament", and until we get to that stage I think, as far as I can see, nothing is gained by making any provision for the signature of the General Agreement, apart from whatever signature is necessary to indicate the willingness of the key countries, whatever they may be, to apply the Agreement provisionally. So that if it is desired to put into this Schedule a date for signature of the Agreement as apart from the Protocol for Provisional Application, we would wish that date to be after the termination of the World Trade Conference, preferably a month later. P 33 E/PC/T/TAC/PV/5 CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, it is a very small remark: I do not differ from anything Dr. Coombs has said but it does seem to me that, as for as definitive application is concerned, signature is a stage which hardly matter. One could almost dispense with signature in the way of definitive application and simply accept. Dr. COOMBS (Australia): I quite agree: that is why I was perfectly happy when no provision was made for that in the original schedule. CHAIRMAN: Any other comments. Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, there is one tiny thing: I don't know if it is really worth going into - only a point of mechanism arising out of what Dr. Coombs said about the difficulty of specifying the names of countries for provisional acceptance. That might give rise to a small problem but it could easily be solved in some way such as this: that there could easily be an understanding as to which were the key countries: the representatives of key countries at New York could all meet at a certain rendezvous at a certain time, they could count up to make sure they were all there, they could produce notés to give their different authorizations, all take our their fountain pens, and sign. P 34 35 ER E/PC/T/TAC/PV/5 Dr. H.C. COOMBS (Australia) Mr. Chairman, I do not see that there is any difficulty about the point that I have raised, namely, the inclusion of the Governments concerned if the text of the Agreement were published at the same time as the Tariff Schedules, is a but it does arise if there/desire to publish the General Articles to the Agreement some month before the Tariff Schedules themselves come into force, but if they are to be published together, I ate no difficulty at all about the inclusion of the names of the countries concerned. Dr. H.E. Z. AUGENTHALER (Czechoslovakia): I see that we are turning around the same difficulty the whole time so I would like to make a suggestion, and I shall make this proposal to all delegations present. I think it would be a pity after four months of negotia - tions here to lose our time and the money of our Governments and in the end be still uncertain as to what will happen, so we propose to all the delegations with whom we have negotiated the tariff reduc- tions to put them into force in a way in which those countries find best in their constitutional practice, - if they prefer bi-lateral agreements, or as an annex to the existing commercial treaties,or any way they find possible, because I think the aim of our negotia- tions was tariff reductions. If we do so we shall act exactly in the terms of our recommendations and the resolutions that we have taken. Those tariff reductions could be incorporated later or immediately according to the wishes of the particular countries in this Tariff Agreement, and any country would be free to accede or not to accede to the Tarifff Agreement independely of those tariff reductions. M. P. FORTHOMME (Belgium): Mr. Chairman, I would like some explanation of the statement that the putting into force of this ER 36 E/PC/T/TAC/PV/5 agreement does not mean acceptance of the Agreement, at least by the Governments which are putting the Agreement into force provisionally. an Agreement It seems to me that putting/into force provisionally is accepting it subject to two conditions: one , that parliamentary approval is obtained later on; two, that the conditions of agreement should not be changed by the Charter which comes later on. Except for that it seems to me that once you decide to apply provisionally, you accept the provisions as far as the Government is concerned. Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman, I think my understanding of the position as regards provisional enforcement is entirely the same as Mr. Forthomme's. There is, of course, a difference: we have written into the draft of the General Agreement that countries that have merely enforced provisionally could withdraw on 60 days notice. If, of course, we had a separate protocol, I presume that provision would be transferred to the Protocol, Apart from that my understanding is exactly the same as his. Mr. P. FORTHOMME (Belgium): Mr. Chairman, I understood that this provision of withdrawal within 60 days was principally put in in order to be able to cope with Parliamentary refusal of the Agree- ment,or a change of circumstances, such as the previous acceptance of the Government which would have to be withdrawn, because, as I said, the basic conditions in which the concessions were given, had been changed; but I agree with the delegate for the United Kingdom that provisional putting into force is acceptance by the Government. I think that there should be signature of the Agreement because, I my understanding of the signature of the Agreement it/is an engagement by the governments to present this to a legislative authority and to get the final approval and ratification. Therefore I think that there should be a signature of the Agreement. Otherwise we would be putting E/PC/T/TAC/PV/5 into force provisionally something for which we would not even have the engagement of our Governments to present it to their Parliaments. Mr. A.J. SHACKLE (United Kingdom): Would there be any difficulty about writing in the Finral -eot that the delegates will recommend the document to the attention of their Parliaments? CHAIRMAN: I am afraid that if we reopen that question we might Just as well sign. I think the purpose in fact is just to establish the text. Mr. J.M. LEEDY (United states) I wonder whether it would not meet the point of the Belgian delegate, as well as Dr. Coombs's, sim- ply to approve the date of the signature of the Agreement after the World. Conference? Mr. H.L. FRESRUET (Cuba): Mr. Chairman, there are so many interesting points in the speeches that the delegates are making here, and we are enjoying them so much that we do not want to miss a word from them; so I wonder if the delegates would be kind enough to speak a little bit louder. CHAIRMAN: I think that applies to Mr. Leddy's last point. Mr. J.M. LEDDY (United States) I suggested that Mr. Fort- homme's proposition might be met and also Dr. Coombs's by putting the closing date for signature of the General --greement after the World conference. I do not think it would even make a difference if it were six months after. Mr. B.N. ADAKAR (India): Mr. Chairman, may we know, as a matter of clarification, whethe if the signature of the Agreement is E/PC/T/TAC/PV/5 allowed to be deferred until after the end of the World Confer- ence, it would be practicable to publish the text of the Agreement along with the schedules? Is it intended that the Agreement should be published along the schedules only after the Buy countries have signed it without waiting for a large number of other countries to indicate their decision as to whether they are going to sign or not? Dr. J.E. HOLLOWLY (South Africa): M. Chairman, When we discussed this matter last week, I suggested that either the Tariff Negotiations Working Party or a special ad hoc Committee should draft the necessary instrument putting in dates and putting in percentages which can be changed by the meeting if necessary. Well, we have on spent some hours/;ht and I think that if an outsider examined the verbatim reports of the two meeting s he would be doubtful if we had thrown any light on the subject. Is are merely arguing around getting nowhere because we have not got anything definite. If we had a definite text of the final Act and a definite text of the protocol with definite dates in it, then we could say whether those dates suit us and whether those percentages suit us, and could there- fore make progress. it seems to me we are, going round a mulberry bush now. CHAIRMAN: There in a lot of substance in what the South African delegate has said, but I should like to point out that the Tariff Negotiations xIing Party has spent several months and.eavouring to draft the General Agreement, and it is now before us subjec to discussion, Before we can take upon ourselves the the task of drafting, we must get clear/expression of views from all the members of this Committee that this subject of the General ER E/PC/T/TAC/PV/5 Agreement is of interest to all members of the committee, and that is the reason for which we have been having this general discussion on the 7 points covered by this Paper. I think the discussion of to-day has served a useful purpose. It has brought about some ideas which have not been present in our minds before. I think we have at least a general agreement that there should be a Final Act, and thatthoue signing the Act agree that this General agreement which has been drawn up in Geneva is accepted. We have also agreed provisional application of that/the General Agreement here/should be separated from the General agreement and put into a Protocol. That Protocol should name countries that are necessary in order to give provisional applica - tion . The Protocol should be open to signature up to some date, say, November 14th. The question upon which we have a difference of opinion is whether or not there should be provision for a final date of signature of the agreement. The United States delegate has made a proposal that this could be any time from the date of signing the Final Act up to one month after the World Conference. I have not heard any objection to that proposal, so I take it that that is agreed. The only point on which we have some sort of difference of opinion is the simultaneous public announcement, A suggestion has been made that there might be a public announcement of the terms of the General Agreement apart from the tariff Sonedules, but I do not find any strong measure of support for the separation of the publica- tion of the General provisions from the Tariff schedules. F ~ ~ ~ ~~~~~~~~~~~~~~:x . 2 39 E/PC/T/TAC/PV/5 The whole purpose of the General Agreement is to give effect to Tariff Schedules, and therefore the document would not be complete without the Tariff Schedules. I think there is agreement here that there has to be publication before there can be provisional application, and that that publication should take place shortly after - Dr. Coombs has suggested a week - the date of the Signature of the Protocol. I think we can leave this question now, which is item 3 on our Agenda, and wve can consider that we have dealt with item 4, Provisional -Application of the Agreement. There is a pretty complete statement on the position of twelve Delegations given on pages 7 and 8 of our Working Paper. Other Delegations, notably India, lebanon, Chile and China, have indicated their position today, and I think the Brazilian Delegation has referred to its position at the last meeting. I would, therefore suggest that we pass on to the next item of our Agenda, and that we leave over, for the time being. Dr. Holloway's suggestion that we set up a Drafting Committee. The drafting of the Final Act should not take very long: it could be drafted, I think, by a sub-Committee or by the Tariff Negotiations Working Party in the course of one or two meetings, and as for the Protocol bringing in the provisional application, that would no doubt follow very much along the lines of the Article XXXII; so I would suggest that we conclude this general discussion under these heads before we consider what steps we should take as to submitting further drafts for the consideration of the Committee, If that is agreed, I would like to suggest we take Item 5 on our Agenda. M. Pierre FORTHOMME (Belgium): Mr. Chairman , I would like to ask whether it would be possiblr for me to come back later 40 V E/PC/T/TAC/PV/5 on to this question, as to whether the General Agreement should be signed before putting it into force provisionally or not? CHAIRMAN: Certainly. Mr. J.P.D. JOH1SEN (New Zealand): Mr. Chairman, as will be noted from paragraph 4(b)(ii), New Zealand is one of those countries that is unable to apply the Agreement even provisionally until ratified by parliament. It appears probable that if publication is not going to take place until 17th - 20th November, parliament may not be sitting at that time, and we would be unable to give effect to the Agreement till possibly three or four months later. I would just like to be clear whether the provision it is proposed to make for signature of the Protoccl for provisional application would require iature by a country like New Zealand. It would seem that when we are in a position to apply the Agreement we could sign it finally. CHAIRMAN: I think the question raised by the Delegate of New Zealand is related to the question as to what countries would or not would/be considered "key" countries for the purpose of provisional application. I think that that is a question we can refer and pick up later. It is difficult for me to give a reply to the Delegate of New Zealand. Mr. J. MELANDER (Norway): Mr. Chairman, we are in almost exactly the same position as New Zealand as regards the provisional application of the Agreement. Neither the Tariff part nor the Charter part can be put into force, oven provisionally, until accepted by Parliament. We feel that to have one month 41 v E/PC /T/ TAC/PV/5 after the end of the Havena Conference, as the final date within which to sign and put provisionally into force the Charter and the 'General Agreement as a whole, would perhaps be too short notice. We would prefer two months. CHAIRMAN: There being no further comments, I suggest that we now take up Item 5, which is Inclusion in the Agreement of the Articles of the Charter which are reproduced in Part II. Members of the Committee will find on page 9 of Document W/301 that the Delegations of the United States, Netherlands and Belgium stated that they consider Part II to be an essential part of the General Agreement. The Norwegian Delegation proposed that Part II be deleted.. The Australian Delegation proposes in document W/277 that Article XXII (equivalent to Article 38 in the Charter) be transferred from Part III to Part II. The Secretariat pointed out that the decision on whether Part II should remain in the General Agreement is closely related to Item No.6, which deals with the effect of the Charter on the Agreement.upon the entry into force of the Charter. I think it would be useful if we could now have a general discussion on Item 5. No doubt Delegates will feel it necessary to also touch upon I tem 6 when.discussing the questions raised on Item 5. H.E. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, we share the opinion of those Delegations which thought that the second Part should be entirely deleted, As it should enter into force only about April or June 1948, that is, after the Havana Conference, we see no necessity for having Part II in the Tariff Agreement . 42 V 43 E/PC/T/TAC/PV/5 CHAIRMAN: Does any Member of tho Committee wish to speak on that point? Dr. H.C. COOMBS (Australia): Mr. Chairman, we have given a good deal of thought to this question. It has always been our view that the logical way of approaching this question of tariff negotiations would have been for it to have succeeded the acceptance of the Charter. We recognize that that has not been practicable, and indeed, for some reasons, it was not even desirable: there were certain advantages to be gained from tackling the problem of the Tariffs simultaneously with the working out of the Charter itself. But we have got to recognize that that does carry certain difficulties with it: that we are, so to speak, operating part of the contemplated, Charter before we have actually got a Charter to work on. We have accepted, the position that the conclusion of an Agreement in which tariff consessions are exchanged can precede the conclusion of the discussions and agreement about the content of the Charter itself. We are prepared to wait until after the World Conference to know what the content of the Charter is going to be. We are prepared for the tariff reductions negotiated to be operated while those discussions are going on, both as evidence of the real results being produced from this process of negotiation, and as evidence of our determination to operate not merely a Charter but a General Agreement covering tariffs. But we cannot. see why it is necessary for us to anticipate the results of the World Conference by the incorporation in the Agreement on a provisional basis., subject to existing legislation and other provisos, things which look like a substantial part of the Charter. V E/PC/T/TAC/PV/5 It seems to us that there is real danger - in fact, there are several dangers - in such a procedure. First of all, as has already been pointed out, whatever reservations we may make about the nature of our acceptance of those clauses, there is no doubt that the fact that we had. agreed to them in the General Agreement and had attached our signatures to them and were operating them provisionally, would be regarded as evidence that they were acceptable to us in the Charter itself, and tosome extent, therefore, our freedom of action would, in fact,be limited: at least, there would be a tendency for it to be limited in fact, however clear of obligations we were in theory. Another difficulty is that there would be danger of misunderstanding by other countries that we were in effect deciding upon a significant part of the Charter iln advance. The thing that worries me most of all is the implication which is carried by the inclusion of those Articles in the General Agreement that it is not necessary to have a "Charter. We have pointed out all the way through that the obligations in various parts of the Charter are inter-dependent, and that our capacity to accept the obligations in Chapter V at$ dependent upon the acceptance of obligations in other parts of the Charter, particular in the Chapters dealing with Industrial Development, Employment and stability for Primary Production. Those are the necessary requisites of acceptance of these obligations. Once we have accepted. those obligations, however, in a General Agreement, there does appear to be a danger that the urge to complete a Charter will be very much reduced, and, quite frankly, we feel concerned at the pressure to include these things in the General Agreement as, so to speak, evidence of the desire to insure themselves on the part of certain other countries. V 44 E/PC/T/TAC/PV/5 Furthermore, if you assume, as I think it may be necessary to assume, that there will be some countries in which Chapter V will, so to speak, be popular and other parts of the Charter unpopular, then the acceptance of the General Agreement with Chapter V in it gives those countries a definite incentive to reject the Charter, because they have got a General Agreement with all the things in it which they like, and why should they then accept a Charter which has an addition to those things a lot of things that they do not like? We think we can get an objective consideration of the Charter as a whole only if we some to the consideration of it as a whole and without prior commitments about any of its parts, so that from that point of view it seems to us preferable, from an honest and Objective consideration of what the Charter ought to be, to think of it without prior commitments in the form of an Agreement which incorporates only part of it. It has been suggested that certain parts of this Charter must be incorporated in the Agreement in order to protect the tariff concessions negotiated. I have thought that over with very great care, because that would appear to me to be a legitimate reason for including General Articles in the Agreement. If it were necessary, in the short time during which this Agreement will operate provisionally, to incorporate specific Articles for the protection of those concessions, we would be prepared to agree that they should go in, but two things stick in our minds - the first is that the period is short, and the second is that the countries know that a Charter embodying provisions of this kind are going to be on the map next year. We came to these tariff negotiations after a period of many months, during which it was .perfectly well know that tariff 45 E/PC/T/TAC/PV/5 negotiations were going to be conducted in Geneva, and it was provisionally and without commitments of this sort agreed in London that it would be undesirable for countries to alter their tariffs, or in other ways to change their attitudes, in order to strengthen their bargaining position. Now, on the whole, with certain exceptions, we believe that that was honestly observed by the countries concerned. We did trust one another to come to these negotiations after a delay of six or nine months without having done anything in the meantime to strengthen our bargaining position for those negotiations, Now here what we are asking one another to do is to promise, for. a period of a few months, during which we work out the details of an agreement or agreements about commercial policy, as well as other matters which we incorporate in the Charter, not to chisel away the concessions which we have granted to other people by devious means. Mr. Chairman, I do not believe it is necessary to have anything in this Agreement beyond, first of all, and undertaking to grant to the countries concerned the concessions embodied in the Schedules; secondly, an undertaking not to nullify or impair those concessions by indirect means.; thirdly, an undertaking to listen to a complaint and consult if any other contracting country thinks that you have nullified or impaired a concession. Now, if we have an Agreement of that sort, we have operating from the outset tariff reduction which it is our prime purpose to achieve here. Without undertaking commitments before the broad discussions which will take place at the World Conference, we do not appear to be trying to push other countries into accepting something which we have not had time to have a look at. Furthermore, we are not called upon to accept a part of the Charter without having all particulars 46 J. E/PC/T/TAC/PV/5 in front of as. It is. going to be exceedingly difficult for delegations to convince their Governemtns that one particular part of the Charter, taken by itself, is a satisfactory deal for them. The different parts of the Charter have a different appearance to different countries. Some of us will be bound to put emphasis on the advantages which we are expected to derive from the employment provisions or industrial development provisions, others will need to put the emphasis on the negative advantates,on the diceipline which countries are proposing to accept in relation to their commercial policy, but those are parts of the Chapter, and if we take part of it out now then it is likely to be difficult to get acceptance for. it. Furthermore, it will make the rest of the Charter, when it comes into force after final acceptance next year, an unbalanced document because either what is good or what is bad from your point of view will have been taken out and incorporated in the General Agreement. Now, Mr. Chairman, we, as I say, have given this a great deal of thought and we still feel absolutely unconvinced of the necessity for the incorporation of Part II. Our approach to the General Agreement should be this that we all agree that we should include the tariff Schedules, What else it ought to include I believe is up to those people Who want to Include it, that is, we start with the tariffs and the Tariff Schedules, and if anybody wants anything else put in, I believe the onus of proof as to the necessity for its incorporation lies in the country which wants it - and all I can say is that we are, from. a point of honour, prepared to be convinced, but I do not think it is going to be easy. CHAIRMAN: Dr. Holloway. 47 J. J . Dr. J.E HOLLOWAY (South Africa): Mr. Chairman, or, this subject of the inclusion of .Part II in the Agreement, These seem to be at least four different lines of thought. The first is that Part II substantially as drafted, with possible minor modifications, is an essential part of the General Agreement; the second is that no part of the text of the General Agreement should, be included until after Havana; the third is that the portions of the text now proposed should' be agreed, but after Havana, any changes made.there should automatically replace the present text; the fourth is that we should include and lay down certain rules for the replacement of Havana ammendments. Now, before going into details on any. of those suggestions it seems to me that, except for the point that Dr. Coombs has just made and assuming that that point is not upheld, there may be a possibility of selving this problem without going into any of these alternatives. Dr. Coombs has, if I understood him correctly, just appealed to everybody not to make what looks like a miniature Charter, Of course, if that view prevails and ee have only the Tariff Schedules, then all other points fall away anyway. It does not seem to me likely that it will prevail, that is why I go on to second point. The difficultiess which have been foreseen here by various Delegations may be difficulties which may be fairly easily side- Stepped, on the -lines that Dr. Augenthaler has just indicated . if we can divide up the subject into two parts - I do not know that the/point has been sufficiently clearly brouglt out that the Agreement for provisional application is an entirely separate thing, with entirely separate Members. It has got some of the same material, but it is of no concern, subject to Dr. Coombs' point, to J. 49 E/PC/T/TAC/PV/5 other Members. At present, we have the names of six countries listed which indicate that they can enter into a provisional Agreement. Those countries are entirely in their right to, enter into an Agreement if they see fit and. if they can agree in terms, and if those countries foresee no difficulties in accepting certain texts now put into their Agreement, which is the provisional Agreement. If all of them can come together on that point, then it seems to me that we can leave it to these countries to say what they are going to put into the General agreement, in this treaty which is a treaty between those six countries. Then welcome to the point that Dr. Augethaler has maches, it seems to me that the Agreement which one would hope is an Agreement between seventeen countries, is an Agreement which is not going to be made in any case until after Havana, because there are too many of us whose constitutional machined is such that we cannot get the stuff through before several months after Havana. E/PC/T/TAC/PV/5 Now, why not face the fact then, if it is the case, as I think it is the case, that a sufficiently large number of countries will not be able to implement the General Agreement to hake it acceptable, that you will not get the 85% or whatever percentage is necessary, that you might as well put off the drafting of what you are going to put into the General Agreement until after Havana, That leaves the problem of any difficulties arising from putting in a text now to the six countries which are now constitusionally in a position to enter into that Agreement. The issue is narrowed down to those countries, and it seems to me those countries ought first of all to examine whether they can enter into an Agreement of that kind and, if they can enter into an Agreement of that kind, then we can perfectly safely leave that question to them, and leave the text of the General Agreement, as far as the seventeen others and any others that may come in in the meantime are concerned, until after the Havana Conference. I suggest that, Mr. Chairman, as a way of sorting out the problem. It may not work. It may be that even among the six countries there are one or two that cannot do it; but three of the six have already indicated that they want this Part II put into the Agreement; if the remaining three also say they want it put into the Agreement, then it is a matter for them to fix that up, and we can follow in good time. CHAIRMAN: The Delegate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, as Delegates will have observed from our paper, we are of the opinion that Part II of this draft ought not to be part of this. Agreement; in other words, the Agreement ought to be a multilateral tariff agreement only. That, I think, is our starting point, I do not want to hold up the time, of the members here by P 50 SI 51E/PC/T/TAC/PV/5 going into all the reasons for this standpoint. I will, at this stage, only say that I agree substantially with what the Delegate of Australia said Just now, What has been said by the Delegate of South Africa is to my mind also interesting. It is the same starting point: that we have agreed now to introduce a Tariff Agreement; those countries which feel they can include additional provisions in such an Agreement are of course fully entitled to do so. I think that is a suggestion which certainly merits consideration. CHAIRMAN: It is now six o'clock and I propose that we adjourn the-discussion now and resume tomorrow at 2.30 p.m. The Delegate of Czechoslovakia. H.E. Z.AUGENTHALER (Czechoslovakia): Mr. Chairman, may I beg to make a suggestion which may help us in our further work: it would be if the Executive Secretary might send to all Delegations a kind of questionnaire and ask them to answer certain precise questions. I would suggest the following questions: that each Delegation should answer if its Delegation is ready to accept the provisions of Part III then, if this Delegation can sign the Tariff Agreement already here, or in which form: then, if not, if the Delegation can put the Tariff reductions into force and, if the Delegation is ready to put the Tariff reductions into force, in which form, CHAIRMAN: With regard to the suggestion of the Czechoslovakian Delegate, I have to point out that, in regard to his first point as to whether or not the Delegations are ready to accept Part II, that is the purpose of the discussion which are are having now: we have come to that item on our Agenda. With regard to the other points which he has set forth in his proposed questionnaire, I think they have already been covered. We have circulated Delegations and we have obtained pretty complete 52/PC/T/TAC/PV/5 answers covering those points, Certain of that information is given in the paper which we have before us. So I do not think we would really be fulfilling a very useful purpose in sending out a further questionnaire, but if it is the wish of the Committee that we should adopt that suggestion, I an sure we should be very glad to do so. I should like to know if any other members of the Committee support the suggest ion of the Czecho slovakian Delegate. Dr. Speekenbrink. Dr. A. B. SPEKENBHINK (NeTNERLANDS) Mr.. Chairman, I have a different suggestion to make. I think we might say that a number of countries who are, let me say, key countries, and are also members of the Tariff Negotiations Working Party, have made a draft and put that before this Committee. Now,on the othbr side, we have Dr. Coombs, who has given much thought to this problem and who has been supported by a few other Delegates about a different approach to this problem. So it might be useful if we could get an alternative draft by the hand of Dr. Coombs, assisted maybe by a few other countries, just giving us his idea of the Ceneral Agreement together with the Protocol that should be attached to it, also in the light of the discussions of today and the proposals he made earlier in regard to the time-schedle., Then we should have two different lines of approach, and I think that might be useful for our further discussions and serve our purpose' much better than a new questionnaire. CHAIRMAN: I would like to make an alternative suggestion which I think might meet the point of view of both the Czechoslovak Delegate and the Netherlands Delegate; and would not involve us in being perhaps side-tracked ih furtjer documents:- P 52 P 53 E/PC/T/TAC/PV/5 Let us first of all finish this general discussion. We will then ask the Secretariat to prepare a document summarising the points which have been brought out in this general discussion, After we have considered that, we can then decide what further steps we should take with a view to furthering the work of getting agreement on a text for the General Agreement, Is that agreed? M. PIERRE BARADUC (France) (Interpretation): Mr. Chairman, I am rather afraid that a general discussion will get us nowhere. Mr. R. J. SHACKLE (United Kingdom). Mr. Chairman, I would like to support your proposal in that we really do need to hear the views of Various Delegations before we can do any useful paper work. Mr. Winthrop BROWN (U.S.A.) I agree. CHAIRMAN; Any objections? The Delegate of the Lebanon. Mr. Moussa MOBARAK (Lebanon) (Interpretation): Dr. Chairman, I have a suggestion to make which might expedite our work. I think the difference at present is between those who are in favour of the Agreement as it stands and those who are in favour of deleting Part II. I think it would be necessary to consult the Committee to know what is the sense of the majority, and then we could revert to the suggestion made by the Delegate of Czechoslovakia, supported, I believe, by the Delegate of Belgium, for simply signing a Protocol which would not be binding; and, instead of devoting one or two further sessions to a general discussion, which, as the French for Delegate said, would prove fruitless, you might simply ask/those in favour of retaining Part II and those against it. P 54 E/PO/T/TAC/PV/5 CHAIRMAN: The Delegate of Belgium. M. Pierre FORTHOMME. (Belgium): Mr. Chairman, after four months of Geneva I feel like a sleep-walker, but I feel certain that I did not support anything today, nor last time. CHAIRMAN: I think it is necessary that we should permit the general discussion to continue. Three Delegations have already expressed their point of view on the subject of whether or not Part II should be included, and I do not think it would be fair to the other Delegates if we did. not give them the same opportunity. Therefore I propose that we continue this discussion tomorrow at 2.30 and, after having had general discussion, we can come to a decision. The Meeting is adjourned. (The Meeting rose, 6.10 p.m.)
GATT Library
hn171gh5417
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. First Meeting held on Thursday, 10 April 1947 at 3 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, April 10, 1947
United Nations. Economic and Social Council
10/04/1947
official documents
E/PC/T/PV2/1 and E/PC/T/PV2/1-3/CORR.1
https://exhibits.stanford.edu/gatt/catalog/hn171gh5417
hn171gh5417_90260187.xml
GATT_155
8,420
52,485
A.I. UNITED NATIONS NATIONS UNIES E/PC/T/PV2/1 ECONOMIC CONSEIL AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT FIRST MEETING HELD ON THURSDAY, 10th APRIL, 1947 AT 3P.M. IN THE PALAIS DES NATIONS, GENEVA. Mr. DAVID OWEN, ASSISTANT SECRETARY-GENERAL (TEMPORARY CHAIRMAN) (NOTE: The Verbatim Roports of the six meetings of the FTirst Session of the Committee held in London from .5th October 1946 to 4,th November 1946 wil ~be o und in ocu.mensSE- /PC/T/PV1.-6) RBA'2IM REPORT~~ :' . j~~~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV 2/1 C TEMPORARY CHAIRMAN: Ladies and gentlemen, it has been the dear wich of the Secretary- General of the United Nations to come to Geneva to open this, the Second Session of the Preparatory Committee of the Conference on International Trade and Employment, and he has asked me to explain to you that only his preoccupation with certain new and heavy political tasks at make Success prevented him from coming here today. He has, therefore, detailed to me the responsibility and privilege of opening this meeting. It would be difficult to over-estimate the importance of the task before this Session of the Preparatory Committee. It is one of the most important to be undertaken by the United Nations in any field. The world has suffered, and is suffering tragically as the consequence of war, poverty and economic disorder, and it is the major task of the United Nations to dominate the as yet uncontrolled forces which have produced these evils, through the machinery of international co-operation. After the defeat of the enemies of democracy in the first world war, a brave effort was made to deal with the economic ills which were bedivilling the progress of mankind, through the machinery of the old League of Nations, in whose magnificent buildings - now the European Offices of the United Nations - we meet today. This effert failed, not to any important extent through the fault of the devoted band of able international civil servants who .serve. the League, but because of a collective failure of imagination and. will on the part of the governmnts. concened:. Faiure! to establish an orderly system of internatinal; economic intercourse auming at fall employment an. the expansion of trade throughout the worl3 played its part in the dnterioration of the political situation which led to the second world catastrophe through which the world has -"passd. within a single generation. c... . ,. B. 2. l . At incalculable cost the enemies of democracy have been defeated for a second time, and we are now presented with another chance to come to grips with the forces which dispose men's minds to violent solutions. We must not fail again. As a consequence of the war, and in spite of its devastation from which many countries are recovering only slowly, the industrial potential of most nations has been developed out of all normal measure. Figures of productivity for a number of the states here represented show greatly encouraging increases over pre-war levels. If anything, nations have become more dependent upon one another as a consequence of this increased productivity. In this new situation a world trading system consisting of mainly self-contained units could only lead to chaos - chaos such as we have never known in the economic field. What could nations do with their greatly increased production were they not able to exchange it for the excess wealth of their neighbours? This potential abundance can contribute to an improvement in the welfare of all, or can result in bulging pockets of wealth in an otherwise impoverished world. Surely it is only in a system of freely flowing trade that the greatest prosperity of the greatest number can be obtained. Cynical views abound and there is much legitimate cause for disheartenment in the world as we see it about us, but I am confident that this work which we began in London and continued in New York will not fail, if only because it cannot afford to fail. Each government here represented is, naturally enough, desirous of obtaining the best possible bargain in furtherance of its own legitimate interests. This is natural and desirable. However, I say to Delegates tnat whenever they reach a point when they feel that the balance of benefits and concessions is against them and they feel they cannot accept such an arrangement, I say to them that they must visualize their countries' trading and general economic situation in the absence of agreement here at Geneva. - f - ~~~~~~~~~3- ! X~~~~~~~~~~~~~~~~~~~~~~~~~~~~: B. 4 E/PC/T/PV2/1 Let them think of the great depression of nearly twenty years ago. Let them think of a mass of unemployed. Let them think of the consequent poverty to the citizens of their country. Let them think of quotas, of exchange restrictions, of desperate subsidization, of rising tariff barriers and of wheat and coffee being burned because the world trade machinery had so broken down that willing markets could not absorb these foodstuffs. And having visualized such a situation, let them study again whatever ~~~~~~~~~~j. prebee3 are busotting them mnd let thea then decide whether a small c-ncssion at Geneva is not wvll worth their share of an ezrln i.gado zdi treae. Thu naternadeor.l Traet Organisation; the Charter of which eou wiilebo consldaring here, will be the first specialized agency acte lly 'o b.- set Uup ebyNthe nitd 1ationso in che ecnomio field: and it wItlptake ius nlaee wurh therfoci iatoenationel economic agcncies ahriahyhad _le.d, been established - the International aaibour Orn,neation,athb Food cnd egOriaulturion g nisatta, the InternationalRBcok fruc-eO nst-litiel pne Dev].oomcnt and the iatoinaeionel MonktaryeFund - whonmthe Econocic and Sooial Council came into exisWence. Ve are therefore in an important sense testing the ntrength aid effectivenesn of the United Nations in the economic field. The measure of success reached in the setting up of the intetnationalarrade Orgonizatiol will in 2arge measure -e . .,t se oef the-Luccss the United Nations can hope to dbtain to-lay el .hat fi6Ld, i t Ievmust be uVldewh toaael 4io /that tt.iCha-.e. Lhe 'hrtr efnahi Iatvr-,deonrgaTisatiO,;.e h.-on, uven as at present drafted, represqns ea uni-e..,xperimcnt in that it aims to bring wipreh asi comfn nenvedwnrld tremifg syst;M economies of all types, ranging elom entir;,y free enterprise countries to those wmich have roved warts r to'.rd.a state trading. This is, indeed, omoe ofmtoe ast iapert>nt aspecCs ofethe Ghartcr. The Charter ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. _ .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i B.5 E/PC/T/PV2/1 must provide a framework within which the trade of any nation, whatever its economic structure or political ideology, may be improved through the many benefits which membership in the Organisation will offer. Apart from the fact that this meeting will play an important part in determining the course of the United Nations in matters economic, it may well be that our political future will be affected by what happens here. Political frictions too often flow from difficulties in trade relationships. It is a platitude and yet true to say that unrest and trouble breed in empty stomachs. Prosperous and contented peoples are not notorious for their aggressiveness to their neighbours. It is when a people can do little worse that it casts covetous eyes beyond its frontiers and dreams of conquest. Real economic prosperity for all nations and I stress all nations - is, an essential prerequisite of that peace we have been pursuing so ardently and at such frightful cost for many years. It is evident that we are met here in Geneva for a new stage of a great adventure whose goal is the banishment of property and insecurity throughout the world. You have come here entrusted with a delicate and important mission by your respective governments and by the Community of Nations. May you all return home bearing the fruits of your labours in the successful accomplishment of your mission. And I hope you will keep before you throughout the objective which can only be attained through this meeting: world economic cohesion and co-operation as opposed to the chaos and disintegration that would follow were you to fail. -5- 1 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV.2/1 TEMPORARY CHAIRMAN: I would like to ask Mr. Moderow, the chief of the European Office of the United Nations here in Geneva to say one word of welcome to the delegates. MR. MODEROW: I wish to welcome you, ladies and gentlemen, as head of the United Nations establishment in Geneva, which since yesterday according to a decision of the Secretary-General has been called the European Office of the United Nations. This is a great moment for our office. For the first time we are servicing this building for an important conference held under the auspices of the Secretariat of the United Nations. As you know, the basic Geneva establishment is very limited for the purpose of this conference, and for other meetings which will be held simultaneously or consecutively it has been temporarily expanded. It was a hard job for me, for my assistants and for the staff of this office, and it had to be partly improvised. There may arise some shortcomings for which I apologise in advance. I hope you will have full comprehension for the fact that this is the first experience on a large scale for the United Nations administration in Geneva. Criticism is welcome and I assure you it will be conscientiously enquired into and remedy as far as possible provided. This building has good traditions of administrative efficiency and technical achievement and we hope gradually to attain the same standards. I was very happy to be able to put at the disposal of the delegations 130 rooms, in spite of the fact that simultaneously some other meetings will take place here, and I hope you will be comfortable in your offices. There is another aspect to every confer;nces the hotel accommodation. Not oallcf you ladies and gentlemen may be entirely satisfied with the accommodation provided. I should like however, to draw your attention to a special difficulty with arises in -6- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Ai ~~~~~~~~ I '0 E/PC/T/PV.2/I Geneva with regard to hotel accommodation. Apart from many other factors, it is, I believe, for the first time in the history of this not very big city that it has to offer hospitality simultaneously to several international conferences of which two at least are very important. Also in this matter the services of the United Nations are at your disposal, and I can assure you that every effort will be made to meet as far as possible the wishes of the members of the delegations. -7- .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. E/PC/T/PV2/1. Before calling for nominations for the chairmanship of the Second Session, I would like to ask Mr. Moderow, the Chief of the European Office of the United Nations here in Geneva, to say one word of welcome to the delegates. Mr. Moderow: I wish to welcome you, Ladies and Gentlemen, as head of the United Nations Establishment in Geneva which, since yester- day, according to a decision of the Secretary General, has been called the European Office of the United Nations. This is a great moment for our office. Fur the first time we are servicing in this building an important conference held under the auspices of the Secretariat of the United Nations. As you know, the basic Geneva Establishment is very limited. For the purpose of this conference, and other meetings which will be held simultaneously or consecutively, it has been temporarily expanded. It was a hard job for me, for my assistants and for the staff of this office and it had to be partly improvised. There may arise some shortcomings for which I apologise in advance. I hope you will have full comprehension for the fact that this is the first experience on a large scale for the United Nations Administration in Geneva. Criticism is welcome and 1 assure you it will be conscienciously enquired into and remedies as far as possible provided. This building has good traditions of administrative efficiency and technical achievement and we hope gradually to attain the same standards. I was vary happy to be able to put at the disposal of the Delegations 130 rooms , in spite of the fact that simultaneously some other meetings will take place here, and I hope you will be comfortable in your offices. There is another aspect to every conference - the hotel accommodation. Not all of you, ladies and gentlemen may be entirely satisfied with the accommodation provided. I should like, however, to drew your attention to the special difficulties which arise in Geneva with 1 Dl E/PC/T/PV2/1 regard to hotel accommodations. Apart from any other fixtures, it is, I believe, for the first time in the history of this not very big city that it has to give hospitality simultaneously to several international conferences, of which two at least are very important. Also in this Mecca the services of the United Nations are at your disposal and I can assure you that every effort will be made to meet, as far as possible, the wishes of the members of the Dele- gations concerned. MR. DAVID OWEN (Temporary Chairman): It is now my privilege to call for nominations for the office of Chairman of the Second Session. MR. CLAIR WILCOX (UNITED STATES): The Preparatory Committee for an International Conference on Trade and Employment appears to have come of age. We have moved out of the sombre light and the intimacy of London's Church House into the vast spaces and the brilliant sunshine of the outer world. Perhaps this may be symbolic of the magnitude of the task which we now have before us. Accordingly, the Chairmanship of the Second Meeting of the Committee will require an unusual combination of knowledge and wisdom, decision and firmness, fairness and tact and, above all, a pervading sense of humour. Fortunately, there is one man who is known to all of us to possess these qualities in ample measure. It is the hope of the United States, in which I am sure that we are joined by the other members of this Committee, that the distinguished member of the BelgianeDolegation who presided over the first meeting of the Committee with such dignity and grace will consent to resume the chair for its Second Meeting, so that Geneva may move as smoothly as did London towards its appointed go.l, I count it an honour to present to this meeting the name of M. Max Suetens. .r, DAVID OW EN(Temporary Chairman): M. Max Suetens has been proposed: any support for this nomination? -9- ~~~~~~~~~~~~~~~~$ X~~~~~~~~~~~~~~~~~~~~ D2 E/PC/TPV2/1 M. ANDRE PHILIP (France) (interpreted): The French Delegation is happy to second the suggestion which has been made by the United States Delegation and to ask that the Chairmanship of the Assembly should be given to the Belgian Delegate, Mr. Max Suetens. We have already had the privilege of having him in the chair of the Preparatory Committee in London and all those who took part in the London meetings have had an opportunity to admire the authority and clearheadedness and the tact with which he presided over our sessions, at a time when he came back from the long session when he had difficult problems to deal with. The French Delegation feel that, judging from the experience already acquired, M. Max Suetens is the best Chairman we could possibly have had this session. MR. DAVID OWEN (Temporary Chairman): Do any other Delegations wish to speak on this subject or are there any other nominations? (after a pause). It is my very great pleasure in these circumstances to put the name of M. Max Suetens to this meeting as the nominated chairman of the Second Session of the Preparatory Committee. Will those who are in favour of this motion, please signify, (after a pause). I hereby declare M. Max Suetens as the Chairman of this meeting by acclamation and unanimity. -10 - ~~~~~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV. 2/1 CHAIRMAN: Ladies and Gentlemen I would like to thank you most sincerely for the honour which you have done me and my country in re-electing me to the Chairmanship of the Preparatory Commission. It is with joy, .although with some confusion, that I take the Chair to-day, It is with joy because I f ind here again so many friends of whose valour and qualities I personally know and whose perfect spirit of co-operation which they bring to our work I so deeply appreciate; with confusion also because I find in front of me imposing delegations presided by ministers-that circumstance itself gives me great satisfaction. If some of the countries here represented have delegated their ministers, their well-known ministers and most appreciated ministers, it is because they all have a conscience of the importance of the work which we are about to undertake and all want to co--operate to our common work. Gentlemen, it is more than five months since we have seen our farewell in London and in between, the work which we started in London has been studied in different countries and has been confirmed with the necessities of internal policies. I believe that we can all be perfectly satisfied with results. The concord and agreement which have come to us from many quarters tends to prove that there exists in the world faith in the work which we are about to undertake. One would have thought even that the victory of the republican party in theUnited States could have brought about some scepticism, but on the contrary, the elections have demonstrated how much, as always - 11 - f'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' E/PC/T/PV. 2/1 the Americans have a sense of the greatness o their own country of their continent and the world. I would like to insist on the word "always", because this permanent aspect is most important as far as commercial policies are concerned which impose themselves to all the variations of the parties since the last but one war as it has been so perfectly understood. We clearly understand now that the Delegations of the United States is not representing the policy of one party, but is representing here, really the policies of the nation itself. We have had in that respect the declarations made by Mr. Clayton, and those which President Truman made at Waco on March 6th last. The second witness is given by Australia. It is with great joy that they, with an astute parliament, have with a large majoirty voted to adhere to the agreements of Bretton Woods, which implies that Australia definitely accepts to participate in a policy of wide co-operation, economic and internations A third testimonial given by the FAQ is the very interesting report which the Preparatory Commission on the World Food proposals as submitted at a conference which took place between 28th October, 1946 and 24th January 1947, and full support has been given to the articles of the Charter which relate to inter-governmental agreement on basic products. This approbation shows all the value of the work which has been done in London by our Food Committees. We must underline that in conformity with a resolution passed in London at the end - 12 - ~~~~1 1. E. 3. E/PC/T/PV. 2/1 of our third session study groups working along principles which have been put forward by the same chapter or charter have been created for wool and for rubber. No doubt, we find next to those signs which ares so full of promises other signs which are less full of promises, but we can have a certainty that we are on the right road and that we have only to continue our way. In that respect I am particularly happy to congratulate the drafting committee, and more particularly its Chairman Mr. Colban for the work which it his done in New York. The report of this Committee has unhappily come to us a little late, but it is a most important contribution and will permit us to talk again of the discussions on those contreversial questions, or questions which have not yet been solved but very carefully discussed. I am perfectly sure that you will join with me in thanking the Swiss Government and the Canton of Geneva for the hospitality which they afford to us. Many of us who have participated in the work of the League of Nations know Geneva. They will tell you how delightful a spot it is to live in, right on the border of the Lake of Geneva. Switzerland is not represented among us, but we all know the interest which the country gives to our work - interests which is so clearly shown by the articles published by the different papers. Now, Gentlemen, I have only to wish you God speed on our work. Be assured that I will try to give all my good will and all the work which you might expect from me as I discharge my duties as Chairman. -13- I i~~~~~~~~~ E/PC/T/PV.2/1 I do not wish to end my little speech without thanking my English speaking friends for the kind things they have said of me, and without saying how glad I am to be with them again. We meet in a spirit of co-operation and good will and I feel sure we shall be able to create a solid and enduring world. CHAIRMAN: The next item on our Agenda is the election of two Vice-Presidents. You may recall that according to Article 7 of the Rules of Procedure of this provisional Organisation, the Conference has to find two Vice-Presidents. Several delegations have felt, however, that this was not sufficient, and the whole problem is being considered by the appropriate authorities at present. We have not yet had time to do it finally, and I propose myself to make further suggestions to this meeting at a later time. However, if in the meantime any delegation have any suggestion to make, they may approach Mr. Wyndham. CHAIRMAN - And the next item is the adoption of the provisional Agenda which is set out on EPC 35. May I take it that the provisional Agenda is adopted? The Agenda calls for discussion and approval of amendments to rules and procedure. These amendments will be submitted to the meeting by the Executive Secretary. MR. WYNDHAM-WHYTE: Mr. Chairman, the rules of procedure as adopted at the first session of the Committee are set out on page 45 and the following pages of the Report of the First Session, and in outlining the amendments which are being proposed by the Secretariat I shall refer to that document. The first amendment refers to Rule 7 and follows from the statement you have already made about the number of Vice- Chairmen, and it is the suggestion of the Secretariat that Rule 7 be amended to read as follows. At the commencement of each Session the Preparatory Committee shall elect from its representatives a Chairman and such-number of Vice-Chairman as it deems necessary for the efficient discharge of its responsibilities. The Chairman and Vice- Chairmen shall hold office until the end of the Session at which they are elected. - 14 - ~~~ F -1 E/PC/T/PV2/1 CHAIRMAN - Are there any observations concerning this Amendment? Adopted. Mr. WYNDHAM WHITE ( EXECUTIVE SECRETARY) - The second substantial amendment, Mr. Chairman, which the Secretariat propose is in Rule 46 on Page 46 of the Report. That rule deals with the consultation by the Committee with certain non-Governmental agencies, and there are set out in that Article as it stands at present the names of four non-Governmental Agencies which at the time of the first session of the Preparatory Committee were the only non-Governmental agencies which had what has come to be known as Category (a) status, that is to say within the category of non- Governmental organisations regarding which the Economic and Social Council have laid down certain regulations for its consultation with them. Since the date when the present rule was adopted at the First Session the Category (a) has been enlarged, and there are a number of other non-Governmental organisations included in that category. Therefore to take account of that change of circumstances it is proposed that Rule 46 should be amended to read that the Committees of the Preparatory Committee may consult with non-Govern- mental organizations in Category (a) either directly or through Committees established f r the purpose. In other, words, there is substituted for the four organisations named specifically the general description "Non-Governmental organisations in Category (a)". CHAIRMAN - Are there any observations concerning this Amen dment ? Approved. MR.WYNDHAM WHITE (EXECUTIVE SECRETARY) - The last amendment which we have to suggest, Mr. Chairman, is of an entirely formal character and relates to Rule 43 on Page 46, which provides for the issue of a Journal to the Preparatory Committee. It is not Proposed at this Session to issue a Journal, and the purpose of 15 F - 2 E/PC/T/PV/2/1 the Journal in providing information to delegations about the meetings and arrangements for the Second Session will be fulfilled by the issue of daily notices, but not in the form of a Journal. It is therefore proposed that Rule 43 be deleted. CHAIRMAN - Are there any observations concerning these deletions? Adopted. CHAIRMAN - The next item on the Agenda is the presentation of the Report of the Drafting Committee. I invite Mr. Colban, the President of this Committee, to come to the rostrum. Mr. ERIK COLBAN (NORWAY) Mr. President, Gentlemen, the Report of the Interim Drafting Committee has been distributed to the Governments and I take it that it has come into the hands of all the delegates here. You will remember that we decided in London that the terms of reference to the interim Drafting Committee should be to go through the result of the work achieved in London with the view of trying to get the texts as clear and straightened as possible. At the same time trying to draft in some what more detailed form the taper which should incorporate the results of the negotiations on custom policy. We have got in accordance with these terms of reference, and I hope that the Report of the Interim Drafting Committee may prove helpful. The London Report was necessarily in an unfinished form because the work itself had not been finished in London, and even the Report of the Interim Drafting Committee may give the impression that it is very far from being finished. You have all the articles of the Draft - notes, observations and results - but I beg you not to over-emphasise the importance of all these exceptions. I can assure you that a 16d;~~~~~~~~ F - 3 E/PC/T/PV2/1. Technical Committee as Interim Drafting Committee was not in a position to enter upon any fundamental political discussions, and we have had to take the material resulting from the London Conference without trying to bring new political considerations to bear upon it. But my own view is that if this Conference can work with the same spirit of co-operation as the Interim Drafting Committee we cannot fail. I owe the most sincere thanks and votes of appreciation to all my colleagues in the Interim Drafting Committee - everyone of them worked with the purpose of achieving agreement. Even those who fought for separate lines of action did it so as to put their reasons as clearly as possible before their colleagues, thereby giving them an opportunity of seeing what could be in favour of their spirit of... We have thrashed it out and when you find in the Report of the interim Drafting Committee certain problems which we have left unsettled and even presented you with a number of alternative observations, that does not mean that these problems are insoluble; it simply means that in New York, where we had to get through the work before the end of February, we could not get any further. But I feel personally that in continuing the expert work of New York on a political level here in Geneva, we shall solve most of our problems and even with a number of reservations go on with the Draft Charter to the General Conference, I would not consider that at all as a sign of weakness or defeat. There are a number of problems which may be solved in different ways, and if we put alternatives to the world I cannot believe that the world consciousness of the importance of the task before then should not enable them to agree. I said that the Report of the Interim Committee is in your hands, but it is not yet in the hands of the public. We discussed it in New York, and I said to the Drafting Committee that only some few weeks separat 17 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. F- 4 E/PC/T/PV/2/1. us from Geneva. It is much better not to publish it under our own authority. We leave that to the Preparatory Committee itself. The important thing is that it would be helpful if we could get public opinion directed to our work by putting this Report in their through the hands and with the reservations I have allowed myself to make I trust that public opinion represented through the Press will ot over-emphasise the differences of opinion they find in the Report but much more emphasise the very high degree of common agreement on the different problems. I beg to suggest, Mr. Chairman, that you propose to the Assembly the publication of the Report of the Interim Drafting Committee. 18~~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV2/1 TEMPORARY CHAIRMAN: Anyone wish to speak on the Report? I call upon Sir Stafford Cripps. SIR STAFFORD CRIPPS: Mr. Chairman, since we last met in London in the autumn I have no doubt that a great deal of work has been done by every member country on the great task that lies ahead of us. But I would like in particular to refer to the work of the Interim Drafting Committee which was set up at the close of the First Session in order to carry further the preparation of the proposed Charter for an international trading organisation, which on the basis of an extremely useful draft got out by the United States of America had been formulated in London. It was inevitable, I think, that our last Session, strikingly successful though it was--successful, I venture to say, beyond the hopes and expectations of many who were there,-- should have left for further consideration some of the more technical Articles without which the Charter would be incomplete, and that there should also be a large number of passages of which the drafting was inadequate or on which there had not been a full definition of conflicting views. The Committee met in New York on the 20th of January and finished its work on the 25th of February. The Delegations were small and consisted of highly qualified experts and I think that all of us who have studied their report will agree that it is a most valuable contribution to our great enterprise. It will, I confidently predict, very greatly ease our burdens when we come to consider once more the draft Charter and the very wide field which it is to cover. We were all clearly fortunate in our choice of representatives on this Committee, but above all we can congratulate ourselves on the Chairman, to whom all those present at New York would agree that a very considerable share of the credit for the Committee's success is due. -19- E/PC/T/PV2/1 I refer to Mr. Colban, whom we are very glad to see again here as the leader of the Norwegian Delegation. To him and to the Vice-Chairman, Mr. Adarkar of India, we owe a great debt and I would suggest that we should place on record here and now cur sense of obligation to Mr. Colban, to his Deputy, to.all the members of the Drafting Committee and to their Secretary, Mr. Lacarte and his staff. I would also, Mr. Chairman, like to second the proposal of Mr. Colban that this document should be published, because the United Kingdom Delegation believes that nothing but good can come from such publication. CHAIRMAN: Ladies and gentlemen, I am sure that the whole Committee will want to join Sir Stafford Cripps in the praise which he has paid to the Drafting Committee, and, more particularly, to its Chairman, Mr. Colban. I for my part would like to join my own congratulations to those presented by Sir Stafford Cripps. Does anyone want to speak on the Report of Mr. Ambassador Colban? The only thing we have now to decide is, following the proposal by Mr. Colban, is there any objection to publishing the Report? The proposal is therefore adopted. Point 4 of the Agenda is a general discussion of the scope of the work of the Second Session. I expect, and I sincerely hope, that most of the Headsof the Delegations will wish to express their opinion of the present state of our work. A certain number of Delegations have expressed their wish to speak-in order: Australia, Belgium, Brazil, Canada, South Africa, New Zealand. I am now going td call on the different Delegations to ask them whether they are prepared to speak now or tomorrow morning. ...I gladly call the Delegate for Australia to the rostrum. DELEGATE FOR AUSTRALIA (DR. H.C. COOMBS):- Mr. Chairman, before we begin our work in this Session, it would, I believe, be fruitful for us to look back on the results of our labours in the First Session. That Session produced real achieve- -20- ~~~~~~ I G. 3 E/PC/T/PV2/1 ments which were due, I believe, to the fact that certain basic principles underlay the Committee's approach to its problems. I think it is worth while to review briefly those principles, since the success of our work here may well depend upon their application to the problems which we now face. The first of these principles was the recognition that high levels of employment and of effective demand do much to determine the volume of world trade. The theory and practice of domestic economic policy was revolutionized in the years which followed the Depression by the recognition of the dominant role of effective demand. It was long, however, before the effects of this revolution were felt in the consideration of the problems of international trade. Indeed, historically it may well prove to be the major achievement of the Preparatory Committee that it brought this about. The second basic principle was the recognition that economies at different stages of developments with widely varying problems and organized according to different political philosophies,cannot follow uniform economic policies, and that consequently rules governing international trade must be flexible if the legitimate needs of national economic policies are to be met. Thirdly, it was recognized that many trade barriers are erected not as ants of ill-will, but as the means to achieve legitimate purposes or to protect domestic economic welfare from real dangers. -21- E/PC/T/PV. 2/1 DR. COOMBES: (Australian Delegate): This is not to say that the barriers are necessarily the best means of achieving purposes or that the fears of dangers they are designed to meet are not exaggerated or indeed that the history of commercial policy does not abound with the examples of exaggeration and extravagance. It means that an integral part of the task of reducing trade barriers is to provide positive aid in achieving the legitimate national purposes by means less inimical to the interest of other nations and that we must be prepared at times to wait while fears are quietened by the results of co-operation. In other words there was brought to the task of the London conference of this Committee an understanding, a tolerance and a humanity which had resulted in a Charter which despite its interventions provides in my opinion a wiser and more workable basis for the conduct of international trade and any basis which has been proposed before. The present session wills I hope, approach its problems in the same way. There are two main tasks. First to review the earlier work on the Charter and to examine some of its difficult problems which were left over from the first session. Secondly, to seek in negotiation a reduction of those restrictions embodied in tariffs and preferences. One problem to my mind stands out in relation to the Charter. When the world conference meets we shall have represented there countries who vary from the point of view of their state of development and their system of economic organization even more widely than those represented here. It is important that the Charter should be such that all countries of good will can accept it and the organization which it proposes to set up such that all countries of good will can, with advantage, become members. In the negotiations about tariffs and - 22 - . 1~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV.2/1 preferences we are faced with a practical problem in which it would be very easy for the general principles underlying our achievements in the first session to be lost in an atmosphere of hard bargaining. However, from some points of view the time is auspicious. In the world generallythere is no problem of effected demand. Indeed those of us who have advocated for full employment so passionately are in danger of being embarrassed by the fullness with which our prayers have been answered. Indeed if I was not so overwhelmed by the magnificence of my surroundings I should, I think, be reminded of the Scottish parson who prayed for rain. The following day it rained and it went on raining and it rained for weeks, until finally the parson took up the matter again and he prayed thus: "Lord, it is true we prayed for rain, but this is ridiculous." At any rate, whatever the difficulties with which this state of excessive employment may confront the peoples and governments of the world, it does mean that demand in the field of international trade is now at a high level. The problem is not to find markets in which to sell goods but to find the goods to meet urgent needs. We can, therefore, now if we will, see tariffs and preferences in their right perspective. An effective demand is at such high levels that the influence of tariffs and preferences on the flow of trade is small indeed, affecting the direction and composition of trade rather than its volume. This should mean that both those seeking reductions in other peoples' tariffs and those defending their own will be less likely to exaggerate the importance of the particular tariff rates over which they are bargaining. This would be the more so of course if countries could be confident of the persistance of these conditions of high effective demand, - 23 - E/PC/T/PV. 2/1 There are two possible approaches to negotiations avowedly on a mutually advantageous basis. The first is to interpret advantage in a strictly national sense. To assess on the positive side of the balance sheet only those benefits which accrue directly to increase national trade. The second, and I believe the wiserapproach, will seek to take into account the role which the tariff plays in the economy of the country negotiating. To assess the purposes which it is designed to achieve and the fears which it is designed to quiet. It will be prepared to see in the achievement of those purposes and the quieting of the fears advantages from which other countries too can, and will, benefit. In other words if we can apply to the problem of tariff and preference negotiations the same principles of understanding, of tolerance and of humanity which ensures the achievement of the first session. If we choose the first approach there is real danger and we shall look back upon the structure we are labouring to build and find that however impressive its facade it too, like so many attempts of this kind in the past, is at best an empty sham. On the other hand if oecchoose the second we can make one step further in the task of showing what the people of the world are desparately anxious to believe that nations can work together for common ends. The Australian government approaches the problems of this conference with a real sense of urgency and an awareness that the Australian people have an abi.C.ng faith in the future of international co-operation and it is my privilege to assure you that the Australian delegation will, at this conference, do its utmost to embody that faith in the word of this conference. - 24 - I , d J.1 E/PC/T/PV.2/1 BARON VAN DER STRATEN-WAILLET ( Belgian Delegate): The economic union existing between Belgium and Luxembourg has, from the out- set given its full support to the world Charter of Trade and to the creation of an international Trade Organisation. They have consistently followed the work acheived by this Organisation, and are willing today, as they were before, to give it full sup- port. All members of the preparatory commission have played a part, and a useful part I dare say, in what has been achieved until now, but there is one country, I believe, to which parti- cular tribute must be payed from this rostrum. I wish to refer to the United States of America. The American nation is conscious of its responsibilities which is plays in the economic fields It has supported the efforts which the United States government has consistently developed for the development of exchanges between states and the reinforcement of economic and international solidarity. The two traditional political parties in the United States, the Republic and the Democratic, have shown today a wish and a will to co-operate with the other countries which is the best evidence for the final success of our undertaking. I wish to associate myself fully with what has been said from this rostrum by our President and by Sir Stafford Cripps concerning the work of the Interim Drafting Committee which has met in New York earlier this year. The Draft Charter has been altered by the changes which have been introduced in this document by the Interim Drafting Committee. The new articles have been drafted in a very fitting and proper way. On the other hand, certain changes which have been suggested in the text shall certainly call at a later stage for some -25- AM J.2 E/PC/T/PV.2/1 observations on our part. However, I should like right now to mention one technical gap which is particularly regrettable for the French-speaking delegation. I feel that it is regrettable that a French version of the Draft Charter should not have been circulated to members of this Conference at the same time as the English text was being sent out. Belgium, gentlemen, is traditionally a country of economic freedom. The commercial policy which we have pursued since the end of the war is the evidence of what I have just said. The Belgian government has opened its doors as widely as possible to imports. The goods which are not an object of international rationing enter Belgium in such quantities as to satisfy financial demand. During the first quarter of 1946 the monthly average of imports was 2,802,600,000 Belgian francs. At the end of the same year 1946, the monthly average had jumped to 6,322,000,000, in other words an increase of 125%. At the'beginning it prove. necessary to submit trade in Belgium to control by the means of licenses, but this system was applied very moderately. Import licenses were granted so liberally that very soon imports exceeded actual needs of the domestic markets. In 1946 only half of the licenses were established by the proper agency of the Belgian government and were actually used for imports. Furthermore restrictive controls were gradually deleted for numerous goods. For these goods all the importer is required to do is to make a ~declaration which amounts to compldte fre(Zom .. tra e -More-than half of the imported goods are those which were imported to 1946, were imported under the system of the simple declaration. In other words complete freedom. The increase in the amount of imports has continued at the same rate for goods submittee co licpnoe and for free goods. Experience has shown that the fact of liberating - 26 - E/PC/T/PV/2/1 certain items from the necessity of obtaining an import license does not in any way effect imports. Evolution remains constant without any appreciable variations in the quantities imported in prices. The actual incentive which regulates the amounts of imports is the effective demand. In any field where discrimination between the category of goods might have brought about unemployment Belgium has refrained from introducing it. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ . : J. 4 E/PC / T/PV. 2/ 1 Many goods are now being imported in quantities which exceed those which existed before the war. This for instance applies to wines and liquids to tobacco and cigarettes, perfumes, furs, knitted goods, electrical appliances, radios, and so on. We have consequently by our policy contributed very largely to rebuild international trade in the world. This liberal policy which we have applied to our imports has been extended to our export policy equally. We have reduced, as far as possible all obstacles to the sale abroad of Belgian goods. Unfortunately, we have been brought to know that a deletion of administrative restrictions concerning export of our goods has not had the influence which we were entitled to expect. In October 1946 goods which were exempted from export licenses represented thirteen per cent of our total exports; in December 1946, the percentage had decreased to 11.5, and in February 1947 it had dropped again to 7.9 per cent. This experience gives us the impression in Belgium that we are the only country which is there to engage on the role of suppression of obstacles to international trade. Most other countries do not seem to have chosen the course which Belgium has adopted concerning its foreign trade. Nevertheless, we are determined to continue on the road which werhave chosen. On April 1st the Belgium government decided to suppress import licenses for a great number of goods. Almost a hundred new items on the customs tariff have become free as a result of this recent measure. Belgium has shown its faith in international co-operation in the respect of commerce by still another measure. In full agreement with its partner in its Tariff Union, Luxembourg, Belgium has concluded a customs union with the Netherlands. - 28 - . 1 ~~~~~~~~~~~~~E/PC/T/PV 2/l One aspect of this new agreement made between two good neighbours interests particularly this conference at this time. I wish to refer to thu common tariff which our two countries have adopted, a tariff which will serveeas a basis ffor the negotiations which we intend to conduct at this Geneva eeeting. We have not Just amalgamated the previously,/axisting tariffs of our two countries, we have created a new instrument which shall serve as a basis for our new customs community and whioh will have a life of its own. Ve have been obliged to achieve this and to set up a completely new system. In other words, tc set up an autonomus tariff without-taking into account the policies which had inspired previously the two 3ountries whose tariff is-now amalgamated. The order in which goods are listed in this new tariff established between Belgium and the Netherlands has been based on the draft list nomenclature of goods which nas been suggested by the League of Nations in 1937. This.list tends towards an international unification of terminology used concerning customs duties. It results in bringing more order and clarity to the tariff and affords a scientific basis for the necessary statistics. Almost all the new duties are based on the ad valorum principle. They have been fAxed at the lowest possible level compatible with an adequate protection of the vital economic interests of Belgium, Luxerbc.11re cte Netherlands. The new customs union will afford two countries which produce raw materials and fool stuffs one of the L rest existing markets in the world. Their goods will-enter this new territory without paying my duties, or paying extremely low duties. On the othexrknn industrial goods are accessed in such a manner as to assure our producers a stable national market without which their undertakings could not live or prosper - 29 - I q~~~~~~~ E/PC/T/PV. 2/1 In as much as our purchasing power depends essentially on our manufacturing and export industry, their prosperity affects equally the countries which are our suppliers. The new customs union corresponds to the conditions set forth by the draft Charter which this meeting will have to consider at a later stage. The average duties provided for by the new customs tariff do not exceed any one of the duties provided for in the previously existing tariffs of each of the two countries concerned. - This moderate approach to the prsblem of tariffe which we have imposed in all freedom and liberty constitutes, if I maj so, our advanced contributions to the common aim of this international conference. If new concessions were to be asked from us we could at most accept this in the spirit of the draft Charter itself, and concelidations of osrtain of the tariff- 30 vided for. I V K - 1 E/PC/T/PV2/1 During the last few years economic nationalism has caused humanity terrible and useless sufferings. We must now in common effort put an end to the selfishness in respect of the economic welfare of the world. We are gathered here in this Geneva Conference in our attempt to do so. Let us have the courage and wisdom to proceed boldly in the way which has been proposed to us by the previous meetings of this international gathering. The Belgian and Luxembourg Economic Union has no other ambition than to contribute to the best of its ability to the common aim of this Conference. CHAIRMAN - Gentlemen, I suggest now that we adjourn for the day and that we meet again to-morrow, To-morrow there will be two plenary public meetings, one in the morning and one in the afternoon. In the morning at 10.30 we will continue to hear general declarations. If any delegation wants to speak to-morrow ~~~~~~~~~~~~~~~~~~~ and has not oet given the name if his representative, I will ask nim kindly to do bo .. soon as possille0 The M.et±ng is adjourneda .he MsatinE D ' -'30 p.m. A S4 , .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
GATT Library
cv539cn4518
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. First Meeting of Commission A held on Tuesday, 27 May 1947, at 10.30 a.m., in the Palais des Nations, Geneva
United Nations Economic and Social Council, May 27, 1947
United Nations. Economic and Social Council
27/05/1947
official documents
E/PC/T/A/PV.1 and E/PC/T/A/PV.1-3
https://exhibits.stanford.edu/gatt/catalog/cv539cn4518
cv539cn4518_90240057.xml
GATT_155
7,628
46,097
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV. 1 27 May 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT FIRST MEETING OF COMMISSION A HELD OIN TUESDAY, 27 MAY 1947, AT 10.30 A.M., IN THE PALAIS DES NATIONS, M. MAX SUBTENS (Chairman) GENEVA (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). ER - 2 - E/PC/T/A/PV.1 CHAIRMAN (Interpretation): The meeting is called to order. Before starting with the discussion on Chapter IV of the Draft Charter, I wish to draw your attention to document W.78 of the 23rd May, which is the Second Resort of the Charter Steering Commit tee. I intend to have the document debated and approved this afternoon, and we will start the meeting of this afternoon with the discussion and approval. -3- S E/PC/T/A/PV/1. CHAIRMAN (Interpretation): We pass on now to the discussion of Chapter IV, Economic Development. We shall deal with that Chapter in exactly the same way as we dealt with Chapter III; that is to say, we shall endeavour to reach agreement in the Committee and we shall refer to sub-committees, which will be appointed at a later date, establishing final drafts reconciling the various views, and so on. We will begin with Article 9. I would remind you that the United States Delegation has proposed two amendments to this Article; one is a revision of the title and the second is the addition of a paragraph with regard to capital investments. I suppose you. have all taken cognisance of these two proposals and we can now discuss them. Dr. GUSTAVO GUTIERREZ (Cuba): Mr. Chairman, before going into discussion of the title of Article 9, the Caban Delegation desires to bring to the attention of the Committee certain points relating to the matters concerned in Chapter IV. We consider this Chapter one of the most important for those countries not fully developed economically. As our Chairman made clear in his statement at the Plenary Session, we consider that this Chapter is unbalanced. It relates mainly to problems of commerce and customs duties and leaves very little for the economic development of those countries which have not achieved a full state of industrialisation. We consider that the industrialisation of a country which has not yetv completed its economic development does no harm to the fully industrialised countries but, on the contrary, is extremely helpful, in the expansion of their industries as well as in S - 4 - E/PC/T/A/PV/1. world trade. The only difficulty is the transitional period, during which the highly industrialized countries have to adjust their economies. This is clearly stated in the findings in the publication of the League of Nations entitled: "Industrialisation and World Trade, 1940", that the development of the less industrialised countries is the responsibility not only of those countries but also of the community of nations. This was clearly stated for the Western Hemisphere at Mexico. We also feel that, in the circumstances, the obligation of an undeveloped country should have its counterpart in the co- operation of the other countries secured by the Charter, and which will give to the under-developed countries the necessary freedom of action. We have found -- we must say, with some regret - a certain suggestion by the Secretariat, following a resolution by the Economic and Social Council of the United Nations, as to the taking out of this Charter the first part of Paragraph 2 of particle 11, where we find some of the very few practical methods outside of the general economic principle stated without limitation. The only thing that looks like implementation is taken away and if that is taken away, in our opinion, nothing remains of Chapter IV. We are very much in agreement in the main with the proposal of the United States that gives some implementation, but the proposal of the United States to start with a modification of an item of this Chapter is so important to us that we must confess we have not completed the study of this proposal and therefore we will not be in a position to express our viewe on it, probably until tomorrow. Novertheless, we do not want to raise any obstacle to the discussion of Chapter IV and we are ready to take part in the discussion of the rest but reserve our point of view on the first proposal. As I say, we can discuss the rest after having heard the proposal of Czechoslovakia in relation to the suggestion of the Economic and Social Council. P. CHAIRMAN (Interpretation): Does any delegate wish to speak on the United States amendement? This United States amend- ment, I repeat, consists in adding a sentence to Article 9 reading as follows: "They also recognize the importance of private and public international capital movements, int productive investments in promoting and facilitating such development." I will add that this amendment also provides for a change in the title of Article 9 and in the title of Capter IV itself. Mr.OLAIR WILCOX (United States): We received this morning, about half an hour ago, a number of proposed amendments to Chapter IV none of which we have as yet had an opportunity to read. I do not know whether other delegations received our proposed amend- ments at an earlier date, or whethher they have had an opportunity of reading them. I am prepared to speak on the subject if it is the desire of the Committee that we go ahead at this time, but before doing so I should like to know whether the members of the Committee would like to have a few more hours to read the amendment s which have been distributed before entering into the discussion. CHAIRMAN (Interpretation): I would not like, of course, to answer for the other members of the Commission, but as for myself I can say that I received all amendments on Saturday, and had full opportunity of studying them. I believe, in any case, as regards thn United States amendment just mentioned, that we can exchange our views on the subject in general. E..:.. Z. AUGENTIALER (Czechoslovakia) (Interpretation): Mr. Chairman, I would ask of the delegte of the United States if the amendment means that the Organization recommends to countries to - 5 - - 6 - E/PC/T/A/PV/1 -. accept loans from abroad or whether it extends even to participation in industries: I mean, whether there is only the sense that the foreign countries are offering loans of capital to develohet1l industries or whether ie mvans participation in the corresponding industries. In the lattcr oase a country might say: "Well, I am keen to accept loans to develop my industrial life, but I am not willing tccaQoept direct participation in the management of my in- dustries if it would entail acting against the principles of the Chart"r.' J. -7- E/PC/T/A/PV/ MR. C, WILCOX (United States) Mr. Chairman, if it is the desire of the Committee, I would make a brief statement on the amendments that we have suggested in this connection - our suggestions as to the title of the chapter, and the title of Article 9, and the inclusion and additional sentence in Article 9, and the suggestions that we shall make as to possible amendments to Chapter I on Purposes, and to Chapter VIII on Organization are derivative from the proposal that we made with respect to Article 12. The Charter already recognises the problem of foreign investment in two articles - article 12, pararaph 2, and Article 61, paragraph (c). I think that there would be a case for the inclusion of reference to this problem in Article 9, and also in Chapter I, even. if our suggestions as to the amendment of Article 12 were not adopted or were modified. But it seems to me necessary to make some sort of a general statement of what we have in mind here, in order to put our suggestions with respect to the Article into their total setting. With respect to the questions asked by the delegate of Czechoslovakia, I do not believe that there is anything in our suggestions that would require any aountry to accept any loan, and as far as the particular provisions of any loan or investment are concerned, that would be a matter which should be worked out between the countries involved in connection with the particular loan or investment, and there is nothing in our suggestions that would determine the provisions of any specific arrangement, and certainly there is nothing in our suggestions that would require any country to accept a foreign investment that required foreign participation in the management . of the industry concerned. I might raise some little question about the use of the word "accept". I am not sure that that does not involve the -8 - E/PC/T/A/PV. 1 implication that the country that receives capital is conferring a favour upon the country that supplies capital. I would assume usually in an international capital movement that there should be mutual advantage for, the two countries concerned. Now, if I may say something about what we have in mind here, it would run along this line. We have recognised in our discussions that there are, in various parts of the world, countries that are urgently in need. of additional supplies of capital for their reconstruction and for their industrial development. That capital can be supplied in three ways. It can be supplied through international organizations, such as the International Bank for Reconstruction and Development. The advantage of this mechanism is that the countries that are able to supply capital turn it over to an international organization and the loans that are then made to the countries that receive capital are internationally administered. We regard that principle as a sound principle. We think that it has very great advantages. But I think we all recognize that present needs for capital will go beyond the capacity of that institution in the immediate future. A second possible source of capital fund is by government to government loans, either through direct loans or through institutions or agencies of governments. There has been a considerable volume of such loans and it is possible that further loans of this type will be made in the future, but in this case it is perfectly clear that the transaction becomes an inter-governmental transaction; that it therefore requires action by parliaments and that establishes something of a bottle-neck in the making of such loans; that it places a limit on the quantity of capital that can be transferred in that way; that it involves a certain rigidity and lack of flexibility in individual international capital movements. The third possible source of capital transferrence, of course, is by private lending-either loans or direct investments. There is in existence in the world a large volume of savings which provides a potential source of capital funds for the reconstruction and development of the countries that need those funds. E/PC/T/A/PV 1 The advantages of such private investment are:. (1) Speed. That is, individual arrangements can be made between lenders and borrowers without requiring the delays involved in parliamentary action. A second advantage is flexibility. In general Government to Government lending deals only in large sums involving large- undertakings. In the case of private capital transfers, the amount may vary, from one project to another. Also the terms may vary from one project to another as to the charges involved, the maturities and all the other details. It is possible for borrowers and lenders to make arrangements which are to their mutual advantage. So you have, I think, in private capital transfers the advantages of greater speed and g eater flexibility, and you have, I believe, the possibility of capital - a large reservoir of private savings for the recon- tLruction and development of those parts of the world that require it. I think it is perfectly clear that that flow of private capi- tal has not been resumed since the war, and that there is no prospect of its resmiption in the near futur., There are many reasons for that which I will not go into. There is concern on the part of possible lenders concerning the future economic prospects of potential borrowers and con- cerning the character of future economic and political relation- ships. It is our view that something can be done, and that some- thing should be done to encourage a renewal of the flow of private capital; and we believe that can be done without invol- ving some of the difficulties that may have troubled such inter- national investments in the historic past. Certainly we believe that no country would accept - if we use`lcdcep't - a foreign investment to which terms are attached that would eo disadvantageous to keep. G. E/PC/T/A/PV.1 - 10 - What we have proposed in the Amendments that we have suggested for this Chapter is, I think, completely consistent with the provisions that are already in the document, in the form in which it emerged from the meetings in London and New York. We do propose in the statements of purpose giving recognition to this problem as a problem related to that of econo- mic development, and as one of the purposes of the Organisation, We had a rather lengthy discussion in London about the question of whether there should be an economic development commission. We arrived at no decision on that question, because we referred it to the Economic and Social Council since it involved the question of jurisdiction of the International Trade Organisation in relation to other international organisation. On that point we have now had a reply from the Economic and Social Council. We believe that if the scope of the function of a Fourth Commission could be large enough to include the problem both of development and investment which we regard-as closely related, that such a Commission should be established, and we propose that this Commission be charged with the function that was assigned to the Organisation in Article 61 (c) of the present Draft with respect to the preparation of mutual conventions or agreements, Articles and so forth, to be recommended to Member Governments. One other important suggestion that we make in this connection appears in Article 12, paragraph 2. What we have done is to look at this problem of private capital movements and ask ourselves not what are the maximum rules and principles that ought to be laid down and recognized, but what is the minimum that is necessary; and what we have proposed here is to make explicit in paragraph 2 of Article 12 what was perhaps implicit in the existing Draft with respect to abstensions from unreason- able treatment of specific foreign enterprise , having made international investments; and our suggestions there are redu- ced to three principles: (1) National treatment. That, however, is qualified by the provision that exceptions may be made to national treatment G. E/PC/T/A/PV. 1 - 11 - by the unilateral decision of a country involved, and the only requirement is that public noticed be given as to the exceptions, (2) Most-Favoured-Nation treatment, without qualification. (a) Adequate, effective and prompt compensation when invest- ments are taken over by the State. Our proposals do not go beyond that. There are many other problems involved in international investment. Our suggest- ion would be merely that these questions be left for the Develop- ment and Investment Commission to work out and to recommend to Member Governments for their later consideration. We do think that the minimum that a private investor in another country would require before he would consider making an investment is: (1) That he know the terms on which that investment was to be made and the treatment that he was to get; (2) That he be treated no less favourably than a private investor in another country is treated in dealing with a third country; and (3) That if his property is taken away from him, he will be paid for it. - 12 - E/PC/T/A/PV. I -12- Now we have the later suggestion in our proposed third draft 2(a) which is novel, and it is the suggestion that a country which desires to receive private foreign investments may voluntarily file with the Organization a unilateral statement as to the conditions which it will accord to such investments. It may put in that statement anything that it pleases and the Organization would have no authority whatsoever to dictate or even to suggest what terms should be written in to the statement. It would be purely voluntary, it would be purely at the option of the country involved. The statement also could be modified at any time by a unilateral decision or could be withdrawn entirely. The only requirement would be that countries would continue to accord to investments made during the period when their voluntary statement was in effect, the treatment which they said that they would accord to such investments. Now, I say that it is a novel suggestion. We think it not to be unreasonable because it involves no compulsion to file and no compulsion as to the contents of the filing, and no compulsion as the modification or withdrawal. The whole thing is put in the form of voluntary action. Now, those are the provisions of the various amendments that we suggested that relate to the question of international investment, in its relation to the problem of development. I have spoken at this length in order to indicate the relationship of these various provisions to one another because that explains the purpose of the suggestions that we have made concerning Article 9. I do not think that that can be reviewed in isolation from the paragraph of our proposal as a whole. We have, in connection with this, made some other minor suggestions concerning textual amendments to which I-shall not refer at the present time. - 13 - M. L.GOTZEN (Netherlands): Mr. Chairman, the Netherlands delegation is of the opinion that the proposals made by the delega- tion of the United States of America for the amplification or the Charter by the insertion of some paragraphs concerning foreign investments are of great importance and a very valuable counterpart of those Articles dealing with economic development. In con- sequence the Netherlands delegation is quite willing to give its support to these amendments although on some minor points we may probably want to suggest some additions or alterations. Thank you. Mr. L.D. MARTINS (Brazil) (Interpretation): Mr. Chairman, I wish to add to the statement just made by the delegate of the United States that the Brazilian Delegation also conceives the problem of the development of not completely developed nations as inseparable from the means to achieve such development, and I wish to remind you in this connection that in London it was the Brazilian delegation which explained the close relation between these two points. We presented at the time an amendment with regard to move- ments of capital, in the reciprocal interest of the country receiv- ing such capital and the country giving it. We explained also that this influx of capital could be made in three different ways. We shall have in due course to present three amendments to the United States amendment to Article 12, but with regard to Article 9 we wish to insist on the fact that in no case should Chapter IV be made less favourable to the under-developed nations, because this Chapter has been inserted in the Charter precisely in favour of those nations and should not apply more to the highly developed countries. E/PC/T/A/PV/1 P. p. E/PC/T/A/PV/1 -14- M. ANGEL FAIVOVICH (Chile) (Interpretation): For the Delegation of Chile, Chapter IV constitutes one of the most important chapters of the Charter which we are at present engaged in studying. It is obvious that if this Chapter does not determine the conorete means to achieve the development of small countries, and which those countries need, a large part of our future action will be jeopardised. For this reason the delegation of Chile accepts in principle the United States proposal as constituting a concrete step towards the ideal which we are pursuing, which is to realise the economic develop- ment of the small countries yet insufficiently developed. Having said this and having given my agreement in principle, I reserve my right to present such alterations or comments at a later date as I may deem necessary; but we wish that Chapter IV shall achieve in the interest of the needy countries their very urgent needs in development. - 15 - D.R. P.S. LOKANATHAN (India): Mr. Chairman, may I at this stage move, on behalf of the Indian delegation, a short adjournment of this meeting to consider this very vital issue. It is said that the amendments were before us on Saturday, but the delegations as a whole have had no opportunity of consultation and defining their attitude with regard to this. It is not a question of our examining the merits of the various amendments put forward by the United States delegation. I think that on the substance of most of them we may be in agreement, but the larger question remains as to whether we should at this stage and in this Chapter bring in those features which were not theta before. The question of foreign capital is engaging the attention of the government of India, and if we are to consider this very vital issue at the present tine, we may not be able to take any position at all without reference to the government of India. Apart from this there are also other reasons. I wonder whether it would be possible for this meting to stand adjourned at least until tomorrow, for instance, so that in the meanwhile we may consider whether it is desirable to bring the question of international investment into this Chapter. I am not for one moment suggesting that the question of international investment is irrelavant to this Chapter - certainly not. Nor do I suggest that some of the details proposed by the United States delegation are unworthy of acceptance, but. I am more concerned with the larger question as to whether the structure and face of this Chapter would not alter if we are going to have a new set of ideas, and in any case we are not in a position to define clearly our attitude and we would. very much appreciate a short adjournment of this meeting. E/PC/T/A/PV.1 J . 1 J. CHAIRMAN: The delegate for Belgium. M. J. JUSSIANT (Belgium) (Interpretation): The Belgium delegation wishes to join itself to the delegations who have just supported the United States amendment, which consists in adding a sentence at the and of Article 9 and in altering the title of this Article and of Chapter IV. We shall not discuss at present certain deletions of parts of sentences of this Article, which may be studied at a later date, but we consider that the United Stated amendment raised a very important point without charging the substance of the Article, but at the same time it improved the Article considerably, and it improved this Article because the balance established in this article in favour of a country nut completely developed is increased in favour of this country. -17 - The economic development dealt with in Article 4 can be achieved in different ways. First of all by the national efforts of a country concerned, and there is a French proverb, which is a very important French proverb, which says, "Help yourself and Heaven will help you"; but this national development necessitates a very large effort which may at times surpass the possibilities of a country concerned. All efforts in those countries are then tending towards the one aim of improving the economic development and it may be necessary for that country to adopt restrictive measures to effect a single improvement. These restrictive measures we precisely want to avoid. That is why we come to a second way of developing a country, which is by means of external help or participation, which is beneficial to all parties concerned; because, of course, it is no effort to the country granting the help, because there is through that help a large expansion in their trade and international relations in general with the country thus assisted. Capital investments obviously provoke an expansion of the commodities and. goods, and of trade relations and at a later date, an increase in the possibility of a country thus helped. in participating in international trade. But the external assistance or participation of the countries which are not. sufficiently developed is not sufficiently precise in Chapter 4 as it stands, because we might by reading the provisions of the Chapter ask ourselves whether such help or assistance could not be limited purely and simply to the sending of a few technical experts. Well, the Delegate of the United States has very well shown the very important part which private investments can make in development, and in answer to the Delegate of Brazil, I would say that this Amendment would certainly not be less advantageous to E/PC/T/A/PV/1 E/PC/T/A/PV/1 - 18 - the small countries, but will enable them to make their develop- ment within a general framework instead of within a narrow frame- work, and for these reasons I repeat we support whole-heartedly the U.S. Amendment. CHAIRMAN: The Delegate of Australia. Mr. McCARTHY (Australia): Mr, Chairman, the Australian Delegation generally supports the proposals made by the United States, and follows and recognises and accepts the exposition of the reasons put forward by Mr. Wilcox. We recognise that in any schemes of development, particularly in countries in the early stage of development, the import of capital is always highly important, and is one of the outstanding means of bringing about development. We also recognise that where countries want to import capital for developmental purposes, they have to secure the co-operation and the goodwill of the lenders; and the lenders- are, of course, entitled to all the protection that it is practicable to give them in an Article such as this. Therefore, we accept the alteration in the title of Article 12, and in the expansion of Article 12 in the way proposed by the Delegate of the United States. In doing that, I think we recognise that we are giving almost complete support to the United States proposal. We are in some doubt, however, as to whether the title of the whole Chapter should be altered. It does seem to us that the title. "Economic Development" as it is sets out the objectives of the whole Chapter; and even though investment is an important, perhaps an outstanding, means to bring about economic development, it is only a means, as distinct from the objectives. Therefore, we would prefer that the original or existing title remain. Perhaps I could say we will not wish to press that, if the Committee as a whole thinks it desirable, but we do feel rather E/PC/T/A/PV/1 -19 - more definitely on the inclusion of the last sentence which is proposed for Article 9: "such attention as we have given to the detailed proposals"; and I think we should say we are not sure we follow the whole of the Drafting amendments - we think that Article 9 should be devoted to a statement of the objections and left at that, and that the proposals for high-lighting the importance of investment, and of giving more detailed attention to the part that it will play, should be confined almost entire ely to Article 12. It seems rather logical that we should start the Chapter with a statement of the importance, and then a reference to the domestic resources; and. if it would help by bringing Article 12 next as a fully developed Article on the subject of the means, and in doing so bring out investments, we would agree to that. So to sum up, Mr. Chairman, we would give as our view that we are in accord with the principles, that we agree with the alteration in the title and the expansion of Article 12, which is the most important Article from the viewpoint of the changes suggested; we would prefer the title to stay where it is, but we will not press the for it; but we would urge that Article 9 be left as it is, or at least it be included without the last sentence as suggested by the American Amendment. ER - 20 - E/PC/T/A/PV/1 Mr. J.T. CHWANG (China): Mr. Chairman, the delegation of China Support, in principle, the amendment brought forward by the delegation of the United States, which is very important, of course, to this Chapter IV. Nevertheless, the Chinese delegation would like to make a small amendment to theirs. As a matter of fact the world is not quite recovered from the war damages, and the economic situation of the whole world is not yet quite settled, therefore, a premature action may be harmful, particularly for members who want to arrive at the object of this Charter and especially for some other countries who want to contribute their share therein. The economy of each country involves many elements and therefore it is very complicated and only its own government can judge best and take the necessary measures to develop the requirements of the situation. Therefore, some of the paragraphs made by the delegation of..the United States would be better changed or modified so that we can make it better for the undeveloped countries. M. BARADUC (France) (Interpretation): The French delegation wishes, first of all, to associate itself with those delegations who have stressed the importance and interest of the United States amendment. We consider also, that those amendments bring a solution to the difficult problem raised by Chapter IV and would countribete to re-establishing the general equilibrium of the Charter. We shall, therefore, fully contribute to the necessary alterations to Chapter IV according to the wishes expressed by the delegate of the United States. I have, however, some observations to present. First of all, one detail in drafting. I am in full agreement with the first amendment to Article 9, that is to say, the insertion E/PC /T/A/PV .1 - 21 - of the words "for dependent territories", but I am not in agreement with the French translation of that text, and I would like the French text to read: "pour les territoires qui en dependent", which is more in keeping with the sense. As for the last sentence to be added to Article 9, I would probably agree with the Australian delegate when he said that that sentence might be better placed. in Article 12. However, the statements made this morning by the United States delegate are so important that I would ask that a verbatim text of the statements be circulated and it might be even useful to take some part of the statements and embody them into a special Article, because this matter is so important not only to the development of countries not yet fully developed, but also for other countries insofar as it fixes the condition of public or private financial assistance. I would therefore think that it might be useful to set up a special drafting Sub-Committee to examine the drafting of a special Article to be inserted in Chapter IV, and which would embody certain of the amendments offered and certain parts of the text of the United States delegate. S -22- E/PC/T/A/PV/1 H.E. Dr. Z. AUGENTHALER (Uzechoslovakia): Mr. Chairman, Gentlemen, I am greatly obliged to Mr. Wilcox for his interesting explanation. Now as we reach the point where we are discussing the general principles of capital investment, may I be allowed to make certain observations on the programme as a whole. In the past we knew three categories of international economic freedom; there was freedom of movement of goods, of capital and of persons. The third freedom. I think, disappeared entirely. Now we are putting the question of freedom of movement of capital on the same level as the movement of goods. I think there is an important distinction between movement of capital and goods. Goods are imported or exported, but if we are dealing with foreign investments in a country it is nearly the same thing as if I am giving the right of citizenship to some foreign person. Now you know well that every country is extremely careful about according citizenship of its own country to some foreign persons, and they are mostly bound by certain conditions. we are sitting here around the table, all of us representing different countries, but the Charter is not envisaged only for us: the Charter is envisaged for the whele world. Now, one day Germany, for instance, may be a Member of the Organisation. In this event, we should be obliged to accord to German investments in Czechoslovakia the equality of treatment accorded to other investors. we had curtain experiences with German investments and capital participation in Czecho- slovakia and I should say they were not so innocent of the catastrophe which happened in Czechoslovakia. - 23 - S E/PC/T/A/PV/1 There are three different positions for the foreign investor, as there are in the American amendment. The e is first the Most-Favoured Nation treatment, that is, equality of treatment for all, with no distinction. There is a second principle, that is, each Member shall accord to citizens of other Members treatment no less favourable than it accords to its own citizens, That is the second principle, the national principle, but there is a third principle which accords preferential treatment to foreign investors, where they are more favoured than their own citizens. That is in the case of compensation. It may be that a country accords a more effective compensation to its own citizens, but perhaps not promptly. It may be for I do not know how many years, but the foreign investors would have preferential treatment over their own citizens. I wanted to make those few remarks just to show you that, in our opinion, investments cannot be treated in the some way as movement of goods; that probably they need some special rules entirely different frame those concerning goods. CHAIRMAN: (after the above remarks had been interpreted into French): Dr. Augenthaler, do you wish to say anything else? H.E. Dr. Z. AUGENTHALER (Czechoslovakia) replied in French; no interpretation. Dr. P.S. LOKANATHAN (India): Mr. Chairman, Judging by the progress of this debate, it is clear that my motion for adjournment does not meet with much favour here. If I am right in that surmise, Mr. Chairman, I should like to say, on behalf of the Indian Delegation (with whom I have now had a S - 24 - E/PC/T/A/PV/1 chance of consultation), that we would make an appeal to the United States Delegation not to press this whole series of amendments at this stage. We remember that when this Chapter was drafted in London it became a groat selling point with us in India. We thought that this Chapter IV was something like a charter for the less developed countries. Although there were serious limitations in this Chapter, and it was also somewhat imperfect in many parts, on the whole the country accepted the principle and the spirit of this Chapter. - 25 - Now it is sought to introduce matter which of course in one sense is relevant but which in our view is somewhat extraneous, and it is also not necessary in our opinion to set out the terms and conditions of international investment in this Chapter at this stage. No-one, for instance, suggests that foreign capital should be accorded anything but fair and equitable treatment. India's history bears ample witness to the fact that at no time did India accord anything but the most generous treatment to- every kind of foreign capitalist: if therefore we make this appeal, - and I am sorry I do not have the persuasive manner of Mr. Wilcox - if therefore we make this appeal to the United States delegate, it is because we feel that the whole face of this Chapter will undergo complete alteration, it not disfigurement, and we feel that in India a Chapter which is going to include all these conditions and treat- ments of foreign investment will not be accepted, and I think we will find it is verydifficult indeed to persuade our countrymen to accept this Chapter in a modified form. That does not imply that we are at all opposed to considering the terms and conditions of international investments in different places and in different contexts. In this Charter there is ample room for providing for such regulations and terms. 61 (a) already provides for it, and is intended to provide for it. If you set up a Development Commission, as we hope will be dons, one of the major tasks that Development Commission would be pre- cisely to go into the matters which the amendments of the United States delegation are intended to coover. And again, it is not as if the lenders today and the borrowers today are all such innocent, unsophisticated people. We all know that we cannot get funds unless we guarantee equitable terms. There is already an International Bank which lends at Government level, but the funds are coming from E/PC/T/A/PV/1 P. P. - 26 - E/PC/T/A/PV/1 private capitalists, and therefore it is certain that the Inter- national Bank would already be at this task of drafting a code and defining the terms under which capital must flow from one country to another. Again, a s you all know,. the Economic and Social Council through its Sub-Commission on Development is engaged in this very task and, if I know the position correctly, it is already at it, and a Sub-Commission which is going to be set up very shortly will have this as one of the important matters in its agenda. Therefore it isnot as if, merely because we do not accept this amendment at this stage, borrowing and lending will cease. Again, it is possible to lay down a general obligation on the part of the International Trade Organisation in connection with the provision of financial facilities. That sort of general obligation could be included in this Chapter. But what I do feel is that it is not desirable to go into great detail and state all the various Conditions under which the loans would be given or the terms under which the borrower can borrow. All this need not be spelt out in such detail in this Chapter. And for another reason, too. we have, great difficulty in accepting this amendment: as I said in the first few remarks that I made earlier, our country is now considering and examining the whole question of the terms on which foreign capital should flow to a country. We are not against private investment as such but we are very anxious that private investment should not get an economic hold nor a political hold in the national life and we want to take proper precautions. These are questions which these delegations here in Geneva may not be able to come to a decision upon. There- fore for these various reasons I think it would be much better if -some more time is g iven and if, when the Commission is set up, it P. - 27- E/PC/T/A/PV/11 goes into the matter more carefully it may have the opportunity of considering the views of all the countries. The agreement which has got to be drawn up is already provided for in 61 (c) and countries which want this amendment will certainly raise the ques- tion when that agreement is discussed. Our feeling is that if you alter this Chapter in the form which the American amendment seeks to do it will be regarded more as a Charter for the bankers than for the less industrially-developed countries, and we do not went that that impression shall prevail in any country or in any undeveloped country. Mr. Chairman, I am sorry for having to say this, but I do hope that the delegate from the United States will consider this in the proper spirit and give sympathetic consideration to the proposal put forward by the Indian delegation. J. MR. C. WILCOX (United States): Mr. Chairman, with reference to the hope expressed by the representative of Brazil that in the course of the amendment we should not detract from the provisions in the Charter with respect to development. I should say that we are in complete agreement. We believe, that proper provisions, with respect to investment will promote and not detract from the development programmes, and , as I say, we are in complete agreement with this point. With respect to the points raised by the delegate for India, I shall have to admit that we are bringing this material in at the Second state of the committee work. We did not introduce it in London. You will remember, however, that the chapter on economic developments was written in London, it was brought in at that stage. The third stage of our international work on this problem, of course, will come at the time of the world conference when the report of this committee is presented and considered. We have not waited until that time to put this problem before you. Furthermore, I do not believe that we shall need to arrive at decisions on this matter in great haste, because I assume that we will remain in the pleasant environment of Geneva for several more days and weeks, perhaps months. The delegate for India has suggested that the provisions of our amendments are extraneous to the purpose or the content of the Charter. I can only point out to him that the Charter already contains in Article 12, paragraph 2 and in Article 61 paragraph (c) material on this point. He says that this would cover the problem of foreign investment in great detail, and would spell out all the terms and conditions of foreign investment. I submit that that is not the case. We have not undertaken to spell out all the terms and conditions of foreign investment, andthere is here no great detail - we have tried to keep our suggestions as brief and simple as we can. He says that the development of E/PC/T/A/PV/1 - 28 - - 29 - E/PC/T/A/PV/1 principle with reference to investment would be the task of the Economic Development Commission, if we set up such a Commission. If that is the case, I do nut see why we should object to saying so. He said that even if we do not take action in this area, the international flow of private capital will not cease. Our concern is that the international flow of private capital has not started, and gives no prospect of starting as conditions stand today. I have listened with a great deal of interest to the comments made by the various delegates with respect to the amendments that we have suggested, and I find such a large measure of sympathetic interest, that I believe it would be inappropriate for me to accede to the request of the delegate from India that the amendments be withdrawn. Several delegates have suggested that they support the amendments we have suggested in principle, but will desire to suggest changes in detail. With respect to that I would say that we do not feel that we have said the last word on this subject, but only the first word, and that we are, of course, willing to consider suggestions and meet problems and situations as they appear to other members of the Committee, With respect to the suggestions of the delegate of Australia that the problem be treated in Article 12 but omitted from Article 9, I do not have a strong feeling, and I am extent to leave that to the sub-committee to decide in view of its judgement as to the Chapter as a whole. G. E/PC/T/A/PV/1 - 30 - CHAIRMAN (Interpretation): We have heard this morning a very interesting discussion on the United States Amendment, and most of the Delegations who spoke spoke in favour of this Amendment. Two Delegations have asked. that the question be adjourned. One Delegation asked for 24 hours adjournment, and the Delegate of India asked for a longer adjournment. I regret to say that I am limited by our time-table, and that we have only two days for this Chapter IV. I therefore suggest we resume discussion of this United Statet Amendment to-morrow afternoon, and we must at last reach a provisional decision on this Amendment. This afternoon we shall carry on with the study of other Amendments on Article 9, and in particular of the United States Amendment on Article 9 which does not affect the question of capital investment. Then we shall pass on to Articles 10, 11 and so forth. I have two further communications - first of all a Sub-Committee on Chapter III under the Chairmanship a the Delegate of India will hold a meeting at 5.30 this evening in Room 210; secondly, the Delegates from Frame and Czechoslovakia have asked that there w ill be a verbatim edition of Mr. Wilcox's speech. I wish to inform the Committee that the Secretariat has just told me that a verbatim record of this meeting, containing Mr. Wilcox's statement, will be circulated this evening. The Meeting is adjourned. The Meeting rose at 1 o'clock.
GATT Library
gt827yt4603
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. First Meeting of Commission B held on Thursday, 29 May 1947, at 10.30 a.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, May 29, 1947
United Nations. Economic and Social Council
29/05/1947
official documents
E/PC/T/B/PV/1 and E/PC/T/B/PV/1-3
https://exhibits.stanford.edu/gatt/catalog/gt827yt4603
gt827yt4603_90250064.xml
GATT_155
8,209
49,421
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/B/PV/1 29 May 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FIRST MEETING OF COMMISSION B HELD ON THURSDAY, 29 MAY 1947, AT 10.30 A.M. IN THE PALAIS DES NATIONS , GENEVA Hon. L.D. WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office. Room 220 (Tel. 2247). E/PC/T/B/PV/1 M. Max SUETTENS (Chairman of the Preparatory Committee) (Interpretation): The Meeting is called to order. Before commencing the work of Committee B, I should like to inform all Delegations that tomorrow morning at 10.30 we shall have an Executive Session, for the examination of a Report which has been circulated under the reference E/PC/T/70 and which contains recommen- dations of the Working Party on Tariff Negotiations. I will ask every Delegate to inform their respective Delegations. After that, we shall meet as Committee A. Gentlemen, as Chairman of the Preparatory Committee, I declare open the first meeting of Committee B, which is responsible for the examination of Chapters VI and VII of the Draft Charter. In the use of my powers as Chairman, I have appointed, with his agreement, Mr. Wilgress, First Delegate of Canada, Ambassador and Vice-Chairman of the Preparatory Committee, as your Chairman. I can assure you that he will prove an excellent Chairman and I wiaL you good work and Good luck. I will ask Mr. Wilpress to come to the Chair. The Chair was then taken by The Hon. L.D. Wilpress (Canada) CHAIRMAN, Mr. Suettens, fellow Delegates, I wish to express my thanks and appreciation for the honour which has been conferred upon me and upon my country in being nominated Chairman of this important Committee, Whilst extremely gratoful for the honour which has thus been conferred upon me, I am at the same time deeply conscious of the very heavy responsibility I have assumed in accepting this task. E/PC/T/B1PV/l CoTrettevwh, vli st it has not as heavy gn Anenda before it as Conmittee A, still has to deal with some very importand ani diffi- cult parts of the Draft Charter. It will be necess ry .for me toehav the co-operation of alembe Mbrs of the Committee and I shall do my utmost to discharge tfue inctions of Chairman to the best of my ability. The first item on our Agenda is the nomination of acVioe- Chairman of this Committee. I will ask for nominations. M. LHI1TGES (Belgium) (Interpretation): Mr. Chairman,hIvbase the honour to nominaMe A. Royer, French Delegate, as Vice-Chairman. CHAIRMAN : The nomination of M. Royer has been proposed by the Delegate of Belgiumr Axe there any othnr Nominations? I take it then that the nomination of M. Royer is unanimous? (Aeredd) I will ask M. Royer to take his place on the rostrum. - 4 - p E/PC/T/B/PV/1 CHAIRMAN: Fellow delegates, we shall follow in Commission B the same kind of work as has been followed in Commission A, that is, we shall take up the various items of the draft Chatter which have been assigned to this Commission and we shall consider the various points of difference, the reservations which have been made to the Draft Charter and also the amendments which have been pro- posed by the various delegations. We shall endeavour to consider these points of principle and, if any questions arise which are best suitable for resolution in a sub-committee, the Chairman will exercise his authority to appoint a sub-committee for the purpose. Our agenda for today consists of Chapter VI, Articles 39 to 45 inclusive, of the draft Charter, drafted by the Drafting Com- mittee in New York. The working document for this purpose will be document E/PC/T/W/132 which has been circulated to delegations this morning. Are there any observations on this proposed procedure? Mr. Chairman, Mr. G.L. MEHTA: /there is a general question which I desire to raise on behalf of my delegation arising out of the Exception pro- vided in the United Kingdom Amendment to Article 45 (Paper E/PC/T/W/131 of 28th May), since that pertains to the whole chapter and involves a fundamental issue. We have been given to understand all along that the assumption on which not only this Chapter but the Charter as a whole has been drafted is that services are to be excluded altogether from the scope of this Charter. It will be recalled that the question was debated at some length in London where some delegates suggested that the provisions of this Chapter should he extended to cover services, while one delegate stated that the Chapter would have no meaning if the question of restrictive business practices, relating to services such as shipping, insurance and banking, were excluded. In the P. E/PC/T/B/PV/1 General Comments on Chapter VI of the Drafting Committee's Report, this position has again been reiterated. It is clear therefore that services are sought to be cut out of the purview of this Chap- ter and of this Charter. But the United Kingdom Amendment as it stands implies that restrictive business practices pursued by individual enterprise in regard to services as well as goods would come within the scope of the Charter while such practices, if pursued under an agreement or understanding would be exempted as a result of the Exception provided for whether such agreement or understanding is a private or inter- governmental one, or concluded under the authority of the United Nations. In other Words, the Exception in the United Kingdom Amend- ment implies that certain practices in regard to serviceswould be included within the scope of the Charter. I would suggest, Sir, in all humility, that this is not consistent and we have to decide whether services are to be included or excluded from the scope of the Charter. It is not logical to say at one stage that services are to be excluded end then reintroduce an Exception which was origin- ally provided for in the U.S.A. draft relating to services. It is also necessary to clarify this point because there is another Amendment which brings in service and which has been tabled by the U.S.A.; - Amendment as an addition after Article 15, put as Article 15A in paper T/W/23. I may point out incidentally that the term "Transportation" also occurs in Article 15 (Paragraph 3) where it obviously refers to internal transport service although external or overseas services are excluded from the scope of the Charter. I would therefore urge that the commission should clarify this point before we proceed to examine the various amendments relating to this Chapter. E/PC/T/B/PV/1 CHAIRMAN: With regard to the point just raised by the delegate of India, I would draw the attention of the members of the Commission to the first page of document 132 on which they will note that a reservation against the exclusion of services mentioned in the Drafting Committee's Report was made by the delegates for Brazil, Chile, Cuba and India. The Czechoslovakian delegation has expressed its adherence to this reservation. The delegate of Cuba has also expressed himself in similar terms. This question gives rise to a question of principle which affects the whole of Chapter VI, and therefore I think it is a suitable subject for discussion at the outset of our deliberation. Therefore, I suggest that the discussion be confined to the question- of principle, and that the actual text of the United Kingdom amendment dealing with Article 45 be not discussed until we come to that particular Article of the Chapter. I would also wish to remind delegates at this time that we have only three meetings in which to get through our work. There had been four meetings scheduled, but it is necessary for Commission A to meet tomorrow morning, so that if we do not get through our work tomorrow afternoon, it will be necessary for us to call a meeting Saturday morning. Therefore, if the members of the Commission wish to avoid meeting on Saturday morning, it would be desirable to limit discussion as much is possible, but I shall do my best to give all members of the Commission ample opportunity to express their views, but I would urge them to be as brief as possible. The discussion is now open on the question of principle raised by the delegate of India. The delegate for the United Kingdom. -7- J. E/PC/T/B/PV/1 MR. S.L. HOLMES (United Kingdom): Mr. Chairman, I feel that the views of the United Kingdom have been expressed at some length on previous occasions, and they are probably so well known that I need not go into them at any length here and now. The point is, I think, this, and it should be stressed, that we do not wish to avoid the issue of restrictive business practices in relation to services, but that we do not feel that Chapter VI of the Charter is at all a convenient or appropriate way of dealing with the issue seeing that there other bodies either in the field or about to be in the field which will be dealing in a comprehensive way with the various services which have been mentioned. It would be, in our view, inappropriate and inconvenient to deal with one aspect only of services in the Charter whereas other aspects of services, which we would have something to say about ourselves, were to be taken over later by some other more appropriate or specialized bodies. Insofar as the remarks of the Indian delegate are directed to some possible inadequacy of the United Kingdom proposal in regard to Article 45, bowing of course to your ruling, I would only say that we would put that right if necessary when we come to consider Article 45. I think that an amendment to meet the suggestion of some inadequacy or illegicality in our proposal would be a very simple matter. As regards the remarks of the Indian delegate generally, I can only say here and now that we must adhere to our position, and that it would not, in our view, be appropriate to deal with the field of services in this connection now as has been suggested by certain other delegations. - 8 - E/PC/T/B/PV/1 CHAIRMAN: The Delegate of Czechoslovakia. Mr. MINOVSKY (Czechoslovakia) (Interpretation): A good many services are absolutely indispensable for a normal develop- ment of the world economy, and the Charter provides already for certain services - I am bearing in mind transit, but it is not possible to exclude others which are of equal importance to the Charter. In my opinion it is not necessary to deal with the services in detail in the Charter; but I believe that the principle must be adopted that any discrimination between the services is contrary and in contradiction to the spirit of the Charter itself. Therefore, Mr. Chairman, in order to be brief, the Czechoslovak Delegation associates itself fully with the reservation made by the Delegate of India. CHAIRMAN: The Delegate of Cuba. Mr. GUTIERREZ (Cuba): Mr. Chairman, the Cuban Delegation has no doubt that there is a big gap in the Charter. In a Charter that is supposed to be directed to the purposes of developing trade and employment we have had the experience that after negotiating in relation to, the lowering of customs duties we have noticed with shipping lines that have raised their freight tates that they have raised them to such an extent that all the good intentions of lowering the duties between two countries have been good. for nothing, and. that we have only been working for the benefit of the shipping companies. We are working, again, against the things that make possible the enlarging of trade; and we are leaving out the question of Shipping, when shipping in many cases not only under direct control of the Governments, but of cartels, even of Trusts and Organisations, is of such a kind that really we are not helped as to the freights and rates that have to be applied. E/PC/T/B/PV/1 Sometimes their decision as to freights goes over the decisions of Governments. What is the use of working here for weeks and months to bring down the customs duties of countries if afterwards the freights are set in such a form that undue use can be made of the benefits we intend by our work? The argument that this is not the proper part of the Charter, or that there are other institutions that should take care of this matter, I do not think is very important, because we have an international union that has been working in relation to customs unions for many years, and yet more than 40 per cent. of the text of the Charter is devoted to new regulations of an international character relating to customs duties. The Cuban Delegation sympathises very deeply with some of the phrases used by the Czechoslovak Delegation, and is of the opinion that some principles relating to services such as shipping, insurance and banking should be inserted in the Charter, and that if desirable, something developed through other international agencies already established ought to be created; but the Charter, without principles in relation to shipping, insurance and banking, will never be a complete Draft. - 10 - V E/PC/T/B/PV/1 CHAIRMAN: The Delegate for Chile. M. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairman, we have not yet found a possibility of not working under duress. I shall not bring forward our arguments against this omission. Our arguments are the same as those which were brought forward by the Delegate of Cuba, and the principle has been ably explained by the Delegate of India. We must not forget, Mr. Chairman, that there are countries like our country which are principally exporters, and which in order to live commercially are compelled to resort to maritime transport. If such restrictive practices are admitted, this will be a gap in the Charter; and it will be practically impossible to fulfil other obligations which derive from the Charter if this gap exists - a gap which would throw a shadow on these obligations. CHAIRMAN: The Delegate of Australia. Mr. E. McCARTHY (Australia): Mr. Chairman, the Australian Delegation is in complete sympathy with the views of India, Chile, Cuba and others in support of the viewpoint that services should be referred to in this Chapter; but whilst being in sympathy with those views, the Australian Delegation does face the fact that it seems that nothing really can be done about it at this meeting of the Preparatory Committee. I am in agreement with the United Kingdom Representative in saying that within Chapter VI the circumstances that are objected to in regard to services cannot be met. In shipping alone, I am prepared to agree that many of the objectives of the Charter will, in a measure , more or less be offset by certain shipping - I--- - V E/PC/T/B/PV/1 practices; but it cannot be dealt with in this particular Chapter, and to deal with it effectively at all, it would require a much more comprehensive approach than is now suggested. The shipping problems which countries will have to face, and which wore very much in operation before the War, would require a very special study, and would require work, extending overtime, by people competent to deal with them. Delegations, in my view, are not equipped to tackle the shipping question here, I doubt very much whether it is in the terms of references of the Preparatory Committee whether we could actually do it. Probably, if the shipping monopoly practices were examined, it would be found that they deal with the zoning of certain areas where certain groups of shipe serve obrtain ports and not others. It would be argued and it is argued, with a certain degree of truth, that such practices as those under certain circumstances conduce to efficiency. In other circumstances, I am satisfied that they militate against many of the forms of international trade which we are trying to improve. I am prepared to say personally that shipping requires attention -- that there are many practices which require examination; but it has got to be done in a very compre- hensive and a very discriminating way. Like others who have spoken on this subject, Australia is vitally interested in overseas shipping, and would be very glad to subscribe to any propositions that were put forward for the review of international shipping. But it has come to the view that nothing can be done, not only in Chapter VI but at this Conference. - 12 - V. E/PC/T/B/PV/1 I would, therefore, summarise our view by saying that we are in sympathy with the views put forward by the representatives who desire services to be introduced, but a we believe that their views could only be met by/very much more comprehensive approach than is possible in this Chapter. Then the next question is, can it be dealt with in other Chapters? Our view would be that we doubt whether this. Preparatory Committee is competent to do it, and further, even it were, we are not equipped and I am certain that many other Delegations are not equipped, to enter into such a comprehensive examination of the subject, and, at any rate, it is too late to attempt it now. Therefore, our attitude would be that we cannot agree that the subject of services should be introduced into this Chapter, and we would agree with the amendment which the United Kingdom will bring forward in due course. - 13 - E/PC/T/B/PV/1 M. MONTEIRO de BARROS (Brazil) (Interpretation): Mr. Chairman, the Brazilian delegation consider that the inclusion of services in this Chapter is not only useful bat of primary necessity, because If this inclusion is not made it might lead to the failure of negotiations on tariffs, if all clauses regarding the phrase are absent. We all know that certain commercial activities tend towards the monopolisation,and the transports are certainly one of these activities. Now since experience shows us that international transport and international trade are closely linked and are particularly closely linked with international maritime transport, this must be mentioned in our Charter and certain rules must be established. I agree that as it is not possible to discuss during this Session the matter in detail, this must, of necessity, call for the presence of experts, and certain rules must provide for certain particular cases, but as the honourable delegates of Czechoslovakia and Cuba pointed out, it is possible at least to adopt the principle. It is necessary that the principle should be adopted now so that, when the time arrives and another Conference or another international agency deals with the problem, it finds the principle firmly established. I thank you, Mr. Chairman. Mr. A.P. van der POST (South Africa): Mr. Chairman, all economic activities are necessarily inter-related, and if there should be mal-practicesin one field they would probably, in most cases, affect the activities in another field. But, on the other hand, we have special fields for the different economic activities. We do the work of specialists. ITO is a trade organization which deals primarily with trade, and although nobody would deny that ER -14- E/PC/T/B/PV/1 mal-practices in the field of banking, insurance and shipping have their effect on trade, I cannot agree with our Indian delegate and his supporters that the ITO. Charter is a suitable place to include a provision for all these various fields. We must be prepared to .deal with the thing properly, and if we are to include such a wide range of human activities in the ITO Charter as is proposed by our friends from India and from South America, we run the risk of over- loading ourselves and undertaking too much. Services are special agencies. We have special or anizations, already international organizations, in the field of banking to deal with them, and we cannot hope to provide an adequate organization in the ITO to deal with these highly specialized services. I cannot but support the attitude adopted by the United Kingdom, and feel that it would be highly unwise of us to extend the ITO Charter so as to include all the various services. It is argued that we should refer, at any rate, to the principle. I do not think, even, that this is necessary, because that would be merely a pious expression of an opinion and would, in itself, be an admission that we are not able to deal with all these various activities - essentially economic activities - in the ITO Charter. S. CHAIRMAN: The Delegate of France. M. LECUYER (France) (Interpretation): Mr. Chairman, the French Delegation certainly does not misjudge the importance which is attached to the question of services, and we would be happy if it could be mentioned in this Chapter, especially since France has always depended to a certain extent upon services which were ensured by other nationals than nationals of the French Republic, and this fact is now accentuated. Therefore it would appear to us highly desirable if it were possible to deal with this question here, as it is of primary importance. During the course of the discussion nobody contested - and I believe that nobody will contest - the importance of this problem. However, I also think we would all agree that there are no questions which are more complex and more difficult than the questions concern- ing insurance, shipping, air transport and banking. In a few words, the honourable Delegate for Australia has pointed cut the difficulties which I attach to the question of shipping. If we had experts here, I believe that a trustworthy de demonstration of this complex question could be given in a few moments. Therefore I believe that such a discussion would lead us so far that we would all recognise very quickly the need for a special conference, and, although we sympathise in a very high measure with the proposal to include services in this Chapter, we are of the opinion that it would be wise to abide by the conclusions which were reached in London. CHAIRMAN : The Delegate of the Netherlands, Dr. P. LEENDERTZ (Netherlands): It is very comprehensible that when one is talking about restrictive business practices, say, about cartels, the idea comes up that in this connection the complexities of shipping, insurance and finance should also be considered, but, as E/PC/T/B/PV/1 - 16 - a matter of practice - I will not repeat the reasons, which have already been reported here by the Working Party - it does not seem possible to do it in this Charter of the I.T.O. The fields of each of those so-called services are so extensive that cartel practices are only one of the activities which are pursued in those fields and it is entirely impossible to take the matter of cartels and restrictive business practices out of those fields, to treat them apart and put them into this Charter. They must be seen together with all the other questions which also arise in connection with those services. One can have equal sympathy with the views expressed by the Delegate of India and the others who are in agreement with him, and it is perhaps a point which might be considered here,that it is the intention of the Economic and Social Council to set up a specialised agency for maritime questions. This being so, I do think we could not make any allusion to those services in this Charter. It has been argued here that just one general allusion could be made to them, in order to induce any specialised agency which might be set up to give attention to it. I rather doubt whether that is within the competence of the Organisation we are considering here. I do think that would be a matter for the Economic and Social Council to deal with and not for the Organisation we are now trying to set up. Thank you, Mr. Chairman. P. E/PC/T/B/PV/1 M. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): Mr. Chairman, the view was expressed that services are an important part of the Charter and nobody denied this point of view, but on the other hand the view has also been expressed that we have no experts here who could deal with the problem to the fullest extent. I repeat, that in our opinion it is not necessary to deal fully with the problem at the present stage, but I believe that it is highly desirable to establish certain principles, among them the principle that any discrimination for transport, insurance and banking would be contradictory to the Charter. I also cannot accept the idea that we cannot deal with this problem here because it is a difficult problem. Well, what of it? Even if the problem is difficult, we have had questions presented which are more difficult and less important than the question of services and still they have been included in the Charter. Therefore it seems to me fully justified to establish certain principles at this stage and here. CHAIRMAN: The delegate of India. Mr. G.L. MEHTA (India): Sir, I suppose I am now the last speaker because we have had a full discussion on this question, but before you close the discussion I should like to make a few points clear. First of all, in the statement which.I read out at the outset, I had raised only a very specific issue, namely, if we are going to exclude these services from the purview of the Charter, whether there was any place for amendments such as those tabled by the United Kingdom (I am particularly referring to this amendment in regard to Exceptions to which I referred earlier), as well as to such amend- ments as tabled by U.S.A. as Article 15A. I submit, Sir, that if services are to be included that should be done in a direct and straightforward manner, that is, by laying - 17 - ~ ~E/PC/T/B/PV/1 down a certain general principle, if the Committee so desires; but if it is found that on balance it is desirable to exclude services, then I submit that no reference should beicade to servioes in either this Chapter or pny other Chanter of the Charter. Thu Australian delegate referred, for example, to the question of the terms of reference. As regards the terms of reference, I believe this question was debated at some length in London and it was also suggested that the question whether thfse services Tell under the terms of reference of the Preparatory Committee or not should be referred for a ruling to the Economic anc Social Counoil. In fact, you will see that in the General Comments on Chapter VI in the Drafting Committee's Report, in sub-clause (a), it has been mentioned that "one delegate held the opinion tfat services Tell under the terms of reference of theCPreparatory comcittee..." eto, The point is, if this was the difficulty, then surecy reference oould have been made to this Council before this Preparatory Committee met in Geneva. Then I should also like to say this: that actually the first U.S.-. draft that was prepared did include this exclltion, as wiLl be evident by Aference to .article 40 of the U.S.A. Draft Charter. Article 40c sub-clause(o) makes reference t "agreements-or under- standings concerning railway transportation, aviation, shipping, and telecommunication services," It was after considering this draft and because the relative Committee in London came to the conclusion that services should not be included that in the revised draft which was put forward this sub- clause (c) was excluded, with the result that it will be found, by Aeference to article 45 of the London Committee's Report, that in this provision of "Exceptions to the Provisions of "this Chapterlthere is no reference to Services. - iR - , _ , _ , - 19 - p. E/PC/T/V/PV/1 I submit that that was a consistent attitude to adopt, If there was going to be no inclusion of services, then there is no point for providing for a special exception in regard to this matter. There are many other matters, Mr. Chairman, - take immigra- tion, for example, or movement of labour, movement of capital, and so on, which are also connected directly or indirectly with inter- national trade, but these are not dealt with in the Charter and there is no reason why, if we decide on balance to exclude services, any special exceptions should be provided in the Charter. The Australian delegate said that there should be no reference to services, not only in this Chapter but in this Conference as a whole. Well, if that is the case, then there should be no refer- ence to services in this Chapter as provided for in any other place. I should also like to state, Mr. Chairman (I apologise for that because I thought I would make the position of the Indian delegation clear at a later stage), that I have referred to the United Kingdom amendment not because I want it to be discussed on its merits - I bow to your ruling that that can be done later - but because it raises this fundamental principle and this fundamental issue, whether services are to be included or not, and our submission is that services are not to be included, then there is no place for such exceptions to be provided. As regards the other question, namely the inclusion of ser- vices, I said I apologist because I did not really make the position clear at the outset. I thought that would be considered later. But since you have invited discussion on the question of principle, I should like to mention that the Indian delegation has been care- fully considering this question since the London Conference, and in Geneva. We recognise the close connection and relationship between goods and services such as shipping, aviation, banking, insurance, E/PC/T/B/PV/1 telecommunications, etc. which really combine the producer with the distributor and are essential to international trade. In fact, as our friends from South America said, we too in our own shipping anti baking and insurance have suffered very severely because of the discriminatory practices which have been adopted against them. Therefore we have also felt that this is a matter which an Organisa- tion like this should be competent to deal with. But I must say this: that, speaking for the delegation as a whole, there is considerable force, we feel, in the argument that the International Trade Organisation should not be overburdened with too many tasks and obligations and functions at the outset, and I think there is also considerable force in the cort-ntion that some of these questions which are, as the other delegates have mentioned, so complex and technical, had better be dealt with by the specialized agencies of the United Nations concerned in consultation with the International Trade Organisation whenever necessary. That is all that I want to state. P. -21- E/PC/T/B/PV/1 CHAIRMAN: I wonder if I am correctly interpreting the views Just expressed by the Indian delegate if I, state that he is not proposing that services should be specifically included in Chapter VI, but that he is only opposed to the exclusion of services as covered by the amendment proposed by the United Kingdom delegation, and that he would. be content if the text was left as it was in New York so far as services. were concerned, which will then enable the International Trade Organization to consult with other specialized agencies on restrictive practices in tne field of services. Would that conform with your view? MR. G.L. MEHTA (India): That is quite correct. CHAIRMAN: The delelgate for Czechoslovakia. M. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): Mr. Chairman, I would only like to mention that Article 12 speaks of capital funds, specialized personnel and managerial skill. This is nothing else than services. Therefore, if we want to avoid speaking of services in the Charter we must also come back to Article 12. CHAIRMAN: In reply to the delegate of Czechoslovakia, I would point out that we do not expressly exclude services. There is no objection to including in other parts of the Charter services which have a bearing on those particular Articles on other subjects. I do not think that what the delegate for Czechoslovakia has just said is inconsistent with the view expressed by the Delegate of India. I am wondering if the other delegations who have expressed themselves in favour of the inclusion of services are also sharing the same views expressed by the delegate of India. J. E/PC/T/B/PV/1 MR. G. GUTIERREZ (Cuba): The Cuban delegation reserves the possibility to present an amendment in order to find out where those principles related to services could be inserted, because I am very much afraid that every one of the Committees, when they cover Chapter I, will say "This is not the proper Chapter"; when they take Chapter II, they will say the same, and so, on with the third, fourth and fifth until the Charter ends. So we wish to find. out first in what part of the Charter this matter can be contemplated. G. - 23 - E/PC/T/B/PV/1 CHAIRMAN: If I interpret the view expressed by the Delegate of India correctly, it is that if services are not expressly excluded from this Chapter the Organisation would be able to deal with services in consultation with other specialised agencies specially set up to cover the fields relating to particular services. Mr. GUTIERREZ (Cuba): Mr. Chairman, if that is the interpretation I do not share it; so I cannot support the Delegate of India's suggestion as to the effect of its Amendment. CHAIRMAN: I was hoping to be able to find a solution to this problem at the present stage of our discussion, if those Delegates who had spoken in favour of the inclusion of services shouId all have shared the view of the Delegate of India. We could then leave this subject at the present time and return to it when we deal with the Amendment proposed by the United Kingdom. Mr. GARCIA-OLDINI (Chile) (Interpretation): We must go back somewhat. We cannot accept the view that this agency is not competent to deal with the problem. I believe that if our views could be heard outside these walls people would be astonished. Commerce is a means of exchange between countries, and there is no commerce without transport; and if we to not find a fair solution for this problem then a lower and fair commerce is not possible either. If we leave this very important gap as it stands, then countries may adopt certain measures to fill this gap out; not and then they will be free/to abide by certain agreements. It would be contrary to commonsense to decide that we are not competent to deal with the problem. In our opinion it would be quite wrong not to include a reference to it in the Charter. Of course, the problem is complex, and it is possible that its solution necessitates a special Conference; but we believe that G. - 24 - E/PC/T/B/PV/1 the principles should be clearly established, in one of the other Articles of the Chartert. This will be a safeguard, for us and on that point we make a formal reservation. CHAIRMN: The Delegate of Brazil. Mr. MONTEIRO DE BARROS (Brazil): The Brazilian Delegation fully adheres to the statement just made by the Chilean Delegation. CHAIRMAN: If I may sum up the present state of our discussion, it is this. Some Delegations are in favour of the inclusion of services in Chapter 6. The Indian Delegation takes the position that if services are not excluded fran the scope of Chapter 6, then any Member who considers that practices relating to services are having a harmful effect on trade could raise the question in the International Trade Organisation, and could then consider it in consultation with the specific specialised agency concerned with that question. Is that the correct interpretation, Delegate from India? Mr. MEHTA (India): Yes, Sir. CHAIRMAN: Other Delegations propose that there should be a specific exclusion of services. The way it seems to the Chair is that the position taken by the Delegate of India does present a possible mutual ground on which we might all reach a unanimous conclusion, and therefore I would like to take the sense of the Commission as to whether or not a basis does exist for a solution of this difficulty in the mariner proposed by the Delegate of India. - 25 - CHAIRMAN: The Delegate of South Africa. Mr. A.P. VAN DER POST (South Africa): Mr. Chairman, I am not quite sure now about the position as summed up by you. That seems to be in a way the correct interpretation of the course of the discussion, but, on the other hand, India says that it does not want services to be specially excluded. We, for our part, feel that we do not want services specifically included, and the interpretation you have given is that it is at any rate implied that they are included. Now, we have got an amendment on Article 15(3) in Commission A to exclude transportation from 15(3), and I could therefore not at this moment subscribe to the interpretation Which you have given on behalf of India. I very much regret that without further consultation I cannot enable you to arrive at that unanimous decision on the basis of the Indian inter- pretation. CHAIRMAN: The Delegate for Australia. Mr. E. McCARTHY (Australia): Mr. Chairman, with a view to clarification as to the proposition, it does seem to us that if that view wore taken you would find that the Organization would be obliged to undertake investigations on receiving a complaint which it might be unable to bring to a conclusion, the reason being that this Chapter is linked up with the rest of the Charter. It refers to Article 1, and to take just one example: if a complaint comes from any Member on an agricultural product or goods dealing with subsidies, the Organization has not a Chapter on subsidies to define what is admissible and what is not, and that would assist it in coming to a conclusion; but if a complaint were made under Article 40 on shipping, for example, and -- - PI V. E/PC/T/B/PV/1 the subject of that complaint was subsidies, what could the Organization do? It says it shall examine and take every possible action to prevent it, and so on, and I suggest that on the question of subsidies as applied to shipping, it could not possibly give a decision unless it went over the whole field of subsidies, and its infinite variety as applies to shipping. Now, is that right? I suggest that the objection to examining services in the way that the Indian proposition might require is that the restrictive business practice, as it stands now, is a part of the Charter. where the Organization will get a whole lot of criteria to judge what is objectionable and what is not. As an alternative, it might be that an extra paragraph could be put into Article 45 or at least an extra Article on the lines that where the Organization deems that a complaint is not within the terms of this Charter, it might refer to another specialised agency. That would avoid any exclusion and it would avoid the Organization perhaps having to undergo a lot of invest- igations which this Article 40 lays down, and on which it could not come to any conclusion, because it was a service and services are not covered in the Charter. We are, therefore, in some doubt as to whether we could support the view that the leaving out of the United Kingdom proposition might have the result of the Organization being able to automatically pass over a complaint on a service to some other Organization. I do not know whether that is very clear, but it seems therefore that we would want to have a look at it again before we say that we agree to the Indian proposition. - 27 - E/PC/T/B/PV/1 Mr. P. LEENDERTZ (Holland): Mr. Chairman, I do not see clearly - perhaps I did not follow entirely well - what could be the use of the Organization being able to transmit any complaint to another specialized agency. Could they not transmit their complaints directly to the Organization? Mr. S.L. HOLMES (United Kingdom): I am not quite sure whether I followed in detail what the representatives of Australia said, but I think that, in general, we agree with it. The difficulty at the moment, as we see it, of accepting the solution which he proposed is that we are not quite clear whether that would put the position beyond doubt, or whether the same sort of question or item would now arise under the Charter, whenever anybody made a complainton the ground of restrictive business in relation to a service. Our object in putting forward our amendment to Article 45 had been to put the matter beyond doubt, hoping that members would be generaly satisfied with the full opportunities which we believe will be provided to them and to all of us if necessary, to raise this question at the proper time and in relation to the proper type of agency. It would, I think, perhaps be better to see for the moment whether a further reading of the Article which we proposed - the revision of Article 45 - does not really meet the point which a good many delegations have expressed, and the point which was made by the representative of India in the second place. I rather hesitate to go through the actual wording of our proposed revision of Article 45, because we are not dealing with the text, but I would feel that that, or something very close to it, is representative of the general view of the members here. -28- E/PC/T/B/PV/1 CHAIRMAN: In view of the remarks just made by the delegate of the United Kingdom, and in view of the fact that we have already had a very exhaustive discussion on the principles of the inclusion and exclusion of services, I would propose that we take up now the text of the United Kingdom amendment to Article 45, and discuss further the text of this amendment. We could have a statement from the United Kingdom delegate explaining the nature of his proposal and the reasons behind it. We could then adjourn and reconvene sharply at 3 o'clock to consider the United Kingdom amendment. I would like to know if this proposal meets the wishes of members of this Committee? S. E/PC/T/B/PV/1 - 29 - M. Stanislav MINOVSKY (Czechoslovakia) (Interpretation): I think, in order not to increase the existing difficulties, my Delegation will not insist that the matter be dealt-with in connection with Article 39 and we reserve our right to come back to it when we take up tne United Kingdom amendment for discussion. It my other colleagues agree with this proposal, I suggest that we should continue the discussion, Article by Article, and that we take up the next Article this afternoon. CHAIRMAN: I take it the Czechoslovak Delegate has no objection to taking up the United Kingdom amendment along with Article 39 at the present time ? Mr. F. Garcia OLDINI (Chile) (Interpretation): Mr. Chairman, is it understood that we shall take up the whole matter again, other- wise I do not understand how we can discuss an exception to a rule which does not exist. CHAIRMAN: Is the United Kingdom Delegate agreeable to the course proposed? Mr. S.L. HOLMES (United Kingdom): Certainly, if that is the wish of yourself and the Committee. I might make a few remarks on Article 45, in the terms of the revision which we propose. As I have explained, we felt that the only important thing, perhaps, was that there should be a certain clarity and that we ought to know where we stand. It had always been our view that to intro- duce the whole field of services in this connection in the Charter would be to extend the range too greatly and that it would be perhaps to ignore the very great complexities which the whole question of services introduces, as several speakers this morning have explained. S. E/PC/T/B/PV/1 - 30 - We feel that what we want to do is to put things in their right places and that this it what our amendment would do. As has been mentioned, certain particular services, certain particular transport- ation services, for instance, are covered or are about to be covered by particular specialised agencies and one would not be surprised if those agreements setting up such specialised agencies made provision - perhaps rot altogether out of line with the sort of provision that is made in Chapter VI here - for dealing with complaints regarding restrictive business practices which in some way impede the objects of those agreements. I might, I think, say that some of the remarks made this morning do seem to suggest a certain confusion between the objects of Chapter VI and discrimination, but we would recognize also that in certain cases - in one, at any rate, perhaps, that of insurance - there is no very obvious body at the moment that would be prepared or competent to take over the subject as a whole or, incidentally to the subject, com- plaints whish might be made against certain practices in the insurance field. Though there again I am speaking without prejudice to the question whether such complaints can appropriately be made against insurance companies; that would remain to be seen. Now the whole field, perhaps, is not covered by existing agencies or agencies which are in immediate prospect. We would feel that banking - transportation I have mentioned, because there are many such agencies - would obviously be the field more of the International Bank. That would leave us perhaps with one or two gaps of which insurance might be one. S . E/PC/T/B/PV/1 - 31 - In the opening words of our revision, you will find, Mr. Chairman a reference to Article 61 (c) . Article 61 (c) comes in that part of the Charter which relates to the Organization and it provides that among the functions which this International Trade Organization will have would be to make recommendations for and promote international agreements on certain measures designed to improve the bases of trade. Now if it does appear that there is some service which is not covered by an existing and appropriate agency, and there were general agreement that that type of service should be covered by some inter- national understanding, then it might be that there was general agree- ment that this was an appropriate matter for the organization to take up under the functions attributed to it in Article 61. So that the object of the first part of our amendment was to remedy any possible omission, to fill any possible gap which might exist in the field of services, but to leave services where there was an appro- priate agency to deal with them to be dealt with by that agency. If it trespass on each other's territory, we feel that confusion is likely to arise. If, for instance, we make recommendations about civil aviation, or we try and take some action in relation to civil aviation,then shall we not confuse the issue, and will it be for the general benefit? The whole field with which the new post-war arrangements are dealing is a very large and complicated field and it is quite essen- tial, we feel, that there should be a fairly clear understanding as to who does what. On the other hand, supposing we do feel it nece- ssary to intervene in other people's business, then shall we not find that other people wish to intervene in ours? - 32 - J. E/PC/T/B/PV/1 MR. S.L. HOLMES (United Kingdom) (Contd.): I wonder whether it would be for the general benefit if we had addressed to us from a whole number of other agencies a lot of recommendations about how we should conduct our business. Therefore, Mr. Chairman, I would hope that with the provision which I have explained that exists in the terms of our amendment for gaps to be filled, it might be the pleasure of this Commission to take our amendment in the spirit in which it is intended - as a helpful amendment designed both in the short run and in the long run to promote the orderly conduct of business and to inure to the general advantage. I do not think, Mr. Chairman, that I need say more than that, at this stage at any rte, in defence or explanation of the straight forward amendment which we have proposed. CHAIRMAN: The Commission will resume sharply at 3 o'clock. We will resume discussion on the question of the inclusion or exclusion of services in relation to both Article 39 and Article 45. The meeting is adjourned. The meeting rose at 1.00 p.m.
GATT Library
zj795tb1501
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. First Meeting of the Tariff Agreement Committee held on Tuesday, 5 August 1947, at 10.30.a.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, August 5, 1947
United Nations. Economic and Social Council
05/08/1947
official documents
E/PC/T/TAC/PV/1 and E/PC/T/TAC/PV/1-4
https://exhibits.stanford.edu/gatt/catalog/zj795tb1501
zj795tb1501_90260002.xml
GATT_155
8,354
49,986
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQU E ET SOCIAL RESTRICTED E/PC/T/TAC/PV/1 5 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FIRST MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON TUESDAY, 5 AUGUST 1947, at 10.30.A.M. IN THE PALAIS DES NATIONS, GENEVA. Hon, L.D.WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel: 2247). Delegates are reminded that the texts of interpretations which do not pretend to be authentic translations, are reporoduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. ER 2 E/PC/T/TAC/PV/1 CHAIRMAN: The meeting is called to order. This is the first meeting of the Tariff Agreements Committee, which has been set up by the Chairman's Committee. We shall take as our Working Paper document T/135, which is a report of the Tariff Negotiations Working Party on the General Agreement on Tariffs and Trade. The procedure I propose to follow is to, first of all, have a general discussion on the re ort of the Tariff Negotiations Working Party, and I would ask Members of the Committee to concentrate their attention on parts I and III of the Draft Agreement, because those are the parts which are peculiar to the General Agreement. re Part II, as the Members of the Committee know,/produces sections of the Charter for which the text has not been definitely approved. After we have had a general discussion of the report of the Tariff Negotiations Working Party, we can then take up in detail the Articles of the Draft Agreement commencing with parts I and III, and leaving any detailed consideration of part II until a definite text of the Charter has been established by the Preparatory Committee. It will be in order, however, for Members of the Committee in the course of their general discussions, to refer to the statement which has been appended to the report, and which is given in Annex I on pages 10 and 11, and- which compares the draft proposal of the Tariff Negotiations Working Party with the equivalent articles in the New York Draft and which have been put in the records of the New York text of the Charter. Are there any comments on the procedure that I have outlined? I take it then, that the procedure is a proved by the Committee, and we will therefore commence the general discussion of the report of the Tariff Negotiations Working Party, concentrating our attention on parts I and III of the General Agreement. Does any Member of the Committee wish to speak on the report? 3 E/PC/T/TAC/PV/1 Dr. H.C. COOMBS (Australia): Mr. Chairman, there is no doubt that the Tariff Steering Committee had a very difficult problem to deal with in its consideration of the General Agreement, As I see it, from the mechanical point of view, the main features of that problem were the desirability of getting the tariff reductions negotiated here operative as early as possible in order to take advantage of the progress made here as quickly as possible, and, furthermore, to avoid the difficulty of having the results of the negotiations held up from operation, and therefore perhaps subject to leakages, criticism and so on for a long period, while at the same time it was necessary to fit the introduction of the results of the Agreement into the requirements of the various constitutional and political problems of the Members of the Committee. I find myself full of admiration for the ingenuity which the Tariff Steering Committee has shown in working out a solution to these difficulties, and I think the essential features of the plan, which,as I understand it, are to enable countries to accept the agreement provisionally or definitely,whichever they wish, at the outset, are that those who have accepted provisionally will be required, after the World Conference when the precise content of the Agreement is finally known, to decide whether they propose to accept it definitely at that stage. ER 4: This basic idea does seem to me to be a very ingenious way of solving, quite a difficult problem, We have, however, given a good deal of thought to the time-table as it is implied in this Report and to the obligations which we would be accepting if we agreed to the plan as it is embodied in the Report of the Tariff Steering Committee, and I am sorry to say that our conclusion is that it is not practicable for Australia to accept the time-table and tho obligations whioh the Report would - appear to require us to accep.- As I understand it, the programme the Committee contemplates is that roughly on the 10th September we will conclude our negotiations here and that there will be a period of two or three weeks in which the texts will be tidied up and checked and that by the end of September the Delegations here will be expected to be in a position to sign the Agreement on behalf of their governments Now, the nature of that signature and its meaning is a matter of profound importance and, as I understand it, the signature would mean that the government on whose behalf the signature was made would be undertaking: (a) to introduce the tariff schedules and Agreement at least provisionally and (b) on the. assumption that the out come of the World Conference was satisfactory, to accept the agreement 'c iti y sometime next year. That undertaking would, of course, be subject to approval by the parliaments of the courtries concerned; but it would be a clear undertaking by the government to introduce ultimately the Agreement to parliament, with the government's support. Now that, Mr. Chairman, is in my country at any rate a very serious undertaking for a government to give in 'l 1' which is of profound economic importance and in connection with. an Agreement which covers not morely a very large proportion of our customs E/PC/T/TAC/PV/1 J. 5 E/PC/T/TAC/PV/l tariffs. but a. very substantial part of the commercial policy generally. I do not want to woary the Committee, Mr. Chairman, with the story of our political problems, but it is the practice in my country for major decisions of Cabinet and of Parliament to be made after prolonged and detailed examination, criticism an, counter- criticism and quite a lot of public controversy - there may be opinions as to the merits of this form of political activity but they are, from our point of view, fundamental and we must accept them. The fact that that is the way we go about our political business makes acceptance of the programme contemplated here quite impossible for us. So far, the work here has been carried out by the Delegation in close consultation with those Members of the Cabinet who are directly concerned, but a complete review of the results of this Conference has obviously not been taken by the Cabinet merely because it is impossible at this stage. At Some stage in the programme, the Austrlian Cabinet will need to review the results of the negotiations as a whole, review the outcome a the discussions on the Charter as a whole, and reach a decision as to whether on balance, it is a desirable thing for Australia to accept this Agreement. That will be quite a difficult task and it will, in my opinion, be impossible for it to be undertaken until both the Charter discussions and the Tariff negotiations here are substantially completed. It is a process which will take not days, but certainly weeks and possible months. Furthermore, the Government will of necessity have to carry out the same sort of consultation and discussion within its own party, and that, too, will take time, although to some extent, of course, it is simultaneous with the examination of the project by the Cabinet. So, I inform the Committee of this, Mr. Chairman, in J. 6 . E/PC/T/TAC/PV/1 order to illustrate thr difficulty which we would have in accepting the programme. It would, I have no doubt whatsoever, be quite impossible for the Government of Australia to be in a position to meet the undertakings which signature would involve by the 30th September. We have been forced, therefore, to the conclusion that the proposal that the General Agreement on Tariffs and Trade should be signed in that sense at Geneva is impracticable. We have, therefore, an alternative suggestion to put to the Committee. It appears to us that if the Tariff negotiations are concluded on the 10th September it will then be necessary, for our Delegation at any rate, to return home to place the results of those negotiations before Cabinet, and to be available for detailed consultation as to their implications. V 7 E/PC/T/TAC/PV/1 We would wish, therefore, merely to leave here in Geneva a minimum number of officers who would be concerned with the checking of the text and the general tidying up work here, and we would wish that those officers should be required only to initial a text her. as an accurate record of what had in good faith been negotiated and agreed to by the Delegation; that there should be fixed before we leave Geneva a date and a place when those countries participating in the negotiations would be expected to append the ir signature to the General Agreement with the implications of signature which have been suggested here. The sort of idea which we have is that by 30th September the texts ought to be ready for initialling as correct, and that at a date, say, 15th November or perhaps 21st November, the opening of the World Conference might be fixed as the date when countries would sign the General Agreement, and thereby undertake to introduce at least provisionally the tariff schedules and the content to the General Articles of the Agreement. If that were done - if the signature took place, say, at the Headquarters of the United Nations in New York on 15th November, in the meantime work could have been got ahead on the mechanics of getting the tariff schedules ready for introduction and announcement; and it could be agreed that on some date shortly after 15th November there would be simultaneous announcement in all countries who had signed the Agreement of the schedules which were to be operative, and countries could then make them operative in accordance with their own constitutional and parliamentary procedures as soon as they wished to do so. They could do it simultaneously with the public announcement or, if they wished, they could. 8 E/PC /T/TAC/PV/l leave making them operative until some days or weeks after that, if that was convenient to them; but it does seem to us to be absolutely foundamental that announcements should be simultaneous. There could be nothing worse politically, as far as I can se., for any Government, than to find tariff reductions which it proposed to make in its tariff announced in somebody else's Parliament, and become available to their own nationals only through the Press. It does seem to us that simultaneous announcement is a fundamental requirement, although simultaneous operation is no t nearly so important - though it should, quite clearly, be open to countries to make their reductions operative if they wished on the date an which they were announced. To sum up, Mr. Chairman: it seems to me that the sort of programme which would be a practicable one from the point of view of my own country, and I believe a number of others, would be, if we conclude our negotiations here on 10th September, to initial the texts as agreed on 30th September and to set the date of 15th or 21st November for formal signature either at the Headquarters of the United Nations or in Havana; and that it should be agreed that there should be simultaneous announcement some time in December, and that the new rates could become operative at any time after the simultaneous announcement which was convenient to the countries concerned. Mr. Chairman, that completes what I have to say about the mechanical difficulties of making. it operative and the programme which is entailed. There are certain other features of the two parts of the Agreement which i would wish to refer to; but I wonder whether it might not be better to leave those, since they are on quite a different point, and take them up after the other Delegates have expressed their views on this problem of the time-table. V E/PC/T/TAC/PV/1 CHAIRMAN: Dr. Coombs in his opening remarks has dealt with the important question of the timetable relating to signature, simultaneous announcement and provisional application of the General Areement, It might be useful, and it will facilitate the work of our Committee, if other members, in their opening remarks, could also express their views on this question in order that we may obtain the sense of the Committee on this important question of the timetable. Do any other members of tlhe Committee wish to speak? (No delegate asks to speak) It is a rather unusual state of affairs in Geneva when no-one wishes to speak. Mr. H.E. Z.AUGENTHALER (Czechoslovakia): Mr. Chairman, I think that if we have to sign the Tariff Agreement we are entering, into very important obligations for our Governments. It is not only a question of the reduction of tariffs, but of all the other matters which come into this Agreement, and; as stated in the Protocol of signature, the Governments undertake to be guided by the provisions of the Draft Charter in their activities. I am afraid that the Constitutional laws of Czechoslovakia do not admit of a procedure of that kind. I have requested the opinion of the authorities in Czechoslovakia on this matter, but have not yet received instructions, In my opinion, however, I think that the Czechoslovak Government would be able to put into force provisionally the tariff reductions on those Articics which are directly (Concerned with Customs and Customs formalities, but that, the rest could not be put into force before a decision on them has been taken by Parliament itself. M. E.L.RODRIGUES (Brazil): Our position, Mr. Chairman, is almost the same as that of Australia, and we see no other way than to agree with the delegate of Australia. However, I should like to have 9 M. M. 10 E/PC/T/TAC/PV/1 some explanation about the inclusion of the Articles of Parts II and II: of Document T/135 in the General Agreement at this stage. If we have to take into consideration the fact that the text of these Articles may be changed in Havana, I feel that by including them in the General Agreement we are anticipating our decision. If, later on, there is a new discussion and the Articles are changed, we shall be causing ourselves a good deal of difficulty. I should like to have an explanation on this matter so that I can give full information to my Government. G 11 E/PC/T/TAC/PV/1 CHAIRMAN: I may explain for the information of the Delegate of Brazil that Parts I and III are those parts which are peculiar to the General Agreement, and do not reproduce Articles of the Charter except to the extent that Article 1 is a reproduction of Article 14 of the Draft Charter. With regard to the division into three parts, I would xxvii refer the Brazilian Delegate to Par; I of Article I'dv which is given on page 61 of the Report and which provides that if, on or after the day of the signature of the Charter of the International Trade Organization, two-thirds of the contracting parties so agree, Part II of this Agreement, in whole or in part, shall be suspended on a specified day and shell, on and after such day, be superseded by the provisions of the Charter for such time as the Charter remains in force, provided that all of the contracting parties to this Agreement shall on that date have become Members of the International Trade Organization, A further reference to Parts 1,II and III will be found in Article add which deals with provisional application of the Agreement, and which is given on page 63 of the Report. Are there any other speakers? The Delegate of Norway. Mr MELANDER (Norway): Mr. Chairman, our position is substantially the same as the position of Australia. Our Delegation will have to report to our Government the results of the Tariff negotiations, and the Government will have to place them before our Parliament. It is very unlikely that it would be possible for, first the Government, and secondly Parliament, to take any decision on whether or not we are in a position to put into force this Agreement, until the end of November. Consequently we feel that the date suggested by the Australian Delegate - November 21st - probably would be the earliest date on which we could sign and put into force provisionally this E/PC/T/TAC/PV/1 Tariff and. Trade Agreement. On the other hand there is one other consideration, I think, and. that is that if this Agreement will contain substantial parts of the Charter more or less on the same lines as the present proposal, it may well be that our Government and. Parliament will consider that this is in reality a question of putting into force the Charter before it has been finally accepted; and it may well be that some of the articles of the Draft Charter as provisionally agreed. in Geneva will be such that our Government and Parliament will be in doubt as to whether they Could. be accepted.. That, I think, is very likely. In any case, if it i s a question of introducing or including essential parts of the Charter in the Tariff and Trade Agreement, I should not be surprised if the decision of our Parliament will be that we will prefer to wait until the end of the Havana Conference, so that we know the results of the Charter then we can take a decision on whether or not the Charter ought to be accepted , and then at the same time consider putting into force this Tariff and. Trade Agreement. XXXII I would in this connection mention that article of the Draft Text (page 65) refers to the provisional putting into force of Parts I and. III of the Agreement, and. Part I1 of the Agreement to the fullest extent not inconsistent with existing; legislation. Now if that means that substantial parts of the Charter, as in this proposal, will hate to be put into force immediately, at the same time as the Tariff part, if these Articles do not conflict with existing legislation, then it will mean, as far as I Can see, that we shall, in fact, be putting into force substantial parts of the Charter. If it means, or if it could be altered to mean, that any Government signing the Tarif f and. Tade Agreement shall be allowed to put into force Parts I and. III only, and, then reserve its opinion as to whether or not Part II should. be put into force provisionally, until the final Conference is ever, I think that will make the position much easier. 13 CHAIRMAN: The Delegate of the United Kingdom. Mr. J.R.C.HELMORE (United Kingdom): Mr. Chairman, I have listened very carefully to the speeches which have been made subsequent to the speech by the Delegate of Australia with which we began, and I have the feeling that those Delegates who have spoken have not appreciated the ingenuity of the Tariff Steering Committee, to which the Delegate of Australia referred, in resolving this problem of bringing the tariff schedules into effect quickly without making it necessary for Governments finally to face all the problems concerned in the Draft Charter until it has been finished with and put into this final form and agreed at Havana. I would like therefore to underline certain words in the draft put before us which seen to me to answer most of the difficulties which have been raised. In the first place, as I understand it, Mr. Chairman, it is suggested to us in this draft that we should proceed by way of provisional Application. If we look at Article XXXII, on P. cs 63 and 64, which deals with provisional application, we see that the real meaning of pirvisional application is that the Agreement can cease to be provisionally applied by any country et 60 days' notice, That is not a very difficult obligation to undertake, it seems to me. So that any Government which does apply it provisonally is binding itself for 60 days at a time. (Not that one hepes Governments will apply it provisionally and cease to apply it provisionally two months later), Nevertheless, it is possible to say to Parliaments and to the public in our various countries that provisional really does mean provisional, and that there is an escape; from this at very short notice . S S In the same, article - Article XXXII - Paragraph 1 (b) deals with the provisional application of those parts or the Draft Charter which are incorporated in Part II of the General Agreement. Those, the Draft suggests, we should apply provisionally, that is, two months at a time, to the fullest extent not dnconsistent with existing legislation, so if any of us has legislation which is inconsistent with Part II we are not required to alter it. There is a very obvious reason for that. No parliament would want to alter legislation to comply with an agreement which as only being applied provisionally, Then, when we look at the Protocol of Signature, to which the Delegate of Czechoslovakia referred, which, as it wore, picks up the remainder of the Draft Charter, the under- the taking says that "pending/entry into force of a Charter," we should "observe to the fullest extent of our authority the principles of the Draft Charter. " We do not say "the provisions of the Charter"; we say "the principles of the Draft Charter" I think there is an important difference of emphasis in those two words, We say: "to the fullest extent of our authority." I understood from the Delegate of Czechoslovakia that he feared that the fullest extent of the authority of his Government would be nil, so I do not think he would find that undertaking a very onerous one, The third difficult point is how do we bring all this into force provisionally when we are not sure whether the final Charter will be the same as the Draft, end that we deal with by saying that as soon as the Draft Charter becomes 14 E/PC/T/TAC/PV/1 S 15 E/PC/T/TAC/PV/1 a final Charter and comes into force, the parties to this Agreement immediateoly decide whether to scrap Part II altogether - which on. would hope it would be possible to do - or to modify it so as to conform, In those three main ways, Mr. Chairman, it seems to me that the Draft which has been put before us does meet the basic problem to which the Delegate of Australia referred. That does not mean - to say, that some of the words in this Draft may not require to bs altered or to be re-examined, but in principle it seems to me that the solution has been found far us. May I. now refer to the remarks of the Delegate of Australia on the time-table. I .would not like to commit -myself at this moment on how his objective can be met. Whether it is by initialling here or whether it is by signing here with certain reservations attached to some signatures - that those signatures are a referendum - is a matter we can look at further, but the main idea of his time-table - September 10 for finishing the negotiations, September 30 for finishing the texts and seeing that the scheduls are accurate, with some method of leaving the Agreement open for signature until about the middle of November, coming into force between the middle of November and, say, the. end of the year seems to me to be acceptable. E/PC/T/TAC/PV/1 I would like to underline what he said about the absolute necessity for a firm undertaking between governments that publication must be simultaneous, and must be in each of the capitals of the governments who have signed or who have initiated. I think I should add, from the United Kingdom point of view, that the date of November 1st for the provisional application which not appears in the draft, would/be possible. That is quite apart from the question of when my government could authorise signatures It is a question of the administrative work which has to be done in order to effect the changes in the tariffs. I suspect that the date. of November 1st was out into this draft before we had agreed on a slightly longer timetable for the Tariff Negotiations than we had agreed upon yesterday, and for my part I would sooner see a date of December 31st in the paragraph providing for provisional application. ER 17 J. E/PC/T/TAC/PV/1 CHAIRMAN: The Delegate of South Africa. DR. J.E. HOLLWAY (South Africa): Mr. Chairman, before devoting my attention to the questions before the Committee now, I would like some elucidation about article XXXII. Article XXXII contains certain blanks. It is not clear to me how the Committee, when they drafted this, intended those blanks to be filled in. They could be filled in either by putting into them the names of all the governments not mentioned here who are Members of the Conference, or only the names of those governments who can provisionally, at the date mentioned, put into force Parts I and II. I presume the latter is the intention, but if the letter is the intention, the last sentence of paragraph (b) should not be part of paragraph (b) at all but it should be a sub-paragraph of paragraph 1. At present, it is simply part of paragraph (b) and therefore seems to refer to Part II only. CHAIRMAN: The Delegate of South Africa has called attention to what is a typographical error in the setting up of Article XXXII. The last sentence of paragraph 1; reading "The other signatory governments, and the above named governments in respect of any territories other than their metropolitan territories, shall take like action as soon as possible after November 1, 1947." should be a separate paragraph - at least, it is part of paragraph 1, but it should not be indented. The indentation should only be (a) and (b), and then the remainder of the paragraph should read as if it were a separate paragraph of parragraph 1. As to the first question raised by the South African Delegate, it is obvious that :provisional application can only be made effective if certain governments find it possible to do so on a certain date. A decision as to what governments are necessary EP/T/TAC/.PV/1 in order to give Provisional Application to the Agreement was not taken by the Tariff Negotiations .Working Party, because that is properly a question which would have to be deferred until . later stage, so that the only countries that are given in the First part of paragraph 1 are those countries which were represented on the Tariff Negotiations Working Party. The Members of the Tariff Negotiations Working Party felt that their governments could give effect to the Provisional application - not necessarily on November1st, but on some data which would later on be Agreed upon. Then, it would be question to be examined as to what other countries were necessary in order that Provisional Application should be effective on that date, leaving the other signatory governments to apply Provisional Application as soon as possible after the specified date. I think that answers the question raised by the :South African Delegate. J. 18 V 19 E/PC/T/TAC/PV/1 CHAIRMA.N: The Delegate of France. M. Pierre BARADUC (France) (Interpretation): Mr. Chairman, the representative of the United Kingdom has very skilfully presented the advantages of the text of the Draft Agreement, and he has stressed the ingenious provisions which were found by the Steering Committee in order to make the text applicable. I have nothing to add to his statement, since I fully approve it and fully associate myself with what has been said by the- Representative of the United Kingdom. As you said yourself, Mr, Chairman, France is among the countries which are enumerated in Article XXXII _s being ready to apply this Agreement provisionally. In Order to make clear to my colleagues the position which is adopted by our Delegation, I may add that we are ready to sign the Draft Agreement on 3Oth September, and that we are ready to apply it provisionally. I say only "provisionally", because we can adopt final application only with the approval of the French Parliament. However, we have not the intention to ask for the approval of our Parliament before the World Conference -firstly, because it might meet with very serious objections on the part of the members of our Parliament if we seek the application of a text which has not been finally approved by the World Conference, and secondly, because it would put the French Delegation at the World Conference in a difficult position. Indeed, the French Delegation at the World Conference would not be in a position to accept the slightest modification of the Charter if the Charter were approved by the French Parliament. Therefore , we can apply this Agreement only proves finally and seek the approval of Parliament at a later stage. However, after having listened to the statements made by several Delegations, I wonder if even a provisional application V 20 E/PC/T/TAC/PV/1 is possible, if only a limited number of Delegations are ready to apply this Agreement provisionally. I believe that It is necessary to achieve the agreement of the majority of the countries represented here, in order to make this provisional Agreement workable. Indeed, we would meet with the greatest inconvenience if we had only five or six signatures to the provisional Agreement. E/PC/T/TAC/PV/1 E.E. Mr. WUNSZ KING (China): At this early stage of our deliberations I do not propose to go into details, nor do I intend to commit myself to anything definite, even in a provisional way. I wish first of all to add my tribute to the Tariff Working Party for having prepared and produced this admirable document. I say it is admirable only a provisional way. We are all agreed on this point, that in accepting and signing this Tariff Agreement we would be under- taking some very important obligations with far-reaching consequences in the economic and commercial spheres. As to that, we are all agreed, We are also agreed that in so doing we would, be making an experiment which is really unprecedented in nature, for the under- taking is not only limited to the reduction of tariff rates, but also serves as an acceptance,- even in a provisional way - of certain ob- ligations or the principles of certain stipulations which would subsequently be contained in the Charter and be finalized at the World Conference in Cuba. I am wondering whether we could put into force, even in a provisional way, these principles of certain stipulations which have not taken definite form. Can we put them into force before we attend the World Conference in Havana? I am not in a position to argue with the United Kingdom delegate whether the word "provisional" actually means provisional in its full force, but only "provisionally provisional". Experience has taught us that there would not be very much difficulty in having a provisional arrangement become quite definite. I appreciate all the mechanical, practical and legislative difficulties which have been mentioned by my colleagues, because we in China are no exception in this respect. We also have our difficulties, and now that the new Chinese Constitution is in the 21 M 22 E/PC/T/TAC/PV/1 process of being put into force, we do anticipate some peculiar legislative difficulties in our case with respect to this Tariff Agreement, as well as with respect to the future Charter of the I.T.O. Therefore, we feel that the Chinese Government must be given sufficient time to examine the documents as a whole and to consider its final position in respect of certain stipulations, or their principles, which would be put into force before the coming into force of the Charter itself, and which the Chinese Govern- ment has, I am very sorry to say, not seen its way up to now to accept in their present form. I really am not in a position to say when the Chinese Government will authorise its representative even to initial this Tariff Agree- ment, not to say sign it definitely, unless the way is cleared in such a manner as to enable the Chinese Government to give its authorisa- . tion. My mind is open as to what should be the way, or ways, by which the Chinese Government (and I suppose some other Governments also) will be enabled to authorise its representatives either to initial or to sign the documents, I should think, however, that one of the ways - tentatively at any rate - would be that suggested by the Norwegian delegate. He, if I understand him correctly, thinks that the best thing to do in the circumstances would be to incorporate in this document only Parts I and III, but not Part II. That suggestion seems to be quite helpful Another way of doing it would be. - if I understand the United Kingdom correctly - to sign the docu- ment with reservations attached to the signatures. As I say, my mind is open and I have to think it over and recommend the ways to my Government for consideration. 23 CHAIRMAN: The-next speaker on my list is the United Kingdom Delegate. He has asked for permission to give an explanation of his remarks, as asked for by the Chinese Delegation, so I will give the United Kingdom Delegate the flo r. Mr. HELMORE (United Kingdom): Thank you, Mr. Chairman. It occurred to me that possibly I spoke in a rather compressed fashion when I referred to signature with reservation. I was not thinking of a signature which would reserve a particular point in the Agreement, because then we should not all be signing the same Agreement, I was thinking of a signature on the said 30th September in Geneva, which would be asubject to a- reservation that the signature was ad referendum, and that would be one method I was suggesting of meeting the point made by the Australian Delegate, that his Government would reed to have time before, so to speak, the signature could become fully operative; but it would be a signature to the Agreement as a whole. CHAIRMAN: The Delegate of China. Mr. WUNSZ KING (China): Mr. Chairman, I feel very grateful to Mr. Helmore for his explanation on this point; but still, I have to come rather to the conclusion that there is no meeting of minds between him and myself. CHAIRMAN: The Delegate of the United States. Mr. WINTHROP BROWN (United States): Mr. Chairman, I think that we are undoubtedly all agreed that it is imperative that we place the tariff concessions which will have been agreed at this Meeting into effect at the earliest posible date. In the first place, it is obvious that the sooner we can get these tariff concessions in to operation, the sooner their, beneficial effect on trade will be felt, and it is certainly important that we try to help trade between ourselves and the rest E/PC/T/TAC/PV/1 G 24 of the world as quickly and as. effectively as possible. I think we would. all be agreed, also, that it would be extremely difficult to keep these tariff concessions which we have agreed here, so to speak, on ice, or in the closet for any substantial period of time. The items agreed upon would be bound to become known partially, and. a tax would be laid on the Agreement based upon imperfect knowledge of the sum total of the Agreement, and a very difficult situation would be presented for all of us. I think it is also clear that tariff concessions can be put into effect only in connection with a certain minimum number of the so-called. General Provisions which are necessary to protect these concessions, and to give them validity and meaning. That, of course, is the reason why the Tariff Negotiations Working Party has recommended.. the inclusion in the General Agreement of certain of the provisions from the Charter, namely, those in Part II. I mention that point because it is a suggestion made by the Delegates from Norway and. China that we might proceed by putting Parts I and III of the Agreement into effect, but not Part II into effect. I am quite sure that it would not be possible for most of us to put tariff concessions into effect, unless they were protected. by a minimum, number of General Provisions, and for our part, at least, we feel that the ones recommended by the Tariff Working Party represent that minimum. I think it is also extremely important that we come to the maximum measure of agreement here at Geneva. We had always hoped. and expected. that the General Agreement would be signed definitely here. We, of course, are in a somewhat similar position to many 25 of the other Member countries here, in that when our negotiatons have completed their negotiations, we must submit the results to our Cabinet and. President, for his final approval. Our particular situation is such that we can do that very rapidly, and we had felt that the two or three weeks necessary for the so-called. 'tidying-up' process would. be sufficient to enable us to get that necessary approval. We had hoped that. that would also be true for other countries present. However, from what the Delegate from Australia and some others have said., it wolud. appear that that period of time might not be sufficient, E/PC/T/TAC/PV/1 S E/PC/T/TAC/PV/1 Therefore we must consider what other line we can follow: whether we should follow the sugestion of the Australian Delegate and initial the Agreement here to fix the text, and fix a definite date for signature, say, about the 1st or the 15th November, or oven the 21st; or whether we should endeavour to get the signatures of the countries which are represented on the Tariff Working Party and which can sign on September 30, plus as many others as are in a similar position, leaving a period, say, until some time in November, for other Governments, who have to take further time for consult- ation, to sign. We are quite prepared to examine any one of those alternatives, to see which one can best meet the needs of the Members. I cannot urge too strongly, however, the importance which we attach - and which I am sure all of us attach - to having this Geneva Conference come to the most definite possible conclusion about the General Agreement and the tariff concessions, It would be most unfortunate if we should be in a position where we reach a tentative agreement here and start negotiating all over again at Havana or at Lake Success in November. That we must avoid at all costs. I wonder, Mr. Chairman, if it would not help us in reaching a conclusion as to what course we should pursue if we could get an indication from the Members present as to how many of them are in the position which we in the Triff Working Party are in, of being able to sign at Geneva and bring the Agreement provisionally into force, say, before the end of the year, and how many are in the position of the Australian Delegation, who will need a longer period, say, until the middle of November, before they will be able to sign the agreement. S E/PC/T/TAC/PV/1 I would also like to add our voice in support of what the Delegates of Australia and the United Kingdom have said about the extreme importance of having the publication of the details of the Agreement take place simultaneously in the capitals of the Members represented here. The details of this Agreement should not be made public until they are made public by all of us at the same time, I would also like to stress the importance of fixing a definite date by which the concessions will come provisionally into affect, and I would hope, as a Christmas present to the world - which needs such presents very badly, that that certainly could be settled before Christmas. 28 E/PC/T/TAC/PV/1 CHAIRMAN: The Delegate of Chile. M. F. GARCIA OIDINLI (Chile) (Interpretation): Mr. Chairman, I would like to make several remarks, which are, perhaps, somewhat beside the main question but which are, nevertheless, intimately connected with this debate. We are supposed to accept Parts I and III, or rather we are expected to discuss Parts I and III of this Draft agreement, but we are not supposed to discuss Part II of the Agreement for the very obvious reason that Part II actually reproduces Articles of the Charter and the Charter is not yet finally approved. But, Mr. Chairman, if I look at the first Part of this Draft Report I see that it mentions there Articles 1 and 2 of the Charter. Now, if I revert to Part III of the Report I find there Article 38 which is also a part of the Charter. Now, Mr. Chairman, if we decide not to discuss Part II of this Report since it reproduces Articles of the Charter, then we must also wait until the Charter is approved before we discuss Parts which reproduce certain other articles of the Charter. The reasons which are being put forward in order not to discuss Part II must also be true for the Articles which are reproduced in Parts I and III of the Report. I might add further, Mr. Chairman, that articles 14 and 38 which are mentioned in the Report have not yet received their final draft - they were referred to the sub-committee on Chapter IV, and we might be assured that they will not leave the sub-committee on Chapter IV in exactly the same shape as they entered it. The am same might also be true in respect to Article 32 - although I/less affirmative in respect of this article - and, as you know, there exists an amendment to Article 32- an amendment which was also referred to the sub-committee on Chapter IV. 29 E/PC/T/PAC/PV/1 Therefore, Mr, Chairman, if we want to be logical and if we want to remain in conformity with the decisions of the Chairman's Committee, we must leave out of our deliberations the Articles of the Charter which are mentioned in Parts I and III of the Report. Therefore, we must concentrate our discussion on the present development, and in this connection I would like to draw the attention of the Committee to the French translation of paragraph (b) of Article XXXII - I say intentionally "translation" because I do hope that there is a mistake of translation and that we are not faced with a different French version. Indeed, we read in the French text "Part II of this Agreement to the fullest extent... The other signatory governments, and the above-named governments in respect of any territories other than their metropolitan territories.....". Now, Mr. Chairman, if I remember my school logic and my school French, I understand from this paragraph that the parties signatory to this agreement undertake to apply Parts I and III of the agreement and Part II to the extent at which it is compatible with their legislation to all territories other than their metropolitan territories. I expect that there is a drafting error in the French text, but I must call the attention of the Secretariat to the permanent neglect which is shown to the French text. It is a pity that it is I who must point this out - it would be the right of the French-speaking delegations, but since they have not done so and since, apparently, they work on the English text., I fear that it is my duty to draw attention to this mistake. I do hope that the English text has been drafted differently, because if this were not the case then I respectfully submit that our whole discussion lacks sense. 30 E/PC/T/TAC/PV/1 Now, Mr. Chairman, I under tand that the Chairman made the proposal that in order that certain parts of the Provisional Agreement could become applicable, it is necessary to have a certain minimum of countries which declare themselves in a position to apply this Provisional Agreement from a certain date. However, the text which is submitted for our attention is altogether mute on this point, and leaves no open door. The text only signifies that the five members of the Working Party as well as all other possible signatories of this Draft Agreement undertake to apply Sections I and IIof this Draft Agreement, as well as Part II to the extent where it is compatible with their legislation. But nothing is said about the necessary minimum in order to render this Agreement operative. I believe that the idea which was propounded from the Chair in this connection is a sound one, and ought to be adopted by us. I should even say that it ought to be made a condition of the provisional application of th :. Draft Agreement. Now, insofar as we are concerned, Mr. Chairman, I wonder whether we will be able to apply the provisions of this Draft Agreement as from 1st November. Indeed, it is proposed that an Agreement to be signed on 30th September should become operative on 1st November. It is, however, a multilateral Agreement. Therefore, we must take account of the possible repercussions on the economic relations of the countries applying this Agreement with all other countries which are not parties to the Agreement. We must also take into account the possible implications of this Agreement in regard to the legislation of the countries concerned. It is quite possible that certain provisions are not in V V E/PC/T/TAC/PV/1 conformity with the legislation of the countries concerned, although they are not directly incompatible with this legislation. We must also consider the possible implications which this Agreement might have in regard to the policy of taxation whit is pursed. by the countries concerned, and we must consider whether it is possible for the countries concerned to iron out in a month ' time all budgetary difficulties which might arise in connection with this Agreement. Therefore, Mr. Chairman, I must provisionally reserve the -answer of our Delegation to your query. CHAIRMAN: The Delegate of Chile has called attention to certain inaccuracies in the French text. I might inform the Committee that the. French and Belgian Delegations are very much alive to certain of these inconsistencies between the French and English texts, and we received this morning a statement from the French and Belgian Delegations correcting certain parts of the French text. This will be issued as a corrigendum. With regard to thc particular sentence to which the Delegate of Chile referred, there is a serious error in that paragraph in that the qualifying phrase "in respect of any territories -ther than their metropolitan territories" should relate only to the above-named Governments, whereas in the French text it roads as though it refers also to the other signatory Governments. The Secretariat will issue a corrigendum correcting various other inconsistencies between the French and English text-and will also correct this particular part of the French text. With regard to the other point mentioned by the Chilean E/PC/T/TAC/PV/1 Delegate, it is true thet Articles I and II of Part I embody substantial parts of Articles 14 and 32 respectively of the Charter, and also that Article XXXII, Part III, embodies substantial parts of Article 38 of the Draft Charter. I might mention, however, that Part I is an essential part of a General Agreement on Tariffs and Trade. It is, the part that gives effect to the tariff concessions, and therefore it has quite a different character from Part II. The same applies to Article XXII, which reproduces Article 38. It has been out in Part III because that seems to be the most logical place for it; but it is a provision without which the tariff concession could not be applied. We have now reached a time at which it will. be necessary for us to-adjourn - it is after one o'clock - and I therefore propose that further discussion be postponed till tomorrow. If he wishes, I will give the Delegate of Chile the floor first things tomorrow. It is only possible for us to schedule three meetings this week -that is, this morning, tomorrow morning: and Thursday morning. The programme on Friday is so full that I do not see any possibility of scheduling a meeting of this Committee. I had hoped that it might be possible for us to get through the general discussion on the three mornings allotted to us this week, and that we might be able to proceed next week to take up the particular Articles in Parts I and III of the Draft Agreement. However, it is too early a stage in our deliberations to know whether or not it will be possible for us to get through the general discussion this week, and therefore I propose that we should continue tomorrow at 10.30, after which we can take a decision as to our further programme of work. There being no further business, the. meeting is adjourned. (The. meeting rose at 1.10 p.m.) V
GATT Library
bz883pq8207
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Forth Meeting of the Tariff Agreement Committee Held on Wednesday, 20 August 1947 at 10.30 a.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, August 20, 1947
United Nations. Economic and Social Council
20/08/1947
official documents
E/PC/T/TAC/PV/4 and E/PC/T/TAC/PV/1-4
https://exhibits.stanford.edu/gatt/catalog/bz883pq8207
bz883pq8207_90260008.xml
GATT_155
9,488
57,195
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/4 20 August 194 7 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. FORTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON WEDNESDAY, 20 AUGUST 1947 T 10.30 A.M. IN THE PALAIS DES NATIONS. Hun. L. D. WILGRESS (Chairman) GEZIEV1L. (Canada) Delegates wishing to make corrections in their speeches address their communications to the Decuments Clearance Room 220 (Tel. 2247). should Off ice, Delegates are reminded that the texts of interpretations, which do not pretent to be Luthentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretatios connect, therefore be accepted. NATIONS UNIES V 2 E/PC/T/TAC/PV/4 CHAIRMAN: The Meeting is called to order. Members of the Tariff Agreement Committee will remember that at the close of the last meeting we stated that we would take up the Articles of Agreement in Part III one by one. However, since that time we have received the amendments to the Draft Agreement which have been submitted by the various the delegations and it has seemed to meas Chairman,and t /Secretary of the Committee,that it would be more practical and would facilitate our general approach to this whole question of the General Agreement if we had a further discussion and endeavoured to resolve certain fundamental issues which have come to light as. a result of the discussions which took place in this Committee at the meetings we have already held and as a result of the amendments which have been submitted by the different delegations. Accordingly we propose as a working paper for the Committee document E/PC/T/W/301 which was issued, on the 15 August. This document seo.: forth-seven basic questions which we thought it would be useful for the Committee to discuss one by one with a view to obtaining the sense of the Committee with regard to these basic issues, and if we could clarify them it would greatly expedite our work when we come to consider the various Articles of the Draft Agreement. It is necessary, I think, that we should, when we take up these seven basic issues, Limit the discussion Strictly to each issue as we take it up, and that Members of the Committee should refrain from :: ferring to the other issues and confine themselves strictly to the issue that is under discussion. Otherwise, we may be in danger of wandering over too great a field and not serving the purpose of this Working Dape', to clarify these seven basic issues, As we proceed, we might find difficulty in reaching finality on one or. several basic questions, and it might be ill-advised at this stage to come to a definite decision-on these issues. That, I think, we can only judge as the discussion proceeds but our effort should be to try to reach as much finality as is possible, so that when we come to consider the various Articles there will not be a resumption of the general discussion on these basic issues. I trust that the procedure I have outlined is satisfactory to the Members of the Committee. Do any of the Members of the Committee wish to comment on that procedure? If no Member of the Committee wishes to comment, I take it that the procedure outlined is adopted. The first of the seven basic questions will be found on Page 2 .of our Working Paper. It is headled "Submission of the Agreeent to the Economic and Social Council for approval". This question has been raised by the Czechoslevak Delegation in Document E/PC/T/W/274. During the course of the discussion, the United Kingdom Delegation pointed out certain facters which are set forth on page 3; out otherwise during the course of the general debate there was not any definite expression of views on this question, and I think it would hell in clearing the air if we had a discussion on this particular matters Does the Delegate of Czechoslovakia wish to speak on the subject? H.E. Z . AUGENTHALER (Czchoslovakia): Mr. Chairman, we think that there are two possible ways of dealing with this matter. One is that we sign and put into force an international treaty for the reduction of tariffs. In that case,. we. would not need to have in mind any prior consultation with the Economic and Social Council, because such a treaty would be registered with United Nations and it would onter lnto force. On the other hand, if we are creating here a kind of permanent E/PC/T/TAC /PV/4 V 4 E/PC/T/TAC/PV/4 or semi-permanent institution, I think we should seek the advice of the Economic and Social Council, because it would be rather as if we were creating a new specialized agency for customs questions, and not only customs questions, but also related matters-all the more so if those Articles concerning the Economic and Social Council should be included in the Charter we are drafting. In that case, we think it would be wise to seek the prior consultation with the Economic and Social Council. Mr. Winthrop BROWN (United States): Mr. Chairman, we are, in our tariff negotiations here, coming to an agreement with respect to tariffs and preferences, and also with respect to certain ``channel'' provisions which are related to the matter of tariffs and preferences, and which are necessary to provide a proper protection and setting for the tariffs and preference schedules. Certain of those provisions will require consultation between the parties to the Agreement, for their administration, in certain cases, and therefore we provide a machinery by which that consultation can take place - in other words, the Committtee which is referred to in the Agreement. This is not creating a new international organization, but is providing a machinery whereby the parties to this Agreement can properly administer it, are it therefore seems to us that there is no necessity for submitting this Agreement to the Economic and Social Council.at all. CHAIRMAN: The Delegate of South Africa. Dr. J.E. HOLLOWAY (South Africa): Mr. Chairman, I do not think that we need spend very much time on this issue. I know of nothing preventing my country from entering into trade agreements on a multilateral basis with other countries. If V 5 E/PC//T/TAC/PV/4 there is anything like that in the charter of the United Nations, I am not aware of it. That may be ignorance on my part. But if I am correct on that point, it does mean this: that if there is a motion that this Agreement should be submitted to the Economic and Social Council, that motion must be an unopposed motion. It must be unanimously agreed to, because it does involve everybody giving up some right, and therefore you cannot do it without having unanimous agreement. For ourselves, we are not prepared to give agreement to this. E/PC/T/TAC/PV/4 CHAIRMAN: Any other Member of the Committee wish to speak on this question? Are there any Member of the Committee who support the proposal of the Czechoslovak Delegation. Does the Delegate of China wish to speak? Mr. WUNSZ KING (China): Mr. Chairman, I have some sympathy with the point raised by our Czechoslovak colleague. On the other hand, I also understand the reasons why it is not quite necessary to submit this to the Econumic and Social Council. I would like to remind my colleagues that the Chinese Delggation has presented a rather modest amendment which appears in Doc.W/276, proposing that the United Na.tions are authorised to effect the registration of thisAgreement as soon as it comes into force. Now I am wondering whether, if this amendment is adopted, it might not be capable of meeting the point of our Czechoslovak colleague half-way. CHAIRMAN: The Delegate of Cuba. Mr. GUTIERREZ (Cuba): Mr. Chairman, I think that this point is covered by Article 102 of the United Nations Charter. The Registration Office of the United Nations is working according to this provision, and I do not think in every particular Treaty there is need to insert this proviso - it is a little far from the suggestion of the Czechoslovak Delegate as to submission of the paper for approval by the Council. CHAIRMAN: It would appear that we have completed discussion on this subject. There does not appear to bo any measure of support for the proposal of the Czechoslovak Delegation. On the other hand, as the Chinese Delegate has pointed out, it will be necessary to submit the Agreement for approval to the United 6 G E/PC/T/TAC/PV/4 Nations, and the Cuban Dlegate says there is an obligation on all Members of the United Nations under the Charter; and that, I think, makes the relations of the agreement to the United Nations quite clear. I therefore think we can pass on to the text item on our agenda, and take it that the Committee does not support the proposal of the Czechoslovak Delegation. Dr. HOLLOWAY (South Africa): Did I understand you correctly to say that after agreement has been made it should be sent for approval to the United Nations? CHAIRMAN. If I used. the word ``aproval" I meanttregistration", I should have said that all Members of United Nations are under an obligation under the Charter to have it registered. The next item with which we have to deal on page 3 of the Working Paper is entitled ``Significance of signature of the Agreement at Genava''. This i s vided in, two parts as there are two related issues involved here. "The Australian Delegation has expressed doubt as to the significance of signature, which it understands implies the commitment by Governments to introduce ultimately the Agreement to Parliament with the Governments', support. "This position of the Australian Delegation is supported by the Brazilian, Indian and New Zealand Delegations. In document W/271, the United States Delegation has proposed an Amendment which meets to some extent the point raised by the Australian Delegation. We have also on the bottom of page 4 of W/301 the opinion expressed by the Legal Adviser of the. Secretariat, and it is 7 G E/PC/T/TAC/PV/4 pointed out that this legal interpretation may dispel some of the doubts which have been expressed; but if any Delegation wishes to do so it can protect its position by signing ad referendum. The second point which is very closely related to the first is the question which has been raised by certain Delegations to the effect that /of the Agreement might/ constitute an obstacle to discussion of the Charter at the World Conference; the Syrian-Lebanese Delegation has pointed out that this understanding concerning signature will not constitute an obstacle to the freedom of discussion on the Charter at the World Conference; and we consider it would be useful if the Committee could reach an understanding in this connection. I would like first of all that the discussion should be confined to the first of those two points; and we might then take up the point given under little tb) here on page 5. The Delegato of Cuba. Mr. GUTZERREZ (Cuba): In relation to the first point, the statements made by several delegations with respect to the' constitutional limitations of the entering into force of the General Agreement on Tariff and Trade and the prevailing uncertainty in connection with the time factor required to secure the various P-rliamentary approvals moves the Cuban Delegation to request of the others that they consider the possibility of not signing the Treaty in Geneva, leaving this f or the last day of the World Corf erence on Trade and Employment. The basic reasons which prompt this proposal are, first that it does not seem practical to insert in the General Agreement provisions of a Draft Charter of the ITO which would surely be modified by the World Conference before it should G 9 E/PC/T/TAC/PV/4 become effective. It seems preferable not to repeat in the General Agreement only some articles of the Charter, but there should also be inserted in said agreement the obligation of giving complete enforcement, as far as possible, to all the provisions of the Charter. Secondly, the Tariff negotiations have not been able to reach the stage of coordination necessary to enable the General Agreement to be completed and signed by all countries represented in Geneva. The pertinent schedules agreed upon could be initialled here and then further negotiations continued bilaterally, country- to-country, in the interval between the Geneva and Havana Conferences, with the purpose of completing them in the latter city so that the General Agreement could be duly signed with sufficient time to submit a complete document for the ratification of the corresponding legislative and executive bodies of each signatory party. 10 S E/PC/T/TAC/PV/4 CHAIRMAN: The Delegate of Australia. Dr. H. C. COOMBS (Australia): Mr. Chairman, I do not wish to go over again the reasons which prompted the Australian Delegation to raise this question of the signature at Geneva. I would, however, like to remind Delegates that it is necessary, in the light of Australian administrative and political practice, that neither the j urt2r , Government nor the Australian Parliament should be committed at Geneva in any way. We have therefore to ask that we, at any rate, be not called upon to sign a document in Geneva which carries any implications of commitment for the Government or the Parliament. I notice that the Legal Adviser of the Secretariat considers that this signature which is proposed does not constiute anything more than an authentication of the text. I have a profound prospect for the Legal Advisor and a layman's disinclination to disagree with exports, but, after all, this General Agreement, in its present draft, starts off: "The Governments of the Commonwealth of Australia" - etc., etc., - "have, through their respective representatives, agreed as follows," Articles I to III, and then, in Article XXXII,the Governments of certain countries - which may include Australia - shall, on and after such-and--such date, app?'.y provisionally the parts of the Charter, etc.; "In witness whereof the respective representatives. after having exchanged their full powers, found to be in good and due form, have signed this agreement and have affixed their seals hereto." Well, Mr. Chairman, that may be an authentication of a text but it does not sound like it, and I shall have difficulty S 11 E/PC/T/TAC/PV/4 in convincing my Government, if I affix my signature to that, that I have not done anything more than authenticate a text, Accordingly, Mr. Chairman, I find myself dissatisfied with what is proposed. I do not find much comfort in the proposal of the United States Delegate which he has put forward in an attempt to meet our difficulties. He suggests, in effect, that we should attach a reservation to our signature, to the effect that it would become effective only when our Government has given written notice to that effect to the Secretary-General of the United Nations. I find that subject, to some extent, to the same complication; that it does imply a commitment, even if it is qualified in the way suggested. Another difficulty is that it would, so to speak, put Australia in a special position, and this is a difficulty which I find in the solution which the South African Delegate has him- self put forward. He would sign ad referendum. I agree that covers the position formally, but I do believe it is undesirable unless absolutely necessary. There is a difference between countries, in a way which draws attention to the fact that certain countries have not behaved in precisely the same way as other countries. It is capable of being misinterpreted in two ways: first of all, that they are in some way recalcitrant - which might, of course, be true - and, on the other hand, it may be interpreted as meaning that, inffact, they are committed in the same way as the other countries, and that the attachment of the ad referendum or the qualification suggested is merely a device and, in fact; the commitment has been entered into. We therefore do not like that suggestion. We have, however, a proposal to put forward which seems to us to meet the require- ments of those countries who are anxious to attach their signatures 12 S E/PC/T/TAC/PV/4 to this document as quickly as possible, and also of those countries who feel it necessary that they should, after the completion of the negotiations in Geneva, formally place this thing before their Governments for consideration before their signatures are attached. At international conferences it is the custom frequently to have what is called a final act, in which the Heads of Delegations attach their signatures to a document which records, in brief terms, what has proceeded and has attached thereto a text which is, by the signature of that final act, authenticated. We would propose that at the end of this Conference there should be a Final Act by which, in signing, the Heads of Delegations would authenticate the text of the General Agreement. The General Agreement should then be available for signature at the Head Office of the United Nations and should remain open for signature until, in accordance with the tentative timetable, the 15th November, or before if that is thought preferable, during which time representatives of the countries here could sign the document or inform the Secretary-General of the United Nations that they accept the obligations implied by signature. That would mean that if one of the Delegations here is, in fact, in a position to sign this document at the conclusion of this Conference, he could send a telegram immediately to the Secretary- General of theUnited Nations, informing him that he was prepared to sign, of he could ask his representative in that country to sign for his Government. There need therefore be no delay, on the part of those countries which wish to sign, in signing immediately.. We could conclude here on 30th September, as is suggested in this programme, then their signatures could be attached on that day or on the first day of October. 13 S E/PC/T/TAC/PV/4 On the other hand, other countries who wish to place this matter before their Governments would have from then until the 15th November before attaching their signature. On the other hand, there would be no distinction between the action taken by one country or the other. At the con- clusion of the Conference here, we would all take similar action, and between that date and the 15th November we would again all take similar action, on the assumption that we were authorized by our Governments so to do. That does seem to me to offer certain very definite advantages. It does meet the requirements of the countries which are anxious that their signatures should be appended promptly and it similarly meets the requirements of those countries which need delays in order to have this text examined by their Governments. At the same time it makes no distinction between them in the nature of the action to which they are called upon to commit themselves. I would just like to comment on the suggestion which has been made by the Delegate of Cuba. I am, of course, in agreement with the basic proposition which he has put forward, that there should not be a signature of this document here in Geneva, but I find some difficulty, Mr. Chairman, on the assumption that our negotiations here do conclude by the date forecast, in believing that we could leave this signature and the publication of the text and the entry into force of the Agreement as long as the Cuban Delegate's proposal would imply. It does seem to me that, once agreement has been reached here, the time which should elapse between the conclusion of those negotiations and the publication and entry into force of the actual reductions in the tariffs required should be as short as is consistent with democratic procedure. 14 S E/PC/T/TAC/PV/4 Therefore, Mr. Chairman, whilst I have a good deal of sympathy with the Cuban point of view, I would be anxious, if it is possible, for us to adhere to a programme roughly corresponding to that set out in the Schedule, with the variations which I have suggested. If I could just repeat those final words; the positive suggestions we put forward are: that on the 30th September, or a date approximating thereto, all Delegations should sign a Final Act at the Geneva Conference which would authenticate the text of the General Agreement on Tariffs and Trade, and from that date until the 15th November the General Agreement should be open for signature at the Head Offices of the United Nations; that on the 15th November or thereabouts there should be a simultaneous public announcement, and, furthermore, that countries should be permitted to put these things into force on or after that date at their discretion. 15 ER E/PC/T/TAC/PV/4 Mr. WINTHROP BROWN (United States): Mr. Chairman, I am sorry that our suggestion did not fully meet the point made by the Australian delegation, but after listening to the delegate from Australia, I am persuaded that it did not, and it seems to me that the suggestion which he has made is a very constructive one with which we would be able to agree. There is one point, however, that I think should be made clear. It is, of course, necessary for countries to know in considering whether they will give provisional application to the Agreement, how many other countries are going to be able to do it, and if the Australian suggestion would include that in the final Act, there would be an agreement suggested in our amendment. that certain named countries at least would agree to give provisional application to the General Agreement by a certain date provided that the other countries had also signed by that time. In that case this suggestion would be quite acceptable to us. May I supplement that by saying that we would expect to sign immediately and we would hope that the other countries which have already indicated that they could sign at once, and would put it provisionally into effect by the end of the year would do likewise, but we should be perfectly happy for the agreement to be left open for signature by other countries not able to sign at once. Dr. H.C. COOMBS (Australia): I do not quite understand the first/point made by the United States delegate. Does he mean that Australia, f or instance, by signing on the 14th November would thereby be undertaking to put the General Agreement into provisional operation before the 15th December on the assumption that the other countries did the same? It would, in fact, be our intention to make the 16 ER E/PC/T/TAC/PV/4 Agreement operative so far as Australia is concerned as soon after the signature date as practicable - as a matter of fact, on the same day. Mr. R. J. SHACKLE (United Kingdom): I would like to say - subject to approval by my delegat ion which I have not yet consulted - that the suggestion which has been made by Dr. Coombs, together with the comments made by Mr. Winthrop Brown, seems to me to be the best proposal which has been made up to now, for our purposes. It is my impression that we should agree and subscribe to this proposal - subject, of course, to reference to my delegation. I would add just this: that as regards the suggestion which was made by the delegate of Cuba, I feel, as Dr. Coombs has said, that there would be very serious difficulties if the publication and enforcement of the General agreement on Tariffs and Trade were deferred as long as the proposal indicates. Mr. J. J. DEUTSCH (Canada): Mr. Chairman, with respect to the Cuban suggestion, we also see very great difficulties In postponing the matter until after the end of the World Conference. With respect to Dr. Coombs's suggestion, we find it a very con- structive one, and we could accept it. We would also, however, like to have a provision like the one suggested by the United States delegate, that the Agreement would not come into provisional effect for any signatories unless the Agreement came into effect also with respect to certain named countries. 17 J. E/PC/T/TAC/PV/4 DR. H.C. COOMBS (Australia): Could I just ask a question in regard to that, Mr. Chairman? CHAIRMAN: Is the Belgian Delegate agreeable to the Australian Delegate asking a question? The Delegate of Australia. DR. H.C. COOMBS (Australia): I just want to mare sure, Mr. Chairman, that the point made by the United States Delegate would not prevent one country taking action in advance of others, provided it was after the date on which the simultaneous announcement had been made. As I pointed out earlier, it would be necessary for Aus tralia to take action on the same day as the announcement was made, and it might be, in the case of the United Kingdom, from what I understand of their position, six weeks before the United Kingdom is in a position to make the Agreement provisionally effective. I presume that once the text has been made public, the countries who are prepared to do so are free to implement the Agreement, so far as their own tariff is concerned. CHAIRMAN: Speaking as Chairman of the Committee, I would think that there would be no objection on the part of the other countries concerned to one country giving effect to tariff reductions before them, The date agreed upon would simply be the last date upon which they could give provisional application - but, of course, I am open to correction by any Member of the Committee. The Delegate of Belgium. 18 J. E/PC/T/TAC/PV/4 M. P. FORTHOMME (Belgium) (Interpretation): Mr. Chairman, I think the proposal of the Australian Delegate extremely reasonable, and probably the most practical one we have heard so far, but I have some doubts about one aspect of the question and I would like to hear what solution can be found to it. The procedure suggested by the Australian Delegation supposes that, at the time of the signing of the document, all Governments concerned will have reached a final decision concerning the reservations they made to the different Articles contained in the General Agreement. Therefore, before the time of signing the document, it will be possible for them, if they maintain their reservations to have the text re-opened to see what solution can be found to the difficulties due to the reservation. But if no final decision is reached before the date of signing, the Governments will be faced with two alternatives: either they will be in a position to withdraw their reservations, and then nothing will prevent them from signing the document, or they will not be in a position to withdraw their reservation, even if it is a minor one, and then they will not be able to sign the document. I would like to know what solution can be fount to this difficulty. CHAIRMAN: The point just raised by the Delegate of Belgium is a most important one, and it is one to which we will have to give very careful consideration. However, I think it would be better if we could defer discussion on this particular point until we reach items 5 and 6, because that is where these points can best be discussed. It would, I think, help the discussion if, for the time being, we just keep to the question of Significance of Signature of the Agreement at Geneva. There are, of course, a lot of 19 J. E/PC/T//TAC/PV/4 questions to be raised on Significance of Signature at Geneva, but we will try to deal with them under the points we have provided for in this Agenda. The next speaker on my list is the Delegate of France. M. ROYER (France) (Interpretation): Mr, Chairman, I would like to ask the Delegate of Australia for a clarification. The proposal he made aims only at introducing an additional stage in the procedure of signing at Geneva. Otherwise, the procedure provided for in the Australian suggestion has exactly the same effect as the procedure provided for by the Working Party Draft. However, there is an obscurity here. I would like to know the date on which the names of the countries who are prepared to implement the Agreement provisionally will be inserted in Article XXXII, or in any other part of the Charter. I think it is important - and the French Delegation has expressed the difficulties of implementing the Agreement - if only a smell number of countries are party to it. I would like to know at what time we will know which countries are prepared to implement it provisionally before December 15th. CHAIRMAN: Would the Delegate of Australia care to reply to that? DR. H.C. COOMBS (Australia): As I understand it, other countries would know which countries had signed the General Agreement provisionallly as they signed, and they would know, therefore, by the 15th November, how many had agreed to implement it by the 15th November. They could then decide whether there were a sufficient number who had signed to warrant taking the action which they had J. 20 E/PC/T/TAC/PV/4 agreed to take, which their signature implied their willingness to take, so that if, on the 15th November, the Government of France found that there were X countries which had agreed, which had signed the General Agreement and had therefore undertaken to make it provisionally operative on the 15th December, and they believed that X was sufficient for their purposes, they could go ahead. On the other hand, if they felt that the number was not sufficient, or that it did not include countries which were essential from France's point of view, then they could abstain from making it effective. That, as I understand it, is the purpose of Article XXXII: to give you a clear right to take back the obligation implied by your signature, if corresponding action is not taken by other countries. CHAIRMAN: The Delegate for Cuba. DR. G. GUTIERREZ (Cuba): Mr. Chairman, if the Cuban Delegation had not had very serious doubts of the legal and juridical possibilities of what we are trying to do, it would not have presented for the consideration of the other Delegations the problem it has presented. I am very sorry to state that, according to my experience as an old student of international law, I do not see what difference exists between the Final Act to be signed and the Treaty. According to the decision of the International Court of Justice, treaties are undertakings of obligations and rights, and whatever we call it - a protocol, agreement, final act or anything else - it will always be a treaty. I do not want to go into the technical discussion of this matter. For us, it is the same final act in this type of treaty 21 J. E/PC/T/TAC/PV/4 as the Delegate of France has just said so ably, and I do not know what kind of treaty is this one that stands by Article XXXII when it takes up the question of Provisional Application. There are four Governments that can apply the provision, and if they want to call that a multilateral treaty between four nations, that is all right, but if it is supposed to be the basis of a treaty to be open to the rest of the world, that is quite different, especially when you take into consideration that they will apply provisionally only Parts I and III of the Agreement, that is to say, eleven may be Articles, leaving out twenty-two which / going to be modified by the World Conference, and the whole Treaty is not going to enter into force until next year. E/PC/T/TAC/PV/4 It seems more practical not to rush this matter in that way, but to have the draft Charter approved or modified, and have a definite text, and then have the whole document in force at the same date, because according to our suggestion, it will not make any difference at all when the obligations enter into force: they will enter into force the same day. The only difference would be that in one case we would have a complete legal backing, and in the other case we would be making circles around a problem without giving any real decision. That is the only point to which we want to call the atten tion of the different Delegations assembled here, because it seems to us that we are overlooking the juridicial aspect of these obligations. Final Acts generally do not mean obligations upon the Governments: they are only recommendations; and if they place obligations upon the Governments, they are no longer final acts - they are treaties. CHAIRMAN: The Delegate of the United States. Mr. Winthrop BROWN (United States): Mr. Chairman, first may I say that I entirely agree with your statement that provided there is simultaneous publication and entry into force of the document, there would be no objection if there wore some differences in the actual time at which they were put provisionally into force, provided there was a date before which that must be done. I think the point made by the Delegate of France is an important one, and for our part, we would like to have it definitely decided, before we begin the final act, as to which countries are the so-called "key" countries: in other words, that we should have an agreement before we leave here that certain V 22 V 23 E/PC/T/TAC/PV/4 countries making an adequate trade coverage would put the Agreement provisionally into force by the dates selected, provided sufficient other countries to make up that coverage, and including certain key countries, had done likewise. We feel, with the French Delegation, that it is important that that be fixed before we leave the matter. As far as the point raised by the Cuban Delegation is concerned, I would like to add our Delegation's support to the points made by the Delegates of Australia, United Kingdom and Canada, about the extreme difficulty which would be involved in having a prolonged time between the conclusion of negotiations here and the entry into force of the General Agreement. CHAIRMAN: The Delegate of Australia. Dr. H.C. COOMBS (Australia): Mr. Chairman, I would like to refer to two points which have been raised. The first is the question of key countries. I quite agree that the countries are entitled to be able to anticipate what is going to be done by the key countries, but it seems to me to be impossible for key countries to give an undertaking here in Geneva that they will make this Agreement operative by the 15th December, and it is the purpose of the procedure which we have outlined to avoid that. I think that the position is quite adequately met if here in Geneva the countries which are agreed to be key countries will undertake to give a decision; and as they will undertake to give a final decision by the final signing day, that will mean that if the decision of their Government is a favourable one, other countries will know that they are coming in by the final signature date, and then it will be possible for all the other key countries to know definitely whether their requirements for 24 V E/PC/T/TAC/PV/4 provisional operation are met. The thing to be avoided is uncertainty as to whether all the key countries are, in fact, going to be in; so that all we need is an undertaking from any country which is regarded as a key country that it will reach a decision by that date. I am not sure if Australia is classified as a key country for this purpose, but we are prepared to give an undertaking to reach a decision by that date, and I think that is as much as we can be asked to do. The other point was the nature of the Final Act. I am not a lawyer, and I have very little experience of international conferences, Mr. Chairman, but it seems to me that in this matter we can make the Final Act what we like, and what I had in mind was that the Final Act would be a brief outline of what had taken place in descriptive terms, and a statement that the Delegations here represented had agreed upon the texts attached, which would be submitted to their Governments for their consideration. If that is the nature of the Final Act we want, then it seems to me, Mr. Chairman, that we are fully capable of seeing that it takes that form. CHAIRMAN: I think we have had an extremely useful discussion of this point 2 on our Agenda, and the discussion so far has advanced the ideas on this question. Do any other Delegates wish to speak? Dr. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, as my instructions and powers are at present, the Netherlands Delegation will be able either to intiial or to sign an Agreement at the end of the Geneva Session. I am speaking on the basis of the present discussion, and I am entirely in agreement with either the proposal of Dr. Coombs or the ideas of Mr. Winthrop Brown, so I await the development of our discussions. I would only like to point out that when we have to sign, we will, in the first place, sign on behalf of the entire Kingdom of the Netherlands, including all its overseas territories. E/PC/T/TAC/PV/4 There again, with regard to our Tariff concessions you will find this position, that for the Metropolitan territory our signature will be connected with that of Belgium and Luxemburg, because it will be a Benelux concession for a customs union. For the other overseas territories, we might have to make certain reserves, as, as you know, the Kingdom of the Netherlands is in course of re-construction, and so there may be a day when we declare/certain territory autonomous in its external and commercial relations, when they have reached the minimum status. In that case we will make efforts to have those countries accept and follow what we have signed. But there might be here a certain difficulty for which we must make a reserve which in due course we will work out. This may be a difficulty confront ing other countries, when we have a long discussion on Tariff Agreements, so we might also raise this point for discussion in this Committee. Mr. RODRIGUES (Brazil): Mr. Chairman, in regard to this point 2, I should like to state that Brazil would like to follow as close as possible the Australian Amendment; but our constitution requires that any agreement before put into force must be approved by the Congress. We would do our best to get the approval of the Congress before November 15th; but we are not in a position to take any commitment with regard to the action of the Brazilian Congress, and I should like to explain our position, because if we cannot get approval before November 15th we will be in a position very different from the situation given by the Australian Delegate. Mr. MELANDER (Norway): Mr. Chairman, I take it that the Australian proposal for a Final Act will mean that the Delegations 25 G 26 G E/PC/T/TAC/PV/4 signing the Final Act will not bind the Governments of their Countries legally to anything at all. They will only authenticate the text of the Agreement. That is their legal obligation. Secondly, do facte, the Delegations which sign the Final Act will do so if they consider that they are in a position to recommend to their Governments to accept as a binding obligation the obligations set out in the Final Act. That I take it is the idea of the proposal. If that is so, I would say on behalf of the Norwegian Delegation that we would be in a position to sign the Final Act, if we considered that the General Tariff and Trade Agreement were such that the Delegation could recommend to the Government to accept it. That, of course, will depend on the clauses which will be included in that Agreement. CHAIRMAN: The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): Mr. Chairman, I only have a small point to make in reference to the position of overseas territories which are autonomous in respect of the matters provided for in the Agreement. The position with regard to those territories will be very similar to the position as stated by the Netherlands in regard to the Netherlands overseas territories. The point is that the United Kingdom Delegation cannot agree to bind those territories which are autonomous in these respects. It will have to wait for them to decide, and that will involve a slight modification of Article XXXII as it is at present provided. That is all I have to say. Mr. SPEEKENBRINK (Netherlands): Mr. Chairman, when Mr. Shackle associated himself with my remarks, I think he was under a misapprehension. I spoke of countries that might receive G 27 E/PC/T/TAC/PV/4 autonomy in the contact of their external and commercial affairs, or become a Dominion, which at present do not have that status. Mr. SHACKLE (United Kingdom): I think I did appreciate that distinction. The position is that some territories, in our case, are already autonomous as regards this. CHAIRMAN: The Delegate of South Africa. Dr. HOLLOWAY (South Africa): Mr. Chairman, I think perhaps we may make some progress if we just go on really substantial things, and then let the form be decided afterwards. We have form and substance a little bit mixed up. The first important thing is authentication of the text. That obviously has got to be done, and done by the people who have established the text. I would suggest that to meat the convenience of everybody, there should be some time during which the countries here represented should be able to sign somewhere or do whatever is necessary just to authenticate the text. That is the first point which is essential. I suggest we should have some time for that, because it is quite clear some Delegations are going to be negotiating right up to the end of September; and there will be quite a large number of Delegates who will have finished their work long before and cannot stand about there kicking their heels, because all over the world there is a shortage of the type of people who are here, and their countries require tneir services for other purposes. Secondly we require a substantial undertaking, which is to be an undertaking with all the force that is necessary by the laws of particular countries, to carry out the undertakings in that text which has been authenticated. Various countries have various requirements, and we have got to give them time. 28 G E/PC/T/TAC/PV/4 As far as we are concerned I think I have explained that Parliament must approve, and Parliament will not meet until January; so that may be it will be January, or middle February, before our Parliament can consider that text. The position of other countries is different. Therefore it does not matter whether the form is signed or anything else, that instrument has got to be deposited somewhere where that country can consider it. That raises the question, are we all going to insist on everyone here carrying it out before we bring it into force. Well, I think quite obviously nobody is going to insist on that absolute condition. If one or two fall by the wayside, I think the rest will probably still be prepared to go on. Therefore, in that instrument, whatever you make it, you have got to state that the countries undertake to bring it into force when not less than so many have brought it into force, and possibly give a date by which that can be done. That is or is not necessary according to the views of Delegations. point You have got a third/, which is a subsidiary problem dealing with the entry into force. The third is exactly the same as the second, that is, an instrument is required by which countries undertake to bring the provisions into force provisionally. As soon as "x" countries have agreed to do that, on the day when it is announced that "x" countries have done it - off you go! Those who can will bring it provisionally into force. Those are the only three points we have to decide. Whether you sign, or sign ad referendum, or anything of that sort, is not important. If you get those three things fixed in a document you have solved your problem. S 29 E/PC/T/TAC/PV/4 CHAIRMAN: The Delegate of China. H.E. DR. WUNSZ KING: (China): So far as the Chinese Dele gation is concerned, we shall have no difficulty in signing the Final Act on September 30th, if by that time the texts of the Agreement and of the Tariff Schedules are ready. We understood that the Final Act is actually by no means final and that the signing of the documents will, as has been pointed out by the Legal Expert attached to the Secretariat, merely serve to establish the authenticity of the texts, but I am not sure whether the Chinese Government will be able to signify its final acceptance by or on November 15th. This is because of two simple reasons: first, the legislative procedure might entail a considerable amount of necessary delay, and, secondly, unless the whole question of reservations is solved in the meantime, there will certainly be a great amount of difficulty in this regard. As to the question of adherence to the provision concerning Provisional Application, I shall reserve my opinion until we come to that. CHAIRMAN: Are there any other speakers? The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I shall be very brief. I simply want to make it quite clear that, by initialling or signing the Final Act, the texts of the Agreement and of the annexed lists will be established once and for all, and it should not be understood that the signature of the Final Act would enable some parties to re-open the text of the Agreement or, even worse, the tariff concessions. 30 S E/PC/T/TAC/PV/4 After the signature of the Final Act, any country will be able to ratify it or not, but no alteration of the text will be. possible without the general consent of all the signatories. CHAIRMAN: I believe Dr. Coombs would agree with that interpretation. Dr. Coombs (Australia) Yes, Mr. Chairman. CHAIRMAN: The Delegate of Czechoslovakia. H.E. DR. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, the more I listen to all these speeches and declarations, the more I think of Goethe's "Faust", where he says: "Das ist die Flucht der bïsen Tat" - "the cause of the crime was a bad deed !" - I think that our bad deed is that we have put in the hundred-years'-old practices of commercial policy, that is, the bilateral tariff agreements extended to all countries have a Most-Favoured-Nation clause. We put it in a footnote, with three provisos or two provisos on its coffin. If we did away with this very old practice, I think eighty or ninety per cent of our difficulties would disappear, because it would always be open to countries which have negotiated to put the concessionss into force if they find it convenient to themselves. If we try, all together, by one stroke, at one moment, to put them into force, we have either to- wait until the last one is able to put them into force or we have to revise all our schedules because, if there were, for instance, only ten countries able to put them into force, then of course no country would be ready to put into force unilateral reductions of customs tariffs for those countries which are not willing to put them into force. 31 E/PC/T/TAC/PV/4 That is why I think we should consider carefully what we are doing and if we wish to remain in those difficulties, which you will see are extremely grave and which may make it possible that, at the end, nothing will remain of the whole Agreement. On the other hand - at least, I speak for myself - we are all tired and we would need a certain time to think over the problem and to consult our Governments. That is why I want to suggest question of that we leave now, at this moment, the/tariff agreement negotiations, that we sleep on it, and that we return to the discussion of this matter, say, when the tariff negotiations are over, which would be after the 10th September. Mean while, we would have sufficient time in which to consult our Governments and to see what are the possibilities and which way could be chosen. ER 32 E/PC/T/TAC/PV/4 Dr. H.C. COOMBS (Australia): I just wanted, to make a small point, Mr. Chairman, particularly in relation to the comments of the delegate from South Africa. It seems to me that we could agree (1) that .'r.;. should, at the end of the Conference prepare a document establishing the authenticity of of Geneva, /the text; (2) that a final date for signature by key countries should be fixed - such as the 15th November; (3) that there should be a date on which it is agreed that the full text would be published simultaneously - such as the 16th November, and (4) there should be a date on which the General Agreement would enter into force through provisional application by key countries - such as the 15th November. I think all the points are covered, and those countries which are not key countries and who would find a diff iculty to adhere to that programme because of constitutional difficulties, would be able to adhere at any time convenient, consistent with their con- stitutional necessities. Mr. WINTHROP BROWN (United States): Mr. Chairman, I agree entirely with the delegate of Australia. M. E.L. RODRIGUES (Brazil): The explanation which was just given by the delegate for Australia is very useful to me, but I should like to explain our position. Our constitutional procedure in this case would be to sign the Agreement ad referendum and send if it to the Congress. In this case, however,/we .-..... nnot get the of the Congress approval/for the 15th November, we would accept another date, such as June 30th, 1948, and that will cover our position. Otherwise I will not be able to sign the Agreement because I cannot commit myself without the agreement of the Congress. Dr. J.E. HOLLOWAY (South Africa): I suggest that either a small Committee or theTariff Working Party be asked to draft an instrument on these lines. E/PC/T/TAC/PV/4 M. PIERRE FORTHOMME (Belgium) (Interpretation): Mr. Chair- man, I merely want to raise one point. If the date of publica- tion is appointed for November 16th, that means that no country able to will be/submit the Agreement to its Parliament before that date, because submission to Parliament implies publication. CHAIRMAN: A very valuable point has been raised by the dele- gate of Belgium, and we must consider it when we come to the next item on our Agenda, which is Tentative Timetable of Developments. Are there any other speakers? I think we have a substantial measure of agreement among the majority of the members of the Committee on the proposals which were put forward by Dr. Coombs in the earlier part of our debate. I think there is a fairly general agreement that there should be a document prepared which would establish the authenticity of the text, - not of the General Provisions but of the tariff concessions,- and that this document should be signed by all the delegations if they find it possible to sign it. I also understand from the elaboration of Dr. Coombs's pro- posal by Mr. Brown, that those delegations who wish to sign the document in Geneva could do so, but according to the proposal of Dr. Coombs the date of signature should be left open to the date to be agreed upon. We should also agree as to the date of simultaneous publication, and later on, to the date of provisional application by key countries. Does the proposal of Dr. Coombs share the support of all the delegations that are represented in this Committee? The details will still have to be worked out, and we will be coming to the principles involved in some of these details in other items of our agenda. Later on we will have to proceed to the general drafting. That can either be considered in connection with the Articles of the Agreement/or if it is the wish ER 33 EF 34 E/PC/T/TAC/PV/4 of the Committee later on to adopt the suggestion of Dr.Holloway that the text of the final Act should be drafted, we can do so but I would suggest that we postpone that for the time being until we come to the other items of our Agenda and until we see the whole picture more clearly. As to the suggestion raised by the delegate of Brazil which relates chiefly to the provisional application of the Agreement, we will come to that under point 4. There has also been the point raised about key countries' provisional application. We can consider that under point 4. There is also the important question of the dates. We shall come to that in our next item, No.3, and we will have a full dis- cussion on that which will help to clear our minds on that particular problem, so I think we can leave the discussion on the date of signature in Geneva. I do think there is general agreement on this point. We can go on now to the next point in our Agenda and decide later on as to what steps we should take to appoint a special sub- Committee for that purpose. With regard to the suggestion of Dr. Augenthaler that we should postpone further consideration of the General Agreement until we have completed our tariff negotiations, I take it that if we now do not/consider the General Agreement/we would have to stay here another month after we have completed the tariff negotiations, and this would make it difficult for those governments who are in the position of the South African Government who want their key men back. I therefore do not think it is necessary that we should pro ceed with the suggestion of Dr. Augenthaler and if the Committee 35 ER E/PC/T/TAC/PV/4 agrees we can take up other points in our agenda which are given in our working paper, at our next meeting. We have not yet touched point (b) on page 5 which raises the question as to whether or not the signing of the General Agreement will constitute an obstacle to the freedom of discussion at Havana. We shall consider that at our next meeting. I would now like to hear the views of the Committee as to whether we should have a meeting tomorrow or postpone it until next Monday. We could have our meeting on Monday afternoon, or we could have it tomorrow morning. I have the impression that most of the delegations will wish to have time to prepare their statements for the public session, and if it is the wish of the Commission we shall postpone our next meeting until Monday after- noon. 36 J. E/PC/T/TAC/PV/4 CHAIRMAN: The Delegate for Australia. DR. H.C. COOMBS (Australia): I wanted to ask, Mr. Chairman, whether it is really necessary not to have a meeting tomorrow morning? We regard this question of the General Agreement as one of very great importance and of very great urgency, and we would wish, therefore, to proceed with the discussion of the problems embodied in it as early as possible I just wanted to ask, therefore, whether it would not be possible for us to proceed with our deliberations tomorrow morning? CHAIRMAN: If there are no objections, we could meet tomorrow morning at 10.30. M. P. FORTHOMME (Belgium): I would rather not, Mr. Chairman. CHAIRMAN: This is a point of procedure on which we could very well take a vote. Will all those Delegations in favour of meeting tomorrow please raise their hands? DR. G. GUTIERREZ (Cuba): Will that be for all nations, or only for key nations? CHAIRMAN: All the Members of the Committee. Will all those in favour of meeting tomorrow please raise their hands. Those against? I think the energetic Delegations win by 11 votes to 6. We will meet tomorrow at 10.30 a.m. The meeting is adjourned. The meeting rose at 1.05 p.m.
GATT Library
zq385kh3528
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Forty-First Meeting of Commission "A" (Articles 25 27, 26, 28 29) Held on Friday, 15. August 1947 at 2.30 P.M. in the Palais Des Nations, Genxva
United Nations Economic and Social Council, August 15, 1947
United Nations. Economic and Social Council
15/08/1947
official documents
E/PC/T/A/PV/41 and E/PC/T/A/PV.39-41
https://exhibits.stanford.edu/gatt/catalog/zq385kh3528
zq385kh3528_90240207.xml
GATT_155
18,966
117,330
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/*U /PV/41 15 August 1947 SECOND SESSION OF THE PREPATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. FORTY-FIRST MEETING OF COMMISSION "A" (Articles 25 & 27, 26, 28 & 29) HEID ON FRIDAY, 15. AUGUST 1947 at 2.30 P.M. IN THE PALAS DES N'TIONS, GENXVA. M. Max SUETENS (Chairman) (Beligum) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel .2247), Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS NUNES P. CHAIRMAN The Meeting is called to order. We shall now take up Articles 26, 28 and 29, which were examined by a special sub-Committee. The report of this Committee is to be found in Document E/PC/T/163. The Chairman of the sub-Committee was Mr. Phillips of the Australian Delegation, and I call upon Mr.T hilli ps to usbimt his report. rM.J .G. PHILLSIP (kustralia): ML rChairman, I have the honou tro submit this report on behalf of the sub-Comamttee. eYT sub-Comzmttee consisted of the rserce.ntatives of usAtralisa Canada, Cuba, Czechozsovakia, Friace, the United Kingdom and the United States of Lemica. In addition, 3r work was reagtay ehelped by the representatives of several other Delegations and by the rprcse.-antives of thEIneternational onetMary Fund and the Intunoeioane Bank iar fRconestruction and Develpmct.e Wcweere abl to ereach substanti-l aagreement on Artio6c 26 :d a29. Or Article 28 dealing with xceltionps from non-discrinnamtion various circumstances ade mit impossible o retach 'nafl conouscions with tihe time at r diousposal. s stated in our rzret, pthe text submitted is tentati anrede subject to furthg coensideztiron by the Govcnmeentzof sthe Djsailongas concerned. In Particular, thr~ a --aweo portizinobnssquare brackets in th teaxt, and those we were unable to rroleve in the tie avamilt16a E/PC/T//S4A1 - 3 - However, subsequent to the completion of our Report there have been further discussions among Members of the Sub-Committee, and as Chairman I am now able to state that a Document will shortly be circulated which has the agreement of the Members of the Sub-Committee and which will remove the necessity for one of the sections in square brackets - that is the section in paragraph 3 (h) of Article 28. I understand also that Discussions among Members of the Sub-Committee will result in some other proposal being put forward to the Commission this afternoon which may have the effect of removing the remaining square brackets, and also of removing some reservations which are contained in our Report. On behalf of the Sub-committee I think we should like to apologise for the fact that these Amendments and new proposals may come up this afternoon; but it was impossible to deal with them in the time at our disposal. I think that is all I need say in introducing the Report, except to thank again the other Delegations who Participated in its preparation. CHAIRMAN: (Interpretation): We shall now take up the examination of the various Articles, beginning with Aticle 26. The Delegate of Belgiu.m - 4 - M. FORTHOMME (Belgium) (Interpretation): The Belgian Delegation considers that the whole of Article 26 is not very felicitous in spite of all the work caused in producing it, and that it would be best to delete it altogether. Article 26 was exclusively written under the impact of the immediate post-war period. It is a compilation of methods in force in 1947, designed to fight with a very limited success the economic difficulties of 1947, but ought we to overlook the fact that the Charter is not intended to be temporary? We should not conceive the Charter as if the post-war period would never come to an end. We, too, have also suffered severely, from the war and understand the anxieties and difficulties which are expressed in the complicated provisions which are suggested to us. We do not criticize the methods now used by such-and-such a Government, which is experiencing difficulties. We know that these difficulties derive from the huge war effort accomplished by this country. We know that debts, the policy of austerity, restrictions on imports and consumption - in a word, all the economic disadvantages, are the price of victor, and freedom, but there is a total difference between the acceptance of a regime of restriction which is the inevitable result of the war and the approval of texts which would authorize the continuation or revival of an unhealthy regime of restriction when we have again a rived at a peace- time economy. A distinction should clearly be made. We must make a far-seeing effort; then the dangers will appear clearly. We shall see that the texts proposed to us militate against our interests and that they will create the evils which we have met here to avoid. EPC/T/A/?PV41 - 5 - E/PC/T/A/PV/41 In the first instance, let us consider the danger of a parallel action between the International Monetary Fund and the ITO. In Articles 8 and 14 the Statute of the Monetary Fund already provides that, when there are difficulties in the balance of payments, this body is entitled to grant permission to restrict imports. One might think that if it was deemed that the question should be dealt with in the Charter, it is because it was considered that the provisions of the Constitution of the Fund could be improved. In the text before us me do not find any improvements, but rather a considerable regression. Two bodies, two statutes, two methods of procedure will, from now on, govern the same matter. The disadvantages are quite striking. We have thus created all the co-ordination difficulties between two international bodies. A few days ago, in the Chairman's Committee, a similar situation was referred to. Our Commission had voted White on a question of the right of voting of non-Member States. Beyond the Atlantic another Council voted Black on the same question and we find ourselves in a bottleneck - 6 - E/PC/T/A/PV/41 and compelled to appeal to the old diplomacy to find a compromise. We are compelled to wait, perhaps, until the Council of the United Nations should arbitrate in such disputes, with considerable delay, between two bodies which each have their pride and their esprit de corps. Do you not think that, in spite of the goodwill of the people involved, such an opposition may also take place later between the ITO and the Monetary Fund ? Do you not think that the prices in business will increase whilst diplomats, Ministers, and the Council of the United Nations are exchanging visits and telegrams in an effort to come to an agreement ? The multiplicity of new international bodies is a danger and we may well fear that we shall here recons- truct Byzantium, which was famous in history because, whilst scholars discussed their theories about the sex of angels, the enemy was driving through the gates of the city. E/PO/T/A/PV 41 These complicated ,. and indeed, unduly complicated discussions, will be an open invitation to states who desire to set up an un- healthy protectionism because theywill be able to play one Charter against another: the Monetary Fund against the I.T.O., the I.T.O. against the Monetary Fund, and, in fact, do what they desire behind the appearance of solem texts. We know that the sab-Committee has reflected on such a manoeuvre. It tries to oppose it by the subtlct7 of the clause of "non-frustration". Do we really believe that we can face up to the evil with this bit of drafting, and in the ab- sence of a remedy would it not be better not to set up or encourage conflicts of competence between permanent bodies and not to create a maze favourable to all men of ill will? Is it possible to make some sacrifice and to think that this lack of organisation is off- set by considerable advantages brought by the Charter by a real progress on the provisions of the Monetary Fnd? It will perhaps be argued that the possibility of discussing within the I.T.O. con- ference is a remarkable progress; henceforth all the countries assembled will be in a position to study what commercial measuers should be takes when a state of alarm has been proclaimed in the financial field. Wc would agree to atdmidit that thig would be a progress if immediately after the essential objects wire not deleted from the subject of the Discussion to leave only speeches on second- qry aspects. In fact, our Charter creates in th eidsucssions hunting preserves and priv?at domnins. We f ar that any policy, as oson as it has been labelled a policy of reconstruction or in- dustrial development or raising of productivity levels or of ocn- stant increase of demand for full employment, will be ntake away from discussions and really made taboo. We fear that the same will happen as regards the senice 'ormulae as is the case with virtue. You know the eruel words which were said in this connection: "Oh virtue what crimes are committed in thy name. " We could similarly say: "Oh, reconstruction; oh, economic development; oh, increasing demand, how amny commercial restrictions rae made in your name.! ER - 8 - Another restriction of commercial matter is equally and in the same way taken away the discussion. It will be prohibited to make referencr to it, except to arrive at platonic scademic recommendations. I refer to that matter which provides that frontiers can be immediately closed to everything except to We authorise, and therefore weu endorso, this selfish and short-sighted policy which States have been tempted to apply all the time and which consists in buying only raw materils abroad and selling only finished products, bearing rich through the benefits derived from the conversion. In this first trade Charter, we are restoring the narrow policy of mercantism , which is condemned by experience, condemned by economic doctrine for almost two centuries, condemned by a memorable revolution which took place beyond the Atlantic in 1776. It which is necessary to repeat here that imports/are considered as non- essential for the consumer are considered essential for the producer. For instance, the importation of wines is superfluous, but the export of wines is essential for a country of vine growers which has capital invested in the vines.. The same applies to the textiles, etc., We can do without them, but the producer country cannot stop producing and selling them. The economy of all the countries which are represented here,bon itad brt¾, i s, depefwell .sother_s for its equinmlibriucm geupoahe exehnk:f nopn-dQcstmtil -rCta. Thoeroe er;re c nr-osdftisdal pro'uc i yr evedoped hmoi hl cv -nm econoray The qcualinfia.tifs cve d citrasogc h..ra 3(c) (ii) is only in appearanced a elusion. ;ciexpenaeasce ,vs shown that syrmblic inrpotation was of no .J E/PC/T/A/PV/41 help to the industries suffering from restrictions. To allow a State which is experiencing financial difficulties to close its frontiers immediately, except for the purchase of raw materials or investment goods, would create, on the basis of the Charter, unemployment and financial losses in the territories of states - all the neighbouring/. this, without any previous authorization, without even the possibility of having the matter usefully discussed later by the International Trade Organization, since the complaining State will immediately meet a kind of forclosure. It would be indicated to that State that this discussion is forbidden under the Charter or that its conclusions woulo be fruitless. We might, therefore, ask ourselves if the advantage of being able to discuss commercial measures remains an advantage, since the discussion will be narrow and limited. The set-up for those who wish to institute an unhealthy protectionist regime is, therefore, simple. One builds up as one likes a balance-of-payments in disequilibrium, one increases it on imports by some programme or other;- (i) by re-equipment of roads and railways, (ii) by construction. of houses for the workers and social installations, and (iii) by town planning hand development. On the other/, one restricts exports to lower the prices and raise the standards of living. Next, the International Monetary Fund and the International Trade Organization must approve these plans. Then, one closes one's frontiers to all but raw materials which are not found in the country.- Finally, should someone raise an objection, a reference is made to Article 26. Thus we arrive at the capital mistake in the text. This article contains a method to create economic depressions. Pre-war experience has shown that when a country is threatened with J - 9 - J. - 10 - balance-of-payment-difficulties, it is neccesary to sound the alarrms urgently and to warn that by some instinctive reflexes, which are frequent in the case of panio, it does not take defensive measures such as are likely to lay the evil upon its neighbour. Article 26, instead of circumscrbing the source of evil makes it possible, without any discussion and with the formal authorisation by the Charter, and therefore with a kind of injunction from the Charter itself, immediately to spread economicr.IO3 vices. This Charter contanains ma acutoti multipofeliecr mic eono u.seqalimtriur Arand ,icle 26 is a machinem to aacnuafdusre,a bre. :r-ropagateco eoucmio isceSm lai io.tu he ones which happened bweeten 192a9 nd 5l95,a universal fuamentalnd depression which upset world business anpd oliticalrd oer. V E/PC /T/A/PV/41 We make an urgent appeal to the Commission to realize the harmful effects of Article 26. We can now see with a certain unconcern the closing of frontiers, since it will always be possible to sell elsewhere . Buyers are not lacking. But we should think of the slippery slope of depression. . The first State which loses its footing on the balance-of-payments ascent may, under the Charter, push a second State down. Then that one will also pull down a thiL one, and, like Alpine climbers in distress, they will all fall down at an increasing pace. In a word, it will be a crisis on behalf of the Charter and in conformity with the provisions of the Charter. Airticle 26 seems to have forgotten to such an extent that there may be periods of economic depression, that it contains in this connection only a narrow provision at the end of Section 5, when it is provided that after it has been found that the disequilibrium is general, a Conference may be convened to advise upon ways and means. We imagine that this Conference will be more or less like the one which met in 1933 to study what remedies could be found for the crisis which had started in 1929 Is it not feared that once more we shall come too late? Is it not necessary to provide at least for the obligation to call a Conference urgently as soon as the germ of the economic disease is detected in a country, in order to prevent spreading contagion? We hope that the Commission will realize that we have asked, even at a belated time, for a new effort, in order that we shall not appear later as people who, instead of avoiding fires, have created a whole machinery in order to spread them, and have taken every step to ensure -that the fire brigade shall - 11 - V E/PC /T/A/PV/41 systematically arrive late. If we do not delete that text, the Charter, instead of being a Charter for economic development, will be a Charter for depression; instead of economic co-operation we shall have autarohy; instead of a Charter for full employment, we shall have a Charter of unemployment. CHAIRMAN (Interpretation): I have listened with the greatest interest to the statement just read by M. Forthomme. This statement suggests the deletion of Article 26. M. Forthomme has raised a number of points, and I think that if I allowed a discussion to take place now, it would last the whole afternoon. As we must conclude the examination of Articles 26, 28 and 29 today, I shall, with your permission, ask one Delegate, and one Delegate only, to speak in favour of Article 26. After that, if M. Forthomme insists, we shall take a vote on the deletion or maintenance of Article 26. Is there any Delegate who wishes to speak for the maintenance of Article 26? Mr. J.R.C. HEIMORE (United Kingdom): Mr. Chairman, I think that those who have been concerned with the project of the I.T.O. since before 1945 might be forgiven for supposing that the Principle of Articlc 26 was generally acceptable to the Countries which havo been on the Preparatory Committee, and therèfore if my remarks about it are somewhat impromptu a it is for that reason. Obviously, everyone here who is concerned with the expansion of international trade must sympathise with the desire that trade should not be subject to restrictions on balance-of-payment grounds. But, unfortunately, we know - 12 - V - 13 - E/PC /T/A/PV/41 that countries are in balance-of-payments difficulties, and I do not think that anyone here would be prepared to guarantee that they will not be in balance-of-payments difficulties again even after the so-called transitional period. We should, therefore, not be doing our duty if we failed to provide for a set of rules to ensure that those restrictions were applied only when necessary, and only to the extent nacessary. The alternatives would be to allow them to be appIied whenever anybody thought fit, without any rules, which would befar worse for international trade - and, I suggest, for international peace - than Mr. Forthomme has suggested; or we should not provide for balance-of-payment restrictions to be used at all, in which case I am absolutely certain there would be no International Trade Organization. As so often,we have attacked these difficult problems on the basis of trying to understand them; trying to see what it is that causes particular countries to use particular methods; trying to see what difficulties those methods cause for others, and *1.t., at a synthesis of that thought in a set of rules which look cG'Gri er;i itod. It is much better; it seems to me, to have complicated and reasonable rules which can be understood after study, than to have no - rules. Now, I hope Mr. Forthomme will forgive me for suggesting that he has not realliy digested article 26 in its present form. It is quite true that, as he says, in the name of development, social policies and so on (I have said it so often I have forgotten how it goes now!) a Member can decide priority as between the various classes of his imports. It seems to me very strange that if that is so wrong ini the future, the Belgian Delegate himself should have said that he understood exactly what it was being done now. Either a country has foreign exchange resources to buy all it wants or it has not. If it has not the exchange resources to buy all it wants, then it must buy some things it wants more than others. I think I have said before in this Commission that it is the habit of many people who are not in balance of payments difficulties to assume that those countries which are in balance of payments difficulties rather enjoy restricting their imports. I can assure those countries, if there are any, that it is not at all an enjoyable thing. One buys one's bread before one's jam, but there is no pleasure whatever in eating dry bread.; nor, indeed, in knowing the grocer who sells the jam. And we do see immediately in the sub-paragraph immediately after the sub- paragraph which allows that order of priority to be drawn up, that countries which apply the restrictions shall do so in such a way as to avoid unnecessary damage to the commercial or economic interests of any other Member. I do not believe; Mr. Chairman, that those words are there for fun. They are there as part of an undertaking which we Suggest countries should comply with, and after all, the United Kingdom is not only in balance of payments difficulties itself, it is suffering quite considerably from other people's balance of payments difficulties, and I have no hesitation whatever in saying that if other countries were to use their balance of payments difficulties - as I do not believe they would - to inflict unnecessary damage on the commercial or economic interests of the United Kingdom, I should have no hesitation in taking them up under that sub-peragraph, and I hope that every other country would do the same, if it similarly thought that unnecessary damage was being done. We have some other things, too, in this Article which are - 14 - - 15 - worth remembering. In the first place, we do not say that once you are in balance of payments difficulties you can restrict as much as you like. We say that When you are in balance of payments difficulties you can restrict to the extent necessary. It is an exceedingly important distinction between the blank cheque once you are in difficulties, and the liberty or licence to do as much as is necessary to meet with the difficulties; and we go on and we provide that as you get out of the difficulties the restrictions are progressively to be relaxed. We provide many other safeguards. We provide for complaints, for consultation, and in extreme. cases for a Member to be told that he must either alter his ways or leave the Organisation; or, as it says in the Article, he must either amend his ways or have unpleasant things done to him - which, of course, means the same thing. That is quite a serious deterrent. Finally, we provide that if there is persistent and widespread difficulty, the Organisation itself shall take the initiative to see what can be done, and I do not think, Mr. Chairman, we ought to look at this article in isolation. There are many other things in the Charter which we hope will cure the circumstances that give rise to balance of payments difficulties. There is the Employment Article, there is the Draft Resolution which in due course we hope will go before the Economic and Social Council, which we drew up in London and omitted to mention at the Geneva Meeting, because presumably it was generally understood to be a good Resolution and one which had come forward at the right time. There we provided for a whole series of types of action designed to prevent the loss of markets, which may be the first sign that balance of payments difficulties are going to develop in the future. I am afraid, Mr. Chairman, that these have been somewhat halting remarks, made completely impromptu; but so far as I have been able to, I have endeavoured to answer the views which have been put forward. S - 16 - CHAIRMAN (Interpretation): I will ask M. Forthomme whether he is prepared to reserve his position until we have concluded the reading of Article 26. Some amendments may be submitted which may alter the aspect of this Article. Therefore, at the conclusion of the reading of Article 26 we will ask M. Forthomme whether he insists on his position. The Delegate of Belgium. M. FORTHOMME (Belgium): Mr. Chairman, I do not wish to hold up this debate and I would be perfectly willing to agree with your suggestion, but before doing so I would just like to add a few words. The Commission should not remain under the impression that in my proposal I had lost sight of the necessity in which many countries are placed nowadays, through balance-of-payments difficulties, of adopting exceptional measures, In the original speech I made, I mentioned my under- standing of these circumstances, an understanding ;which is prompted by the fact that my own country is one of the countries which has suffered from the war and is, moreover, a partner in a customs union with a country which has suffered even more from the war. it reminds me of Guauctemoc, Emperor of Mexico, who 'was being roasted on the grill with a number of retainers and allied kings and, when they were all complaining and screaming at one moment, turned round and said: "Do you think I and lying on a bed of roses?" Therefore, before we go on to the debate on Article 26, I would just like to add this: my proposal that Article 26 should be deleted should not be understood as a sterile and bare proposal of sheer deletion. I do think that some E/PC/T/A/PV/41 S - 17 - E/PC/T/A/PV/41 provision should be made in this Charter for this transitional state of affairs. I think that the whole of Article 26 is too elaborate, opens too meany possibilities for abuse, and is of too definitive a charsoter for the purpose, but I do think thet the wise thing would be to delete Article 26 and ut in a provision to deal with the immediate balance-of-payments difficulties, rather on the lines of the present Paragraph 3(a) of Article 26 which we have before us. It would then be possible, later on, for the Organization to study and, in view of the circumstances which will have arisen, in, say a rear or two's time, draft a definitive Article in which more mature principles could be embodied. E/PC/T/A/PV/41 CHAIRMAN (Interpretation): We shall now take up the study of Article 26, paregraph 1. Are there any remarks? Paragraph 2, sub-paragraph (a). No remarks? Sub-paragraph (b)? Paragraph 3, sub-paragraph (a): sub-paragraph (b). Mr. L.C. WEBB (New Zealand): Mr. Chairman, I have been instructed to ask for the insertion of some words "notwithstanding the provisions of paragraph 2 cf this Article, after (i). I have circulated the text of this amendment. It is not an amendment of substance. It merely removes a slight difficulty which we have found about the word necessary" in 2 (a). It has seemed to us possible that the word "necessary" must be construed to mean that the maintenance of import restrictions would not be necessary because there is after all something else you could do to avoid the mainten- ance or the institution of those restrictions. That situation is dealt with in 3(b)(i), but it seems to us that it will be an improvement to make the matter clear by the insertion of the words we have suggested to make it clear that the Organisation may not interfere with certain domestic policies. Mr. G. BRONZ (United states): Mr. Chairman, paragraph 2 (a) provides that restrictions may be instituted, maintained or intensified only to the extent necessary to carry out certain changes or direc - tions in the monetary reserve position. Paragraph 3(b) (i) says that assuming that suchrestrictions are necessary "no Member shall be required to withdraw or modify restrictions on the aground that a change in such policies would render unnecessary the restrictions...." It seems to me that 3 (b) (i) is perfectly clear in that respect, but the amendment proposed by the New Zealand delegation would he redundant and would probably be unfavourably received by the Legal Drafting Committee who worked over the text, and I suggest that it is quite unnecessary, and that the aim the New Zealand delegation - is - E/PC/T/A/PV. 41 is attempting to achieve is apply covered by the present text. Dr. A.B. SPEEKENBRINK (Netherlarnds): Mr. Chairman, I have some difficulty in understanding, this paragraph, and it might be that some member of the sub-Committee could enlighten me there. In 3 (b)(i), the same paragraph that the delegate a New Zealand referred to, it is said "Nu Member shall be required to withdraw or modify restrictions on the ground that a change in such policies would render unnecessary the restrictions which it is applying under this Article." Now later on in the next paragraph, with which we have not dealt, I would like to ask a question. Under 4 (d) where we have the consultation clause we read: "If no such settlement is reached and if the Organisation determines that the restrictions are being applied inconsistently with the provisions of paragraphs 2 or 3 , and there I get a little bit muddled. If you say here that "No Member shall be required...." and so on, and in the next paragraph you say that it is inconsistent with the pro- visions of paragraphs 2 or 3, is it then not the case tha t a Member can always say "Well, that is is interference in my domestic affairs, and you connot ask me that because it is fully consistent with 3(h) (i) ER -19 - - 20 - MR. J. G. PHILIIPS (Australia): Mr. Charman, I do not think that there is any contradiction between the two things.. In the view of the sub-committee, 1Ithink, paragraph 4 (d) provides that if restrictions are held to be in conflict with the criteria laid down in paragraph 2, or particularly in conflict with the undertaking in paragraph 3(o) (i), (ii) and (iii), then the Member can be required to modify or withdraw its restrictions, but paragraph 3(b) (1) says only that you cannot be required to withdraw or modify restrictions on the grounds that a change in your domestic policy would make them unnecessary. I do not think that there is any contradiction between those things. If they are necessary in the sense of meeting the criteria on paragraph 2, if they are administered in a way which is in accord with the undertakings in paragraph 3(c), then you cannot be you required to withdraw them on the grounds that if/adoptl a policy of deflation or ceased reconstruction, you would no longer be in difficulties, but if you undertake restrictions which do not meet the criteria of paragraph 2, or if you breok the undertakings given in paragraph 3(c), then you may be required to withdraw the restrictions . DR. A.B. SPEEKENBRINK EENether- ndsietherMr.a.S): o. amChairman, I nderstandingriht in pauagraptn,. tha-p r:gh p(i) opfc aaacrah 2sei lly v-s he praincipparagraphjle ,n in 3 "-r) you havse thie irat caffeanctsme soferti nb aures, avd if you he cfirast eoffets ndyyu ca show gato athe Orniz-ion that you really are harmed by this, then a cathere aiks ose toa ges fnrdom chn i estic policy. . PHILLIPS 'Al. Jal.a lIS.ust1i): I have not quite understood the ointMr. pe eeDoes k' SLobrinXmaintain that the ecfirst e;f( PV/41x T/,,/-''Ql - 21- of applying restrictions will be to break the undertakings in paragraph 3( a) DR. A.B. SPEEKENBRINK (NetherIands): Yes, What I am afraid of here, Mr. Chairman, is that paragraph 3(b) (i) might make an escape clause, and so I would prefer to have here "No Member shall be required to modify restrictions only on the grounds.....". CHAIRMAN (Interpretation): Gentleman, we have now two amendments before us, and I am afraid that the second amendment has made us forget the first one submitted by Mr. Webb. We shall, therefore, refer to the first amendment. You remember that the New Zealand Delegation proposed to add the words "No twithstanding the provisions of paragraph 2 of this Article" at the beginning of paragraph 3(c) (i) of article 26. Does Mr. Webb maintain his amendment in the light of thc explanation supplied by the United States Delegation. MR.L.C. WEB (New Zolaantd: 2M. Chairman, this is purely a quastino of ,hothor a corss rcforucnc is desirablo. Mr. Bronz has su-gcsted that rpobably such a cL ss referancc, owuld, in any case, be cleetod by the Loeal Drafting rotmmitee, but I mcn not s sure on that point bcoause thoeunifr= .lipouc of the Lealg Dr.lting 0Cmimttseehs anot eene to suprepss ers osrfuerceucs, utb only to s uress nouzesarsy cross inreference nda it setsm to s utath this is a "dsirablto vosbsrf,;roee cin view of the fac tthat there is a principle established in para>rah p3(b) (i), and tIhink that ripnacpl-ei s intnaeQdto apply to rapa;phra2( a) at dto this gqaeztn oof necessity. Therefore, I think that the cross-reference is desiraleb to mka kthat plina. In other worad, it is Cdsiraleb to make it plain that no one can cmeo t yoou and say: V"lWl, if you did not pursue a certain domestic policy in connection with your economic development and full employment, then you would not need to apply this restrictions. It seems to me that that is not p-efectly clear frm othe toet andth, erefore, the cress-reference wo.ld be useful. E/PC/T/A/PV/41 CHAIRMAN (Interprotation): In these circumstances, gentlemen, are we agreed that we shall accept the New Zealand amendment? Dr A.B. SPEEKENBRINK (Netherlands): Could not we leave it to the Legal Drafting Committee? -CHAIRMAnterpretation): Tho question must be settled here. Two opinions have been expressed, for and against. Are there any Delegations against tha amendment? ( fewA Delegates raised their hands). I conclude that the others are in favour of the amendmet? The amendment is adoted. The amendment of the Netherlands Delegate reads: "No Mcbr shall be required to withdraw or modify restrictions on the sole ground," etc. Mr. George BRONZ (United States): Mr. Chairman, want to return for a moment to the question of the New Zaland amenedment. I am afraid it was decided on silence by the greater part of the Dcgtcs preeseente, and hle I diewd not want to go too far into it, perhaps we oit to gou ag little further. I am afraid that adding the words as proposed by the New Zealand Delegate would involve a danger, and that is the danger trtparagrahaph 3(b)(i) woulcbe consdtrued to mean that oven if the restrictions are not necessary in the light of paragrph 2(a), tahey might ncorholCe ebo impoesed.e when While/I commented previously I only directed my attenti to the necessity for the words, in the light of the construction plaed by the N. -;ala. wDelegate, Ind think it is important to point out that there is a positive danger that oen if a V - 2 - E/PC/T/A/PV/41 country is not losing monetary reserves and is not in imminent danger, or not otherwise meeting the tests of 2(a), this additional language might. be construed to mean that import restrictions may be maintained. It seems to me that the amendment is dangerous in view of that possible construction and wholly unnecessary to achieve the construction found by the New Zealand Delegate. CHIRMAN (Interpretation)s The amendmmen ha8sbeen carxrid. It will be submitted to tho Lcgal Drafting Committee with the ramraks made by the United States Delegate. Mr. George BRONZ (United States): Mr. nCairman, in view of the fact that only a enewjrpsitive votes were registered, I would ask for a re-count. OCIARAMN (Interpretation): Those in favour of the New Zealand amendment please raise their hands. Those against? H.B. Z. AUGENTIHAK (Czechoslovakia): A point of order. I think we have already taken a vote against". OCAMVItA (Interpretation): The United States Delegate asked that the vote should be taken again, to avoid any ambiguity. Those against? The amendment is carried by seven votes to four, and will be transmitted to the c-Leal Drafting Committee with the remarks made by the United States Delegate. We revert to the amendment of the Netherlands Delegate: "No Member shall be required to withdraw or modify restrictions On the sole ground" t,ce. Any objeocion to this amendment? V - XS - - 24 - E/PC/T/A/PV/41 Mr. L.C. WEBB (New Zealand): Mr. Chairman, I would object to this amendment, because I think we have established clearly that certain policies are outside the competence of the Organisation to interfere with. It seems to me that Mr. Speekenbrink's point is adequately covered by (c)(iii), and also by the general process of complaint and redress under Article 35 (2) -wherever Article 35(2) has come to rest, because there the scope of complaint which a Member has is in no way limited by anything in the Charter, and it seems to me that that provides for his point quite adequately. M. Pierre FORTHOMME (Belgium) (Interpretation): Mr.Chairman I consider that the discussion which has just taken place points out the extreme weakness of the means of defence against any abuse of restrictions, and therefore I support the amendment of Mr. Speekenbrink. CHAIRMAN: The Delegate oof the United Kingdom. V - 25 - Mr. HELMORE (United Kidgdom: Mr. Chairman, I would be reluctant to see any change in the sub-paragraph, which I know has been discussed and re-discussed, drafted and re-drafted, in order to give satisfaction to several -delegations who are already reasonably satisfied with that particular point of view. The reason why I intervened was to quote a precedent from a document which Mr. Forthemme quoted at the beginning of this discussion with such approval - that is the Ati-les of jAosiction of th Ient;enational Monetary Fund. I sc. they had the same problem in xdafting ead they saitd"shall not object to a proposed change because of the admostic, social or political policies of the Member proposing the change". I simpect that if they had agreed with Mr. Speekenbrink, they would have said "solely because" of that. They did not say that, and I suggest we follow their example. CHIIA'RM: The ".dlegeae of tDheNetherlanad. Mr. SPEPKENBRINK (Netherl.ads): Mr. Chairman, I am sorry I cannot I especially with what Mr. Webb just said, that our policies are clearly outside the scope of the International Trade Organisation. It increases my fear, again, of making an ieocpo clause. CHiLAIRi ( Interlrpretion): I therefore insist that yo men Aedntme be taken int conosideration. Considering that the opinions arowiedely different on this subject, I shall ask those who are in favour of r. SMpeekenbrink's monAmeot eto raise their hands. There are 4. Those a,ingst? There are 9 against. Defeated. Ly Afurther roareks on 3 (b)? 3 (c)? The Do,.aete of the United Kingom. E//T/2TPVA/41 G - 26 - E/PC/T/A/PV/41 Mr. HELMORE (United Kingdom): Mr. Chairman, Members of the Committee will be aware, that this is a United Kingdom reservation against c (ii), which refers to the question of "importation" on which we had considerable discussion in the Commission before this Articles was sent to the Sub-Committee. I would like, very briefly, if I may, for the benefit of those Members of the Commission who are not on the Sub-Committee, to explain our reasons for this reservation. As the United Kingdom Delegation explained in the discussion in the Commission, we were very nearly the inventors of what is known as the "total import" policy, and we have been applying it since 1945. It may, therefore, be somewhat surprising to say that we could not accept this paragraph for total imports. The reasons are that, although the paragraph is not in the comprehensive form which caused. considerable objection when we discussed it in the Commiesion before, neither is it in the form which we said was essential for us in order to accept it, namely, that obligations which could be shown to be equal were imposed on all Members of the Trade Organisation. In particular, the words, "to avoid the application" seemed to us extremely weak, and the word "unnecessarily" in the next line seems to us to be open to a completely subjective interpretation by any Member of the Organisation. That is to say, if this were stated by a country to be a necessary restriction, nothing could be done about it. We would be anxious, Mr. Chairman, to get rid of this reservation if some changes can be made to meet us, and I think I should say straight away that we would, with some misgiving. G - 27- E/P C/T/A/PV/41 accept this paragraph if the words "to avoid the application of" were omitted, and the words "not to apply to" were inserted instead, and then leave out "which would unnecessarily", and insert "so as to prevent unreasonably". The first part of it would then read, in full: "Not to apply restrictions so as to prevent unreasonably the importation" etc. Without some such change as that we should be compelled to maintain our reservation against this sub-paragraph. S CHAIRMAN. (Interpretation): Gentlemen, we have now before us an amendment submitted by Mr. Helmore which, if adopted, would make it possible for the United Kingdom Delegation to withdraw their reservation. Is the Commission prepared to consider this amendment? Are there any objections to this amendment? Mr. J.G. PHILLIPS (Australia): Mr. Chairman, this amendment would be acceptable to the Australian Delegation provided there were another amendment lower down in the paragraph the. deletion of the word "of" before "restrictions." CHAIRMAN (Interpretation): Are there any further objections? Is everybody agreed? The amendment is therefore carried and the United Kingdom Delegation withdraw their reservation. CHAIRMAN (Unit ed Kingdom ): :ES, eS, Mr. Chairman. CHAINRMM (Inteerprtation): Are these any further observations on sub-paragraph (c)? Thelee Dgate ozecf choslovakia. HE.MrZ.AENUHALER G:UCzcechoslovakia): Mr. Chaiarm;, as far es I deunrastnd itw,e hn eth qe;stion was discussed in the sub-committewee iisedaaea point.W eee fl it important that under thisdeae of minimum commercial quantities there shoulde b an understood priority for eth import of spare prt, thei Iport of spars parts into a country, youa re akming it impossible for otehr countries to export machinery. I do not wish to move an amendment ehre, the but only to have this on/record. HACIMAN R(Interpret tio)n : That will be don./ S - 29 - E/PC/T/A/PV/41 Are there any further remarks? (Agreed) Gentlemen, I think we shall have a very heavy day and we may have to contemplate a night meeting; therefore it is necessary to have a races. I suggest that we adjourn now until 5.15. This will be all the more necessary because we have just received the Report of the Legal Drafting Committee on Articles 26, 28 and 29, to which it will be necessary for us to give our attention. When we meat again we shall first take up the amendment to Article 25. The Delegate of France. M.BARADUC (France) (Interpretation): When you suggested a night meeting, Mr. Chairman, I take it you forgot that tonight India is celebrating her independence and that we have all been invited. CHAIRMAN (Interpretation): I have not received an invitation and therefore did not know, there was a party. Mr. HELLMORE (United Kingdom): Mr. Chairman, I hasten to say that on August 15 I am no longer in a position to do anything with the Indian Delegation to secure you an invitation. Neverthe- less, I would very much like to suggest that we should not con- template an adjournment for dinner but that we should work straight on; I suggest that the absence of dinner might increased the speed and that, with luck, we should finish by nine o'clock, I have every reason to believe that, in addition to the more normal refreshments at in evening party, we might find sandwich. CHAIRMAN: The Delegate of India. Mr. B.N.ADAKAR (India) Mr. Cheirman, I must apologis on behalf of our Delegation for this lapse on the part of the office of the Delegation in not seeing to it that the invitation intended for you was delivered in time . Chairman: We will meet again at 5.15 p.r (The Meeting ad journed at 4.50 p.m.) ER -SC - E/PC/T/A/PV/41 (The Meeting resumed at 5.25 p.m.) CHAIRMAN (Interpretation): The Meeting is called to order. We shall first examine the amendment proposed. by Mr. Shackle to paragraph 3 of Article 25, which has been circulated. Everybody has read it. Is there any objection to this amendment? Mr. George BRONZ (U.S.A ): Mr. Chairman, the amendment in substance is acceptable to us. I suggest that we should save quite a few words if we kept he first two lines as given in the text and then struck out the rest and said instead: " made affective through state trading operations." Mr. R. J. SHACKLE (United -Kingdom): Mr. Chairman, that suggestion is entirely acceptable to me. CHAIRMAN (Interpretation): Does everybody agree to this amendment in its now form? The amendment is carried. We continue now with the discussion on Article 26, paragraph 4 (a). Are there any remarks? Gentlemen, I suggest. that from now on instead of referring to Document 153 we continue our discussion on the basis of Document 171 submitted by the Legal Drafting Committee. Paragraph 4 ( a) on page 7 n Are there any remarks? Sub-paragraph (b) Sub-paragraph (a). Are there any remarks? Sub-paragraph (d). Sub-paragraph ( e) M. PIERRE FORTHOMME (Belgium): (Interpretation) Mr. Chair- man, concerning the insertion of this new sub-paragraph (e), is it really necessary to maintain the last sentence in paragraph 4(a), which reads: "No Member shall be required in the course of con- sultations under this sub-paragraph to indicate in advance the choice of timing off any particular measure which it may ultimately determine to adopt." We would prefer here to insert the secrecy cause. CHAIRMAN (Interpretation): Has everyone heard the amendment suggested by Mr. Furthomme? Could I now ask Mr. Phillips to give his opinion on this amendment? Mr. J.G. PHILLIPS (Australia): Mr. Chairman, I do not think I could express an opinion on behalf of the sub-committee on this point as I do not remember that it was specifically discussed. Well, for my own part, as t :e delegate for Austrlia I think that the two provisions might still be retained even though I do agree with Mr. Forthomme's idea that they do more or less relate to the same point, but personally I would prefer to retain both even though tho secrecy provision has been added . There is still some point in not, requiring a Member in prior consultation to indicate exactly what he may do. I think the consultation is likely to be more valuable in principle if a member does not feel forced to disclose what he proposes to do, and when. CHAIRMAN (Interpretation) Since Mr. Phillips enjoyed the confidence of the sub-Committee, his opinion would reflect that of the sub-Committee. M. PIERRE FORTHOMME (Belgium) (Interpretation) Mr. Chairman, may I add this: that even before sub-paragraph (e) was inserted, I considered already that the last sentence in sub-paragraph (a) took away most of the scope of the authorisation given on measures ER. - 32 - E/PC/T/L/PV/41 rather indeterninate, and now sub-paragraph (e) does away with one of the real dangers that existed, and which were concentrated in the last sentence of sub-paragraph (a). Thererefore, this last sentence can only serve now to limit the possibility of exemina- tion by the Organisation of measures that are contemplated in the interests of the use of legitimate restriction I think that it would be a good thing if the Oranisation were duly informed of those restrictions. CHAIRMAN (Interpretation): Does anyone else wish to speak on this amendment? - 33 - M. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairman, we would like to have both texts retained as they are at present, because we believe that the position covered by the two paragraphs is not the same. paragraph (e) applies to the which is general clause/provided f or the secrecy of Consultations, whereas paragraph (a) simply provides that the Member will not have to communicate in advance the kind of measures he will eventually adopt. Furthermore, the necessary possibility is left since paragraph (e) speaks of alternative corrective measures which may be available. CHAIRMAN: Dr. Speekenbrink. DR. _..B. SPEEKENBRINK (Netherlands): Mr. Chairman, I also have some doubts here, The particular sentence to which the Belgian Delegate referred must also, I think, be read in coujunction with the last part of sub-paragraph (c), where it says "As a result of such consultations, the Organization may approve in advance the maintenance, intensification or institution of restrictions by the Member in question insofar as the general extent, degree of intensity and duration of the restrictions are concerned. To the extent to which such approvual has been given given.....etc.", and then we are not acting contrary to the principles, but I am wondering, if you do not say anything about the choice or timing of any particular measure, how will you ever be able to give approval ? MR. J.G. PHILLIPS (Australia): Mr. Chairman, there is another aspect of this matter, and I think it might help if I describe briefly what sort of procedure the sub-committee had in mind under J. the various paragraphs of this Article, or rather, the various sub-paragraphs of paragraph 4. Paragraph (a) provides for the prior consultation between the Member of the Organization before the restrictions are instituted, and very likely, we hope, before the Member has made up his mind whether he needs restrictions at all. The prime purpose, as the sub-committee saw it, of this first paragraph, sub - paragraph (a), is to allow or require the Member to go to the Organization when he thinks he may need restrictions. He would then consult with the Organization and the Internationl Monetary Fund as to the nature of his balance-of-payments difficulties, the alternative corrective measures which may be available and the possible effect of such measures on the economy of other Members. This might well be before he had made up his mind either whether he need restrictions or, if so, what form they shoud take. In fact, I think I am right in saying that the sub-committee hoped that this would be so, because there is a better chance of persuading the Member to adopt a reasonable course of action if he has not already crystalised his ideas about the action he should take. There is, however, no question of approval by the Oraganization in this sub-paragraph, it is a question of consultation only. Sub-paragraph (b) piovides for consultation with a Member who is already applying restrictions. Sub-paragraph (c) is a Provision that a Member, if he wishes, may, go to the Organization and got prior approval for restrictions which he thinks he may need in the future, or which he wants immediately, and where he feels he has a strong case for them; therby avoiding the risk of complaint later on the rounds that he was not justified in applying them. Sub-paragraph (d) is, of course, the complaint procedure. - 34 - - 35 - E/PC/T/A/PV/41 This sentence, therefore, at the end of sub-paragraph (a) should, I think, be retained not merely on the grounds of secrecy, but also to suggest that when the Member consults with the Organization under this sub-paragraph he should not be required to have complete his plans, he should not be required to have chosen himself what he is going to do. In fact, as I said before, the sub-committee hoped that in most cases he would not have made up his mind, and this sentence says that he shall not be required to indicate particular measures which he may ultimately determine to adopt. It is. as I said, not only a matter of Secrecy but a suggestion that the Member need not indicate measures when consulting with the Organization. I think, therefore, that the sentance should be retained. V CHAIRMAN: The Delegate of Belgium. M. Pierre FORTHOMME (Belgium):(Interpretation): Mr. Chairman, I have listened with great attention to Mr. Phillips' statement, and I have found it ingenious; but I would better understand it if sub-paragraph (a) did not contain the wards between brackets "or, in circumstances in which prior consultation is impracticable, immediately after doing so". In fact there is such a likeness between (a) and (c) that from time to time one has the impression that it is the same paragraph. CHAIRMAN (Interpretation): Practically every Delegate who has spoken,has spoken in favour of the maintenance of this sentence. In these circumstances, does Mr. Forthomme maintain his amendment? M. Pierre FORTHOMME (Belgium) (Interpretation): I do not insist. CHAIRMAN (Interpretation): Are there any further remarks on sub-paragraph (e)? Paragraph 5. Any remarks? It is adopted. Mr. J.G. PHILLIPS (Australia): Mr. Chairman, before we pass from Article 26 may I just refer very briefly to the fact that there is an Australian reservation on paragraph 2(b) of Article 26? I did not raise that at the time, because we have no amendment to propose, and I did not wish to provoke discussion. Our reservation does not imply that we are t-' agreement with the general intent of the paragraph, namely, that the severity of import restrictions should be relaxed as commitions improve, and that they should be removed entirely when the Member's balance-of-payments is no longer threatened. We wish to be sure, however, that the criteria applied are not so rigid as to require - 37 - that a Member should remove import restrictions prematurely, before its balance-of-payments has been restored to equilibrium on a stable basis. It is because our Government still has some doubts as to whether the present wording gives the necessary flexibility that we are forced to maintain this reservation for the time being. CHAIRMAN (Interpretation): We therefore take note of the Australian reservation. We now take up Article 28. M. Pierre FORTHOMME (Belgium)(Interpretation): Mr. Chairman, may I recall that I raised a preliminary question on the whole of Article 26, and I should like to know now whether your decision to take up Article 28 now means that the Commission as a whole is against this preliminary question? If this is the case, my Delegation makes a full reservation on the whole of Article 26 until a thorough examination has been made by the Belgian Government of that Article within the general framework of the Charter as a whole. This reservation extends also to Article 28 and to the whole of Article 29. As regards Article 28, it is said in the Report of the Sub-Committee that the text is submitted by the Sub-Committee Itself subject to its being examined by the Governments of the Members of the Sub-Committee. Now, if the Members of the Sub-Committee, who have studied this Article for a month, must require the approval of their Governments, the other Members of this Commission should all the more ask for a thorough examination. For this reason too, I must lodge a general reservation on Articles 26, 28 and 29. CHAIRMAN (Interpretation): Note is taken of the reservation made by Mr. Forthomme. V - 38 - Mr. BARADUC (France) (Interpretation): If I am not mistaken, Mr. Chairman, we have only adopted the English text of Article 26. In fact, we have had no time to examine the French version submitted by the legal Drafting Committee, and it might be necessary later in the evening to revise the French text, in which we have found a number of mistakes which I should like to have the agreement not only of the other French-speaking Delegations on, but also of the Commission as a whole. CHAIRMAN: This is agreed. The Delegate of the United Kingdom. Mr. HELMORE: (United Kingdom): I was going to ask you whether you intended to ask us to approve the version submitted by the Legal Drafting Committee of this paragraph which was dealt with before. As far as I am concerned on the English text, I am prepared to say that it would be acceptable with the Drafting Amendments submitted by the Committee straight away. I am a little bit puzzled by the intervention of the French Delegation, since I understood that the French and Belgian Delegations were represented on the Legal Drafting Committees and it seems to me a bit odd that they should now say there are mistakes in the French version they submitted to us. CHAIRMAN: Mr. Baraduc. Mr. BARDUC (France) (Interpretation): May I reply to Mr. Helmore that without disavowing my colleagues (and I think Mons. Forthomme will agree with me) neither myself nor Mons. Forthomme are members of the Legal Drafting Committee, and therefore we have had no time to reed these texts. Furthermore, I have just been informed that the Legal Drafting Committee itself has found that there were a number of E/IC/T/A/PV/41 G errors, and has just circulated a Corrigendum. CHAIRMAN (Interpretation): Mr. Helmore raised another question. He pointed out that up to paragraph 4 we worked on the basis of the text supplied by the Sub-Committee, and then we continued on the basis of the text submitted by the legal Drafting Committee. Is this Commission agreed to accept the version of the Legal Drafting Committee for the first four paragraphs of Article 26? The Delegate of Chile. Mr. GARCIA OLDINI (Chile) (Interpretation): I have a third question to raise, Mr. Chairman. I do not consider it is normal that a new text be circulated while a text is under discussion. I do not see why the English-speaking Delegates should have the advantage of being in a position to read a text beforehand, to study it carefully and compare its drafting with another previously existing drafting supposing they enjoy this advantage. At any rate, as regards the French-speaking Delegations I cannot admit that a new, text should be circulated in the course of the discussion because we have no time to compare it with the text that is to be found in the Report of the Sub-Committee. Everyone knows that very frequently a change in the wording may entail a change of substance. CHAIRMAN: The Executive Secretary. Mr. .WYNDHAM WHITE (Executive Secretary): Mr. Chairman, I want to say a word or two or both texts. First of alI, I should like to say that there is no reason why the English- -39- E/PC/T/A/PV/41 speaking Delegations should appear to be more favourably treated than the French Delegations, since the Report was distributed to them at the same time as the text in French. I do wish to place on record that this suggestion, and similar suggestions made in Sub-Committees to the same effect, have no foundation whatsoever. There have been certain difficulties owing to the heavy demand on the staff here in certain cases with the French texts, but very special efforts have been made by local staffs to overcome this, and I think the French Delegations were free from any discrimination in this sense not only in this particular case, but generally. Secondly, it is a bad policy to submit a document at such short notice. The reason why it was done is that the Legal Drafting Committee are working extremely long hours and extremely hard, and have been able to produce their revisions of the Sub-Committee Reports in almost every case in time for them to be taken at the same time as the Sub-Committee Reports. They have done that as an extra convenience for the Preparatory Committee, and I have asked for the co-operation of the Commission in dealing with its Reports as soon as they come forward, as otherwise it may be necessary to envisage a further sitting of the Commission in order to consider points of drafting contained in the Drafting Committee's Reports. If there are points of drafting which cause difficulties to Delegations, then they can reserve their Amendments and we will find occasion between now and the Plenary Sessions to clarify the points. G - 40 - S -41- E/PC/T/A/PV/41 CHAIRMAN: The Delegate of Chile. Mr. F. Garcia OLDINI (Chile) (Interpretation): I should like to make it clear, Mr. Chairman, that I am very happy that you have given the Executive Secretary an opportunity to supply us with an explanation. I am even happier to find that I was mistaken when I said that in the present case there had been some discrimination, and you must not forget that I added "if any." Even if it was never the intention of the Secretariat to make any discrimination - of which I am certain - in fact, this discrimination has existed and in many cases the French- speaking Delegations in sub-committees have had to wait during the whole of a meeting before thay could get the French translation of a text of four lines. CHAIRMAN (Interpretation): In conformity with what has been said by Mr. Wyndham White, I suggest that the various Delegations should study carefully the first three paragraphs of Article 26 and make any relevant remarks to the Secretariat, which will find some means of dealing with them. The Delegate of the Netherlands. Mr. A. B. SPEEKENBRINK (Netherlands): Mr. Chairman, I would like to say a few words. I am still a little worried about that famous article 3(b)(i) and I have not had time enough to think it over. The reason I am so worried is because I do feel that this Chapter, like other Chapters of the Charter, was a compromise between several points of view, - but I'do think it is a very commenda eleffort. Nevertheless, Just becaeus it is a compromise, I doef-el that the powers of the Organization for consultation and even action should be as er-at as possib.e, That is the cause of mwo zrry he.e I would therefore like to reserve my attitude with regard to this special sub-paragraph for a few days. CHAIRMAN: (Interpretation): Notice has been taken of Mr. Speekenbrink's remarks. CHAIRMAN: The Delegate of the United States. Mr. George BRONZ (United States): With respect to the same sub-paragraph, I have undertaken to secure the views of the head of my Delegation and I hope to be able to say some- thing on it, if necessary, before the close of the session today, I just wanted to say that before we pass on from Article 28. CHAIRMAN: We pass now to Article 28, Paragraph 1; Preamble, Page 14 of the Report of the Legal Drafting Committee. The Delegate of New Zealand. Mr. L. C. WEEB (New Zealand): MIr. Chairman, I just wonder, in this Proamble, whether the Committee which produced this text has not said more than it wanted to say - "to prevent the development or maintenance of bilateral trade patterns as an enduring feature of world trade." I think I see the purpose of that and I think it is a commendable purpose, which is to condemn bilateraliss, or What I might almost cell the bilateralism of Dr. Schacht. We do not very much like the term, because it seems to us that eetn in teh graet period of free trade, under free trade conditions the trade of a number of countries fell naturally into bilateral patterns. Tecerfore it would be justifiable either to suppress this reference to bilateral patterns or to say "bilaearal patterns of a tyep which are restrictive to world trade," because tehre are bilateral patterns which I think haecaen element of stability and expansion. P E/PC/T/A/PV/41 CHAIRMAN (Interpretation): Is there any remark on this amendment? The amendment is either to reads- "The Members also recognise the need for close limitation of such departures." or to continue: - "..... to prevent the development or maintenance of bilateral trade patternsof a type restrictive of international trade as an enduring feature of world trade." For my part, I suggest that the shorter the better. Therefore that we should put a full stop after the word "departures" and delete the last three lines. Mr. George BRONZ (U.S.A.): Mr. Chairman, it seems to me that the amendment proposed by the Delegate of New Zealand raises a rather fundamental question of policy. The draft of Article 28 which has been presented here represents a very difficult and delicate compromise between different points of view on the subject-matter of the Article. From our point of view, our insistence throughout this Conference that we are here to formulate a Charter for a multilateral pattern of world trade as against a purely bilateral pattern is well known and has been expressed on many occasions. This is the only reference in the entire Article to the necessity for protecting what we regard as the fundamental principle of the entire Charter - that we are headed toward a multilateral rather than a bilateral trade. This injunction was included as a recognition that the exceptions provided in Article 28 are very definitely to be considered exceptions to meet unusual circumstances as detailed in the Article, but the principle of multilateralism as an objective of the Organization should be kept in mind. It is therefore argued that the inclusion of the sentence as it is is of vital importance to the balance of Art: 28. 43 44 E/PC/T/A/PV/41 CHAIRMAN (Interpretation): I wonder if the two points of view of Mr. Bronz and Mr. Webb could not be reconciled by a sentence in the following terms:- "The Members also recognise the need for close limitation of such departures ...." and then continue: to avoid that the maintenance of bilateral trade patterns should prevent the promotion of multilateral international trade." Mr. George BRONZ (U.S.A.): I am afraid that such phrasing, at least as given in the interpretation, suggests that we would not condemn the maintenance of bilateral trade patterns except to the extent that they prevent the promotion of multilateral international trade. It seems to suggest that you can maintain bilateral trade patterns while efforts are being made to promote multilateral trade. I think that is rather putting multilateral trade too far off into the distant future. CHAIRMAN (Interpretation): It is not my part, of course, to intervene in the debate, but this is exactly what I meant. almost In fact, bilateral trade is not an evil in itself and/all forms of trade are bilateral. The statistics of the League of Nations have shown that 75% of the whole of international trade was bilateral while 25% only was multilateral. M. PIERRE B.R.DUC (France) (Interpretation): Mr. Chairman, I fully understand your attitude, but I think that in fact the French words "courrants commerciaux" are/rather unsatisfactory translation of the English "trade patterns "because I think - I do not know if I am mistaken - but I think that the word "pattern" implies something systematic and artificial, while the expression "courrantss commerciaux" in French is perfectly normal, and to condemn bilateral commercial trends would be to condemn nature itself. But what I think is that in the English phrase there is something which is not to be found in the French phrase, and I suggest that the phrase should read: "courrants commerciaux artificiels", or in English "artificial commercial trends." CHAIRMAN (Interpretation): I would like to point out that Mr. Webb's amendment referred to the English text. May I make another suggestion? "The Members also recognise the need for close limitation of such departures as to bring about as soon as possible that revival of multilateral international trade." Mr. GEORGE BRONZ (United States): Could we say "so as not to handicap the revival of multilateral international trade"? Mr. J.R.C. HELMORE (United Kingdom): I am awfully sorry to intervene in the discussion. I like your suggestion, Mr. Bronz, but I have some objection to the word "revival" which in English is associated a little bit with the Salation Army, and, in any case, implies that multilateral trade is quite dead. I do not believe it is. M. PIERRE BARADUC (France) (Interpretation): I think I would make the same remark as Mr. Helmore with regard to the word "revival" because I think that multilateral trade is ready to revive like E/PG/T/A/PV/41 Mr GEORGE BRONZ (United States): Could we say "achievement" instead, of revival"? CHAIRMAN (Interpretation): I suggest that we adopt the English version, and we shall then find a satisfactory French equivalent because I am myself not satisfied with my own version. Mr. PIERRE BARADUC (France) (Interpretation): Could we have the adopted text in English? Mr. GEORGE BRONZ (United states): "The Members also recognise the need for close limitation of such departures so as not to handi- cap achievement of multilateral international trade." MR. Z.AUGENTHALER (Cechoslovakia): I have a question to ask which I am afraid was not answered in the sub-Committee concerning the words "substantial and widespread disequilibrium"., Is it a dis- equilibrium in countries with whom the other respective countries have a substantial part of their trade, or is it World-wide disequilbrium because I am afraid that it is of little use to me if at this m ment it is very cool on the North Pole and I am sitting in Geneva, CHAIRMAN: (Interpretation): I think you will find a reply in the French text which is perfectly clear. J. H.E. DR. Z. AUGENTHALER (Czechoslovakia) (Interpretation): It is a very good explanation, but it does not impress me. CHAIRMAN (Interpretation): We now pass on to sub-paragraph (b). MR. J.R. C. HELMORE (United Kingdom): Mr. Chairman, in the Drafting Committee's version on page 15, about half-way down the paragraph, there are some words which read as follows "from countries, limiting imports because of balance-of-payments difficulties". We would like to move the omission of those words so that the relevant part of the sub-paragraph would read "depars from the provisions of Article 27 to the extent necessary to obtain additional imports above the maximam.....etc.". We think that those words would be undly limiting in that they would prevent to obtaining of additional imports from a country which was not limiting imports itself but which, nevertheless, had a currency which was inconvertible. It might also prevent the obtaining, of additional imports from countries which were prepared to facilitate it by witholding the currency of the buying country, and in any case, we suspect that there might be some incentive to certain countries to endeavour to continue to limit their imports because they wish to be discriminated in favour of. In any case, there are all the other safeguards in the Article, and in view of the limiting effect of these words we think they would be better removed. CHAIRMAN (Interpretation); Are there any remarks on this amendment? M. P. BARADUC (France) (Interpretation): I am entirely in favour of this amendment. 48 CHAIRMAN (Interpretation): Is everybody agreed? The amendment is carried. Is everybody agreed on the text of paragraph (b) on page15? Agreed. Page 16. Are there any remarks on paragraph (i)? (ii)? MR. J.R.C. HELMORE (United Kingdom): Mr. Chairman, we have an amendment which we hope will be regarded as almost entirely of a drafting character. It has been circuaIted on a paper which has no heading, but which has at the bottom No. M. 397/47. It reads, in English, "The Member taking, such action does not do so as part of any arrangement" - and here the different wording comes - "by which the gold or convertible currency which the Member currently receives directly or indirectly from its exports to other Members not party to the arrangement is appreciably reduced....." - and then it goes on as before. We think that the words as they now stand might give some encouragement to the undesirable practice which is existing of payment in the gold of other countries for certain goods, and we believe that the words which we have very carefully express ! the intention of this paragraph, which is that countries should not be parties to any arrangement which diverts their exports away from markets where they can normally earn hard currency which, of course, is available for expenditure in any party, and thus removes, to that extent, the need for operating under this Article. CHAIRMAN (Interpretation): Are there any objections to this amendment? E/PC/T/A/PV/41 J. 49 J. E/PC/T/A/PV/41 MR. J.G. PHILLIPS (Australia): Mr. Chairman, this was one of the points on which the sub-committee had not really completed their discussion, but I would assume that the Members of the sub-committee would have no objection to this. CHAIRMAN (Interpretation): Are there any objections? M. P. BARADUC (France) (Interpretation): I have no objection to the English text, but strong objections to the French text which contains at least three fundamental mistakes, but we shall, of course, revise the French text accordingly. CHAIRMAN (Interpretation): Subject to this reservation, Are there any remarks on paragraph (iii)? Are there any remarks on paragraph (c)? Are there any remarks on paragraph (d)? Adppted. 50 V E/PC/T//A/PV/41 CHAIRMAN (Interpretation): Paragraph 2. Any objections? (Adopted). Paragraph 3(a). Mr. J.R.C. HELMORE (United Kingdom): I am. sorry to be taking up so much time, but here again is one of the amendments which will come up on completion of the work of the Sub-Committee. It is proposed to add some words after "prescribed" (we thought it was going to be "specified", but I see the Legal Drafting Committee say it ought to be "prescribed"). The words are: "for the purpose of ensuring compliance with the provisions of paragraph 1 of this Article, provided that the Organisation shall not require that prior approval be obtained for individual transactions". Those words have been circulated, together with a motion in French, for which I hardly dare expect any approval whatever, prior or subsequent. The purpose of this amendment is apparent on the face of it: that it is not intended that the limitations which the Organisation may prescribe should go down to the detail of requiring prior approval of individual transactions, which, in our view, would be an impracticable '.ok and indeed a dangerous one for the Organisation to undertake. I might perhaps finish these remarks by venturing to express the hope that if this amendment were adopted, it would enable the French Delegation to remove the reservation which is contained in Note 5 of the Sub-Committee's Report, and which suggested the addition of the word "general" between "any" and "limitations". I hope they will agree that this amendment has the same effect. CHAIRMAN: The Delegate of France. 51 V E /PC/T/A/PV/41 M. Pierre BARADUC (France) (Interpretation): I entirely agree with the amendment suggested by Mr. Helmore -of course, in the English version- and if this amendment is embodied in the text of this paragraph, my Delegation will be in a position to withdraw its reservation on this point. CHAIRMAN (Interpretation): Any further remarks? ;Y 1MEELANDER (Norway): The Norwegian Delegation would not, I think, be able to accept the draft text as it stands here. We would certainly feel that the British amendment is an improvement and would for that reason be in favour of that. But, at the same time, I think that we would be in favour of deleting paragraph 3(a) altogether . We feel that as the Sub-Committee's Report is of a tentative nature, it would perhapss not be right to take any final decision on this point, and we have decided that we will just make a general reservation on Article 28 as a whole. Consequently, I am not going to make any special reservation on paragraph 3(a). I just say that I would prefer the British amendment for the text as it stands, but that we do maintain a general reserrvation on Lrticec 8S asae whole. HALIMAIN (Inecpyertation):Alny observations? H. . Z .ALUENTHALLER (Czecessovvkia): Mr. Chairman, Iwo uld like to staeo thatI1 am in the same position as Mr. Melander, n if it could. be allowed, I woaud like to make a general statement at the end of the discussion on Article 28. C'HAIRMA (Interpretation): I entirely agree. Are there any :frther remarks on paragraph 3(a)? Paragr-ph 3(b). 52 Mr. J.G. PHILLIPS (Australia): In my opening remarks when I introduced the Report, I said that there was one point where square brackets had been left in the Report of the Sub-Committee, and where subsequent discussion by the Members of the Sub-Committee had agreed on the proposal, which would remove the square brackets. This is the paragraph where that proposal is made, and the proposal to take the place of the words in square brackets in the third, fourth and fifth lines in the English version is labelled as a new paragraph 5 of Article 29. It has been distributed, I think. It is suggested that that paragraph be inserted in Article 29 and that the words "or exchange restrictions on payments and transfers in connection with imports" appearing in this sub-paragraph should then be deleted. 53 G E/PC/T/A/PV/41 I am sorry, the text is now being distributed. I thought it had been distributed. CHAIRMAN: (Interpretation): Mr. Phillips, the suggestion made is to delete the words between brackets in sub-para. (b), and to substitute for them a new paragraph 5 in Article 29. Any objection to this Amendment? Mr. SPEEKENBRINK (Netherlands ): May I ask for one explanation, Mr. Chairman. I cannot understand the last part of it. We say here, "If the Organisation considers, at any time," and so on, "it shall report thereon to the International Monetary Fund". What happens then? Mr. PHILLIPS (Australia): I feel that some explanation is perhaps necessary here. The phrase that was previcusly in square brackets in sub-paragraph (b) provided that the Organization could in effect disallow exchange restrictions imposed by a Member which were discriminating in a way inconsis- tent with the exceptions under Article 28. There is, however, or there was in the Sub-Committee, some doubt as to whether there should be a specific provision here which would allow the Organisation in this particular place to disallow exchange restrictions which might have been approved by the Monetary Fund. The solution of the problem which the Sub-Committee reached was to propose that if the Organisation found that a Member was achieving by exchange restrictions results which he would not be allowed to achieve under the Charter by import restrictions, there are two courses open. The first is the one that is proposed in this Amendment, that the Organisation should draw the attention of the International Monetary Fund to the fact 54 G E/PC/T/A/PV/41 that this was occurring. The second point is covered in paragraph 4 of Article 29, which provides that a Member shall not frustrate the intent of the provisions of the Charter by exchange action, nor the intent of the provisions of the Articles of Agreement of the Monetary Fund by trade action. Perhaps that is an adequate explanation. Mr. SPEEKENBRINK (Netherlands): My objection is that if you say that in the Report, you do not say it might be asked for action to be taken, or something like that. We can only "report". CHAIRMAN: (Interpretation): Do you suggest any change in the text? Mr. SPEEKENBRINK (Netherlands): Yes, possibly to ask for action to be taken, or something like that. Mr. PHILLIPS (Australia): I can only say, Sir, that I think the Sub-Committee felt that if the matter was brought officially to the notice of the Monetary Fund, that was sufficient. CHAIRMAN: The Delegate of the Netherlands. Mr. SPEEKENBRINK (Netherlands): If the Sub-Committee thought that over, I am prepared to follow their judgment. CHAIRMAN: We agree, therefore, on the Amendment suggested by the Australian Delegate. Agreed. S 55 E/PC/T/A/PV/41 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Arc there any further remarks on sub-paragraph (b)? ND2 remarks4 (Agreed) We pass on to sub-paragraph (c). The Delegate of the United States. Mr. BNZ (Uni.td>Sntes):- Mr.' heirman, therc has beer.: distributed a documcnt-Su:y'sted re-wording of `rticle 28, Pargeraph 3(c) - bearing the number, in the lower left-hand corner, Y.399/474 This document has been agreed among a nuiber of Delegetions on the Sub-committee, although it had not been presented in time for a Sub-committee nectingW To eliminate the dissgreem<nt involved in the bracketed words "not later then" appearing in the to-Xt s reported by the Sub-committee, what has been done in this amendment is to include a new sentoc:,which begins on thr ccvonin of the Ynglish text, There is also a change of wording at the beginning. Instead of saying: "Not later than three years after the date on Which the International Monetary Fund began operations', we say: "Not later than March 1, 1950", which is a shorter way of saying the same thing; and in the next sentence, which included the, bracketed words, we have now substituted for the bracketed words and for the phrase following thein, including the refer-nce to the Monetary Fund, the shorter referonc6: "On or about Mirch 1, 1952,i The substance of the question was whether the Organization would be free before Mrch 1, 1952 to review the question of whether or not there is then a widespread disequilibrium, and the resolution of tho difference is in the form of limiting the reviyw in the second sentence of the paragraph to one "on or about March 1, 1952," and to provide, in a new sentence which had been added, 'If it appears at any date prior to March 1, 1952, S 56 E/PC/T/A/PV/41 that there has been a substantial and general improvement in international trade and payments, the Organization may review the situation at that date." I suggest the adoption of this text. (After the interpretation): My attention has just beer, called to the fact that the Legal Drafting Committee has made one minor change in the English text and apparently it was not indicated by underlining, At the end of the text, the text reported by the Sub-committee read: ". . . shall cease six months after such determination." The Legal Drafting Committee's text is entirely acceptable to me and I therefore suggest that the new proposal should be construed in that way. (After the interpretation): a Mr. Chairman, just to avoid any possible misunderstanding, ehe words "not lctor than" would come in the last line but one of both the suggested re-wording and the blue text; it is not to be confused with the "not later than" clause appearing in brackets much higher up in the text, CHLIRMAN (Interpeetation): Arc there any objections to the amendment proposed by the Delegate of the United States? ac objections? Tee Delegat. of Nrw Z.aland, Mr. GOD.a.aWHITE (New Zenlnnd): MreChairman, I havc no objection to that amondment, but I w-uld like to ask for clarification - perhaps I should ask the Chairman of the Sub- committee - concerning the last sentence of this draft. It provides that the provisions of Paragraph 1 of this Article shall be suspended in certain circumstances, and I would like to ask exactly what that means. I have in mind the case that the provisions might be suspended and then, many years later, a disequilibrium might arise again: can Members then take action under Paragraph 1 if it were suspended, in case a disequilibrium were to arise at some future date, or would this mean that Paragraph 1 would be suspended for all time ? P 57 E/PC/T/A/PV/41 Mr. J. G. PHILLIPS (Australia): Mr. Chairman, the intention of the Sub-Committee was that the provisions of paragraph 1 should be suspended only if and when the Organization found that another substantial and widespread disequilibrium had commenced. You will observe that in the sixth and following lines of the text distributed just now the provision is made that "the Organization shall review the question of whether there then exists such a substantial and widespread disequilibrium, and that this shall be done "at such times ... as the Organization may decide". That was intended to imply that at any time the Organization could review the question of whether a substantial disequilibrium existed, and if it found that it did, then the provisions of paragraph 1 would operate, Mr. G.D.L.WHITE (New Zealand) signified assent. CHAIRMAN (Interpretation): The New Zealand Delegate is satisfied with these explanations. Are there any further remarks on the new version of 3 (c)? M. P. BARADUC (France) (Interpretation): I entirely agree with the United States amendment as submitted in the white paper. (Further exchange of remarks between M. BARADUC and the CHAIRMAN not fully interpreted) (Interpreter): The Chairman pointed out that the last sentence had been altered to read: "... shall cease not later than six months after such determination" and the French delegate replied that he could only accept the existing text: "shall cease six months after such determination." CHAIRMAN (Interpretation): This alteration has been suggested by a Sub-Committee on which there is a French member: p 58 E/PC/TAA/PV/41 M. P. BARADUC (France) (Not interpreted) CHAIRMAN (Interpretation): Does the Commission agree with the suggestion of the Legal Drafting Committee? The French delegate thinks that the Legal Drafting Committee has slightly gone beyond its rights. Is there any objection to leaving the text as it was: "... shall cease six months after such determination"? Mr. GEORGE BRONZ (U.S.A.): I understand that the Legal Drafting Committee had in mind that, since the Member would have the complete freedom to choose whether to cease immediately or to cease three months after, or six months after, there would be no additional limitation on the Members action, and it felt that it would be rather curious to say that the action must cease at one precise date and not recognise that the Member might cease such action earlier. I do not think it makes any difference in meaning. I think the Legal Drafting Committee had a wise point of drafting, but I do not consider it a matter of substance. CHAIRMAN (Interpretation): I feel certain that M. Baraduc will agree with the opinion of the United States Delegate. M. P. BARADUC (France) (Interpretation): I do not attach a very great importance to this question. CHAIRMAN (Interpretation): Paragraph 4. No remarks? Adopted. Paragraph 5. No remarks? Adopted. H. E. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, Czechoslovakia recognises that the principle of multilateralism 59 E/PC/T/A/PV/41 and non-discrimination is desirable for the expansion of world trade. However, she is aware of the fact, and she wishes to emphasise, that, under circumstances of great economic difficulties such as those prevailing in most countries at present bilateral arrangements can contribute also to the expansion of world trade. Further, Czechoslovakia feels that the words "substantial and widespread disequilibrium" should be understood first of all in the sense that it applies to countries with whom the Member has a substantial part of its trade, as it is of little use to the Member that in some other pars of the world there prevail conditions of prosperity. The Czechoslovak Delegation did not raise objections to the Draft Charter text of Article 28, and had the approval of its Government, as this draft aimed at the desirable flexibility of provisions. With regard to the new draft text, however, the Czechoslovak Delegation is unable to define its attitude until it will be in a position to take into account which States will be likely to join the I.T.O., to what extent their currencies will be convertible, how large a proportion of the aggregate foreign trade of the country will be covered by States adhering to the provisions in question, and, if there are non-Members, how the relations to them will be settled, That is why we reserve our opinion on this Article which needs the further study of our Government, especially as we were faced with entirely new amendments presented here only during this Session. 60 ER E/PC/T/A/PV/41 M. E.L. RODRIGUES (Brazil): Mr. Chairman, I am sorry to have to make a reservation on paragraph 5 (b), but I could not agree with the present text. We shall have to reserve our position on it , at least provisionally. M. F. GARCIA OLDINI (Chile) (Interpretation): The Chilian delegation reserve their position on the whole of Article 28. The final decision of the Chilean Government will be taken at the World Conference. Dr. A.B. SPEKENBRINK (Netherlands): Mr. Chairman, will you allow me to say a few words with regard to all these reservations that have now come up. I wonder what worth we can attach to the acceptance of all these Articles especially those very technical Article which have come to our attention in a final draft a very short time ago. I must say that I, myself, cannot judge all the implications thereof. Nevertheless, I am prepared to agree with them, but I would be in a much more difficult position if this acceptance at this moment should mean also that the Articles should go as they stand at present to the General Agreement on Trade Tariffs because we have definite commitments, and moreover, I think that a at home further study/of this problem which is so complicated before the World Conference might lead to some argument from our financial people who are much more qualified to judge ;:Kmthan I am. That might induce us to put forward some arguments at the World Conference so I think that although I entirely agree that at the World Confer- ence we should as a rule try to keep to what we have decided here, there should be a certain liberty - especially with these very difficult Articles - to speak, and even support amendments if they are of a nature to be supported. 61 E/PC/T/A/PV/41 I state this here because we can now all enter formal reserva- tions, and I do not know what we are really going to accept at the plenary session. I therefore would like to ask the guidance of the Chair with regard to the real importance to be attached to the acceptance of these Articles here, and with regard to the liberty to be able to come forward with agreemente. CHAIRMAN (Interpretation): Mr. Speekenbrink, you have your- self given a reply to your own question when you said that we should, as far as possible, keep to the text adopted here while retaining some freedom, namely, that if after examination at home we find the possibility of making improvements, those improvements should be suggested. I think that this is the best reply to your own question. As regards the second question, namely, what will be the case of Articles on which reservations are made with regard to the Tariff Agreement, this is a matter which Cannot be dealt with here, but should be dealt with by the Committee on Tariff Agreements, and this question should therefore be raised in that Committee. Does any other delegation wish to speak on Article 28. 62 J. E/PC/T/A/PV/41 MR. J. R. C. HELMORE (United kingdom): Mr. Chairman, we have some notes in the Report of the sub-committee, and I wonder whether the Commission ought to look briefly at these notes for two purposes: to see whether any of them could be suppressed, or to see what status we intend them to have. I do not intend at this minute to enga e on a problem which his been exercising Dr. Holloway very much in connection with the Technical Articles, the problem of how best to indicate that those notes have a particular status, but I gather that we are to discuss that separately. However, I wonder whether this Commission ought, on these Articles, to indicate whether these Notes have a Particular status or not, whether they are of the kind which are necessary to record or remove a reservation. CHAIRMAN (Interpretation): Referring to the reservations and notes on page 18 of document E/PC/T/183, there is an Australian reservation which has been made, then comes a Unitd Kingdom reservation which has been withdrawn, then - Czechoslovak reservation which has just been repeted, and two French reservations. M. BARADUC (France) (Interpretation): Regarding the French reservations, taking into account what has just been said by you, Mr. Chairman, with regard to the action to be taken on these texts, which, after all, are only a draft to be submitted to the World Conference, the Fench Delegation withdraws it reservations. (The CHAIRMAN read the Note to Article 28, paragraph 5, and said that considering that 3 of Article 28 had been adopted, this Note could be withdrawn). S3 J. E/PC/T/A/PV/41 MR.G. BRONZ (United States): Mr. Chairman, in the sub-committee, the United States raised a considerable question about the draft of paragraph 3. We followed the general policy in the sub-committee of deleting references to consultation with the International Monatary Fund in view of the new draft of paragraph 29(2), which we have not yet reached for consideration. However, in the case of paragraph 3 of Article 28, it was our feeling that the deletion of reference to the Monetary Fund might be construed to exclude consultation with the Fund on these questions. Questions of discrimination under Article 28 do involve financial matters, and the question was raised in the sub-committee and the sub-committee agreed upon the text of this note, and we feel that the note is necessary here in order to avoid a reservation. MR. J.R.C. HELMORE (United Kingdom): Mr. Chairman, I wonder if I could ask the Chairman of the sub-committee to tell us what the reservation was to that Note? MR. J.G. PHILLPS (Australia): I do not think I can completely answer this question, Mr. Chairman, The position was that the Committee agreed to the terms of the Note, and, when it was considering whether it should go into the general part of the Report or into this part dealing with reservations and Notes, the United States Delegate said something along the lines of what he has just said now. In view of that, the Committee left the Note in this part, but I do not remember that there was any specific reservation or that the United States Deletgate expressed any specific text. 64 CHAIRMAN: The Delegate of the United Kingdom. Mr. J.R.C. HELMORE (United Kingdom): Mr. Chairman, I am very sorry to make a nuisance of myself on this. I think that the Preparatory Committee as a whole is probably going to have a great deal of difficulty in reaching an acceptable Solution on Dr. Holloway's point, which I said I would not discuss, and it does occur to me that of all the possible solutions which we may find as to a method of recording these notes along with the text of the Charter in due course (or, I suppose, the text of the General Agreement, although you have said that we must not discuss that) this one would be extraordinarily difficult, because it simply records, as far as I can read it, the result of discussion in the Sub-Committee. CHAIRMAN (Interpretation): But if this note is approved by the Commission, it becomes a note presented on behalf of the Preparatory Committee. Mr. J.R.C. HELMMORE (United Kingdom): But what worries me is how a note in this form is to be given any status in the light of any of the suggestions that have been made for giving other notes status. I do not want to labour the point now. I would merely like to say that it may be necessary to come to this question as to how this note is to be recorded when we have settled the question of where we are going to put the notos and how we are going to put the notes. CHAIRMAN (Interpretation): Then we keep the substance of the note and later we shall try to find out what action can be taken with regard to the note. article 29 - Exchange Arrangements - paragraph 1. No remarks? (Adopted). E/PC/T/A/PV/41 V 65 V E/PC/T/A/PV/41 Paragraph 2. The Delegate of New Zealand. Mr. G.D.L. WHITE (New Zealand): Mr. Chairman, on paragraph 2 we find the last sentence unacceptable - that is the sentence which provides that the Organisation shall accept the determination of the Monetary Fund on certain matters. Our view is that paragraph 1 provides for consultation with the Monetary Fund, the first two sentences of paragraph 2 provide for full consultation and co-operation with the Monetary Fund, and that this enables the I.T.U. to avoid setting up a duplicate statistical and research organisation on these matters. That, in our view, is the correct way that this matter should be handled, and, we think that the I.T.O. should give special weight to the opinions of the Monetary Fund; but we are not prepared to go so far as to say that the Organisation shall accept the determination of the Monetary Fund on the matter set out in the last sentence of paragraph 2. We realise that the last sentence is drafted in such a way that certain of the criteria in Article 26, paragraph 2(a) are left to the Trade Organization, and that the final decision in cases involving these criteria rests with the International Trade Organisation. But if we say that it is going to be mandatory upon the International Trade Organization to accept the determination of the Monetary Fund on these matters specified, it might be that we would find that Article 26 itself was unacceptable to New Zealand. The first two sentences of this paragraph provide for this fall consultation with the Monetary Fund, to avoid duplication of functions and to avoid also conflicting decisions, and in our view that is all that ought to be provided for. We find this new text is a major amendment of substance as compared with the New York V E/PC/T/A/PV/41 text on this matter. We would support the wording proposed by Australia, which would alter the words "shall accept the determination" to the words "shall give special weight to the opinions of the Inter- national Monetary Fund". I do not wish to enter a reservation on this matter at this stage, because I think that the wording proposed by the Delegation of Australia should first of all receive consideration by this Commission. CHAIRMAN: The Delegate of Australia. Mr. J.G. PHILLIPS (Australia): Mr. Chairman, as is recorded in the Report of the Sub-Committee, we disagreed with the view of the majority of the Sub-Committee on this point. We made a reservation, and we maintain that reservation. I do not wish to go any further into the reasons for our view, because we have circulated a document (W/279) which sets them out in full. Mr. J.R.C. HELMORE (United Kingdom): Mr . Chairman, I have two things to say about this sub-paragraph. The first is that I hope the Delegations of Australia and New Zealand, on thinking further about this, may be able to come to the view that, after all, the text put forward by the Sub-Committee is, shall I say, "not so bad". I do not expect them to come to the view that it is perfect, but they might come to the view that it is acceptable. The Orgzanization has a duty of reaching a decision on certain criteria which is set forth in Article 26. In so doing, it is required to accept, in the Sub-Committee's draft, the determination of the I.M.F. on four things: what constitutes a serious decline of a Member's monetary reserves; what is a very low level of its monetary reserves, and what is a reasonable rate of increase, and finally, it is required to accept the determination on the financial aspects of other matters covered in consultation in such cases. 66 67 Clearly it would be for the International Trade Organization to have, so to speak, the last word on what was a financial matter. With that definition of the matters on which the ITO should accept a determination of the IMF, I would regard the Sub-Committee's text as acceptable. I would, however, very much prefer not to adopt one of the suggestions made by the Legal Drafting Committee, which is to leave out the word "final" in the third line on page 27. The word "final", I think, was inserted by the Sub-Committee intentionally. I suspect the Legal Drafting Committee, remo..ed it without appreciating the, nuance thet was intended, to be given by using the rather less usual phrase "final decision". I might perhaps add that I mentioned to Dr. Gutierrez my intention of suggesting that the word "final" was retained , and he said that speaking not for the Legal Drafting Committee but as a Member of the legal Drafting Committee, he could see no difficulty in that. CHAIRMAN: Mr. Rodrigues, The Delegate of Brazil. Mr. RODRIGUES (Brazil): Mr. Chairman, I fully agree with the Representative of the United Kingdom. We should like to have this word. "final" retained . CHIRMAN (Interpretation): Now we have to take a decision on the Australian Amendment, supported by the New Zealand Delegati on. Dr. Coombs points out to-the Chairman that this is not an Amendment, but a reservation. Now the New Zealand Delegate has proposed an alteration in the text, and this alteration would be in conformity with the Australian reservation. Therefore, if it is adopted , the Australian Delegation will be satisfied . 68 G E/PC/T/A./PV/41 Mr. WHITE (New Zealand): Mr. Chairman, I do not wish to be put in the position of proposing an Australian Amendment which is not really an Amendment but which is a reservation; and my purpose in raising this matter was to explain our point of view, to hear the explanations of other Delegations on this matter - and I think Mr. Helmore put his explanations - but I do not wish to propose an Australian Amendment, and therefore what I propose to do is to add our reservation to the Australian reservation. CHAIRMAN (Interpretetion): Note will be taken of the New Zealand reservation. Mr. SPEEKNBRINK (Netherlands): Mr. Chairman, I have not so much an; objection to accepting the determination of the International Monetary Fund, as to what constitutes here "a decline" and so on; but I find it a little difficult to accept the determination of the International Monetary Fund as to the financial aspects of other matters covered in consultation in such oases . That is a little bit too loose for my liking. CHAIRMAN (Interpretation): The Delegate of the Netherlands, do you wish to add... Mr. SPEEKBRINK (Netherlands): Well, I would say I have no objection to it, Sir, but I do not know what are "financial aspects of other matters covered in consultation in such oases". What is the meaning of that? CHAlRMAN: The Delegate of the United Kingdom. Mr. HELMORE (United Kingdom): Would it help, Mr. Chairman, G 69 E/PC/T/A/PV/41 if I give Mr. Speekenbrink an example. In the previous words there is nothing about what happens in en imminent threat case in that Article 26. That is to say, when a Member is facing an imminent threat, there is no determination reserved to the ITO, and it is perfectly obvious that in many imminent threat cases matters to be taken into consideration may be almost entirely trade questions, such as, for instance, the imminent threat to Australian's balance of payments through the failure of her wheat crop. I say nothing about what would happen if all the sheep died. 70 E/PC/T/A/PV/41 Equally there might be, in the case of another country, some financial aspect of the imminent threat on which I should have thought the assistance of the International Monetary Fund would be extremely useful to the ITO. CHAIRMAN (Interpretation): satisfied with the explanation. I hope Mr. Speekenbrink is Mr. SPEEKENBRINK (Netherlands): I am not entirely satisfied with the examination, but I will not insist. CHAIRMAN (Interpretation): Is there any objection to Mr. Helmore's amendment to maintain the word "final" in the third line of Page 27? M. BARADUC (France) (Interpretation): I think it is absolutely essential to maintain the text as prepared by the Sub-committee, but in French it should read: "its final decision." CHAIRMAN ( Interpretaion): carried, Are there any Paragraph 3: Paragraph 4a The amendment is therefore other remarks concerning Paragraph 2? (Agreed) No remarks? (Agreed) There is a Note to Paragraph 4 of Article 29. The Delegate of New Zealand Mr. B. D. L. WHITE (New Zealand): Mr. Chairman, I am aware of the Note to Paragraph 4, but I would still like to ask for a clarification of what is meant by frustrating the intent of the provisions. The previous text on this subject referred to the frustrating of the purposes of either S 71 E/PC/T/A/PV/41 Organization, I have listened to quite a lot of debate in the Sub-committee on this matter, but it seems rather difficult for a country which is not at present a Member of the Monetary Frund to be asked not to frustrate the intent of the provisions of the Monetary Fund, and I must ask for a clarification of exactly whet these words mean in such a circumstance. CHAIRMAN : The Delegate of Australia. Mr. J.G.PHILLIPS (Australia): Mr. Chairman, I am not sure that I can add much to the first sentence of the Note. It says: "The word frustrate is intended to indicare, for examples that infringements by exchange action of the btr of any Article of this Charter shall not be regarded as offending against that Article if in practice there is no appreciable departure from the intent of the Article " Perhaps I should add that one of the reasons why the word "purposes" as used in the New.York text was deleted was because that would probably have referred enly to Article 1, and the changes in Article 1 made in this meeting at Geneva gave the Organization, I think, only one purpose, which was, in effect, to carry out the intentions of the United Nations Charter - or the relevant intentions - and the other things which had previously been purposes were named objectives. I am not suro that I can really a dd anything to make the point clearer, CHAIRMAN (Interpretation): Is that explanation satisfactory to the New Zealand Delegate? Mr..WHITE (New Zealand): Mr. Chairman, I think it is much clearer that way, when you are talking about exchange action S 72 E/PC/T/A./PV/41 frustrating the intent of the provisions of something in the Charter, than it is when you are talking about the complementary process where you are not, by trade action, frustrating the intentoof the provisions of thactti±tles of Agreement of an organization to which you do not have to belong. I do not think it is at all clear in that case, but I do not press for any further explanation, CHAIRMAN (Interpretation): Are there any further remarks on Paragraph 4? The Delegate of Canada. Mr. J.J.DEUTSCH (Canada ): Mr. Chairman, we regard the Note to Paragraphs 4 and 8 as essential, as an official explanation of the text, and would want the Note treated in that way in the final disposition off this Report. Mr. F. Garcia OLDINI (Chile) (Interpretation): I support that suggestion. CHAIRMAN (Interpretation): That suggestion will be met. We pass to Paragraph 5. Mr. HELMORE (United Kingdom): This will now be Paragraph 6, Mr. Chairman. CHAIRMAN (Interpretation): Paragraph 5 Will become Paragraph 6. Are there any remarks? (agreed) We come to the former Paragraph 6, the new paragraph 7, Mr. HELMORE (United Kingdom): There is a consequential alteration, Mr. Chairman, in the numbaring on Page 29 of the Legal Drafting Committee's text. It shod read: "A special exchange agreement between a Member and the Organization under Paragraph 6". 73 E/PC/T/A/PV/41 CHAIRMAN (Interpretation) Former 7, new 8 Any remarks ? Former8, new 9 and last H. E. Z. AUGENTHALER (Czechoslovakia) Mr. Chairman, as Article. 9, paragraphs (a) and (b), was accepted, then we withdraw our reservationn on Article 27, but I would request that to this Article. should be added a note in the sense that was agreed by the sub-Committee, that is that a Member is permitted to require an Import licence or permit to be utilised for the importation of a product from a particular country or source, for balance-of-payments reasons. That is the last remark, No. 8, in the comments of the Sub-Committee. CHAIRMAN (Interpretation): To what note do you refer, Mr. Augenthaler? H. E. Z. AUGENTHALER (Czechoslovakia) : Note No, 8, under Part III, Comments of the Sub-Committee: English text pages 22 and 23. CHAIRMAN (Interpretation); Everybody has this note. It is on pages 22 and 23 of the English text, Document E/PC/T/163. Mr. F GARCIA OLDINI (Chile)!(Interpretation): Has this not been adopted, Mr. Chairman? CHAIRMAN (Interpretation): No, we hare not adopted it. This note should be worded in a different manner and appear, not as a remark of your Delegation, Mr. Augenthaler, but as a general remark, H. E. Z.AUGENTHALER (Czechoslovakia): Then I would suggest the following : "A Member is permitted to require an import licence or permit- to be utilised for the importation of a product from a particular country or source, for balance-of-payment reasons, p 74 E/PC/T/A/PV/41 CHAIRMAN (Interpretation): Does everybody agree? The note had already been approved by the sub-Committee. Mr. GEORGE BRONZ (U.S.A.): The text of the sub-Committee's note is being proposed as a general note? The note as it is given by the Sub-Committee is entirely acceptable to us, I do not know whether the re-phrasing as suggested here might raise other questions. Mr, WYNDHAM -WHITE (Executive Secretary). As I understand the suggestion, Mr. Augenthaler is proposing to amend the note at the foot of page 22 and top of page 23 so as to express the opinion in the affirmative - that the Member is permitted.... Whereas the note of the Sub-Committee merely receives the communication and asks the question. Mr. GEORGE BRONZ (U.S.A.): Well, Mr. Chairman, the Sub-Committee's recommendation on the subject, contained in its Report, or the note inserted by the Sub-Committee, is! "The Sub-Committee considered this communication and felt that the text of Article 29, paragraph 8 (ii) in its present form took due account of the problems raised by the communication from the Sub-Committee on Articles 25 and 27." We discussed it at length in the Sub-Committee and it is not my recollection that the Sub-Committee was prepared to accept a blanket statement that"a Member is permitted to require an import licence or permit to be utilised for the importation of a product from a particular country or source, for balance-of-payments reasons." Obviously if you add that as a provision by itself it would permit discrimination in the application of import restrictions on a whole new and simple standard which is entirely divorced from the standard which we have just finished writing into Article 28. p 75 E/PC/T/A/PV/41 The much narrower proposal that the Czechoslovakian Delegation had in mind, was considered, and it was the: feeling of the Sut-Committee - if I may take the liberty of giving my recollection of our discussions _ that the present text as amended did take account of the Czechoslovakian point, that it was adequate to cover their point of a, single. piece of paper covering both import licences and exchange control, but it was not intended to provide a new and sweeping exception to the rule of non-discrimination. ER 76 E/PC/T/A/PV/41 Mr. J.R.C. HELMORE (United Kingdom): Mr. hai rman, I wonder if I could make a suggestion which I think might .olve the difficulty quite substantially. It appears from the words in the previous Note at which we were looking that the question was transmitted from one sub-Committee to another and that is why it is here in the form of question and answer. What we suggested doing is to take the Note on page 20 of Document 163 which is called Note to Article 29, paragraphs 4 and 9, and leave it as it is down to where it is typed, an d then go on: "Another example would be that of a Member who specified on an import license the country from which the goods might be imported for the purpose not of introducing any additional element of dis- crimination in its import licenses but of enforcing permissible exchange controls." CHAIRMAN (Interpretation): Does Mr. Augenthaler agree? Then it is agreed. Are there any further remarks on paragraph 9? Article 29 is therefore adopted. Mr. GEORGE BRONZ (United state) Mr. chairman , at the beginning of this meeting this afternoon, a New Zealand amendment was adopted to paragraph 3 (b) (i) of article 26, You will recall that in discussion of that amendment, I raised the question of whether in addition to the construction given by the New Zealand delegation it was not susceptible of another construction which might seriously widen the provisions of article 26. I have coc- sulted wigh my delegation and the Uaited States feel that it will be necessary to reserve its position on this amendment unless then can be an explanation to exclude the interpretation which, as far 77 ER E/PC/T/A/PV/41 as I understand it, nobody here considered offensive, and I would therefore suggest that the following Note would make it possible for us to accept the amendment as adopted earlier this afternoon. I shall read it slowly: "The phrase 'notwithstanding the provisions of paragraph .2 of this Article' has been included in the text to make it quite clear that a Member's import restrictions otherwise 'necessary' within the meaning of sub-paragraph 2 (a) shall not be considered unnecessary on the ground thet a change in domestic policies as referred to in the text could improve the Member's monetary reserve position." The phrase is not intended to suggest that the limitations in paragraph 2 are affected in any other way. 78 CHAIRMAN (Interpretation): What is the opinion of the New Zealand Delegate? MR. L.C WEBB (New Zealand): Mr. Chairman, I do not want to raise any difficulties ovecr a purely formal puint, but I would like time to examine this Note a little more carefully. I wonder whether Mr. Bronz would be agreeable to send this Note to the Logal Drafting Committee with the text is a whole. The matter, could, perhaps, be settled in that way. MR. G. BRONZ (United States): I would have no objection to any procedure the Chairman feels would most expeditiously dispose of the matter. CHAIRMAN (Interpretation): I quite realise that it would be difficult for the New Zealand Delegate to accept this now, but I suggest that he keeps in contact with Mr. Bronz and that both keep in contact with the Secretariat. DR. SPEEKENBRINK (Netherlands): Mr . Chairman, I would like to say that, if a Note to that effect is adopted, and also in view of your answer to my question with regard to our acceptance of the Charter, I woulr withdraw my reservation. CHAIRMAN (lnterpretation): Thank you. I will now thank you all for the effort which you have made these last two days The meeting is adjourned. The meeting rose at 8.50 p.m..
GATT Library
cm177yv5168
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Forty-Second Meeting of Commission "A" Held on Monday, 18 August 1947 AT 10.30 A.M. in the Palais Des Nations,Geneva
United Nations Economic and Social Council, August 18, 1947
United Nations. Economic and Social Council
18/08/1947
official documents
E/PC/T/A/PV/42 and E/PC/T/A/PV.41-43
https://exhibits.stanford.edu/gatt/catalog/cm177yv5168
cm177yv5168_90240209.xml
GATT_155
8,448
51,962
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/42 18 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. FORTY-SECOND MEETING OF COMMISSION "A" HELD ON MONDAY, 18 AUGUST 1947 AT 10.30 A.M. IN THE PALAIS DES NATIONS, GENEVA. H. E. Mr. Erik COLBAN (Chairman) (Norway). Delegates wishing to make corrections in their speeches should addre as their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES S E/PC/T/A/PV/42 CHAIRMAN: The Meeting is called to order. M. Suetens has asked me to apologise to you for his absence this morning, especially as we are going to discuss difficult and important problems. Before opening the discussion on Articles 14, 15 and 24, there is one other point which I should like to deal with. It relates to Paragraph 4 of Article 38. That was passed over previously by Commission A, because it was argued that it was impossible to decide whether or not the paragraph should be retained until we had discussed Articles 13 (A) and 66 (3). These discussions have now taken place and unless there is any objection I take it the Commission agrees that Paragraph 4 of Article 38 becomes superfluous and should be left out. Are, there any objections to the deletion of Paragraph 4 of Article 38. The Delegate of France. M. ROYER (France) (Interpretation): The French Delegation made some reservations when this question was discussed in Commission B, and we are grateful that a delay of 48 hours was granted to examine the question more thoroughly and to make it possible for us to receive instructions from our Government. After examination, the French Delegation accepts the deletion of Paragraph 4 of Article 38. In order, however, to avoid erroneous interpreta ion, the French Delegation would be grateful to the Secretariat, when a Prces Conference takes place, if they would give the necessary clarification to the journalists, so as to avoid any misunderstanding. S S E/PC/T/A/PV/42 CHAIRMAN: (Interpretation): The Executive Secretary informs me that the desire of the French Delegation will be taken care of. Dr. H.C.COOMBS (Australia): Mr. Chairman, I have a slight difficulty in accepting the deletion of this clause. Delegates will remember that in the discussion in the Commission I drew attention to the problem which we have in relation to certain colonial territories, the territories of Papua and New Guinea, for which Australia is responsible. 4 E/PC/T/A/PV/ 42 We had, as I informed the Commission at that time, an arrangement whereby while those territories have their own in- dependent tariff which is essentially a revenue tariff which is quite independent of Australia and to which goods from Australia are subject, they have preferential entry into the Australian market for their main products. So, as I pointed out, this arrange- ment is not in any sense in Australia's commercial interests; in fact, the contrary, but we believe it would be a good arrangement since it is in the interests of the native population of those territories, and we asked that this arrangement should be taken into account in relevant parts of the Charter. You will recall that we were assured, so far as any existing arrangement was adequately covered by Article 14, that any possible desirable extension to this arrangement could be granted under Article 38(4) if we made an adequate case. We are quite content to allow any such subsidiary arrangement to be subject to investigation, and to the report of the Organisation, and the approval of any other country which might consider itself interested. We are a little worried, however, that the deletion of the reference to this provision might be inter- preted as meaning that any extension of this arrangement would be invalid under the Charter. I am not quite sure whether this warrants our opposing the with- drawal. It is clear, of coourse, that under Article 66 we could ask for an exemption from any of the obligations of the Charter, and perhaps it would be possible far us to act under that Article; but, clearly, it is less obviously related to the particular problem we have in mind, and for that reason I would like a little further time to think about this Article. If it is the view of the Com- mission that Article 38 should be redrafted, then I would be prepared .5 ER E/PC/T/A/PV/42 to inform my Government of that fact and week the Commission's approval for the withdrawal of our reservation. Mr.R.J. SHACKLE (United Kingdom): Mr. Chairman, my delega- tion would, I think, be glad to see paragraph 4 of Article 38 deleted; that is, largely from a presentational,publicity point of view. I am afraid it is the hard fact that the uninstructed public in the world tends to regard many international conferences as being rather in the nature of gibberish, and if you look you will find that it does not mean very much. Any critic who wants to make that point with regard to the Draft Charter would find a very fine piece of evidence if he looked at the Article about preferences. First of all he would see Articles 14 and 24 which talk about limiting and eliminating preferences. He would then find Article 13(A) and (B) which makes provision for new preferences. He would then find Article 38(4) which makes another provision for new preferences - unspecified preferences. And, finally, in Article 66 or Article 53 he would find still other provisions, and, putting those extracts side by side, would provoke a nice piece of public criticism. Therefore, we would be glad from the presentational point of view to see that Article 38(4) should disappear. I should think that the Australian case could equally be met under Article 66. CHAIRMAN: The delegate for India. Mr. S. RANGANATHAN (India): Mr. Chairman, I do not wish to express any opinion on the merits of this question, but would it be unduly inconvenient to the Commission if I suggest that we take this matter up the first thing after lunch. 6 ER E/PC/T/A/PV/42 CHAIRMAN: I am rather reluctant to leave this question sus- pended as we are approaching the end of our discussions. At our previous meting we had a general survey of Articles 14,15,16 and 64, and the delegate of Australia brought up the same point as he did to-day, and we all felt very sympathetic to the difficulties he spoke about. Would it be possible that we agree to omit paragraph 4 of Article 38, it being understood that that does not prejudice in any way the point brought up by the Australian delegate? We believe that, at/any rate to some extent,the case as covered by Article 66, and if it is found after further consideration not to be entirely satisfactory, the question could be taken up again on another occasion. 7 J. E/PC/T/A./PV/42 Would that solution be agreeable to the Australian Delegate? DR. H.C. COOMBS (Australia): Yes, Sir, CHAIRMAN: The Delegate of India. MR. S. RANGANATHAN (India): Mr. Chairman, I am not sure that I should have to enter a reservation at all, but if I have to, if you. would permit me to record a reservation in the afternoon, I have no objection to this procedure. CHAIRMAN: The Delegate of Chile. M. A. FAIVOVICH (Chile) (Interpretation) I must take the same attitude, Mr. Chairman, as the Indian Delegate. I wish to declare here that paragraph 4 was left in a beyance because the final text of Article 13B was not yet known and it is still not known, because that part which relates to the Voting question has been deterred until the World Conference in Havana. Therefore, I cannot see how we can take a decision to delete paragraph 4, which is necessary to us. CHAIRMAN: Are there any further remarks? MR. J.M.. LEDDY (Ulnited States): Mr. Chairman, paragraph 4 of Article 38 was introduced in London with a view to meeting, if possible, the views of the Delegate of the Lebanon, that is, the Suggestion that there should be not merely a general provision but a specific provision in Article 66, paragraph 3 envisaging the possibility for economic development purposes. Here in Geneva we have worked out an Article e dealing with that particular point in Charter IV, and it was our understanding that, J. that Article being in Charter IV, there was no need for repeating an additional provision on this subject in Article 38. In deleting paragraph 4, the substance of Article 38 is, of course, in no way changed, but we attach considerable importance to its deletion and Article 13B, I believe, should be maintained. CHAIRMAN: The Delegate of the United Kingdom. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, there is one other point that I would like to suggest for the consideration of the Chilean Delegation, and it is that I do not see what they can lose from the disappearance of this paragraph 4 of Article 38, If looked at from the point of view of the Voting provisions. The point which has been left in suspense in Article 13B is whether you should have a simple majority, or, at the other extreme, a two-thirds majority of those presented and voting, or some Intermediate solution between the two. On the other hand, Article 38, paragraph 4 provides a tighter voting method than any of those which are, I think, contemplated under 13 B. It contemplates that you must have two-thirds of the Members present and voting and, .moreover, that they must constitute a majority of the Members of the Organization. So , looking,at it from the engle of voting, I cannot see what would be ine by retaining Article 38, paragraph 4 if 13B stands. The requirement in Article 38, paragraph 4 would be,:in any case, a tlghter requirement than that envelved in 13B. I would like to suggest that point for the consideration of the Chilean Delegate. 9 V E/PC/T/A/PV/42 CHAIRMAN (Interpretation): May I ask the representative of Chile if, after hearing the declarations of the representatives of the United States and the United Kingdom, he is ready to accept the suppression of paragraph 4? M. Angel FAIVOVICH (Chile) (Interpretation): There are two aspects of the discussion. On the one hand, there is the question of voting, which the Commission decided to refer to the World Conference in Havana. On the other hand, there is a question of a wider scope and which is of particular interest to us. While Article 13B provides for preferential arrangements with a view to economic development, paragraph 4 of Article 38 has a much wider scope, and we are in favour of the maintenance of that paragraph. Preferential arrangements may be necessary for reasons that are not only of an economic nature; there may be several other reasons. This paragraph was maintained in London and New York, and we are in favour of its being retained. Dr. A. B. SPEEKENBRINK (Netherlands): Mr. Chairman, is there any objection to having a special note here saying that we have deleted paragraph 4 of Article 38 in view of the new addition to Article 13, and stating that while we have deleted this, it does not mean that there cannot be new preforential arrangements, because Article 66(3) makes it possible? CHAIRMAN: Would that suggestion be agreeable to the Commission? M. Angel FAIVOVICH (Chile): No. .CHAIRMAN: Then I have to make the proposal to put paragraph 4 in square brackets, with a note saying that the majority 10 E/PC/T/A/PV/42 of the Preparatory Committee favour the deletion of this paragraph. Mr. J.M. LEDDY (United States): I propose that the paragraph be deleted, and that the Delegate of Chile reserve his position. M. Angel FAIVOVICH (Chile) (Interpretation): I think that the Chilean Delegation is not the only one and that there are other Delegations in the same position. Therefore, I am inclined to accept the Chairman's proposal. Mr. R.J. SHACKLE (United Kingdom): Before we come to a decision on this, there is one point I would like to suggest for consideration: Surely there can never be a proposal for a preferential arrangement which has no economic aspect or justification whatsoever? If it has only a subsidiary justification of this kind., it could still come under Article 13B. It is not essential that the whole thing should be purely on economic development grounds. The fact that economic development is one of the justifications surely suffices. CHAIRMAN: The difference of opinion now makes it quite clear that we are not going to achieve a unanimous position as to the maintenance or the deletion of this paragraph. It is then only a question of drafting, as to how this difference of opinion should appear. I am quite convinced that the majority of the Commission propose the deletion, and I think that the proposal made by the Delegate of the Netherlands is, from the drafting point of view, better than mine - that is, that we delete the paragraph and state that the deletion was made on the understanding that the purpose of the paragraph was covered by Article 13B and article 66, and then add that certain Delegates favoured the maintenance of the paragraph. Is that agreeable to everybody? 11 G . E/PC/T/A/PV/42 CHAIRMAN: The Delegate of Brazil. Mr. TORRES (Brazil): (Interpretation): Mr. Chairman, I would just like to raise a point of order. Do I understand that the other Delegations have doubts as to the deletion of this paragraph? I am in agreement to insert the note, and in that case would agree to drop the paragraph altogether; because if so I do not see why we should say "certain Delegations". Lat the little paragraph explain the reasons, and then say one reservation was made. Dr. HOLLOWAY (South Africa): Mr. Chairman, on a point of order. In the terms of Rule 21 of the Rules of Procedure, I propose the closure of the debate. Mr. LEDDY (United States): On the question of whether we shall finish,Mr. Chairman, what proposal is before the Committee? CHAIRMAN: Before the Committee now is my proposal, which is based upon that of the Netherlands Delegate, that we delete paragraph 4 of Article 38 and insert a note saying that the deletion was made because we considered that the contents were already covered by the adoption of Articles 13(D) and 66, and I suggested we add to that "certain Delegates prefer the maintenance of this text". Brazil wanted the last sentence to read, "only one Delegate", but I cannot add that, as we have to consider the position of the Australian Delegate. We do not make any objection but after all, when there is any reservation made, I think it is fair to note the fact that, there are not only, one,but/ two, perhaps three, who would prefer the maintenance of the text. 12 Does any other Delegate than the one representing India want the maintenance of paragraph 4? CHAIRMAN: We have a proposal by the Delegate of South Africa to close the Debate, and I think that all who wish to speak either for or against this proposal should now speak. Mr. MOBARAK (Lebanon): (Interpretation): Mr. Chairman, I wanted to say that I associate myself with the Delegate of Chile and accept the solution proposed by the Netherlands Delegate. CHAIRMAN: Well, I cannot allow any more discussion on the substance. The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): I think that my right course is in a purely formal sense to oppose the closure. CHAIRMAN: May I take it that the proposal I made, based upon that of the Representative of the Netherlands, is acceptable to the Commission? The Delegate of the United States. Mr. LEDDY (United States): We propose replacing the words "'certain delegates" by the number of delegates who have made a reservation. CHAIRMAN: The Delegate of France. Mr. ROYER (France): (Interpretation): A note was circulated yesterday by the Secretariat asking whether it was preferred that the names of the Delegations should be mentioned.. I think that the majority of Delegations are in favour of this proposal, ands 13 G E/PC/T/A/PV/42 therefore I think it would be a good thing to state what Delegations have made reservations. CHAIRMAN: Well, that is very fine in theory; but it commits this Delegation to a final point of view which I do not think we will have. The Delegate for India has just said he might consider the question this afternoon. Australia was willing to accept, on the understanding that the question he brought up should remain open. So I think that in spite of the question submitted by the Executive Secretary, we should confine curselves in this case to'"certain Delegates." S E/PC/T/A/PV/42 Mr. J. M. LEDDY (United States): My proposal was, Mr. Chairman, that it should read "two or three or four Delegates," instead of "certain Delegates". CHAIRMAN: I do not see that very much is gained by replacing "certain Delegates" by "two or three Delegates," because if we were to call on all the Delegates I am perfectly convinced that one or two, or three or four, might abstain and say: "We have not made up our minds; we are indifferent." I think "certain Delegates" expresses perfectly the position in the Commission. Mr. LEDDY (United States): Mr. Chairman, I was under the impression that some Delegates merely wanted time; they did not necessarily wish to reserve their positions. There will be some time before the Plenary meetings and I would much prefer that my proposition should be adopted. CHAIRMAN: I think we should adopt the term "certain Delegates", leaving it to the United States Delegation to raise the question again in Executive Session. Mr. J.G.TORRES (Brazil): Mr. Chairman, I am sorry to say I am not in agreement with the procedure you suggest. I think we should have a faithful representation of the facts and, if you insist upon having "certain Delegates", we should make sure that there is foundation for such an expression. To my mind there are one or two Delagations who are definitely interested in having a reservation stated. Two others are in doubt. I think we should either state the number of Delegations who want their reservations put in or not mention the fact at all, but I am not in agreement with the word "certain." 15 S E/PC/T/A/PV/42 CHAIRMAN: If that is the view of the Commission, that we should indicate that a certain number of Delegates want to maintain Paragraph 4, the only way out of the difficulty now is to take a vote at the beginning of our afternoon meeting. Is that agreed? Dr. J. E. HOLLOWAY (South Africa): Mr. Chairman, may I ask for a vote on my motion? I do not want this debate to be opened this afternoon. I went to put the ruler in the hands of the Chairman, to prevent anybody from wasting another hour. In the last hour nothing has been said which has not been said about a hundred times in this Conference. I have the right to propose this and my point in proposing it is to give the Chairman a whip in his hand with which to whip anybody who wants to propose opening it again this afternoon. CHAIRMAN: There is one speaker in favour of the closure of the debate and two against. Does anybody else wish to speak? H.E. WUNSZ KING (China): The Chinese Delegation is in favour. CHAIRMAN: Is anybody against the closure? Mr. S. RANGANATHAN (India): Provided it does not prevent you from taking the vote which you just wanted to, I support it. CHAIRMAN: I thought the proposal of the South African Delegate meant to close the debate now. We have spent an hour on the discussion. You are in possession of a quite reasonable proposal for the solution of the question. I- I , - 16 S . E/PC/T/A/PV/42 There are differences of opinion with regard to whether it should be "certain Delegates" or whether we should give the number of those who have made reservations. I proposed "certain Delegates." That is the proposal before you. The Delegate of South Africa has proposed that we now close the debate and that we pass on to the decision as to whether or not the Commission agrees to my proposal now. M. Moussa MOBARAK (Lebanon) (Interpretation): You yourself, Mr. Chairman, when you were speaking as Chairman of the Norwegien Delegation, suggested that we should avoid, as far as possible, any votes when there were two opinions, in order not to influence the Havana Conference, Now we could perhaps adopt this suggestion of yours; we are in favour of two possibilities. I would not like to see one majority and one minority report or suggestion on this point and I believe we could say in our Report that there were two points of view - this one and that one - and not proceed to any majority or minority vote. 17 CHAIRMAN: This discussion seems to me to show very much how tired you are after four months work. I made my proposal and I take it that the great majority of the Commission agrees to it, and that should close the debate. We pass on to the consideration of Articles 14..5 and 24, and I would appeal to delegates not to discuss the proceure more than absolutely necessary, but only the very essential problems on their merits. You have before you Document r.en" It is the Report of the Legal Drafting Committee on these three Articles. We have had more than a full general discussion on these Articles. We have had a strong sub-Committee working very hard during several weeks on and, besides, the members of the Sub-Committee have had private conversations, and have been in touch with practically all of the other delegations, so I think that these Articles on the form in which they are now presented to us have condensed the results of all this work. We start with Article 1. General Most-Favoured Nation Preat- ment, paragraph 1. There is no amendment, and no note to the firs paragraph of c Article 14. May I take it ttha we allgree ao tyht parasraph g? .A JGEL AIFOiI0H11C(hile) (Intepre24atoiJ): I Tssoicat3. yself wi h theu appeal ma e by the Ccairman t- avoid an uinecessa'y extension of the discussion. Therefore, I shall abstain from making once more the statements which Ihave already made at the Chairman's Committee and in the sub-Committee. May I only recall that we have submitted an amendment to Article 14 providing for a/preferential regime regarding neighbouring countries under certain urdetermined conditions, and the Executive Committee decided that this amendment was irrelevant since it would be covered by the provisions of Articles 13 and 38. Now that these Articles have been adopted, my delegation considers that these amendment have not be en embodied in these pro- visions. Our amendment deals mainly with the provisions of Article 14, and therefor we must make a reservation on this Article, I prpose to make that reservation in Plenary Session. 18 If I understand correctly, the Chilean reservation deals with the whole of Article 14. The Delegate for the Lebanon. MR. M. MOBARAK (Lebanon) (Interpretation): Mr. Chairman, this amendment having been submitted with full agreement between our Delegation and the Chilean Delegation, we make the same reservation regarding Article 14. CHAIRMAN (Interpretation): I shall ask the Chilean Delegate to contact the Secretariat with regard to the wording of the reservation. Are there any further remarks on paragraph 1 of Article 14? M. ROYER (France) (Interpretation): Mr. Chairman, there is a slight amendment to be made in paragraph 1, in the tenth line of page2 of the French text. The word "impositions" has been substituted for the word "taxes" in other places, and I consider that this should be the case here. CHAIRMAN: Are there any further remarks? Paragraph 1 is approved. Paragraph 2. You have a footnote on page 2 of document E/PC/T/V18: "The Delegate for Cuba reserved his position in relation to preferences accorded by differential internal taxes". Is that reserve maintained? DR. G. GUTIERREZ (Cuba): Yes. CHAIRMAN: Are there any further remarks on paragraph 2? The Delegate of Belgium. M. P. FORTHOMME (Belgium) (Interpretation): (The first remarks made by the Delegate of Belgium refer to the French text only). 19 E/PC/T/A/PV/42 The last remark I have to make deals with tihe shape of sub-paragraph (b), which mentions the preferences which are listed in Annexes B, C and D of the Charter. Now, sub-paragraph (d) refers to preferences listed in Annexes E and F of the Charter, but it may well happen that, at the World Conference, there will be other Member countries which may have Colonial territories, for instance, Portugal may have to submit a list under sub-paragraph (d), although I understand that Portugal considers its Colonial territories as forming one customs territory with the metropolitan country, but this general conception may change in the meantime. Therefore, I suggest that it should be mentioned that the list of sub-paragraphs is not exhaustive, and that it may be modified at the World Conference. CHAIRMAN: Are where any further remarks on Article 14, paragraph 2? We have a paper E/PC/T/W/290 containing a note by the French and Belgium-Luxembourg Delegations. It refers to the exchange of certain specified agricultural and industrial products between Belgium and Luxembourg on the one hand, and certain bordering areas of France on the other hand. The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, it is only out of honesty that the Delegations concerned have circulated this document before the final adoption of Article 14. May I recall that, at the end of the last war, signed an Agreement with the Belgium-Luxembourg Union providing for an extremely special regime for very small quotas of live animals. certain fruits, lime and cement, which are admitted in France under a frontier regime, either free of change or at a very reduced rate, and these are extremely small quantities. V 20 E/PC/T/A/TPV/42 The same applies to Luxembourg for a number of articles. We have always considered this agreement as being a frontier agreement. We hope that the Commission will give the same interpretation to this very limited regime. If the Preparatory Committee considers that this arrangement is not covered by the provisions of Article 38, we ask for the insertion of a special provision, but we hope that the Preparatory Committee will agree with our own interpretation and consider this to be frontier traffic. Of course, we are prepared to supply the Commission with any detailed data regarding the quantities and products involved. CHAIRMAN: I take it that the same applies to the special regime between Belgium and Luxembourg. M. Pierre FORTHOMME (Belgium) (Interpretation): Mr. Chairman, it is not a regime between Belgium and Luxembourg, but a regime in force between the Belgium-Luxembourg Economic Union and France, with a number of reciprocal clauses as regards Luxembourg. Mr. Hassan JABBARA (Syria) (Interpretation): Mr. Chairman, at a previous sitting I asked for a precise definition of the frontier regime. I wanted an exact indication of the scope of this term, and if it really means a "frontier regime", it should be indicated as "a regime to facilitate, both from the point of view of customs tariff and all formalities, the movement of products belonging to people living along the border and who have interests in both countries". Such a zone would naturally be limited to a few kilometres. This point of view was adopted generally, but now we seem to be confronted with another regime. 21 V E/PC/T/A/PV/42 I am not against the suggestion which is made, but I would insist again that the term "frontier regime" should be exactly defined. We should know if here it is a matter of the interests of the inhabitants of the frontiers, or if it is another preferential agreement. CHAIRMAN: Any further remarks? You have heard the explanation given by the Delegate of France, and unless any Delegate feels doubtful with regard to the facts as explained by the Delegate of France, I take it that we should simply note in our records his statement, and consider a new annex to be superfluous; but it is for the Commission to choose. Does any Delegate wish to oppose this solution? That not being the case, it is decided that we note the French declaration and consider a new annex superfluous. We now pass on to the question raised by the Delegate of Syria. Does any Delegate wish to speak on that? Mr. R.J. SHACKLE (United Kingdom): Is it in order to discuss it now, because surely it arose under Article 38? Mr. Hassan JABBARA (Syria) (Interpretation): Mr.Chairman , I believe that the question raised by the representative of France really duplicates Article 38. That is why I had asked for a definition of the meaning of the term. I said that I was not against the interpretation that had been given, but I wanted to know if such a procedure could be used by other countries in the future, or if it is only intended here to maintain an existing situation. I believe that such a definition should be given here and that it would be useful for future action. 22 V E/PC/T/A/PV/42 CHAIRMAN: It is difficult for me now to re-open the question of Article 38. I have not participated in the discussion on that Article, and I do not know very much about it. As to the question of the general application of a scheme like the one explained by the French Delegate, I can say that, for instance, we have a frontier traffic between Norway and Sweden which falls entirely outside all kinds of customs regulations, for the benefit of the population on the frontier. It is entirely the same as the case of the frontier between France and Luxembourg, as explained by the French Delegate; and I think that most neighbouring countries have such exceptional situations. But, of course, it is only for the benefit of the population on the frontier, and for a very, very limited amount of goods. G 23 E/PC/T/A/PV/42 CHAIRMAN: The Delegate of the Lebanon. Mr. MOBARAK (Lebanon) (Interpretation): As you said yourself, Mr. Chairman, such a frontier regime exists practically everywhere for the interests of the populations of these border regions; but these regimes only cover agricultural products, and as far as we know they never cover industrial products. Now in the French note it is indicated that cement is one at the products that benefit from this frontier regime. I do not understand how an industrial product like cement can be involved in such a regime, and in this case I would rather see an Annexe G introduced here to cover this point than leave the situation vague, and to permit eventually some abuse due to this vagueness. CHAIRMAN : The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): Mr. Chairman, I do not know whether one is in order in discussing Article 38 2 (a) here, but apparently discussion on it is proceeding, and I can therefore say this, that it seems to me we are very wise to leave the term "frontier traffic" indefinite. It is obvious, I think, that conditions vary enormously from one part of the world to another. In countries where the population is seattered, negotiations are difficult. Therefore I think it is very wise not to be too specific; and that goes also for the types of goods entering the frontier traffic. It would be better not to specify whether they are industrial agricultural or what they are. It would be for the Organization, when set up, to consider any complaint that may arise; but some regine may go beyond frontier traffic, It should be left to the Organization, and that is how we should leave the matter now. 24 G E/PC/T/A/PV/42 CHAIRMAN: The Delegate of Belgium. Mr. FORTHOMME (Interpretation): (Belgium): I wish to give every assurance to the Lebanese Delegation regarding the possibilities of abuse in connection with lime and cement, and in this connection I shall read Article 10 of the Commercial Agreement between the economic Union of Belgium, Luxemburg and France. "As a temporary concession, having regard to the needs of the French devastated regions and the special trade conditions formerly existing between Luxemburg and the adjacent French departments, the following commodities originating in and coming from Luxemburg shall benefit on entry into France by the following duties, applicable to quarterly quotas fixed at an average of 1,500 tens per quarter for hydraulic lime and 5,000 tons per quarter for cement: (1) Lime: 26 centimes per quintal (2) Cemont: 78 centimes per quintal The lime and cement mentioned in the present Article shall only benefit by the exceptional regime accorded to them provided they are imp rted into France via the Customs Offices.." - and then follows a limited list of Customs Offices through which these articles can be imported. If it is required I can give that list. 25 S . E/PC/T/A/PV/42 May I point out that the requirements for reconstruction after World War I lasted in France almost to the time when the Germans recreated new requirements for reconstruction. CHAIRMAN: I think the statement we have heard by the Delegate of the United Kingdom is very much to the point and, in the light of considerations out forward by him, we should abide by the decision which I understand we have taken on the French proposal, not to insert the special provisions", and leave the question of the exact definition of frontier traffic open to be decided, in each case, by the Organization. Are there any other remarks on Paragraph 2 of Article 14? This not being.the base, Paragraph 2 is approved. Paragraph 3: are there any observations? The Delegate of Australiaa Dr. COOMBS (Australia): Mr. Chairman, before you leave Article 14, there are two points I would like to make - one as Chairman of the Sub-committee which dealt with this matter, and the other as representing the Australian Delegation. Dealing with the first point: the position of the Sub- committee was that there were a number of quite difficult issues involved in these Articles and it was found necessary to refer to a number of specific questions in the Report in such a way as to clarify certain issues .hich Delegations had found obscure, and the inclusion of those comments in the Report was. regarded as essential, by the various Delegations concerned, for their acceptance of the text. I think it is therefore important, notwithstanding the difficulty of time, that the Report of the Sub-committee in respect of those items should be accepted by the Commission, otherwise I feel a number of Delegations will regard themselves as inadequately covered in their acceptance of the text as it stands S E/PC/T/A/PV/42 For the Australian Delegation, I do not went to make any reservation on Article 14, but I would like to remind the Commission that, when this matter was raised in full Commission before, we emphasized that acceptance of Article 14 does represent a fundamental change in the commercial policy of my country and that, whilst we do not wish to amend it in any way, we want it to be quite clear that the acceptance of this principle of Most-Favoured-Nation treatment as replacing the Imperial Preference principle which has governed so much of our commercial policy in the past is dependent upon a satisfactory outcome of the Charter as a whole and also of the tariff negotiations themselves. Therefore, the fact that we have not entered a specific reservation on this Article must not be taken as an indication that we are, at this stage, prepared to accept the principle embodied in this Article. Dr. HOLLOWAY (South Africa): Mr. Chairman, I would like to associate the South African Delegation with the statement Dr. Coombs has just made in his capacity as the representative of the Australian Delegation. CHAIRMAN : With regard to the statement of the Chairman of the Sub-committee, I would like to say it was my intention, after having dealt with each Article, to consider the comments on the Article in the Report of the Sub-committee, to see whether any of these comments ought to be retained as Explanatory Notes or not. S ER Any further remarks on paragraph 3 of Article 14. Adopted. We pass on to the Annexes. The first one is on page 5 of Document 178: List of Territories referred to in Sub-paragraph 2(a) of Article 14. United Kingdom of Great Britain and Northern Ireland and all the Dependent Territories and Dominions. You have the text on pages 5, 6 and 7. I would like to know whether there is any delegate who has any observations to make on any of these Annexes. Mr. R.J. SHACKLE (United Kingdom): I have two points on these Annexes. One is a very small point: the other one, I am afraid, is a somewhat larger one. The first small point is that where it says: "India" I move we insert "as 10th April 1947". That, of course, is the opening date of this Conference. The reason for inserting those words is, of course, that since then the new division betweenn India and Pakistan has come into being and if we did not insert the words the question would arise as to whether Pakistan should be inserted or not. Perhaps I had betwer make that point first and then go on to the second point. M. PIERRE FORTHOMME (Belgium) (Interpretation): I wonder if there would be any objection on the part of the Commission to the much simpler solution of introducing the word "Pakistan". Mr. R.J. SHACKLE (United Kingdom): Well, Mr. Chairman, I am no sure about what because actually Pakistan is a Customs Union with India, and it would not be appropriate therefore to insert this word. This is a solution which in our consideration would be the appropriate one. I should simply say that we should insert the words: "as from 10th April 1947." 27 ER 26 E/PC/T/A/PV/42 CHAIRMAN: May I ask the delegate of India if he is in agreement with the suggestion of the United Kingdom? Mr. S. RANGANATHAN (India): Yes, I am in full agreement with Mr. Shackle's suggestion. CHAIRMAN: Well, then, we take it that the Commission agrees to this amendment. Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman I would like to proceed now to my second point. The second point arises on the Report of the Tariff Negotiations Working Party which is Document E/PC/T/158. It is the Report on Preferential Arrangements not Effected by the Method of a Difference in Rates of Duty. Well, now, that paper explains what the point is. The point is that there are, we think, in the Commonwealth, a certain limited number of places where preference is given on certain things, bacon and meat, not by the method of tariffs but by quotas. The point is that those arrangements shall be provisionally maintained pending negotiation with the principal supplier of the product con- cerned which would result in new agreements to take their place. iin paragraph 1(b)of Art.28 "The preferential arrangements referred to/are those existing in the United Kingdom on 10th April 1947, under contractual agreements with the Governments of Canada, Australia and New Zealand, in respect of chilled and frozen beef and veal, frozen mutton and lamb, chilled and frozen pork and bacon (and hams). It is the intention, without prejudice to any action taken under sub-paragraph (h) of Part I of Article 37, that these arrangements shall be eliminated or replaced by tariff preferences, and that negotiations to this end shall take place as soon as practicable among the countries substantially concerned or involved." 29 ER E/PC/T/A/PV/42 The Tariff Working Party therefore made two proposals. The first one was that paragraph 1 (b) should be inserted to Article 28 restrictions under the preferential arrangements provided for in Annex A of this Charter, subject to the conditions set forth therein." That was their first suggestion. Their second suggestion was to include in this Annex - a passage which I have just read to you which will explain what those particular preferences are, and what it is proposed to do about them. Well, now, the first of those changes is the addition to Article 28 of paragraph 1(b). You will find that in the paper E/PC/T/163 on page 14 and there appears as paragraph 5(b). The exact words have been incorporated, as has been suggested by the Working Party. They read: "restrictions under the preferential arrangements provided for in Annex A of the Charter, subject to the conditions set forth therein." This paragraph has been passed by Commission A last week. We are now left with the remaining part of the Tariff Working Party proposal which is to include this in the annex here. The exact wording which is suggested for this add it ion to the Annex you will find on page 2 of the Tariff working Party Report. My proposal is to insert here in Annex A, that is to say, on page 6, the passage suggested by the Tariff Working Party. It actually would come in as an addition to the amendment of the second paragraph on page 6 of paper 178. 30 E/PC/T/A/PV/42 DHAIRMAN: The Delegate of the United States. MR. J.M.LEDDY (United States): The substance of this proposal, Mr. Chairman, I think was fairly well agreed at the London meeting. The only thing that was left open was the question of what precisely were the products concerned. That having been established at this meeting, I believe that we are prepared to accept this proposal. I should like to call attention, however, to the brackets which appear round the words "and hams" in the list of products. It is my understanding that those brackets are there simply to indicate that it may be necessary to establish in tariff preference on hams, depending upon the outcome of present negotiations. CHAIRMAN: The Delegate for the Netherlands. DR. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, on a point of order, I may be mistaken, but I do not recollect that the addition on Article 28 was formally approved by the Commission. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, this is part of paragraph 5 on page 14 of document E/PC/T/163; which is the Report on Articles 26, 28,and. 29. The whole of that was passed and the object of paragraph 5 was passed without discussion. CHAIRMAN: The Delegate of Canada. MR. J.J. DEUTSCH (Canada): Mr. Chairman, that part of the Report on Article 28 was adopted by Commission A, and I remember there was a reservation specifically moved on that Article at that discussion by the Delegate of Brazil. 31 E/PC/T/A/PV/2 ~~~~~~~~~~~~~/ -'-U/ xI /I '2!Co OEAIRMAi: That is correo. Weohaveea Report by the sub-ounmittoo f.r tha insertion in the second ,aragraph or, page 6 of our text of the text we find in .age 2 of document 73/?2C/158. It has been agreed to by the sub-oommittee, weth three remervations of the Delegatus of Belgiur, erazil and Noseaye g weuld ask vhathar any of thee3 Doleoatts wishes to withdraw his reservation? 's for as I understa-r it, at any rate, spme of them have already made reservati.ns on .rtiolo 28. The question is whether it is necessary to repeat the reservations hera. I leave it .ntirely t. these Dele,ates tJ _ecae. If no wants to sey asything about it, I take it that theae taree Delaoaoos maintain thel: reaervEtion alsc -n this point. The Delegate of Bel,iur. at o. FORTIOXM2 (Bemaium) (Interpreataiun): Mr. Chairizn, the Belgian Delegaton A hac made & General reservation x brtiole 28, which we cunsider aspobeing sufficiont. his specific Zint here has no partioular interest for us. CH&IRM I: The Deleea e of Brazil. lR. J.G. TORRES (Brazil): Mr, Chairman, this matter came to the attention ofgehe Conference at a rather late stacs. our ooconsidet has pot had enouWh time tj onsi>.er the -roblem. Ve have objected to It in the Workln- arty meetings, we have Objected to Itin .lticle 28 ond wish to repeat our objection nuw. CEaIRMN: The Delegate for Norway. MR. J. IELINDUR gNorway): Mr. Chairman, the Norwe-ian DelegatiAn made a zeneral reservation on .rticle 28, and or, this particulemapoint heee weealso prefer to rmuiin in abcyanc., so that we maintain our reservation. - _. Cr/,o 32 V E/PC/T/A/PV/42 Dr. H.C. COOMBS (Australia): Mr. Chairman, I do not want to prolong the discussion; but I would just like to remind the Delegate of Brazil that this matter was raised very early in the discussions in London and was the subject of a very great deal of discussion. The Report of the London Conference (page 22) records the fact that the Committee agreed to the principle of this, and, so far as I am aware, it was the subject of no reservation. CHAIRMAN: May I take it that we are all in agreement with the text of this annex, amended in accordance with the proposal contained in Document T/158, with the reservations of the Delegates of Brazil and Norway? Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, before we depart from this matter, I feel that I should give a certain further explanation, because I want the Commission to be very clear as to what this is really about . The position is this, that for most of the products here concerned, the principal supplier is not here present. It is, therefore, not possible at this stage to negotiate the new arrangements. That is the only r-ason why the matter is at present in suspense in this way. We hope that before long, though, of course, we cannot give an exact date, we shall have an Opportunity of negotiating with the principal suppliers and then dealing with these questions. We cannot, as I say, fix a date for that, but we shall lock to do it as quickIy as possible, and when we do it, we shall not forget that there are other people interested besides the principal suppliers. The last words Of the added paragraph in the Report read: "and that negotiations to this and shall take place as soon as practicable among the countries substantially concerned or 33 V E/PC/T/A /PV/42 involved". The words "or involved" are meant to look to the case of the people who, though they have a definite interest, have not got the principal suppliers interested in this matter. I want to assure them that when the time comes we shall not forget them. Taat is the general explanation that I with to give. Then there is one detailed point on the text: the Tariff Working Party by accident left out a few words in the third line of the paragraph which they suggest on page 2 of their Report. These words are in our present text on page 6 of document T/178: "exclusively between two or more of the territories listed in this Annex". These words should be replaced, so that the paragraph will road: "The imposition of a margin of tariff preference to replace a margin of preference in an internal tax existing, on 10th April 1947 exclusively between two or more of the territories listed in this Annex, or to replace the preferential quantitative arrangements... ."etc. CHAIRMAN: The Delegate of Chile. M. Angel FaIVOVICH (Chile) (Interpretation): Mr. Chairman, our reservation on Articles 28 and 14 also cover the question raised by the Delegate of the United Kingdom, and the note. CHAIRMAN: The Delegato of Brazil. Mr. J.G. TORRES (Brazil): I would, just like to say, referring to Dr. Coombs' remarks. that there are two questions here: a question of principle, and the actual problem involved. It may be true that in London there was no reservation; but the fact remains that it was only late at this Session that we 34 V were really confronted with the practical problem, and I would like to say also that in the tariff negotiations going on here we have not always necessarily adhered to the principle of the principal supplier. CHAIRMAN: The remarks of the last speakers do not alter the decision which I understood we have already taken, namely, to approve this annex with the amendments contained in document T/158. I take it that the decision stands; but there is a note on page 7 of document T/178: "The Delegate for Cuba reserved his position in relation to the imposition of a margin of tariff preference to replace a margin of preference in internal taxes". Does the Cuban Delegate maintain that reservation? Dr. Gustavo GUTIERREZ (Cuba): We are so rry to have to maintain it, It has nothing to do with the system of the British Empire;-but it is a consequential note and we have to sustain it. 35 G E/PC/T/A/PV/42 Mr. LEDDY (United States): I think that the reservation by the Delegation of Cuba is already covered by paragraph 2 of Article 14, and I was wondering whether we could keep/in that one place rather than in three places, as it is now; but I really think that the reservation relates to possible preferential and internal taxes that Cuba may have, and therefore it should appear appropriately in paragraph 2 of Article 14. CHAIRMAN: The Delegate of Cuba. Mr. GUTIERREZ (Cuba): Mr. Chairman, I would very much like to suppress those consequential reservations, and if I am allowed to reconsider the matter with the Delegation, we will try to find a way to have the text of paragraph 2 covered without a reservation. CHAIRMAN: Thank you. The Delegate of the Netherlands. Mr. SPEEKENBRIK (Netherlands): Before you finally approve this Annexe A, I would only like to say that it was with very great hesitation that I in the Working Party agreed to the new addition with regard. to these preferences. We did that for practical reasons, understanding the difficulties concerning the United Kingdom; but I did it with great hesitation. At this moment we might speak of a rather unsatisfactory state of affairs with regard to the whole negotiations about tariff preferences, and the addition is a departure from this principle that we should not continue quantitative restrictions. CHAIRMAN: Well, we have approved Annexe A, and. we pass on at 2.30 p.m. to the examination of the other Annexe. The Meeting is adjourned. The Meeting adjourned at 1.7 p.m.
GATT Library
kn077xp9179
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Forty-third Meeting of Commission "A" held on Monday, 18 August 1947 at j'. 30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, August 18, 1947
United Nations. Economic and Social Council
18/08/1947
official documents
E/PC/T/A/PV/43 and E/PC/T/A/PV.41-43
https://exhibits.stanford.edu/gatt/catalog/kn077xp9179
kn077xp9179_90240212.xml
GATT_155
16,815
101,248
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/43 18 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. FORTY-THIRD MEETING OF COMMISSION "A" HELD ON MONDAY, 18 AUGUST 1947 AT J'. 30 P.M. IN THE PALAIS DES NATIONS, GENEVA . -- - - H. E. Mr.ERIK COLBAN (Chairman) (Norway) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247) . Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES S 2 E/PC/T/A/PV/43 CHAIRMAN: The Meeting is called to order. We now come to Annex B to Article 14, which you will find on Page 8 of Document E/PC/T/178 - List of Territories of the French Union. Does the French D-legate accept the text? M. ROYER (France) (Interpretation): Mr. Chairman, we do accept the text, but I would just like to draw your attention to a few typographical errors. First, there should be an asterisk in the French text after "Treaty Basin of the Congo", as there is in the English text. In line 4 of the French text we should delete the comma. There should be an asterisk added after "Cameroons under French Mandate". It does not exist in the English text, because it is inserted in regard to imports into Metropolitan France. Also, in both texts should be added "French Establishments in India." (CHAIRMAN (Interpretation): Is there any objection to introducing a date into the title? M. ROYER (France) (Interpretation): We have no objection to inserting the date of 10 July 1939, which was the date adopted. CHAIRMAN (Interpretation): My only idea was that the relations between these territories and the French Republic might be modified some time and therefore I was wondering if it was necessary to put a date. I only wanted to ask if it was necessary. If it is not necessary, it seems useless to put it in. M. ROYER (France) (Interpretation): Mr. Chairman it was the suggestion of the Secretariat to put in the dates on which the negotiations were based. These dates, of course, only-concern S - 3 - E/PC/T/A/PV/ 43 the tariff negotiations, but we have no objection to putting them in. CHAIRMAN: As there is no expressed desire on the part of the French Delegation to put a date in, and no other Delegation has suggested the insertion of a date, I think we can accept the Annex without a date. Are there any further remarks? Annex B is approved, with the slight drafting corrections suggested by the Delegate of France. Asner C - is a corresponding list concerning the Customs Union of Belgium, Luxembourg and the Netherlands. Mr. J. M. LEDDY (United States): I note that the Delegate of the United Kingdom has a reservation on this. Our own position is not concerned with the Annex as it stands, but the relation between the Annex and the statement circulated by the Bonelux Delegation some time ago as to the new preferences extended to overseas territories arising out of the Customs Union between the Belgo-Luxembourg Union on the one hand and the Netherlands on the other. On the other hand, I do not think there is any real difference of substance; it as just a question of establishing, to our mutual satisfaction, the products concerned. I think it has been discussed between us what were those products and I believe they can go forward in connection with the Trade Agreement. I think the wise thing would be to approve the Annex as it is, subject to the working out of a mutually satisfactory agreement as to the products concerned in connection with the overseas territories. Mr. R. J. SHACKLE (United Kingdom): I should say that the E/PC/T/A/PV/43 object of our reservation is just the point to which Mr. Leddy has referred. Our position, I am afraid, is that we do not quite know what products are likely to be affected and, until we do know, we felt we had to maintain our reservation. I think we would be agreeable to come to an understanding such as Mr. Leddy has suggested. If and when we are satisfied as to the products concerned, we may be in a position to withdraw our reservation. CHAIRMAN: The Delegate of Belgium. M. FORTHOMME (Belgium): Mr. Chairman, I would like to point out that the idea of basing the acceptance of this list on such-and-such products being included or not included seems to introduce a form of jjuggment which has not been used in the matter of approving various things that have been brought up.before this Commission, such as tariff changes and other preferential lists. I would point out that we do not think the preferential system which was outlined in different documents the Belgian Delegation has circulated to this Commission is in any way at variance with the terms of Article 14. I would like to make a preliminary remark. The preference only operates in the metropolitan territories in favour of overseas territories. It is a preference which is operated in order to give under-developed regions positive aid in their programmes. It is not a preference aimed at giving highly developed countries a reserved or special position in certain export markets. S 4 ER E/PC/T/A/PV/43 Now as to the basis of this preference. The agreement on the Customs Union dates back to 1944. At the time it was signed in and 1944 it was expected that it would be completely in force,/all would be practical details/worked out before the end of the year. It was at. the time when the Allied Armies were surging to the liberation of Belgium and it was expected that in a very short time the Netherlands territory would also be liberated. Instead of that the war took a very unexpected turn and the liberation of the Netherlands was de- layed for several months; several months which caused the greatest havoo in the Netherlands, destroyed much of the face of its economy, and the result was that it has taken us three years to work out the practical application of the agreement signed in 1944. The contents of this Agreement U -, found among other things in the document which we have prepared and which we have given to certain delegations in the ocures of the Tariff negotiations, and- I think if I read is rapidly it would explain what we mean by progress: "The legislation -e in Belgium since 19L4 gave an all-over com- plete exemption for all products from its overseas territories. The customs Union concluded in 1944 between Belgium-Luxemburg and the Netherlands implies the maintenance of free entry for all these pro- ducts originating from all the overseas territories of the parties to the Union. "This is, however, qualified as follows; (a) a great number of products, which are produced in the over- seas territories enter the Union free of duty whatever their origin. There is in consequence no effective pre- ference for such products. The interpretatio n BENELUX puts on paragraph 3 of Art.1 precludes a preference resulting in the future from the imposition of a duty on any such products. In spite of the legislation providing for free entry of the products of over- seas territories, duty would be applied to them in order not to create what, in practice if not technically, would be new preferences. 6 (b) as a contribution towards the general elimination or re- duction of preference margins BENELUX is prepared to negotiate or effective margins existing for a number of products, with a view to their reduction or even elimina- tion." I would add that at the very beginning of the session, at the time the new Customs Tariffs of the Benelux Union was explained, we indicated this question cf preferences. Tt may be that we had a certain diffidence at the time about the extent of those prefer- ences. We explained the principles but we remained in fairly general terms. The reason for that is that we were at the outset of a negotiation which was designed, in the terms of the London re- port,towards a substantial elemination and reduction of preferences. hest It appeared/to us at that time to assert bluntly that we intended to maintain the full extent of the preferences set out in the law in 1924. It might have sounded uncompromising and it might have given the negotiations a very inauspicious turn, In fact the minds of our governments were open. We knew what our rights were, and we were willing to sacrifice a good deal of them; the common objective of freer trade and general prosperity, However, the course of negotiations in the Charter discussions have shown that there is a tendency here in Geneva to take a narrower view of the undertakings to eliminate preferences. We see that as far as practical purposes go no values seem to be attached as a concession to the fact that most nations accepting the Charter give up the right to create new preference except under very strict limitations. Yet it should be borne in mind that in giving up this right we gave up the possibility to enter into preferential arrangements which 7 ER E/PC/T/A/PV/43 would offer a wide scope for action for countries which are not yet bound by existing preferential arrangements. Moreover, we have found that in the tariff negotiations it was asserted that preferences would be given a very high price. We have also seen here persistent and very successful endeavours to write into the Charter provisions and notes cov ering and sanctioning every aspect of existing preferential systems. We have even witnessed the latest of these endeavours this morning. In these conditions it has become quite impossible for the Benelux delegations to contemplate relinquishing any part of their preferential system without some form of compensation. However, under instructions from our Governments we were prepared to receive any requestsfor the reduction or elimination of any particular products and to negotiate them in the most generous spirit. 8 E/PC/T/A/PV/43 CHAIRMAN: I understand that the List contained under C is approved by the Governments directly interested, and in the circumstances I do not see that we can do anything but approve it. MR. J.M. LEDDY (United States): With regard to the statement by the Belgian Delegate, I do not think we would agree that the progress of negotiations this far can be a final judgement of what may be an ultimate result. As I said, we would not wish --to make a formal reservation at all. The question is that it probably relates. to certain new preferences as compared with the preferences existing before the formation of the Customs Union, and we understand that those preferences will relate to certain products, and all we wish to know is what those products are, and we wish to say that we would like to discuss that in connection with the Trade Agreement. We enter no formal reservation on Annex C. M. ROYER (France) (Interpretation): Mr. Chairman, we have no reservations whatever to the List, and we have full confidence in the Delegations which have composed this List. We would just ask if these Delegations would agree to add in the List concerning the Belgian Congo an asterisk and a little Note similar to the one which exists in annex B saying "For imports into Metropolitan countries only". E/PC/ T/A /PV/43 M. Pierre FORTHOMME ( Belgium) (Interpretation): I would like, Mr. Chairman, to reply here to the Delegates of the United States and France - first, concerning the list of products. All those products are from the Belgian Congo. Of course, to know all these products one should go very carefully through certain scientific steps. Concerning negotiations, I would like to say once more what I have said already several times, that we are prepared to receive requests on all products, and to negotiate in the most general spirit possible; and to reduce preferences as far as is compatible. with the mutual interests of parties and, of course, with concessions. At the beginning we were ready to abandon preferences without asking for any compensation, but as we have seen, during the negotiations, that the negotiations were product by product, concession by concession, request by request, I am sorry to say that we cannot act in another way. Therefore, I would like to repeat that we would like to negotiate and are prepared to do so, without wanting in any sense to erect any barriers which would not allow the Charter to realize its real aim, which is to liberate trade. May I add a word in respect of the specific request by the Delegate of France? We completely agree to his proposal to add an asterisk and a note to the effect that this applies only to the products coming from the overseas territory. CHAIRMAN: May I take it that we agree to the adoption of Annex C, with a note on the lines just indicated by the Delegate of Belgium? Dr. A.B. SPEEKENBRINK: (Netherlands): Mr. Chairman, I 9 V V 10 E/PO/T/A/PV/43 fully support what Mr. Forthomme has said. As we are faced now with a formal reservation on one of the Annexes of Article 14(2), I am sorry that I myself must now enter a formal reservation on behalf of my Government with regard to Article 14(2) Annex. Mr. R.J. SHACKLE (United Kingdom): The position is, as I understand it, that certain preferences permit free entry, which has been given for a long time in Belgium, and the preference is now extended so as to apply to the Colonies, the Netherlands, and to all the territories of the Benelux Union. That clearly is an extension of preferences. If we are asked to agree to that - which is the effect if we agree to this Annex - we want to know what the products are, and at present we do not know. That is the position which gives rise to my reservation. I do not know what the products are, and I do not see how I can withdraw my reservation. I am perfectly prepared to report to my Delegation what has been said here; what Mr. Forthomme has said and has offered to negotiate; but I am afraid that for the moment I must maintain my reservation. I am sorry but I do not see any other way out. Mr. J.M. LEDDY (United States): Mr. Chairman, I think that is really the difficulty. We just do not know what it is we are negotiating about the preferences newly extended by Belgium to the Netherlands overseas territories, and newly extended by Netherlands to its own overseas territories and the overseas territories of Belgium. We are not questioning the need for this sort of arrangement because of the Customs Union, because it is a complicated situation, and it is probably necessary to carry out these V 11 E/PC/T/A /PV/43 arrangements, because of political as well as economic difficulties. All we want to know is what the products are that we are negotiating on, and I think it is only reasonable to ask what they are. We did not want to make a formal reservation on this Annex, because we do not quarrel with the principle; but we just would like to have agreement that the products concerned would be established in connection with tariff negotiations. 12 CHAIRMAN: I repeat my question, is the Committee in agreement with the text of Annexe C with the additional note accepted. by the Delegations of Belgium and the Netherlands. Mr. LEDDY (United States): I think, Mr. Chairman, we would like to add our reservation on this matter provisionally. Mr. SHACKLE (United Kingdom): That is our point of view, too, Mr. Chairman. Mr. FORTHOMME (Belgium): Mr. Chairman, I would like to point out three things. The first thing is that we do not estimate that there is an extension of preference at the base date. The agreement dates from 1944, but a series of fortuitous circumstances has made this agreement difficult to put into practice until now. That is, if we considered extending preferences at this present base date because of these fortuitous circumstances, again a case of what I have already protested against several times in this Conference - that what exists is unconditionally approved, and what happens not to exist but only to exist virtually is immediately scrutinised. The second thing I have to say is that as to the products which are liable to negotiation, we cannot give a list, because as I say they are all the products of the Belgian Congo; and thirdly, we do not see the interest of that, as we say that we are bound to negotiate any product that any Delegation at any time wishes to nominate as a product it wants to negotiate on. I do not think it is possible to define more widely the scope of a negotiation. The other point I want to make is that it is very difficult and I think impossible to negotiate on preferences while there is a reservation on the list of territories to which this preference applies. 13 CHAIRMAN: The Delegate of the United States has made a provisional reservation and the United Kingdom modified his reservation in the same sense. With these two provisional reservations, is Annex C agreed? Mr. SPEEKENBRINK (Netherlands): I will make mine provisional too. CHAIRMAN: The Netherlands reserve applies to the whole of Article 14 rolled into paragraph 2. Mr. SPEEKENBRINK (Netherlands): It admits an Annex CHAIRMAN: We pass on to annex D, page 10, List of Territories of the United States of America. The Delegate of Cuba. Mr. GUTIERREZ (Cuba): Mr. Chairman, the Cuban Delegation withdraws the reservation at the end of Annex D as well as Annex A on the understanding that it is covered by the reservation we have made on -rticle 14, paragraph 2. Just to correct the translation, not only here but in Annex. 4 also. CHAIRMAN: Well then, only the reserve on page 2 of Doc. T/178 remains. Mr. GUTIERREZ (Cuba) : UI to now. CHAIRMAN: May I then take it that Annex D is unanimously approved? On page 11 there is Annex E: List of Territories covered by preferential arrangements between Chile and Neighbouring Countries. The Delegate of Chile. 14 G E/PC/T/A/PV/43 Mr. FAIVOVICH (Chile) (Interpretation): Mr. Chairman, I would like to complete the text. There has been an omission and Argentine and Bolivia should be added. CHAIRMAN: You have heard the statement of the Chilean Delegation. Is there any objection? Annex E will contain then Chile, Argentine and Bolivia. The Delegate of the United States. Mr. LEDDY (United States): I think this applies to the arguments already heard in respect of Articles 13B and 38, para.4. It was argued that the arrangements should be subject to the procedures set from in 13 B or 66, paragraph 3. And may I point out that the Delegate of Chile has already reserved his position on Article 14, which covers the Annexes. CHAIRMAN: Is there any other Delegate who is in favour of the addition of Argentine and Bolivia in the list of Annexe E. Mr. TORRES (Brazil): Mr. Chairman, I would like to ask the Delegate of Chile whether the preferential arrangements between Chile and Argentine are already in effect. 15 S E/PC/T/A/PV/43 M. Angel FAIVOVICH (Chile) (Interpretation): I am rather surprised at the observations made by the representatives of the United States of America and Brazil. What we are dealing with here are preferential exceptions already in affect and we do not touch on the these which we have defended somewhere else on the future situation. Here we are covering only agreements in force at the date of April 10, 1947 between these three countries. Mr. J.G.TORRES (Brazil): Am I to understand, Mr. Chairman, that the reply of the Chilean Delegate means that the preferential arrangements between his country and Argentina and Belivia are in force at this time? M. VAIVOVICH (Chile) (Interpretation): That is exactly what I indicated. CHAIRMAN: The Delegate of the United States. Mr. LEDDY (United States): Does this mean that the arrangements were in force at April 10, 1947, or at the date established for the negotiations? If they were in force on April 10, 1947, we cannot accept them as a basis for negotiations with Chile. CHAIRMAN: I am afraid I do not know anything about the existence or non-existence of these preferential arrange- ments, so I must ask Members of the Commission whether, in the light of the declaration made by the Delegate of Chile, they agree to the insertion if the words "Argentina and Bolivia" in Annex E. I would remind you that the United States Delegate has already referred to the fact that the Chilean Delegate has made a general reservation on this Article, which will, of course, . , _ , _ 16 S E/PC/T/A/PV/43 enable his Delegation to bring the question up at a later date, with full particulars as to the arrangements between Chile and Argentina and Bolivia. It is only a tentative suggestion on my part, but perhaps the Chilean Delegate would, on the basis of his general reservation, be content to take the list as it stands in the Legal Drafting Committee's Report and include Argentina and Bolivia in his general reservation, so as to bring it up later on with the necessary particulars - I repeat this - concerning the agreements entered into between his country and Argentina and Bolivia, which would enable the Members of the Commission to see clearly how the matter stands. CHAIRMAN (Interpretation): This would be especially in order to permit the Chilean Delegation to submit at Havana more precise information on the arrangements concluded by Chile with Argentina and Bolivia. Are we agreed on Annex E in its present form? Mr. TORRES (Brazil): Mr. Chairman, are your suggesting that with the reservation of Chile a Note be inserted in the Report, stating the reasons for the reservation? CHAIRMAN: No. I do not want to limit the free action of the Chilean Delegation. I think the Chilean Delegate must be entirely free to submit all kinds of considerations on Article 14 at Havana Mr. TORRES (Brazil): And Annex E remains as it is? CHAIRMAN: - and in his considerations explain the arrangements entered into between his country and Argentina .and Bolivia, as a basis for discussion at Havana. 17 ER E/PC/T/A/PV/43 CHAIRMAN: I take it that Annex E is agreed. Annex F. List of Territories covered by Preferential Arrangements between the Oyro-Lebanese Customs Union and neigh- bouring Countries. Are there any observations? It is agreed. You will remember that the Chairman of the Sub-Committee directed our attention to the Report containing considerations of some importance to certain delegations. We should now briefly go through the Report with regard to Article 14. As far as I can see myself we have already adopted in our text everything of material importance in the Report. There is a point at the bottom of page 4 and on page 5, the sub-Committee says: "In order to paragraph 3 was ended make this perfectly clear / . . and so on. In other words, as far as I can understand it the doubts that have been- expressed in the sub-Committee have been cleared away, and I do not think that anybody would disagree if we do not insert any note on this point. Dr. H.C. COOMBS (Australia): Mr. Chairman, we agree that it is not necessary to record this text in full, but we would wish the Commission to record the interpretation given to this text by the sub-Committee. CHAIRMAN: You have this text of the Report in your hands I, myself, read it very carefully, and I think that the conclusion to which the sub-Committee arrives is perfectly correct, and unless any member of the Commission objects we would state in our report that we have approved of that interpretation. Approved. May I ask the the Chairman of the Sub-Committee whether there is any point on Article 14. I do not think myself that there is. Dr. H.C. COOMBS (Australia): It has been suggested, Mr. Chair- man, that it might be desirable to add to the text of this Report, on page 4,the fact that in the second paragraph reference made 18 ER E/PC/T/A/PV/43 to the fact that other annexes may be required to meet the cir- cumstances of countries who will be present at the World Confer- ence but are not represented here. apart from that I see nothing in Article 14 on which any action is required by the Commission. CHAIRMAN: I think that is a good suggestion. It is evident that some of the delegates may have come with their lists already before our meeting. I added that point to my list, but it seems to me that that point could be understood. Are there any objections? Mr. J.M. LEDDY (United states): In the report which came Legal Drafting to us from the / -Committee that point was taken care of by a very small provision in sub-paragraphs (b) and (d) of paragraph 2 of article 14. Sub-paragraph (b) states "preferences ...... which are listed in Annexes B, C and D. of this Charter." The same thing was done in sub-paragraph '(d).There is no need for such a provision with re ard to Annex A or with regard to the preferences under sub-paragraph(e). I wonder whether we could not just go back to the report of the Sub-Committee to make it quite clear CHAIRMAN: I take it that we are all in agreement with this. We pass on to Article 15. You will see that there is a note on page 12 by the Legal Drafting Committee: "On the assumption that the omission of the title of this Article ...... occurred inadvertently, the Legal Drafting Committee re-inserted the title contained in the New York Report." Are there any objections to the maintenance of that title, which is "National Treatment on Internal Taxation and Regulation." J. 19 E/PC/T/A/PV/43 MR. A.- FAIVOVICH (Chile) (Interpretation): Mr. Chairman, the Chilean Delegation made a reservation on the text of paragraph 1 of this Article. We made a reservation waiting for the text of Article 25 on Quantitative Restrictions. As Article 25 of Chapter IVwas not satisfactory to us, we have to maintain this reservation on Article 25, and in order to be logical we must also make a reservation here on the second part of paragraph h 1 starting with the word "Moreover" to the end of this first paragraph. While we are on this, we would like also to indicate that we reserve our position on paragraph 3 of this Article.. Later on, perhaps, when the technical services of Chile have been able to study the implication of this text, we bright be able to withdraw the reservation. CHAIRMAN: There is also a reservation from the Delegate for China. He reserved his position on paragraph 1 provisionally and proposed the deletion of the second and third sentences. I would like to ask the Delegate of China whether he can forego this reservation? H.E, DR. WUNSZ KING (China): Mr. Chairman, the Chinese Delegation maintains this reservation. CHAIRMAN: We have a third reservation: "The Delegate for Cuba reserved his position and proposed a new paragraph permitting the exemption of domestic products from internal taxes for development purposes". That proposal is contained in document E/PC/T/W/280, and you will find, it on page 2:- "The Cuban Delegation considers it necessary to introduce a sub-paragraph to 20 3 J. E/PC/T/A/PV/43 the new paragraph 1 of Article 15 along the following lines,....", and then you have the proposal. I would like to know whether there is any support in the Commission for the inclusion of this, or whether it should remain as part of the Cuban reservation on paragraph 1. Does any Delegate wish to support the Cuban proposal? (Interpretation): In these circumstances, I believe that the only way to deal with the Cuban suggestion is to consider that it is covered by the reservation indicated on page 13 of document E/PC/T/178, Note 3, reading "The Delegate for Cuba reserved, his position.....", and so on. I hope that this will satisfy the Delegate of Cuba. MR. H. DORN (Cuba): Thank you, Mr. Chairman. CHAIRMAN: We now have three reservations. May I take it from that a part/that we are in agreement with regard to the text of paragraph 1 of Article 15? The Delegate for Norway. MR. J. MELANDER (Norway): Mr. Chairman, the Norwegian Delegation finds it necessary to make a general reservation on Article 15. W-e find that not only Article l5, paragraph 1, but also paragraphs 2, 3, 4 and 5 are not satisfactory. There are : eeeoaly two aspects of the *prblem which is to be- dalt with by, Articl15e , which we feel are not solved here at the Geneva Conference. : I do not want to hold up the Commission in going into detail. I would just mention that the first point is the question of price regulation. We feel that, in order to satisfy the requirements of the Charter and in order to conduct an economic policy for full J. E/PC/T/A/PV/43 employment and increasing standards of living, it will also be necessary to take measures to control or stabilize prices on a reasonably stable level. To meet those objects, it will be .necessary to have a price control system in many countries, and in order to be able to conduct that price stabilization policy, we feel that Article 15, paragraph 1, will have to be altered. Secondly, we also feel that in many countries - in Norway especially - it will be necessary to regulate production on lines which are not quite in conformity with the present draft of Article 15, paragraphs 2, 3 and 4. Here, also, we do niot want to make any specific proposals at this stage, because we feel that the measures we have in mind require some further considerations In any case, however, the Norwegian Delegation will produce a document setting out in more detail the objects we have in mind and the methods which we feel can be applied to solve these problems, and we hope that at the Havana Conference it will be possible to reach a more reasonable and practicable solution. CHAIRMAIN: The Dlelegate of Belgium. M. Pierre FORTHOMME (Belgium) :(Interpretation): I should like, Mr. Chairman, to point out that our acceptance of. Article 15, in its present text, is based on the fact that it is a compromise. Should this Article be discussed again and re-arranged, we reserve our right to ask that it be studied on the basis of the amendment submitted by the Benelux Delegations in Document W/92. CHAIRMAN: Any further remarks on paragraph 1? Mr . J.G. TORRES (Brazil): Mr. Chairrman, I would only like to ask the Commission for its views on the following problem: There care countries have taxes which they apply on imports and exports totally on a non-discriminatory basis, and merely for fiscal purposes. I would like to be enlightened as to whether these taxes are to be considered under Article 15 as internal taxes, or whether they fall urer Article 24, subject to negotiation. CHAIRMAN: As a general reply, I might perhaps mention that under article 15 the internal taxes mentioned there are also subject to negotiations on the same principle as those applicable to customs tariffs under Article 24, so it is perhaps not absolutely vital to draw a scientifically correct line between these internal taxes and customs tariffs. I ought to add that article 24 does not only talk about tariffs but about "tariffs and other charges" That was something to which the Executive Secretary drew my attention just now. Mr. J.G. TORRES (Brazil): Mr. Chairman, I am sorry to V E/PC/T/A/PV/43 insist upon this point; but we in Brazil have certain taxes which we apply on imports for social security purposes, and they apply to every product of every country. We are, however, at a loss to interpret Article 15, because we do not know whether those taxes would be considered as internal taxes, and if so, could continue subject to negotiation; or whether they are not a matter to be considered under Article 15, but instead under Article 24. If they come under Article 24, they are not considered to be internal taxes and the position is clear. But if, on the other hand, they are deemed to be internal taxes, I would like to have the views of the Commission, because in that connection we would have to see just what our position would be vis-a-vis Article 15. CHAIRMAN: The Delegate of Canada. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, is not this the position: that where these internal taxes apply to a commodity which has been bound during the negotiations under Article 24, that internal tax would either have to be bound as part of the tariff rate or, if it is not so bound, it would be ruled out by Article 15. In cases where the tariff rate is not bound, then the internal tax in the sense mentioned by t:he Brazilian Delegate, could be continued. Article 15 would not affect it. CHAIRMAN: On the basis of general application? Mr. J. J. DEUTSCH (Canada): That is right; but where the tariff rate is bound, then you cannot maintain an internal tax over and above the bound rate. Article 15 would rule it Oùt. ? 24 G E/PC/T/A/PV/43 Mr. DORN (Cuba): May _- I ask ona s. question in order to clear up the legal situation envisaged by this question. scee this text concern imports levied on domestic products, or not? CRLANML;: Yes, thma MFy be products produced in the country. Mr. DORN (Cuba): In that oase I think Articie 15 would apply, because that is a question ^f whether it is possible or not to have an internal tax on imported products only, exempting at the same time the corrospsng d;- omestic product. That wax e:aytll, the satu-tion we hae bcfore, and therefore m vr very interested in the answer to the question, ifit is possibloppe maintain these special taxes on imported. products only. Mr. LEDDY (United Sss)taWe: ithga drtoer the statemeont f the Delegate of Canada, I think thAat rticle 15 does not lay down any rule as to binding on internal taxes, but only requires that they be no higher on imported, products than domestic products. I doubt my ability to agree heore n a complete legal definition of what is an internal tax, buto twcthings are perfectly clear. One is, ifethc tax is cecleotod after the goods leave the customs, that is an intaln02 tax, and its influence must be non-discriain&tory. cSesondly, if the tax is cleared at customs and has no relation to the tax imposed do onmestio products, that is an import charge and not an internal tax. CLMAIIF I hope the Caanpdan Delegate will speak very briefly. Mr. DEUTSCH (asnada): It sem-s to me that it all hinges on whether or not the tariff with the tax has been bound, and whether or not the binding included. the tax. The point ist)hat E/PC/T/A/PV/43 you cannot nullify a binding by an internal tax. That seems to me the essence of this article. If the item is not bound, then an internal tax which operates in the same way as a customs duty is not bound at all, and it seems to me it just hinges on whether it is bound, and how it is bound: Whether we are including or excluding the tax. Mr. DORN (Cuba): Would it be possible to put as an interpretive note the explanations given by the Delegates of US and Canada to the text of the Charter? CHAIRMAN: I hope the Commission will not try to give any ruling on this subject. I have my own very definite opinion but I am not going to tell you, because it is so easy to fix one's mine, on some aspect of the case, instead of having clearly before one the purpose of the process in Article 15. As I said at the beginning, in practice it does not seem to be very important whether you calliit internal duty or customs duty, as in both cases you are liable to negotiate for the reduction at the request of the Organization. Mr. TORRES (Brazil): Mr. Chairman, in Article 15, in the last sentence we only speak of negotiation for those taxes referred to in the preceding sentence. It is my impression that we are not subject by the internal taxes to this process of negotiation. The interpretation of the US Representative as given is perfectly satisfactory to us, because these taxes I have referred to are collected at the time the product is received, and that would be perfectly satisfactory to us, because it would then be understood that they are on an equal footing with the import duty, and would come under Article 24. - 25 - E/PC/T/A/PV/43 The reason why I raise this rather difficult question is we wish this matter to be fully understood and not to be requested tomorrow that these taxes are to be dropped automatically under article 15. CHAIRMAN: After all, Article 15 has as its main purpose the treating of national goods and imported goods on the same footing, I think it is practically impossible to come to any exact legal definition of the difference between all the cases in which you have before you an internal tax and the mases in which you have before you a customs charge, and I hope we may leave this discussion, which has disclosed, at any rate, en interesting and important point. The Delegate of France. M. ROYER (France) (Interpretation): I do not desire -to prolong the discussion, but I think it would be useful if the Commission clearly stated that the interpretation given by Mr. Leddy is not an authoritative one. Mr. Leddy has said that whatever is collected at the customs can be construed as being a customs duty, and this would tend to assimilate all French taxes to customs duties. For instance, in France we have a tax on turnover and a luxury tax; these are collected by the customs authorities, but they are, however, internal taxes. This might lead to some confusion, As regards Brazil, I do not know what the position is exactly, but either we have to deal with an internal tax at the same rate on both nationally-produced. and imported articles, which I think is not the case with Brazil - unless I am mistaken, or with some additional charge on the imported product, and in these cases I think there may be some con- fusion with customs duties. .. S -27 - E/PC/T/A/PV/43 CHAIRMAN: I would like to ask the Delegate of Brazil whether, particularly in view of the very interesting remarks just made by the Delegate of France, he finds he has go sufficient clarity on the problem. Mr. TORRES (Brazil): Mr. Chairman, the debate has taken a course which shows there is some difficulty with the interpretation of this Article, and we would be rather worried if this discussion were to be closed after these conflicting statements have been made, because, if the opinion of the Commission is that these taxes to which I have referred - which are mainly for social security purposes and are revenue taxes which are collected from every country, and which are not discriminatory, in the sense that they are collected from every country - are to be dealt with under Article 24, subject to negotiation, we are perfectly in agreement. If, however, there is some question that they may be dis- criminatory and they have to come under Article 15, we would be at a loss to see our position very clearly. In this case, you seem to have indicated in your statement that these taxes, in any case, were all subject to negotiation. I do not think Article 15, as it stands now, authorizes that interpretation, but, if that is also the view of the Commission, then I think it would be necessary to make a slight drafting amendment to say that all existing internal taxes are subject to negotiation, and not refer merely to those taxes relating to products which do not have a substantial home production. CHAIRMAN: I take it we all agree that if the tax is imposed without discrimination upon imported goods only and not on internal production, it comes under Article 24. That ought to give satisfaction. There cannot be any doubt about that. Mr. J.J.DEUTSCH (Canada): I just want to say, Mr. Chairman, that I agree with your interpretation. Mr. LEDDY (United States): Adding only thing; that it is collected at the time of importation and not afterwards. ER 28 E/PC/T/A/PV/43 CHAIRMAN: I do not think that would make any real differ- ence. It would not perhaps be collected at the time of the importation, but if, for administrative reasons, it took place at once I take it that as long as we do not import the national pro- duct in the same way ,it still como under the clause of Article 24. 1 think we can close the disc ssion now. May I take it that with the reservations already made we can now approve Article 15, para- graph 1. Agreed. Paragraph 2, on page 14 of Document 178: there are no notes and no reservations. Is it approved? approved. Paragraph 3: there is a footnote on page 15: "Several delegates not members of the sub-committee reserved their position regarding this paragraph, pending settlement of the outstanding issues on Chapter IV." Now Chapter has been disposed of, and I would strike out this reservation unless any Member of our Com- mission wants to make any further reservations. But evidently the general r' reserves already eod-- cover this as well. The question is only whether there are any additional reserves on paragraph 3 I hope there are none. Paragraph 3 is approved. We pass on to page 16, paragraph 4. I have nd te here that in Document 175, Sage 3, that is tRepoPOPrt of the Sub-Committee dealing with films, that they suggest that there should bet:. following amendment to the beginning of parapragh 4 Aof rticle 15: "Any internal quantitative regulation relating to cinematograph film and meeting the requiremenoftA article 15-B". You will see that as it Stands it is approved as ujobJectionable. The question whether we agree itoit depends on what we think of 15-B. ER We find at the bottom of page 3 of document 175, 15-B. We have had this in our hands for several days, and I would like to know whether any delegate has any remark to make. Mr. R.J. SHACKLE (United Kingdom): The solution proposed in this Paper is one which on certain points still requires some further discussion on our part with some countries, and I am afraid that it is not possible that the discussion of those details should be concluded in time for us to have this text ready before the Charter is to be published. At the same time we are working very hard on points of detail, and we are hopeful that they will be settled soon, and that is really all I can say about it. I should perhaps have made clear that my remarks related to Article 15-B. 29 . 30 E/PATPL./2V/43 M. P. HJFMOROME (Belgium) (Interpretation): Mr. Chairman, we have no direct interest in the discuss ion,which still continues, in connection with Article 15B, but I have one remark to make. It will be impossible for us to accept this Article, whatever its final wording,if it contains certain provisions such as this; "If any Member establishes or maintains interQqQnluantivtatie regulationsrelatio in n on to cinematograph films. etc.", because this formula covers,w as ell, non-exposed films, while the Article is intended,fint, acuc vo ofer exposedmfilis intended for actual showing in cinema theatres, Therefore, we suggest the following amendment:- "If any Member establishes or maintains internal quantitative regulations relating to exposed, positive cinematograph films". MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I should have no difficulty in accepting Mr. Forthomme's suggested amendment although, in fact, I really think that it is clear that this applies to exposed, positive films at cinemas, because it is certain that no screen quota could be imposed on unexposed films, because nobody would want to see them. DR. COOMAS (tustralia): Mr. Chairman, the essential word does seem to me to be "exposed". I am not sufficiently familiar with the technical part of this to be sure that all films that are imported would be positive. I suggest that we just refer, therefore,"to Iexposed cinematograph films". MR. R.J. SHACKLE (United Kingdom): I think my previous remark reaapy enplies to the showing of negative cinematograph filws, vhich I am sure w noldnot be vplpoer .ular E/PC/T/A/PV/43 DR. H.C. COOMBS (Australia): That is not the point, Mr. Chairman, May I presume that, for some reason, films might and be imported under one form/converted to another. I am not qaito sure how this could be done, but it night be necessary to control both negative and positive. It may not be, but it may be. I do not want to leave the Article inadequate, if it is necessary for the purpose contemplated to have it applicable to both. CHAIRMAN: I wonder whether we could not agree to insert Article 15B in the text of the Charter in square brackets with a commentary saying "subject to revision of the text", or something like that. The Delegate for the United States. MR. J.M. LEDDY (United States): I wonder whether we could not take up article 153 after we have finished the rest of Article 15, Mr. Chairman, because these changes in Article 15B depend upon the decision taken on Article 15. CHAIRMAN: I think that we should have a short break for tea until 5.10. E/PC/T/A/PV/43 (The Meeting resumed at 5.40 p.m.) CHAIRMAN: Will the delegates please take their seats, We have had a long discussion about Article 15-B. There was a question that we should postpone further consideration of it, but unless the delegates feel strongly about it I would very much prefer to finish the discussion so as not to lose the benefit of the observations which have already been made. I think we all agree with the suggestion made by one delegate and agreed to by several others, to insert in the second line of the now draft Lrtiole 15-B the word "exposed" before " cinematograph films". I would like to know whether there is any observation on the rest of the text of Article 15-B. I quite agree that it may be difficult for certain delegates to make up their minds but, after all, they have had this paper already for three or four days so I do not see any reason which we should not be able to deal with it. Is there any Delegate who disagrees with this text? Mr. R.J. SHACKLE (United Kingdom): I do not disagree at all with adopting the text, and I shall not have to put on a general reservation - I hope it will be strictly temporary - for the reasons I explained. CHAIRMAN: It would be a provisional reservation? Mr. R.J. SHACKLE (United Kingdom): Yes. Dr. A.B. SPEEKENBRINK (Netherlands): I am in the position that there are some difficulties at the moment for the Netherlands with regard to screen quotas, and so on. I 32 V E/PC/T/A/PV/43 understand that there is some discussion going on in diplomatic channels that might solve this problem, but for the moment I must reserve my position. Mr. Z. AUGENTHALER (Cz ..choslovakia): Mr. Chairman, I make the same reservation as Mr. Shackle and Dr. Speekenbrink. CHAIRMAN: Any further remarks? May I take it that the Commission is in agreement with the proposed text, while these three Delegates provisionally reserve the position of their Governments? In this case, I do not see any objection to mentioning the three Delegates. I consider this new sub-paragraph (a) of paragraph 4 of Article 15 approved, and also the text of Article 15-B to which that new sub-paragraph refers. At the same time, I would draw your attention to another proposal on page 3 of document T/175, relating to Annex A which we have already adopted. At the end of the Annex we read: "The film hire tax in force in New Zealand on 10 April 1947 shall, for the purpose of this Charter, be treated as a customs duty falling within Articles 14 and 24". The Sub-Committee on film questions proposed the following text: "The renters' film quota in force in New Zealand on 10 April 1947 shall for the purposes of this Charter be treated as a screen quota falling within Article 15-B." I take it that we leave it to the Delegate of New Zealand to decide which wording he prefers. Mr. J.P.D. JOHNSEN (New Zealand): The text as it already stands refers to film hire tax. The amendment in Part II refers to film quota. They should both be in. 33 V V 3 CHAIRMAN: That would be an addition to Annex A. No objections? It is approved. After having inserted a new sub-paragraph (a) in paragraph 4, we must slightly alter the old sub-paragraph (a) and call it (b) and say "Any other measure of internal quantitative control," etc. Are there any further remarks on paragraph 4 of Article 15? I am reserving the various notes - I shall come back to them. M. F. Garcia OLDINI (Chile)(Interpretation): With reference to sub-paragraph (b) of paragraph 4, I think that the meaning ought to be made quite clear. I find the present wording rather ambiguous. It reads "(b) any internal quantitative regulation applied by any Member having equivalent effect to any import restriction permitted to that Member under paragraph 2(c) of Article 25". 34 E/PC/T/A/PV/43 G 35 E/PC/T/A/PV/43 Now we have interpreted paragraph (b) in two different ways. Either it refers exclusively to those Members who can use the provisions of paragraph 2 (c) of Article 25, or the reference is only made in an illustrative way as an example, and any Member may apply quantitative internal regulations equivalent to those of paragraph 2 of Article 25. I should like to know tho opinion of the Rapporteur on this point. CHAIRMAN: Well, the Rapporteur is not present. My own view is that it refers only to such Members as might have used paragraph 2 (c) of Article 25. That is how I road the text as it stands. Mr. G GARCIA OLDINI (Chile) (Interpretation): In that case, Mr. Chairman, considering that under paragraph (b) the scope of the provisions of paragraph 2 (c) of Article 25 is wider, and since we do not accept those provisions, we must make a reservation. CHAIRMAN: The same objection as now made by the Delegate of Chile was made according to the Footnote on page 17 also by the Delegates of Canada, Belgium and Brazil, I wonder whether any one of them is prepared to withdraw that reservation. Mr. TORRES (Brazil): Mr. Chairman, the brackets were put into this sub-paragraph pending the drafting of the pertinent provision of Article 25. We are of the opinion that Article 25 should give ample suggestion to the countries interested in this measure, and we see no reason why it should be repeated here, and the reason why we objected is clearly stated in note 3. I would like very much to suggest to the Commission that we dren this paragraph altogether, because it is superfluous, and even in fact a little dangerous, and I would like also to indicate the position of my Delegation that if this paragraph is not suppressed we will have no alternative but to maintain G E/PC/T/A/PV/43 our reservation. Mr. DEUTSCH (Canada.): Mr. Chairman, I wish to support the proposal of the Brazilian Delegate to delete this paragraph. CHAIRMAN: The DeIegate of Belgium - is he of the same opinion? Mr. FORTHOMME (Belgium): Yes. CHAIRMAN: Is there any Member of the Commission who favours the maintenance of sub-paragraph (e). CHAIRMAN: This not being the case, I take it that the Commission decides to omit that sub-paragraph. Agreed. We have taken Footnote No. 3 first. We go back on page 17 to No. 1. The Delegate of New Zealand proposed a certain Amendment, and I think he has considered the matter further and has given me the following facts. Delete the words "shall not be modified to the detriment of imports", and that is what you have on page 17; but he then says, add the following sentence; "Subject to any modification which may have been made as a result of negotiations prior to entry into force of the Charter, no action will be taken to modify any such measures to the deteriment of imports, unless the principal suppliers of the goods concerned have been notified of the proposed. action and given full opportunity to negotiate thereon." CHAIRMAN: It is, of course, up to the Commission to define its attitude to such a proposal beforehand; but nevertheless I would like to know if there is any Delegate who immediately feels that he would oppose it. Is there any Delegate who disagrees with the general idea of this Amendment? S 37 E/PC/T/A3/PV/43 CHAIRMAN: The Delegate of the United Kingdom has asked that the text be read once more, The second half of the new sub-paragraph (b) will be similar to the provisions of Paragraph 3 of this Article: "subject to any modification which may have been made as the result of negotiation-prior to entry into force of the Chart-r, no action shall be taken to modify any such measure to the detriment of imports unless the principal suppliers of the goods concerned have been notified of the proposed action and given full opportunity to negotiate thereon." The Delegate of Canada. Mr. J. J. DEUTSCH ( Canada): Mr. Chairman, I have not got the text before, me but I do not like the sound of the whole thing and therefore I would oppose the general idea. Mr. J.P.D. JOHNSON (New Zealand): Mr. Chairman, if I may, I will take the opportunity of explaining the background for this proposal. I regret it was not possible for me to circulate the text, which is a little different from that shown in the document before us. The idea in connection with this amendment is that it alloys of existing measures not only to be retained in their present form but also for some intensification of them, subject of course to negotiation. It might help to clarify the situation if I refer to a particular product which affects New Zealand. It is only the one product; that is, the growing of tobacco - I think I have mentioned it before, and possibly most of the Delegates are familiar with it. The position there is that we have found that to provide the necessary protection for the local industry - that is, growing tobacco leaf - it has not been possible successfully E/PC/T/A/PV/43 employ a tariff and the most appropriate means has been by requiring the manufacturers of tobacco to use a certain proportion of locally-grown leaf. Under the text as it stands, that procedure is approved of, but it provides that the measure shall not be modified to the detriment of imports. In order words, there would be no possibility of utilising such measure, even though it is more suitable than other measures and less restrictive of trade than other measures, and we think it could not be justified within the principles underlying this Charter. It might be said that you can have recourse to Article 13, but I do not think it was intended that Article 13 should cover a situation such as that. I think article 13 is concerned more with the nature of particular measures. I do not think it would cover a case where you are using, say, 30 per cent of a domestic product and you want to increase that to, say, 40 per cent. I think that would be outside the scope of the Article. One notices, on looking at Paragraph 3 of Article 13, that that it provides/, where the Organization concurs in principle in any proposed measure or modification thereof, it shall sponsor a system of negotiation with the Member whose trade is substantially affected, and if, as a result of those negotiations, a satis- factory basis is worked out between the Members concerned, then that basis is acceptable to the Organization. In other words, it all goes back to a matter of negotiation and we would submit it is reasonable that the same provision should be made in connection with the Article which we are discussing. For that reason, and to make sure that no Increase should be made in the extent to which an existing measure might be utilized without negotiation, we have suggested the modification which you have just read. S 38 S E/PC/T/A/PV/43 I would submit, Mr. Chairman, that, having regard to the position which it is intended to cover, such a provision is justified. CHAIRMAN: If I understand it rightly, the New Zealand Delegate's proposal is now only a more elaborate draft of his original proposal, which simply said that we should strike out "shall not be modified to the detriment of imports". I would like to have the views of the Commission on. that proposal. ER 40 E/PC/T/A/PV/43 Mr. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, that also covers the additional sentence. M. PIERRE FORTHOMME (Belgium): Mr. Chairman, I think that this new text shows exactly how very unsatisfactory has been the development of this whole article. When the sub-Committee started work on this article we had two main lines along which we could pursue our work. One of the lines we had proposed in the Benelux amendment and which in essence, first of all ,would have prohibited all measures of this kind whether existing or new, and, secondly, would have allowed certain of these measures if they were less restrictive than other forms of protection; and, thirdly, would have introduced a method of gcuging this less restrictive effect in the negotiations with the interested parties. The other possibility than the one which was explored was the possibility of prohibiting any new restriction and sanctioning all existing restrictions. I think that by now the Commission would be well aware that I object very much to sanctioning the old, and frowning on the new, especially in the Charter which is designed to provide for the future, and I find now that with the proposal to reintroduce the idea of being able to increase the restrictive effects of mixing regulations by negotiations, we have got to the highest degree of discrimination between those who have forestalled the Charter and those who, having been-reasonable, have waited, or would wait until the need for such a measure became evident. I think that a proposal of this kind is absolutely inacceptable in these terms. I do believe that negotiations with the interested parties is an excellent measure of the nuisance or value of a measure; but to reintroduce it in favour of only certain privileged users seems to me the height of inequity. 41 CHAIRMAN: Are there any other delegates who wish to speak? Mr. J.P.D. JOHNSIN (New Zealand): Mr. Chairman, I would just like to make one observation in regard to the remarks of the delegate of Belgium. I would just like to ask him whether I heard him correctly when he said that action has been taken to forestall the Charter. I would like to assure him that no action of such a nature has been taken by New Zealand. The measure that I referred to has been in operation for some years. M. PIERRE FORTHOMME (Belgium): Mr. Chairman, I would like to make it quite clear that the use of the word "forestall" did not imply in my mind any idea of some rapid manoeuvring on the part of this or that delegation. What I wanted to indicate was that by the fact of having this measure in force at a certain date, luck, if you like, has given certain countries - and as a matter of fact it includes Benelux - the privileged position in comparison with the position of other countries which do not have that kind of measure in force. Mr. J.M. LEDDY (United States): I would agree with the delegate of Belgium that it would be inequitable to provide in this Article that Members who have mixing Regulations may alter them to the detriment of imports and at the same time that Members who do not have mixing regulations can put them into force. On the other hand, I think that the one case which the delegate of New Zealand has in mind is adequately covered by Chapter IV. It would be a new measure on the ground of economic development, and I see nothing in Chapter from IV which would prevent New Zealand from applying through the Organisation for a change in mining regulations, and with the approval of the Organisation or of the Members interested, if there had been negotiation on the subject, to alter the Regulation. The provision ER 42 E/PC/T/A/PV/43 that we read out, I think, has covered that case. Therefore I would oppose the proposal by the delegate of New Zealand. .~~~~~~~~~~h thCHAIMAI: Does th legale the United States give atisfaction to the delegate of New Zealand? Mr. J~p.JOIWNSe ZMrealand): I am sorry, .W. ChOairn, Is am grateful for the obervation made by the delega-e of the United Staces, but I am afraid I Gannot accept it. It seems to mecthet this is purely a oasb for negotiation with the Members principally interested. I cannot see that any purpose is being covered in bringing the case to the Organisation. *en if it is co.peAent to deIlandth it. is far as 1 caa see all we could do is te refer the matter to Mombers and accept what decisions they have re ciec. I think in theh.ipoumstances it is more oracticable, ~nd quite peasonabne, to inclAde clovisiors in this .rtiG e, deal- ing with the situation, I would like, if possible, to have the amvndcent which I have ad-anoed, accepted. J. 43 ~~~~~~~A/PPCT/.L/FV//43 MR. J,M. LEDDY (United States): Mr. Chairman, this subject. was discussed at considerable length in the sub-committee on Article 15, and I think that the view at the time was that the best thing to do was move the approval of the provision as it stands, with the reservation of the Delega Ze of NewZealand. CHAIRMI Before doing that, I would like to ask whether any Delegate wants to speak in favour of the New Zealandenamendmnt? MR. C.E. MORTON (Australia): Mr. Chairman, it is with a certain amount of reluctance that I speak in favour of the amendment of the New Zealand Delegation, because I am not really in favour of the principle which the amendment would appear to advocate. cn the oase of a country with a small and perhaps inefficient primary industry, there is no other way in which you can satisfactorily bring about its development than by insuring a quantitative protection for it. Australia had the unfortunate experience concerning a product which was not protected by quantitive regulation, with the result that the protection of this Article is decreased, and it js now Just a shadow of its former self. I am sorry that my support of this amendment cannot be more wholehhearted, but I feel that it is a shame to let it go without a single friend. NHAIAMWi: Lre there any other remarks? MR. F. GARCIA OLDINI (Chile) (Interpretation): If I understand the point correctly, Mr. Chairman, there is no rigidity in the idea of applying quantitive restrictions in the present cace, This is mainly a matter of procedure. According to the J. 44 E/PC/T/A/PV/43 United States Delegate, the procedure that should be applied is the procedure provided for in Article 13. Now, under Article 13, there is a procedure which world lead to negotiations through a road which is long, complicated and rather difficult. Therefore, I see no disadvantage in avoiding the use of such a prooedure, and reaching the end contemplated, by establishing negotiations along the lines suggested by the New Zealand Delegate in this particular case. CHAIRMAN: Are there any further remarks? This not being the case, I must sum up my impression of the discussion, which is that three delegates have - one with some reluctance - supported the New Zealand proposal, and three have expressed themselves very strongly against it. I have asked twice for further support, so I must conclude that the great majority of the Commission does not support the New Zealand proposal. The way of settling the question, therefore, is to maintain the Note which is on page 17 of document E/PC/T/178, perhaps with some new wording. I will leave it to the Delegate of New Zealand to came to an agreement with the Secretariat on the wording of this new Note. V CHAIRMAN: Then we have the second footnote on page 17 of T/lRS: "The Delegate for Norway proposed that 'the date when the Charter is open for signature' should be. substituted for '1 July 1939 or 10 April 1947' " . Does the Delegate of Norway maintain that proposal? Mr. J. MELANDER (Norway): Yes, Mr. Chairman, it is included in our general reservation. I would propose that the Commission take a stand on this particular point right away. It is a proposal which is before the Commission. If the Commission agrees - well, so much the better. CHAIRMAN: I will follow the same procedure here as in the last case. I will ask whether there is any Delegate who will support the Norwegian proposal on this point? M. F. Garcia OLDINI (Chile)(Interpretation): I support this proposal. CHAIRMAN: Any further remarks? There being no remarks, I think we might also in this case maintain the note, unless the Delegate of Norway finds, as he has already indicated, that he is covered by his general reservation on article 15. I leave it to him as to whether we have a special reservation here. Mr. J. MELANDER (Norway): Mr. Chairman, we do not think it is necessary to have a special reservation on this particular point - a general reservation on the whole Article is sufficient. CHAIRMAN: Then before we finally approve paragraph 4 of Article 15, I will draw your attention to the note by the Legal Drafting Committee, on the bottom of page 16: "The Commission may wish to consider whether the exceptions contained in paragraph 4 are to be exceptions to paragraph 2 as E/PC/T/A/PV/43 well as to paragraph 3. Paragraph 3 begins "In applying the principles of paragraph 2", and paragraph 4 begins "The provisions of paragraph 3 of this Article shall not apply", so as far as I am concerned, I think it is all right to keep the text on which the Sub-Committee has agreed; but I must ask whether any Delegate feels that it would be safer or wiser to say "The provisions of paragraphs 2 and 3 of this Article shall not apply to". Mr. J.J. DEUTSCH (Canada): Mr. Chairman, it appears to me that if we add "provisions of paragraph 2" it will have the effect of widening considerably the paragraph 4, and I do not think that was intended. Therefore, we. should keep the language as it is, namely, "The provisions of paragraph 3". Dr. H.C. COOMBS (Australia): Mr. Chairman, it is quite clearly not the intention of the Sub--Committee that this should extend to paragraphs 2 and 3. CHAIRMAN: Then I take it that we maintain the text proposed by the Sub-Committee and the Legal Drafting Committee. Now, having disposed of all the notes and reservations, I take it that we agree to paragraph 4 with the amendments already approved, including the supp-zsaion, of course, of the old sub-paragraph (b). On page 18 of document T/178 you have the old paragraph 5. As we have already dealt with and approved a provision concerning films, this paragraph 5 is to be omitted. The same applies to the two notes on page 18. We pass on to paragraph 6 (that will be paragraph 5 now). The note of the Legal Dafting Committee says: "It is the opinion of the Committee that the word 'governmental' is not open to misinterpretation in the English text; it comprises all government bodies including local authorities. The French wording has V 46 47 therefore been adjusted accordingly". This note is an answer to a query put to the Legal Drafting Committee by the Sub-Committee. I would ask-the Chairman of the Sub-Committee whether he considers it desirable to insert an explanatory note to cover the point, or whether that is superfluous. Dr. H.C. COOMBS (Australia): It seems to me, Mr. Chairman, that there is no doubt that the comment of the Legal Drafting Committee is satisfactory so far as the English text is concerned. I would not presume to offer any judgment on the French text, but I understand from my Belgian colleague that, in his opinion, it is adequate. E/PC/T/A/PV43 V E/PC/T/A/PV/43 CHAIRMAN: Then I take it that we .leave it to the note by the Legal Drafting Committee. You have at the bottom of page 19 that "The Delegate for China reserved his position provisionally and, proposed to delete the words "or use in the production of goods for sale." You find that in the fifth and. sixth lines in the English text. Does the Delegate of China maintain that reservation? Mr. WUNSZ KING: (China): Yes. Mr. GARCIA OLDINI (Chile): The remark made by me only refers to the French text, as submitted by the Legal Drafting Committee. CHAIRMAN: The Delegate of Chile suggests that the text of the Sub-Committee be adopted. instead of the text of the Legal Drafting Committee. Mr. FORTHOMME (Belgium) (Interpretation): The note of the Legal Drafting Committee shows clearly the reasons for this change. The English words "governmental agencies" covers more than the French words "organismes d.'etat", because it also covers municipal or provincial bodies; and therefore-I think that the change here is justified.. Mr. GARCIA OLDINI (Chile) (Interpretation): In that case I see no inconvenience in keeping the text submitted. by the Legal Drafting Committee. CHAIRMAN: The Delegate of France. Mr. ROUX (France) (Interpretation): The French Delegation thinks that the remark made by the Legal Drafting Committee in 48 G 49 E/PC/T/A/PV/43 the note is quite relevant, and the French text as it now stands is entirely in conformity with the idea expressed in the English text, namely, that the provisions of the Article shall not apply to the procurement by governmental agencies of products purchased for governmental purposes, and therefore the Chilean Delegate could consider himself as fully satisfied. Then there are various clerical errors which only affect the French text. CHAIRMAN: May I take it that after these explanations you approve the text of paragraph 6 (now paragraph 5) of Article 15? Approved. Now we should persevere with article 14. We will look at the Report of the Sub-Committee, and I would ask the Chairaan of the Sub-Committee whether there is any point on that Report to which he wants to draw particular attention. Dr. COOMES (Australia): I think there seum to be a number of points which do amount to an interpolation by the Sub-Cornittee, and I think it would be chesir-able if they were confirmed by the Commission. The first appears at the top of page 7 in the first paragraph, where it says, "Since the present paragraph 2 relates solely to the question of differential treatment between imported and domestic goods, the inclusion of the last sentence in that paragraph should not be understood to give sanction to the use of artificial measures in the form of differential transport charges designed to divert traffic from one port to another". P 50 E/PC/T/A/PV/43 CHAIRMAN: May I take it that the Commission approves of that remark? It is approved. DR. H. C. COOMBS (Australia): And the second point, I think, Mr. Chairman, is on the same page, in the second paragraph: This is referring to charges on imports in connection with a point raised by the International Monetary Fund. The essential part, I think, is the statement that; "The Sub-Committee considered that if such charges are imposed. on or in connection with imports or exports as such, or are imposed on the international transfer of payments for imports or exports, they would not be internal charges and, therefore, would not be covered by Article 15; on the other hand, in the unlikely case of a multiple currency technique, which takes the form of an internal tax or charge, such as an excise tax on a particular product, then that technique would be precluded by Article 15. It may be pointed out that the possible existence of charges on the transfer of payments insofar as these are permitted by the IMF is clearly recognized by Article 14" CHAIRMAN: Does this interpretation meet with the approval of the Commission? No objections? Approved. Dr. H. C. COOMBS (Australia): The third point, Mr.Chairman, is on page 8, in the second paragraph, which reads as follows: - "The Sub-Committee is of the opinion that paragraph 3 as now drafted would not prohibit the continuance of a tariff system which permits the entry of a product at a rate of duty lower than the normal tariff rate, provided the product is mixed or used with a certain proportion of a similar product of national origin. E/PC/T/A/PV/43 The Sub-Committee considered that such a provision would not be regarded as an internal quantitative regulation in terms of this paragraph for the reason that the use of a percentage of the local product is not made compulsory nor is the importation of the product in any way restricted." CHAIRMAN: Does this opinion meet with the consent of the commission? No objections? Dr. A. B. SPEEKEYBRINK (Netherlands): May we ask one questions we only speak here of tariff rates, but we can have other charges on imports, Are they not included? Dr. H. C. COOMBS (Australia): Mr. Chairman, the only thing I can say is that the only point which was raised in the Sub-Committee was the precise question of differential tariff duties, tariff items, themselves, and I am not sure, therefore, whether this would apply in the case of other charges on imports; but presumably, since we hae identified charges on imports with tariffs elsewhere, I see no reason off-hand why the same provision should not apply if the charge is, in effect, a duty. CHAIRMAN: Does this give satisfaction? Dr. A. B. SPEEKENBRINK (Netherlands); Definitely. CHAIRMAN: May I take it, then, that we agree to the remarks made by the Sub-Committee on this point? The Delegate of Norway, Mr. J. MELANDER (Norway): Mr. Chairman, I would like also to have included the next paragraph after the one we P P are Just discussing now; that is, at the bottom of page 8 and the top of page 9. It refers to the mixing of butter with margarine. Dr. H. C. COOMBS (Australia): I was just about to make that my next point, Mr. Chairman. Is it necessary for me to read the paragraph? CHAIRMAN: No, I take it that we are in agreement with that statement by the Sub-Committee. No objections? Agreed. Dr. H. C. COOMBS (Australia): Then on page 9, Mr. Chairman, in the third paragraph, there is a further statement to the effect that it was agreed by the Sub-Committee that the word "governmental" etc.... I think that point has been covered in what has been agreed to so far, and I do not think it is necessary therefore to deal with it. CH.AIRMAN: Now, as to the remark by the Delegate of Norway, that he wants to have also this point included, I would just make it clear what is my conception of the thing: that is, that we have gone through all these Explanatory Notes by the Sub-Committee, not in order to annex them to the Charter, but in order to have it recorded in our Minutes that we have gone through them, and that the Commission has expressed its agreement with the views of the Sub-Committee on each one of these points, I am not quite certain whether I saw the Delegate of China asking to speak, or not. E/PC/T/A/PV/43 H. E. Mr. WUNSZ KING (China): Yes, Mr. Chairman. With your permission, I would like to say that I am reminded by my colleague on the Sub-committee that the Chinese Deleeation made a reservation on Paragraph 3 but that reservation was withdrawn. I have no intention whatsoever off renewing that reservation, but I would simply like to point out that the Chinese Delegation still has some doubts as to whether it would be proper to use the words "competitive or substitutable" in sub-paragraph (b) of Paragraph 3 on Page 15, inasmuch as our first reservation to Article 15, that is to say, the reservation to Paragraph 1, was and is still based, among other things, on our objection to these words. But, Mr. Chairman, this short comment is only intended to be a short comment, pure arid simple. CHAIRMAN: Before passing from Article 15, I would ask the Delegate of France if he has any suggestion to make on the film problem. M. ROYER (France) (Interpretation): In connection with the film question, I have just been informed by the competent technical services in Paris that they have not had the time necessary thoroughly to study Article. 15 (b) and therefore my Delegation associates itself with the reservations already made by the United Kingdom, the Netherlands and the Czechoslovakian Delegations, more particularly with regard to the duration of the quota system mentioned in sub-paragraph (a) of Article 15 B. CHA.IRMAN: We will take note of that declaration. We no: start the examination of Article 24 - Reduction of Tariffs and Elimination of Preferences. Are there any remarks on the introduction to Paragraph 1? Then that is agreed, at any rate provisionally. We can adopt it finally Then the whole Article has been examined, S E/PC/T/A/PV/ 43 Sub-paragraph (a). of Paragraph 1: on.Page 21 you have a Notes "There was an equal division of view among the Members of the Sub--committee on the question whether the words in square brackets should be deleted or retained. The Delegates of Belgium, Norway and the United States favoured deletion, those of Australia, Cuba and the United Kingdom retention of these words. The Delegate of the United States considered that complete deletion of sub-paragraph (6) would be the best course." I will call upon the United States Delegate, who has made the most sweeping proposal, kindly to explain it. Mr. LEDDY (United States): The difficulty arose, I believe, in regard to the promise language of the provision. It was our view that the provision was not necessary, that it was already covered by the basic commitment to negotiate. In order to remove any doubts, we have today distributed a mimeographed sheet suggesting that, in connection with the deletion of sub-paragraph (a) of Paragraph 1, there be included an Explanatory Note in the Report. CHAIRMAN: The Delegate of the, United Kingdom. Mr.SHACKLE (United Kingdom): Mr. Chairman, we are agreeable to the proposal contained in this paper. There is just one thing I would like to say. I would like to call attention to the word "starred" in the third line. That refers, of course, to the practice in certain Sub-committees of affixing stars to those Notes which ought to go forward so as to become part of some king of official commentary on the final text. I will accept S E/PC/T/A/PV/43 this proposal conditional or. that word "starred" being deleted. Subject to this, we are quite in agreement. CHAIRMAN: You have the text of the United States proposal before you. The Delegate of Cuba. Mr. H. DOEN (Cuba): On behalf of my Delegation, I wish to sey that the Cuban Delegation could agree with the deletion of sub-paragraph (a) of Paragraph 1 of Article 24 in the case that the Note proposed by the Deblegate of the United States were not only to be inserted in the report but annexed to the text of the Charts ., giving it thereby the character of a binding condition of Paragraph 1 of Article 24, in its intro- ductory part, in connection with the actual Paragraph 1(b). CHAIRMAN: I take it that the desire of the Cuban Delegation, now put forward, is to treat this Explanatory Note in the same way as we treat other Explanatory Notes; that they are put in on the same page as the Article to which they refer. It will appear as a part of the document itself, but, of course, it will not be part of the Charter. We have omitted a certain clause, but it will have the full :interpretative value. S 56 M. H .DORN (Cuba): M. Chairman, may I only ask one question. Are there other notes which are ann..z:.d to the Charter in order to give the Charter a special interpretation, or is that the only existing form in which a note can be given/an official interpretative character? CHAIRMAN: We have a small number of such interpretative notes, and we discussed them the other day. The delegate of South Africa very strongly maintained that the Charter itself should con- tain some clause stating that this interpretative note could have a full binding valle. Whether we shall fix. adept it I cannot tell because I do not know. It may be taken up at another meeting, but this note will be treated as well as any other inter- pretative note. M. H. DORN (Cuba): In this case I would agree with the note under the condition that the South African amendment will be adopted later on. CHAIRMAN: Well, that condition, of course, car only be made the under a mental reserve because we cannot decide here wh-` /heads of delegations in the Preparatory Cormittee and in Executive Session may find as a result. Mr. R. J. SHACKLE (United Kingdom): I think, Mr. Chairman, there were plenty of precedents in the past for interpretative texts attached to an agreement, but they are not necessarily part of that Agreement. I think there/were many such cases in the past, and we shall find a satisfactory method. CHIRMAN: After this discussion which really was a kind of deviation from the text before us, I take it that the Committee is in agreement with the proposaI of the United States delegate to omit sub-paragraph(a), and instead of that,to insert the note of which he has given us the text. 57 Are there no objections? That is agreed. Then on the top of page 22 we find a note by the Legal Draft- ing Committee. That has been settled already. We come to sub- paragraph (b) which will now be sub-paragraph (a). Where is a foot- note: "The Delegate for Cuba wished to have it recorded that the Cuban agreement to the inclusion of this sub-paragraph is contingent on the retention of sub-paragraph 1(a) in its entirety." May I take it that the delegate of Cuba is satisfied with the insertion of the note that We have just discussed? M. H.DORN (Cuba): I mentioned a reserve before in this connection because we believe that there exists between (a) end (b) a possibility of doubt which we want to exclude. CHAIRMAN: But I hope that the question now is satisfactorily settled and that we can strike it out. M. DORN, (Cuba): Under the condition which, as I have been told, is a mental one. CHAIRMAN: Are there any remarks on the different sub-paragraphs namely, the new sub-paragraph (a) i,ii.,iii, and iv.? Mr. J.M.LEDDY (United states) in .the Sub-Committee's Report, Mr. Chairman, it is stated that: "One member of the bub-Committee suggested that the words land no new contractual right to preferences shall be created" should be added after the word increasedr at the end of sub-paragzaph (iv).'1 'he Sub-Committee thought that this condition should be reserved for the consideration of Commission That was our proposal, Mr. Chairman,but we do not wish to con- sider that at this late stage of the discussions. We think that while there may be a tactical gap here, it would be wise not to take it up now as this would start a complicated technical discussion, and we should prefer to let it stand for the time being. E/PC/T/A/PV/43 58 E/PC/T/A/PV/43 CHAIRMAN: May I take it that we approve sub-paragraph (b), now sub-paragraph (a), points (i), (ii), (iii) and (iv)? The Delegate of France. (M. ROYER (France): made a. remark which does not apply to the English text, and which was not interpreted) CHAIRMAN: I do not think there is any objection to this improvement. We therefore agree on the new sub-paragraph (a). We now come to the former sub-paragrap h (c), now sub-paragraph (b) on page 23. Is there any objection? M. ROYER (France) (Interpretation): Now that it is suggested to have only one word, I prefer the French word "consolidation" rather than the words "Le maintien conventionnel". CHAIRMAN: Are there any further observations? This clause is, therefore, adopted. The Note by the Legal Drafting Committee is disposed of by the remarks of the French Delegate. We pass on to the old sub-paragraph (e), now sub-paragraph (c). In document E/PC/T/W/270 we have an amendment submitted by the United Kingdom.Delegation. You will see that the United Kingdom Delegation proposes to omit the whole text and to insert in its place a new sub-paragraph (a). You will have noted that the United Kingdom proposal took the form of an amendment to a paper submitted by the Tariff Negotiations Working Party in document 136. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I think that the substance of this amendment has already been taken into account in the version of the Legal Drafting Committee. In sub-paragraph (e) J. E/FC/T/A/PV/43 on page 24 of the Legal Drafting Committee's text, you will see at the end the words "and thereupon the parties to such negotiation shall become contracting parties to the General Agreement on Tariffs and Trade, if they are not so already". That replaces document E/PC/T/W/270. There is only one thing that I should add, and that is that there is a corresponding passage to this in Chapter VIII, which refers to the Tariff Committee, and I think. we have got to be rather careful that the drafting of these two passages harmonises. It is, I think, clear that the parties to the negotiations would only become contracting parties to the General Agreement if the existing parties to the General Agreement themselves agree to that happening. I think that is implied by the text here, but that is the essential point to be brought out, and I think it is already brogght out in the text of the relevant Article in Chapter VIII - I am sorry, but I have not got it in front of me now. CHAIRMAN: Is there agreement on the text you. have on page 24 under the heading (e), which will now become (c)? There is only one slight remark that I might, perhaps, dare to make with regard to the words signedd at Geneva on". Be do not know that it will be signed at Geneva, although I have no objection to leaving it in. MR. R.J, SHACKLE (United Kingdom): We could put dots in instead of the word "Geneva". CHA IRMAN: Is that agreed? Then we pass the text of this Paragraph. 59 J . 60 E/PC/T/A/PV/43 . We now pass on to paragraph 2 of Article 24. There is also an amendment suggested by the United Kingdom Delegation in the paper I referred to, that is, document E/PC/T/W/270. MR. J.M. LEDDY (United States): Mr. Chairman, I think that that is already taken care of in the Drafting Committee's Report. CHAIRMAN: That is so. Are there any other remarks on paragraph 2?. 61 Mr. J. LEDDY (United States): One very small point: we notice the deletion of the words "by the Organization" at the end, and in the French I see there is some reference to notice being directed to the Directer-General of the Organization. I wonder what the difficulty is there. I believe that throughout the whole substance of the Chapters we have referred only to the Organization as such, and not to any particular part of the Organization. I think that the English text, without the reference, is the Preferable one. CHAIRMAN: Has any other Delegate an opinion about this? Then we maintain "by the Organization", and in the French text "le mise en application de la mesure en question et sur preavis adressé par écrit à l'organisation, e ?.-ci l expiration..." Is that agreed? M. ROYER (France) (Interpretation): I think that it is at the end that the words in brackets should be retained - "the date on which written notice of such withdrawal is received by the Organization". CHAIRMAN: We must strike out "Director-General" from the French. are we now in agreement on this text? (agreed). Paragraph 3. Any observations? Agreed. There is a footnote on page 20: "The Sub-Committe- agreed that the text of Article 24 as drafted would not prevent Members of the Organization from concluding new, or maintaining existing, bilateral tariff agreements which were not incorporated in the General Agreement on Tariffs and Trade, provided that the concessions provided for in such agreements were generalized to all Members in accordance with the terms of Article 14." E/PC/T/J,/PV/43 V E/PC/T/A/PV/43 On this explanatory note there is a Norwegian proposal to make it a new paragraph 4 of Article 24. Mr. J. MELANDER (Norway): Mr. Chairman, the reason why we have produced this amendment is that the history of the texts leading up to the agreement so far achieved, by the Preparatory Committee would make it useful, in our view, to have this explanatory note in the form of a new paragraph. You will remember that the United States draft proposal, the London agreement and the New York text of Article 24, paragraph 1, refer to the obligation of each Member, upon the request of any other Member or Members, to enter into these negotiations. Now Article 24(1) has been altered to read that each Member shall, upon the request of the Organization, carry oat such negotiations as the Organization may specify. Also, in the new paragraph 1(e) it is expressly said that the results of the negotiations shall be incorporated in the General Agreement on Tariffs and Trade. Further, the second paragraph of the New York text, according to which the Members should inform the Organization about the progress of their negotiations, has been deleted in the new text. It is for these reasons that we feel it would be useful to have it expressly stated - although it is generally agreed by everybody - that paragraph 1 in Article 24 does not exclude bilateral tariff agreements; of course, on the assumption that the concessions under such agreements will be made for the benefit of everybody by virtue of Article 14 of the Most- Favoured-Nation clause. It is our view that, especially because of the history which has led up to this, so to speak, last-minute change in this important provision, it would be very, useful to have expressly stated in a paragraph the point covered in that note. V 63 Mr. SHACKLE (United. Kingdom: I would like to make a suggestion that instead of putting this paragraph into the text of the Article we should try in some way to treat it as we have just treated. the question' f the United. States Delegation. In other words, it could, be marked with an asterisk and sent forward as one of the notes which would be qualified to go into the final form. The reason why I suggest that is that I think these two notes should have the same status, one having no higher or lower status than the other. The reason is that I have. the feeling that somebody may think one overrides the other. I am sure it is not the intention to do this. If we add. this particular note we are now discussing in the text, somebody would say that bilateral tariff agreements, of which the results are not generalized. under the most-favoured- nation clause, would be, as it were, rendered totally illegal. That could. not be the intention, because clearly there will be certain particular preferential arrangements remaining which are sanctioned, subject to the provisions, by this Article. I feel if we were to put this paragraph into the text of the Article,owhile leaving the other merely a note, we might give rise to some such interpretation as that. For these reasons I suggest we give an asterisk to this note, and keep it on the same footing as the note in explanation of the former paragraph 1 (a). Mr. LEDDY (United. States): Mr. Chairman, we would support that suggestion of Mr. Shackle's, with just one small Amendment. The proviso at the end we should like to read as follows: are with provided. that such agreements/consistent / the principles of the relevant Article, and. that the concessions arising out of such agreements are generalized to all members in accordance with .Aticle 14". E/PC/T/L./P7/43 G E/PC/ T/A/PV/43 CHAIRMAN: Any further remarks. Hon. L.D. WILGRESS (Canada): Mr. Chairman, the Canadian Delegation also supports the suggestion of Mr. Shackle. CHAIRMAN: What does the Norwegian Delegate say to the drafting Amendment? Mr. MELANDER (Norway): Accepted. Dr. COOMBS (Australia): Does the United States Delegate consider including the words "relevant principles"? Mr. LEDDY. (United States): The proposal is consistent with the principles. I wonder whether the word is really needed. CHAIRMAN: The Delegate of New Zealand. Mr. JOHNSEN (New Zealand): There is just one point Mr. Chairman, on which I am not clear. There is some reference to Agreements being extended to all other States-Members. In the case of bilateral agreements made between Members by virtue of a preferential system, I would just like to be sure that there is no obligation to extend these concessions to all Members. CHAIRMAN: In so far as under the most-favoured-nations principle it concerns them, these bilateral agreements will bring in all Mernber States; and in the bilateral agreements you can enter the number of things that do not directly concern tariffs, and it is an open question to what extent they will have to be shared with all other Members of the ITO. 64 E/PC/T/A/PV/ 43 Mr. R.J. SHACKLE (United Kingdom): I would think that the point mentioned by the Delegate of New Zealand is covered by paragraph 2 of Article 14. It is a question, as in that Article, of independent agreements. I do not think there should be any inconsistency. That is why I propose that we retain this as a note and not as part of the text of the Article. Mr. J. MELANDER (Norway): Mr. Chairman, in view of what has been said by the United Kingdom Delegate I agree with the proposal that we should make this particular note one of these interpretative notes on the same standing as the ones referred to by the United States Delegate, instead of making it part of the substance of the Article itself. CHAIRMAN: Is there any divergent opinion? Then we agree to the adoption of an explanatory note of the standing previously laid down and to the following redraft of the Norwegian proposal:- "The provisions of this Article should not prevent Members from concluding new or maintaining existing bilateral tariff agreements which are not incorporated in the General Agreement on Tariffs and Trade provided that such Agreements are consistent with the principles of Article 24 and that the concessions arising out of such agreements are generalised to all Members in accordance with Article 14." E/PC/T/A/PV/43 CHAIRMAN: The Delegate of Czechoslovakia. H. E. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I would like to make my reservation on the proviso of the United States Delegate, because he says provided that they are consistent with Article 24. If it means actually that they should be mutually advantageous - well, I may be negotiating, and some third party can come and say to me that it is not mutually advantageous. I think if I am giving, unilaterally, to some country reductions on tariffs , and I am extending it to all Members, that is only my business. Dr. J. E. HOLLOWAY (South Africa): Mr. Chairman, this is one of the cases where nobody would take Dr. Augenthaler to lawl CHAIRMAN: Does the Delegate of the United States feel very strongly the need of this proviso - that such agreements are consistent with Article 24? After all, all the Members of the I.T.O. are committed to observe the principles of Article 24 and it seems rather a hint that when they are negotiating bilateral agreements they might do something wrong, something inconsistent with the obligations to which they have subscribed. Would it not be more reasonable to have confidence that they are observing their commitments? Mr. J. M. LEDDY (U.S.A.): Mr. Chairman, it was our view that tariff negotiations between members of the ITO would proceed in accordance with certain rules laid down in Article 24, and I refer specifically to the rule set forth in new sub-paragraph (a) of paragraph 1. If we had no note, we would have very little difficulty, but since we have a note and it is inexact, we should just like to have that deficiency repaired. I really do not think anybody is going to have any difficulty P 66 P 67 E/PC/T/A/PV/43 with the kind of Agreement Mr. Augenthaler is talking about. If two countries agree, it is, after all, mutually advantageous, or they would not agree, But we do attach importance to the other principles particularly. Dr. H. C. COOMBS (Australia): I think, Mr. Chairman, there is something to be said for leaving in the word "relevant"; even though I agree with the Delegate of the United States that the words "consistent with" implies that,lit polutes only to the relevant clauses, I think if you include the word "relevant" it does emphasise the idea that there are provisions of Article 24 which are, so to speak, special, because of the particular negotiations we have got in mind, and they would not necessarily have anything to do with - would probably not refer to - other negotiations which might be entered into as contemplated in this note. I think there might be some advantage in leaving in the word "relevant". I think that might cover the point, for instance, raised by the Czechoslovakian delegate, and he might reply "Well, that position is not relevant to these particular negotiations." CHAIRMAN: Is this Australian suggestion accepted by the United States of America? Mr. J. M. LEDDY (U.S.A.): I take it that our minds meet on this point; that we agree that the relevant principles pertaining to Article 24 are those which appear in paragraph 1 (a) Dr. J.E. HOLLOWAY (South Afraca): Mr. Chairman, I hope Dr. Augenthaler will withdraw his reservation, because, if he is riqht, the South African Delegation has already in the course of these negotiations broken the rules by giving concessions in a particular case without getting anything back! E/PC/T/A/PV/ 43 CHAIRMAN: May I take it that we are now all in agreement on the Note in the text I read out, with only the addition of the word "relevant", so that it would read: "with the relevant provisions of Article 24." Is that agreed? (Agreed). M. FORTHOMME (Belgium) (Interpretation): The Belgian Delegate made a suggestion with regard to the French text of the last sentence of Paragraph 2 which does not affect the English text. CHAIRMAN: I think we would all agree that is a great improvement. Now I must once more bother the Chairman of the Sub-committee Dr. COOMBS (Australia): `I have much pleasure in saying that, so far as I amaware, there are no comments of-inter- pretation by the Sub-committee dealing with this Article which require determination. CHAIRMAN: This brings to an end Commission A. The Meeting rose at 7.45 p.m. 6S S
GATT Library
qt524rh1996
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fourteenth Meeting of Commission A held on Thursday, 19 June 1947 at 2.30 p.m. in the Palais Des Nations, Geneva
United Nations Economic and Social Council, June 19, 1947
United Nations. Economic and Social Council
19/06/1947
official documents
E/PC/T/A/PV/14 and E/PC/T/A/PV.13-15
https://exhibits.stanford.edu/gatt/catalog/qt524rh1996
qt524rh1996_90240099.xml
GATT_155
7,924
49,111
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PVI/14 19 June 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE. UNITED NATIONS CONFERENCE ON TARADE AND EMPLOYMENT. VERBATIM REPORT FOURTEENTH MEETING OF COMMISSION A HELD ON THURSDAY, 19 JUNE 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA . M. MAX SUETENS (Chairman) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel.2247). NATIONS UNIES (Belgium) L. 2 E/PC/T/A/PV/14 CHAIRMAN (Interpretation): The meeting is called to order. We will proceed with our Agenda and take up Articles 31, 32 and 33, This is an extremely important section covering state trading. In connection with paragraph 1, there are two amendments; The first moved by the Ozechoslovak delegation and the second by the delegate of the United States. I will oall-upon-both-dalegat ions to speak to their amendments. E/PC/T/A/PV/14 H.E. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, Gentlemen, during the discussion on the statement of the Belgian delegation I had the honour to point out three aspects connected with state- trading operations. The first was that it is a mistake to consider state-trading as opposed to free-trade and that in our view the opposite of free-trade is protectionism, as state-trading actually may be either protectionist or tending to an expansion of world trade. SecondIy, I pointed out that we are living in a period when entirely new forms of economic life develop and that is is extremely hard to make precise provisions for something which up till now has no definite form and which operates under entirely abnormal conditions. Thirdly I remarked that the whole issue is obscured today by certain considerations which in their substance have nothing to do with state-trading itself but which are just an expression of abnormal post-war circumstances such as are shortages of commodities, scarcities of freely convertible currencies, disequilibrium in balances-of-payment and so on, all cases for which there are special provisions in the Charter. I suppose that the provisions of Article 31 and 32 - I have no definite feeling as to Article 3 - are intended to come into force only when the special difficulties I mention above, that is, the disequilibrium of balances-of-payments and shortages of commodities, disappear and when the state-trading countries will be faced by a situation in which their exports could freely flow into some markets of other countries and when all com itions will exist in the state-trading countries for removal of restrictions on import or export. J. - 3 - E/PC/T/A/PV/14 Now as to state-trading operations themselves, not only you, but also we, find it extremely hard to work out a very precise definition of rules which would apply in the same way to every specimen of state-trading. Many countries have entirely different forms of state-trading and most of them are functioning in entirely different ways. As sea-faring countries represented here.know very well, it is customary to baptise ships by breaking a. bottle of champagne against their sides. I doubt that the same procedure is suitable for baptising babies. I think that it might be of some use if I explain what kind of state-trading we have in Czechoslovakia and how it works, as all this might help us in our state-trading discussions. First of all, we have monopolies established and operated mainly for revenue purposes or for purposes of health and security. Some of them are centuries old such as, for instance, the tobacco and salt monopoly or the monopoly for explosives. There were never any troubles with their functions and :I do not see any necessity for some new provisions in this respect. The second group of state-trading enterprises is especially intended to maintain stable prices for some primary commodities, mainly foodstuffs, and to assure the farmers of a certain degree of stable incomes. In these cases there is actually no single organization but more or less a kind of association of producers, mills, distributors, and so on, with an obligation to buy from the farmers for some fixed prices and to sell at fixed prices, too. The imports and, in the end, the exports, if there are any, are done on a strictly commercial basis. It goes without saying that purchases or sales abroad are in direct connection with the results of home-crops. There is a tendency of the Czechoslovak Government to plan Czechoslovak home production - 4 - J.v ~ E/PC/ 5 -T/A/PV/14 incecoordanoe with the recommendations of FAO which means that we have no intention to increase production or to afford some special protection to these products for which there are no natural sondttione in Czechoslovakia. That is, for instance, why our plan intends to reduce the oreage c ult ivaaedforwhett and some similar transformations of this kind. There is a third category of what yca might oPll state- trading enterprises in our country, but I sometimes doubt very much if this category falls under the definition of state-trading at all. Under this category falls what we call nationalized enterprises, that is, mines and large key industriese Theso enterprises actually work in exactly the same way as private enterprises. The state has no control over their commercial activities. Now you may ask me, what exactly may be the difference between these enterprises and private enterprises, and here we come to a point which is only superficially dealt with in the Charter, namely, economic planning. The sense of this planning is, expressed in an extremely simplifiea form, thet the enterprises themselves inform the planning centre about their production possianlities "Id how they envisage their work. on Afterwards the need of raw materials and/so available in the production is beang calouleted. If it becomes evident that for instance the requirements of industries producing luxury goods are toc large and that we would be unable to procure all the materials required by them, because they are neither available in the country nor, eor balanco-of-payments rnasons, cam be supplied from abroad.,pand that tossibily we would be faced with a situation that we would not have sufficient raw materials for the production of some essential goods, then the suppmy of aaw nateripls for non-essential purposes is cut down even if, for instance, the -E - 6 - E/PC/T/A/PV/14 production of some luxuries would be more profitable than the production of some essential articles. This is the task being given to the industries but from that moment on the state administration interferes in no way with their commercial activities. These industries are buying and selling according to their own criteria and are obliged by their very statutes to work according to commercial considerations. These enterprises, also, are not controlled as to their exports. As to imports the only means of control are those used for balance-of-payments reasons and if there is a plan for imports it is a very flexible one, based on the requirements of state and private enterprises and actually consisting only in an equitable distribution of foreign currencies available at any moment. I think that this is nothing particular to state-trading, as every country which finds itself in balance-of-payments difficulties has to proceed in exactly the same way. That is why we suppose that what is actually called here state-trading, will become effective and will be clearly defined only in a few years,when the reconstruction period will be over, and that only at this moment will it take a precise shape. When I said. yesterday that in our opinion the rules of state- trading in connection with the international markets should be worked out in the same way as customary law in the Anglo-Saxon countries is created, there was neither a lack of goodwill from our side nor a tendency to defer the whole problem. In the years to come we see actually no practical difference at all as to the working of economies of other countries in balance- of-payments difficulties and ourselves and we would need no special provisions as to state-trading whatsoever. I hope that these few remarks may be of some use when we consider articles 31 and 32 about which, I repeat, we feel rather doubtful. But we are trying to do our best to put the Charter into force and I hope we will succeed in our work here. G. -7 - E/PC/T/A/PV/14 Now when we were working on our Amendments, we noticed that some of our Amendments are very close to those presented by the United States. In certain Amendments may be there are differences, but we would be obliged if we can have an opportunity to discuss this matter with the U.S. Delegations, and to see, if possible, how to present a common Amendment for Articles 31 and 32. E/PC /T/A/PV/14 CHAIRMAN: The Delegate of Czechoslovakia. H.E. L. AUGENTHALER (Czechoslovakia) (Interpretation): Mr. Chairman, during the interpretation of my speech, the English word "controlled" was interpreted into French by the same word. Personally, I do not think that this interpretation is quite correct. We had in mind rather the words directed" or "guided" CHAIRMAN: I call upon the Delegate of the United States. Mr. John W. EVANS (United States): Mr. Chairman, before discussing our amendment, I should like to express our appre- ciation of the spirit of co-operative-ness and openmindedness with which the Czechoslovak Delegate has approached the study of our amendments. I hope with him that we can agree between ourselves on a text which might not be too far from either of those already presented, particularly in the case of Article 31 in which I think the approach of the two Delegations was quite similar, although there are differences in detail. With that in mind, I will not attempt to discuss the detailed differences between these two texts, but I believe I owe it to the other Delegates present to present at least a brief explanation of what the United States had in mind in its proposals for the redrafting of Paragraph 1 of Article 31. For the most part, we consider these changes to be strictly drafting changes, even though they may appear to be rather far reaching. We have attempted to improve what seemed a somewhat cumbersome text, particularly the rather difficult reference to the countries in which the enterprise was located (which got us into some rather complicated grammatical problems) and we think we have worked out a formula which does precisely what the original draft did in that respect, but states the rule in a very much simpler form by use of the phrase "affecting international trade". - 8 - V - 9 - Our second main change was one that had to do entirely with eliminating what had been criticised at times as an economic anomaly in the previous paragraph. I think it was clear that the operative phrase of the previous paragraph was that enterprises which came within the scope should carry on those operations in international trade' according to commercial principles, but because that had been introduced by a phrase which referred to: "treatment no less favourable than" it raised the question as to whether we were implying that commercial principles in the case of a monopoly necessarily meant that exactly the same price would be offered or that the goods would be offered for the same prices in different have simple markets. In order to avoid that implication, we/made a/change of recasting the first requirement in terms of the general principle of the Most-Favoured-Nation treatment, parallel with the provision. of Article 14 with respect to the operation of privately owned enterprises, and have kept as before the operative provision, the provision for purchases and sales under commercial considerations. The only substantial chance, in our opinion, that we have is introduced/to provide a mechanism -whereby the criterion of "commercial considerations "may have an oppertunity truly to operate, is in the final phrase "through public offers or bids or otherwise, shall afford the enterprises of all members full opportunity to compete for participation in such purchases or sales". We have tried to reflect in a short phrase, a general principle which does if it is to remain in existence. and must control the operations of a commercial enterprise/. That, Mr. Chairman, I think, is all I can add to the explanations in the annotated agenda, unless other members of the Commission would wish to raise any particular questions with regard to it. E/PC/T/A/PV/l4 - 10- E/PC/T/A/PV/14 Mr. J.A.MUNOZ (Chile): Mr. Chairman, as we see it the fundamental change in the amendment proposed by the United States delegation, consists in replacing the provision of the previous text which said that. "State trading enterprises shall accord to the commerce of the other members "treatment no less favourable than that accorded to the commerce of any country ...."etc.by a new provision which says that these enterprises shall"act in a manner consistent with the principle of general Most-Favoured-Nation treatment". We agree with the United States delegation that this is not a modification of substance from the New York text, and as it is explained in sub-paragraph (b), must be interpreted as meaning that such enterprises, in making their external Purchases or sales, must be guided solely by commercial considerations. If this is its true interpretation, we would have no objection to the United States delegations amendment. We would, Mr. Chairmaun, however, at this point wish to refer to the comments made by the United States delegation to the effect that the modifications to this paragraph, apart from simplifying the language, have, as their object, to eliminate the possible inference that Most-Favured-Nation treatment by state enter rises might require the fixing of identioal prices to buyers and sellers in different markets. You will recall that, at the request of Dur delegation, the Drafting Committee in New York placed on record in its Report on page 27: "that the charging by a state enterprise of different prices for its sales of a product in different markets, domestic or foreign, is not precluded by the provisions of Article 31, provided that such different prices are charged for commercial reasons, to meet. conditions of supply and demand in export markets". We understand that the new text proposed for this paragraph by the United States delegation confirms this interpretation, and we would therefore request that, in the Final Report of this Preparatory Commission, this interpretation goes on record - that is that the fixing of different Prices in different markets for reasons of competition is included in the expression "commercial considerations". - 11 - CHAIRMAN: Mr. Shackle. Mr. R.J.SHACKLE (United Kingdom): Mr. Chairman, I would like to deal with two of the points Mentioned by the United States Delegate. The first is the one to which the Delegate of Chile has just referred; that is, the substitution of the phrase about the principle of general Most-Favoured-Nation treatment for the previous text, which referred to treatment no less favourable. On the face of it, it seems to us that that is not in itself an extremely explicit change. It does not fully explain just what the underlying difference is, and I entirely agree with the Chilean Delegate that it does remain very necessary to keep on record what is stated in the note at the foot of Page 27 of the New York Report, namely, "that the charging by a State enterprise of different prices for its sales of a product in different markets, domestic or foreign, is not precluded ... provided that such different prices are charged for commercial reasons, to meet conditions of supply and demand in export markets." I quito agree with the Chilean Delegate that that explanation ought to be placed on record in conjunction with this paragraph. My second point relates to the words which have been introduced at the end of (b), namely, "... through public offers or bids or otherwise, shall afford the enterprises of all Members full opportunity to compete for participation in such purchases or sales. " Our feeling is that that wording is too narrow. It seeks to tie up the State trading enterprise in a tighter way than the private trading B/PC/T/A/PV/141 S - 12 - E/PC/T/A/PV/l4 enterprise. The private trading enterprise will have a wide variety of methods at its disposal. Although it cannot seek public tenders, nor follow the methods of a public auction, it will have many more strings to its bow, so to speak, and we fell that the State trader should have Just as full opportunity in the methods it employs, so long as they are truly commercial, as the private trading enterprise. For that reason we suggest a somewhat less tight form of words, to go like this: "and shall afford the enterprises of all Members fair opportunity to participate in such purchases or sales." That appears to as to get the essential underlying idea without tying up too closely the exact methods which the State trade is expected to follow. L.. - 13 - E/PC/T/A/PV/14 Dr. T.T. CHANG. (China): I would like to say a few words concerning what we think of paragraph 1 of Article 31; after that I would like to explain cur attitude to the comments of the United States delegation. Although the Chinese delegation has not introduced an amend- ment on paragraph 1of Article.31, we do think that the text is insufficient. Our main objection is to the first part of the second sentence which reads: "to this end such enterprise shall, in making its external purohases or sales on any product be Influenced solely by commercial considerations, such as price, quality, marketability",etc The text does not cover cases in which international loans are involved. Where an international loan is Involved, it is not always possible for a country or a srate-trading enterprise in making its external purchases and sales to be influenced solely by commercial considerations. China has a loan arrangement with certain foreign countries, and cannot therefore support the text entirely. As to the amendment proposed by the United States delegation, we oppose it inconnetion with certainFirstly we oppose it in connection with certain terms. We fear that the use of the term "general most favoured nation treatment" may lead to confusion or to undesirable lnflueences. This possbility is also recognised by the United States delegation in its own comments at the bottom of page 3 of the annotated agenda (W/198). The United States delegation has even found it necessary to propose a supple- mentary paragraph to avoid confusion. We wonder whether confusion can be entirely avoided, and whether the term ''non-disoriminatory treatment of state favoured-enterprises"is not sufficien for our purpose here. We thereafor have thei intention of supporting the phrasing used in the text. L. - 14 - Secondly, the amendment does not cover oases in which inter- national loans are involved, and in such cases state-trading enter- prises may not be able to make purchases or sales solely in accord- ance with commercial considerations. Thirdly, we are wondering whether the matter can be altered, partioularly when a certain product is urgently needed and which should be disposed of in a short time, or when tle policy of a country is concerned. For these reasons we cannot agree with the amendment intre- duced by the United States delegation. Mr. JOHN W. EVANS (United States): I should like to answer some of the remarks made by the delegate of China. The first point, dealing with the problem created for the countries who are the recipients of international loans, was, I believe, covered in the Report of the first meeting of the Preparatory Committee. On page 17, section E note no., the statement is made: "The view was generally held that a country receiving a loan would be free to takes this loan into account as a commercial consideration' when purchasing its requirements abroad. The position of countries making such'tied loans' was another question." It was our own feeling when we considered this possibility that that is the correct interpretation, and I think the delegate of China has nothing to worry about at least in that respect. The second point made by the delegate of China has to do with the interpretation of the most-favoured-nation principle. I would point out that our reference to "confusion" in our comments dealt with the confusion created in the earlier draft. We do not think there is any confusion in our amended draft, because the amended draft makes it much clearer than the original draft that the requirements: of commercial considerations is in fact the operative requirement. E/PC/T/A/PV/14 J. /PC T A/ 3B/~~~~~~~~~~EC/1T/A /PV/1 4 - 15 - It makes it very clear that that is the interpretation to be placed on the most-f- vouradnatioa treatment, whereas the connection between the two in the earlier draft was, I think, much less clear. I also want to say wish respect to our added wording - this may be partially an ansurer io both the United Kingdom delegation and the Chinese delegation - that we did riot provide that "public offers or bide" was to ropresont the only incans whereby a Member migWe comply with this general proviLion. li added the words "or otherwicel in ordcr to tcko carc of the quite obvious fact that business enterpriees do not always do thir business on the basis of public offers or bids. CKAIRICN (Interpre'ation) The delegate of France. MM C. IGONCT (France) (Inrerpretauion): Yr. chairman, I would like to make two remarks conlurning the statement made by the represnctative of Czechoslovakia, which will irnlude, at the same time, remarks concerning the statements made by the delegate of China and the dclugate of the United Kingdom. First, where the sta-emunt of the representative of Czechoslovakia is concerned, I would like to extend my full support to it since we are in a similar situation, and we believe that the drafts of Article 31 and 32 should specify that during the transitional period when a scheduled programme of exports is established, provisions should not apply which arc normally appuicable to a state enterprise, It is q;ite obvious that in oases, especially during the transitional period, when the external trade is, ruled by fixed programme, the volume of this trade cannot be influenced by references to prices nor by the sources of the purchase. Therefore, during the transitional period, the necessary exceptions should be made from the cases which are provided for by the Charter for a state enterprise )nnd the restrictive measures which are provided for by the Charter for state enterprises should not apply to them during the transitional period. E/PC/T/A/PV/14 - 16 - My second remark aims at the statement that a State enterprise should be considered in the same light as a private enterprise. That is, that if State enterprises are not allowed any extra privileges they Whould not bear any additional burdens - and if private enterprises are allowed a certain discrimina- tion in their purchase discriminations, which are provided f or by the Charter, and which make allowances for commercial consider- ations, loans, and even for a long-range commercial policy, these same discriminations should also be allowed to a State enterprise which ought to be considered exactly in the same light as the private enterprises are. CHAIRMAN: The Delegate of Canada. Mr. DEUTSCH (Canada): Mr. Chairman, I listened with much anxiety to the remarks of the Czechoslovak Delegate and the remarks just made by the Delegate of France. I appreciate the particular difficulties that some countries faced during the transitional period, but I am not clear that that has any relevance particularly to what we are now discus sing. It seems to me that the problems of countries during the transitional period will be dealt with in the sections dealing with the balance of payments, and where there are import programmes, presumably those import programmes are based on an adequacy of exchange resources, and those programmes would be carried out under these provisions of the balance of payments, and I do not think there is any need to make any revision in the State-trading section. So I do not think that there is any need here in these provisions to take care of shortages of exchange which exist during the transitional period. - 17 - With reference to some of the remarks of the Delegate for Czechoslonakia, he suggested that we should not try and formulate rules at this stage, or at least not particularly detailed rules, but that we should wait for experience.. I think there is a good deal in that, but I am concerned that the State-trading enterprises sould not be allowed such greater freedom and scope that they assume a dangerous position in relation to countries which are organised on a private enterprise basis. The Charter does lay down rules for trade that is conducted on more or less a private enterprise basis, and the rules that are laid down for State enterprises should not be in general more loose or provide wider scope than those rules; and therefore I think we must lay down certain rules here. I do not maintain that we now know in detail everything they should provide for; but we must have certain general principles and rules that must apply to them, otherwise the Charter will be seriously out of balance. Therefore, I think we cannot simply accept statements here that do not provide for some rules. CHAIRMAN: The Delegate of Brazil. MIr. RODRIGUES (Brazil): Mr. Chairman, I want to express our views about the last part of sub-paragraph (b) in the Amendment added to paragraph 1 by the American Delegation. We should like to see the words "trough public offers or bids or otherwise" deleted, because we do not think that this way of dealing with this matter could be workable. CHAIRMAN: The Delegate of China. Mr. CHANG (China): Mr. Chairman, although it is mentioned in E/PC /T/A/PV/14 G. - 18 - E/PC/T/A/PV/l4. the London Report that the view was generally held that a country receiving a loan will be free to take this loan into account as a commercial consideration to implement its requirements abroad, we do not think that it is quite competent that that commercial consideration should cover cases in which loan arrangements are involved; so we would like to see the text as it stands here clarified. V - 19 - V1% CHAIRMAN: The Delegate of Czechoslovakia. H.E. Ar. Z. ."UGENTHLLkR (Czechoslova~ia): Mr. Chairman; I think I owe some explanation to the Delegate of Canada. I hope it was not understood from the remarks I made here that we do not want any rules at all. You have seen, from our own amendments, that we are in favour of certain rules. What I thought practical was that we should not have too many detailed rules because the period is too uncertain: the functioning of state enterprises is not yet clear, as the issue. is confuoed to-day as t. what actually is the substance of these state enterprises and what is only the consequence of the balance of payments difficulties. That is one point. The other refers to the transitional period. For the same reason, i think that foe a certain timn nobody will even notice that there is a certain difference between state enterprises and non-state enterprises, because if they are acting according to commercial considerations there can be practically no difference so long as there are restrictions on exports or imports for reasons of balance of payments difficuliieser Tho d.iff-xence may only be seen later and that is why we thoughtbthat it would 'e practicable to make very detailed rules after wafde when the dilfcrences come to light. Now, as to the notion of commercial considerations, it is in our laws that state enterprises have to act according to commercial considerources. Of c in this case, they should not ither for idered,e'_.:r -advantages or disadvantage, in another way. They have to act as private commercial enterprises, so they must have the same rights as private - I-e Jm I t //1 A O - 20 - E/PC/T/A/PV/14 commercial enterprises. It means that they. should not be submitted to some special rules which would discriminate between them and private enterprises. Let us suppose, for example, there is a state enterprise in one, country and a private enterprise in another country which imports wheat. Now, I could not go to the private enterprise and say, "Why did you buy the wheat, at what price did you buy it, were you guided by commercial considerations or not?" because they would probably say "Mind your own business "' But we feel that there should not be a door open so that any competitor might come and say, "Well, you are a state enterprise. You have to always give a full account of why, what and where you are buying". I think it would be a discrimination as against private enterprises, and as we are here to abolish general discrimination, so I would request the same treatment for the state enterprises. ER - 21 - M. C. IGONET (France) (Interpretation): Mr. Chairman, may I Support my Czeahoslovakian colleague by Giving two examples which I think illustrate what he had in mind. First of all, let us take the example of a French company which has a monpoly of electrical power in our country. This company has to buy equipment, and it may call upon foreign corporstions to supply this equioment. Now, if the French company has to be guided solely by comercial considerations, it might be argued that it should buy at equal quality the equipment which will be offered at the lowest price, and which could be suplied in the shortest possible time. However, there are other considerations which might influence the decision taken by the company, just as it might have influenced the decision taken by private corporations In the same juncture. For instance, we may want to buy this equipment in Switzerland because of certain facilities of payment which may be given to the Frenoh State Company by the government of this country. For instance, there may be a provision for the supply of elctrical power at a later date. This is why, in certain cases, just as a private corporation would, so a state trading enterprise of this kind might be prompted to accept a bargain which perhaps could not be construed as being a deal dictated by a strictly commercial consideration. Again, we might take. the example of a French refining company -in which buys oil from other corporations/which it may have, for instance, a certain financial interest. Perhaps, in such a case, the French refining corporation wouId be prompted not to buy at the lowest possible price, but from another corporation in which it holds an interest, so that the deal might prove profitable to both, and in particular to the French corporation. In this case oil would be perhaps bought, not at the lowest possible price, but for other reasons which in the end would - as in the case of a private - 22 - E/PC/T/A/PV/14 In this case corporation - prove beneficial to the company concerned../ We do not want it to be objected to the company in question, that because it is a state trading enterprise it should not be allowed to do so, and should be compelled to buy at the lowest possible price leaving aside all other considerations which might influence its decision. These are two examples which I think clarify the position. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, I am grateful to the French delegate for stating in greater detail what he had in mind. I agree with him, that the examples which he has giver do not necessarily require the state enterprise to buy at the lowest price, I do not think that commercial considerations should be defined in such narrow terms. I do not think that "comercial considerations" is intended to mean simply the lowest price. I think it means all the considerations that might influence any commercial transaction, and I think the case cited by the French delegate, in which he :explains that there are other considerations than low price, are perfectly legitimate,and I think any enterprise would take all these things into account, and I certainly would agree myself that all those considerations must be taker into account. We must not simply interpret "commercial considerations"' as meaning lowest price. The other point to which he referred was the case where the company could prefer to buy in Swltzerland because of the possibility of making payment in Switzerland, whereas there is no such possibility elsewhere. It seems to me that the rules that should govern in that case are ones that are to be laid down in the balance-of-payments section of the Charter, and presumably this section would take care of the situation, or should take care of it, if that is considered desirable. I do not think the rules of state trading should ER 23 - EC/PC/T/A/PV/14 include the provisions having to do with balance-of-payments difficulties. It seems to me that the rules regarding balance-of- payments difficulties should apply equally to state trading enterprises as they do, to private enterprises, and what can be done under the one, can be done under the other equally. But we should not confuse the issue by having balance-of-payments considerations in two places of the Charter. They should be dealt with solely under the balance-of-payments provisions. E/PC/T/A/PV/14 CHAIRMAN (Interpretation): The Delegate of New Zealand, Mr. L.C.WEBB (New Zealand): Mr.Chairman, I wanted to raise a point in connection with the suggested change of title which the United States Delegation has made. It is not merely a point of wording. It is proposed to change the title from "Non-discriminatory administration of State-trading enterprises" to "Most-Favoured-Nation treatment by State-trading enterprises," It seems to me that the change gives a sort of precision to the title which, in fact, is not present in the text, because the text says: "... act in a manner consistent with the principle of general Most-Favoured-Nation treatment which is applied in Article 14 ...". In other words, we are not precisely requiring Most-Favoured-Nation treatment by State- trading enterprises; we are requiring State-trading enterprises to act consistently with the principle of Most-Favourd-Nation treatment. I would suggest that possibly the best title for this A rticle would be: "The administration of State-treading enter- prises," and on that point I must confess that I find some difficulty in discovering, for myself what exactly is meant by the application of Most-Favoured-Nation treatment to State-trading enterprises. A minute ago there seemed to be some agreement here that the term, commercial considerations, which is referred to in (u) of the United States draft, does imply that State enterprise is required to buy or sell at the bast price. But if that is the case, is that altogether consistent with what generally regard as Most-Favoured-Nation treatment? There are one or two other points which I would make in connection with the United Sates re-draft, which are perhaps more a request for information than anything else. S -24 - S - 25 - E/PC/T/A/PV/14 I find the expression "such enterprise shall", and I wonder whether that is a permissible wording, seeing that it is not the enterprise which is the Member of the International Trade Organization but the State concerned, and it seems to me that it is necessary to go back to the original text and refer to the Member concerned rather than to the enterprises There is also a significant difference between the United States text and the New York Draft, in that the United Stats re-draft eliminates the last phrase of Paragraph 1 of article 31 of the New York Draft - 'having due regard to any differential customs treatment maintained consistently with the other provisions of this Charter," It seems to me that, having regard to the reasons which led that phrase to be put in in the first place, it is probably still necessary that it should remain there. I would like also to associate the New Zealand Delegation with what has been said against the inclusion of the words "through public offers or bids." It is true that "or other- wise" occurs, but it seems to me that the specific reference to public offers or bids is inappropriate, and particularly inappropriate when we come to consider the scale of operations of many State enterprises. I would finally agree with Dr. Augenthaler that we should beware of attempting to legislate too precisely to meet the case of State enterprises, not out of any feeling that State enterprises should be put in a privileged position, but rather from the fueling that the first essential of sound legislation is that we should be thoroughly familiar with what we are legislating about. S - 26 - E/PC/T/A/PV/14 I think it is true that most of the countries represented here have had a somewhat limited experience of State trading and therefore it is not easy to understand precisely the natural of the problem with which we are dealing, and I think Dr. Augenthaler has made very well the point that we may very easily impose a greater degree of restriction on the activities of State enterprises than we are imposing upon the activities of private enterprises. L. - 27 - /A//Tlt/,,PV/14 CHAIRMAN (Interpretation): The delegate of the United States. N r. JOB W. EVANS (United States): I feel that several points made by the New Zealand delegate should be answered. The first matter raised was in connection with our prchosed diange in the title of this ArtiWee. go do not feel atroll stmtngly about the change, but we thought it was a logical change in view of our redrafting of the Articlee in tho wey tee Axprcssion"most-favoured- nation" was used. For our part we should be perfectly happy to Go back to the title in the New York draft if it is preferable to the other delegations I 4o not believe that the wording proposed by the New Zealand delegate would be avemmpro'rsent, because the strocture Of section B now seems to bn one ii which two relajed sube cts are discussed; the first is the question of the obligation of the most-favoured- nation principle to the operofions Or State enterprises, and to balance a similar principle in connection with privately owned enterprises. The second is in article 32 an eftort Io balance to some extent the obligatioe on thofpart cC some countries to negotiate in connection with the expansion ef trado. Whatever titles are used they should make clear theedieferonco between these two conc3ptions. With regare to ohp socand pnint raised, we difmake a change in the wording in omihting toe words "haeine aud rcg rC. to such differettialment,atr so ands-Iforth.Jt aslour be3ief.that that wording was unnecessary as it was included coic the noept of commer- cial consideratioes. Wo mro be w ang about that. Another point made bewthe ao Zealernted dezto has b do with - 28 - the use of the wording "such enterprise shall", instead of the words originally proposed. Actually that is not as radical a change as he seems to think, because in the New York draft the words "such enterprise" were the subject of the second sentence. We would have no objection to an effort to recast the paragraph in such a way that the member becomes the subject of the obligation, but that would require a number of other drafting changes. The most important point and the one on which I feel much more strongly than any of those I have mentioned so far, was made by the New Zealand delegate who felt we might be going too far in legislat- ing to cover the operations of State trading enterprises at a stage when we do not know too much about those operations. In the first place, I do not feel that the New York draft or our proposed amend- ment did go very far towards legislating for the operation or State enterprise, but it seems to us it went at least in the direction of the balance which is absolutely essential to providing some means whereby the members who have State trading enterprises can live up to the same obligations which members who carry out their trade by other means are going to observe. A number of delegates have referred to what seems to them the imposition in this draft or more rigid requirements than those applied by the Charter to private enter- prises. That is based on a misunderstanding of one of the purposes of section E:when we compare the obligations placed upon an individual privately owned enterprise and the obligation placed on a State enter- by prise in this Chapter, we have/no means completed the comparison which is operating - the comparison between the obligation of the member who deals through private trading end the obligation of the member who deals wholly or in part through State enterprises. E/PC/T/A/PV/14 L J. - 29 - E/PC/T/A/PV/14 The Members who carry out their trade through private firms will have accepted in Chapter V obligations with respect to the negotiations on tariffs, obligations with respect to-quotas-which are completely inapplicable in the case of a state enterprise, because a similar undertaking by the Member carrying out its trade through state enterprises would necessarily be meaningless, and that is the reason why there must be rules in this section applied to state enterprises which do not apply to private enterprises in other parts of the Chapter. I think that is all I have to say, Mr. Chairman. CHAIRMAN: Dr. Holloway. DR. J.E. HOLLOWAY (South Africa): Mr. Chairman, there are two points involved in the drafting which might have the special consideration of the Committee to which no doubt these Articles will be referred. I think on the whole it is probably an improvement to refer in this Article, as the United States suggest, to Article 14. It does, however, at the stage at which we are now, produce difficulties of interpretation, difficulties of understanding where we are, because it refers to measures which may be taken under Article 14; article 14 again refers to measures which may be taken under Article 15; and Article 15 again refers to measures which may be taken under Article 24, so ne does not know just what the limits of one's commitments are, and I would suggest that the Drafting Committee might, before they deal with it in the manner suggested by the United States which seems to have certain advantages, just link up with what the Committee on Article 14 has done in the draft to that Article. J.- 30 - E/PC/T/A/PV/14 The second point is likewise one of drafting, one but/in which the change of drafting may make a very considerable change in substance. It is in paragraph 2 of the Article. In the New York Draft, there would seem to be a mis-print somewhere, because in line 2 we read 'purchases of imports", in the next line purchases or imports", and lower down again "purchases or imports". The Czechoslovkian amendment has eliminated the words "purchases or imports", and the United States amendment has kept the words "purchases or". It seems to me that the United States amendment, dealing as it does with an Article dealing with the most-favoured- nation treatment. (or, if we take the Now York Draft with non- discrimination), is the correct one. I would like to draw attention to the essential difference which comes in if we take either the New York Draft or the Czechoslovakian amendment. In both these cases we are departing, then, from the main subject of this Chapter and I suggest that might also be considered by the Committee which deals with the Article. G . - 31 - E/PC/T/A/PV/14. CHAIRMAN: The Delegate of Norway. Mr. OFTEDAL (Norway): Mr. Chairman, the Norwegian Delegation finds the New York Draft of Articles 31 and 32 satisfactory, except may be for one point. In paragraph 4 it is stated that due regard shall be had to the fact that some monopolies are established, and operated mainly for revenue purposes. The Norwegian Delegation believe that this paragraph should bc extended also to include monopolies of social, cultural and humanitarian purposes, and we have proposed an Amendment to that effect. What we have specially in mind is the sale of alcohol or liquors. After the last war we had just like the United States prohibition against the sale or consumption of alcohol. This was given up when the sale of alcohol was converted to a monopoly, which uses a price policy as part of a regulatory machinery. This monopoly has worked Very well, according to our opinion, and it has become an integral part on the social welfare policy of the- Norwegian Government, and the Nerwegian Government would be extremely reluctant in changing this policy, which it considers very successful We believe that before that monopoly is established, both these purposes should be excepted from the provision of Article 32. CHAIRMAN: The Delegate of Czechoslovakia. Mr. AUGENTHALER (Czechoslovakia): Mr. Chairman, I have the feeling that we are a good way on to reaching an agreement. That our points of view are not so far away each from the other's; and, of course, there are very important questions which we have discussed, and I think that we would need two G. - 32 - E/PC/T/A/PV/14 hours to think that out, and that is why I would like to move the closure of the Debate for to-day, just to afford the Members the opportunity of reflecting on all that has been spoken t o-day. CHAIRMAN (Interpretation): I think, Gentlemen, that we would have everything to gain by accepting the Czechoslovak proposal, since it would afford him an opportunity of consulting with his U.S. colleague with a view to presenting a draft amendment. CHAIRMAN: The Delegate of the United Kingdom. Br. SHACKLE (United Kingdom): I would like to say this, that the U.S. Amendment extends considerably beyond Article 31, and I had some large Amendments to Article 32, and I cannot help thinking that the Amendments to Article 32 are linked with the others, and it may be desirable to consider Article 32 as well. I feel, therefore, that it may be well to take in Article 32 before we re-consider Article 31, -32 - V. E/PC/T/A/PV/14 CHAIRMAN (Interpretation): May I ask a question of Mr. Augenthaler? Does he intend in his new amendment to cover only Article 31, or to cover also Article 32? H.E. Dr. Z. AUGENTHALER (Czechoslovakia) (Interpretation): Mr. Chairman, I only had in mind Article 31. I meant that ,rticle 32 should be discussed perhaps tomorrow or at some later date. CHAIRMAN (Interpretation): In that case, gen lemen, I think we can adjourn the meeting now, it being understood that we will take up tomorrow the new amendment which is to be presented by Mr.Augenthaler and the representative of the United States, and we will resume the discussion of Article 32. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I would like to ask whether it would be possible to have an opportunity of considering the new text beforehand? It is rather difficult to discuss a text one sees for the first time at the meeting. CHAIRMAN: (Interpretation): I have the same wish as yourself, and it is just with a view to being able to receive the text before the meeting that I am suggesting the adjournment of our meeting now. The meeting stands adjourned. (The meeting rose at 5.10 p.m.)
GATT Library
cc153gw1695
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fourteenth Meeting of the Tariff Agreement Committee Held on Tuesday, 9 September 1947, at 2.30 p.m. in the Palais Des Nations, Geneva
United Nations Economic and Social Council, September 9, 1947
United Nations. Economic and Social Council
09/09/1947
official documents
E/PC/T/TAC/PV/14 and E/PC/T/TAC/PV/12-14
https://exhibits.stanford.edu/gatt/catalog/cc153gw1695
cc153gw1695_90260050.xml
GATT_155
14,898
90,104
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC /PV/14 9 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT. FOURTEENTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON TUESDAY, 9 SEPTEMBER 1947, AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA. Hon. L.D. WILGRESS (Chairman) (Canada) Deleates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES -2- E/PC/T/TAC/PV/14 CHAIRMAN: The Meeting is called to order. We will resume our discussion of the General Agreement on Tariffs and Trade by taking up Article XXV and the Articles following. On Article XXV - Withholding or withdrawal of Benefits - we have a proposal by the Czechoslovak Delegation, which is given on Page 7 of Document W/312, in which they propose an amended wording for this Article. Are there any comments on the Czechsolovak proposal? Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman, as far as I can see, there is no substantial difference of meaning here at all; the amendment is purely one of wording. As far as I can see, it makes the passage resd rather more clearly. The only point at issueis the substitution of the word "State " for the word "Government." As Dr. ..::nthaler no longer feels strongly about this, and as we have not in any case used the word "State" bafore in this General Agreements I would like to suggest wo retain the word "Government; " othrerwise I have no particular remark to make. CHAIRMAN: The Delegate of Czechoslovakia. H. E. Mr. Z. AUGENTHALER (Czechoslovakia): . Mr. Chairman, as we stated yesterday, we have no objection to the word "Government" remaining. Mr. J. M. LEDDY (United States): Mr. Chairman, there is one substantial point in the suggestion; that is, the deletion of the provision whereby it would be the contracting Committee which would determine whether a particular contracting party had a substantiel interest in the product concerned. We attech no S - 2 - S - 3 -E/PC/T/TAC/PV/14 particular importance to keeping that provision. CHAIRMAN:Are there any other comments on the Czechoslovak proposal? Does the Czechoslovak Delegate attach importance to the deletion of the words "the; Committee determines to have"? H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I would prefer these words to be deleted, because as it stands now it maans all the contracting parties. There is no question of an Executive Board, as for the Charter. It is quite natural that these contracting parties which are interested will come forward and approach the other countries, so I do not see why there should be special mention of the Committee. CHAIRMAN: Are there any other comments on the Czechoslovak proposal? Does the Committee agree to accept the Czechsolovak proposal, with the substiation of the word "Government" for the word "State"? Dr. COOMBS (Australia): I just wanted to raise one question, Mr. Chairman. In what way would it be done? How is the Committee to determine whether the contracting parties have a substantial interest in the matter? C HAIRMAN: Would Mr. Augenthaler like to answer that cuestion. H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, as the country would have the obligation to inform all contracting parties, and would also have the obligation to enter into negotiations upon request, it means That any interested country would come forward. E/PC/T/TAC/PV/14 CHAIRMAN: Are there any other comments on this proposal? I take it then thst the Czechoslovak proposal, with the substitution of the word "Government" for the word "State", is approved. (Agreed) . Article XXVI - Modification of Schedules. The United Kingdom Delegation suggest that the word "Modificastion," in . the title should be deleted and replaced by "Variation". Mr. SHACKLE (United Kingdom): And, similarly, Mr. Chairman, in the last line but two, where ,w suggest substituting the word "vary" for "modify. " The word "modify" seems to us rather inappropriate; it seems to suggest there should be a further reduction, whereas this may be a change either way. '"Veriation" can cover either increase or reduction, whereas "modification" seems to us rather to mply reduction. That is the reason why we suggested the change;. CHAIRMAN: The Delegate of C ine. Mr. D. Y. DAO (Chine): Mr. Chairman, there is just a point on which I should like some clarification. May I refer back to Article XXV? CHAIRMAN: Yes, but - Mr. D. Y. DAO (China): With reference to the words ''at any time"; does this refer to any time after the entry into force of the Agreement or any time after the provisional Application of the Agreement? CHAIRMAN: I think the words "at any time" -,-ply to any time the A reement is in force, whether provisionally or definitively; that is, a contracting party could withhold concessions from another country Or withdraw con at any time it saw fit, even at the aiving effectto provisional ap pliction tlme of giving effect to provisional rpplication. S P. Mr. D.Y. DAO (China): Mr. Chairman, according, to the present paper there will be an interval of about six months probably between the provisional anpplication of the Agreement and the definitive entry into force of The Agreement. It does not mean that during, the six months any contracting party who has applied provisionally can withdraw or withhold benefit? CHAIRMAN: If a country has not become or ceases to be a contracting party, then the countries which are applying the Agreement, whether. provisionally or definitively, could withold or withdraw concessions which they negotiated with that country . I take it that that is the meaning, of that Article. M.ROYEM (France) (Interpretation) Mr. Chairman, the remark I want to make concerns only the French text, The words "which has not become or has ceased to be, a contracting party" in the English text have been translated into French by a sentence which means "A government which has not in the following period adhered. to the Agreement" and this provision then would seem to be covered, not by the provisions of the Articles mentioned before, but by the provisions of Article XXXI. Therefore I think we have to modify the French text to put it into harmony with the English text. CHAIRMAN: Due note will be taken of the remarks of the French Delegate in preparing the French text. Mr. Dorn. Mr. H. DORN (Cuba): May I only ask one guestion. Does this refer also to the time during which the Agreement is open to signature? That I think is something which must be settled, be cause there is a time in . which one part of the Governments, of the States, have signed, and the Agreement is open for signature up to a fixed date, and the question is whether in the meantime this right to resort to withdrawal is legally possible. 6 E/PC/T/TAC/PV/14 CHAIRMAN: I think the meaning of the Article is quite clear because it says "Any contracting party shall at any time be free to withhold or to withdraw", so it does cover also the period when the Agreement is open for signature. The Delegate of the United States. Mr. J.M. LEDDY (United States) I should like to suggest- if the suggestion has not been already made and agreed to - that we should have for this Agreement a Legal Drafting Committee, such as we had in regard to the Charter, to go over it very carefully; we could then refer to the Legal Drafting Committee such questions as to whether the phrase in Article XXVI should be "'modification" or "variation". I have some difficulty with the word "variation" and I do not have any with "modification". It seems to me that clearly means modifying in any way, and this was used in other Articles of the Agreement, for instance in that dealing with Emergency Action. But I would like to stress the advisability now of agreeing upon a Legal Drafting Committee, to which we could, perhaps, refer some of these questions which we have just dealt with and which are difficult for us to decide here. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I do not want to press this suggestion to change "modify" to "vary". I think it is a matter of the same words meaning different things to different people. To me, "modify" implies that you have something extreme; you tone it down and make it less extreme. That is modification. To take something which is already moderate and make it extreme is not, in my mind, modification. Still, that is merely a question of taste, and I am not prepared to press my suggestion. P. 7 EPC/T/TAC/PV/14 CHAIRMAN: I would like to say a few words with regard to the suggestion of the United States Delegate to set up a Legal Drafting Committee. It had been my intention to bring this question before the Committee but I thought that the proper time to do so would be when we had completed our second, reading of the Draft Agreement and the Secretariat had then prepared a clean text. I do not think there would be anything, for the Legal Drafting Committee to work on until that stage had been reached. I would therefore suggest that discussion on this question be left over to another occasion. The Delegate of the Lebanon. M. Mouesa MOBARAK (Lebanon) (Interpretation): Mr. Chairman, I am not competent to discuss the substitution of the word "vary" for "modify", but I know that in French if, instead of "Modification" we had 'changement' this would not be good French and anyway there is a difference of meaning between those two words, I would like to have the opinion of the French Delegation on this question. M. ROYER (France) (Interpretation): Mr. Chairman, is seems that the tendency within the United Nations is, when a draft is "modified" in English to "modify" the French text accordingly, even if the Frenoh word which is used after that is not the correct one. And the only correct word in French which could appear in this draft is the word "modification". Also, I would beg the Secretariat to Change or to modify the word in French which has been translated from "Schedules" in English. The word in French appears to be "barème", but "barème" is, in French, something corresponding to what is known in English as "quick reckoning method" and therefore we prefer the word "liste". P. 8 E/PC/T/TAC/PV//14 CHAIRMA.N: The Delegate of Norway. Mr. J. MEKLANDER (Norway): Mr. Chairman, with regard to the Legal Drafting Committee for this Agreement here, I agree that it is too early for the Legal Drafting, Committee to start work, but I suppose most of us hope to be able to go home on Sunday, and it might perhaps be useful to consider the establishment of the Committee so that the Members could be prepared to work rather quickly and so that, when we come to the stage when we can let them work., they can work immediately. CHAIRMAN: It is because I wish to complete the consideration of the General Agreement as quickly as possible that I wanted to avoid a debate at this stage on the setting up of a Legal Drafting Committee. Perhaps it might satisfy the Committee if we were to approach the Tariff Negotiations Working Party to consider this question and then they might be able to suggest the composition of the Legal Drafting Committee, which would save us from having to go into this matter in detail here. The Delegate of Cuba. Mr. H. DORN .(Cuba) Thank you so much, Mr. Chairman. CHAIRMAN: Is that suggestion approved? The Tariff Negotiations Working Party will therefore consider this question their meeting tomorrow with a view to making their report subsequently to the Committee. The Delegate of the United Kingdom. Mr. R.J. SHAKLE (United Kingdom): There is not very much left for me to say, Mr. Chairman. I quite agree to the suggestion about the Legal Drafting Committee. As to my amendment, I have already "modified" it by withdrawing, it. P . E/PC/T/TAC/PV/14 CHAIRMAN: We hare another amendment of the United Kingdom Delegation in which they suggest that the words "on or after November 1, 1950" should be replaced by the words "after three years from the date of provisional application of this Agreement". The Czechoslovakian Delegation considers that mention of a date should be avoided. 10 V E/PC/T/TAC/PV/14 Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I presume we shall need to name a period if we do not name a date, and I take it that to say "three years from the date of provisional application" is probably the right sort of sense. I suppose if we definitely decide that provisional application is to take place on 1st January, than 1st January 1951 is the date we would name, but if it is preferred to say three years from the date of provisional entry into force, that is what we suggested. CHAIRMAN: I should like to point out to the United Kingdom Delegate that there appears now to be some difficulty in referring in the text of the General Agreement to provisional application, as that is no longer part of the General Agreement. It is going to be covered by a separate Protocol, and therefore as we have more or less agreed that the date for provisional application shall be January 1st, perhaps the simplest thing would be to change the date November 1st to January 1st 1951. Mr. R.J. SHACKLE (United Kingdom): Quite agreeable. CHAIRMAN: The Delegate of Czechoslovakia. Dr. Z. AUGENTHAIER (Czechoslovakia): Mr. Chairman, we propose the deletion of the first words. We are an exporting country and we are greatly interested in the stability of customs duties and so on; but, on the other hand, we recognize that today we are living in a world which is changing extremely rapidly. We have been negotiating on certain presumptions which may be entirely different in one year's time, so that is why we wish to keep open the possibility of negotiations taking place between the interested countries any moment they wish, even before the date 1st November 1950. 11 V E/PC/T/TAC/PV/14 CHAIRMAN: The Czechoslovak Delegation has proposed the deletion of the words "On or after January 1st 1951. Are there any comments on this proposal? Mr. E.L. RODRIGUES (Brazil): Mr. Chairman, I believe that Article XVIII will give to any country the possibility of avoiding the difficulty of which the Delegate for Czechoslovakia has spoken. I believe that by using this Article in such an emergency, there would be no necessity for changing the date. CHAIRMAN: Are there any other comments on the Czechoslovak proposal? Mr. J.M. LEDDY (United States): Mr. Chairman, it think it would be preferable to keep this paragraph of this Agreement intact during the first three years or its life, and I think that the amendment proposed by the Delegation of Czechoslovakia would be a rather serious one if the Committee should adopt the amendment which has been put forward by the Delegation of Australia, which would permit a country to withdraw the concession if it failed to reach agreement. In the circumstances which would confront many countries during the next three years, I wonder if there is going to be any real need to enter into tariff adjustments at the time that Dr. Augenthaler mentioned. I should suspect that many of the countries will, in any event, be influencing restrictions for in balance-of -payments reasons, and that/many countries, the tariff will not be a substantial factor in trade. I should like therefore to support the Delegate of Brazil in keeping the paragraph as it is. E/PC/T/TAC/PV/14 CHAIRMAN: Are there any other comments? Are there any other Delegates supporting the proposal of the Czechoslovak Delegate? Then I take it that the sense of the Committee is that the words "On or after January 1st 1951"should remain. There is another proposal of the Czechoslovak Delegation, which suggests the deletion of the words "...and subject to consultation with the other contracting parties which the Committee determines have a substantial interest in the trade in the product concerned...". Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, this suggestion is the same as we made concerning Article XXV, because we thought that whoever is interested will cry out loudly enough. It is not necessary for the Committee to put some nails on his chair! CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I think that after the modification which was made in Article XXV, we ought to modify Article XXVI on the same lines and adopt a formula similar to that which we have now adopted for Article XXV. In fact, if we were to support the words which the Czeohoslovak Delegation suggests, then the Article would mean that the modification could occur through bilateral agreement between the two parties, and that the other Contracting Parties which have an indirect interest would not be able to be heard. Therefore, I think that we ought to adopt a formula similar to the one that we have adopted for Article XXV and state that other Contracting Parties, upon request, will be able to consult with the Contracting Parties which have a substantial interest in the product concerned. V 12 E/PC/T/TAC/PV/14 CHAIRMAN:. Would that suggestion meet with the approval of the Czechoslovak Delegate? Mr. H. DORN (Cuba): May I only draw attention to the fact that in this case the legal situation would be that when a country thinks it has a substantial interest and is not approached, Article XXI would have to be applied? I only draw attention to the fact because I think you must know that before you decide about the modification of the wording. In order to avoid all these difficulties, the words "the Committee" have been inserted. Without these words, the real situation would be that the country which has a substantial interest and is not approached would be entitled to invoke Article XXI. I think that interpretation is correct. CHAIRMAN: Are there any other comments on the proposal of the Czechoslovak Delegation, as modified by the French Delegetion? Mr. J.M. LEDDY (United States): I wonder whether a solution could be found simply by deleting the words "which the Committee determines" and changing the word "have" to having"? There is a difference between Article XXVI and Article XXV. Article XXV permits a country to take action first: in other words to determine that a particular concession it negotiated with a country which does not become a Contracting Party will be withheld. In the case of Article XXVI, the intention is, I think, that consultation shall precede the withdrawal of the concession - that is to say, the modification of the concession. The action will not be taken first and consultation later. Therefore, I think that it would be better to adopt the amendment as suggested. V 13 14 CHAIRMAN: Are the Czechoslovak and French Delegations in accord with the suggestion of the Delegate of the United States? M. ROYER (France) (Interpretation): Mr. Chairman, could the United States Delegate read out again the proposal he has just made? CHAIRMAN: It is to suppress the words "which the Committee determines" and to change the word "have" to "having", so that the sentence would read "and subject to consultation with the other Contracting Parties having a substantial interest in the trade in the product concerned". Dr. H.C. COOMBS (Australia): Mr. Chairman, we would not wish to see those words omitted. The purpose of this particular part of the paragraph is to limit the right of other countries to hold up or delay or prevent the withdrawal or modification of the Sohedule between the countries with which they have been negotiating. It is necessary to recognize that negotiations are sometimes conducted with one country where a number of other countries -perhaps one, or a larger number - have as substantial an interest in the commodity as the country with whom the negotiations were completed, and in our opinion, other Contracting Parties who have a substantial interest are entitled to be consulted before an item is withdrawn from the Schedule, but we believe that that right should be limited to those countries which have a substantial interest. Now, in the absence of any method of determining finally what countries have a substantial interest, the procedure involved might be unduly protracted. It would be possible for any country to claim that it has a right in any concession, with E/PC/T/TC/PV/14 V E/PC/T/TAC/PV/14 whoever it was negotiated, because under the multilateral system of recording the results of these negotiations, those concessions are granted as a matter of right to all the participating countries. Therefore, any country can claim that it has an interest in any item in any Schedule, and if they wish to be difficult, it would be possible for them to hold up a modification of the Schedule by claiming an interest in a commodity, their interest in which was exceedingly remote. We were anxious , therefore, that there should be some method of setting an end to the claims of so-called interested parties, to prevent their holding up a concession of this sort, and it seemed to us that the obvious thing to do was to give the right of decision to the Contracting Parties, acting together, so that if a country claimed an interest and the country which had granted the concession did not think that that interest was sufficiently significant to give the country the right to be consulted, then it could be settled by majority vote of the Committee and you could get on with the business. We think it is important, therefore, that there should be in this paragraph a way of determining whether, in fact, a country claiming a substantial interest has an interest sufficiently substantial for the purpose of this paragraph. V 16 E/PC/T/TAC/PV/14 CHAIRMAN: The Delegate of India. MR. B.N. ADARKAR (India): Mr. Chairman, it seems to us that, in addition to the reasons just given by the Delegate for Australia, there is one further reason why the words: "which the Committee determines" should remain in Article XXVI. The situation dealt with in this Article is very similar to that dealt with in paragraph 3(a)of Article XVII, the Article which deals with Adjustments in Connection with Economic Development. Both these provisions deal with the procedure to be followed when a Member wants to vary, or modify a negotiated tariff concession. In one case, the variation is required for economic developmeont, and in the other case it may be required for any other reason, and it seems to us that it would be fair to prescribe an identical procedure for these cases. In paragraph3(a)ofArticle XVII, which lays down the procedure by which a Member could secure relief from an obligation it has incurred through negotiations with another Member, it has been provided that the necessary consultations between the Contracting Party and the other parties which would be substantially affected would be sponsored and assisted by the Committee. That being so, it follows that, so far as paragraph 3(a) is concerned, the Committee which will sponsor the negotiations will obviously decide which contracting parties would be substantially affected and which would not, because the negotiations are intended to be sponsored by the Committee. It seems to us to be appropriate that under Article XXVI also it should be left to the Committee to decide which countries have a substantial interest and which have not, because we E/PC/T/TAC/PV/14 believe that the procedure in the two cases should be identical. We would also, by supporting the Australian Delegation on this point, not like to support the further amendment which they have suggested in document E/PC/T/W/326, because that would involve a different procedure under Article XXVI as compared with the procedure under Article XVII. We think that the procedure should be the same, and if the Australian amendment in document E/PC/T/W/326 is adopted for Article -XXVI, a similar amendment would have to be made to article XVII. CHAIRMAN: The Delegate of Belgium. Mr. P. FORTHOMME (Belgium): (Interpretation): Mr. Chairman, I should like to support the proposal made by the Australian Delegation. In fact, the text which is now before us was originated by our Delegation who wished, at the time, that the Committee should sponsor multilateral consultation, while a change should be brought to the joint schedules. Therefore, we like the present text very much better because it is more elastic, and we would like it to be maintained. CHAIRMAN: The Delegate of Cuba. MR. H. DORN (Cuba): May I only point out, Mr. Chairman, what the difference between the two alternatives is. If we leave the wording as it is, then the Committee has to determine right from the beginning which are the countries having a substantial interest; if we strike out these words, then the Committee has to determine too in the case of doubt, because a country not approached, which believes itself to have a substantial interest, is entitled on the basis of 17 J. J. 18 E/PC/T/TAC/PV/14 Article XXI to first approach the country which wants to change the Schedule, and if the other country does not want to consult with it, then the Committee decides. That means that the only difference is that you have two stages of procedure instead of one stage of procedure. I only wanted to make that clear as it may, perhaps, influence the decision. CHAIRMAN: The Delegate of the United States. MR. J.M. LEDDY (United States): Mr. Chairman, we are perfectly satisfied with Article XXVI as it stands. The Delegate of Australia has given some good reasons for keeping this procedure in whereby the contracting parties acting together will determine what countries should be parties to the negotiations for modification or withdrawal. I recognise that it may involve some additional procedure, but, on the other hand, it will avoid possible disputes, and I think that that is a wise thing to do. With regard to the provision for determination by the Committee, I would say that,any country having a substantial interest in the product, if that country asserts that it has a substantial interest, then there is some danger that it may lead to disputes without this provision for settling the matter in advance. CHAIRMAN: The earlier part of the discussion of this Czechoslovak proposal seemed to be in its favour, but the latter part of the discussion has indicated that there are strong objections on the part of certain Delegations to the adoption of the proposal, and the trend of the discussion seems to be against it. J. I would therefore suggest to the Czechoslovak Delegation that we allow this text to stand as it is now, and we proceed to consider the amendment submitted by the Australian Delegation to this Article. The Australian proposal is given in document E/TAC/T/W/326, which was circulated this morning. The Delegate of India has already expressed his views Dr. this proposal, but I take it that the Delegate of Australia would wish to comment on this proposed amendment. DR. H.C, COOMBS (Australia): Mr. Chairman, this addition to the Article concerned is designed to make effective what we have always been led to believe, that is, that the Agreements that we enter into here have a time-limit of three years in respect of any commodity which we bind. If a country - and I think this is a point of very great interest to the Indian Delegation and to any other Delegation representing an under-developed country - agrees to bind an item in its Tariff Schedule in one of these Agreements, it is binding it for three years. Now, it is true that if it does not specifically take action to unbind it it continues, but the obligation that we are accepting here in respect of a tariff item is initially to bind the item at the rates set out in the Schedule for three years, and we want to make sure that, at the end of that three years when we have fulfilled the obligations which we undertook, we are free without accusation, without bad faith or without unduly complicated procedure to exercise the right which we never gave up, that is, to unbind the item after the expiration of the period for which we bound it. 19 That makes a very important distinction between the procedure which the Delegate for India has referred to in relation to Industrial Development Provisions. The provision in article XVII which deals with Industrial Development was designed to deal with a request by under-developed countries to unbind an item while it had an obligation to bind it, that is, during the period for which it had undertaken to bind the item. Now, what we are concerned with is not that, but we are concerned with making sure that, at the end of the period for which we bound the item, we are free to do what we like with it without difficulty, without charges of bad faith and without an unduly complicated procedure and, furthermore, without the danger of the whole of the Agreement which we entered into going down the drain. So, Mr. Chairman, the first paragraph of this clause clearly sets out your right to modify the Schedule, but it makes it subject ~~~~~~~~~~~~~~~ to agreement with the parties concerned. Now, we would wish, of course that any change of this sort be made by agreement, because if we wish to take an item out of our Schedule there clearly it is fair and proper that the countries with whom we negotiate should be free to make the corresponding changes in their Schedules in order to restore tWe balance. .e arelnot seeking uniateral benefits in this matter, but we would merely wish to exercise a right which we clearly have, and we want to make it quite clear that if we choose to exercise that right any country with whom we have negotiated itself is free Jo modify its Schedngly,correspondixgyn but we want ary such exercise to be limited to what is corresponding and not to be used in a punitive way. E/PC/T/TAC/PV/14 It is quite clear that we can, under the first paragraph, unbind an item after three years if the other countries primarily concerned agree. We believe that in the majority of cases there will be no difficulty. There might be a little discussion about what would be the corresponding alteration in the benefits accorded bythe other countries, but in the great majority of cases it will be possible to reach an amicable solution. But we cannot put ourselves in the position in which the other country is unwilling to reciprocate and in which a freedom which we have never given up can be taken away from us. We want to put in a subsequent paragraph which says that, if agreement is not possible after consultation has taken place, we are then free to take the item out of the schedule and do whet we like with it, but, in so doing, we recognize we must free the other parties to act in the same way. Our suggestion is subject only to the Committee agreeing that the action which they take is roughly corresponding to the cause which it is designed to meet. So, under this procedure, Mr. Chairman, the first action would be consultation with a view to agreement between the parties primarily concerned, by which we would take out of the schedule the items which correspond to such concessions as the other parties have made to us which we can agree appear to be reasonable. If we cannot reach such agreement, then we take out the items anyway. Than the other parties take what action appears reasonable to them. I think our amendment is perfectly reasonable and I think the Delegaté for India will agree with me that it is a substanitally different situation from a request to modify a schedule during the period for which the schedule was originally bound. S 21. S CHAIRMAN: The Delegate of India. Mr.- B. N. ADARKAR (India): Mr. Chairman, I thank the Delegate of Australia for the explanation he has given. Our objection arose from the fact that in Article XVII no time limit has been prescribed; in other words, that Article continues to be imposed during the lifetime of the Trade Agreement. If, however, it is understood that Article XVII is subject to the provisions of Article XXVI that is to say, if the procedure laid down in Article XXVI will apply whether the modification of schedules is desired for purposes of economic development or for any other reason - if that understanding is clearly recognized by the Committee then we will be quite prepared to accept the amendment proposed by the Australian Delegation. CHAIRMAN: The Delegate of France, M. ROYER (France)(Interpretation): Mr. Chairman, I fully recognize the value of the arguments just put forward by the Delegate of Australia, but I do not think the solution which he proposes for this problem is quite in agreement with the spirit of the Charter. . I secme to mc that the work we have done could be easily compared to knittin,, andl if we pulw the tooneat n n end, then all the knitting will come to pieces. For instance; if Countr w'B' -.ithdraws the concessi na it.hes made to Country 'a' bscouse C untry 'A' has withdrawn the same concessionn, theo other parties who are interested, not in the concesgionse-rantzd to Country 'A', but in the concessions granted to CouB'ry '3 will, in their turn, withdrew th6 concessions which thee havo themselves granaed, end nothing will remain ofAthee,grerment. 22 7/PAT/T.i/PV/14 S E/PC/T/TAC/PV/14 As I have said, I can quite well see the value of the Australian Delegate's arguments, but I wonder if we could not find a solution which would be different from the one he proposes. We could, I think, find a solution in the provisions of Paragraph 4 of Article II, which state that if a country withdraws concessions, it ought to offer concessions for an equivalent amount on another item, for instance. Therefore the balance of the concessions made and granted by the countries would not be disturbed and we could thereby maintain the minimum of concessions which appear in the present Agreement. There is another point which is troubling me. This Agreement will be signied for a period of three years, but we hope that in three years' the another step will be taken towards the reduction of trade barriers, because we do not really think that whet we have achieved here is an eternal solution for the reduction of trade barriers. But we have provided nothing for this eventuality and there is nothing in the Agreemant which would enable a now Agreement to be signed or this Agreement to be improved without denouncing the present Agreement. I think we ought, to provide here for a provision stating that nothin in the present Agreement precludes the contracting parties from entering into a new Agreement with the other contracting parties, or, as the case is stated here, to deterisate the situation prevailing at the time, but on the contrary, to improve the conditions prevailing at the time. Therefore we think the present Article should be completed by such a provision. CHAIRMAN: The Delegate of the United States. Mr. J. M. LEDDY (United.States) Mr. Chairman, I have not had an opportunity of consulting my Delegation on this amendment, which was circulated this morning, and Iwould like to do so up before we take/ a position on it. 24 S E/PC/T/TAC/PV/14 I should say that it is a rather serious amendment. It materially affects the stability of the Agreement and it does, I believe, go somewhat further then it has been usual to go in bilateral agreements in the past. Under bilateral agreements the usual practice, I think, is to make the Agreement subject to determination at six months' notice, or some short notice after the initial period, but not to permit the withdrawal of individual items. 0n the other hand, the determination of a bilateral agreement is a much less serious thing than determination or withdrawal from an Agreement of this size, covering, in the case of some countries, many hundreds of items, and I think there may be need for more flexibility then we now have in Article Without coming to any decision on the matter at present, I Wondered whether, perhaps, a suggestion along the lines of that put forward by the French Delegate would not be a better one. 25 P . E/PC /T/TAC/PV/14 CHAIRMAN: The Delegate of Norway. Mr. J. MELANDER (Norway) Mr. Chairman, I read the Australian proposal as a means of, so to say, establishing a compromise method as between the one laid down in Article XXVI and the one laid down in Article XXVIII. Article XXVIII says that on or after 1 November 1950 any party can withdraw completely on six months' notice. Now the reason why we have article XXVI relating to Modification of Schedules is, of course, to provide for a possibility of not going to the drastic step of completely withdrawing. The amendment proposed by the Australian Delegation to my mind is an attempt, to make Article XXVI more flexible in order to prevent parties, in case they do not agree, in accordance with Article XXVI, from then taking the rather drastic step of withdrawing completely. If that is the reason, and I think that is the way in which it must be interpreted, I would not consider it as being contrary to the spirit of the Agreement. I would say it would be in conformity with the spirit of the Agreement. If one is allowed to withdraw completely, and then of course be in a position of starting fresh negotiations at scratch, I think it would be useful to have a provision for not going to that drastic step. Consequently, I feel that the Australian proposal is reasonable, and I would support it in principle. I do not deny that there might be some minor change in the text, but in principle I think the amendment is sound. CHAIRMAN: The Delegate of Australia. Dr. H.C. COOMBS (Australia): Mr. Chairman, I think the Delegate of Norway has given part of the answer which I wanted to give. The proposal certainly in my opinion is not in any conflict 26 with the general spirit of the Agreement; in fact it does seem to be a very necessary one if the spirit of the Agreement is to be observed. As regards the Delegate of France's homely analogy, it does seem to me there are time when unwinding a bit of knitting is a good idea. If the pullover no longer fits, it is quite a good idea to unwind it and knit it again so that it does fit. And that is precisely the type of situation which this provision is intended to cover. That is, it may be perfectly reasonable for a country to accept a binding of certain items now, but in a few years time when its industrial developments have gone a little further, the lines may have changed and it may well want to shift the balance of its activities and change the direction of its protectionist policy, and in those circumstances it seems to me perfectly proper that it should be able to take advantage of a right which it has not given up, that is a right to unbind an item after the period for which it has agreed to bind it. That does not mean to suggest, as the Delegate of France appears to consider, that we will go on progressively reducing the scope of the Schedules. On the contrary, we hane never assumed that they were the last tariff negotiations which would take place between the countries here present and other countries. We have assumed that it would be a continuing procedure. We hope there will be a bit of a gap here and there so that we can spend so me time at home. But we did anticipate that tariff negotiations would in the future be a standard part of the procedure of the ITO and that, as a result of those negotiations, there would be a continually changing pattern in the Schedules; so that it would be perfectly possible that a country which had hold out certain items for negotiation during the period in which it was important to get the industry concerned established, would subsequently be ready to 27 unbind or reduce tariffs on that item. So there is no reason to assume, merely because you permit a country to withdraw an item at the end of the period for which it has bound it, that you are freezing the content of the Schedules with the exception of the item you have withdrawn from it. On the contrary. If, however, the Delegate of France considers it necessary to make any specific provision in the Agreement for now negotiations some time in the future, we would have no objection, though we under tand it is perfectly well catered for in the Charter at present. Any country is at liberty to negotiate if it is invited to do so. Therefore it seems to me there is ample provision for new negotiations and extension of the content of the Schedules as well as for the change in their content in the way in which we suggest. And, further, Mr. Chairman, I want to emphasise the point I started with: that is that we have been told here and we have been negotiating on the basis of the fact that any binding we undertook was a binding for three years. We do not think it reasonable that we would have to withdrew from the Agreement merely becausa we want to exercise a right on one item. In other words, what we are asking, for here is to make specific a right which I think every one of us understood we all possessed. If we cannot have such a provision, not necessarily in the words I have suggested but a provision along those lines, then, to extend the Delegate of France's metaphor a bit further, we can only conclude that somebody has been pulling the wool over our eyes. 28 E/PC/T/TAC /PV/14 CHAIRMAN: The Delegate of Belgium. M. Pierre FORTHOMME (Belgium) Mr. Chairman, it seems to me that the Australian amendment in fact just states that no-one can be forced to maintain a concession beyond the date of the initial engagement if the party wishing to withdraw the concession is willing to forego theadvantages it received for having given that concession. I have some doubt as to the necessity of making that statement. It seems to me that this principle is already in the text of Article XXVI and that to spell it out is to sound and to be unduly pessimistic. It seems to me that the fault of this amendment is that it presupposes that in three years time we will all be eager to do just one thing and that is to withdraw concessions we have given as quickly as we can and as many of them as we can. Secondly, it seems also to presuppose that any attempt to withdraw a concession will meet with unrelenting and unreasonable opposition. I do not think it will be so. I do think that if negotiations are open with the other contracting party and if the party wishing to withdraw a concession makes it very clear from the outset that it intends to withdraw this concession because it judges it is a vital interest for it to do so, then other countries will then confine their negotiations to either trying to obtain a compensating advantage or, if no compensating advantage can be obtained, to determining which of their own concessions they will withdraw as an equivalent of the advantage they are losing. In these conditions I think that it would not happen that a proposal to withdraw one or two or a few concessions of vital interest to a country would meet with unreasonable opposition from the other countries. 29 P. E/PC /T/TAC /PV/14 The only cases where a deadlock in the negotiations would occur would be if the amount of the proposed withdrawals was so considerable as to imperil the whole plan and structure of the Agreement. At that time we would find ourselves confronted by a lack of will to continue and we would probably see the whole Agreement fall to pieces; and I do not thing either the introduction of this amendment or the lack of it would prevent the agreement falling to pieces if the will to maintain it in force were absent. But as long as the will to maintain the Agreement is existent, I am perfectly certain that, with the present text, it would be possible for any country to withdraw any concession which is of vital interest to it. 30 CHAIRMAN: The Delegate of Syria. M. Hassan JABBARA (Syria ) (Interpretation): Mr. Chairman, the Agreement and the tariff negotiations which are part of the Agreement are valid for three years. After a period of three years, the States concerned may wish to be free again or to maintain the Agreement in force. Article XVII provides for modifications of the Agreement during the period of application of the Agreement, if the economic conditions of the country requesting a change warrant such a modification of the Agreement. Article XXI provides also for adjustment in case of the default of one of the Contracting Parties during the period of application of the Agreement; but what the Agreement does not provide for is an examination. Once the period of three years has elapsed, there should be an examination of the general situation, to consider the results of the Agreement during this three-year period and to start new negotiations taking into account the benefit of three years' experience and also considering the conditions prevailing in the countries taking part in the Agreement at that time. I would suggest, therefore, that Article XXVI be modified to include such a provision, stating that after three years, new negotiations will take place and that in these negotiations the modifications in the condition of the Contracting Parties will be taken into account,and that the tariff negotiations will be reviewed and readjusted in the light of the conditions prevailing at the time. Such a provision would, in my opinion, avoid a country taking such a drastic step as is provided for in Article XXVIII, and therefore, after negotiation with the other interested party, a country will be able to say whether it determines to stay within the framework of the Agreement or E/PC/T/TAC/PV/14 /Il Al V 31 E/PC/T/TAC/PV/14 to withdraw from the Agreement. CHAIRMAN: The Delegate of Czechoslovakia. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, in principle I would like to support the opinion of the Australian Delegation, because I think that it is wise and that it corresponds to the realities of life. As the Agreement stands, it would mean that if any country would like to withdraw some concession the country concerned (I am speaking only of after 1950) would either have to quit entirely, or set in motion a general customs war. In this case, I think the role of the substantially interested countries would be the role of the Irishman who, seeing some men fighting in the street, asked "Is this a private fight or can anyone join in?" Well, as to the third or, as we call them, substantially interested countries, they paid for certain concessions, and I suppose that the negotiations were equitable. If I negotiated with Country A, I gave certain concessions and I got concessions and there should be equity in those concessions. The same applies to Country B. Now, if I withdraw a concession from Country A, I agree that Country A should be entitled to withdraw his concession too; but I do not see why Countries B, C and D should withdraw their concessions, because they did not pay for the concession I gave to Country A. To arrive at a just solution, I would suggest that instead of "provided that the Contracting Party having a substantial interest" we put "provided that the Contracting Party wvith which such treatment was negotiated". This would stop the further withdrawal of concessions. No customs war would be set in 32 V E/PC/T/TAC/PV/14 motion, and the third substantially interested parties would be free to negotiate with the country withdrawing the concession, on the assumption that they are willing to give to this country some concession, because otherwise there would be no equilibrium in the concessions. CHAIRMAN: The Delegate of the United States. Mr. J.M. LEDDY (United States): Mr. Chairman, I think there is truth in what has boon said by the Delegate of Australia and the Delegate of France, and I was wondering if we could not, in some way, put their two suggestions together and perhaps arrive at a solution. What I had in mind was that we might perhaps add to the existing text a provision that in the negotiations the Contracting Parties concerned could endeavour to maintain a general level of mutually advantageous concessions which would not, on the whole, be less favourable to trade than those provided for in the Agreement now, and then go on to say that if, however, agreement, cannot be reached, the country desiring to withdraw an item from the Agreement may do so and the other country may suspend equivalent concessions. I think that would keep before us the objectives of the Charter to achieve a substantial reduction of tariffs, and, at the same time, permit the necessary flexibility for withdrawing individual items as an alternative to complete withdrawal from the Agreement. CHAIRMAN: The Delegate of the United Kingdom. Mr. R..J. SHACKLE (United Kingdom): It seems to me that Mr. Leddy has suggested a possible happy solution, and I would like to suggest that it be carefully gone into. E/PC/T/TAC/PV/14 CHAIRMAN: The Delegate of Cuba. Mr. H. DORN (Cuba): Mr. Chairman, I would also be grateful to have again the text of the proposal made by the United States Delegate, because I think that there are two very valuable ideas contained in this proposal. If we change the words "having a substantial interest", I think that we have to take into account- and that was the real reason of the proposal made by the Australian Delegation--the multilateral character of the negotiations, because I think that a country will have taken into accout not only the direct concessioins made in the negotiations with the other country, but also the indirect concessions made by the same country to third countries. Therefore, I think that if there is a change in the Schedule, then the countries which made concessions based on the concessions which the other party gave to a third country, have to ask if the equilibrium is maintained or not in relation to the country which withdraws the concession, or if there is anything to be done in order to re-establish the equilibrium. But I think that this point may be cleared up easily, and that we cannot only limit the action to the country directly negotiating the product in question. This last point can, I think, also be taken up in the proposal made by the United States Delegate and,therefore, I think it would be very useful to have his wording before us in order to decide about the Australian Delegate's proposal. CHAIRMAN: The Delegate of Australia. , Dr. H.C. COOMBS Alustralia): Mr. Chairman, if I understood the United Staecs Delegate's suggestion properly, it would mean that in the first instance, the country wishing towiwthdraw i V 34 E/PC/T/TAC/PV/15 an item would seek to restore the balance by adding an al ternative concession rather than asking its opposite number to withdraw, and we would agree heartily that that would be a desirable procedure, and I think that the deletion of some words of the Rind suggested by the United States Delegate would probably me et the situation, provided that the provision which we suggested to the same effect followed on, to make it clear that if a deadlock did occur, it could be resolved. I would like to emphasize, in view of what the Belgian Delegate said, that we are not anticipating such deadlocks in fact, we do not expect that they will ever occur; but we think it is bad constitutional practice not to provide for the pesuibility of deadlocks, and for their being resolved. I think, Mr. Chairman, that a solution to this problem can be found along the lines suggested by the United States Delegate, 35 J. E/PC/T/TAC/PV/14 CHAIRMAN: It seems that we are on the road to attaining agreement on this question. What is necessary is that there should be further explanation of the various ideas which have been put forward at this meeting. Therefore, I think that the best procedure would be to set up an ad hoc sub-committee to consider the question, I should like to know if the Committee is agreeable to this proposal. Are there any objections to the setting us of a sub-committee? I would therefore propose that the following Delegations should comprise an ad hoc sub-committee to give further consideration to the Australian amendment in the light of the discussion which has taken place at this meeting:- The Delegations of Australia, Belgium, Czechoslovakia, France, India, Norway and the United States. I would like to nominate the Delegate of India as Chairman of this sub-committee, the sub-committee to meet tomorrow morning at 10.30. Are there any comments? The proposal to set up a sub-committee is approved. We now pass on to Article XXVII - "Amendments". We have the amendment of the Australian Delegation, which is given in document E/PC/T/TAC/323. providing for a new text to replace paragraph 1. At the same time, we might give consideration to the proposal of the United Kingdom Delegation that paragraph 1 could be detached from the rest of the Article and made into a new Article with the title: "Suspension and Supersession". MB. R.J. SHACKLE (United Kingdom): Mr. Chairman, our amendment is obviously not one of substance at all, it is purely a matter of arrangement. Our feeling is that the first paragraph, which deals with supersession by the Charter, is quite a distinct matter from the other. E/PC//T/TAC/2V/14 miscellaneous amendments which might be thought desirable in this Agreement, and we feel that that justifies having two separate Articles. We would propose that paragraph I should be kept in one Article with the title: "Suspension and Supersession", while the remaining paragraphs should be a new Article headed "Amendments". That involves one consequential amendment, namely that in the second line of paragraph 2, after the words "provisions of this Article", one would add "or of article XXVII". As I say, this is not an amendment of substance, it is purely a matter of arrangement and clarity. CHAIRMAN: Are there any objections to the proposal of the United Kingdom Delegation? There being no objection; we can take it that the proposal of the United Kingdom Delegation is approved. We can now pass to the consideration of the draft amendment submitted by the Australian Delegation for the revised text of paragraph 1. Are there any comments on the Australian proposal set forth in document E/PC/T/T/W/323. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I must confess that there is one point on which I have some doubts, although I think we entirely agree with the general scheme of this suggested Article. We have certain doubts about the opening words of paragraph 2. You will see that in the General agreement it says that if there is an objection by a contracting party then there is to be consultations between the contracting parties, but the opening words of paragraph 2 J. 37 J .E/PC /T/TAC/PV/14 say that that meeting with the contracting parties shall only happen within the sixty days after the necessary 20 ratifications, which are required to bring the Charter into force,have already been deposited. Well, by the time that that has happened the situation would, so to speak, be no longer fluid, and the judgement of the contracting parties would be lessened. It does seem to me that that may have a number of awkward consequences and, amongest others, it may have the effect of delaying the ratification of the Charter, because it may well happen that a contracting party may have certain doubts about the changes that have been made and it may wish to get the views of other contracting parties. Having done that, it would be in a position to decide what it would do about ratification, whereas, if there had been no such discussion, it may feel thai the wisest plan would just be to sit back and wait and see what other countries do, and if you get a lot of countries doing that it may mean that the Charter will not come into force, or that its entry into force will be quite considerablly delayed. For that and other similar reasons, my feeling is that it is not advisable to prescribe that this meeting shall be delayed until the ratification of the Charter has come in. I suggest that we should say-something like this:. First of all, you have the sixty days within which the objection has to be made; then, within a further sixty days there shoul be a meeting of the contracting parties to discuss the situation, and I think one might possibly wind up by saying that in any event there shall be a meeting within the sixty days after the 20 ratifications have been deposited, and that at that meeting some unanimous or definite decision will have to be reached. That is rather the scheme that I would suggest. J. E/PC/T/TAC/PV/14 The provision leaves over the meeting until the 20 ratifications have already been deposited, when it necessarily follows that the Charter will come into force. It may have some very unintended consequences, I think. I would just like to make a small suggestion as to a draft which, I think, would give effect to my point. The first paragraph would consist of some such words as this: "Thereupon within sixty days following the notification of the objections the contracting parties shall meet to consider the situation" and you will then add, at the beginning of paragraph 2, which would otherwise remain as it is "In any case, this objection has been raised under paragraph 1" and then go on as before with "within the sixty days days..... etc.". The effect therefore, would be that, if there is an objection,there would be a meeting of the contracting parties within two months to consider the situation but, in any case, if the matter has not been cleared up in that way then there will have to be a meeting after the 20 ratifications have been deposited to come to some definite decision. That would be my suggestion. CHAIRMAN: Are there any other comments? The Delegate of New Zealand. MR. L.C. WEBB (New Zealand): Mr. Chairman, I just wanted to raise a point of procedure, which I think possibly is not really important, that is, you say the Australian amendment says any contracting party may object. Now, it seems to me that two questions arise there. The first is to whom does the contracting party object? where does it lodge its objection? The second question is, when an objection has been lodged, to whom is the objection circulated? I would assume that it would be circulated 38 39 J. E/PC/T/TAC/PV/14 to the countries which are signatories of the Final Act, but I would like those points cleared up because it seems to me that it is desirable if this amendment is adopted, to change or give that part of it a greater precision. This also, to my mind, raises a question which arises in connection with many of the Articles of the General Agreement, and it is a question which it may not be appropriate to raise at this moment, but it is simply this: that the General Agreement has imposed upon the contracting parties a whole series of highly important duties which are, in effect, the duties - or correspond to the duties - which will be discharged by the Organization under the Charter, and yet there is no provision for regular meetings of the contracting parties. 40 S E/PC/T/TAC/PV/14 We do not know who summons the meetings. What is more important: it would appear that no provision has been made for any sort of Secretariat and I find some difficulty in envisaging how a Secratariat would be provided. As I say, I do not know whether this is the appropriate place to raise this particular question, but I feel it is a matter which we shall have to consider at some time in these deliberations on the General Agreement. is CHAIRMAN : This question/really covered by Article XXIII, which we considered the other day, and during the course of our discussion the United States Delegation agreed to submit a re-draft of this Article in the light of the general agreement which had been reached in the Committee to replace the word "Committee" by the words "contracting parties." If the Delegate of New Zealand will refer to Aticle XXIII he will see that in Paragraph 2 the position is met, by saying: "The Secretary General of the United Nations is hereby requested to convene the first meeting of the contracting parties." No at doubt that first meeting the contracting parties will take whatever steps are needed to settle such questions as future pro- cedure, Secretariat, and such other arrangements which may be necessary for them to carry out their functions during the very short time in which it is envisaged that it is necessary for joint action to be taken by the contracting parties, because in Paragraph 7 of Article XXIII provision is made that as soon as the International Trade Organization has been established and is capable of exercising its functions, the contracting parties may discontinue the meetings provided for in Article XXIII and may transfer to the Organization the function of giving effect / _ 1 - - '- 1 .s S 41 E/PC/T/TAC/PV/14 to the provisions of the Agreement. In other words, once the Organization is in being, the Tariff Committee considers it will be the Organization which will undertake those functions. The Delegate of Chile Mr. F. GARICA OLDINI (Chile)(Interpretation): Mr. Chairman, I Acar that the Australian amendment would only lead to the result that you would never be able to replace the Articles of the Agreement by the Articles of the Charter once the Charter is adopted, and I do not see how this agreement will function if the substitution of these Articles is impossible. I think the remarks made by the New Zealand Delegate are quite pertinent ones and that one would be, in fact, creating a second small organization at the side of the ITO. If we request here unanimous agreement for the substitution by the Articles of the Charter for the Articles of the Agreement, it may be a very elegant way, but indeed a roundabout way, of introducing the right of vote, The veto was eliminated in the Economic and Social Council, but here we are introducing this right of vote within the Committee, except of course, that the Committee is not called a Committee any more, but is only called "the joint action of the contracting parties," and the word "vote" is obviously not mentioned. But if it only requires one voice to prevent the substitution, then I think we will have, to all eternity, the Articles of the Agreement and not the Articles of the Charter in Part II. Therefore it seems to me it would be more logical to follow the suggestion of the New Zeland Delegate and provide for a Secretariat, maybe a budget, and maybe other things also, so that we can have the Agreement functioning properly. 42 E/PC/T/TAC/PV/l4 I would like to state now that the Chilean Delegation cannot accept the text of this amendment, and I wonder if all the Delegations here are ready to accept such a text, It seems to me it is only logical that the text which we adopt should, on the other hand, be in accordance and in harmony with the purposes for which we gathered here. I believe those purposes can only be met if we adopt the principle of automatic substitution. Any other device might be very ingenious, very clever, but it could only load to the result that the Articles of the Agreement will never be replaced by the Articles of the Charter. Therefore, Mr. Chairman, if the interpretation I have given is the correct one, the Delegation of Chile will never be able to accept this amendment. CHAIRMAN: The Delegate of India. Mr. B. N. ADARKAR (India): Mr. Chairman, we have to con- sider, under this Article three types of amendment. It has been suggested by the Tariff Negotiations Working Party that amendments to Part I of this Agreement should be effective only by the unanimous consent of all the parties. The Indian Delegation would be quite prepared to accept that decision. Another type of amendment would be to go forward with the replacement of Part II of the Agreement by the Articles of the Charter, and the third type of amendment would be all other amendments which do not conform to the description of the first two types of amendment. As regards the replacement of Part II by the provisions of the Charter, that is an amendment which requires special treatment for two reasons: in the first place, Part II involves obligations which are substantially different in nature from the obligations 43 S E/PC/T/TAC/PV/ 14 involved in tariff concessions. Secondly, tariff concessions cannot be withdrawn except by unaimous consent, but, so far as the obligations laid down in Part II are concerned, they raise wider issues of commercial policy and therefore unanimous consent should not be required in respect of those obligations. Moreover, by the time the replacement question would arise, something may have become known about the fate of the Charter. If the ITO Charter is adopted a.t the World Conference, and if the contracting parties accept the ITO Charter by joining the ITO, then presumably they should have no objection to the replacement of Part II by the Charter. Therefore a somewhat easier procedure should be adopted, so far as the replacement of Part II be the Charter is concerned, than the procedure indicated for changes in Part I of changes in the tariff concessions. We thought the Australian Delegation was in favour of providing for a simpler procedure for replacement of Part II by the Charter and we would therefore like to be sure that the amend- ment suggested by them is consistent with their intention. It seems to us, on reading this amendment - and I speak subject to correction - that if any of the contracting parties objects to any provision of Part II being replaced by the corresponding provision of the Charter, and if such a contracting party maintains the objection throughout the deliberations which will follow, the replacement cannot come about: that is to say, that any of the contracting parties can exercise a veto on the replacement. If that is the intention, the result is that the procedure suggested by the Australian Delegation would make replacement far more difficult than the procedure suggested by the Tariff Negotiations Working Party, and that is a position which we consider to be most S E/PC/T/TAC/PV/14 inconvenient. It would place the country objecting to replacement in a more favourable position than the country which desires the replacement. A country which wants the existing provisions to be maintained can maintain its objection throughout and thus block the replacement. On the other hand, a country which wants replacement has only one alternative, namely, to withdraw from the Agreement. That alternative is open to it only if the country has not given definitive application to the General Agreement, but such a country will not know whether or not replacement is going to come about until 60 days have elapsed after the ITO Charter comes into force; therefore a country which wishes Part II to be replaced by the Charter will have to delay its definitive application of the General Agreement until 60 days have elapsed and until further consultations have taken place. That places a country which wants the replacement to come about in a less favourable position than the country which is objecting to the replacement by the Charter. Secondly, it is this Article of Amendment which will determine the relation between the General Agreement and the ITO Charter. Anything is said in the Australian amnendment as to whether contracting parties will or will not join the ITO Charter. If it is to be understood from the terms of the Australian amendment that Part II will be suspended and superseded by all the provisions of the Charter, then we have to provide for a situation in which a contracting party may be prepared to accept all the provisions of the Charter which is eventually adopted which correspond to the provisions at present included in Part II but may have difficulty in accepting other provisions of the Charter and may, for that reason, have to keep out of the ITO. 45 In such a situation I do not understand what will happen. If any of the contracting parties fails to join the ITO, not because it has any difficulty in accepting either Part II of the General greement or the corresponding provisions of the Charter which will be eventually adopted, but because it has difficulty in regard to other provisions, is it to be understood that such a country will be forced to withdraw from the Agreement? I do not know what the answer is, but we should like to have clarification on the point. This difficulty does not arise in the original draft, which states that the question of supersession of Part II of the ITO Charter will not arise unless all the contracting parties have become members of the International Trade Organization. If any of the contracting parties does not join the ITO then the replacement will come about by the process of amendment, indicated in paragraph 2 of Article XXVII. We would therefore like to have clarification of this point. We, for our part, were quite happy with the existing draft, with the draft suggested by the Tariff Working Party, subject to certain amendments. We proceeded on the understanding that if all the contracting parties joined the ITO there should be no difficulty in replacing Part II by the Charter: we would prefer "by the corresponding provisions of the Charter" but we would be quite prepared to accept any other alternative which meets with general agreement. But some discretion should be left to the contracting parties. It may be possible to make some provision for a fresh review of the position, but the provision should not be quite as rigid as that in the original draft, and we therefore proposed that the decision at the time of such a review should be taken by a simple majority and not by a two-thirds majority. That was the main amendment which we have suggested and we think that, with that amendment, the procedure for replacement P. P. 46 E/PC/T/TAC/PV/14 would, be simple enough and would not give rise to the sort of difficulties we feel about the Australian amendment. However, it may be that, in view of the positive assertions on the part of the Australian Delegation on earlier occasions, they would favour automatic supersession of Part II by the Charter. We were somewhat puzzled by the terms of the amendment proposed by them and would therefore like to have clarification as to whether or not our understanding that this amendment makes supersession much more difficult than the provision indicated by the Tariff negotiations Working Party is correct. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, may I state that we have devoted many hours to discussing this question of trying to find a solution to this very thorny problem in this Working Group, but I think it is impossible to find a solution which would satisfy everyone. We had the feeling that we could not accept or come to a solution with the conviction that this was the perfect solution. The Working Party envisaged a certain number of solutions, and a form which would be given to those solutions, but, after pondering them, they did not find one of the solutions which had been envisaged satisfactory. I would like to point out to the Indian Delegate, in reference to the remark he made that it is possible for a contracting party to the Agreement to stay outside of the ITO, that this is a solution which will not occur, because the Preparatory Committee has provided that the benefits and the advantages granted to a contracting party should be withheld if the contracting party did not join the ITO. E/PC/T/TAC/PV/14 M. ROYER (France) (Interpolation in English): No, I did not say that. I said that the Preparatory Committee submitted three alternative solutions, one of which provides.... (Interpretation, continued): .... The Preparatory Committee submitted three alternative solutions and in one of these solutions it is provided for that the benefits and advantages of the concessions should be withheld from a contracting party which did not join the Organization, and there- fore there would be a contradiction to think that a contracting party could not or should not join the ITO. Therefore, the solution which was proposed by the Indian Delegate cannot be a complete one. Now,if we come to the Australian amendment it seems that the Australian amendment has some good points in it but also it tries to solve a problem which has no solution, like the problem of squaring a circle. I would like here to draw the attention of the Chilian Delegate to the fact that, in spite of appearances, it seems that the Australian amendment trios to avoid the use of veto and in fact deletes the use of a veto right, because when will these provisions function? We have two cases in history where a condition of unanimity is requisite; that is first in the case of a jury and secondly in the case of a conclave which proceeds to the election of a Pope. This condition of unanimity seems illogicaI in itself, but nevertheless thus two bodies do function properly, and juries give their opinion on matters which are submitted to them, and also Popes have always been elected up to this day, and I do not see here why this same provision should not function properly here. If in a jury there is one dissentient voice raised nevertheless it is not this dissentient voice which carries the day, and in a conclave it is the same 47 P.48E/PC/T/TAC/PV/14 thins and it is not the voice of the dissenting Cardinal which also carries the day for the election of the Pope. I am certain that the same would apply here and that one dissentient voice within the contracting parties acting jointly would not carry the day. Therefore I think that, in spite of appearances, it would be best for us to adopt the Australian amendment and I think that all the cases which might eventually arise will not happen, and I hope and believe that the Charter which will emerge from the deliberations of the Havana Conference will correspond in fact to the text which we have now before us and to the Charter which was adopted in Geneva. P: 48 49 CHAIRMAN: The Delegate of Syria. M. Hassan JABBARA (Syria) (Interpretation): Mr. Chairman, the Syrian-Lebanese Delegation have spoken more then once on this point are shown their desire to see the provisions of Part II replaced automatically by the provisions of the Charter when once the Charter is adopted, and on this point we find ourselves in complete agreement with the statement made by the Chilean Delegate. I think that the form of unanimity which is provided for in the Australian amendment cannot work in the way it is put forward hare, and if this form of unanimity were to be adopted, I think that it could only work in the opposite way that is to say, that unanimity would be required if the principle of automatic substitution were adopted, and so to modify this principle. If this amendment were so modified, it would cover our wishes; otherwise, we have to agree with what the Chilean Delegate said, that is, that this amendment would loud nowhere and, in fact, would lead to no substitution of the provisions of this Agreement. I do not think that the comparison which was made by the French Delegate could sway our decision, because if we consider the election of the Pope, it is possible that a dissenting Cardinal might be swept away by the Holy Spirit, and, on the other hand, within a Jury one dissenting member may be convinced by his colleagues and may be reasoned with so as to see the truth. But here we will have representatives of important interests discussing and perhaps clashing with other representatives of important interests of other States, and I do not think that they could always be convinced by the arguments of the opposite parties. On the other hand, in many cases they may wish to maintain their E/PC/T/TAC/PV/14 V E/PC/T/TAC/PV/14 position and only consider the interests of their own States and their own trade. I doubt, therefore, very much whether this principle of unanimity could work harmoniously. Now, coming to the amendment itself, it seems to me that paragraph 3 of the amendment ought to be modified so as to clarify the whole amendment. We read "On November 1st 1948, or such earlier date as may be agreed, should the Charter not have entered into force, the contracting parties shall meet to agree unanimously whether the General Agreement should be amended, supplemented Or maintained". This is not what the amendment ought to state. It ought to state that the contracting parties should gather to review the situation in the light of the decision made at the Havana Conference regarding this Charter, and not to decide unanimously whether the General Agreement should be amended. CHAIRMAN: The Delegate of Australia. Dr. H.C. COOMBS (Australia): Mr. Chairman, I have listened with consideraable interest to Mr.Jabbara and, other Delegates, as a result of which I do not feel so proud of this draft as I did when I started. A number of points have been raised, some of which I feel to be valid criticism. I think the New Zealand point that it should be clear from the text where objections are to be ledged and who should be notified of those objections is one which should be covered in the draft, quite clearly. With regard to thepoint raised by the United Kingdom, it would be desirable have a meeting as soon as objections have been lodged, without waiting for the period which we refer to in the second paragraph, I am. less certain about that, but I think V 50 E/PC/T/TAC/PV/14 perhaps there may be something in it . The reason why we suggested that consultation should take place in the period of sixty days after the deposit of instruments of acceptance by twenty governments is that it is only when twenty instruments of acceptance have been deposited that you know that the Charter is going to come into force, and it seemed to us to be a bit academic to be considering what you should do about objections to the Charter replacing provisions of the Agreement if you did not know whether the Charter was in fact going to come into force or not . But, at the same time, as the United Kingdom Delegate has pointed out, the content of the Agreement may be one factor influencing a country deciding whether it will in fact deposit an acceptance to the Charter, and it may be desirable, therefore, to allow for consultations to take place at any time after the closing date for objections. I think that could be obtained just by deleting the first three lines and a bit, of paragraph 2, and inserting the word "thereuponon", which would enable the contracting parties to confer at any time it was convenient, so to speak, after the closing date for objections, but before the Charter in fact came into force . The Delegate of Chile raised objections to the inclusion of the word "unanimous" in these two paragraphs. I agree that the appearance of that word is perhaps a little unfortunate, but my understanding of this is that you cannot have an Agreement of this sort unless all the parties to it consent to what is in it. If they do not consent to what is in it, they will not become parties. I think that some of the difficulties felt by the Delegate of 51 V E/PC/T/TAC/PV/14 Chille and. also some of those felt by the Delegate of lndia, will be removed if I explain what sort of procedure I had in mind when we prepared this draft. It seems to me that the first part of the first paragraph makes it clear that s supersession by the provisions of the Charter would be automatic, and if nobody objects, the Charter provisions take the place of those of the Agreement. Now, supposing somebody objects: then, it seems to me, you have a meeting at which the objector has to explain why he does not think the relevant provision of the Charter should take the place of the provision of the Agreement. The onus of proof is on him, and if he is in isolation - if he is the only one who is not prepared to accept the provisions of the Charter, then -unless, of course, he is a very important Delegate- the outcome will presumably be that he will have to make up his mind -that is, his Government will have to make up their mind- whether they accept the Agreement with the supersession of the clause from the Charter, or whether they stay outside the Agreement. Or, at any rate; he would have to persuade a sufficient number of the others to agree to his proposal, whatever it was, for them to be unanimous and for the remaining minority to be faced with the choice of joining or getting out. Therefore, the use of the word "unanimously", as we saw it, merely recognized the fact that you cannot have an Agreement of this sort to which all the contracting parties are not unanimously consenting,--perhaps unwillingly in some instances, but still consenting--to the content of the Agreement, because if they do not consent, they will stay out. I may say that in the original wording of this, the word "unanimously"did not occur, but was put in at the request, I think, of the French Delegation, who drew attention to the 52 V 53 E/PC/T/TAC/PV/14 necessity to recognize the facts of life. The other point that the Indian Delegate raised I do feel some more concern about, and that was when he drew attention to a confusion which I think is a real confusion in this draft, as to two problems associated with the relationship between the Agreement and the Charter. The first is that the provisions of the Agreement are narrower than the provisions of the Charter, and one of the concerns of some of the Delegations here (including my own) has been to ensure that all countries party to the Agreement accepted the other obligations which are incorporated only in the Charter. If there were no Charter, then presumably we would look to an extension of the Agreement, so that it incorporated at least the essential provisions relating to employment, industrial development, commodity policy and so on. On the other hand, there is the question of the precise form of the commercial policy provisions in the two documents and the problem arises as to whether it is practicable or desirable to have two sets of provisions relatings to commercial policy, one in the Agreement and one in the Charter, which are not identical, and that is a slightly different question. I think it is possible to have two different sets of provisions provided they are not in conflict. It would be possible for the parties to the Agreement to perhaps agree on a somewhat closer set of provisions than it was possible to give the General Agreement, and that would not necessarily be objectionable; but again it would be essential that the onus of proof that a closer set of provisions was necessary or desirable in the agreement should be on those people who are dissatisfied with the provisions of the Charter. V V 54 E/PC/T/TVC/PV/14 The substance of what I had to say, Mr. Chairman, indicates, I think, that in certain respects, at any rate, the draft which we have put before you is less than satisfactory, although I do believe that the main principles underlying it--i.e. that in the absencee of objection, supersession of the provisions of the agreement by those of the Charter should be automatic and secondly, that the onus of proof should be on the objector, and thirdly that in the event of objection the parties should meet and confer, and that the result should be something to which all the parties who remain parties to the Agreement do concur in- are, on the whole, sound; but if I can make a suggestion, Mr. Chairman, we would be grateful if the Committee would give us another try at this - not necessarily by ourselves - but perhaps in consultation with other Delegations interested because we feel that there are changes which could with advantage be made in this draft. E/PC /T/TAC/PV/14 CHAIRMAN: The Delegate of Cuba. Mr. H. DORN (Cuba): Mr. Chairman, I fully agree with the proposal to review the formulation in the light of the discussion. Therefore, I only want to add a few words about the legal situation as it stands based upon the formulation before us, If you apply the general rules of interpretation accepted in international law, you come to the following conclusion: paragraph l contains the automatic supersession, Therefore, there must be a special clause for the consequence if there is one objector, and the natural consequence in international law would be that there must be a decision about the objection, and only about the objection. That would man that the second paragraph would have to state that you may retain or amend the clause of agreement by unanimous decision, but if you cannot get unanimous decision then the principle as stated in paragraph I would be valid. . This interpretation is onlmaredo doubtful bone woBard contained in paragaph 2 in the words which you find he:e " . shall be superseded, retained or anekd"do If you strike out the word "superseded", then, practically, the interpretation which I gave would follow the lines of the rules generally accepted in interti tonal law. That is the first point, and the second point that I want to add is that there will be a great difficulty, if you do not accept' the superseislon because the clauses of the Charter would be international obligations between the mane contracting parties covering the same field, and the general rule of international law as that subsequent obligations supersede prior international obligiteons between theameae parties if they cover the same field. 55 56 I do not really see, up to this moment, how, without a special clause contained in the Agreament, you could avoid this legaI consequence, and I only wanted to state these two points for the reconsideration which is going to be made of the proposal of Dr. Coombs. CHARMAN: The discussion which has taken place on the Australian amendment has enabled certain delegations to point out objections which they have to the Australian draft. Dr. Coombs has recognised the validity of certain of these objections, and has asked for the opportunity of submitting a revised proposal in the light of the discussion which taken place here. I think that the Committee would wish to grant this request of the Australia Delegation. I therefore suggest that we defer further consideration of the first paragraph of Article XXVII until the Australian Delegation has had time to submit a revised draft. I therefore propose that we adjourn the discussion now and that tomorrow we shall take up the othe r paragraphs of Article XXVII. Is tha t proposal agreed? Agreed. The meeting is adjourned until 2.30 p.m. tomorrow. The meeting rose at 6.25 p.m. E/PC/T/TAC/PV/14
GATT Library
tm581yz8190
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fourth Meeting of Commision A held on Wednesday, 28 May, 1947, at 3 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, May 28, 1947
United Nations. Economic and Social Council
28/05/1947
official documents
E/PC/T/A/PV/4 and E/PC/T/A/PV.3-6
https://exhibits.stanford.edu/gatt/catalog/tm581yz8190
tm581yz8190_90240063.xml
GATT_155
12,591
76,126
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/4 28 May 1947. SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FOURTH MEETING OF COMMISION A HELD ON WEDNESDAY, 28 MAY, 1947, AT 3 P.M. IN THE PALAIS DES NATIONS, GENEVA. M. MAX SUETENS (Charman) (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). NATIONS UNlES (Begium) S - 2- E/PC/T/A/PV/4 CHAIRMAN (Interpretation): The Meeting is called to order, We will go on with the discussion of Article 13. I would remind Delegates that this morning we said we would discuss the question of whether we should approve the principle explained by the Delegate of Chile, that is to say, to consider Article 13 as an Article of principle, with as few rules of procedure as possible and those very flexible; or whether we should accept the idea expounded by the Delegates of Australia and the United Kingdom, to have a more speedy but at the same time a more precise procedure on Article 13. Does anyone wish to speak? M. Jean Jussiant. Mr. JEAN JUSSIANT (Belgium) (Interpretation): In New York, Mr. Chairman, I was somewhat frightened by the length of the text of Article 13 and if we were now dealing only with the question of form I would prefer the form given to this Article by the Delegations of Chile and New Zealand, which is more concise. But we are not dealing only with the question of form and the disadvantage I see in the text presented by these two Delegations is that, according to the idea expressed, a country who wishes to impose restrictions can do so prior to any con- sultation. This, in my opinion, is very dangerous. We have been very careful in the Charter to fix very strict limits to the restrictions which may be put on trade, and the limits apply to situations which are very clear in effect, such as a lack of equilibrium in the balance-of-payments, and so on. In the position in which we arc now, the situation is not of the same kind as the one I mentioned and it would be very difficult to fix a limit to the restrictions. Therefore S - 3 - E/PC/T/A/PV/4 I would rather support the proposals made by the Delegations of the United Kingdom and Australia. Their two texts are in any case not very different from each other and I think it would be comparatively simple to harmonize them in a single text. CHAIRMAN: The Delegate for Canada. Mr. J. J. DEUTSCH (Canada): Mr. Chairman, in this morning's discussion I was impressed by the concern of various Delegations regarding the possibilities of delay under the operations of Article 13. I feel that the proposals put forward by Australia and the United Kingdom are very constructive in the direction of making Article 13 more effective for its purposes and therefore I would like to support in principle the proposals put forward by Australia and the United Kingdom. CHAIRMAN: The Delegate for China. R.hs i. A.,) ,hi k w.na): Mr. Chairman, I wish to raise a point of order because, in the opinion of the Chinese Dele- gation, the Chinese proposal is the farthest from the original text, so we believe that the Chinese proposal should be put to the vote first. CHAIRMAN (Interpretation): I will answer the Delegate for China by saying that we are not at present voting out only discussing. I also believe that it would be useful to add the Chinese amendment to our discussion and, as a matter of fact, it was Mr. Helmore himself who mentioned the Chinese amendment this morning, so I think we could also discuss this amendment. - 4 - Dr. J.E.HOLLOWAY (South Africa): Mr. Chairman, in the course of the discussion this morning it seemed to me that quite possibly certain Delegates were at cross purposes with each other about the meaning of the New York Draft of Article 13. I think perhaps if I put a very simple question about that, it would resolve this. My question is this - I am still referring to the main New York Draft which it is proposed to amend; that draft uses the words, in line 4 of Paragraph 2 (a ): "would conflict with any other provision of this Charter": now would those words moan that there are any circumstances whatever in which a Member is bound to inform the Organisation every time it imposes or increases an unbound protective duty? I think If that question could be resolved, the conflict there seemed to be this morning would be dissolved. S - 5 - E/PC/T/A/PV/4 CHAIRMAN (Interpretation): I do not think that the time has come to raise such a question and I have in any case no qualification to answer it; but, speaking for myself, I would say that I do not believe that each time a country intends to raise a duty which is not consolidated it has to consult the Organization. We pursue the discussion. Is there anyone who wishes to speak? Dr. H.C. COOMBS (Australia): Mr. Chairman, it seems to me that the critical issue involved in the amendments which have been submitted is that of whether it should be the right of a country contemplating protective action at present forbidden under the Charter to take action along those lines prior to consulting with and obtaining the approval of the Organisation, or whether it should be required to consult with the Organisation, with other countries concerned, and to obtain approval before it takes the action. That seems to me to be the fundamental issue. It is true that some countries attach particular importance to the right to take that action prior to consultation in con- nection with quantitative restrictions for protective purposes. Other countries would like to have the freedom in relation to all forms of protective action at present proscribed under the Charter. I would like to remind delegates of the way in which our present proposals developed in London. The Australian ddlegation did, at the London Conference, put forward certain proposals at the beginning of the discussions on industrial development which the Conference was good enough to take as a basis for discussion. Those proposals included a provision substantially along the lines now put forward by a number of countries, i.e. that a country should be free to take action to adopt protective measures of a kind /_, rw / A p P. - 6 - E/PC/T/A/PV/4 proscribed under the Charter, subject to the right of other oountries to complain and to seek to force the country concerned to obtain subsequently the approval of the Organisation. As a result of the discussions in London we agreed to drop that proposal and to accept the one which is now in the Charter, that is one which requires prior approval of the Organisation for action of that kind. We did that as part of the general process of compromise which was in evidence at our London discussions. I do not suppose that anybody, any country, went, home after the London discussions feeling that the Charter was completely satisfactory from their/point of view. Compromise and sacrifices were made, I presume, by all the countries. Certainly, speaking for the Australian delegation, we believe that the Charter contains a number of elements which from our point of view are less than satisfactory. Nevertheless we were in London prepared to accept that position because we recog- nised that this whole process of hammering out a Charter for Inter- national Trade between countries of differing interests and differ- ing systems of economic organisation is fundamentally one of com- promise. We are therefore - despite the fact what on the whole I think we consider our original proposal perhaps still the best - we are therefore prepared to accept and to support the compromise at present embodied in the Charter with tile modifications which we have suggested in the amendmente we have now put forward. I think, Mr. Chairman, you dld suggest that they differed in principle from the proposals put forward by the Indian and the Chilean delegations. I would like to suggest that, they do not differ in principle; they are an attempt to go some of the way to overcome the very real difficulties associated with this procedure. Obvious- ly, the big advantage of being able to take action in advance of - 7 - of approval is that no delay is involved. If you accept the need for prior approval it becomes desirable to reduce the possibilities of delay to a minimum, and that was our purpose - not to suggest some- thing which was in conflict with what the Chilean and Indian and other delegations were putting forward, but to seek to obtain by other means substantially the s ame results. We do not suggest that they are completely satisfactory, but they go some of the way, and we are pre- pared, in appropriate circumstances, to support that compromise as part of a Charter which is itself a series of compromises. There is only one thing that I want to add to that position: it is possible, indeed it is desirable, to accept compromises of a kind which involve you in accepting undertakings which it is not entirely satisfactory from your point of view that you should accept; but that willingness is dependent upon your belief that other countries have the will and the capacity to carry through their part of the com- promise. Every country will come out of this discussion with certain phases of the Charter fairly close to what they would wish; there are others where they will be accepting for the sake of compromise some-- thing less than satisfactory. It is important that the countries participating should be confident that the other countries have both the will and the capacity to implement both the provisions which are satisfactory to them and the ones where they have accepted some com- promise. Now, Mr. Chairman, the position of the Austral delegation is that we have sought in the amendments which we have put forward - and I do not wish to suggest that they are by any means the last word; a number of other suggestions including that of the United Kingdom delega- tion obviously need to be examined together with our own - we have put forward these proposals as an attempt to meet some of the real E/PC/T/A/PV/4 P. P. E/PC/T/A/PV/4 -8- difficulties which we recognise inevitably exist in a formula which makes it necessary for a country to seek prior action. We do that as evidence of our capacity and our willingness to reach compromises not entirely satisfactory to ourselves; but I would emphasise that that is dependent upon our belief that other countries will demon- strate, not merely in discussions on the Charter but in their actions elsewhere, that they, too, hare that will and that capacity. - 9 - MR. H.C. HAWKINS (United States): Mr. Chairman, the American delegation is in full agreement, I think, with what the Australian delegate has just said. I think he has described accurately the evolution of Article 13. We recognise that it does represent compromises and must represent a compromise. We are in agreement in substance with the proposals made by the Australian delegation and the United Kingdom delegation regarding provisions which would speed up the action of specific proposals for the imposition of protective measures. We think that those proposals might well be made the basis for discussion. CHAIRMAN (Interpretation): The delegate for India. DR. P.S. LOKANATHAN (India): Mr. Chairman, the delegate of Australia has undoubtedly summarised the position quite correctly and, if I may say so, very objectively. E/PC/T/A/PV/4 J. - 10 - E/PC/T/A/PV/4 With his appreciation of the effects of the various Amendments moved this morning with his narration of the circumstances that led up to this Article 13, paragraph 2, I have no quarrel. Indeed, I agree with almost every word of what he has said; but it does seem to me there is one point of difference between The way in which quantitative restrictions for protective purposes have been treated and the way in which the rest of the restrictions have been treated in this Charter. I think attention should be given to that essential point of difference. When you have tariffs you are allowed to use tariffs, and any country that wants to reserve a certain article is not expected to give any reduction in tariffs beyond the level at which he can afford to go; and therefore tariffs are permitted; if a country wants to protect in respect of an article on which it is entirely binding by an agreement, one understands that that country must go to the Organisation, and therefore a theme of that kind is different from the way in which you say, in respect of quantitative restrictions, that you ought to go to the Organisation in order to use quantitative restrictions for protective purposes. Take the question of quantitative regulation for the balance of payments difficulties. There you allow the country which wants to use quantitative regulations for balance of payments difficulties to do so without having to come to the Organisation in the first instance. It is permitted, in regard to subsidies, to do practically the same thing. What do you say in respect of quantitative regulations for protective purposes? Article 13 paragraph 1 says "All forms of protection are allowed" - in whatever form, it is stated, it is allowed - but when you come to Article 2, paragraph 3 you are told that quantitative restrictions for protective purposes are outside the scope of this Charter. It is a violation of the G. -11 - E/PC/T/A/PV/4 Charter when you try to impose quantitative regulations. Now it is that distinction which does not go wall with us. We cannot accept the position that merely because a country wants to use quantitative regulations for its protection it should be treated entirely on a different footing from countries which have special quantitative restrictions when in any other difficulty. The balance of payment difficulties should justify a country in using quantitative restrictions without having to go to the Organisation in the first instance, and I cannot see why the same facility should not be given to those countries. Therefore, the question of whether you ought to go to the Organisation or not will depend upon whether we have got an agreement. The country which has tariff regulations and has therefore restricted its own powers certainly should not be allowed to violate its own agreement without consulting the Organisation previously. With respect to quantitative restrictions for protective purposes there should be certain criteria laid down, and if the country departs from these criteria then it should be open to the other countries affected to go to the Organisation. That is the real substance of our Amendment; and I think it is this distinction that should be taken into account. It is no use giving the right to take protective measures - and we have it on the authority of various Delegates that protective measures here include every kind - what is the good of giving that power, when you say the use of quantitativ restriction would be a violation of this Charter? The two things do not go together. There is an inherent contradiction between 3l and 32, and this contradiction must be removed.. CHAIRMAN (Interpetation): M. Baradue, the Delegate of France. - 12 - E/PC/T/A/PV/4 M. BARADUC (France) (Interpretation): The French Delegation has so far rersir-ccG from taking part in this debate; but I would like to remind you that we consider Chapter IV with great interest for various reasons. First of all, ac, already explaineo. in London, we consider this Chapter is of great interest for countrise which are insufficiently developed in thc economic field, and countries which are trying to find means of aesuring this economic development which is indispensable to international trade in general, and which is the ohief aim of our meetings. Secondly, we also consider this Chapter with great interest because France is responsible for territories to which Chapter IV would apply directly. Finally, there are some provisions in this Chapter which apply directly to some European countries which have been victims of the War, and in that respect the French Delegation would support the Czechoslovak amendment explained this morning. Having said this--and I would like to say immediately to the Delegation interested that they should see in our position no hostility whatever towards them--I wish to say that I consider that the debate that has taken place has been very well summed up by Dr. Coombs when he reminded us of the historical aspect of the question in London and his statement was an appeal to reason. From the debate which took place today, and as I said myself this morning -- and there I agree with what the Delegate of Belgium has just said we find that it is indispensable to make precise provision in Chapter IV or elsewhere in the Charter for the procedure to be followed. We should not confins ourselves to a dec- layation of principle as the Delegation of Chile might advise us to do, because tho result would be a lack of balance V. - 13 - E/PC/T/A/PV/4 between the various Chaptere of the Charter, and in particular between Chapter IVand Chapter V, which are closely connected. In that respect, I do not completely agree with what the Delegate of India said, because we find also in chapter V, as regards the quantitative restrictions, and impossibility of applying such restrictions without prior authorisation from the Organization. Therefore, I cannot agree with the Delegate of India when he said that theire was a diffrence of treatment between Chapter IV and Chapter V. We should, on the contrary, study closely the provisions of Chapter IV in conjunction with the corresponding provisions of Chapter V, and no diffrence whatsoever should be made in these provisions, which provide for protection that in some cases might be cumulative. CHAIRMAN : The Delegate for Chile. M. F. GARCIA-OLDINT (Chile) (Interpretation): In stressing the necessity for having precise regulations, the Delegate of France accepts tacitly the principles which we are defending, and to avoid any possible misunderstanding, I would like to state that we never said that our statement should constitute only a declaration of principle. We have provided for some regulations in our text itself, and if it is true that such regulations are presented in a summary form, it is none the less precise and detailed. The Delegation for Chile is in addition, as I have already said this morning, ready to accept any rules proposed, provided that such rules do not go against our objectives, and if this morning we said that we refused to take as a basis for dis- cussion the Australian amendment, we none the less consider V 14 E/PC/T/A/PV/4 this amendment ss a good plan or a a good frame work where various provisions not contained in our proposal could be inserted. CHAIRMAN: The Delegate for Brazil. Mr. J. G. TORRES (Brazil): Mr. Chairman, this morning after having studied the proposal put forward by the Australian Delegation, we expressed the view that after the exchange of views in this Commission, it might be adopted as a Working Paper or a basis .or the work of the sub-Committee. I think we have now come to the conclusion that there seems to be a consensus of opinion in this Commission that the Australian paper, possibly associated with the English paper, if we decide precise dates, would exactly fulfil that purpose This is especially so after we have heard the very interesting expose of Dr. Coombs and after having heard the views of the French Delegation. I would, therefore, move, Mr. Chairman, in order not to prolong this discussion, that we refer the matter to the sub-Committee and adopt the two papers as a basis for the work of the sub-Committee. - 15 - E/PC/T/A/PV/4 CHAIRMAN (Interpretation): At the time when the delegate for Brazil was soeaking, I was about to make a similar proposal to the Committee. I think we can therefore consider the discussion as closed, and ask the Sub-Committee to try and harmonise the text. We have now to study the second fundamental question, which is the question of preferential arrangements. I would remind the Committee that two delegations - Chile and Lebanon - wieh to insert these regional preferential arrangements among the means tending to economic development of undeveloped countries. The discussion is open on this part. Is there any delegation wishing to speak on that point? M. HEL1MORE(United XKingom): Mr. Chair,man, I simply want to ask the Chilean delegation how this amendment of theirs would owrk. What we are talking about in aAticle 13, and particularly paragraph 2, is the adoption by a member of a particular device. Now, if I understand preferential arrangements - and that may be somewhat doubtful - it seems to me that there are at least two people involved in preferential arrangements, and I suppose that if one calls those members A and B and they are both in the same stage, as it were, of economic development, and both decide to adopt such measures, one could conceivably, with some straining of the language, get the or-ranzzaton to approve the adoption by A of a measure which will assist B's iEnutsr1ialiation,and the adopt-on by Io ' a measure which would assist A's industralisation. But if A and B were not in the same stage of economic development, as might happen, then I cannot see how this amendment could achieve the object which it is intended to fulfil. E/PC/T/A/PV/4 Mr. F. GARCIA OLDINI (Chile) (Interpretation): I think the aim of my amendment can be sumarisod in a few words. First of all, in answer to the Delegate of the United Kingdom, I would like to toll him that the idea underlying our amendment was precisely elaborated during a conversation I had with him. I think, further, that there is no confusion in our text. It says that the Members recognise that, in the case of certain industries which it may be necessary to develop, they can call upon special governmental assistance, including protection or other measures. I see nothing illogical there and I see no mention of one member only. It is obvious that if one of these treasures is a preferential agreement, two or three Members, in general, will be involved. In that case the measures which might be used would affect two Memrbers and the regulations and procedure which would have to be established would have to be followed by those two Members. The reason why we have to consider that regional arrangements should be included in these provisions is that if we limit to capital investments the action which might be taken in order to develop an under-developed country, then we run the risk of having industries which will be useless or, so to speak, still- born, and such industries will not be able to find outlets for their products. It is necessary to have a large market and in order to have this m is _czs3r have arrangements and agreements with other countries to enable the new industries to live and not to become a new burden on the country which creates them. S E/PC/T/A/PV/4 We are prepared of course to accept capital in order to develop certain industries but these industries, in order to live, must have a stable and expanding market and it is difficult to find such a market if we limit our field of activity to these ., under-developed and small countries. Preferential arrangements would therefore help in finding the necessary markets, which are indispensable. If not, we have two alternatives; either we shall not be able to find the necessary capital, because the investor will consider that an industry cannot live) or any industry created will be still-born. CHAIRMAN: Does any other Delegate wish to speak? M. Jussiant. M. JEAN JUSSIANT (Belgium) (Interpretation): The Belgian Delegation has studied the Lebanon anendment with interest. Being ourselves a small industrial country with a very small market, we realise very well the difficulties of their situation and in the past we have made various efforts to obviate that situation. In particular I would mention the Conferences of Oslo and Ouchy, but the agreements which were passed during these conferences were of a completely different kind. The to have/ idea was merely/a reduction of customs duties and not any restrictions, whereas the amendment which has been submitted by the Lebanese Delegation might cause some confusion. We envisaged various preferences which would aim at making some reserves and having extensive markets, but it might be a dangerous tendency. If we are in favour of expanding markets as much as possible, we do not think that such provision should be included in this Chapter, which deals with the development of under-developed countries. S E/PC/T/A/PV/4 - 18 - I would mention that not all smell countries are undeveloped economically and I think therefore it would be better if this idea could be included elsewhere in the Chartar. I have been wondering whether it is a good idea to include such a provision in the Charter at all, because the main object of the Charter is the reduction of customs duties and the stabilising of those the/ duties and therefore/creation of larger markets which will ultimately be of profit to the small countries. P. - 19 - E/PC/T/A/PV/4 Mr. J. MIKAOUI (Lebanon) (Interpretation): Mr. Chairman, this morning my colleague has already explained to the Committee the objectives of our amendment. I would not come back to that, but I would like to remind the Committee that we do not ask for the guarantee of a preferential system automatically, even to neighboring countries, or countries which are ecnomically on the same level. We do not ask this automatically, but only with reference to the Organization. Therefore we think that our amend- ment is really moderate, and should be included in Article 13. All we ask is that the Organization may study with care the regulations which might be established for a preferential system in order to develop our markets and our products. Mr. R.L. FRESQUET (Cuba): Mr. Chairman, we are here engaged in an enterprise in trying to free world trade. Sometimes we think that we are in a laboratory trying to invent more devices to restrict world trade: Nevertheless, there are two justifications, or two exceptions to that general or main rule of our behaviour here, the rule that applies to those nations devastated by war and the rule that applies to those nations under-developed economically we have agreed to that already. These two rules are practically of the same nature: that is why we agree entirely with the proposal of the delegate from India that those two rules should be treated accordingly on the same foot- ing. There is a miner difference between the two, nevertheless, and this minor difference is that in the case of countries devastated by the war the measures to protect their economics, sere of a global nature, that is, applied to the whole of their balance of payments; whereas in the case of under-developed countries, the measures should be taken individually to protect infant industries in need of such protection. But in both cases there should be a time limit. P. - 20 - If we treat this matter in Article 26 or in hero, I think we oan go further than following any particular amendment and we will be able to be fair to those conditions. But I do not think that in this Chapter is the opportunity to introduce a new exception to that general rule, an exception that will lead to the establishment of regional economic groups. I do not think the amendment belongs here and, may I dare to say, maybe it does not belong at all in the Charter. Protective measures are in our judgment in the case of under-developed countries destigned to protect particular industries 6xr particular countries. This new amendment presented by the Lebanese delegation will broaden tremendously the scope of that purpose and will provide a protection and. not only the protection by means ofquantitative restriction but by means of execption to all the rules of Chapter V, the industries of two or more countries going, as I said before, to the establishment of a regional economic group. That, in my judgment, is one of the strongest obstacles that we can put in the way of freeing world trade. Does anyone else wish to speak? CHAIRMAN (Interpretation) : J. - 21- CHAIRMAN (Interpretation): I believe that the situation is not very clear, I must say that as your Chairman I find it somewhat difficult to refer this question to the sub-committee as it stands at present. I do not see clearly if there is here a majority in favour of the amendment. The delegate for the Lebanon has just told us that he was very modest and nice, that he did not want to be obstructive, but that as a representative of a country which is not fully developed yet economically it seams to him that he is entitled to some measure of protection including preferential arrangement, it being understood that such arrangements will, be subject to the procedure which has been mentioned in that case. I would like to know whether you wish to accept this interpretation, and whether, ir that case, the sub-committee might draft a text embodying this idea. MR. C. WILCOX (United States): Mr. Chairman, I find in the present drafting of the Charter in Article 38, paragraph 4 these words: "the Members recognise that there may in exceptional circumstances be justification for new preferential arrangements requiring an exception to the provisions of Chapter V. Any such exception shall conform to the criteria and procedures which may be established by the Organization under paragraph 3 of Article 66". It is not clear to me whether it is the intention to move the deletion of this paragraph and the substitution of the wording suggested for paragraph 13, or to retain both paragraphs. I should like to be enlightened on that point and be informed why it is necessary to make the ssme exception twice In the document. MR. J. MIKAAOUI (Lebanon) (Interpretation): In New York, in the discussions which took place there, someof our colleagues E/PC/T/A/PV/4 - 22 - Will. already reserved their position on Article 38, and we/find these reservations again, no doubt, when Aticle 38 is in discussion. The other countries, those countries which were formerly part of the Ottoman Empire, have a tendency in orde to develop their industry and their economy to grant preeretial systems. The amendment now under discussion was also mentioned and submitted in New York, and I wish to maintain it all the more as I believe, if I have understood correctly, that it is inconformity with what the Australian delegate has said; previously. The procedure is already provide for by the Charter because the Members may ask permission of the Organization to establish a preferential system, but what we wish is to revise the procedure and ask the Organization to consider favourably a request of that kind in order to develop the exchages of countries which formulate such a request. I draw your attention to the fact that our proposal would not duplicate with other amendments of texts which might be adopted, because we are not trying to restrict the entry of imported goods, but simply to facilitate the gaining of more extensive markets for our products. . G. E/PC/T/A/PV/4 - 23 - Mr. GARCIA-OLDINI (Chile) (Interpretation): When the question was discussed at the same time as the discussion on Article 14, we suggested that a Sub-Committee be appointed to study it and at the same time Articles 13, 14 and 38, and unfortunately the Committee did not follow us, and at the time when the vote was taken it was stated that the vote was not on the substance of the question, but only on the insertion of our proposal in Article 14; and that the question should be taken up again when Article 13 or 38 came under discussion. Now we are discussing Article 13, and we remember what was said when our proposal was submitted. We are submitting an Amendment on Article 13 which is not entirely satisfactory to us, but which at least leaves the door open, and of course we agree that some precision and some regulation would be necessary; but now we hear the Delegate of the United States suggesting that the question should not be discussed with article 13, but possibly with Article 38. We find ourselves, therefore, in a very strange situation. At the time when we discussed Article 14 we were told that the question, would be discussed in the discussion of article 13. Now we are discussing Article 13 we are told we should not discuss that now, but Article 38; therefore, I wonder whether it would not be possible to study Articles 13 and 38 together, and decide whether our Amendment should be inserted somewhere in one of these Articles or rejected altogether. CHAIRMAN: (Interpretation): The Delegate of the United States. Mr. WILCOX (United States): I think the Delegate of Chile may have misunderstood my question. I did not suggest that the question should not be discussed in this connection. I merely asked if it were discussed in connection with Article 13, and action were taken in connection with article 13, whether it would G. - 24 - E/PC/T/A/PV/4 be probable that paragraph 4 of Article 38 would be removed from the Charter. I should think it would then be redundant, and would moan the same thing. Really, what seems to be involved here is whether the matter of determining criteria and procedure is going to be undertaken by the Organisation as provided in article 38, paragraph 4, or is going to be undertaken her, and now by the Sub-Committee; and I think if the Sub-Committee considers this problem it should consider the two Articles together, because they are obviously related. Mr. GARCIA-OLDINI (Chile) (Interpretation): I see no disadvantage to any Amendments or procedures being studied and kept, if necessary, in the various Articles. In this Article 13 we are only dealing with economic development. In the other Article 38 the text mentioned is dealing with another situation, which is much broader and somewhat different. Therefore I think there would be no disadvantage in keeping the text of Article 38, even if our proposal be accepted for Article 13. 00 course, if we accept our proposal for Article 13, it might be necessary to change the text of Article 38, but I see no disadvantage in keeping it. CHAIRMAN: (Interpretation): I believe that now the situation is clarified There is no formal objection to the consideration of the Lebanese Amendment, supported by the Delegate of Chile. I therefore propose that that this Amendment be referred to the Sub- Committes for final draftng. Of course, it will be impossible to deal with this Amendment without any reference to Article 38, paragraph 4, and .his text will have ultimately to be altered. Therefore, I see no disadvantage in asking the Sub-Committee to study the insertion of this Amendment in Article 13, and make a proposal for a new drafting of Article 38. G. E/PC/T/A/PV/4 - 25 - Dr. HOLLIWLY (South Africa): Mr. Chairman, on a point of correction. I do not know whether the translation exactly conveys what you said. I understood you to say that there is no objection to the Amendment of the Delegate of the Lebanon, supported by the Delegate of Chile, going forward for further study. The translation said, "There is no objection to the Amendment". There may be very strong objection to the Amendment. THE INTERPRETER: I said there was no objection to the Amendment being considered. I have got it in my paper. CHAIRMAN (Interpretation): The Chilean Amendment is to be treated exactly on an equal footing as any other Amendment. It is referred to this Sub-Committee for consideration. We now have to decide on the proposal made by Mr. Coombs, which consists in adding a new paragraph 13(A) - a new Article - dealing with the countries which may wish to join the International Trade Organisation, and therefore would have to agree in advance to the provisions of the Charter. Is there any objection to referring this Amendment to the Sub-Committee? Dr. COOMBS (Australia): If I may make one small point of explanation. The misunderstanding arose from the wording of my statement; but from your summary of the proposal there does appear to be a suggestion that this proposal would refer only to new Members and not to original Members, if you might call them that, It was our intention, of course, that this transitional period would be available to all Members - original ones, as well as new. In effect, it gives all Members who become subject to the provisions of the Charter a period of time in which to put their house in order. - 26 - CHAIRMAN; The Delegato of the United Kingdom. Mr. J.R.C. HELMORE (United Kingdom): Mr. Chairman, this morning when I was speaking of the United Kingdom amendments. I pointed out that we had been thinking of the same point as is dealt with in the Australian Article 13A in a new paragraph which we suggested for addition at the end of Article 13 as new paragraph (e). I attach no importance whatever to the point as to whether it comes as a new Article altogether or a new paragraph in the old Article; but I think the point to which the Australian Delegate has just called attention, namely, whether this applies to new Members joining the Organisation or to original Members at the time they joined the Organisation, is one which the Drafting Committee will haveto look at. You will see that our version refers to the date of entry into force of the Charter, and that, of course, is applicable to what I might call original Members, There is one other point which I would like to suggest that the sub-Committee should consider, and that is that we do not wish to see, because this "let-out" for existing operations is put into the Charter, one day before the Charter comes into force all the countries in the world put into force every single measure of this kind that they can in order to get in first. I think it is a difficult point to meet, but obviously there might be some -- clearly none of the original Members who might be those sitting around this table would do such a thing -- but there might conceivably be some Governments somewhere in the world which would seek to take advantage of a provision of this sort, and it seems to me that it needs some careful thought to see how we can avoid that situation. E/PC/T/A/PV/4 V V. - 27 - Mr. Clair WILCOX (United States): The amendment 13A proposed by the Delegation of Australia raises the question as to the time which is to be applied to the measures in question. I think there is difficulty both as to the use of the time of ratification and the time of joining the Charter and perhaps a good timing would be the adoption of the date May 28th 1947. That is, I, think, a matter to which the sub-Committee should give some attention. There is another matter in the next line. The proposed amendment treats in the same way measures which conflict with the provisions of the Charter and measures which conflict with any obligation which a Member may assume through negotiations with another Member or Members. Dr. H. C. COOMBS (Australia): May I say that those words remained inadvertently and we did propse to suggest that they should be cut out. Mr. Clair WILCOX (United States): I have no objection to this Article going to the sub-Committee, but in the same way in which the other Article went to the sub-Committee for consideration. CHAIRMAN: Does any other Delegate wish to speak? E/PC/T/A/PV/4 ER M. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): I wish to point out that there are some protective measures which are already authorised by the Charter for the duration of more than one year. I therefore assume that it would be useful to add a sentence to the text of Article I3A as it stands: "Where a member is, at the time of joining the Organization, using any protective measure which conflicts with the provisions of the Charter or with any obligation which the member may assume through negotiationis with any other member or members, and which is not covered or allowed by some other provisions of the Charter, that member should not . etc." There are, as I said before, some exceptions provided for two or three years, as is, in particular, the case of occupied countries. CHAIRMAN (Interpretation): If I have understood well, the delegate for Czechoslovakia wishes this amendment, the principle of which, he accepts, does not go further than other Articles of the Charter to deprive members of rights already granted to them by other provisions. I think we can leave that question to the Sub- Committee. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, I would like to ask a question for purposes of clarification. I wonder whether Dr. Coombs tends, in this amendment, to include protective measures or to refer to protective measures whether or not the Items are included in the tariff agreements? In other words, I can see two possibilities. One is protective measures applied on items which are not bound in the tariff agreements or protective measures, whether or not they are bound in the tariff agreement. It makes a considerable difference as to which is intended. E/PC/T/A/PV/4 Dr. H.C. COOMBS (Australia): As I pointed out when the delegate of the United States was speaking, it was our intention. to delete from Article 13A the words following "provisions of the Charter" down'to "member or members". If those are deleted, it is clear that our suggestion for this transitional period applies only to those protective measures which conflict with the provisions of the Charter which would not include; of course, tariffs. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, I am sorry to detain the Committee again. My question was this. If a member agrees to bind the tariff item in agreement, may that member continue to apply a quantitative restriction pending the determination by the Organization, or may it not? There are two questions. Some items will be bound in tariff agreements, and other items will not be bound in tariff agreements. May a member continue to use protective measures contrary to the provisions of the Charter for both types of items or only for the types that are not bound? Dr, H.C. COOMBS (Australia); Mr. Chairman, as I see it, it would depend upon the nature of the tariff agreements, If the tariff agreement was entered into, binding a particular item duty at a time when a quantitative restriction was operative on that item, and the fact that that quantitative restriction was operative was known to both parties at the time when the agreement was entered into, it seems to me then, that it would be reasonable for this item to allow the continuance of that quantitative restriction in the same way as the quantitative restriction on any other item. If of course much quantitative restriction was not operative by which the tariff agreement was intended, then it would be different. I think it would be unlikely, in those circumstances, that a 29 ER 30 E/PC/T/A/PV/4 quantitative restriction would be imposed subsequent to an agreement on an item bound in such an agreement, and if an attempt were made to act in such a way it would be capable to act under the terms of the Charter. Mr. CLAIR WILCOX (United States): I do not believe the answer given by the delegate of Australia meets the problem raised by the delegation of Canada. It seems to me that what was really intended here does not conflict with any of the provisions of the Charter or with any obligations that members may assume to negotiations. What was intended was measures which conflict with the provisions of the Charter, and do not conflict with any obligation which the member may assume through negotiations with any other member. Certainly it would not be the intention of Article 13A, as proposed, to abrogate from the text of the Charter. This is a problem I suggest we leave to the careful attention of the Drafting Committee. S 31 CHAIRMAN (Interprotation): I believe we can entrust the Sub-Committee with the care of drafting finally Article 13A. M. Baraduo, would you like to say anything? M. PIERRE BARDUC (France) (Interpretation): I think the amendment presented by the Delegate of Australia certainly deserves to be taken into consideration, with the other amendments, by the Sub-Committee, but, insofar as it applies to the rules to be observed by new Members joining the Organi- sation, it seems to me that it raises an objection of principle that does not apply only to this Chapter, I do not think that anywhere in the Charter we have envisaged its application to new Members who wore not signatories to the Charter but who ultimately apply for Membership of the Organisation. I think it might be useful to envisage the insertion of a special provision covering the whole Charter but applicable in general to those now Members. Let us take, for instance, the case of two governments who have had agreements with one another for a long time, agreements which provide for discriminatory measures: are they going to be obliged, when they join the Organisation, to cancel those arrangements altogether; are they going to be given time to do so, or what is the procedure? I think we should cover that in the Charter. CHAIRMEN: Mr. Helmore. Mr. J.R.C. HELMORE (United Kingdom): Mr. Chairman, if I might attempt to deal with the difficulty which M. Beraduc has just raised, the two cases seem to me to be entirely different. S S E/PC/T/A/PV/4. In the case of an arrangement for mutual discrimination, that is outside the provisions of the Charter altogether and if countries want to join the I.T.O. it seems to me they must give that up before they join or at the time of joining, or, conceivably, they could negotiate with the I.T.O. about what latitude should be given to them in bringing such an arrangement to an end. In this case we are considering an article which allows, after consideration item by item, the use of a particular device and it seeded to us that it would hardly be sensible to require everybody to give up the use of these devices, only to apply, the day after they join, for permission to use them again, and possibly to receive it within five or six months. That is why the two cases seem to me to be on an entirely different footing. If a thing is forbidden, one gives it up before joining. Ift a thing is permissible after consideration by the Organisation, then in principle at any rats there is a case for allowing it to continue whilst the Organisation considers it. J E/PC/T/A/PV/4 ER. J.J. DEUTSCH (Canada): Mr. Chairman, this raises some rather large questions with regard to tariff negotiations. If countries are permitted to continue quantitative restrictions for a period and then may request for the indefinite continuation of them latex from the Organization, that means that in the case of negotiations on tariffs, you have to ask in each case whether a quantitative restriction exists and if so, whether the country using the quantitative restriction will desire to continue with it after asking permission from the Organization. Now, that puts a different complexion on the tariff which you are negotiating. IT seems to me that you are now into negotiating both tarifs and to some extent quotes. That was not the intention. So far, we have all assumed in our tariff negotiations that quantitative restrictions are excluded. If any- thing like this is adopted, that assumption can no longer be used. I just want to suggest that .that raises some rather large issues with respect to the second part of our work here at Geneva, and I hope the sub-committee will keep that in mind when they come to consider this matter. CHAIRMAN (Interpretation): Does any other delegate wish to speak? The Australian amendment will therefore be referred to the sub-committee, which will take into account the observations just made. We have therefore finished with the debate on Article 13. We have now to discuss the fundamental questions raised by the delegation of the United States as regards Capital Investment and Movement of Capital. I will remind you that two delegations had asked for this question to be reserved for today, They are the delegations of E/PC/T/A/PV/4 Cuba and India. I therefore assume that the delegations are now ready to discuss the question. DR. GUSTAVO GUTIERREZ (Cuba): Mr. Chairman, we are ready for the discussion. I will not speak at the moment, but when the question arises. CHAIRMAN (Interpretation): But the debate has already taken place, and in order to conclude we are merely waiting for the opinions of the delegates of Cuba and India, who asked for the matter to be postponed. DR. GUSTAVO GUTIERREZ (Cuba): Mr. Chairman, we would simply say at this moment that we are very sympathetic with the proposal made by the United States delegation. Our main objection to it is that we do not consider it convenient or proper to introduce an amendment in the title of the Chapter. We consider that it should be left like it is and. called "Economic Development". Probably there could be inserted. a special Article which could perhaps be entitled. 'International Investment for Economic Development". Then, on Article 12 we would suggest some slight alterations. We are absolutely ready, and we welcome the investment of foreign capital's and we consider that it is of prime importance for the development of under-developed countries to grant to those foreign capitals an equal position of guarantees, but they should be drafted not as carefiully as possible so as/to give foreign capitals a better standard than national capital, not avoiding the possibility of the national capital to work for the development of the country, and at the same time, not leaving any possibility for foreign capitals to mingle into political quest ions. That is our position. With that in mind., we think that this Chapter should introduce the biggest part of the amendments of the United States delegation. J. 35 CHAIRMAN (Interpretation): The delegate for India. DR. B.N. GANGULI (India): I am sorry to say that the Indian delegation is in the position of being caught napping. The Leador has just left as we expected that the matter would not be taken up at the fag end of this meeting today, but since the, question has just been raised, I should like to say very briefly the position of the Indian delegation with regard to this very fundamental question. We feel that we are not inclined to favour any detailed prcoedure being adopted with regard to the treatment of capital and enterprise in a particular country which has borrowed capital from another country.w We have noted the detailed procedure which has been laid down in the terms of the American amendment. We feel that it should be the business of specialized agencies, like the International Bank or some kind of reconstruction organization, to lay down conditions under which foreign capital might be permitted to move from one country to another, either for purposes of development or for purposes of reconstruction. We are in favour of laying down a very general principle embodying the essential saf guards for creditor countries. We afeel that the purpose might be served by the statement of a general principle, not necessarily in terms of paragraph 2 of article 12, which in our opinion is rather to comprehensive, but the purpose can be served very well in terms of the amendment which we have proposed. Here we say: "each Member which receives facilities for its industrial and general economic development shall not only carry out all international obligations regarding the treatment of the enterprises, skills, capital, arts and technology imported from other countries to which it may be subject or which it may undertake pursuant to sub-paragraph (c) of Article 61 or otherwise, but also J. E/PC/T/A/PV/4 J. E/PC/T/A/PV/4 36 shall in general take no unreasonable action injurious to the interest of the particular business entities of persons within the jurisdiction of other Members which supply it with such facilities". The words which occur at the end of the sentence are, in our opinion, the significance so far as the point on our amendment is concerned. E/PC/T/A/PV/4 37 We do not want to undertake any sweeping and general obligation with regard to the treatment of foreign enterprise, or things like that, but if a particular country has imported the enterprise, skill, capital, arts or technology of another country we think that the creditor country is justified in asking for a safeguard of this character. Therefore, we want to limit the obligation of a particular country regarding the enterprise, skill, arts or technology which may be provided by a particular country; but beyond that we are not in favour of laying down any general obligations. CHAIRMAN: (Interpretation): The Delegate of New Zealand. Mr. WEBB (New Zealand): Mr. Chairman, the New Zealand Delegation feels with the Delegation of India that it is inexpedient and a little unwise to attempt at this time to give as much precision as it is apparently sought to give to the provisions of the Charter relating to international investment. It is our view that the matter is for the purposes of the Charter adequately dealt with in Article 61(c) and again in Article 12, paragraphs 1 and 2; and we further attach some importance to the fact that at the meeting of the Economic and Employment Commission of the Social and Economic Council which begins on June 2nd, the Agenda includes the consideration of international action for facilitating the better utilisation of the world resources of manpower, materials, labour and capital. It seems to me that by adopting the American series of Amendments we would be destroying the balance of this part of the Charter by elaborating and emphasising one of the factors in progressive economic development. It seems there are other factors which might equally be elaborated, because they are equally important; but I think what is more serious is that we would be, by tackling this Amendment, approaching an important problem in what seems to me a partial and a hurried manner. I say "partial" because it seems E/PC/T/A/PV/4 38 to me that if we are going to tackle this problem of international investment we should tackle it as a whole, and not merely tackle one segment of the problem, which is the problem of what one might call private international investment. What is proposed here is a code for private international investment, and one might elaborate a code for Government to Government lending. It would be an interesting document, but I do not know that it would be a wise document to place before this Conference at this time. I say "hurried", because although I do not doubt that the American amendments have been very carefully considered, yet I do not think that this Conference has the time to tackle the problem in all its aspects. It seems to me that we should look at the whole problem if we look at it at all, and that would include lending by Governments and also, of course, by private investors. And furthermore, that we should consider the obligations of lenders as well as of borrowers, and that we should not attempt to deal with the whole matter by applying a few simple principles of equity. It is for those reasons that we feel that it would. be wise to leave the matter more or less as it stands in the Charter at the present time. E/PC/T/A/PV/4 CHAIRMAN.: The Delegate of the United States. Mr . Clair WILCOX (United States): Wi-.r. references to the ooaients made by the Delegate of India, I should like to say that our Delegation is in agreement with the purpose of the amendment proposed by the Indiana Delegation which appeare at the bottom of Page 5 and the top of Page 6 of the Secretariat' Agenda. The significant point there is the introduction of the word "particular", and I think this was always the intention of that section, and the amendment as suggested makes it explicit. The other point that was made was that the International Bank for Reconstruction and Development may have an interest in problems in this area also, and I would suggest that when a sub-Committee considere this matter the Representative of the Bank be asked to be present and give us the advantages of the views of the Bank. Mr . L. GOTZEN (Netherlands): Mr. Chairman , I am afraid I cannot agree with the remarks made by my college for New Zealand on this matter, as, in my opinion, the Articles proposed by the American Delegation form, as I have already said, a very valuable counterpart of the Articles on economic development. In the world, as it is now, there are great capital funds awaiting an opportunity of fertilising the fields of economic developmnt, and I am very much afraid that if we should not set up some court on investments that it would be quite diffe --f for these fn ;¢ ->>-1Prr'es r^ .30 w;."i s those fields. As to the time we have had for studying this matter, I should say that as the Session is not yet over, and I think we will be here for many days or many weeks, even perhaps a few months, we all have time to study this matter, and at the end of the Session, we might come to a conclusion on these matters. V 40 Dr. H.C. COOMBS (Australia): Mr. Chairman, it is clear that when the Sub-Committee comes to deaI with these suggested amendments it will have to take into account not merely the economic implications 0f these proposals, but the political aspects of these questions, which may well prove to be very complex in character and indeed some of them may prove to be beyond the normal field of competence of people at this Conference. I daresay the Sub-Committee will find that out - if I am correct - as they proceed. I wish, however, to make a specific suggesion. In our preliminary consideration of this it has occurred to us that, in the Articles of Agreement of the Monetary Fund, countries are given the right to control capital movements. Furthermore, it is provided that they may be required by the Fund to control capital movements. Now the precise implication of that right and that possible obligation on the proposals which the United States have out forward, are not clear to me at this moment. But I would suggest that the Sub- Committee, when it comes to consider this question, should consider it in the light - alone with other things - of the intentions lying behind the Articles of Agreement of the Monetary Fund in relation to the movement of capital, and that for that purpose it would., perhaps, be advisable for the D'_r,1fL' s-3 to call into consultation the representative of the Fund who, I understand, is here. Mr. ITTh T. .rr fC)RD (Reresentative of the International Bank): Mr. Chairman, after the release of the United States proposal on investment, I have cabled the international Bank to enquire as to their views on the proposal. I have been informed by the Bank that they would like to have it included in the record that they 41 are entirely in sympathy with the general purposes and objectives of the proposal that has been made. They wish me to add, however, that obviously they had not had time to study the precise language and they are not attempting to deal with the precise form or phraseology which should be used, but they do feel that it is important in this area to encourage as far as possible the use of private capital in international investment, and that, therefore, if it is possible or practicable to work out some proposal of this character, that it might be a thing worth while doing. I would like to add, too, that the Bank has authorised me to say that if the proposal along this line was adopted, the Bank would be very happy to co-operate in every possible way in carrying it out and in doing what they can to make a success of that. Obviously the Bank does not want to enter into any discussion as to whether this should be an ITO or United Nations wording. Their interest is only to see that something along this line - if this Committee should find it practicable - should be given whatever encouragement is possible to accord them. I might further add that obviously the term "international investment" is extremely brood. Obviously the Bank would regard the provisions here contemplated as dealing with a field other than the Bank itself - that is the limitations and powers of the Bank as spelt out in its Charter. The Bank is not in any way inclined to encreach in the field of anything of that character but would simply facilitate the discussion by making it clear that we do not attempt to claim any authority in this field nor likewise do we believe that it is your wish that the Article would be in any way amended by this procedure. 42 CHAIRMAN (Interpretation): I thank the representative of the Bank for his statement. Mr. C.H. CHEN (China): Mr. Chairman, in the last meeting the Chinese delegation supported the United States proposal of adding the international investment to this Chapter. But at the same time we expressed our view that the text, as proposed by the American delegation and stated on page 6, we wish to amend. Concerning the first paragraph, in the last sentence we wish to add a few words. Instead of the word "supply" we wish to amend it to 'undertake to supply in accordance with its laws, regulations, or the treaty obligations it has assumed". In the second paragraph, after the word statement" we wish to add the words "of policy". Concerning the last sentence, we also wish to make changes, namely "treatment no less favourable, than that accorded to the citizens or legal entities of any third country" is, in our opinion, more appropriate in a bilateral treaty, whereas we are feeling with a Charter of multilateral character and containing the Most-Favoured- Nation clause already stated in another Article, so that it seems unnecessary for us to retain this phrase in this paragraph. And of course we are aware that any third country may be a non-member country, but we hope that, eventually, all countries will join this Organization.and any member who will join this Organization, will, of course; undertake to observe all the obligations stated in other Articles of this Charter. So in principle, we support the American delegation's proposal to have this addition included in this Chapter, but as to the text proposed, we wish it to be carefully considered by this Committee. E/PC/T/A/PV/4 43 - -, -? -' - . CHAIRMAN (Intrprotation): I believe thct a strong majority of Members have given their opinion in favour of the United States amndnn. Therefore, acfter the debate whioh took plac yesterday and again today, we cian eask the Sub-Coimtteo to study these rticles and draft a final text which will take into account all the opinions expressed. Ar you all in agreement? (Agreed) Threa is onoquestion wtlast on which I want to have your opinion jbefore we can adourn: that is the amendment presented by nthee South ,Afhrcica Dlegation wih is contained in Docum eente W102, but I'aieoaee that the Delotoof South Africa would like to explain his amendment himself. YDr. J.E.H0I11GVh Afr.ica):rma Mr, ChairAn, ould like to suggest, after we have heada a whol dy debating an Article with the unfortunate number of 13, theat to com along at this staage with proposal which , although it is quite small in its particular context, afafeects a lrg number of ftioheecsin thoarter, woul d be a-mot unpopul-.armIove, t teherefor propose that we should sit again. Dr. GUSTAVRREO GUTIEZ (Cuba): Foer theme vry sa reasons, and some others, we may have to havem tehe coplte deletion of the whole paragraph, so I do not know if it will be preferable to submit the whole thing to the Sub-Committee, . HDr. J.EOLLoOWAY (Suth Africa): Hairman, Mr. C I do not think t is a matter for the Sub-Committee that I am ra Iising, am raising a point of order, whether at this late hour we should start on an entirely now subject which will keep you very long nd the discussion of which, in any case, will not be conc.luded, RA/P (I,./4. 44 S E/PC/T/A/PV/4 I do not think it is fair to produce what I can assure you is an important subject relating to the whole construction of the Charter at this time of the day. CHAIRMAN (Interpretation): It was my intention to conclude the discussion on Chapter IV today. However, in view of the suggestion of the South African Delegate we shall have to moot again tomorrow. In that case, we shall adjourn until tomorrow morning at 10.30, when we shall study the South African amendment. Committee B will meet tomorrow afternoon. M. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): Mr. Chairman, in view of the great importance for Czechoslovakia and Central Europe as a whole of the United Status amendment to Article 12, I would ask whether Czechoslovakia could follow the debates of the Sub-Committee when it discusses the United States amendment. This is only a request and I do not insist if it is not possible, CHAIRMAN (Interpretation): I cannot, of course, answer for the Sub-Committee, of which I am not a member , but it has always been understood,- for Chapter IV as well as for the pre- ceding Chapters - that the Committee could appoint any Member who might be interested in a given questions I am sure that if you apply to the Sub-Committee you will be invited to the debate. Mr. E. W7WIDF8j,:iw,~(Executive Secretary, Preparatory Commit- tee): Mr. Chairman, the modification of the arrangements which have been suggested by the Charter Steering Committee and approved by the Preparatory Committee does raise certain procedural difficulties and I think if we are to keep within the arrangements made by the Charter Steering Committee we shall have to envisage Committee B meeting tomorrow morning at the same time as Committee A, or, alternatively, of having a second meeting of Committee B on Saturday morning. E/PC/T/A/PV/4 45 MR. E. WYNDHAM WHITE (Executive Seoretary) (Contd.): I think that the Chairman of the Charter Steering Committee would agree with me that the modification of dates at this early stage would make a serious alteration in the arrangements which the Steering Committee has laid down, and I am wondering which of those two arrangements commends itself moat to the Committee. Either the first meeting of Commission B should take place tomorrow morning as planned, but simultaneously with a further meeting of Commission A, or the second meeting of Commission B should be postponed until Saturday morning. G. E/PC/T/A/PV/4 46 Mr. WILCOX (United States): The Steering Committee was meeting to-day in an attempt to re-schedule the meetings at the beginning of next week. It is extremely important that this Commission and. Commission B complete the work on Chapters 4 and. 6 this week, Now that could be done by a simultaneous meeting with Commission B on Chapter 6, if we thought. it would be feasible and possible. If that should not be possible, then I should think that the meetings on Chapter 6 in Commission B. should take plae on Thursday afternoon, Friday morning and afternoon, and Saturday morning. That would enable that Commission to complete its work. I think it would be preferable, however, if we could meet simultaneously as previously stated. CHAIRMAN (Interpretation): I am compelled to ask various Delegations for their opinion, because the simultaneous meeting of two very important Commissions might raise difficult problems on some of these. Mr. GARCIA-OLDINI (Chile) (Interpetation): I have already explained on various occasions the difficulties experienced by the small Delegations, and it seems to me rather strange that each time when there is a question of this kind we are told it is absolutely imperative to adhere to the schedule established, and our possibilities are not taken into account. I think we should adhere to the plan within the limit of our possibilities, and I think when there is a conflict between schedules and our possibilities the Schedule should be changed, and our possibilities only should be taken into account, if we want to do good work; and furthermore, I think that when such a change in the schedule is contemplated. the Delegation should be informed in due course, so they can see whether it is possible or not for them to adhere to that proposal. Mr. GUTIERREZ (Cuba): We have had to-day a meeting of this G, 47 E/PC/T/A/PV/4 Charter Steering Committee and of the Working Party, and we have almost come to an agreement as to how to handle this situation and. the time-tables. I think that if we can ask our distinguished colleage from South Africa to drop his proposal of discussing this matter as a matter of fundamental principle, taking into account that everything in life is relative - even the existence of us - I think that this question could be settled at once: if he is good enough to let this matter be discussed in the Sub- Committee; and as the Report of the Sub-Committee is coming back to the Executive Committee we would have a long discussion about that. I think that would be the most simple thing, because probably to-morrow the two Steering Committees will find a way out of this situation. Mr. HELMURE (United Kingdom): I wonder if I might make a suggestion which would help. I strongly suspect that the Delegate from South Africa would not be prepared quite to agree with the suggestion that has just been made, because I made it myself privately just before, and he said "No!" very firmly to me; but I would like on behalf of (if I might presume to call them so) the large Delegations to assure the Chilean Delegation and other small Delegations that we have our difficulties too. There seem to be an awful lot of us, but it takes just as much time to get the right people at the right place for the right meeting as it does in a small Delegation. The specific suggestion I would like to make is that we should stick to the business as arranged, for to-morrow. That I think is a convenience to everybody: They have probably made plans and got ready for it. That would give us two meetings of Commission B to-morrow. Then on Friday morning - not to-morrow morning - we should deal in this Commission with the South African E/PC/T/A/PV/4 48 proposal, and probably go on with Commission B in the afternoon. I know it is very dangerous indeed to prophesy on these matters, but I have been looking at the Amendments which have been suggested for Chapter 6, which has to be taken in Commission B, and they seem to me: to be neither so numorous nor so fundamental as those we have been discussing this afternoon; and it is conceivable that in three meetings Commission B would finish its work, especially if everyone there were animated by a desire to get it done as quickly as possible in order to keep to the time-table. I believe that is an arrangement which would meet the convenience of the greatest number of people, and if a meeting on Saturday morning had to be arranged for a short time to finish up the fourth part of Commission B's work, that would be the least inconvenient re-arrangement. 49 CHAIRMAN: The Delegate of South Africa. Dr. J.E. HOLLOWAY (South Africa): Mr. Chairman, if the time for discussion has got to be rationed, then it should be rationed so as to give the various Delegations an opportunity, The difficulty now is that it has got to be rationed or otherwise all Delegations, partcularly small Delegations, have got to be put to a great deal of inconvenience. I am not prepared to put other small Delegations, having a small Delegation myself, to that inconvenience. The matter which I raised, I raised at the first stage, because, as I said before, it affects a very large number of paragraphs. I shall have further opportunities of raising it. I had thought by raising it at an early stage, so that on a matter of fundamental importance the Conference can pronounce itself at an early stage, we would save time when we got to those things, but I shall have an opportunity of raising it again. I shall give up what I had hoped was an opportunity of saving time, and I withdraw my proposal, CHAIRMAN: (Interpretation): I will ask the Delegate of South Africa not to withdraw his proposal and to agree to presenting his proposal on Friday morning. Dr. J.E. HOLLOWAY (South Africa): I am prepared to throw myself on the mercy of the court. CHAIRRMAN: The Delegate of the Netherlands. M. L. GOTZEN (Nether lands): Mr. Chairman, there is only one thing I should like to ask Mr. Helmore. I really do not see the difference betwee Committee B meeting tomorrow the whole day and Friday afternoon and meeting tomorrow in the afternoon and E/PC/T/A/PV/4 V. 50 V E/PC /T/A/PV/4 Friday the whole day. Mr. J.R.C. HEKMORE (United Kingdom): Mr. Chairman, in one or perhaps two sentences, this gives me an opportunity to take the Committee inside the workings of a large Delegation. It is difficult at twenty minutes to seven on Wednesday evening to re-arrange one's plan in a large Delegation for halfpast ten on Thursday morning, and it is very much easier to stick to what we have been planning for--that is, to discuss Chaptar VI tomorrow, and to give ourselves twenty-four hours in which to find all members of our very large Delegation and to tell them that what they thought was going to happen on Friday is not going to happen on Friday! CHAIRMAN: We all agree with Mr. Helmore's proposal, and this Committee will meet again Friday morning at 10.30. The Meeting rose at 6.45 p.m.
GATT Library
cq665gm4035
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Fourth Meeting of Commission B held on Saturday, 31 May 1947. at 10.30 a.m., in the Palais des Nations, Geneva
United Nations Economic and Social Council, May 31, 1947
United Nations. Economic and Social Council
31/05/1947
official documents
E/PC/T/B/PV/4 and E/PC/T/B/PV/3-5
https://exhibits.stanford.edu/gatt/catalog/cq665gm4035
cq665gm4035_90250069.xml
GATT_155
8,919
54,426
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL RESTRICTED ECONOMIQUE 31 May 1947 ET SOCIAL SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT FOURTIH MEETING OF COMMISSION B HELD ON SATURDAY, 31 MAY 1947. AT 10.30 A.M., III THE FALAIS DES NATIONS, GENEVA Hon. L.D. WILGRESS (Chairman ) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). NATIONS UNIES - 2 - CHAIRMAN: The meeting is called to order. We shall resume our discussion of the United States revision of Article 40. The first speaker is the delegate from New Zealand. Mr. G. LAURENCE (New Zealand): Mr. Chairman, the only point I had in mind to raise at the time of the adjournment last night was to ensure that this paragraph would not be referred to the Sub-Committee before the first item on page 9 of W/132 had been discussed by this Commission. CHAIRMAN: The New Zealand delegate has proposed that, before the United States proposal - revision of Article 40 - be referred to the Sub-Committee, there should be a discussion of the United Kingdom and French reservations regarding the submission of written complaints on behalf of any affected person. Is that right Mr. Laurence? Is that agreed? If so, I would propose we should take up this point now, and then return to the discussion of the proposed revision of the United States of Article 40. The delegates of France or the United Kingdom wish to discuss this point? Mr. S.L. HOLMES (United Kingdom): I will ask my French colleague to speak first. S - 3 - E/PC/T/B/PV/4 M. LECUYER (France) (Interpretation): I feel deeply honoured by the gesture of my British colleague, who deferred to me, especially as the amendment had been prepared by the United Kingdom Dolegation and the French Delegation had adhered to it, In order to explain the matter fully, I should also say that there was French initiative at the basis of this Article. We considered that the intervention of private persons in such complaints was rugrettable and that is the reason why, in New York we suggested that private individuals should act only with the assistance of their Governments. This is a rather difficult legal conception, due to the fact that the French word ``assistancec'' has no exact equivalent in English legal terminology, although it has a very precise meaning in French. This is the reason why we gave up our amendment and adhered to the British text, which says that complaints shou-ld be lodged by States on their own behalf or on behalf of tho injured parties. Why did we envisage the deletion of direct intervention on the part of private individuals or companies? The question has two aspects: one is the legal aspect, and on this point I shall be very brief because this is a delicate matter on which I am not competent. We have here prominent lawyers and I should run the risk of receiving from them remarks. or lessons that should be taken in the sense of correction -- of what I say. I shall therefore only make a remark based on common sense. P. -4- E/PC/T/B/PV/4 What do we intend to do? Do we intend to defend particular interests, particular commercial practices, such as counterfeiting. The reply is "No." Our intention is only to protect inter- national trade and therefore we have to deal with a clause of general interest and it is not a private individual who is in a position to form an exact idea of what general interest is and to defend it. This is the responsibility of governments and States. I admit that the New York text provided that a complaint made by a private individual should be examined by the Organisation with the authorisation of the Government of which this individual is a national, but it is not exactly the same thing. What would happen? We all know - without casting any aspersions on administrations - that it is sometimes rather difficult for a national administration to resist certain particular interventions, for instance, on the part of a powerful Company, and when a powerful Company asks some minor official to defend certain interests it may be difficult for that official to refuse the necessary visa or authorisation and he 'will think "Well, after all, let them take their chance." The case will be. different if the Government itself takes the matter in hand and submits the case to the Organisation because then the Government's responsibility will be involved. Thus we will avoid a multiplicity of ill-founded complaints and perhaps even certain cases where there might be some attempt at blackmail. There are also other reasons. It is, I think, also necessary that the Government should be in a position to instervens in what should be described as the subsequent procedure. Let me explain this: The Organisation will carry ou investigations in various countries, and in particular in the country of which the complainant is a national. It will therefore be necessary for the Government to be in a position to intervene and help in the investigation. It is also possible that the national home-legislation should be re- sorted to in that particular country, and that the Government P. - 5 - E/PC/T/B/PV/4 concerned should take action under that particular legislation. For that reason too, it is necessary for the Government to be in a position to follow the matter closely with the Organisation. For these various reasons we on the French side must insist that the matter be considered either by this Commission or by sub- committee 2, and. we are of opinion that the Governments should be absolutely compelled to intervene in the procedures, at all the various stages of the procedures, on behalf of the party injured. CHAIRMAN: Is there any other speaker? M. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): The Czechoslovakian delegation were always of the opinion that we should not open the door to the possibility of private persons, represent- ing private interests, presenting complaints and causing those difficulties to governments, difficulties which may in oertain cases be created for political motives. Therefore we support the amend- ment presented by the two delegations. Mr. S.L. HOLES (United Kingdom): Mr. Chairman, I would like to say that I deferred to the French representative not only because he has been present in New York but also because of his great know- ledge which I think has been reflected in the remarks he has made. I think it falls to me to say that the point is clearly a d ifficult one. It has two aspects; one whether or not governmental authorisa- tion of the putting forward. of the complaint is required, and the second is, I think, a kindred point. The second aspect is whether we should allow a complaint which originates with some private in- dividual or enterprise to be explained by the private individual or enterprise in person. I would myself feel that the matter should be capable of solution by subcommittee 2; but, in general, I have of course list ened with the greatest respect to remarks by our French colleague which I wouldd say reflected very closely the course of the discussion at New York. as reported by our own representative there. - 6 - E/PC/ T/B/PV/4 CHAlRMAN: The delegate of China. M. C.E. CHEN (China): Mr. Chairman, .the Chinese delegation also wished to associate themselves with the amendment made by the United Kingdom delegation an: supported also by the French delegation. We think it is simpler for the Organization to receive complaints direct from Members only, and not from any individuals concerned. That would simplify the work of the Organization. Another point is that it would avoid any risk of unnecessary complaint by indlividuals, because a given action may affeot private individuals to different degrees, and it is better to have the members, who have the jurisdiction of the individual business enterprises or individual processes, to consider the complaint first. Then, after due consideration, they would decide whether any complaint should be subcitted to the Organization or not. .another reason is that since complaints are likely to be made in English and French, if individuals are allowed to make complaints it would be much easier for some countries to make complaints very frequently and it may be very difficult for other countries to have an equal chance, so that in order to give all the Member countries an equal opportunity to submit complaints, the Chinese delegation feels it is better to have it done either on the Members own behalf or on behalf of business organizations or persons within the jurisdiction of a given Member. CHAIRMAN: The delegate of the United States. MR R.P. TERRILL (United States): Mr. Chairman, it might be well if I recall some of the history of the evolution of this particular point. In the original draft Charter that the United States suggested for consideration in London, the idea was expressed that it should be left to the autonomus decision of each country as to the procedure it would establish for the submission of complaints on the part of its nationals, as well as those that it submitted on its own hehalf. That is to say, a Member could require that its nationals file no complaints on their own behalf at all, either through the government or directly themselves. That is, if a Member so chose, it would be the sole agency in that country to file complaints. On the other hand, some countries might feel that they wish to merely authorise the complaints of nationals, that is, take no particular position themselves in a given case. Still other countries might feel that their nationals could, file directly with the Organization if they chose. G -8- E /PC/T/B/PV/4 At London the wording was somewhat altered to provide for a uniform procedure on the part of all countries. The wording in the London text as i recall it at the moment was with the permission of the Member conce'-ned."; that is to say, the Member Government whose nationals were complaining would have to permit them to file a complaint. We came to New York and the further suggestion of several Delegation, most notably the Delegations of France and Belgium; and also I thought that with the concurrence of the United Kingdom representative we changed "permission" to authorise". a slightly more formal word. Now we have before us a proposal to go still further in the direction of making every complaint to the Organisation a matter of formal Governmental action. The discussion this morning would seem to indicate that various Delegations would consider this to be a rather unrealistic, formal sort of matter, and one which does not have, perhaps, very much substance. I think, Mr. Chairman, that the United States Delegation would regard this point as really fundamental to the entire character of the procedures; and the machinery provided under Chapter VI for the receipt and settlement of complaints. As we see the matter, Mr. Chairman, the suggested. Amendment would force each Government to take a position on each complaint before it was submitted. That would require that in each country an investigation be carried out and a determination would be made with each Government before it submitted the point to the Organization. The complaint, i n other words, would be a very serious matter. It would. in effect constitute, a charge against another Member of a breach or violaton of the Chaster. That is precisely what we have sought to avoid, and that we had agreed upon generally on the earlier and the present formulation 9 E/PC/T/B/PV/4 of the text on this point. We feel that it would be, therefore, a very serious matter if this Amendme-nt were found to be acceptable; and, as a matter of fact, one would hardly need the Organisation at all, if each Government carried out an investiga- tion of its own before it submitted a complaint. Let me recall to you that before a Government could make up its mind conclusively on the final merits of a complaint as to whether it was interfering with world trade, etc., it would have to consult with other Members and go through a very long procedure, because frequently adequate information is not within the possession of any single Government. We feel, therefore, that such a requirement would stall the machinery that we have now envisaged in Chapter VI; that it would make it cumbersome, slow and ineffectual, and would probably destroy the meaning and the efficacy of this Chapter. Speaking on the other side of the question very briefly, the present text provides adequate protection against frivolous, malicious, unwarranted, or politically inspired complaints. There are two steps in the procedure which must be taken before an investigation is conducted by the Organisation. Those steps are: First, that the Member must authorise the complaint. That I is to say, the Member Government must be convinced that the complaint is justified. It assumes, therefore, some measure at responsibility for the complaint in question. Indeed, of course, if the Member itself is complaining, it assumes full responsibility I for its complaint. I was suggesting principally a complaint which originated with commercial enterprises within the jurisdiction of a Member. The second step which would guard against malicious or G - 10 - E/PC/T/B/PV/4 unwarranted complaints is the screening procedure set forth in Article 40 in some detail. That is one of the functions of the Organisation, to decide whether in the case of any given complaint it is of such a character that an investigation should be made. as our talks have proceeded in London, and then at New York, I think we have all come to place more and more emphasis on this screening procedure, and we have now provided for it rather fully, and, in the re-drafted text of Article 40 which the United States has laid before you, we have set this screening process up by itself and in some detail. We would therefore feel, Mr. Chairman, that the present text and the proposed revision of Article 40 as su.-ested by the United. States, takes care of all of the possible objections that have been raised this morning to the present formulation, which is that complaints originating from business entities within a member country shall be authorised. by that Member; and our understanding of that is that a Member need, not make up its mind to make any final decision as to whether there has been a violation of the Charter, but it merely must decide whether the complaint appears to be justified. The function of the Orgnisation is to determine whether there has been in a given case harmful effects on world trade. I submit that this is the entire purpose of the investigation, and, that Members should not be required to take a position -n the matter before they submit a complaint charging another Member as in effect violating this Charter. - 11- E/PC/T/B/PV/4 CHAIRMAN: Il tnere are no other Delegates who wish to speak on this question, I would propose that this matter be referred, to the sub-Committee 2 , who will, be able to take into account the observations of the Delegate who have spokenr this. morning. on this.question. Is that agreed? (Agreed) I would now like to ask the Commission if we, are in a position to refer the United States revised text of Article 40 to the sub-Committee or are there any other Delegates who wish to speak before it is referred to the sub-Committee? The Delegate of Belgium. V. - 12 - E/PC/T/B/PV/4 M. THILTGES (Belgium) (Interpretation): The remarks of the Belgian and Luxembourg delegations on the draft Article submitted by the United State delegation will be brief, because the French delegate yesterday has already spoken on a number of points and I shall not enlarge on it. I should only like to say a few words in connection with the new paragraph for Article 4C which appears at the top of page 8 of the English text of document W/132. This is, in our opinion, a substantial change which extents the scope of the text agreed in London, considerably. It is said in the new draft that, if the Organization determines that the practices in question have had, or are about to have, the effect described in paragraph 1 of Article 39, it shall request each member concerned to take every possible action to prevent the continuance or recurrence of such practices. This new text raises a number of objections. First of all I have one remark of detail to make. The substitution of the word "determination" for the word ``findings", is not, in our opinion, in conformity with the proper part to be played by the Organization. What is more important is the commitment to prevent the continuance or recurrence of such practices as substituted for the former wording "the practices". The comments by the United States delegate on this change explain that this is, in fact, a considerable extension of the text agreed in London. It means that they cover similar practices to those which are the subject of an investigation. I should like to recall In this connection that the Belgo-Luxembourg amendment referred to an abusive use of such practices, and for my part I cannot agree with such an extension of the meaning. I would like to make now another remark which is, perhaps, less important, in connection with the inclusion in the text of the words ``recurrence" which have not ER - 13 - E/PC/T/B/PV/4 been adopted in London and which have only been adopted in New York with some reservation. But I will reserve my right of speaking on this matter in the Sub-Committee because it is connected with the Czechoslovakian amendment which has also been referred to the Sub-Committee.. M. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): Mr. Chairman, the Czechoslovakian delegation considers that considerable parts of the American proposal are useful and acceptable. However, with regard to point 2(c) of tee text which, in the American draft, is number 9, we are not of the opinion that the words "the publication of such reports or any portion that may be withheld, if indeed the cause is justified, ``should'' be deleted as is proposed by the United States delegation. In fact, this clause which it is proposed to delete does not contain any obligation for the Organization. It simply reserves the right of the Organization to withhold the publication of reports or any portion thereof, if the Organization considers that this cause is justified. Therefore, we think that the Organization should not be deprived of this possibility and that these words should be maintained. Mr. F.A. McGREGOR (Canada): Without making any extended comments, Mr. Chairman, I would like to record our agreement with the Czechoslovakian position on this particular point, Dr. P. LEENDERTZ (Netherlands): Mr. Chairman, I would just like to make one remark. I am fully in agreement with the remarks made by the Delgian delegate. I only want to add that his ER -14 - E/PC/T/B/PV/4 objection to the word "determination" might be extended to many points where that word is used, and I do think that that word might cause a lot of misunderstanding because it seems that, in the ears of the American and English gentlemen, the word has a slightly different meaning than in the ears of those who do not speak the language, and I only want to recommend to the Sub- Committee, that it gives its attention to the meaning of this word in the Article. E/PC/T/B/PV/4 CHAIRMAN: The Delegate of the United States. Mr. Robert P. TERRILL (United States); Mr. Chairman, I want to report to the question that has been raised concerning the proposed deletion in Paragraph 9 of the suggested U.S. re-draft of Paragraph 2(c) of Article 40, concerning the withholding of reports or portions thereof by the Organization. The record will show that yesterday the United States D-legation put forward two reasons why this should be done: first, on the grounds that the present clause would be ineffectual; secondly, that it would be undesirable, and -finally we pointed out what the real substitute f'or this clause would be. Several Delegations have, addressed them- selves to this point this morning. I have heard no compelling arguments, except that the clause should be retained. I might therefore just extend my previous remark to say this: as you all know, this Charter was widely discussed in the United States by the public, by various organisations and before the United States Senate. T..e existence of this particular clause aroused considerable apprehension and therefore, unless there were real compelling reasons for including it, we have been persuaded by the public reaction that it should be deleted. Mr. Chairman, I do not believe it is sufficient merely to say that in the light of superior wisdom - which has not been expressed - we should retain this clause. If there wore compelling reasons, which I confess I do not know at all, then of course we would be perfectly willing to listen and to give them full consideration. CHAIRMAN: The Delegate of Czochoslovakia - 15 - S S E/PC/T/B/PV/4 Mr. STANISLAV MINOVSKY (Czechoslovakia) (Interpretation): Perhaps, Mr. Chairman, the text could be changed so as to make it clear that it should be applied only in exceptional cases. we could find a form of words to indicate that it is only when some vital interest of a .Member State are involved that the Organisation would be empowered to withhold. publication, CHAIRMAN: I think that is a matter which might be discussed by Sub-Committee 2. If there are no other speakers wishing to comment on this particular proposal I think we are now in a position to propose that it should be referred to Sub-Committee 2, who will take into account all the observations which have been made in regard to the United States proposals Is that agreed? (Agreed). Al the outset of our discussion on Article 40 it was agreed that the other proposals relating to this Article should be referred to the Sub-Committee without further discussion in the Commission. I wish to bring to the attention of the Commission an oversight on the part of the Secretariat in drawing up Document W.132. An amendment proposed by the Czechoslovak Delegation, and given in Document E/PC/T/W/1I9, was not included in the list of proposals relating to Article 40. A note regarding this proposal should be made on Page 9, between items 4 and 5. I would also suggest that this amendment proposed by the Czechoslovak Delegation be taken into account by the Sub-Committee. Are there any objections? (Agreed). S - 17 - E/PC/T/B/PV/4 Before we proceed to Article 41 I would like to make a reference to certain amendments which were submitted' after the deadline for the submission of amendments with regard to. Chapter VI. One of these amendments is that contained in Document W.138, submitted by the Delegation of the Netherlands, and when we are considering Paragraph 3 of Article 39 I propose that this should also be taken into account by the Sub-Committee. Mother amendment filed by the Netherlands Delegation after the deadline for submission of amendments is given in Document W.139. This relates to Article 42 and Ipropose that when we come to Article 42 we should also propose that this be referred to the Sub-Committee. The other amendments which have been submitted after the deadline include an amendment proposed by the Belgian Delegation in relation to Paragraph 3 of Article 39. This is given in Document W.130 Rev.1. This also will be referred directly to the Sub-Committee. I also understand that the Chinese Delegation have submitted an amendment to Paragraph 1 of Article 39. This also will be referred directly to the Sub-Committee. Are there any objections? (Agreed). We will now pass onto Article 41. - 18 - P E/ PC/ T/ B/PV/ 4 Mr. F. McGREGOR (Canada): Before we leave Article 40, May I refer very briefly to the proposed amendment at the bottom of page 8, paper W/132 - the word "as" substituted for a long phrase. The thing that has troubled some of us for a long time is the very frequent repetition throughout several Articles of the Chapter of the sixteen-word phrase "which have or are about to have the effect described in paragraph 1 of Article 39".. A very substantial reduction in the number of words can be effected if the single word "as" is used instead of the greater -part of the long phrase. Not only would it save typing and paper but the meaning would be more accurately conveyed. The long phrase refers only to the effect described in paragraph I of Article 39, but that is only one condition which must be ful- filled before commercial enterprise would properly be subject to investigation; the type of practice, the nature of the commercial enterprise, the scope of its control, are also important conditions and these would be referred to if we would use the words "as des- cribed in Article 39". I have not actually counted the number of words which would be saved by this amendment, but Itake it that the nett saving would be approximately 85 words. Our other suggestion is to eliminate the words "paragraph 1" (at the end of the same clause ) and thus refer to the whole Article which des- cribes in its second paragraph the nature of the enterprises affected, the extent of their control, the type of practice, and the effects. CHAIRMAN: I am sure that if the sub-committee reduces the number of words in Chapter VI they will earn the gratitude of all members ofthe Commission. Mr. W. THAGAARD (Norway): Mr. Chairman, I propose adding the words "in international trade "to paragraph 1, sub paragraph (a) (ii) and to paragraph 2, paragraph (b). We have the words "in - 19 - E/PC/T/B/PV/4 international trade" in paragraph 1, subparagraph (a) (i). We ought to put them also in (ii) in the same sub-paragraph and in paragraph 2, sub-paragraph (b). CHAIRMAN: The delegate of Norway has made a proposal with regard to Article 41 which we are now discussing. It is Article 41? Mr. W. THAGAARD (Norway): Yes. Mr. A.P. van der POST (South Africa):. But I have still something to say about Article 40 - a question of procedure, arising out of Mr. MoGregor's remarks. CHAIRMAN: Mr. McGregor was somewhat out of order in that we had already decided to remit -rticle 40 to the sub-committee. But if you have any particular comment to make we will hear it now. Mr. A.P van der POST (South Africa): It is not a question of altering principle. It is merely that I would suggest for the consideration of the Commission and the sub-committee that Article 40 deals with procedure in respect of complaints and so forth in fair detail, and I want to suggest for consideration that in the body of the Charter we should not enter into details about procedure. That would more suitably be dealt with in an annex, In the main Articles of the Charter we should really deal with principle; principle of right to complain, of right to be heard, and the obliga- tion to report; but the details of procedure should be embodied in a schedule, a schedule to this particular Chapter, are not as part of the Chapter. That is all I wanted to suggest for the consideration of the sub-committee, Mr. Chairman. - 20 - CHAIRMAN: The delegate of South Africa is somewhat late in making this suggestion with regard to article 40, but I am sure his comments will be taken into account by the sub-committee. I am afraid Ioan allow no further discussion to article 40, as we have already passed on to article 41. Are there any comments with regard to the suggestion made by the Norwegian delegate? MR. S.L. HOLMES (United Kingdom): Mr. Chairman, I have a small point in regard to article 41, paragraph 1(b) in the United States draft. This reads at the moment, that the organization is authorised, among other things, "to request information from Members in connection with such studies". These are the studies relating to restrictive business practices. It has occrred to us that perhaps it would be wrong to confine one's sources of information solely to Members, and that perhaps consideration should be given to the question whether one might not also usefully ask for information from non-Members, or even bodies which are not solely governmental. In this connection I would like to refer to the Commodity Chapter, Chapter. VII of the Draft-Charter, Article 48, paragraph 2 where it suggests in connection with commodity Study Groups that non-Members, having a similar interest, may also be invited to take; part in the work of such a commodity Study Group. I only make the suggestion so that it may be considered, if you agree Mr. Chairman, by the sub-committee which will be looking at this passage. CHAIRMAN: The study of the proposed revision of Article 41 submitted by the United States delegation; and also the suggestions which have been made this morning by the delegate of Norway and by E/PC/T/B/PV/4 the delegate of the United Kingdom do not, I think, give rise to questions of substance which need. to be discussed in fall Commission. Therefore, I am wondering if the Commission could not agree that this proposed revision submitted by the delegation of the United States, together with the suggestions of the Norwegian and United Kingdom delegates, be referred to the sub-committee without further discussion in this Commission. The delegate of New Zealand. MR. G. L. URENCE (New Zealand): Mr. Chairman, there is a question which I think may be considered in respect of article 41 on the lines suggested by Mr. MoGregor yesterday. I do not want to go into the question again of the merits or otherwise of the registration of cartel agreements, but in re-reading Chapter VI in the light of the discussions yesterday on the merits or otherwise of registration of cartels, it occurs to the New Zealand delegation that in certain cases there may be merit in having something in the nature of a census taken of International agreements in respect of particular commodities, Yesterday, the registration of cartel agreements was objected to on general grounds, but I think we can all appreciate that different commodities have different standards of singnificance in international trade, tand there are a great number of commodities that do not enter into international trade at all, and it seems to us that there may be occasions when Members may be justified in asking the Orgnization to consider the question of having cartel arrangements registered or, indeed, in connection with investigations that the Organization becomes obliged to carry out as a result of complaints, there may be merit in asking for a census in cartel arrangements. E/PC/T/B/PV/4 - 22 - Now, in the time that has elapsed since yesterday, we have not had the opportunity of considering just where this question could best fit into the Chapter, if it did find favour with the Commission, but I would ask the indulgance of the Commission to consider whether or not it would be reasonable to oblige the sub-committee to take into account representations which may be made on the lines of the case that I have stated E/PC/T/B/PV/4 CHAIRMAN: We had a very full discussion yesterday on the of registration/agreements and a vote was taken which I interpreted to be a rejection of the Amendment proposed by the Brazilian Delegation. The suggestion of the New Zealand Delegation is along somewhat different lines, He is proposing that the Organisation should endeavour to compile a census of agreement. That suggestion could be examined by the Sub-Committee if the Commission thought fit, but I would not want at this stage to reopen a debate on the general question of the registration of agreements. Any other comments on Article 41? Mr. MONTEIRO DE BARROS (Brazil) (Interpretation): Mr. Chairman, the Brazilian Delegation agrees that the examination of Lrticle 41 should be referred to the Sub-Committee, but pr<-Qrves its rights to present Amendments in regard to Article 41, especially after taking into consideration the proposal just made by the New Zealand Delegate, and after discussing the matter with the New Zealand Del egat ion. CHAIRMAN: The Brazilian Delegation has the right to submit the Amendment at the start of the discussion in the Commission, and it will be in order for them to submit an Amendment on this question. Other Amendments will be referred directly to the Sub-Committee, Any other comments? Mr. GARCIA-OLDINI (Chile) (Interpretation): Mr. Chairman, I would be grateful if the United States Delegate would kindly explain the meaning of the Amendment rewarding paragraph 2(b). In fact in paragraph 2(b) the New York text provided for conferences for the purposes of general consultation; and in the - 23 - G - 24- E/PC/T/B/PV/4 Amendment which is now before us, the word. "consultation" has been replaced by the word "discussion". Now I think that the word. "consultation" had. a wider scope than the word. which is here before us, and I would like the United States Dclegate to explain the exact meaning of this alteration. CHAIRMAN: The Delegate of the United. States. Mr. TERRILL (United States): The reason that that was done is explained in the comment which was supplied in Document TW/122 on page 11. The word. "consultation" was used in our Amendment of Article 40, the preceding Article, to describe a procedure under which a Member could consult directly with other Members regarding a particular restrictive business practice. That amendment appears as paragraph 1 of Article 40. "The Organisation shall arrange, if it considers such action to be justified, for particular Members to take part in a consultation requested by any Member which considers that any practices exist which have or are about to have the effect described in paragraph 1 of Article 39. It would. have been confusing, therefore, to use this word "consult", or "consultation", again, in another and quite different context, because the sort of conference that is proposed. in Article 41 is not a contentious conference at all; and, in fact, it is quite a different sort of proceeding than we have in Article 40, under points of Procedure. In the latter case, namely, under Article 41, we might envisage the following situation as an illustrati on. A commission on business practices has stated a certain - 25 - E/PC/T/B/PV/4 problem which is of general significance to all, or most, of the Members, and it formulates, let us suppose, a uniform clause to be inserted in all national laws regarding-a certain subject. It might then call for a General Conference of Members to consider and. discuss this proposal, and if they favoured it, to recommend it either directly to the Members or recommend it to the Economic and Social Council for submission to the Members. V - - E/PC/T/B/PV/4 Now, that kind of a Conference is quite different from the cosultative procedure under Article 40, and if the word "discussion" is too narrow, as it may well be, then we should broaden that in accordance with the suggestion of the Chilean Dolegate. CHAIRMAN The Delegate of Chile. M. E.E GARCIA QLDIMNII (Chile) (Interpretation): Mr. Chairman, I am grateful to the Representative of the United States, who has to a considerable extent clarified the question now. However, perhaps through some inaccuracy in the interpretation - and I am sorry to be obliged to say so with regard to the interpreter - the Delegate of the United States may have had the impression that I asked him why he proposed to delete the word "consultation". In fact, the deletion of the word "consultation" is adequately explained in the document referred to. The point of my question was to ask why it is proposed to substitute for the deleted word the phrase generall discussion". Usually general discussion is followed by a particular discussion, and, in any case, it leads to conclusions, whether these conclusions take the form of recommendations or something else. Now, this text which says "general discussion" may create the impression that what is meant here is a sort of general and non-comarcial conversation, which we can observe in several instances, when various people meet and discuss political, literary or philosophical matters, and do not try to formulate any conclusions, perhaps because thay are afraid that the views expressed are too widely divergent. This, of course, is a procedure and a result which we should like to avoid, and we are certain that this is the intention - 26- V. E/PC/T/B/PV/4 of all the Delegates. Therefore, I should like to request the representative of tho United States ,who widbrtoo1 to change the wording, to go a little deeper into this question, and perhaps to consider a procedure and a wording which would ensure that these discussions should not be without conclusions. CHAIRMAN: I am sure the point that we are discussing now is largely a question of drafting, and the sub-Committes will take into account the views that have been expressed by the Delegate of Chile. Any further comments on points of substance in relation to Article 41? -27 - ER If not, I propose that this Artile 41 together with the proposed revision and suggestions which have been made by the delegates of Norway and the United Kingdom. and the delegate of Chile, be referred to the Sub-Committee for further study. Are there any objection? Carried. We now pass on to Article 42. My study of this Article has led me to the conclusion that the main points of substance arise out of the proposed rearrangement and reformulation of this Article submitted by the delegation of the United States. The other proposals are largely matters of drafting and I would, therefore, propose that we follow the same procedure that we did with Article 40, and only consider, in this Commission, the proposed revision submitted by the Lelegation of the United States, and the other proposals shall be referred to the Sub-Committee without further discussion in this Commission. Any objections? Carried. Will the delegate of the United States wish to explain the purposes of his proposed revision? Mr. Robert P. TERRILL (United States): Mr. Chairman, I as shall speak only very briefly. We have pointed outs/in Article 40, the improvement of the arrangement of the Art cle so that it would be clear to people who had not attended the succession of Conferences that we have had, and that we will continue to hold, on the Charter, as to the precise meaning. It has been a very difficult Article to follow, and almost all of the changes, we feel, are those of drafting. There are also a lot of other improvements that will suggest themselves to other delegates, and that can be considered in the Sub-Committee. ER - 29- E/CP/T/B/PV/4 There are only, I think, two things that I would like to point out, particularly in order that my colleagues might not think they are falling into any traps as they felt yesterday, or that this is an ominous revision. The first change occurs in paragraph 1 as it Is presently drafted. The change is as follows. "Each Member shall take all possible steps by legislation or otherwise, to forbid and prevent, within its jurisdiction., practices." Formerly the obligation was to ensure. It seems to us that it would be much more meaningful if we were to reflect the general obligation of members, that is set forth in Article 39 paragraph 1. There the word "prevent" is used. We believe, however, that in connection with implementing that obligation, members should give notice to those who are affected within their jurisdiction, that henceforth these practices will not be permitted. In other words, they should forbid the practices by due notice in accordance with their own legal or governmental system. In the case of the United States, that would take the form of law. In other cases it might consist of an announcement on the part of the government. We feel that that change is in the interest, certainly, of clarity, and giving a little more backbone to what is intended by Article 39 paragraph 1. Mr. Chairman, would you prefer that I go on to the other changes that I have? The other point that I would like to call attention to is in connection with paragraph 4. There we have inserted a word which may, or may not, have a particular significance to other delegations. "Each member shall take fullest account of the Organization's determinations, requests and recommendations made on the basis of its investigations and determine and initiate apropriate action in accordance with the member's ER - 30 - E/PC/T/B/PV/4 system of law and economic organization ... etc." The words "initiate" are added to indicate there that there is some obligation to initiate the appropriate action. In the event that no action is believed. appropriate, then of course the member is perfectly free not to take it, and the following paragraph 5 provides for just that contingency. I believe those are all the points I want to mention, Mr. Chairman. S - 31 - E/PC/T/B/PV/4 CHAIRMAN: The Delegate of the United Kindom. Mr. S.L.HOLMES (United Kingdom): Mr. Chairman, it so happens that on both the points to which the United Sates representative has called attention we should have felt it necessary to make some comments, because they seem to us to be more than points of drafting and with your permission I should like to refer very briefly to these two points. If the first place, we find it impossible to agree that the words ``forbidd and prevent" are better than the word "ensure", even having regard to the explanation given by the United States representative, orally and in this paper. I think it is a great pity to tamper with the text unnecessarily - I am sure everyone would agree there; and would not everyone agree that there can really be no more lawful expression than the word "ensure", which means, to make certain. Unless there is some really good reason for altering this , we would press that the existing text remains at it is, on the grounds that it is really stronger end not weaker than the alteration which has been suggested. Secondly, as regards Paragraph 4, it seems to us illogical to make the alteration proposed unless you go a little further, and, if this amendment is pressed, we should have to suggest that the whole expression "determine and initiate appropriate action" be expanded; otherwise we reel that there will be the danger of misconception or a contra- diction. We should have to Propose something like this: "decide on and initiate the appropriate actions if any, to be taken.'' -32 - S E/PC/T/B/PV/4 I felt it was desirable just to make these two points, because they were ones which seemed to us to be just a little more than mere drafting alterations, CHAIRMAN: Are there any other comments on Article 42? If not, I propose that the United States' proposed revision of Article 42, together with the other proposals included in Document .132 , be referred to the, Sub-Committee for further study. Are there any objections? (Agreed). Article 43 - there are no observations in Document W.132; therefore I think we can take it that the text as given in the New York Draft is approved for this first reading. The same applies to Article 44. Are there any objections? (Agreed). We now come to the Report of the Sub-Committee, who will propose the inclusion of Article 41A - Procedure with respect to Services. Dues any Member of the Commission wish to speak to this proposal? Mr. W. THAGAARD (Norway): I think we should have some more time before we enter into a debate upon this matter. Personally I am not prepared to speak on behalf of the Norwegian Delegation, because the Members of the Delegation only received this document this morning and therefore we have not had time to discuss it in the Delegation. It is a proposal whichcalls for examination. It raises a question of principle, The New York Draft is shaped in relation to goods only; it refers to production, imports, exports and purchase and sale of goods. J. E/PC/ T/B/PV/4 MR. W. THAGAARD (Norway) (Contd.): We are now to widen the scope of Chapter VI to include services of trasportation, insurance, banking and other services and tho question arises as to the consequences for other parts of the Charter. It seems to me that it is necessary to have this matter thoroughly studied and clarified before we take any decision concerning the proposal. of the new article 44 - A. I suggest we have some more time. CHAIRMAN: With regard. to the comments of the Norwegian delegate, I would point out that this is a report of the sub- committee, which hlas been chartered by this Commission to find a solution to these particular difficulties, which is confronting the Commission. - This report was circulated yesterday at our meeting, and therefore it has been in the handsof members not quite twenty-four hours, but at least over night. However, in view of the prop-sal of the Norwegian delgate, I feel I must putit to the Commission that this report be not proceded with now, but held over to a later stage of our discussion. DR, G. GUTIERREZ (Cuba): Mr. Chairman, I agree that the delegate from Norway, had no opportunity to give -further consideration to the document, When he has this opportunity, he will realism that this compromise document does not bring to the Charter the whole matter of transportation or banking or other services, but simply establishes very broad principles that when matters arise, as contamplated in paragraph . of Article 39, they might be taken to any of the specialised international agencies -that have already been astabished and that if it is a case of knowing the agency established, the Organization will act in the - 34 - J . E/PC/T/B/PV/4 form provided for in Article 61 of the. Charter already. It is not a new thing. It is not a rabbit that via have brought out of our hat, it has come out with the co-operation of all assenting opinions, so I think that as soon as we have an Opportunity to go into this side of the question, it may be that we will find it very simple. CHAIRMAN: The delegate of India. MR. G.L. MEHTA (India): Mr. Chairman, I would like to associate myself with what the delegate from Cuba said just now. We entirely -agree with the Norwegian delegate that we want time to study this, and that it might be considered at a later stage. But I thought that a very fair compromise between the differentt .points of view had been arrived at by the sub-committee, and I sincerely hope that after further examination, the Norwegian delegate will also f all in line and a agree with this particular amendment that has just been suggested. When Mr. Holmes of the United Kingdom said:in the beginning that he hoped. to produce a rabbit out of the hat I was rather soeptical, I must confess, because I did not see whether there was any hat at all there, but as members have seen, nobody was talking through his hat in this matter, and something much more than a rabbit has been produced. In fact, Mr. Chairman, you yourself have commented on the procedure and report of this sub-committee, and, said that it is an example that should be followed. I therefore hope that this amendment will be accepted in due course. While I congratulate my friend from Cuba on behalf of our dalegation for the initiative that he has taken, may I say, Sir, with due modesty, that this question of the inclusion of services was raided at the London meeting by the Indian delegation, and I think we are also entitled to express satisfaction at the result that has been achieved. G -35- E/PC/T/B/PV/4 CHAlRMAN: I take it that is the sense of the Commission is with the proposal of the Norwegian Delegate that further consideration of this Report be deferred. I would therefore propose we take up: the Report of Sub-Committee 1 when we receive the Report of Sub-Committee 2. Any objections? Carried. We now pass to Article 45. I would like to ask the Delegate of the United Kingdom if he wishes to proceed with their proposed Amendment to Article 45? Mr. HOLMES (United Kingdom): Mr. Chairman, I do not think I shall be offending anybody if I say at this stage in our proceedings that I am quite unable to withdraw the Amendment we propose to Article 45. Had the proposed Article 44(a) been accepted. here and now, the position might have been quite different; but at the moment I must ask that the Amendment remain on the paper. CHAIRMAN: Under those circumstances we will defer further consideration of the United Kingdom Amendment to Article 45, and also the Chilean re-formulation of paragraph 1(c) of Article 40 mentioned. on page 14 of LW/132 until after the Report of Sub- Committee 1 has been considered. The Chilean re-formulation really relates to Article 45 of the Draft. Any objections? I would also propose that the proposal of the Delegation of Australia for re-arrangement of Article 45 and the proposal made by the Canadian Delegation be referred to Sub-Committee 2. CHAIRMAN: The Delegate of South Africa. E/PC/T/B/PV/4 Mr. VAN DER POST (South Africa): Mr. Chairman, I do not want to detain the Comrmission unnecessarily, but I should be glad if, perhaps, for the guidance of myself and the Committee generally, one point might be clarified, or that somebody could give me an explanation on that. I said yesterday, when I supported the Canadian Amendment to article 39, that it had removed certain difficulties I had had in connection with Article 39; but in our Delegation there are some who are not quite satisfied about the implication of 39, particularly as re-worded. Now we have in most countries certain marketing legislation concerning agriculture, under which certain powers are given to farmers' organisations, and so forth, in marketing. I will quote a specific case. In your re-draft of article 39 - the Canadian re-draft - there is reference to substantial control or influence of trade among two or more countries in one or more product. The exact meaning of the words "control or influence of trade among one or more countries" - the implication of that - is not very clear to us. We nave, for example, a Citrus Control Board, which is the sole marketing body for South African oranges. It sells to overseas markets and mainly in the United Kingdom, and to some extent in Scandinavian countries, and on the Continent; and, of course, in south Africa. Now the argument has been produced in our Delegation that the South .African Citrus Board has a substantial control in two or more countries, namely, its own and the United Kingdom; and that, therefore, this whole Article or Chapter would apply in such a case. I am inclined to think it. would not apply to any of the organisations mentioned in Article 31, and I shall be glad, perhaps, if somebody could enlighten us on that point, as otherwise we would have to consider legislation for submitting an Amendment to Article 45. G. - 37 - V. E/PC/T/B/PV/4 CHAIRMAN: The Delegate of Canada. Mr. F. A. McGREGOR. (Canada): Mr. Chairman, may I suggest that even though the sub-Committee will now be suffering from a burdensome surplus -- such a surplus as will make it necessary for them to work on Sunday and every night -- it would be desirable for that-sub-Committee to take into consideration the references made by the Delegate of South Africa, and if it is found that such an Organization as he has suggested would be wrongfully included, then to consider some amendment to article 45 and submit it with its report. Mr. A. P. van der POST (South Africa): That satisfies me, Mr. Chairman, thank you. CHAIRMAN: Are there any further observations? The Delegate of Brazil. M. Monteiro de BARROS (Brazil): (Interpretation): Mr. Chairman, I would like to make just one remark on Document E/PC/T/SR.2 on page 5. It is mentioned in the French text that we made a reservation against the inclusion of "private enterprises''. This should, of course, be "public enterprises". The English text is correct. CHAIRMAN: The correction requested by the Delegate of Brazil will be made in the French text. Are there any further observations? (Pause). Then we have come to the end of our first reading of Chapter VI. We will resume the discussion on Chapter VI in Commission B after we receive the report of sub-Committee 2, at which time we will consider the reports both of sub-Committee 1 and sub-Committee 2. I wish to thank the Members of the Commission for having co-operated with the Chair in enabling us to get through our work in the four days allotted to us. The Meeting is adjourned. The Meeting adjourned at 1.15 p.m.
GATT Library
xq634mm2664
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Nineteenth Meeeting of the Tariff Agreement Committee held on Saturday, 13 September 1947, at 10.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, September 13, 1947
United Nations. Economic and Social Council
13/09/1947
official documents
E/PC/T/TAC/PV/19 and E/PC/T/TAC/PV/17-19
https://exhibits.stanford.edu/gatt/catalog/xq634mm2664
xq634mm2664_90260069.xml
GATT_155
10,122
61,307
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/19 13 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. 1. 1, ,, I VERBATIM REPORT ,, ' - 1 , j <- : , NINETEENTH EEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON SL1AYP 1 SEPTEBER 147, AT 10,30 P.M. I THE PALAIS DES N' ONS, GENEVA. Hon. L.D. WILGRESS (Chairman) (Caneda) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220. (Tel. 2247),. Delegates are reminded that the texts of interpretations, Which do not pretend to be authentic translations, are reproduced for gera1l guidanoe only; corrigenda to the texts of interpretations annot, therefore, be ,accepted. CHAIRMAN: The meeting is called to order, At the close of our meeting last night I announ ed that we N would take up first thing this morning Document E/PC/T/l95, which is a draft prepared by the Secretariat covering the procedure for, the preparation for signature of the Final Act and of the General Agreement on Tariffs and Trade and of the Protocol. We will request the Committee to approve of this document to-day and members of the Cornmittee are asked to pay particular attention to see that their Delegations carry out the requests which are set forth in this document, both in relation to what they should do.with their own governments and the information which they .Should provide for the Secretariat It will now. be in order for any member of the Committee to ask any question or for any explanations they wish regarding this document. Any comments with regard to this document? The first section deals with Credentials, Are there any points arising in the first section? The next point deals with soals. I think that is quite clear. The third point deals with languages. Any comments? Dr. G. A. dAMSVELT (Netherlands): Mr. Chairman, I regret that I have not had timce to go over this particular paragraph with my Delegation. I should like to make 'a reservation here. CHAIRMAN: That will be quite in order, but if we o not hear from the Netherlands Delegation we shall assume that they have no objection. Dr. G.A. LAMSVELT (Netherlands): Thank you. M. ROYER (France):(Interpretation) : Mr. Chairman, I . would make a small remark on the form in which this paper is drafted, This remark applies to Credentials, We read that E/PC/T/TAC/PV/19 these oredentials may take the form of letters signed by Foreign Ministers, and this seems to be too brief a formula because, in fact, we do not think that the Credentials should take the form only of letters. Of course, they will have to be signed by the head of the State or the Foreign Secretary, but nevertheless we do not think they could be in just the simple form of letters. CHAIRMAN: Would the Delegate of France suggest the change of the word "letters" to "documents"? M.ROYER (France) (Interpretation): The word"letter" has in French a more informal character maybe than in English. I think we could draft this sentence as follows: "These credentials might be signed by the Foreign Minister when this procedure is in accord with the constitutional rules of the countries concerned" CHAIRMAN: The change will be made. H. E. Mr. WUNSZ KING (China): Mr. Chairman, while we are on the point of languages I would like to make one remark which I would like to put on record as a matter of principle. I should like to have a Chinese text of the General Agreement as well as Schedules but as a great concession, in addition to the Tariff concessions, I would not insist on this point from the practical point of view. I wish it to be understood that this extra concession should not lead to any other concessions in the future. R . 4 CHAIRMAN: I thank the Delegate of China for his remarks and I am sure that this will in no way affect the status of the Chinese language which, according to the Charter of the United Nations, is one of the official languages of the United Nations, The Delegate of Cuba. Dr. Gustavo GUTIERREZ (Cuba): Mr. Chairman, I do not want to create any problem by asking for a translation of the General Agreement into Spanish, neither of the Charter, at this moment, but I think that document should be translated into Spanish, which is another official language of the. United Nations, as soon as posible. CHAIRMAN: Are there any other comments? 4. Method of Reproduction. Are there any comments? Mr. J.M. LEDDY (United States): Before we leave this point of languages I think we have all got to be quite clear that the proposal here is that the Tariff /Schedules shall be authentic in either English and French or in one of the two and in no other language. I think we all of us ought to be fully aware of what we ate deciding here in that provision. CHAIRMAN: Are there any other comments in regard to the section on languages? Item 4, Method of Reproduction. Members of the Committee will note there a request of the Secretariat to be informed regarding the points mentioned on pages 4 and 5 as soon as possible. Are there any comments? Section 5, General Timetable. Are there any comments? Then I take it that the Committee approves of this document with the addition which has been suggested by the French Delegation regarding Credentials. The Delegate of Belgium. E/PC/TAC/PV/19 P. P. E/PC/T/TAC/PV/19 M:- Pierre FORTHOMME (Belgiam): Mr. Chairman, this is not an observation for any change in the document, but I think it might be a good idea for the Secretariat to let us know exactly the size of paper which will be required for making this document, in order to think of cutting the stencils. CHAIR MAN: I will ask the Secretariat to explain the position regarding paper. Mr. LACARTE (Deputy Executive Secretary) The Administrative services in Geneva have been looking into the matter and they find that the only type of paper that we can use for the original, the English original and the French original, is white paper the same size as this which is being used in all documents. That will be for the general provisions and the Schedules. As regards the copies the delegations will take away with them, these will have to be done on this same size of paper, this qual ity, either white or blue. We will endeavour to use white, which is probably better, but there may not be enough available so it may have to be blue. I am afraid that this prejudges somewhat the provisions of the Committee on the form of the Schedules. We cannot have Schedules any wider than this paper, because we cannot get the paper for it. So that is the position as regards that. CHAIRMAN: The Delegate of Brazil. Mr. E.L. RODRIGUES (Brazil): Mr. Chairman, I think that it will be wiser to have sent to the Secretariat at the same time the liat of concesions in the national language of the country, so as to avoid any misunderstanding later on; because we know sometimes the tariff structure is not easy to translate, so it would be safer to have the lists of negotiations in the national language. P. E/PC/T/TAC/PV/19 CHAIRMAN: The provision in this document. regarding languages is that the Schedules should be authentic in either English or French or both. There would be no objection of course to any delegation losing a copy of their Schedule in their own language with the Seoretariat. Are there any other comments? 7 H.E.Dr. Z. AUGENTHALER (Czechoslovakia). Mr. Chairman, just a technical proposal - I would suggest that Mr. IaCarte, who is a highly attractive male secretary, should organize a meeting of all our typists to explain the technicalities to them and in which form it should be written, and so on. CHAIRMAN: Mr. LaCarte has already had that idea in view. He proposed that he would call a meeting of the Secretaries of Delegations in order to give them an outline as to what the Committee here has decided, and then the Secretaries of Delegations would be expected to inform their typists. H.E. Dr. Z. AUGENTHALER (Czechoslovakia): So long as he gives the instructions in secret! M. ROYER (France) (Interpretation): Mr. Chairman, the French Delegation would like to have as soon as possible the form, that is to say, the frame of the Schedules, the length and width or the columns, etc. Thus, we would be able to take advantage of the next few days and our typing service would be able to prepare the frame of the Schedules themselves. CHAIRMAN: It is my intention that we should have a discussion on the form of the Schedules, I had hoped on Monday, as soon as we have made enough progress for the Secretariat to be able to prepare .a clean text of the Agreement. At any rate, I should think the discussion of the Schedules would take place on Tuesday next. Are there any other comments? E/PC/T/TAC/PV/19 J. J. 8 E/PC/T/TAC/PV/19 M. P. FORTHOMME (Belgium) Mr. Chairman, I suppose that having the discussion on Tuesday would mean that, by that time, the amendments regarding Article I which affect the form of the Schedules will have been settled? CHAIRMAN: I am not aware of any amendments outstanding on Article I other than the Australian amendment, which we decided to hold over, and I do not see how that can affect the form. M. ROYER (France) (Interpretation) : Mr. Chairman, the amendment is on Article II, paragraph 2. CHAIRMAN: We decided to discuss the French amendment on Article II at the time we are discussing the form of the Schedules. There being no other comments, I think we can pass. to the next order of business. I would propose that we should now take up the proposed new paragraphs 6 and 7 of Article XVII suggested by the United States Delegation, given in document E/PC/T/W/328. The Delegate of the United States. MR. J.M. LEDDY (United States): Mr. Chairman, these provisions are based upon Article 14 of the Charter which envisage the possibility of maintaining economic development measures pending consideration by the contracting parties, provided that these measures are notified to the Governments signing the Agreement before the date of the Signature of the Agreement. There are only three changes which have been made as compared with the corresponding Article in the Charter. Firstly, all reference to the Signatare or acceptance of the Charter itself has been deleted, because it is not relevant for this purpose. E/PC/T/TAC/PV/19 9 Secondly, the provision of paragraph 7, saying that the provisions of paragraph 6 do not apply to any product described in a Schedule annexed to this Agreement, is a compensation for the provision in the Charter referring to obligations which had been negotiated or to measures which might nullify or impair those obligations. This is simply referring to products In the Schedules of the Agreement. Thirdly, we have inserted in lieu of the phrase "date of .Signature of the Agreement" simply "date of the Agreement". We have made provision now in the General Agreement that the Agreement shall bear the date of the Final Act, and that is the date which is to be used as a basis for determining whether or not a notification of measures to be maintained has arrived on time. Now, the requirement in the Charter is that notification must take place 30 days prior to the Signature. I have put those time periods in brackets, because I think that we will have to discuss the question of the time prior to Signature which should be allowed. I believe that we are today about 30 days prior to the Signature, and I suggest :that' we may want to reduce this period somewhat, because I believe that the Members of the Committee, perhaps, have not given thought to this particular problem, and they should have time to do so before we fix a definite period after which a notification will not be in order. CHAIRMAN: Are there any comments? Monsieur Royer. M B. ROYER (France) (Interpretation): Mr. Chairman, this text does not appear to me to be quite clear. There are two cases which J. 10 we can consider. The first case is that of ,what we term the contracting parties themselves, that is, the seventeen countries represented here taking part in the negotiations; the second case is the case of other countries which may adhere to the Agreement at a later date. If we consider first the case of the seventeen countries represented here, I do not think that this text can be applied to them, because the methods provided for in the text have been accepted anyhow prior to the Signature, and this Agreement cannot rule 'a posteriori'. On the other hand, We are dealing with the case of countries which will adhere at a later date to the Agreement, and then these countries are not, contracting parties, because the words "contracting parties" have a specific meaning and only apply to the countries represented here. Therefore, we ought to find in the second case another draft. I have no objection in principle to the substance of the draft, but, nevertheless, I think that we ought to draft another text which would be different from the corresponding Articles of the Charter, and which would provide for the case of the contracting parties on the one hand and, on the other hand, for the case of countries adhering at a later stage to the Agreement. - 11 - Dr. Gustavo GUTIERREZ (Cuba): The Cuban Delegation has no objection to the first paragraph of this new text. If any alteration has to be made in order to improve the text, we would be willing to accept it. For us, contracting parties are not only.. the ones which are here now and will sign the agreement but anyone signing the Agreement in the future. One objection we do have is in relation to the second small paragraph, numbered 7. I suppose it means "The provisions of Paragraph 6 of this Article shall not apply to any product described in a Schedule annexed to this Agreement." That text would practically nullify the whole effect of Paragraph 6, because in the Schedules annexed to this Agreement, when we have the consolidated Schedules of the different nations, there will probably be all the different products of the world and of every nation. Of course, I understand the idea of the United States Delegate, that the negotiations that have been conclude here in relation to verious articles should not be jeopardized in any way by this provision, but I think the only thing we could do would be to adjust Paragraph 3 of Article 14 of the Charter, which gives the real idea of this matter and which roads like this: "This Article small not be construed to apply to a measure which would be inconsistent with any obligation that the Member concerned has assumed through negotiations with any other Member or Members pursUant to Chapter IV or which would tend to nullify or impair the benefit to such other Member or Members of any such obligation. " I think that is proper and that this Paragraph 7 should read more or less in the form of Paragraph 3 of Article 14. As it is now it is absolutely impossible to eccept it, because it nullifies E/PC/T/TAC/PV/19. S S the whole effect of Paragraph 6. I think the United States Delegate can understand that very easily. Mr.LEDDY LEDDY (Uniad St,?tes): Mr. Chairman, it was always our understanding that ParagraphA3 of -rticle 14 of the Charter dealt .with scheduled products and we would not be able to aaqypt !y interpretation which would permit measures of this kind in respect of scheduled products. Mr. SEHACKL (United Kingdom): Mr. Chairman, I wonder if there is a misunderstanding. It seems to me taat P.ragraph 3 of Article 14 means that where the case arises of any particular Member who has made a concession on a particular pr,ducts the provisions of this Article 14 of the Charter will not apply in respect of that product in respect of that Membe'r, whereas, if I understa.d Dr, Gutiesrez'G point, he rears P-iagraph 7 of this present draft before us as meaning that any product which any c-untries schedule shall not be made the subject by any other country of a measure under this article. I take it that is the point, is it not? CALIRMLN: ehe D-legate of.Cuba, Dr. GUTIERREZ (Cuba): hairmzi rian, I wish to thank the Delegate of the United Kingdom for his clarification of our point, which is exactly as he has mentioned. Mr. LEDDY (United States): In that care, Mi. Chairman, there Is no difference between us at all. Dr. GUTIERREZa(Cubz): . That is what I Thought. CHAIMAN: The Delegate of China. E/PC/T/TA/PV/19 H. E. Mr. Wunsz KING (China): M. Chairman, whilst the Chinese Delegation wishess to reserve its right to give more careful study to these two new paragraphs to article XVII Of the Draft agreement, which reproduce article 14 of the Charter, we would like to point out that if those two new paragraphs are to be adopted we would like to suggest the insertion, after the words of "particular industrics",/the words "or particular branches of agriculture", so as to bring it more into conformity with the provisions in Paragraph 1 and the other parts of this article, M. ROYER (France) (Interpretation): Mr. Chairman, I would second this proposal, because it is, in fact, the text of the Charter itself which speaks of the establishment, development or reconstruction of particular branches of particular industries, or.agriculture. CHAIRMAN: The Dlegate of Cuba. Dr. GUTIERREZ (Cuba): Mr. Chairman, I think both the Delegates of the United States and the United Kingdom, as well as the Delegate of Cuba, have a contrary opinion in relation to this paragraph. I wonder if the text should be agreed in such a form as to make clear its relation to the products described in the Schedule. There is no difficulty of any kind with this provision, but the nations are free to continue their measures against the other nations outside the Agreement. CHAIRMAN: I should first of all like to obtain the sense of the Committee regarding the proposal of the Chinese Delegate, seconded by the Delegate of France, to add, after the words "particular industries", the words "or branches of particular industries or agriculture." S - 13 - S -14- E/PC/T/TAC/PV/19 Mr. LEDDY (United States): Mr. Chairman, I think very probably there was an oversight in the Charter, because Article 13 refers to particular industries or particular branches of agriculture, whereas Article 14 of the Charter simply refers to particular industries. I am sure the intent must have been to cover the particular branches of agriculture. H.E. Mr. WUNSZ KING (China): Article 14 reads: "Any Member may maintain any non-discrirminatory protective measure which has been imposed for the establishment, development or reconstruction of particular industries or particular branches of agriculture." CHAIRMAN: It was evidently loft out of the mimeographed text, but it is in the printed text. I take it that the Committee has no objection to this change. The Delegation of India. Mr. B. N. ADARKAR (India): Mr. Chairman, as I read it, the mimeographed text of the Charter needs some improvements, as the Delegation of China has pointed out. M-y I suggest that the passage on Page 22 of the English texts beginning with "Any Member maintaining any such measure", be put into a separate paragraph, because it applies to (a), (b) and (c); otherwise it would appear it does not apply to (c), I suppose it is a typographical error. It ought to be a separate sub-paragraph. Mr. LEDDY (United States): The printed text is also incorrect,. That particular sentence appears in a sub-paragraph; therefore it applies only to sub-paragraph (c) instead of all the sub- paragraphs. 15 CHAIRMAN: . We agree on the addition of the words "or particular branches of agriculture." The Delegate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, now we have finished with that point I would like to raise just a few queric s. First of all, at the beginning of the draft of Paragraph 6 it refers to the proviso that any such contracting parties shell notify the other contracting parties not later then 30 days prior to the date of this Agreement. That does not seem very clear to us, because, of course, in many cases, if the date of this Agreement is supposed to be the date of the provisinal application by key countries or the final entry into force, and so on, you do not know exactly what is the relation. I think the best reference would be to the date when each contracting party signs. Is that the intention? That is one point. The other point is with regard to Paragraph 7. There it says:"the provisions of Paragraph 6 of this Article shall not apply to any product described in a Schedule," and so on. Would that mean that a country which has granted tariff concessions on some products would not be allowed, for example, to maintain quantitative restrictions under Article l4 of the Charter on the particular products included in the Schedule? 'E/PC/T/TAC/PV/19 S E/PC/T/TAC/TV/19 CHAIRMAN: The Delegate of the United States. Mr. J.M. LEDDY (United States): Mr. Chairman, I thought we had agreed some days ago the inclusion in the Trade Agreement of the provisions, and. to say: "This Agreement shall bear this day's date","this days meaning the day on which the Final Act is signed. That is the point, I think, of "Done at Geneva this ... .day of ... .". There we would have the date on which we would all sign the Final Act; so the thirty days proposed here in the text would be thirty days prior to the day of signature of the Final Act. CHAIRMAN: I think the verbatim record of the meeting at which we considered the first paragraph of Article XXIV will show that we deleted the words "shall bear this day's date" and it now reads: "The presant Agreement shall be open for signature" and there is no reference to that particular provision. The Deleate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, can I then take it that what we have in mind here is that notification shall be given thirty days before any country signs this Agreement? Mr. J.M. LEDDY (United States): Mr. Chairman, the whole purpose of this provision is to allow each country to know what measures are to be maintained and to ; :a. them effectively before that contracting party signs the Agreement. In other words, we, for example, must know before we sign the Agreement what measures other countries propose to maintain under this provision. That is our clear understanding of the Charter language. V 17 CHAIRMAN: The Delegate of India. Mr. B.N. ADARKAR (India): Mr. Chairman, I think the problem is a rather complicated one, because if we retain this provision that the contracting parties shall be notified of the restrictions not later than thirty days prior to the date of the Agreement, we would not be allowing sufficient time for the countries here to examine this question and to make the necessary proposals. Sufficient time must be allowed for that purpose. At the same time, while examining this question, I notice that in paragraph 1(b) of the original Article 14, with regard to any Member which is not a signatory of the General Agreement but which signs the Charter, it has been provided that such Member shall notify the other Governments of restrictions of this sort prior to their signature; the principle there being that the Governments which accept obligations in relation to that Member should know, before accepting such obligations, what restrictions the Member in question has in force. That is the point which has just been raised by the Delegate of the United States. That being so, it is neither practicable to retain the provision suggested here, nor is ~~~straightforward i easy/ to isnsert tprtoviiln that 'e notification should be made not later than thirtyt days prior o the signature of the Agreement. Mr. J.M. EDDY (United States): Mr. Chairman, it is for the reason given by the Delegate of India that we put the "thirty days"in brackets, because we thought there was not enough time for the countries here to consider it, E/PC/T/TAC/PV/19 V E/PC/T/TAC/PV/19 What I suggest we do now is simply to agree upon a date after which no further list of products will be considered, and I should think that perhaps two weeks from today would be ample time to allow an examination of the situation and for the submission of any lists of products they want to put in. CHAIRMAN: The Delegate of Brazil. M-;. E.L. RODRIGUES (Brazil): Mr. Chairman, I have the same difficulty as has been expressed by the Delegate of India, and I cannot agree with the Delegate of the United States that two weeks will be enough time in which to prepare the list. Certain countries who are in a very distant geographical position would have great difficulty in putting measure into force in such a short period. Because of this, I should like to see another way of dealing with this matter, which would allow us and some other countries to agree to a proper fixed date. CHAIRMAN: The Delegate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, fourteen days from today in which to make investigations on this problem and to notify the Organisation or the other parties here would be much to short a time. Two months from now would, be a reasonable period. After all, this is rather a difficult technical problem to study, and we have certainly understood that we shuold, in accordance with the Charter, notify the Members of the Charter or the parties to the General Agreement not later than thirty days before we ourselves sign. That has been our V 19 E/PC/T/TAC/PV/19 understanding. If that is wrong, I regret it, but to accept fourteen days from now would be quite impossible. CHAIRMAN: The Delegate of the United States. Mr. J.M. LEDDY (United States): Mr. Chairman, I think there may be some misunderstanding on the part of the Delegate of. Brazil. This Article does not relate to new measures. It is not designed to give an opportunity for the imposition of new measures. It is merely designed to provide a transitional period for measures which already exist - which have been imposed: which are in force today. With regard to' the suggestion of the Delegate of Norway, these proposals have been before the countries around this table for several weeks. It is regrettable that they have not known of this instuation or have misunderstood it; but the provisions have been there, and for our part we are not prepared to accept or be sign in respect of any other Government around this table a blank cheque. We must know before we sign what the products are. I think that this situation has been understood, and that putting this date off for two weeks will allow ample time for' the experts here (and there are many experts here) to examine the existing rules and regulations that they have and submit a list of products, if they wish to submit a list. It will be open, of course, for other countries to question the products on that list. CHIARMAN: The Delegate of India. Mr. B.N. ADARKAR (India): Mr. Chairman, it seems to me that countries which accept the obligations of this ,Agreement 20 PV/19 should know the exact position. We must remember the fact that most countries signing this Agreement will be only giving provisional effect to their obligations for a certain period. It is not intended that the agreement should enter definitively into force before a certain period has elapsed. In the circumstances, I wonder whether any practical difficulty would arise if we said "not later than thirty days prior to the definitive entry into force of this Agreement". If a country which has given provisional application discovers that.another country has restrictions in force which affect its interests severely, it can propose a modification of the tariff schedules. Even if we say that, we will not be providing for new adherence to this Agreement, that is, countries adhering to this Agreement after its definitive entry into force. With regard to such countries, I think it should be provided that they should be required to notify their restrictions thirty days prior to their adherence. E/PC/T/TAD/PV/1 9 V 211 E/PC/P/TAC/PV/19 CHAIRMAN: The Delegation of Cuba. Dr. Gustavo GUTIERREZ (Cuba): There sees,to be a matter of opinion that there is a misunderstanding with regard to this matter. If, according to Paragraph 7 the provisions of Paragraph 6 of the present article will not be applicable to the produots given in the list annexed to the present Agreement, which has been signed between the contracting parties, I wonder What is the practical importance of this problem. Since, in the list of tariffs, the largest part of the production of the interested countries would be inserted, and if these provisions are not to be applied to what is mentioned in the tariff list, which is the largest part of the production Of the interested countries, I wonder what would be the effect of insisting that notification should be made 30, 40 or 60 days prior to the date of the Agreement. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, the Cuban Delegate has just said what I wanted to say myself. If we adopt paragraph 7 of Article XVII then the question of procedure will not arise. In fact, there is something curious if we look at the time-table, because this Document has been circulated with the date of September 9 1947, and we are asked in this Document to notify the other contracting parties 30 days before tbe date of the present Agreement. Now, the Article of the present Agreement will be the date of September 30; therefore it means that we are asked to give notification before the 1st September and this Document was only circulated on the 9th September. Of course, the text of the Charter was circulated to the Delegations before that date, but, nevertheless , I wonder if all Delegations saw the implications in that respect to the provisions of Article XIV. E/PC/T/TAC/PV/19 Once again we are faecd with the difficulty which arises. from the fact that we are. now discussing the. text of an Agreement, whilst, at the sane time, the text of the Charter has not been finally adopted. I will not go over again the metaphors which were mentioned here in that respect, but I will agree with Mr. Gutierrez when he said that what we need to do here is to have a practical formula, and that, as this problem, from a practical point of view, is not an important one, we) could give time to tho various countries to go throuh their legislations and see what has to be done in that respect. Mr. E.L. RODRIGUES (Brazil): Mr . Chairman, We are not very happy about this paragraph 6. It is indeed a very broad paragraph. If you take into consideration any programme for development and reconstruction, especially in a new country, it seems that this peragraph may cause a lot of trouble for us. I think there is a great deal of reason for us to ask for a little more time, because this paragraph is a little out of line. with the matter concerned in this schedule annexed to this Agrement. It is something new and much broader, and in spi te of the very great facilities we .are going to get from your Governrnent, we are not in a. position here in Geneva to follow exactly the policy of our country with regard to some industries, and I believe it will also happen with some other countries. At the same time, as I said before, it is somewhat out of line with our main purpose here; therefore, we should like to have a little more time. Our interest would be for the deletion of this paragraph. If I am not wrong - if I am. I should like to be corrected - I think it will well deserve some attention, because we want to avoid difficulties in the future ; CHAIRMAN: The Delegate.of Norway. R. 22 R. 23 E/PC/T/TAC/PV/19. Mr. J. MELANDER (Norway) With regard to paragraph .6 of the text, I am in general agreement with the statements made by the Delegate of India and the Delegate of France. I think one must arrange for considerably longer time to make investigations as to these problems. On the other hand, I quite see the point raised by the Delegate of the United States, that he does not want to sign a blank cheque. I think therefore we must have a resaonable time limit in which to notify about these measures before their definite coming into force. P. E/PC/T/TAC/PV/19 24 With regard to paragraph 7 I asked a question as to whether, for example, it would be possible to maintain quantitative restrictions in accordance with Article 14 of the Charter, whether one could maintain those quantitative restrictions also in respect of products included in a schedule of products which have been only included for the purpose of binding a tariff. I have not received any answer to that and personally I should think that the answer would be yes, we can do that. I interpret Artiile 14, paragraph 3, of the Charter in such a, way that, with regard to non-discriminatory measures such as, for example, mixing regulations or internall taxes, one would not be allowed to maintain those by virtue of Article 14 if there have been special negotiations relating to those particular measures, limiting those particular measures; but if the negotiations here have only led to the binding or reduction of a tariff duty without going into these particular products, then I would interpret Article 14 of the Charter, paragraph 3, in such a way that it would be only the nullification or impairment point which could be raised. I do not think there would be any obligation under the Charter, then, to let these measures not apply to products contained in the Schedule. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, as I see it, there are three quite distinct points involved in this discussion. The first point is the point raised by the Delegate of Cuba on paragraph 7 of the paper in front of us. That is a point on which we think we have already come to an understanding, at any rate as between the Cuban Delegation, the United. States Delegation and the United-Kingdom Delegation, namely that this is not intended to mean that any product which is in anybody's Schedule may not be made subject to paragraph 6. It is a question of the provisions which are. in each particular Schedule. That, I think, could be made clear very simply, as a matter of drafting, by inserting in the second line of paragraph 7 after the words "shall not apply" the P. E/CPC/T/TAC/PV/19 25 words"in respect of any contracting party" and then, a little further on, after the words "to any product described in" replace the words "a Schedulo" 'by "the appropriate Schedule". I think this drafting amendment, or something like that, would probably clear that particular point. The second point is the point raised by the Delegate of Norway as to whether this paragraph 7 is to be understood as prohibiting the maintenance of some of kind of restrictive measure, quantitative measure, internal mixing regulation, or anything of that kind on a' product on whech the contracting party concerned has negotiated the tariff for binding As to that question I am not prepared to pronounce a definite opinion off-hand, but it does seem to me very clear that if a tariff binding has been negotiated in ignorance of some restrictive measure of this kind, then it is, so to speak, in a very proper situation, It seems to me it is only if the tariff binding has been negotiated by the parties with their eyes fully open to the fact, that there could be any question of the maintaining of such a measure. I do not feel inclined to go any further into that particular point. The third point is the time by which existing measures have to .be notified. As regards that, I think it was certainly the intention of the Draft Charter that all those measures would have to be notified so that all the respective signatories would know of them before they sign, otherwise they would be signing a blank cheque.' That I think is quite clear as regards every category of Member who signs, if one looks at (a). (b) and (c) of paragraph 1. of Article 14. Even in the case of latecomers in (c) it says ."any other such Member shall, prior to the day of its signature of this Charter, have notified the existing measures that it wishes to maintain to all governments which signed the Charter on the day of its general signature". In other words, before the general signature comes along all those measures have got to be notified. P. Well now, applying that to this Particular case that we have before us of the General Agreement, it would, if one would follow that out, logically follow that all these measures have to be notified at least before the day when the General Agreement is open for signature. That, of course, will mean a short period of time and I am wondering whether as a practical matter we have to insist absolutely upon it. First of all the effective thing which will be done about this General. Agreement is that certain key countries will sign the Protocol of Provisional Application. They will be a limited list; the rest will follow on later. I was wondering if, as a practical measure,it might not be good enough if we say that these measures must be notified at a fixed date, say two months from now, as the Norwegian Delegate suggested. I think that so far as measures in force in key countries are concerned, they will qualify on balance of payments grounds, where they exist, As far as the case of the generality of countrie will be concerned, it seems to me that, as the definitive entry into force is still some months ahead, it will probably be guite enough if we say that two months from now all these measures must be notified. It is not a perfect solution, but I am inclined to believe that it is a practical one, and it miht work. Mr. J. M. LEDDY (U.S .A.) Mr. Chairman, I am afraid that the suggestion put forward by the Delegate of Norway would go far to destroy the basis of the understanding of economic development :which we have so carefully laboured to construct over a period of five months. It is almost incredible that at this 26 P. E/PC/T/TAC/PV/19 27 late date we should have suggestions to the effect that countries may maintain complicated restrictions for economic development purposes on products on which tariff concessions have been negotiated. Surely that has always been clearly understood. I think an examination of Article 13 would bring that out quite clearly. It provides that a country may impose a measure which nullifies or impairs the tariff concession if substantial agreement is reached with the country which has negotiated the concession'. Well now, no-one would question for a moment that a quota newly imposed on an item on which a tariff that concession has been negotiated would nullify or impair / concession. That. has always been a clear understanding. Our view is that if this Airticle 14 is to be departed from substantially, we cannot accept it in the Agreement., I do not wish to say that two weeks is the maximum, but we feel that we must follow this basic procedure of notification prior to signature by the other countries concerned. We feel that is an essential part of Article 14 and we feel it is an essential part of the whole understanding that quantitative restrictions, internal mixing regulations and other such devices, do in fact nullify or impair tariff concessions.. J 28 E/PC/ T/TAC/PV/19 CHAIRMAN: I think we have devoted sufficient time now to the consideration of these two paragraphs. I shall endeavour to make a proposal in the hope that we may reach general agreement, but if that proposal is not acceptable then I see no other course than to set up a Sub-Committee to consider the text of these two paragraphs to see if a proposal could not be submitted which would obtain general agreement. First of all, I take it that the Commiittee would be in accord with the proposal made by Mr. Shackle regarding paragraph 7. If Mr. Shackle's proposal were adopted it would then read as follows: "The provisions of paragraph 6 of this Article shall not apply in respect of any contracting perty to any product described in the appropriate Schedule annexed to this Agreement". Are there any objections to the proposal of Mr. Shackle? Mr. Melander, MR. J. MELANDER (Norway): Mr. Chairman, as far as I can see, that will have to be interpreted in the light of Article 14, paragraph 3. In other words, I would interpret it in this way: in that if/an appropriate Schedule it has been agreed that the tariff duty is so much, and that the internal tax shall be so much, and the mixing regulations shall be cut out in this or that way, everything in accordance with the Draft Charter, that is all well and good, but if the Schedule only contains the tariff duty and nothing more, then I would interpret it in accordance with paragraph 3 of Article 14, namely, that if there are non-discriminatory measures which fall within paragraph 1 of Article 14 they will, of course, be able to continue. J. E/PC/T/TAC/PV/19 29 If this interpretation is accepted, I have no objection to Mr..Shackle's text. CHAIRMAN: I do not think that that would be my interpretation of this paragraph. I think it is very clear that it would mean that the provisions of paragraph 6 shall not apply in respect of any contracting party to any product described in the appropriate Schedule, so, if the product is described in the appropriate Schedule the provisions of paragraph 6 would not be applicable. MR. J.. MELANDER (Norway): Mr. Chairman, I was afraid that that would be the interpretation, and I must say that I would also interpret the language of paragraph 7 in that way. The reason why I raised the point was that I think paragraph 7 as drafted here by l. Shackle would really go beyond Article 14, paragraph 3. It would impose limitations stricter than those laid down in Article 14, paragraphph 3. CHAIMAN: The purpose of Mr. Shackle's amendment was to clarify the wording of the text proposed by the United States Delegation. I think that the text proposed by. the United States Delegation was not clear that it related only to the appropriate Schedule, and that was the purpose of Mr. Shackle's amendment, It Is I think, clear that we are not going. to obtain .agreement on these two paragraphs today. Therefore, I would propose that the matter of drafting these paragraphs be referred to a special Sub- Committee. Is the Committee in accord with that proposal? Is that agreed? The proposal to set up a Sub-Committee is agreed. J. E/PC/T/TAC/P-V/19 30 Accordingly, I will nominate representatives of the following Delegations to compose the Sub-Committee: The Delegate of India, to be Chairman, and the Delegates of Cuba, Norway, Belgium and the United States. M. P. FORTH0MME (Belgium): Mr. Chairman, could I suggest that the Delegation of Belgium be replaced by the Delegation of the Netherlands? CHAIRMAN: Mr. Shackle. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I do not want to be included if it is unnecessary, but this is a matter in which we are interested, and as I suggested the amendment may I make a gesture of self-sacrifice and suggest that the United Kingdom be represented on the Sub-Committee? CHAIRMAN: It is quite in order that Mr. Shackle should be on the Sub-Committee. The only reason that I did not propose him ,was out of consideration to Mr. Shackle, whom I feel is very much over-worked. DR. G. GUTIERREZ (Cuba): Mr. Chairman, I was going to ask to be replaced in the Sub-Committee by Mr. Shackle. CHAIRMAN: I am afraid I did not quite understand...... DR. G. GUTIERREZ (Cuba): I give up my place in the Sub- Committee in favour of the Delegate of the United Kingdom. CHIRMAN: The Sub-Committee would then be composed of the Representatives of the Delegations of India, United States, Norway, Netherlands, and the United Kingdom. E/PC/T/TAC/PV/19 Is the composition of the Sub-Committee approved? I would ask Mr. Adarkar to preside over the proceedings of the Sub-Committee, which will meet at 10.30 a.m. on Monday. I now wish to turn to Article XXII and to raise a question which is of interest to the Delegation of Chile. At the meeting which took place earlier in the week we reached tentative agreement to delete paragrgaph 4 and 5 of Article XXII. The Delegate of India had proposed the deletion of these two paragraphs and that had obtained general support in the Committee, but as the Delegate of Chile was not present at that time it was agreed that the deletion of these two paragraphs should be only tentatively approved and held over .for, confirmation until the Delegate of. Chile could be present. The Delegate of Chile. MR. A . FAIVOVICH (Chile) (Interpretation) Mr. Chairman, we accept the deletion of these two paragraphs 4 and 5 of Article XXII. CHAIMAN: Accordingly, we confirm our decision to delete 'paragraphs 4 and 5 of Article XXII. I would now like to ask the Committee if it would be possible fof us too take up now the revised United States text of Article XXIII, which is given in document E/PC/T/W/330. At the time we were considering this text it was decided to defer further consideration until the United States Delegation could submit a reviced text and until we had considered paragraph 1 of Article XXVII. As the Members of the Committee know, there has been some delay in our consideration of paragraph I of Article XXVII., but I am wondering if the Committee could not agree now to consider the text of Article XXIII as proposed by the United States Delegation and as given in document E/PC/T/W/330. J. 31 E/PC/T/TAC/PV/19 CHAIRMAN: The Delegete of China. H. E. Mr. Wunsz KING (China): M. Chairman, I am sorry to be so late; it is because my mind works very slowly. I want to go back to article XXII, Paragraph 7. I am reminded that at a previous meeting we suggested the deletion of this Paragraph 7, thinking that the provision was not quite necessary, but I understand this paragraph is still there. I would like to suggest we substitute the words "by the regional and local governments and authorities within its territory" by a simpler expression: "to the whole extent of its territory," I believe this is simpler and perhaps more appropriate, That is, I suggest we use the words "to the whole extent of its territory" in substitution for the words "by the regional and local governments and authorities within its territory." It does not change the substance of this provision , but it seems to me this wording is simpler and perhaps a little more appropriate. CHAIRMAN: We have already approved of this text of Paragraph 7 of Articlel e XXII at our second reading, but, with the unanimous consent of the Committee, we can now consider the suggestion of the Chinese Delegate. Is that agreed? The Delegate of China proposes to delete the words "by the regional and local governments and authorities within its territory" and substitute the words "to the whole extent of its territory." The Delegate of the United States. Mr. LEDDY (United States): Mr. Chairman, this particular S - 32 - S E/PC/T/TAC/PV/19 33 paragraph was drawn from the Charter and I think some rather careful considaration went into its framing. I believe it is necessary to distinguish between central or federal governments, which undertake these obligations in a firm way, and local authorities, which are not strictly bound, so. to.speak, by the provisions of the Agreement, depending of course upon the constitutional procedure of the country concerned. I think it really would be preferable to retain this language; it has some relationship with refarences in other parts of the Agreement dealing with actions taken by governments. I am afraid that if we change the language of Pragraph 7 we shall probably disturb some of the interpretations and under- standings that have been arrived at with respect to other parts of the Agreement,. as .well as raising quest ions with regard to .the Charter when we get to Havana. Therefore I should be rather inclined to take the present draft. CHAIRMAN: ,Is there any support for the proposal of the Delegeate of China? In view of the silence of the Members of the Committee, I will take it that the majority of the Committee are in favour of the retention of the text in its present form. The Delegate of China. H. E. Dr. WUNSZ KING (China): I accept your ruling, Mr. Chairman, but sometimes silence signifies the lack of opposition, too. CHAIRMAN: May we now take up the United States re-draft of Article XXIII, as given in Document W/330. Paragraph 1: are there any comments? E/PC/T/TAC/PV/19 Mr. J. P.D.JOHNSEN (New Zealand): I think there is a minor typographical error in the fifth line of Paragraph 1 and I was wondering whether the word "activity" in the last line but two should not be "action". M. ROYER (France) (Interpretation): Mr. Chairman, I would like to make a comment on the English text. It seems to me that in the Preamble we have used the word "objectives" and not "purposes" and we could use the same word here. CHAIRMAN: The New Zealand Delegate has pointed out two typographical errors. The Delegate of France has proposed the. substitution of the word "objectives" for "purposes". Is there any objection to this proposal? Is that agreed? Are there any other comments on Paragraph 1? Paragraph 2: it is necessary to decide upon the date which is given in square brackets, The Delegate .f theUnited States. Mr. LEDDY (United States): I am; wondering if we could fix a limited date. We are n-t certain how long the Havana Conference is going to last. I .suppose such a meeting could take place at Havana. On the other hand, although we could say "not later than X day,"I wonder if we should move up the date of February 1 and say March 1. Then if it is necessary to have an earlier meeting I Suppose it could be arranged. CHAIRMAN: The United States Delegate proposes the date of March 1. Is that agreeable? (Agreed) Are there any other comments on Paragraph 2? Paragraph 3. S -34- - S E/PC/T/TAC/PV/19 35 Mr. SHACKLE (United Kingdom): On th.is paragraph, Mr. Chairman, I would recall that I made a short statement when the original text came before the C'mmittee, I do not think I need repeat that statement. CHAIRMAN: Paragraph 4: are there any comments. M. ROYER (France) (Interpretation): Mr. Chairman, the French text will have to be reviewed, because it seems that the Secretarist has not yet understood fully the importance of capital letters here and there is a mixture of capital letters and small letters whenever the words "contracting parties" appear,, CHAIRMAN: I thank the Delegate of France for pointing that out, Paragraph 5 here- also it will be necessary to decide what to do with the words in square brackets. M. ROYER (France) (Interpretation): Mr. Chairman, if I remember rightly, I think the Committee decided to maintain the words in square brackets. Mr. SHACKEL (United Kingdom): M . Chairmnan, my recollection is the same. CHAIRMAN: Then I take it the Committee has already decided that the square brackets should be deleted. Are thare any other comments on Paragraph 5? Paragraph 6. The Delegate of Norway. Mr. J. MELANDER (Norway): Paragraph 6 covers the same subject as Pragraph 7 of the original draft. I .to not think \ ,we Would have any objection to the text as suggested now in Paragraph 6, but, as I mentioned when we discussed Paragraph 7 of Article XXIII, I would like to reserve our definite stand- point on this until we have finished Article XXVII, 36 E/PC/T/TAC/PV/19 CHAIRMAN:. The Delegate of the United States. Mr, J.M. LEDDY (United States): Mr. Chairman, I just have one question on paragraph 6, and that is, I wonder whether it is necessary. Part II is superseded by the Charter and, of course, this Article really disappears: there are no further functions of the contracting parties to be exercised, because the substantive provisions providing for such functions would have disappeared,.and the functions would be automatically transferred to the International Trade Organization. Now, Now, to whatever extent supersession took place, then all the functions involved in the supervision of those provisions would automatically go to the I.T.O., and the balance would remain here; so I wonder whether we might not delete the paragraph. CHAIRMAN: The Delegate of Chile. M. Angel FAIVOVICH (Chile) (Interpretation): Mr.Chairman, if- I can speak on paragraph 5 again, although we have left the subject, I would like to make a statement. I must say that we regret the provisions which are inserted in paragraph 5 of Article XXIII and the qualification here of a double majority: one majority of two-thirds of the votes cast, and a majority of more than half of the Contracting Parties. As we have stated, we are opposed to such a provision and therefore we must, reserve our position on this point.- CHAIRMAN: Due note will be taken of the reservation of the Delegate of Chile, but I hope that when we come to the third reading of this Article the Delegate of Chile may be in a position to withdraw this reservation. V Mr. B.N. ADARKAR (India): Mr. Chairman, the words "contracting parties" at the beginning of the passage enclosed in square brackets should be in capitals, I think. CHAIRMAN: I take it that the Delegate of India is quite correct. Mr. R.J. SHACKLE (United Kingdom): Regarding the proposal Mr. Leddy has made to delete paragraph 6, expressing an off-hand opinion I would see no objection to that, because, as far as I can see, all .that paragraph 6 says is that the functions shall be transferred, except insofar as it is decited that they shall not be transferred! That, surely, is a thing which is hardly worth saying. If desired, of course, one could defer the question until we have discussed Article XXVII, but I should have thought we could very well agree with Mr. Leddy's proposal straight away. CHAIRMAN: The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairman, I quite agree with Mr. Shackle that 'paragraph 6, as it is drafted now, does not present much interest; but nevertheless I wonder if we ought not to indicate in a very precise. manner that as soon as the I.T.O. is created, the functions of the Contracting Parties should be transferred to the I.T.O., and this,at least, is the view of the French Delegation, because I really do not think that we can run two parallel organisations at the same time. - Within the I.T.O. there will be a Tariff Committee, and this Tariff Committee will have the same functions as the Contracting Parties. On the one hand, the Contracting Parties E/PC /T/TAC/PV/19 V V 38 E/PC/T/TAC/PV/19 have the same functions as the Conference and. on the other hand, the same functions as the Executive Board. I do not feel that we should have two parallel organizations working at the same time on the same matters, because we would be having perpetual conflicts of law. This would be bringing about chaos and anarchy, and therefore we have to writo in an Article here stating that as soon as the Organisation is set up, the functions of the Contracting Parties will have to be transferred to the Organisation; or if we do not want to do this, we have to redraft the Charter. CHAIRMAN: Are there any other comments with regard to the proposal to delete this paragraph? Dr. Z. AUGENTHALER (Czechoslovakia ): Mr. Chairman, I would like to state that we share the opinion of the French Delegate. Mr. R. J. SHACKLE (United Kingd om), I would only suggest, Mr. Chairman, that we had better consider the matter in relation to Article XXVII. CHAIRMAN: I think the remark of Mr. Shackle is a pertinent one. Perhaps we might put this paragraph in our clean text in square brackets. Is that agreed? ,M. ROYER (France):(Interpretation): Mr. Chairman, there is another proposal, which consists in placing into square brackets the words "exccept to the extent that they may agree otherwise pursuant to paragraph 2 of Article XXVII". Mr. R.J. SHACKLE (United Kingdom): That would leave a free field to have wide square brackets! 39 CHAIRMAN: I think everyone will be satisfied if the square brackets are around the whole paragraph, because the greater always includes the less. Is that agreed? The United States Delegation proposes that wherever the word "Committee" appears in the General Agreement, i t should be changed to "Contracting Parties". This will occasionally require consequential changes in related berbs, as, for example, changing "if the Committee decides" to "if the Contracting Parties decide". The proposal continues; "The first reference to the Contracting Parties appears in Article V, paragraph 5, of the General Agreement. The words in parentheses in the fourth and fifth lines from the bottom should be changed to read "hereinafter referred to as the Contracting Parties". Is that proposal agreed? M. ROYER (France) (Intorpretation): Mr. Chairman, I wonder if we might not ask the Secretariat to attach a glossary to' the General Agreement, because the words are used so often in a way completely different from their normal meaning. I think that for the interpretation of the General Agreement a glossary would certainly be very useful. CHAIRMAN: The Secretariat will make these consequential changes, and I think we are now in a position to invite the Secretariat to prepare a clean text of the Agreement. It will be necessary for them to put in square brackets certain provisions such as the Report of the Sub-Committee which is meeting this afternoon, dealing with paragraph 3(b) of Article XXIV. We will also put in square brackets the Protocol of Signature, and we will put in square brackets the Australian proposal dealing with the new Article providing for suspension E/PC/T/TAC/PV/l9 V V E/PC/T/TAC/PV/19 40 and supersession. With. these exceptions, the text will be clean and I propose that at the next meeting, which will take place on Monday, we should take up the paper prepared by the Secretariat on signature of the Final Act, the Protocol of Signature, and the Australian proposal regarding the Article pertaining to suspension and supersession. CHAIRMAN: The Delegate of Norway Mr. J. MELANDER (Norway) Has the United States proposal for a new paragraph 6 to article XIII been dealt with? CHAIRMAN: No, that has not been dealt with yet, and there have been amendments proposed to that Article, so I think we will just, in that case, refer to a new paragraph 6 without giving the text. Dr. Gustavo Gutierrez (Cuba). When will we have that clean text, Mr. Chairman? CHAIRMAN: I will not promise that it will be distributed first thing on Monday morning, but it will be distributed at the meeting on shortly before the meeting on Monday afternoon. I wish to announce that the Sub-Committee dealing with Article XXIV will meet this afternoon at 3.15 instead of at 2.30 as originally announced, The meeting is adjourned. (The meeting rose at 1.5 p.m.)
GATT Library
jz965sk4613
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Nineteenth Meeting of Commission A Held on Friday, 27 June 1947 at 2.30 p.m. in the Palais Des Nations, Geneva
United Nations Economic and Social Council, June 27, 1947
United Nations. Economic and Social Council
27/06/1947
official documents
E/PC/T/A/PV/19 and E/PC/T/A/PV.18-20
https://exhibits.stanford.edu/gatt/catalog/jz965sk4613
jz965sk4613_90240121.xml
GATT_155
12,883
78,998
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/19 27th June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT NINETEENTH MEETING OF COMMISSION A HELD ON FRIDAY, 27 JUNE 1947 AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA Mr. MAX SUETENS (Chairman) (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). NATIONS UNIES E/PC/T/A/PV/19 CHAIRMAN: (Interpretation): The meeting is called to order. I will begin by apologising. We decided to postpone the meeting until 3 o'clock; unfortunately, I, was unable to give due notice to all the delegates in time. Mr. R.J. SHACKLE (United Kingdom): On a point of order, I oan see no secretaries here. CHAIRMAN (Interpretation): If you think we cannot begin without the secretaries, perhaps we had better wait a few minutes. Mr. J. MELANDER (Norway): I suggest we begin, we cannot wait indefinitely. CHAIRMAN (Interpretation): I share that opinion if Mr. ghaokle has no objection. MR. SHACKLE: No. CHAIRMAN (Interpretation): We shall consider to-day Articles 25, 26 and 27. These Articles contain very difficult and complox matters, therefore in order to save time I would suggest that we limit our discussion in plenary session to questions of substance, and refer all drafting points to a sub-Committee which will be formed. Each time an amendment is submitted for the con- sideration of the meeting I shall give my opinion as to whether I consider that this amendment is one of form or of substance; and conseguently whether it shall be discussed here or referred to the sub-Committee. It is, of oourse, understood that if the delegates concerned desires to discuss this amendment in the plenary session, he will be able to do so. - 2 - -3 - MR. O. RYDER (United States ): Mr. Chairman, as I understood it, we are confining our attention to Articles 25 and 27. I believe you said articles 25, 26 and 27. CHAIRMAN (Interpretation): There was a misunderstanding. It is Articles 25 and 27 only. Article 26 will not be discussed. Gentlemen, Article 25 consists of several paragraphs. We shall begin with paragraph 1. There is an amendment of the United States delegation referring to paragraph 1. I consider that it is an amendment of form and therefore I propose to refer it to the sub-committee, provided the United States delegation agrees. MR. O. RYDER (United States): That is satisfactory. Mr. Chairman. CHAIRMAN (Interpretation): Thank you. We now come to paragraph 2, sub-paragraphs (a) and (b). The first amendment we encounter is the amendment submitted by the Australian delegation which concerns sub-paragraph (b). Sub-paragraph (b) in its present draft reads: "Export prohibitions or restrictions temporarily applied to roelieve critical shortages of foodstuffs or other essential products in the exporting Member country". Now, the Australian delegation's proposal is to include the words "prevent or", reading "temporarily applied to prevent or relieve critical shortages". I expect that the delegate for Australia would like to say a few words on his amendment. DR. H.C. COOMBS (Australia): Mr. Chairman, I do not think it is necessary for us to say very much on this. We suggest the inclusion of the words "prevent or" in front of "relieve critical shortages" because it does seem to us to be foolish to wait until J. -4- E/PC/T/A/PV/19 the horse has bolted before you shut the stable door. In other words, there may be conditions in which a critical shortage of foodstuffs is clearly imminent, and we would wish for ourselves and for other countries to be able to take necessary action to deal with that situation without having to wait until the damage has been done. CHAIRMAN (Interpretation): Do any other delegates wish to speak on this amendment ? MR. J. J. DEUTSCH (Canada): I would like to support the Australian amendment for the reasons which he has given. CHAIRMAN (Interpretation): The delegate for New Zealand. MR. L.C. WEBB (New Zealand): Mr. Chairman, I would like to support the Australian amendment. MR. C.L. TUNG (China): Mr. Chairman, the Chinese delegation also supports this proposal. CHAIRMAN (Interpretation): The delegate for the United States. MR. O. RYDER (United States); Mr. Chairman, we are in agreement with the purposes of the amendment but I think it is probably inexplicit as the paragraph is written now but I am perfectly willing to have it clarified. I am not certain that "prevent" is the best word there, and so I suggest that it be referred to the Drafting Committee for phraseology, but I agree with the principle of it. CHAIRMAN (Interpretation): The delegate of Belgium. J. M.P. FORTHOMME (Belgium) (Interpretation): Mr. Chairman, I want to make a point on the French version. I do not think "s'opposer" is the exact translation of "prevent", and I should rather suggest "prevenir" which, moreover, has the advantage of meeting the point raised by my American colleague CHAIRMAN (Interpretation); M. Baradue. M. BARADUC (France): Mr. Chairman, I was about to make the same remark as the representative of Belgium - a remark concerning the French translation of the word "prevent". Moreover, the French delegation is of the opinion that the sub-committee which will consider Article 25 should give the utmost attention to the Australian amendment with which the French delegation fully agrees. G - - 6 _ P E/PC/T/A/IV/19. CHAIRMAN (Interpretation): Gentlemen, I believe that we are all agreed. to accept the Australian amendment as to its substance and to refer the actual terms which were being put in the Dr: t to the Sub-Committee. Are we ael agreed, Gentlemon? We shell pass on to the other Amendments. The Delegate of Norway. Mr. MA&NDE Norway): M.r.Chairman, we have an Amend- ment on 2 (a) whiche. win as cnotincludd Doument W/223 because it came perhaprs a little late. It refers to the last para- graph of 2 (a) and the proposal is to replace the words, 1st July 1949, by 1st March 1932. The reason why we suggeswt that is that e think that the rulest apeplicabe conto he xchangocotrol regulations as laid down in Article 14 off the Monetary und Agreement ought to apply in a paralleel way to Articl 25 2 (a). That is the purpose, and. that would lread to the alteation we have suggested, as the Monetary Fund, started. operations on lt Marandmch last year, seas Article 14 3tion 4 refers to a 5-years period in the course of which the exchange control regulations shall be brought to an end. CHAIRMAN: The Delegaete of the Unitd States. RMr. OSCARS sReYDVTUMiteCdairm ct c : It (bv, as I p::eted. fter the fixed date understood the rAuendmentles. atn m/was no discussed, it was refmaerraed autotticlly Ctmo he Sub-omitte. CHAIRII1nterpretation): That was indeed the rule, in However, I personally do not seoeniences whate any/coever in the Amendmegnt bein discuss.ed here G - 7 - E/PC/T/A/PV/19 The Delegate of the Netherlands. Mr. SPEEKENBRINK (Netherlands): Mr. Chairman, I think I would like to have it discussed here because this is an important proposal. I would like to draw your attention to this - that as the state of affairs is now, the Charter and also the ITO would be very optimistic if they considered being in existence before the middle of next year, or even later, so if we put in here a date so early as 1st July 1949, we ask practically immediately the ITO to start considering whether it Should extend the period in the case of every country. I therefore do believe that an extension is wise. I do not know whether we should have 52, I have not made up my mind on that, but I think it is a little bit optimistic to put in here the date, 1st July 1949. CHAIRMAN (Interpretation): Gentlemen, it is quite obvious since this Amendment was presented at a late stage that certain Delegates will ask for a certain period of reflection. Therefore I shall ask the Delegate for Norway whether he will consent that his Amendment will be discussed somewhat later. Mr. MELANDER (Norway): Yes, that is allright. CHAIRMAN (Interpretation): Gentlemen, I am informed that a new Amendment will be submitted by Mr. Coombs in relation to paragraph 2 (c). I shall make on this new Amendment exactly the same remark I made before. I do not know the contents of the Amendment. It is probable that we shall need time to think it over. Therefore I will ask Mr. Coombs to tell us briefly the purport of his Amendment. G. - 8 - E/PC/T/A/PV/19 Mr. COOMBS (Australia): Br. Chairman, we are not specifically putting forward an Amendment covering this point, because we. are not certain it is necessary. But I wait to raise the point, so that when the Sub-Committee comes to consider this question we can assure ourselves that the point is adequately covered. We do not wish to present an Amendment. Briefly, the position is that 25 2 (c) as it stands approves the exception, of Import and Export Prohibitions and Restrictions which are necessary to the application of Standards of Classification and Grading of Commodities. Now we in Australia do conduct a number of marketing schemes of the kind which this Article is intended to deal with. Some of these are covered adequately by articles 32 and 33, there they do actually buy and sell the commodity concerned. In other cases, however, they merely lay town conditions of purchase and of sale, and for their operation by that means the frequent practice is to require them to obtain export licenses which are granted. perfectly freely on condition they conform to the requirements which are necessary. For instance, to quote one example, we do have a marketing scheme which covers butter, and. we do provide that export licences are required which, as I say, are granted completely freely, provided that the requirements of the marketing scheme are adhered to One particular purpose for which this control is used is to spread the supplies of butter on to the normal market over a rather longer period than they would. be, nor mally, if the marketing were left completely free. - 9 - E/PC/T/A/PV/19 This has advantageous results both from the point of view of Australia as the producing country, and of the consuming countries to which the butter is exported. It means the maintenance of a stable flow of supplies and less instability, therefore, in the prices of the product. It is not used in any way which could be reasonably described as restrictive over the period of the operation of the scheme. We are uncertain as to whether the present wording does clearly authorize procedure of that sort. We believe that such procedure is strictly in accordance with the purpose of this Article, and that the Board conducting this marketing procedure is guided by strictly commercial considerations, and that the procedure is in the interests not merely of the selling party but of the buying parties as well. We would wish, therefore, to have it clearly established that this Article authorizes procedure of that sort. We are content with the present wording so long as we are so assured. If there is any uncertainty about it, we would wish to have an amendment to go in which would clarify the issue. CHAIRMAN: The Delegate of the United States. Mr. Oscar RYDER (United States): It seems to me that the question of the Delegate of Australia might be referred to the sub-Committee, as I think there is no question that the kind of marketing regulations described by the Delegate of Australia are intended to be permitted by this Article, and if to is necessary to clarify that by a note or even an amendment to the text, it would be agreeable to my Delegation. CHAIRMAN: The Delegate of Canada. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, I agree with V E/PC/T/A/PV/19 the remarks of the United States Delegate that the type of scheme the Australian Delegate describes should be permitted, and if the text does not now :provide it, it should be so stated. CHAIRMAN (Interpretation): Gentlemen, are we all agreed that the question should be considered by the sub-Committee? (Pause). We all agreeapparently. We pass on now to paragraph 2(d), which deals with exceptions to the agreements on basiu commodities. We have, however, two amendments which tend to change the place of this paragraph and to transfer it to Article 37. If this is done, paragraph 2(d) will not only list exceptions to Article 25 but will list all exceptions to Chapter V. I personally believe that this matter could be usefully referred to the sub-Committee, provided the Delegations concerned agree with this point of view. The Do legate of the Netherlands . Dr. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, before you refer this matter to the sub-Committee, I would like to state that the position in not so simple as it seems here. In this connection I would like to refer to E/PC/T/W/207 in which the Netherlands Delegation proposed a new Article 57A. The argument we put forward was that we have many parts of Chapter V dealing with the subject of Chapter VII, and we thought it might be useful not to overburden Chapter V with cross-references to Chapter VII. I therefore wonder whether it is sufficient to refer this small point of paragraph 2(d) to the sub-Committee who have to look into the whole matter of Chapter V and Chapter VII, - 10 - V E/PC/T/A/PV/19 but I would not like to let paragraph 2(d) to to the sub-Committee without having referred to this proposal. CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. JHACKLE (United Kingdom): Mr. Chairman. I am bound to say that I feel very loubtfuI about the proposal contained in the Netherlands paper W/207. It seems to me than the procedure involved in Chapter VII is a lengthy, complicated and rather cumbersome one, and I should be very sorry to see it having to be invoked under any one of the large number of Articles of the Commercial Polices Chapter. It is suggested here that it might be brought in not only into the present Article about subsidies, but also into the maximum price margin under state trading Article _. 32); Import restrictions (Article 25, 2(e)), the paragraph we are now about to discuss. antidumd cpitervailingng anou duties (Article 17), and also other proposed exemptions under Chapter V. Well, I cannot ehelp feling that if the whole mechanism of Chapter VII has got to be brought into play underne each o of these Articles, a greet part of the Commercial Policy Chapter is going to be practically unworkable, and I am bound to say I do not like the proposal. V - 1l ER - 12 - E/PC/T/A/PV/19 Dr. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, may I just answer one thing. It was not my intention that we should have this discussed. I can quite see that other delegations might have objections, only I think it does throw a clear light on the main points where Chapter VII touches on Chapter V, and the only reason to why I refer to this is that when it comes to referring/one paragraph taking the place of another paragraph under Article 25, it might be useful to look into the whole problem, and it is the only reason for my argument at the moment. CHAIRMAN (Interpretation): Does the representative for the Netherlands see any objections to the question being referred to the Sub- Committee for consideration? The Sub-Committee will make due allowance for the statement now made by the representative of the Netherlands. Dr. A.B. SPEEKENBRINK (Netherlands): I am in agreement with you, Mr. Chairman, if the Sub-Committee will contact the other Sub- Committee. CHAIRMAN (Interpretation): Does everyone agree on this point? Agreed. Mr. L.C. WEBB (New Zealand): Before we pass to (d), could I raise one point in connection with this sub-paragraph? I understand the view referring to the general proposal to transfer the substance of (d): to Article 37, as not being a matter of great substance, but I would draw your attention to the matter raised (at the top of page 5 of W/223) on the United States amendment which, in fact, proposes what I think is a change of substance in that it proposes that the exception here should only refer to regulatory inter- governmental commodity arrangements. That seems to me to be a - 13 - E/PC /T/A/PV/19 question of substance, but I would point out that the Committee which is dealing with Chapter VII has a proposal which, in effect, demolishes this definition of regulatory intergovernmental commodity arrangements. It seems to me that there is a slight point of difficulty here, and it is very much a question of substance whether this exception refers to all intergovernmental commodity arrangements or only to one type of them. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, we thought in the case ofour proposed amendment and the United States amendment, have to that we should/wait for the revision of the Sub-Committee on Chapter VII. I am bound to say that apart from the revision made by that Committee, we ourselves see no objections to the inclusion of the word "regulatory". Regulatory agreements were contemplated and is the in the New York text,/that/type of question which would arise, but it seems to me that possibly it may be difficult to come to a decision on the precise wording of this new paragraph for Article 37 at the present moment until there has been an opportunity of seeing how Chapter VII has been changed in the Sub-Committee. with We might possibly content ourselves / discussing the wording principle of Article 37, while leaving the precise/unsettled for the our feeling was that may moment. I think/it may well haopen that commodity agreements/involve agreements other things than merely quantitative restrictions. There may be / about subsidies and tariffs and other things, and therefore it is a wider one desirable to make the exception/than in the present Article on quantitative restriction, but as I say I think the precise formulation will have to wait until we have seen what has happened to Chapter VII. - 14 - E/PC/T/A/PV/19 CHAIRMAN: Mr. Ryder. Mr. Oscar RYDER (United States): I want to express general agreement with what the British delegates has said. It seems to me it will be initially for the sub-Committee on Chapter VII to deter- mine the character of the provisions in Article 37, and for this Commission finally to adopt or reject them. CHAIRMAN (Interpretation): Does any other delegate wish to speak on the subject? It seems to me that it would be wise to wait for the final rate of Chapter VII before we embark upon a general discussion. We shall therefore postpone the discussion on this amendment. Paragraph 2 (e). We come now to a discussion on paragraph 2 (e). Numerous amendments have been presented dealing with this paragraph. I Direcall that the paragraph intends" to restrict the quantities of the like domestic product permitted to be marketed or produced." Two delegations, that of China and the Netherlands, have submitted amendments proposing to replace the word "restrict" by the words "to regulate the quantities", and then to add also the words "or stabilise the prices of such produots." We also have an amendment submitted by the delegation of Norway. This delegation also prefers the word "regulate" to the word "restrict." However, the Norwegian delegation wants to spread the provisions of sub-paragraph (e) to similar derived products. I think we might begin our discussion by one of the amendments which have been submitted to us. R.T. SHACKLE (United Kingdom): I think there are three para- graphs here which should be read together. First of all, there is that part of the Netherlands amendment which introduces a refer- ence to "like or a directly competitive domestic product." Then there is the Norwegian proposal which dealeswith "domestic products L . E/PC/T/A/PV/19 wholly or in part produced by the imported commodity". Thirdly, there is the point of the interpretation which we have given notice to naisol'n. I do not know whether it is worth while to raise my point now, but. it might possibly be convenient for me to do so, because the connection which I see between then may perhaps become clear. I will deal with the point by way of a practicalexample. It may become necessary for us in the United Kingdom to regulate the landings of fresh fish from British fishing vessels, so as to avoid as far as possible the glut landings of fish that happen from time to time which, of course, make the price. suddenly collapse. In these circumstances, we should have to regulate. imports within the provisions of this Article so as to counterbalance the regulation of the landings of the home caught fish. Clearly, it is no use regulating the landings of home caught fish if fish caught by other countries'fishing boats can be brought in and produce those gluts which the scheme would be designed to avoid. Under these circumstances we should have to regulate imports within the provisions of this paragraph, and that would mean that the requirements as to maintaining the proportion between the homo eaught and imported fish must be related to the proportion in a previous representative period, subject to any special factors that may affect the position. It is quite clear that it would be impossible to work a satisfactory scheme of that kind if we fresh can regulate the fresh fish - fresh herings or/haddock - in that way, but could not at the same time regulate the imports of those fis- at the next stage of processing, that is to say, smoked herrings and smoked haddock, and that for two reasons, because in the first place the fresh fish is a raw material from which the smoked fish is made, and secondly, because the smoked fish competes directly with the consumer of the fresh fish. - 15 - . , _ _ , - 16 - So we assume that the country with a regulatory scheme of that kind would be entitled, for example, to regulate imports not only of fresh fish, fresh herrings and haddock, but also of smoked herrings and smoked haddock. This regulatory scheme could not be worked satisfactorily if that were not the case. We think that that is, in fact, the intention of this paragraph as it now stands. It speaks of fisheries products imported in any form, and on our interpretation, what I have said would fall within the words of this paragraph, but I would like to make sure that that is the view of this Committee. I should. say that while I have quoted instances about fish, those are not necessarily exhaustive. The question may also arise as regards other agricultural products, but the most obvious cases do concern fish. I hope I have made myself clear. I think I will hand in to the Secretariat in due course a paragraph which says briefly what I have now said, so that it might go on record, and if desirable the sub-committee could look at it before making up their minds. I think I will now hand the paragraph over to the interpreter. I should, perhaps, add this: that it does seem to me that in connection. with the Norwegian and Netherlands amendments on this, unless I misunderstood them, they deal with this same point that the regulation on fresh products may be circumvented by imports of that product in the next stage of processing, that is to say, in the case of smoked. fish as compared with fresh fish. Thank you. CHAIRMAN: Monsieur Speekenbrink. DR. A.B. SPEEKENBRINK (Netherlands): Mr. Chairman, if I may just add an augmentation to that of Mr. Shacklel's. We think that once you have taken a position to restrict or regulate J. E/PC/T/A/PV/19 - 17 - J. . E/PC/T/A/PV/19 quantities of imported products for various reasons in the economic and social field and you intend there to stabilize the price of such products, with these considerations, it is not sufficient that you will only restrict, for instance, the import of wheat, where you have maize and rye and products that could be used, to a certain extent, for the same purpose. Therefore, we propose to have here "the like or a directly" - I repeat "directly" - "competitive domestic product". It is not our intention to look here for a new escape clause or something like that, but we do not see how we can ever work a measure of a scheme as proposed in this paragraph without extending the scope of these commodities to this directly competitive product, thereby fully, submitting to the judgment of the International Trade Organization and its bodies. I then return to the arguments of Mr. Shackle. I cannot see much difference, for instance, between wheat and rye and between smoked herrings and haddock, and I will even go further - he talked about smoked herrings, well that is one stage further. I am still in the first stage when I discuss competitive products here. E/PC/T/A/PV/19 CHAIRMAN (Interpretation): The Delegate of China. Mr. TUNG (China): Mr. Chairman, the Chinese Delegation attaches a great deal importance to the provisions of this sub-paragraph, We have submit ted Amendments in the Drafting Committee to minimize the effects of these policies on the national economy of agricultural countries. We feel we have to conform our position to the present proposal for the following reasons. In the first place, an under-developed. country like China, with the livelihood of most of her people dependent on agricultural economy, regards the price structure of her agricultural products as of vital importance. It not only affects the standards of living among masses of her population, but also determines the success or failure of any attempts at industrialisation. The Government of such a country must be able from time to time to adopt prompt and effective measures to regulate the variety and quant ties of agricultural products, in order to stabilise their prices and maintain a proper balance between foodstuffs and raw materials on the one hand and industrial manufactures on the other. Yet this is extremely Difficult to achieve under the Draft Charter as it now stands, for it fixes a prerequisite condition in the form of a proportion between the domestic output and imports of agricultural products. The second point is that the rigid provisions of paragraph 2 (e) will prevent an agricultural country from developing her own capacity of production and perpetuate her dependence on external supplies to meet her vital requirements. Such a country may have been compelled for long periods in the past to import large quantities of agricultural products on accountof natural G - 18 - E/PC/T/A/PV/19 calamities, social disturbances or simply transport difficulties. Yet none of these temporary emergencies is an adequate reason why that country need or should. permanently depend on foreign supplies. As soon as these emergencies have passed and order has been sufficiently restored, the home supply of such products would tend naturally and steadily to increase, accompanied by a corresponding decrease in the demand for the imports of like products. If, however, she were forced. to couple this decrease with a proportional reduction in the quantity of domestic like products, as purported by the Charter presented by the New York. Drafting Committee, the effect would be highly disastrous. It would impair her capacity to supply the major portion of her own needs and perpetuate her reliance upon foreign food and raw materials to feed her people and her vital industries It would, moreover, cause a heavy drain on her foreign exchange resources which might otherwise be available for the purchase of foreign capital goods. Such an unfortunate result would be contrary to the aims of this Charter and would render nugatory its provisions for assistance in the industrialisation of under-developed countries. The third reason is that the supply of these agricultural imports, on which a Member county is made to rely so much to me et her vital needs, may not be always reliable. Natural disasters, social unrest, transport breakdowns may also operate at any time in the sources of supply, and thus cause serious interrupt ions to a steady flow of products from the supplying countries. Again, for unforeseen reasons or an economic or political nature, these countries may be compelled to make sudden adjustments of production and exportation, thereby severely curtailing their customary supplies to the said Member country. - 19 - G. G - 20 - E/PC/T/A/PV/19 This would certainly result in an abrupt and uncontrollable price disturbance in her home market and might even lead to widespread. starvation and unremediable dislocation in many of her industrial enterprises. It is, therefore, highly arbitrary and unfair to tie the economic destiny of a Member country to unpredictable external supplies by a rigid formula of proportional reduction as set forth in paragraph 2 (e) of Article 25. For these reasons the Chinese Delegation strongly recommends the adoption of the foregoing Amendments, including the deletion of the last three sentences of the said sub-paragraph in the original draft. Mr. Chairman, the Chinese Delegation does not only object to the reduction of products, we also object to this fixed proportion which is set by the sub-paragraph between agricultural imports and domestic products; and we are ready to agree with the Netherlands and Norwegian proposals in re- wording the first sentence of this sub-paragraph; but we insist on the deletion of the last three sentences in the original Draft. - 21 - E/PC/T/A/PV/19 CHAIRMAN: The Delegate of the United Kingdom. Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman , if I may I should like to refer to my previous remarks and also to those made by Dr. Speekenbrink. It is quite clear from what Dr. Speekenbrink has said that his case is not like my case. He has in mind two products in the same stage of processing. I have in mind one and the same product in different stages of processing. I would like to add just this for Dr. Speekenbrink's consideration, that, of course, it is clearly open to him, as the paragraph now stands, if he regulates both wheat and rye, to regulate the imports correspondingly. On the other hand, in the case of the fresh herrings and the smoked herrings, we control all the imports of the fresh herrings. It follows from that that ipso facto we are put in indirect control on the production in the United Kingdom of smoked herrings, so there is a diff- erence there between our case and his case. In our case, the one product is the raw material of the other, and we cannot control them both. On the other hand, so far as I can see, in the case Dr. Speekenbrink has mentioned, it is not clear on the face of it why both the competing products should not be controlled. The only other thing I would add is that it still seems to me that probably the Norwegian amendment has my point in mind. No doubt the Norwegian Delegate will explain that to us. CHAIRMAN: The Delegate of China. Mr. C.L. TUNG (China): The Chines, Delegation has in mind that China's big problem is in respect of raw materials. Other countries also have the same problems, but they have very good remedies. We have to feed our people and clothe our people within our own doors. I think it is fair to supply the major portion of our own foodstuffs and raw materials. We do not want our economic affairs to be bound by such a fixed law, and so make China dependent upon foreign supplies which are not always reliable. The reasons I have already explained in full in the paper. - 22 - E/PC/T/A/PV/19 Mr. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairman, you may recall that, in London and New York, we have made reservations about this paragraph because we believed then, and still1 believe, that it should not be restricted to purely agricultural products and products coming from fisheries, but should also apply to industrial products. If we had to go by the principle of equilibrium andjkustice, and ifw e had to abide strictly by the provisions of the Charter, we should suggest deleting this paragraph. H owever, in asking that certani measures be aketn in order to protect the industrial products of industrially rather backward countrie,s we recoginse that othre countries may request that the same measure should be applied to develop their agricultreu ro their fihersies. In studying the text of het New York Draft, we see that provisions tendign, to restrain them raetk quantities of market similar/products were limited in it, ald have now been cnsoierdably widened, and that boisde the concept of regulating we found a new concept of stabilising as wlel. Furtermhore, ew have formulatde that provisions were limited to similar national products now that the provisions have been xteneded to competitivepr oducst. This question has already raised many conrevprtises, andpr obabl ywill go on doing so. uF we see that there is a new notion here of poducrt wholly ro in t * ared, and we wndoered whethe foir the sake of logic, and if we ed not awnt to dleete hisj paragraph, fi would not bea disavble to add X -gn to id.ustrial pordcuts with all deure servaionst of co ruse. Icidentallyn, I find that, ufrhetor on in the same tet,m there are ame ndments tending to achieve that objec.t Our nitnetion isto sppuort theseam endments, which tend to dad thesep orvisions, ubt if htey souhld be adopted here, we would have to abide by the rservations that e w haeve a ready made in London and eN Yorwk. - 23 - E/PC/T/A/PV/19 Mr. B.N. ADAKAR (India): Mr. Chairman, in connection with this discussion on sub-paragraph 2(e), I would like to draw your attention to a reservation made by the Indian delegation in London and in New York, which has been referred to on page 8 of the Annotated Agenda. The amendment suggested by the Indian delegation on this paragraph is more or less similar to that suggested by China, and so far as the concept of stabilising the prices of primary products is concerned, I think it is incorporated in the amendment suggested by the Netherlands delegation also. I would only add that our main reason for suggesting this amendment was to provide for a situation in which import regulation becomes necessary the in connection with/domestic scheme for stabilising the prices of primary products, even when the primary products concerned are not in surplus supply. Under the draft as it stands, it is possible to introduce import regulations only in connection with measures which operate to restrict domestic production or market. Restriction on production is necessary only under surplus conditions, but in countries which depend on primary production to a very large extent, on their and/the stability of which/economy depends - the stability of the income of private producers - schemes for stabilising the prices of primary products are necessary, even under normal conditions whether the normal supply position is of shortage or of surplus. If such schemes are to be efficiently operated and managed, it is necessary that governments concerned should have effective control over supplies as well as prices, and therefore it is necessary that the governments should have power to regulate imports even when no measures are found necessary to restrict domestic production or markets. It seems to us, therefore, that the insertion of the words "regulate production or marketing is an improvement. So far - 24 - E/PC/T/A/PV/19 as the question of stabilising the prices of primary products is concenned, I am inclined to think that if the words "regulate the production or marketing of such products, or marketing of likely domestic products" are inserted, then that might perhaps dispense with specific reference to the concept of stabilising prices, because any scheme which seeks to stabilize prices will, in most cases, Involve regulation of production in the market of domestic products. Therefore, if the word "restrict" is retained, it will be necessary to make a specific reference to the other objective of stabilising the price of domestic products. But if that word were replaced by "regulate" then the specific reference to stabilising the price of domestic products would not be necessary. - 25 - E/PC/T/A/PV/19 As regards the other suggestion made by the Chinese delegate, which was also rade by the Indian delegate on another occasion, namely, the deletion of the last three sentences in this sub-paragraph, beginning with the words "moreover, any restrictions applied" which requires a fixed proportion to be maintained between domestic produc - tion and imports, I would point out that this question is directly related to the other question of permitting the use of quantitative restrictions for protective purposes, because the idea underlying the suggested provision is to prevent the use of quantitative restrictions for protective purposes, that is to say, for c 'L ,n Securing for domestic products a greater share of the domestic market. We have prepared an amendment on this subject in the form of a separate Article under Article 26(a), but we would be quite pre- pared to leave the consideration of this paragraph until after a decision is arrived at on the other amendment. On the present occasion I would suggest for the consideration of the Committee that whatever the merits of the position of allowing a fundamental restriction on quantities are, that restriction should not be applied to any situation in which agricultural products are in surplus supply. After all, it must be recognised that domestic producers have a prior claim on the domestic market. If, in a country which is dependent on imports the domestic market is all the domestic producers have, they have no alternative but to sell their entire product to the domestic market. The importers have the opportunity of going to other markets, but the domestic producers are absolutely helpless in a situation in which there is a local surplus. We therefore suggest that the application of this principle should be modified in this particular instance, but we would be quite prepared to reconsider the position of this paragraph after a decision has been reached on the other question. - 26 - L. E/PC/T/A/PV/19 Mr. DEUTSCH (Canada): The Canadian delegation has always had great difficulty with this sub-paragraph. We are quite sympathetic to some of the remarks that have been made by the delegate for Chile. It does seen to us that if we have regard to the logic of this Charter, and if we have regard to maintaining a fair balance between agricultural and industrial products, that we should delete this sub-paragraph. It does draw a distinction between the treatment that has to be accorded to agricultural exports and exports of industrial products. This sub-paragraph would allow the imposition under certain conditions of quantitative restrictions against agricultural products. That is not permitted in the case of industrial products, and therefore there ison the surface, and I think fundamentally, a distinction here in the treatment of countries that are dependent upon industrial exports and those that are dependent upon agricultural exports. The Chilean delegate has suggested the ultimate logic of this is that we should allow the same privileges to countries that import industrial products. There is a good deal of logic in that position. However, we would like to see neither si tuation; we would like to see the same treatment accorded to both which would be the result if this sub-paragraph were deleted. However, there have been arguments made in support of this sub-paragraph, arguments that one can understand, namely, that countries that are confronted with difficulties with agricultural producers, confronted with the problem of burdensome surpluses can only be corrected by the adoption of a programme of adjustment by the Government, involving the control or restriction of product on. The theory of the sub-paragraph as it now stands is that if a country, it order to deal with a burdensome surplus of agricultural production, adopts a programme which involves the restriction of production so as L. - 27 - E/PC/T/A/Pv/19 to overcome the surplus, then that country may impose quantitative restrictions against imports. That is the theory of the paragraph as it is now written. The justification is that there is very little purpose in restricting domestic production if at the same time you allow imports to come in freely. One frustrates the other. If you are really to restrict domestic production, you must also restrict imports. There is logic in that argument. - 28 - EC/PC/T/A/PV/19 Of course, the same logic, perhaps, could be applied to industrial goods, but a distinction is made with agriculture, which is much more difficult to deal with than industry. But now, Mr. Chairman, these amendments seen to us to destroy any logic there is left in this sub-paragraph, and if these amendments are adopted, then I suggest that the Chilean delegation's arguments are unnecessary. The first amendment I wish to consider is the substitution of the word "regulate" for the word "restrict". New, the word "restrict" is very important here, because it is addressed to the correction of a problem, namely, the problem of cealing with an unmanageable surplus, and we are trying to restrict production to deal with the unmanageable surplus, and if you restrict production therefore you have to restrict imports, out if you substitute the word "regulate", it may mean anything; it does not require restriction; you may have any kind of programme about agriculture; it may even mean increasing production in a regulative fashion. It may mean any number of things, and therefore the loigic of this would be entirely destroyed. In other words, if you do anything about agriculture in the way of a government programme, you can restrict imports. This is what it comes down to. Now, it seems to me that if that change is made it would destroy there any logic, if there is any left, in support of this particular paragraph. Another consideration has now been introduced, namely, to stabilise prices. In other words, if you adopt the programme to stabilise prices, you will get an exception from the rule against quantitative restrictions. That is an entirely new idea as far as this Charter is concerned, and why limit it to agriculture purely? It would greatly extend. the application of this paragraph if, every time you had any kind of a programme which stabilised -29- J. E/PC/T/A/PV/19 prices, then you could apply quantitative restrictions against imports. Now, that seems to us to widen this very greatly. Finally, the suggestion is that we should be allowed to regulate the quantities of the like or a directly competitive domestic product. There is some logic in the argument that has been made there, but it would seem to us that if the import of adirectly competitive product is to be restricted, then the domestic production of that article should also be restricted. I think the remarks of the memberfor the United Kingdom are very pertinent in that connection, that is, if you want to control the imports of a directly competitive product you should also, at the same time, according to the logic of this argument, restrict the domestic production of that same product. It is always open to any country, if it can meet these conditions where it is necessary to control quantities of a directly competitive product for the reasons given in this paragraph, to restrict the output of the domestic product, and then it may restrict the imports of the same product. But if it cannot meet the conditions specified, then it should. not have the right to control the imports of those products. Again, the net effect of this additional "like or a directly competitive domestic product" would be to widen the application of this Article. For these reasons, Mr. Chairman, we take a very serious view of these amendments. It sees to us that they would destroy the basic logic of this sub-paragraph, insofar as there is any logic to it, and would take us very far afield in the general balance and general structure of this Charter, and we would get to the position where the remarks of the delegate of Chile, to our mints, would, be unanswerable. Thank you. G - 30 - E/PC/T/A/PV/19 CHAIRMAN: The Delegate of Czechoslovakia. Mr. AUGENTHALER (Czechoslovakia): Mr. Chairman, I think that we have recognised in our work until now that there is some substantial difference between primary commodities and the manufactured articles; and that it is, more or less, also the basis of the Amendments presented here. I would like to state that we are in favour of the Netherlands Amendment as it stands here, because it is short and it is clear. Now, on the other hand, we are framing here certain rules for certain occasions. It may be that some countries are following the same aims by means of other procedures or by means of other instruments, such as, for instance, the State monopolies or State tradings; and that is why we think that when Article 32 has to be formulated there should be in article 32 no provisions which would request from countries following the same policies as here,which would discriminate,or which would. impose some other duties than those imposed upon countries here according to Article 25 2 (e). Thank you. CHAIRMAN: The Delegate of Brazil. Mr. RODRIGUES (Brazil); Mr. Chairman, after reading in my country paragraph 2 of Article 1 of the Charter, which reads-, "To further the enjoyment by all Member countries, on equal terms, of access to the markets, products and productive facilities which are: eeded for their economic prosperity and development", we think we presume to give up too many quantitative restriction, and should try to follow as much as possible the tendency of the Charter drafted by the United States; and. because we believe sincerely in that drafting, which E/PC/T/A/PV/19 in general was aiming at 4 better situation for international trade, we came to this second Preparatory Committee. Especially in regard to negotiations we tried to co-operate, and we made a lot of reductions and gave concessions in such a way as to show very clearly our desire to reach a position that could be a stone in that building we are trying to build here. Everybody knows that Brazil had, before the war, semi- restriction, and a very stiff legislation about the importation of some goods; but we are giving up all of these restrictions. But what we think most of all in our discussion here is that we are going very far from the first drafting, and countries like Brazil, which are less developed, and which follow with all sincerity, and with a real desire to co-operate, this draft, now are having a very sad experience. We are in a position of not being able to explain well our attitude here in regard to our acceptance of the rules, which, in the first moment, would be looked at as being against our interests; and now we have to accept measures which are being designed and suggested by countries in a better state of industrial development which are really unfair, especially if you take into consideration what the Delegates for Chile and Canada have explained so well. Because of this I can not agree with the Amendments presented with regard to paragraph 2 (e), but I would suggest that the Amendment presented by the United States on page 10 of this Report should be approved; otherwise we have to reserve our position and be strongly against any other measure which is going very far from the Charter in which we believe, and upon which we take up our attitude here. - 31 - V - 32 - E/PC/T/A/PV/19 CHAIRMAN: The Delegate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, the Norwegian Delegation is in agreement with those Delegations who have expressed the view that quantitative restrictions ought not to be allowed to be used as a protective measure as a general rule. We are in full agreement, consequently, with the principle laid down in Article 25, paragraph 1. In regard to the exceptions in paragraph 2, and especially 2(u), with which we are now dealing, we think that the general view that quantitative restrictions ought not to be applied ought to be kept as the background when we discuss this Article. On the other hand, I think that we have recognized during the discussion of the different Articles and Chapters of this Charter that there may be a necessity to distinguish between agriculture and agricultural products and manufactured goods. The problem of protecting agriculture is reallylsnot a problem akin to the protection of industry. The problem of protecting agriculture is a problem of a different order. It is not only a question of the standard of living, but there are also other implications, as I think all the countries in Europe which have been o coupled during the War will attest to. Now, in regard even to agricultural products, we think that to use quantitative restrictions even then we ought to be very careful, and to very carefully define the cases in which one ought to be allowed to use these measures for protective purposes. To start with the general remarks which have been put forward by some Delegates here, I think that, generally speaking, we would be in agreement with those Delegations who have expressed grave doubts as to the rightness of extending these provisions to, for example, covering the stablization problems and to certain -33 - V E/PC/T/A/PV/19 other aspects. Further, we think also that one will have to be very careful in extending the regulation in paragraph 2(e) to cover not only like but competitive products. That, we think, is of a dangerous character and one has to consider at very carefully. In regard to agriculture, on the other hand, it may be that it would be necessary to introduce certain alterations, The alteration which we ourselves have put forward has one very limited objective. The text which we have produced does not, perhaps, clearly indicate what we have in view, so I would like in a few words, to indicate that. What we have in view is that the production in Norway of meat, eggs, bacon and so on has, generally speaking, tended to increase to such an extent that it has been necessary to restrict it. That is our experience during the inter-War periods. Now, in order to restrict that production we could introduce regulations of the kind already indicated here; but we have come to the conclusion that the best way in which to restrict the production of, so to speak "finished" agricultural products, namely, meat, bacon, eggs, milk and so on, is to restrict the importation of agricultural feeding stuff. When I say "restrict the importation of agricultural feeding stuff" I have, of course, in mind that some Delegation might then say, "Well, if you restrict the importation of feeding stuff you have to restrict the production of feeding stuff in your own country". The reason why we have not Suggested that is that there is really only a very limited production of feeding stuff in Norway at all, and the possibility of increasing it is very limited - practically nil; so that throught the restriction of imports of feeding stuff we do not -34 - E/PC/T/A/PV/19 protect Norwegian production. If we should restrict that little cultivation of grass, of whatever it might be which would be the parallel rule here, it would imply administrative measures which would really be too big and too expensive in relation to the costs. Therefore I would make it clear that when we introduce this rule to restrict: the importation of feeding stuff in order to restrict the production of meat, milk, eggs and so on, that is not in order to protect the production of feeding stuff in our own country. That is really the only purpose of our amendment, and it is limited to that very clearly defined purpose. ER -35 -E/PC/T/A/PV/19 Now, with regard to agricultural products, our opinion is that fishery products ought not to come within this general rule at all. We think that when it is possible to conclude a commodity agreement on fishery products, which would be possible under Chapter VII, it would not be necessary to introduce these rules here as applicable to fishery products. That is our general standpoint, and the reservation we made in London is maintained here. I would also mention one point in this relation, especially in relation to the remarks made by the delegate of the United Kingdom. He mentioned that, if there is a question of limiting the catch of say, fresh herrings, by British fishing boats in the North Sea because many boats come in and, so to speak, dump the catches on the market, he says that it would be necessary, for example, to limit the amount of fresh herrings and fresh fish from the Norwegian, Swedish and Icelandic boats as well. Well, I think that there is little to be said for that, but I think that can be covered by the commodity agreements, and it ought not to come under this regulation here. But then, when he said that he would not only need the right to prevent fresh herrings and fresh fish from coming to the United Kingdom from abroad, but also he would need to prevent, for example, smoked herrings or sardines from coming in, I cannot see any analogy at all as those fish products like sardines and smoked fish and, to the same extent, dried fish and so on, can be stopped. If they are sent in to one country they can be stopped there and need not be consumed immediately. They can be stopped for many years, and consequently his argument, as far as I can see, applies only to fresh fish because there you have a possibility of stooking it. You have the position there that, if they cannot be consumed they rot. That is a point which should be considered, but I think that should be covered under commodity arrangements and not those regulations here. That is generally how we consider these Articles and the amendments which have been so far produced. E/PC/T/A/PV/19 L. 36 M. PIERRE FORTHOMME (Belgium) (Interpretation): The Belgian delegation were never very happy about the exception which was in- serted in sub-paragraph (6) of paragraph 2 of this Article; however, we finally accepted it with great reluctance. But we went to explain that this exception limited the exact aim we have in mind. We would remind you that in New York the Belgian delegation insisted on introducing the notion of the incidence of seasonal variations in the price and rules applying to agricultural products. This is a notion widely applied in customs and tariffs and we all know there are various rates in tariffs according to the season when an agricultural product is imported. I would like, in addition, to ask a question. The Norwegian delegate has explained his amendment as being of a very limited application, and that the draft of his own amendment might be broader than the intention of the Norwegian delegation itself. I want to know what is the exact extent of the exception in the last sentence of the Norwegian amendment, - "This rule shall not apply to products used in the production of domestic agricultural products", etc. If this rule applies to the whole of sub-paragraph (e), then have no objection to it, but if this rule only applies to the sentence reading: "moreover any restric- tionsapplied under (i) above, shall not be such as will reduce the total at imports relative to the total of domestic production" and so on, then we consider the Norwegian amendment applies the principle of unlimited restriction of any production which might be used, such as the production of fertilizers, binder twine, etc. Mr. E. McCARTHY (Australia): The Australian delegation finds itself rather questioning the nature of the amendment proposed to this Article. The Canadian delegate has said quite a lot that was in our minds but we would like to point out that it has seemed to us E/PC/T/A/PV/19 from the outset that this particular Chapter or Article has been weighted, in favour of importers of agricultural poducts. It does appear that it can have the effect of being highly protective, and the degree to which it would be protective would be at the discretion of importing countries, in fact, it is not difficult to conceive an exporter negotiating in a particular agreement a reduction of duty in an agricultural product, finding that because some form of government instrumentality was operative in that country, the value of the reduction of that duty had been offset. It, is important to consider that exporting countries with their surpluses which have arisen by reason of the fact that they are natural producers of the product, have got to sell the product. other- wise they cannot buy from the countries who are probably importers of primary products and sellers of secondary products. Therefore, we feel we should say that we were never happy about this particular sub-paragraph from the outset. It was in a way broken down by certain conditions, whereby it was said that where restrictions were imposed because there were domestic restrictions, that at no stage should the imports be less than during a representative period. A good deal of the work under this Charter, and particularly negotiation on tariffs, was designed to secure greater opportunities to sell surpluses of primary products, and to sell them under market competitive conditions. Therefore, a country having a reduction in duty, with a commodity that formerly never found a market in a country at all, right now find restrictions imposed, and would have no redress because over a representative period the im- ports had not been reduced. Again, we note the suggestion that if there is a stabilising proposal in the importing country, it can at its own discretion limit imports. At what level are the prices to be stabilised? At considerably above import price? If they are, that is a high degree of protection. 38 The point we emphasise is that this is taken away from the of negotiating field altogether, and the importers/primary products are, if these various amendments become effective, given a degree of protection that exporters certainly do not have, and compensation is not provided by way of increased opportunity for the shipment of their primary products, - compensation for the relaxation of any import duties which they are supposed to give under the trade agree- ment. We realise that something is called for. We would prefer to see the sub-paragraph eliminated; we are not saying it again because we did agree at Church House, to a compromise which was not very much in our favour and we do not wish to depart from it, but the se amendments are a distinct widening of the agreement that was reached at Church House, such a big widening that it justifics us in reopening our protest and pressing for consideration of the views which I have just put forward. I repeat that I realise we cannot have it eliminated, but we think that in sub-committee some very close attention ought to be given to the conditions under which it is applied, and careful con sideration should be given to the question as to whether the power which undoubtedly has got to be there is not widened too much r the sub-Committee we hope that these aspects will be carefully considered. We would summarize our views by saying the amendment put forward here taken as a whole gives too much relaxation to the importer of primary products. They draw mo '^ distinction between the claims of exporters and the rights of importers to impose so me restriction. Too much discretion is given to importers as to the degree of protection they will give themselves under the proposal. Whilst we agree that the sub-paragraph in some form should remain, we do not wish it to provide for any greater relaxation for the im- porter of primary products then is now provided. E/PC/T/A/PV/19 L. J. 39 - . E.0. YDEMR (United States): Or.Chairman, our delegation has studied these amendments which are included in the various proposals, They are five in number. uThe first one that I wold like to discuss is the one incorporatemd. in the amendment subitted by Norway to change the language to "to regulate the quantities permitted to be marketed or produced of the like domestic product or of domestic products wholly or inm part produced by the iported commodity or". Now, that addition of "domestic products wholly or in part produced by the imported commodity" has set out what has always been intended in the language of this paragraph. The intention was to include the term "in anmy formm" and the sub-comittee ight well consider whether that phraseology "in any form" does act sufficiently. I do not think that there is any controversy on that question. On the second amendment suggested by the delegation for Norway, I agree with the delegate for Belgiwhium that in the form in ch it is presented it leaves the door wide open for imports of products used in producing other agricultural products. That particular problem might be considered and taken care of by the sub-committee. A much more difficult problem is raised by the sugggestion in the amendments proposed by the delegations. of the Netherlands and China to extend the exceptions to like or directly competitive domestic products. Now. I am bosnund to say that there something to be said for that suggestion. Manifestly, if the Soya United Statesc should limit the prodution of/oil it might be necessary to restrict the import of competitive oil, like sunflower or peanut oil, which is directly competitive, as if they were like products. I agree, however, with the delegate for Norway that there is a great danger in doing that, and I think considerable E/PC/T/A/PV/19 J. E/PC/T/A/PV/19 40~~~~~~~~~~~~40 study of that problede b should becmmmby ethe sub-oomitte which will be appointed to handle this. The other twoa amendments tht have been ucproposed are mh more serious. The first of them would substitute the word "regulate" for the "word "restrict, and I do not neead to add to wht the delegate for Canada so well saidg about the daners of that substitution. To my mind, it would practhically throw te door wide open to violation of the panrohibition of imposition. Tmehe fifth amodit suggested is to alelow quotas who they are domestic meaasures for sctbilizing pries. I should hesitate long befr expanding the exceptions in this eway. PFrc cstabilization is 3veery broad tom which may cover a wide diversity of measures having widely different results. I fear that it would not be permittced in the ase of measures taken ein the nam of price stabilization, and the prohibition of quotas contained in this article will becomee utterly maningless. The exceptioavns which he alregadey been ared to in this Article, aticle 26A, and 1in iticlel, have alre-dy seriously weakened the prohibition of quotas. If, in addition, we have an exception for price stabilizatiuon, not mch is lMeft. oreover, I do not see cthat any ase can be made for it.h If te price stabilization measures have the effect of raising domestic prices above world prices then there is no occasion for restricting them. not eaIf such =ures, however, doe/raise'hndomestic price above world prices, then the difficulty is that the measures will result in expanding domestic production at the expenpse of imorts. In this case, it seems to the Unieted Stats delegation that quantitative restrictions should not be peurmeitted nlss domestic production is also restridcted, an, if that is also restricted, then the sub- paragraph 2(e) as it stands permits the imposition of quotas. Than' you. E/PC/T/A/PV/19 41 CHAIRMAN: The Delegate of the Netherlands. Mr. SPEEKENBRINK (Netherlands): I wish to say, Mr. Chairman, a few words just to explain our position more clearly. It is that we have proposed these amendments because there are very grave social problems involved. We do not object to any consultation. Indeed, we are in favour of it. I might refer to what we have said about the close relationship between Chapters V and VII here. We are in full agreement that we should not do this thing unilaterally, without consultation and the possibility of negotiating these things, but we cannot agree at the moment to this Article as worded in London and New York, because we think it does not say enough and may also not be clear enough; and indeed, in the Sub-Committee we will discuss that further and perhaps come to some conclusions there. The only point I still have to make is this, that from our Amendment it was not clear that we had no objections at all against the last part of paragraph 2 (e) - that we have no objections against those stipulations that say that restrictions shall not be such as will reduce the total of imports relative to production and so on. Our Amendment simply referred to the first part of that paragraph, and the sentence from"Any Member" and so on can remain, as far as we are concerned. CHAIRMAN: The Delegate of the United Kingdom. Mr. SHACKLE (United Kingdom): Mr. Chairman, I do not want to say very much, but I would like to make a few brief comments on some of the points made in the course of this discussion. 42 E/PC/T/A/PV/19 In the first place we have had certain suggestions which would widen the scope of this paragraph very much, so as to make practically general protection for both agriculture and also industry by means of quotas. Well now, in our conception of the object of this paragraph, that is not at all what it is desired to do. It is desired to deal with a particular situation of difficulty which affects agriculture and fisheries. That may be summed up in this sort of way, that in agriculture and fisheries you have to deal with the precious bounty of nature, which will sometimes give you a huge catch of fish or a huge crop, which knocks the bottom out of prices. You also have the phenomenon peculiar to agriculture and fisheries of a multitude of small unorganised producers that cannot organise themselves. It often happens that the Government has to step in to organise them. But if it does so, it cannot allow the results of its organisation to be frustrated by un- controlled. importers. That is, as we see it, the raison d'etre of this paragraph. Well now, certain other Delegations have suggested that this should apply, if it be adopted, to industry as well as agriculture. The answer to that, I think, is that industry is in quite a different case. It does not suffer from the capricious bounty of nature, Industrial producers are usually very well able to look after themselves. There is no need for the Government to step in and do it for them, and consequently there is no case for controlling imports of industrial products in order to counter- balance an international scheme. The case of industry is entirely different from the ease of agriculture. G. 43 Well now, I would like to come to some points raised by the Norwegian Delegate. He first of all suggested that what is needed in the case of fish is not the kind of scheme we had in mind but an international commodity agreement. As to that I would say that we do not by any means rule out the idea of an international commodity agreement about fish, but this paragraph, in our conception, is designed to meet certain difficulties which are just as much applicable to the case of fish as to agricultural products. The Norwegian Delegate seemed to think that we had it in mind to extend this control not merely to cured and smoked fish but also to things like tinned fish and sardines. That is not our idea. All that we have in view is an extension to those earlier stages of processing which result in a perishable product. You cannot keep a kipper indefinitely. E/PC/T/A/PV/19 V 44 Varieties that cannot be stocked - those are the things we have in mind. If we could not control the importation of kippers any scheme for herrings would break down. We notice that the principle of the Norwegian amendment does, to some extent, seem to recognize that you have to take care of the processed product at the same time as you take care of the raw product. I would suggest that what we have in mind here is the peri-:hable kind of processed product, not the kind which is capable of being stocked. Well now, as regards that, I hope I have made it clear that we are not asking for any amendment of this text. We are quite content with it if it is interpreted in the sense that it seems to us obviously to boar with the United States wording "in any form" and the United States Delegate has agreed that that was the intention. I would like to mention just a few points made by the Delegate of Australia. I would like to say that we view this not as a means of protection but as a moans of making watertight, and making possible the working of, necessary forms of internal control. The text at the end of the paragraph about the representative period, if it stood entirely by itself, might - as Mr. McCarthy has suggested - make for excessive rigidity; but you will notice that that was qualified by the term "special factors". The meaning of the term "special factors" brings me to the second point of interpretation which I would like to put forward. It is this: we assume that 3* reference to "special factors" was not intended to allow a country that operates a regulatory scheme of this Kind to adopt measures that would be prohibited under ether sections of the Charter. E/PC/T/A/PV/19 V. 45 E/PC/T/A/PV/19 We take it that the term "special factors" would include real changes in relative productive efficiency as between domestic producers and foreign producers, or as between different foreign producers: in a word, real changes in the competitive situation and not, as I have said, changes artificially introduced or encour ged by Government action of a kind which other sections of the Charter would not allow. If that interpretation is right, it does seem to me to follow that we need not fear an excessive rigidity coming out of this reference to the "repre- sentative period" and the "special factors", because if the representative period is not representative, and if there are special factors which have modified the competitive situation, then those factors have got to be taken into account; and although it is for the Member concerned, in the first place, to select the representative period and to size up the special factors, that is provided for elsewhere and is subject to appeal, so I think that this point is covered. I would like to make one more remark concerning the inter- pretation of "special factors": that is, that it arises not only here but in two other passages in this Draft Charter - in Article 27,paragraph 4, and also in the Article about subsidies (Article 30, paragraph 5), so if this interpretation which I have sought to give to the term "special factors" is agreed, I think it would mean that it is agreed that the inter- pretation has that general effect. 46 Mr. B.N. ADAKAR (India): Mr. Chairman, I am very sorry to inflict my views again in this discussion, but I shall try to be brief. The issuesinvolved in the amendment suggested by us in London and New York, and those which we have supported in the course of this discussion, are of vital importance to countries in a position such as that of India. An objection of principle has been raised to import regulations being used in connection with schemes for stabilising the price of primary products. I think it is too late in the day to argue about the desirability, or otherwise, of promoting greater stability of primary prices. I think it should be accepted that, both in the interest of primary producing countries as well as in the interest of the stability of world economy, it is necessary that the income of primary producers should be kept as free from fluctuations as possible. Now, in view of that wider objective we must consider whether, in the case of particular primary commodities we are interested in, there are any international schemes which seek to promote greater stability of primary prices. If there are no such international schemes, I think that any primary government which is responsible to/producers must take local measures to secure greater stability. Such local measures for securing greater stability of prices will necessarily involve supplies as well as imports. Control of prices is unthinkable without control of import regulations, and for that reason import regulations in connection with price regulations is justified. It has been suggested. that such measures might be used to maintain world prices. Now, it is true that such measures could, in certain circumstances be employed for that purpose, but as is widely known, the main object of most such schemes is to promote greater stability, that is to say, to eliminate fluctuations, and if such schemes are limited to that objective they will not result in domestic prices being E/PC/T/A/PV/19 ER 47 E/PC/T/A/PV/19 maintained on a world level. It is quite true that, if prices are maintained on a world level, import regulations may be used for protective purposes. I can understand if that is an arguemnt against the deletion of the provision contained in this paragraph, against maintaining a fixed rate in domestic products and imports, but if that provision is retained I do not understand how the maintenance of stable prices could be of a useful purpose. One cannot argue against the deletion of production and import, and at the same time argue that that may be used for particular purposes. If a suitable ratio is maintained between domestic production and imports, then naturally stabilisation schemes, ipso facto, have not had the productive effect. Therefore, one can oppose the deletion of the provisions which require fixed ratios being maintained between production and imports. But having secured the retention of that provision, one cannot use this argument against schemes which aim only at stabilising domestic prices. So far as the provision dealing with the maintenance of fixed ratio between production and imports is concerned, I would say that the Indian delegation would be quite prepared to accept the same procedure for protective import quotas and for agricultural products as for manufactured products. We have proposed an amendment providing import quotas for manufactured products. We would be quite content to follow the same procedure for agricultural products agic .r, _% n:f z.t' products. Dr. A.P. van der POST (South Africa): Mr. Chairman, as a representative of an agricultural country, I would join issue with my friends of Chile and Canada in their conclusions that, if we extend certain privileges to any country proposed, those privileges must necessarily be extended ultimately to industry, and would support Mr. Shackle in his remarks on this point. I believe that ER 48 E/PC/T/A/PV/19 we do not want to open the door too wide, and we have got to make exceptions - that is, while we can confine our exceptions in this particular case to agriculture, there is a very big difference as emphasised by Mr. Shackel and the Indian representative, between agriculture and industry. By its very nature, industry is dependent on natural forces. Industry can rationalise, but we cannot do that to the same extent in agriculture. Agriculture still depends on natural forces. It may be that, if we attempt to rationalise in agriculture in the same manner as we rationalise in industry, a whim of nature may upset our whole rationalisation scheme. Therefore, we have got to make an exception in the case of agriculture, and I therefore protests as we cannot argue that if we extend these privileges to agriculture, and it follows naturally that they must also be extended to industry. Therefore, it seems to me that the arguemnt used by our Chilean representative and by the Canadian representative, that with these further proposed privileges for agriculture we would be upsetting the balance of the Charter and that this should be more related, ultimately does not hold much water. It ignores the very fundamental nature between agriculture and industry. CHAIRMAN (Interpretation): We will resume our discussion next Monday. The meeting is adjourned. (The Meeting rose at 6.25 p.m.)
GATT Library
zk814jh7770
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Ninth Meeting of Commission A held on Thursday, 5 June 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 5, 1947
United Nations. Economic and Social Council
05/06/1947
official documents
E/PC/T/A/PV/9 and E/PC/T/A/PV.8-11
https://exhibits.stanford.edu/gatt/catalog/zk814jh7770
zk814jh7770_90240083.xml
GATT_155
14,367
86,046
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL RESTRICTED ECONOMIQUE E/PC/T/A/PV/9 ET SOCIAL 5 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT NINTH MEETING OF COMMISSION A HELD ON THURSDAY, 5 JUNE 1947 AT 2.30 P.M. IN THE (Chairman) ( Norway ) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). DES NATIONS, GENEVA NATIONS UNIES H.E. MR. ERIK COLBAN G E/PC/T/A/PV/9 CHAIRMAN: The Meeting, is open. I think we may start, even if some Delegates have not yet arrived. Do you remember that the Article we are going to discuss to-day, article 15 of the Draft Charter, was not drafted at the London Session, and. the Drafting Committee, on the basis of the discussion in Commission 2 in London, has tried to set up a text which is inserted in the New York paper. Obviously this places this Article in a slightly different position from the Articles which were drafted at London, and that perhaps is the reason for the very great number of Amendments we are going to go through. Nevertheless, I hope we shall be able to boil down the differences so that it can be put to the Sub-Committee to dispose of. You will see in the New York paper, under the heading "General Comments", that one Delegate, the Delegate of Brazil, proposed adding a new paragraph. I would like to ask the Delegate of Brazil whether he wants to speak on this suggestion? Mr. RODRIGUES (Brazil): Mr. Chairman, we have received instructions from Brazil to withdraw this reservation. CHAIRMAN; Thank you. I hope we can go on with the same result for others. The second point, in the General Comments in New York, was made by the Delegate on Cuba, but I think that when he said nothing he meant to reserve his position. That is now covered by his definite proposal for certain Amendments. Mr. GARCIA-GLDINI (Chile) (Interpretation): May I suggest, Mr. Chairman, that we defer your lest question until the Representative of Cuba has arrived? G. 3 E/PC/T/A/PV/9 CHAIRMAN: I regret I did not notice that the Delegate of Cuba was not present. We pass on then to paragraph 1. There you will see, in Doc. W/150, that the Delegations of the United States, Cuba and Norway propose the deletion of the first paragraph of the New York Article 15. The Delegate of China proposed a certain Amendment to this paragraph, but if the paragraph should be omitted altogether, that amendment would, of Course, disappear, and I do not think we need to deal with that Amendment in the first instance, whether or not we decide that the U.S. proposal is accepted, Mr. SHACKLE (United Kingdom): Can I ask a question, Sir? I assume that the U.S. proposal is dependent on the addition they suggest at the end of what is now paragraph 2. Is that so? CHAIRMAN: It is my own opinion, but I wanted to ask the U.S. Delegate to answer the question. Mr. Oscar RYDER (United States): Mr. Chairman, I do not know whether I would say "dependent" but "closely connected", as regards the two Amendments; and in the original proposal which we considered at the London Meeting, in paragraph 2 it was provided that Members recognise that the imposition of internal taxes on the products of other countries for the purpose of affording protection for the domestic production of competitive products would be contrary to the spirit of this article, and they agreed to take such measures as may be open to them to adopt a new or higher tax of this kind within their territory. Now, at the New York Meeting of the Drafting Committee, that provision was dropped out, and apparently the first paragraph of the present Draft was inserted. Now that paragraph is binding on no one, it expressed an auditory principle, and I see no useful G- -4- 2E/PC/ALP/'V/9 purpose that it seervs, to retain it in the present Draft of irciole 15. Nnw the problem which Article 2 of the old preceding Draft was intended to cover is covered by the Amemdtent which the U.S. Delegation erc ofifergin to paragraph 2, which, if thi -paragraph 1 comes out, will become paragraph 1; and that reads: "Moreover, in cases in which there is no substantial domestic production of like products of national origin, no merber shall impose new or higher internal taxes on the products of otheM eeembcountriesl for the purpose of affording protection to the production of competitive products." That makes the meanngE uchoel.erorc hbn4it was in the original United states proposal. V -5- E/PC/T/A/PV/9 CHAIRMAN: The Delegate of the United Kingdom. Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, after the explanation which the United States Delegate has just given, I say that I support his amendment: that is to say, the present paragraph shall be deleted on the understanding that it is replaced by the sentence which he proposes to add at the end of what is now paragraph 2. CHAIRMAN: The Dele legat: of aurhy.- L. M. ANDELI}E (Norway): Mr. Chairman, our proposal for the deletion of paragraph 1 ns Lot dependent upon the inclusion of the last sentence of paragraph 2 which is included in the new American prspo al-in fact, we would not be able to accept the new proposal to paragraph 2 suggested by the United States. We maintain our proposal that paragraph 1 should go out, and then when we come to paragraph 2, which would then be new paragraph 1 we could t kp'u; the other problems. CHMARY&N: eTre Dsleeaoo vf China. Mr. K.SA M (China): Mr.aCrman,i:w vhat the Nerwaniuu Delegateshsa Qzid in rrgaid toragaap-r1h i reseazsntz ouiew:Bws too. CKLANMJX:A e r; thern a"y otherm rksrLr? eTht Dgaee:tc of gBelium. M. MOSTIN (Biumjb()nterpretationb:oi) Mr . Chairman, the gBeliaen Dlegation ask ior the maintnance of paragraph 1. CHAAIRMN: e Th Delte aoga f Chile. M. F. GARCIA OLDINI (Chile) (Interpretation): M. Chairman, may we ashek t wNgoreian Delegate to indicate why he suggests the - 6 - E/PC/T/A/PV/9 deletion of paragraph 1 without favouring any addition to paragraph 2? e W would like to know the reasons for ihts suggestion. CHAIRMAN: The Delegate of Norway. ILJ T. LAUiNDER (Nwrvay): Mr. ah,mani:, the reasonsia that, in ouv riew, pagraruphnis thexeszingL. dfact would be, practically 6peang.t, eqla1 to thexe.isting paragraph 2 and the first sentence of paragraph 3. In other words, pararap2 L and the first sentence of para raph 3 are, in our view, the complete application of the principle laid down in paragraph 1. We eecl, however, that paragraph 1 is not as clear. as it should be. Consequeltiy, we suggest that it be delated.O n. the other hand, of cour, - we maintain that the present paragraph 2 and the first sentence of paragraph 3 be maintained. CHAIAN:: The le2pgetc of Cabc. M. G. GUTTREIREZ (Cuba): Mr. Chairman, enGL tsi;aragrap h 1 of Article 15 was discussed, the CubaneDulegation resvered its position. Now we have presented an amendment for the deletion of paragraph 1. We are very sorry to state that we are absolutely unable to accept the text of the New York draft, because it clearly says something that in our opinion no country can fulfil. It says: "The Members ageec that neither internal taxes nor other internal charges nor internal laws, regulations or requirements should be udec to fafdrCidec6lt y-or indirectly for any national product". We mu t-steta very clearly that our country is having la s-enacdea every day and is continually enacting lawsot3 protect its national inrezestq, because there is no other way for thenirdustrialisation of the country. If we accept that wording, we would be acting agasn4anrx capceted law and weacrnnot accept that. V E/PC/T/A/PV/9 Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I would say this: that I would agree,I think, that paragraph 1 of this Article, as it is drawn, is too widely worded. At the same time, I think there is quite a definite case for the addition which the United States suggests to make to the end of the present paragraph 2. I might illustrate by an example. Let us suppose that some country in its negotiations has secured the binding of the duty on oranges. Country A gots a duty on the binding of oranges from Country B. Now, Country B after that can proceed to put on an internal duty of any height at all on oranges, seeing that it grows no oranges itself. But by putting on that very high duty on oranges, it protects the apples which it grows itself. The consequence is that the binding duty which Country A has secured from Country B on ito oranges is made of no affect, because n ix. ±otthpe eerca oranges f s pushed d):wsp zoghih by tshinze natra duty that none o nca buy ethm. The Consequence is that the jocbet of that binding is defeated. Ist esem tmeul ahlt that is a point ahet sag eot to beat>ken cert ofancad I think that eho United States amendment is well-ccnoeived to take care of it. CHRAIMAN: ehQeDogebetc of Belgium. . _ 7 - - 8 - E/PC/T/A/PV/9 M. PIERRE FORTHOMME (Belgium) (Interpretation): I believe that, if it is true that the Cuban delegate has made a point, it would be excessive to draw the conclusion from that point that we should proceed, with the suppression of paragraph 1. It is perfectly true that a certain number of laws or international regulations are meant to be in favour of the industrialisation of the country, and therefore they have, in some respects, their influence on imports in this country. However, a great number of laws are directly and specifically meant for the protection and therefore I should think that even taking into account the observations male by the honourable representative of Cuba, the suppression of paragraph 1 would not serve the purpose and to restrict only the meaning of Article 15 to duties and taxes would be to limit it to too great an extent. M. GARCIA OLDINI (Chile) (Interpretation): I think that two arguments have been brought forward in favour of the suppression of paragraph 1. However, we could deal with this question before we continue with the study of paragraph 2 as it stands. Therefore, I would like, Mr. Chairman, to ask to divide the discussion into two, just to restrain ourselves. CHAIRMAN: I was Just going to make a suggestion on the same lines, with a slightly different result. Some delegates would be willing to agree to the suppression of paragraph 1 on the condition of the American addition to paragraph 2 being accepted. So I think in order to clear the discussion we will deal first with the American proposal with regard to paragraph 2, and in the light of the result of that discussion we could then decide whether we should maintain or not maintain paragraph 1. - 9 - E/PC/T/A/PV/9 Mr. K.S. MA (China): Mr. Chairman, I want to support the views of the Chair, just expressed. CHAIRMAN: If there is no objection, we shall then deal with the American proposal of addition to paragraph 2. The text has already been read to you by the American delegate, and I would like to hear the opinion of other delegates. Mr. J.J. DEUTSCH (Canada): Mr. Chairman, I would like to support the Aerican amendment to paragraph 2. M. GARCIA OLDINI (Chile) (Interpretation): However attentively I have been listening to what has been said up to now, I have not got the impression that enough arguments have been put in favour of considering the addition of this new text, without taking it into relation with paragraph 1. CHAIRMAN: Obviously, when we discuss whether we shall accept the American addition to paragraph 2, we will know that after having done that, we shall go back to paragraph 1. We have the two paragraphs in mind, but we look upon the two paragraphs from the point of view of the American amendment to paragraph 2. Mr. J. MELANDER (Norway): In addition to what I said a few minutes ago, I would like to come back to the American proposal. The case mentioned by the United Kingdom delegate is a point which I think we have to meet in one way or another, but his point was really one where you have an extreme case of a country, having agreed to tariff reductions, introducing internal taxes in order to defeat the purpose of the agreement on tariffs already concluded. That is a very extreme case and a case which I think is very ER - 10 - E/PC/T/A/PV/9 unlikely to happen in the form he mentioned. That is the reason why I do not think we should accept the American proposal in its present form. The main reason is, to my mind, that we are laying down in Article 15 the principle of national treatment, in other words that goods of foreign origin shall be treated on the same lines as goods of national origin. That is the principle and to introduce any amendments to that principle, which would so to say lead to foreign products being treated in a different way, would to my mind go much too far. However, as. I said, I think that we could perhaps try to find ways and means to meet extreme oases like the one the United Kingdom delegate had in mind. But I think that in principle we should stick the rule as it stands in the present paragraph of Article 15, and try to solve that other extreme case in a different way. S - 11 - E/PC/T/A/PV/9 CHAIRMAN: The Delegate of China. Mr. K.S.MA (China): Mr. Chairman, on this question of national treatment, our new Treaty of Commerce with the United States, to which we attach great importance and which we regard as a concrete expression of the cordial relationship that has existed all along between the two countries, expressly states that national treatment is confined to taxation only. This is as far as we can go. Any provision or any amendment that would extend the application of national treat- ment beyond taxation would place a serious restraint upon the government concerned to make the necessary improvisations to meet the needs of the constantly changing conditions inherent in the initial stages of industrialization. The extension of national treatment beyond the purview of taxation would jeopardise the position of an undar-developed country in its industrialization, which requires, from time to time, readjustments to new conditions. It will stifle its growth and is, therefore, contrary to the aims of the chapters on Economic Development in the Charter. Expansion of inter- national trade and economic development of Member countries must go hand in glove. An impoverished China will benefit no country, evan though international trade be free of all restrictions and tariffs. For that reason, we are unable to accept the United States amendment, particularly in regard to the second part of the paragraph from "Moreover" onwards. We propose the deletion of that part. We can accept the first sentence in this paragraph. CHAIRMAN: The Delegate of Belgium. M. Pierre FORTHOMME (Belgium) (Interpretation): Mr. Chairman, we would agree with the United States amendment with one S -12- E/PC/T/A/PV/9 slight amendment - a sub-amendment, if I say say so - because we are not agreed upon the introduction of the words "impose new or higher internal taxes on the products of other Member countries. . ." I think it will be quite sufficient if we leave the sentence as follows: "Moreover, in cases in which there is no substantial domestic production of like products of national origin, no Member shall impose new or higher internal taxes on the products of other Member countries for the purpose of affording protection to the production of competitive products." This seems to meet the point which has been made by the United States Delegation. CHAIRMAN: Before calling upon the next speaker, I would like to ask the United States Delegate what he thinks of the suggestion just made by the Delegate for Belgium. Mr. Oscar RYDER (United States): Mr. Chairman, first I would like to make a few remarks about the statement of the Delegate for China. The United States amendment to this particular Article does not deal with anything other than taxes. It recognizes that national treatment may, in fact, be violated when an importing country places a tax on a product which it produces in negligible quantity, if at all, and does not Place that tax on a highly competitive domestic product. P. E/PC/T/A/PV/9 - ~~~~~~- 13 -.... Mr. OSCAR B. RYDER (United States): Mr. Chairman, first I would like to male a few remarks about the statement of the dele- gate from China.. This United States amendment to this particular Article does not deal with anything other than taxes. It recog- nises that an international agreement may in fact be violated when an importing country places a tax on a product which it produces ininegligible q antity If at all and. does not place that tax upon a highly competitive domestic prcduct, and it was to oover that situation that this amendment was introduced. Now,os to the suggestion af the delegaae from Belgium, it wts the purpose of. the .American Delegation in introducing this amend- ment te ensure that there b no new or increased internal taxes imposed in the situation I haee just outlined. Wc did not think it was advisable to try fo force the repeal oA all the existing measures of this kind which, as we understand it, are relatively few. In our opinion such taxes should be treated in the same way as protected duties. M. E.C.RODRIGUES (Brazil): Mr. Chairman, I. support the second part of the United States amendment, but I doubt if I should speak i now about the first part which is the same as the New York draft, because I see the wordc ldirectly or indirebtiy" before "on like products of national origin," If this is the proper time I should like to expres. my'views about that, CHLXkIR): I hould like to finish'the discussion on the Amerinan amendment first. M.P. GARCIA OLDINI (Chile) (Mnterpretmai,n): Nr. Chairifnj as you have pointed out very properly yourself, I think that in the discussion hich we have started on paragraphs 1 and. 2 of Article 15, we should take ascese basis of our disoresion the draft which has been prepared by the Ncw York drafting committee. P. -14- E/PC/T/A/PV/ 9 As far as I am concerned I do not see any relation of substance between paragraph 1 as it now stands in Article 15 and the amend- ment submitted by the United States delegation. Paragraph 1, in fact, establishes a basic principle and says that excessive pro- tection must be avoided in certain given circumstances . The United States amendment, as I see it, refers to an entirely different matter, and, as the issue is not quite clear, the wording of the amendment is obviously fairly involved. Let us read it together to see the points of obscurity which I personally find in this amendment. In addition to the problem of directly or indirectly" to which the delegate from Brezil has already referred, there are several other points which are open to inter- pretation and to discussion. Thus, for instance, in the first line, the amendment refers to" cases in which there is no substantial domestic production." What is the actual meaning of the word "substantial"? Obviously such an expression, vague as it is, calls for varying interpretations. Then, again, in the following lined you find the words "production of like products." The discussions which have taken place at this Conference and at previous meetings of the Trade and Employment Conference have shown that the definition of the word "like" in connection with production is far from being an easy matter. Finally, at the end of the amendment it says "the purpose of affording protection to the production of competitive products." As obviously in the matter which we are discussing the problem will not be of comparing identical products but to find out Whether some product of a different nature may be considered as competitive, there again it will be necessary to indulge in detailed definitions, and, maybe, complicated issues. . P. - 15 - E/PC/T/A/PV/9 The very fact that in this amendment, as I have attempted to point out very briefly there are so many loopholes, and so many terms which require proper definition, would, I should state, be a sufficient reason for not accepting this amendment. There- fore, I wish to state that the amendment as it is now drafted goes beyond the scope of the problem which is laid down in paragraph 1 of Article 15. There are very few States, I believe, which would be willing to accept a classe by which a foreign umpire would have the power to decide whether an internal tax imposed by the State is or is not acceptable for the reasons claimed by such State. J. - 16 - CHAIRMAN: The delegate of France. M. A. KOJEVE (France) (Interpretation): Mr. Chairman, as much as the French delegation has been sorry not to see eye to eye always with the delegate of Chile, I am this time partioularly happy to say that I agree entirely with what has been so clearly and aptly put by the delegate of Chile. CHAIRMAN: The delegate of India. MR. S. RANGANATHAN (India): Mr. Chairman, our delegation also finds itself completely in agreement with the point of view expressed by Chile. Even if we were to accept the general principle underlying this American amendment, in practice we anticipate considerable difficulties for the very same reasons which Chile has pointed out there will be disputes about substantial production. The position is also complicated in India by the fact that, for example, our Provinces have the power to levy sales tax, and every time any Province introduces sales tax on some commodity, it will be open to dispute whether the intention underlying that levy is for a protective purpose or not, and also whether it does infringe on this concept of a competitive product or not. It was mainly with that object in view - that is, because of the distribution of tax in India - that a reservation has already been made, even for the first portion of paragraph 2. So, even if we were to accept the principle underlying this amendment and welcome it, because it restricts the use of this Article by removing from it matters other than taxes, we feel it will in practice give rise to considerable difficulties. Also, it may be unwise to put in a provision which is morn likely to E/PC/T/A/PV/9 E/PC/T/A/PV/9 lead to disputes than to the settlement of disputes - more likely than paragraph 2 without such provisions. CHAIRMAN: The delegate of Belgium. Mr. P. FORTHOMME (Belgium) (Interpretation): I have listened with a great deal of attention to the very lucid explanation given by the delegate of Chile. However, I would. like to put one question. Does the delegate of Chile mean that it would be good to find, perhaps, another draft in order to do away with the difficultics which he envisaged, or does he want to let drop entirely the principle involved in paragraph 2 as it stands? Mr. F. GARCIA-OLDINI (Chile) (Interpretation): Mr. Chairman, I ha.ve already stated at the beginning of my last remarks that, as I eec it, tec whole of teQ United Sa-tes Amendment is outside of the cooec of the Charter, and more particularly of prXgraaph 1 of aticle 15. I have already also stated that I did not believe that any government would accept a clause which is open to such wide interpretation. Consequantly, the only solution that I would consider, as I suggested, is to drop this entirely. CHAIRMAN: The delegate of the United States. MR. O.B. RYDER (United States): Mr. Chairman, the delegate for Brazil complains that the words "directly or indirectly" have the same meaning as the amendment offered by the american delegation. I do not think that that is correct, because the phraseology is Charges of any kind higher than those imposed, directly or indirectly, on like products of national origin", and the American amendments desires to take care of products that are not "like". J. - 17 - E/PC/T/A/PV/9 Mr. RYDER (United states). Now I would like also to make a few remarks on the very interesting statement of the Delegate from Chile. I think we will all have to agree that in this Charter we have to use words which are difficult to find; and I cannot see that "like" as used in the sentence we propose to insert is more difficult to interpret than "like" in the preceding sentence, and I cannot see, from my own experience in dealing with questions of similarity and competition, that it is any more difficult to define products that are competitive than it is to define what products are like. CHAIRMAN: The Delegate of Brazil. Mr. RODRIGUES (Brazil): Mr. Chairman, I have nothing to say against it, the second part of paragraph 2 as it stands in Document TW/150. I think the second part is the only Amendment of the American Delegation: but as the American Delegation had put in the same Amendment - the first part of paragraph 2 - it is the same Draft as the New York Draft, and as I do not agree with the expression "directly or indirectly" included in this first paragraph in the fifth line of the New York text, I should like to explain my views. Everybody knows in taxation there exists a very clear division between direct and indirect tax. In spite of being criticised, it is generally certain, and if those two words "directly or indirectly" remain in the first part of this paragraph, later on the Organisation and every person who has to deal with this matter will have trouble, because we areconcerned with all these products, and the indirect tax cannot be imposed upon products. I should like to ask a question of the representative of the United States. The United States corporation income tax which is imposed with some discrimination upon foreign countries - would it be prohibited - 18 - G. G - 19 - E/PC/T/A/PV/9 in the light of this Draft in tht New York text? It is a direct tax - it is not on a product, because I do not know of any direct tax upon products; but there is no doubt that the tax, the corporation tax, is not a personal tax. But a real tax should be regarded as a discriminatory tax upon products, and you have the same thing in Brazil, and all the countries we represent have the same situation. If the representative of the United States can explain any other meaning of these words, I perhaps can change my idea about them. CHAIRMAN: The Delegate of the United States. Mr. RYDER (United State): Mr. Chairman, the question that the Brazilian Delegate raises is a technical question, and one that probably should be dealt with in Sub-Committee. There are examples which I gave, of a tax, not a tax on a product as such Ac / but on the processing of the product, which are covered by the wor 2n r2e It might be better, however, to delete the words "directly or indirectly" in the fourth line, and insert them in the second line, before internal taxes, so as to read "exempt from direct or indirect internal taxes". However, as I said, this matter we are discussing at this moment is a technical one. CIIR,'& The Delegate of South Africa. MSr. ELLOWaY(soth Africa): MirCha.iman, I had not intended to sApeak about rticle 1, or the rredraeft of Aticl 2 which now takes its place, because it seemed to me such an obviously necessary counterpart of what we are doing in the tariff negotiations that I was a little bit surprised at any discussion except on the wording; but it seems to be necessary just to make this point. G - 20 - E/PC/T/A/PV/9 There does not seem to me to be any purpose served at all, but if any Delegation should give and exchange benefits for the purpose of getting a rate of duty for the introduction of its goods into another country, that country is immediately free to put on an internal tax to stop the concession it has given. That seems to me to be perfectly obvious. When the Delegate for Chile says that this Article 1 is in conflict with the purposes of the Charter, I Just do not know where I am, because if that is the case the value of all the concessions we are getting must be discounted very severely - because one never knows what sort of internal taxes may be imposed by a country to take away the benefits they have given you. - 21- E/PC/T/A/PV/9 CHAIRMAN: The Delegate of Chile. M. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairman, I want to clear up one point. I never said that paragraph 1 was in confliet with the spirit of the Charter. I said, on the contrary, that paragraph 1 conformed to the spirit of the Charter. What is against the spirit of the Charter it the United States amendment, because it conflicts with the spirit of paragraph 1. CHAIRMAN: Now, eleven Delegates have spoken on the question and opinions seem: to be divided. I would, like to make the following suggestion, that the ad hoe sub-Committee be asked to see whether some re-draft of paragraph 2 of Article 15 is possible, so as to meet such points as the one presented to us by the Delegate of the United Kingdom and so as to clear away the objections of the Delegate of Chile; and also to see whether, in the light of the draft they arrive at, it would be right to omit paragraph 1 and make the New York paragraph .2, No.1. Are there any observations on this suggestion? ...Then that is agreed. We pass on to the next item in Document W/150. The Chilean Delegation proposes an addition to paragraph 2. It proposes to add: "The provisions of this paragraph shall not imply exemption from internal taxex imposed on imported products to bring them into line with the taxes imposed on national products". Before asking the Chilean Delegate to kindly explain further, I would like to say that my immediate reaction when I read that proposal was that what it says here should be obvious from the text already before us, but there may be some meaning which I did not catch. The Delegate of Chile. M. F. GARCIA OLDINI (Chile) (Interpretation): Mr. Chairmen, I do not understand your doubts as to the amendment suggested by the Chilean Delegation. .. CHAIRMAN: (Interpretation): Only this, that I find your amendment so obvious a conclusion drawn from the New York text, ahra kingsm-se-it iyspladimiI hdertroon-your point.nu o ER -22 - E/PC/T/A/PV/9 M. GARCIA OLDINI (Chile) (Interpretation): As many other delegates, the Chilean delegation have had some doubts in respect to this Article as well as to other Articles, as to whether certain essential problems and certain aspects of the question which are essential for our national economy were actually applied in the draft of the Articles. The situation to which our amendments refer is more or less the following. After the depression in 1929/ 1939 the Chilean government, for obvious reasons, had to introduce a tax which corresponds more or less to a turnover tax. Such a tax was not very popular and in view of the adverse reaction of the consumers, we had to change our system and, to establish, in lieu of this turnover tax,a tax at the basis, in other words a direct tax which was represented by the turnover tax which had to be changed into an indirect taxation. We consequently are faced, in our country, with two separate systems, one dealing with direct taxation and the other with the indirect taxation. We are anxious that taxes so imposed nationally could be balanced by equivalent taxes which we want to impose on imported products. This is an explanation of the amendment which we have submitted, reading "The provisions of this paragraph shall not imply exemption from internal taxes imposed on imported products so as to bring them into line with the taxes imposed on national products. If this statement is implied in the present draft of Article 15 paragraph 2; and if such facts can be officiallyy acknowledged either in the footnotes to the Charter or in some other official document of the Conference, we will then be satisfied. If this was not clearly stated, we would have to insist on our point of view and develop it at greater length. - 23 - E/PC/T/A/PV/9 Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, if I understandthe point raised here is really a question of whether tax on imported goods is charged. In the case of a home product it naturally is charged within the country - that is obvious. In the case of an imported product it may be much more convenient to charge it at the point at which the goods come through the customs. That is a very common practice indeed, I believe. I certainly see nothing in the Article which would rule that out at all. I expect most countries would want to be sure that it is permissible. I imagine that it is permissible already. I would like to add just one thing more. If you look at Article VIIl on Schedules of Concessions on Particular Products, on page 69 of the New York text, you will see two footnotes. The first one of those notes deals with the following point. The last part of the note says: "Such products shall also be exempt from all other duties or charges imposed on or in connection with importation, in excess of those imposed on the day of the signature of this Agreement or required to be imposed /thereafter, under laws (name of the country) in force on that day provided that this sentence shall not prevent the government of (name of country) from imposing at any time on the importation of any product a charge equivalent to an internal tax imposed in respect of the like domestic product or in respect of an article from which the imported product has been manufactured or produced in whole or in. part." But it is suggested in that footnote that the words on those lines should not appear in the text of the tariff schedule. So it seems that,at any rate,the purposes of a general agreement on tariffs and trade and the schedule of the Drafting Committee was contemplated in New York. E/PC/T/A/PV/9 M. GARCIA OLDINI (Chile) (Interpretation); Just one point, Mr. Chairman. It would be understood that the drafting of paragraph 2 of Article 15 as it now stands, would not conflict with the spirit of the amendment which the Chilean delegation has submitted, and that the footnote which has been read by the delegate for the United Kingdom would also apply in its spirit and definition to the Charter itself. CHAIRMAN: Unless there is any objection to this, I will take that we agree to that interpretation. We now pass on to paragraph 3 of Article 15. There we have, in the New York document, a number of reservations. I have gone through them, and I find that practically all of them have been made subject of new amendments submitted to our Commission and incorporated in W/150. I should think it will be the most practicable way of considering paragraph 3 in dividing it. On the first sentence, we have an amendment by the South African delegate. He proposes the deletion of the word "transportation", in the seventh line of the New York draft. . - 24 - -25- S E/PC/T/A/PV/9 Dr. J.E.Helloway (South Africa): There was a long discussion in Commission B on a counterpart of the same subject as is dealt with by the South African amendment to this paragraph. The question was dealt with in Commission B, whether transportation, telecommunications, insurance, banking and certain other services should be dealt with in the chapter on restrictive business practices. The Commission gave a considerable amount of time to it and ultimately came to a conclusion, which will come before the Preparatory Committee at a later date, which is contained in Document W.144. In effect, the trend of their discussion was that, whilst there are many serious problems affecting international trade in transportation and these other services, it was the feeling of that Commission that the laying-down of rules in detail to deal with those matters would probably go beyond the competence of this Conference and would in any case be undesirable to do. The Cormmission therefore has recommended to the Preparatory Committee another method of dealing with this matter and that will come up later. I could at some length explain what difficulties would be encountered if we simply put this one word ''trans.:. ..j the text and left it at that, It would be a fulmination against this particular type of sin but there would be no further discussion of what the sin was and in what circumstances it had to be avoided. That is what Commission B round, too. I do not propose to take up the time of this Commission by going into details and saying how difficult it would be for this Conference to draft the rules that would be a necessary adjunct to having transportation in this article, unless of course - 26 - E/PC/T/A/PV/9 there is a great deal of pressure to keep the word. In that case, I would have to press the matter further. I suggest, Mr. Chairman, that if you cannot deal with the type of transportation which goes between the border of one country and the border of another country in the Chapter on restrictive business practices, it is as difficult to deal with the portion of transportation which takes place inside the country. After all, the transportation which enters into international trade is not the bit which starts at a border and ends at a border; the goods come from some point inside a country and go to some point inside another country, and therefore that transportation is one whole subject, Tnere is no difference between inland transportation and oceanic transportation from that point of view. I would therefore suggest, Mr. Chairman, that the word "transportation" should be deleted from this paragraph and that when we come to it in the Preparatory Committee we might deal with the whole subject of transportation on the basis of the Report from Commission B. It, however, that is not acceptable to this Commission, I fear I shell have to go at some length into the question why internal transportation is not a suitable subject for treatment by this Conference. 27 Mr. PIERRE FORTHOMME (Belgium) (Interpretation): The Belgian delegation is opposed to the deletion of the word "trans- portation" in paragraph 3 of Article 15. The argument drawn by the representative of theUnion of South Africa from the comparison between the decisions x suggestions which Commission B made con- cerning Chapter VI and the clauses in the Article which we are now discussing seems to be somewhat broad, and in any ease I wish to remind you that when Shapter VI was being discussed the Belgiam delegation always favoured the inclusion of "transportation" in the clauses of that Chapter. We should never forget that what we are dealing with now are protective measures and it seems obvious that the reason for manipulating rules for freight for transportation of goods is that they may become a protective measure as many others are. We all know from experience that it may well happen that an imported product which comes from a point 15 miles perhaps beyond the national boundary may actually be the object of a protective measure, if the rate imposed for such a short distance which this article has to be transported inside the national territory is higher than that for a national product of the same character travelling hundreds of miles inside the national territory. Mr. B. RODRIQUES (Brazil): Mr. Chairman, because we fully agree with the delegate for Belegum. we also think we must maintain the word "transportation". CHAIRMAN: any further remarks? Mr. STANISLAV MINOVSKY: Mr. Chairman, I only wish to mention the fact that the representative of the Union of Smith Africa has mentioned the long discussion which has taken place on this problem and I would like to remind you that the Commission finally decided that the problem of services should be included in the Charter; a majority E/PC/T/A/PV/9 P. 28 decision was taken on this fact, consequently we are faced with that decision of our predecessors. Mr. M.P. PAI (Indis).The Indian delegation, Mr. Chairman, finds that the words "like products" in the sentence which we are dis- cussing is likely to lead to dispute in the actual working of the Article and for that reason we feel that the balance of advantage would lie in accepting the proposal of the South African delegation that the word "transportation" would be deleted from this sentence. Mr. R.J. :. :CKLE (United Kingdom): Mr. Chairman, I would like to say this: that if it is a question of deleting the word "transportation" purely because of this apparent ambiguity of the phrase "like products", surely that argument goes very much further indeed; if that argument is a valid argument it would mean that the whole of this paragraph ought to disappear altogether. So far as the interpretation of like products" is concerned, my impression is that, in practice, that is a term which has been in Treaties for a very long time and it has not given rise, so far as I know, to any particular difficulties of interpretation - I think for this reason: that "like products" is related to the tariff classification of the country co ncerned . The products which fall within a certain head- ing of the tariff classification and are therefore subject to a particular rate of duty are all treated as "like" and therefore when comparing domestic products with imported products it is just a question of what section of tariff classification the particular products would f all in if imported. That is a question which comes up every day, I take it, in the normal routine of Customs operations, to decide under what headings of classification a pro- duct falls, and that determines what are "'like products." So I don't think there is any serious ambiguity in the term "like products", and therefore no reason for contemplating the deletion of this E/PC/T/A/PV/9 P. 29 paragraph which I think would be the logical outcome if we were to decide that "like products" was too difficult to interpret. Dr. G. GUTIERREZ (Cuba): The Cuban delegation really does not desire to go back again through this question of the rôle of transportation and other services in international trade because we were happy in the sub-committee to reconcile the different points or view so as to draft a new text which gives satisfaction to the principle that these services are an important part of international trade and also to the contrary idea that nevertheless they cannot be dealt with in derail in this Charter, but transferred to the speoialised International Agencies, in the cases where those Agencies exist, or taken eare of by the Organisation if there is no such specialized agency. But here "transportation" comes, in our opinion, in a different sense. This is an Article which is trying to avoid a discrimination on products coming into a country by means of taxes or any sort of laws, regulations or requirements affecting their internal sale, offering for sale, distribution or use of any kind, and there is no doubt that transportation is a way to bring those products in. So the Cuban delegation wonders if it would not be wise to leave in suspension, as we say, "on the table", the word "transportation" until we dispose of that special article that was put before the ad hoc sub-committee of Commission B. and then decide. Because if we decide on the first problem, then this will be easily understood E/PC/T/A/PV/9 CHAIRMAN: The delegate of India. Mr, M.P. PAI (India): Mr. Chirman, I would like to clarify the point which I tried to make earlier. It is not our view that transportation should be used for the purpose of protection at all. The point is that in India, and perhaps in some other countries as well, rating policy is based to some extent on the intrinsio value of goods moved, and for that reason rates may be different in the case of goods which are more or less similar but not exactly the same. It is for that reason that I thought that the words "like products" might lead to dispute when it comes to a matter of comparing the rates charged on imported and indigenous goods. MR. R.J. SHACKLE (United Kingdom): Mr. Chairman, I wonder whether I might adjust one point which I made earlier. I was saying just now that one could interpret "like products" in the sense of customs tariffs. In the particular case which the Indian delegate has just mentioned, it is slightly different. One would interpret "like products" in the sense that if the particular goods fall within a particular item, then they are "like products" for this purpose. CHAIRMAN: The delegate for South Africa. DR. J.HOLLOWAY (South Africa): Mr. Chairman, as I said at the beginning, I am trying to save the time of this Commission, because the subject was discussed during the whole session of Commission B, I think. It is clear, however, that all the members of this Commission are not aware of the course that this matter took, and perhaps I may just say a few words on that. In Commission B , it was admitted on all sides, both by those who wanted to include services in the Charter and those who wanted 30 31 to exclude services, that there are problems and very serious problems affecting international trade concerned with transportation, and other services - and I should s y that I am in full agreement that those problems are sarious to us all. The attitude taken, however, by those members of Commission B who did not consider that we could deal with transportation and other services in the same way as we are dealing with other subjects, is that the matter is far too complicated to be dealt with in a few all-embracing sentences, After a very long discussion, the matter was referred to a sub-committee. That sub-committee considered the matter very fully and came to a unanimous conclusion, which is the one to which I referred before, given in document W/144. I shall read just the necessary parts of that to make clear what the approach was of that Commission, and I wish to suggest that that covers the whole of the subject also for Chapter 5. CHAIRMAN: Do you not think that all the members of this Commission have read it? DR. J. HOLLOWALY (South Africa): Well Sir, it is quite clear from the discussion that they have not all read it. The reports says: "Members recognize that transportation, telecommunications, insurance, banking and certain other services are substantial elements of international trade, and that any restrictive business practices in relation to them may have harmful consequences similar to those described in Article 39. Such practices shall be dealt with in accordance with the following paragraphs of this Article. If any Member should consider that there exist restrictive business practices in relation to an international service in the meaning of Paragraph 1 which have or are about to have such 32 harmful effects, an that its interests are seriously prejudiced by this situation, the Member may submit a written statement explaining the situation to the Member or Members the public or private enterprises of which are engaged in the services in question. The Member or Members concerned shall give sympathetic consideration to the statement and to such proposals as may be made with a view to affording adequats, opportunities of consultation and effecting a satisfactory adjustment of the matter. If no adjustment can be effected, the matter is referred to the Organization which then transfers it to the inter-governmental agency if this exists. If they do not exist then the Organization can make recommendations for, and promote international agreements on, measures dasigned to improve the conditions of operation of the service in question so far as they affect the purposes of the Oganization". Now that, I think, is as far as we can go. The subject of transportation is not two subjects. As I have said, internal transportation and external transportation is the same, just in the same way that you have got to take into account railways and Waterways, you have got to take into account internal transportation, you have got to take into account airways. All these things are vastly complex, and I claim, as one of the members of Commission B claimed, that this Conference is not competent to deal with those rules in detail. The matter is much too comiplicated. I will give you an example of that. In the sphere in which this Conference is competent to act, we have brought our experts, and for the simple matter of defining the two words "actuall value" for duty purposes, we have had a sub- Comittee, which met for many many weary hours, and it has referred this to a further sub-committee, which has spent more and J. E/PC/ T/A/PV/9 E/PC/T/A/PV/9 33 more weary hours, so that. some of the members had to drown their sorrow at the "Mere Royaume" last nightl: Now, that Committee is within sight of agreement, after having spent what would be about three or four days of the time of this Commission on two words. I ask you, Gentlemen, where shall we be if we try to define what sort of practices in all the types of transportation, internal banned linked up with international transportation, have got to be/and which ones have got to be allowed? It is simply impossible for as to deal with the problem. We recognise the problem, and I suggest that the draft I have read out to you which covers inland tramsportation is ass far as we can go, but if you leave the word "transportation" in Chapter 5, then a lot of consequences follow from Chapter 5, and, it is to prevent those consequenoes following from a matter which has not been considered more than in just the barest outline that I more the deletion of the word "transportation". J. . . 34 CHAIRMAN: The Delegate of the United States. Xr. RYDER (United States): I am much impressed by the grem rks of the Deleate:of South Africa. There is a difficult transportation problem. I can well understand that in drafting a Chapter on restrictive business practices it would be very difficult to conclude without transportation. Here in this partiAular par5agrach of _rticle 1 we may be inclined to establish a separate principle that there shall not be discrimination against like produ ts in the internal.transportation of the marketing countries; and. I should like to ask theADelegate of South Lfrica: Wh t serious problem -do you think would arise in connection with such. a provision? CHAIRILE: Tho Dclegate of South Africa. Er. HOLLOWAM (So-ah marica): dr. Ch-irz.n, I would mention one specific example - one specific effect. The imported goods start, at Poi-t - which, is the coast - and go to Point B, which is thi interior; and the local goods also start at Point a, on the coast, a go to B, which is the interior. But in actual practice that is not the way things happen. A little bit of trade does go along that way, but immediately you get beyond that simplest example you get into difficulties. Suppose that your competing local goods do. not go from the coast to inland centre B, but from another inland centre to inland centre B. How are you to relate those two things? let us take a further case which happens innour country, aLd which happens in most countries. Suppose that one of those routes is an uphill route, having steep gradients, mountain passes, and. the other one is on the plain or rownhill. How ate you to relate those two things? That is obviously a problem of rsilway economicO. You have got to ran a railway system as one system, and immediately yoh pass beyond tWe very simplest case E/PC/T//2' G. G. E/PC/T/A/PV/9 35 you have a problem of what does this limitation or prohibition mean. It requires the expert knowledge of people accustomed to running railways under very different conditions to solve that problem. It is a problem of railway economics, and, as every railway system has to run as a whole, and as every railway system has to take into account in some form or other the principle of charging the product, by putting in a simple general principle like this you are just barging like a bull in a china shop into a very complicated system which has got to be built up over many years. The second specific case, The second specific case, the effect of including this as a definite prohibition in para. 5, for inland transportation, when you do not include it in para. 6 for international transportation, is this: That you will be hitting at particular countries that have inland transportation but no international transportation. The people with international transportation systems are still free to resort to these practices and do not pretend that they do not do it. They do it every day. You are discriminating against inland transportation and leaving the international transportation free. Well, I do not think that is a thing that this Conference can stand for: - to introduce a thing which is deliberately discriminatory, because we cannot deal with another part of it. It seems to me to be very highly unfair towards a country which has only the type of thing which falls inside the limited scope of Chapter V. V 36 E/PC/T/A/PV/9 CHAIRMAN: The Delegate or Belgium. M. Pierre FORTHOMME (Belgium) (Interpretation): The explanations given by the Representative of the Union of South Africa confirm me in my previous opinion that it is essential to maintain the word "transportation" in the first sentence of paragraph 3 of Article 15. I am fully aware of the difficulties and of the complexity of the problem, and I also recognize, with the Representative of the Union of South Africa, that the practical application of the principles which we are setting down is a matter for the specialists. But the document of which the honourable representative of the Union of South Africa has read a portion establishes the very fact that the Organisation, as such, is competent in respect of the problem of services, and that consequently the Charter is applicable in this respect; and only in cases where the Organisation deems that it is not competent does it say that it may refer such problems to any other intergovernmental agencies, if such agencies exist. All we want to do is to establish this well-recognized principle in the Charter and have it to the Organisation to seek, by the appropriate methods, the principles applicable to the practical measures to be taken in this respect. The large part of the honourable Delegate's observations does not apply to the English text. .-. theIR1: We nave h- tiu u £urbe :jf Delecates, an - g"Urnl imprcsiorn i thatt the Dal&tt_ arG -j' vwry uttich . favohe of l>vr^ ~out tLh wora t although t-isy appreciate ehe very complex and difficult technical aspects of ths question. I¢ t ore sendin- the matter on to the ad hoc sub-Committee 37 I might be allowed to give my personal impression, it would be this, that if we are going to accept the unanimous report of the sub-Committee on services, it would then be quite logical that we should apply the principle of such an act in some specific ease where we can see at once that services can be run in a way which will be harmful, It we say that to, run transport in a certain way wuld disoriminate between netional products and imported products, then I feel that it is natural to say so, and we do not by doing that prejudice in any way other aspects of the harmful effects, or the way in which services are conducted. But I am no export, so I am speaking with considerable diffidence. I just wanted to indicate some line of thought that might perhaps be of some help to the sub-Committee when we send the matter on to them. E/PC/T/A/PV/9 V E/OC/T/A/PV/9 Dr. J. HOLLOWAY (South Africa): Mr. Chairman, I am sorry that you leave the matter at that. I indicated, when I opened the discussion, that I was trying to save the time of this Commission by linking up with the other Commission, but evidently I have failed in that; and I must carry the point one stage further. It seems to me perfectly obvious from the discussion that has taken place, that the point there that discrimination includes one sort of transportation and excludes other sorts of transportation has not been taken into account by this Commission at all and if transportation is left here, then this Commission, in order to be consistent, must go in for international, transportation inland waterways and aerial transportation, and the whole caboodle. That is one point. , . . had The next.point hat I would- ave made if'I/not tried to save th -Commission.time, is this. You cannot judge the running of a ~~~ . . railway system by one little bit of a railway system. That is completely impossible. I quoted one case to the American delegate where, if that was the whole of the railway, there was clearly discrimination bet the matter is not as simple as that, because every bit of a railway system is part of every bit of a railway system. The railway system has to maintain very expensive permanent ways. It is a matter of great importance for it whether it can use the permanent ways to full advantage. Therefore, on occasion, it must charpe a rate which does not Bayfor remy much more than its peite expenses in order not tno have empty trucks runnig to and fro. Now, in the course of doing that,cht may charge a rate whiab happens to ba of an advantage to o lwhice is lpe of trade and. -I:hh ;1ower than the rate on imported goods. The question has got to be solved by experts whether ic that case t ere is an a-tual case of. discrimination against the impsrted articles. Membere here seem to 39 think they can make one general rule and that it is simple to apply it. I tellyou, Gentlemen, it is not simple to apply it. You must look upon a railway system as whole system. You are putting yourselves, by one general rule which is ascribed to a general management of a railway system, in a position that you tell that railway system: "You must hold yourselves to this general rule, and if your whole railway system loses on it that is not our concern". Surely that is a most unreasonable and unbusinesslike attitude to take up for any international body. The problem is one of how to manage an exceedingly complicated system. Now if you have a system which is under one management, let us say a state railway which serves all parts of a single country, at least you have one control, but in actual practice you will have that in the case of some countries. In the case of other countries you have a large number of railway companies running separate railways where the control of the government is immediately less close than it is in the case of its state railway. So again you are discriminating against the countries with the state railways in favour of the countries with private railways. Then you get a further complication. You get a country where you have both private railways and state railways, and sometimes you have a country where you have Private railways and state railways running next to each other in competition. You get complications there that people do not dream of here, and to come along with one general rule which you will, I think, admit you cannot interpret at this Conference, and say: "Whatever happens you have got to foIlow that rule", is I submit to you, the most unrealistic thing that this Conference can do, but if this Conference insists on including one portion of transportation I want to challenge anybody to give me any argument why it should not include at the same time ocean transport canals, airways, mater transport in every country in t e w r d or hn ol ri everytobncym stha m xeso oa n-ber' zf thli Organizatian. You cen answer this queotionke. yTu lip. 40 CHAIRMAN: The Delegate of Australia. Dr. H.C.COOMBS (Australia): Mr. Chairman, I reel some sympathy with the Delegate for South Africa in relation to this matter, because of the very wide range of possibilities that are brought in under this Article. When we came to look at it for ourselves, I think we came to the conclusion, with customary modesty, that in these matters we were perhaps, on the whole, not unduly wicket and that there- fore the burden of accepting this would not be particularly severe: in fact, on balance, we might gain something from the elimination of other people's excravagances, which in this respect at any rate were greater than our owns But we did feel some trepidation about accepting it, because of the multiplicity of things which it might cover. We erice to track some of these down and found the oddest of provisions here and there in our economy for giving slight and unimportant elements of protection to local products and it would, quite frankly, be an exceedingly difficult task to find those things in all their ramifications and remove than by legislative action within any reasonable specified time. Similarly, in relation to transportation, particularly where Government-owned railways and other forms of transport are con- cerned, the issue is particularly complex, since the matters which Dr. Holloway has referred to are sometimes imposed by law, or by some form of legislation, and sometimes are imposed under the authority of the manager of the enterprise under some form of legislative authority which he is given. In those cases, it would appear that if he had the good fortune to fix his rates in terms of a general authority given to him, then he would be E/PC/T/A/PV/9 S 41 free to discriminate in any way he liked, as transport authorities - as I gather - ordinarily do by discriminating against those people who can pay most. On the other hand, if it happened that it was the normal practice to require that the freight rates had to be laid on the table of the Lagislatur and receive Parlia- mentary approval - or at least lie there sufficiently long for it to be assumed that the Legislature did not object - then they would be subjected to this discrimination for something which arose from a form of procedure in regard to the legis- lative customs of the country. It just did occur to us that a lot of these things are not terribly important, and we wondered therefore whether we night not avoid a lot of difficulties for the countries concerned if this rule were made so that it applied in full to laws, regulations and requirements which might be established in the future and applied to those in the past insofar as complaints were received and it could be established that the law or the requirements complained of were, in fact, discriminatory against the imported product. That would mean, I think, that a lot of trivialities would pass unnoticed and that countries concerned would be saved a lot of hard work in finding then and would be saved any implication of bad faith because they happened to overlook them, It would also mean that in the case of the rather complex type of thing which Dr. Holloway has referred to - where you might get things like freight rates, determined by a multi- plicity of factors, etc, which, on the face of it, might appear to be discriminatory but were determined on quite different principles - it would be necessary for it to be established that they were, in fact, discriminatory before a country, would be expected to do anything about than, E/PC/T/A/PV/9 S S E/PC/T/A/PV/9 42 I want to make it clear, Mr. Chairman, that we are not seeking to evade the obligation proposod in this part of the Charter, but we do suggest that if it is taken as it is; in its present form, many countries will find it exceedingly hard to observe the latter of the Article and identify all the oddities of protective practice which they may have embodied in their local laws in one way or another. I believe that, if we can put it around in that way, some of the difficulties which Dr. Holloway has in mind might well be overcome. 43 CHAIRMAN: The delegate for Belgium. M. P. FORTHOMME (Belgium) (Interpretation): Gentlemen. I apologies for taking the floor so often, but I want to point out, first of all, that I consider the explanation just given by Dr. Coombs highly constructive and we should do well to take it into consideration for our future work. As far as Dr. Holloway is concerned, I would first of all point out that,when I speak of transportation, I mean all kinds of transportation from a man's back to jet propelled rockets. On the other hand, if, as far as international transportation goes, there is such a high degree of competition among our transportation agencies that I can hardly imagine a case where one transport organization would be brought to a point at which it should discriminate in favour of its own national product. I quite agree that it such a case did arise, I would be quite prepared to have this international transport on those conditions treated in exactly the same way. Finally, as far as the complexity and highly complicated nature goes, on which Dr. Holloway so forcibly insisted, I would like to say that once the principle is admitted, then the delegations, on the part of the Organization, could form a specialized organization of experts, which would be charged by the Organization itself to fulfil the principles as established by the Charter and the reasons for maintaining the principles in the Charter itself. DR. J. HOLLOWAY (South Africa): I am prepared to accept that procedure, Mr. Chairman. Let it go to the sub-committee, and if the sub-committee is prepared on the suggestions of both Dr. Coombs and Monsieur Forthomme to take the whole field of J. E/PC/T/A/PV/9 E/PC/T/A/PV/9 transportation in its stride, well let them try. I have no objection to them finding out the difficulties. As for the question of competition in international transportation he must be thinking of narrow seas. Let me tell him that shiploads of things coming from western European ports were charged the same rate of freight as ship-loads carried by the same ship from Durban to Mombassa; from Liverpool and Southampton and Rotterdam rates would be the same to Mombassa, and from Durban to Mombassa, practically next door. There is a good deal of that international discrimination against the trade of certain countries, and we have suffered from that. It is particularly for that reason that I must draw attention to the different in the treatment of this subject in this Commission and in Commission B. In Commission B, where the subject of international transportation was discussed, t e.h - Commission was glroaga1y _adest Oaaling wi hby some ,' e br ad gencoal o.ndemnation. CommisAionh&,ewnera ocertain types of national transport is discussed, is strongly in favour of condemning what is happening only in certain countries, and I think certain of the delegates here do not realise that that condemnation may be applied to their own countries, while international transport which affects their international 1 mooetition is free fro mthose uras.eS AIRMAN?.: The degate , of t UniJed itates.St.: - O.B. RY(DER ed UnaietStts): Mhr.rman, I have very Cai, T; littdle to ad to wahaet has lraday bI always recogniseeen sid.3. that -har are great difficultielyins in eaeral principlepp na gn --XI, ' of this kind, qd many of ughttohtose ha.ve been br-bu oere- Probably the m st dirficuplt on the-the p>inciie i z,,- Charter of administrati n oa teansportation- chsrgss and what the traffic will bear. I think ahon f, for this rensci,*this provision were adopted, each country wouldhisy to conform to tid1 provision. 44 E/PC/T/A/PV/9 CHAIRMAN: The Delegate of the United states. recognised Mr. RYDER (United States): Mr. Chairman, I have invariably, and I think all of us recognise, that there are great difficulties in applying a general principle of this kind, and many of those have been brought out here. Probably the most difficult one is the principle of basing transportation charges on what the traffic will bear. I think that if this were the danger, this country would try to conform to this provision, and, as the question was raised with the Australian Delegate, that a country would correct such practices as it was aware of and would rely upon complaints naturally from other countries to catch things of which the, were not aware. So I think that phase of it is rather easily handled. In applying the principle of what the traffic will bear, the country applying that principle would, of course, base its regulations upon that principle, and if any country felt the need, they would make a complaint under article 35; and if the practice was a reasonable practice, in conformity with the usual standards observed in the transportation rates of the country concerned, there would. probably be very little difficulty with it. In any case, if it went beyond that, the burden of proof would be upon the complaining country, and it might be that as a result of- complaints of that kind you might get some practical application of these principles which might be worth while, CHIRMAN: Well, I think we can consider th.e discussion closed; and as for terms of reference to the ad hoc Sub-Committee, I think we might say that they should not try to come to any decision on this until after Commission B has dealt with the unanimous Sub-Committee Report on the services. when that has been done and if that Report is adopted by Commission B in the name G. 46 of the Preparatory Commission, then our ad hoc Sub-Committee has a safer background for their examination of this question, and then they will be guided by the discussion that has taken place here. May I take this as agreed? Then I would like to say that it is only half-past 5, and we could still go on; but we shall not be able to terminate the discussion on Article 15 to-day and that is quite what I expected; and we must then decide whether you will try to do it in the morning meeting to-morrow - we cannot to-morrow afternoon because B is meeting, and in principle we should not meet at the same time; but if you all agree, we could meet at 10.30 to- morrow morning. One more word. Mr. Wyndham White just tells me it has been arranged that there will be Sub-Committee meetings for to-morrow - rather important ones - so he raises the question as to whether we could possibly meet to-morrow afternoon at 2.30, at the same time as Commission B; but I must then turn the question back to him. Is he able to provide interpreters and organise the various staffs to-morrow afternoon? Mr. WYNDHAM WHITE: Yes. CHAIRMAN: May we then decide that we meet to-morrow afternoon at half-past 2, and then we go on with the examination of our paper. We are discussing paragraphs 1 and 2, and I have already said that on paragraph 2 there was an Amendment by the South african Delegation, but also by the United States. We find it on page 6 of Document 150, and as far as I can see, that is part of the United States proposal which does not contain many alterations from the New York text. He inserts the word "purchase" and also the word. "exhibition" in the text, and the last alteration, I take it, is connected with the rest of his proposal, and I would suggest that we pass by this until we take it on the Amendments on the cinematograph films afterwards. Mr. RYDER (United States): That is satisfactory, Mr.Chairman. 47 CHAIRMAN: The Delegate of the United Kingdom.,-CAor.. MlA KA. SHUCCed (Unrgdis:Kin'i): I take it that in discussing thiedUnttur S-ates text we are supposed to turn "a Nelson eye" wherever we see the words "exhibited" and "cinematograph films", and discuss thg para&raph as if they were not there, reserving the subject of films until later. A=IRMW': But before that I would like to mention the proposal of the Chinese Delegation, because teat s6ems to be the most radical one. They propose the eoeplot6 deletion of this paragraph. I do not know whether the Chinese Dclegation, after having read all the different amendments, maintains this rather radical proposal. The Delogate of China. Mr. IAS. Mi (China): Mr. Chairman, I have already explained our position in our discussion of paragraph 2. I said those words somewhat in anticipation of this third paragraph. As I have already said, any attempt to extend the scope of national treatment beyond taxation would be going too far to be acceptable to us, so I do not think I shall go oversame azae ground again, Our point has, I think, been made clear. CAHAIRMN: Then we hav ie -tho middle of page 6 of Document W/150 the next radical proposal by tho Delegation of Cuba. That Delegation proposes to deleee thp second oarta Ogra Praaph 3. We have also proposals by the Delegations of Benelux, Czechoslovakia and New Zealand for a new draft of paragraph 3, similarly from the Delegations of India and Norway. Finally, we haee thV proposal of the United States Delegatirn alXeady mentioned.e Docs the United States Delegate wishpto sPeak on tmisdaeencmant now? V E/PC/T/A/PV/9 48 Mr. Oscar B. RYDER (United States): Mr. Chairman, I think the amendment of the United States needs little explanation. In the New York Draft there was a separate paragraph in regard to the cinematograph film, saying there shall be no restrictions upon regulations restricting the amount of foreign films shown in a particular country, but subjecting them to negotiation. The United States Delegation cannot accept that proposal. It leaves wide open the door for violating fundamental purposes of this Charter. What we proposed here is that in the case of cinematograph films they should be permitted to continue for a period of three years af ter the Charter entered into force. Further regulations-- there is a question here of mixing regulations--are permitted to continue for a year. In that instance, we art in agreement with the New York Draft. Then there is a provision that the"requirements permitted to be maintained under the foregoing proviso shall be subject to negotiation for their liberalization". There is also a provision that "such requirements"-that is, the abolision of film regulations in three years and other regulations in one year-"may be continued for additional periods in respect of any product if the Organization, after consultation with the other Members whose trade is substantially affected by the requirement, determines that in the special circumstances alternative measures permissible under this Charter would not be practicable". The language chosen there: "in the special circumstances alternative measures permissible under this Charter would not be practicable" replaces the words in the New York draft: "concurs that the requirement concerned is less restrictive of international trade than other measures permissible under this Charter". V Now, whether a requirement of one type is more restrictive than another depends upon the degree of different restriction. Whether or not a given mixing regulation is more restrictive than a given tariff duty depends on the height of the duty and the nature of the mixing regulation; and at is in order to afford a real measure for determination here that we suggest the adoption of the term "alternative measures pormissible under this Charter would not be practicable'.' in place of "the requirement concerned is less restrictive of international trade" CHAIRMAN: May I ask the Delegate of Cuba if he would like to support his proposal, namely, to strike out completely the second part of paragraph 3? 50 Dr. G. GUTIERREZ (Cuba): Mr. Chairman, our reason is very simple. We consider that this matter is so complicated that attempting to establish international rules to handle internal matters is something that goes beyond our power, so we are humble enough not to insist. Mr. J. MELANDER (Norway): Mr. Chairman, the Norwegia- delegation is in complete agreement with the Cuban proposal to delete the two last sentences of paragraph 3 of Article 15. I think perhaps that it might be useful to the members of the Commission to try to indicate, in a more general way, the reasons why we are of that opinion. We feel that the problems which we are to solve through this Charter, are to regulate the external trade of the countries. We feel, further, that it is quite obvious that, if the different member countries shall have the right which is provided for, to develop an economic polio in changing circumstances and especially to introduce, or to continue, degrees of planned economy, it will be necessary to introduce regulations, laws, requirements etc., which may have the effect of interfering with the external trade. In this respect, however, I think we shall have to distinguish. It is quite obvious that a great many countries represented here and most of those represented at the final Assembly, are in the position that they have not got typical economic systems like, for example, the United States, or a typically clear-set regulated system like the Soviet Union. We shall find that most countries are somewhere in between, and the provisions in the last part of paragraph 3 of Article 15, in our view, would go much too far. They would, for example, exclude the possibility for a country to lay down that, in E/PC/T/A/PV/9 E/PC/T/A/PV/9 51 order to develop their economic life, they should have the right, for example, to fix that a product should be composed of certain categories of raw materials, some of which might be of foreign origin and some of domestic origin. That I think is quite out of the question. It is really one of the methods through which a planned economy is developed, and to out that out would be quite outside the scope of this Charter. On the other hand, as we have indicated in our memorandum, if we lay dwn that, for example, electrical equipment should be made of certain ra materials, this or that category in that case, we will not have the right to decide that a certain quality should be included in such a way that qualities coming from outside should. not be allowed, whilst qualities domestic coming from the/production should be allowed. In that respect, we should have no discrimination. That would, however, be provided for through the first sentence of paragraph 3 as it now reads. In other words, we feel that we have,in this case, the most typical example of a clash between the methods through which we shall try to regulate the external trade of a country, and regulate the internal domestic policy. In out it in a nut-shell, I think we can say that here is one example where we shall have to see whether it will be possible to provide for a comparatively free and liberal external commercial policy, at the same time, maintaining to a certain. extent, a planned economy on a domestic level. That test we shall have to come across several times, not only in this case but later on as well. Here is one example where I think it is quite clear that we shall get it. That is the reason why we think that the last two sentences of paragraph 3 ought to go out. Futher, I would at the same time mention that paragraph 2 and the first sentence of paragraph 3, in our view, would need some exceptions, though however I shall return to that at a later stage. E/PC/T/A/PV/9,I/ L/- /V 52 Ar. R.JTSHIedLEingdom (Unitua KLa: man Mr. Chzri I could like just to ask a question to make sure that I understood the Neorgweg'iapn Dleates oint correcdtly. I o not know whether what he desires is to be freed teo treart ocmstic poduts differently frpom like imorted ones or whether, on the other hand, what he wants Is to be free to require that certain domestic raw materials shall be used which are not like the imported raw mhaterials wich they substitute. It seems to me that is an essential point here, because it it is No. 2 t-o the quengsicertn nof usi ai domestic raw materials which are different - I do not see that that clashes with the principle of this paragraph. If, on the other hand, it is a question of leaving freedom to treat like domestic products more favourably than like imported products, it seems to me that there is a very direct clash with the principle 'of this paragraph, and I think, in order to appreciate the bearing of this point, it would be as well to have that point clear. CHILd: The Delegate of Norway, MMELANr. J. DER (Norway): Mr. Chairman, I think the answer is comparatively simple. I will try to illustrate it by way of an example.. In Norway we would normally have a regulation to define that margarine should include a certain amount of butters Margarine is produced either in Norway or imported. For practical purposes, it is produced in Norway, because we can knock out any foreign competition on that. With regard-to butter, the answer would be that if we. decided that, for example, margarine should include 20 per oent of butter, we would not lay down that that should be totally Norwegian butter, to the exclusion of foreigen buttr,but, 1l-r In 53 whether of Norwegian or foreign origin, it would be on an equal footing so that in a case where a foreign country like Denmark, for example exports butter to Norway, that would be completely equal to Norwegian-produced butter in that respect. I think that covers the question. Mr. R.J. SHACKLE (United Kingdom): Gentlemen, in view of that explanation I should like to raise the question whether there really- is any conflict with the provisions of this para- graph, because, as I had understood them, this paragraph is concerned with like products, If we read the last two sentences correctly, it surely must mean that this is meant to "preclude the application of internal requirements restricting the amount or proportion of an imported product permitted to bo mixed . ," exactly, and if I understand the Norwegian Delegate's explanation rightly, that is not what he wants to do. CHAIRMAN: The Delegate of Czechoslovakia. M. Stanislav MINOVSKY (Czechoslovakia) (Interpretation): Gentlemen, I want to point out that it is not perhaps as simple as it seems. If we read the provisions of this paragraph as "to preclude the application of internal requirements restricting the amount or proportion of an imported product permitted to be mixed, processed or used", it all depends if we say 20 per cent or if we say 40 per cent. If we go down to 20 per cent; it moans a restriction of the amount of imported products. The whole thing seems to us so involved that we cannot grasp it. S E/PC/T/A/PV/9 E/PC/T/A/PV/9nIr/I 6 54 V/ /J4JX-v/a U. Jo Xlader (Norway): Mr. Chairman, I would suggest answering thee Delegate of the Unitd Kingdom by saying that we have not read the last part of paragraph 3 in the way in which he has road it. We read it in the way that we would not have the right to li down a regulation which would, in fact, result in the cutting down of goods, raw materials and so on, which we have hitherto imported.. Mr. R4.SLCKE (United Kingdom): Well, Gentlemen, I wonder whether, in that case, we might ask the United States Delegation - as it is their amendment - if they can give us an opinion as to what is intended, because we certainly had read the whole of this paragraph as referring throughout to lik;products ande nothing but likcproducts. Mr. Oscar RYDER (United hStates): Mr. Cairman, the point raised here is a vary interesting and complex, one and it involves soLOspects to which I have not given conswideration, I -old etherefore prefr not to answer that question now but to defer y swer until tomorrow, aif ethaet is 3groammbo t the Coinsion. CHsFRMLN Ad t is ealready tonminutes past six, I think we can close the discussion and come together again at 30 ;morrow afternoon. The M;tng rosa atp 6.10 s).
GATT Library
qx889tg2965
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Ninth Meeting of Commission B held on, Thursday, 12 June 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 12, 1947
United Nations. Economic and Social Council
12/06/1947
official documents
E/PC/T/B/PV/9 and E/PC/T/B/PV/7-11
https://exhibits.stanford.edu/gatt/catalog/qx889tg2965
qx889tg2965_90250078.xml
GATT_155
111
779
UNITED NATIONS ECONOMIC CONSEIL RESTRICTED AND ECONOMIQUE E/PC/T/B/PV/9 SOCIAL COUNCIL ET SOCIAL 12 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT NINTH MEETING OF COMMISSION B HELD ON, THURSDAY, 12 JUNE 1947 at 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA HON. L.D. WILGRESS (Chairman) (Canada) Note: Owing to the fact that it was necessary for Commission B to meet at the same time as Commission A it was not found possible to provide a verbatim record for the 9th Meeting of Commission B. An expanded Summary Record has however been prepared and will be distributed to Delegations. NATIONS UNIES
GATT Library
tz174bk7631
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Ninth Meeting of the Tariff Agreement Committee held on Wednesday, 3 September 1947, at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, September 3, 1947
United Nations. Economic and Social Council
03/09/1947
official documents
E/PC/T/TAC/PV/9 and E/PC/T/TAC/PV/8-10
https://exhibits.stanford.edu/gatt/catalog/tz174bk7631
tz174bk7631_90260029.xml
GATT_155
12,135
73,126
NATIONS UNIES ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV/9 3 September 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT NINTH MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON WEDNESDAY, 3 SEPTEMBER 1947, AT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA. Hon. L.D. WILGRESS (Chairman ) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations., are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. UNlTED NATIONS J. CHAIRMAN: The meeting is called to order. Members of the Committee will have sean from the notes of the circulated documents before us that the Committee, proceeding with its consideration of the text of the General Agreement, submit documents S7 and S8 for consideration and approval. These two documents comprise the Sixth Special Report of the Tariff Negotiations Working Party which was issued on August 27th, and the Special Report given in document S8 which was issued on September 1st, Since the Sixth Special Report deals with the situation up to August 23rd and is therefore somewhat out of date, I think we can simply take it as read and approved, and we might only give consideration to document S8, which is the latest Report and which brings the situation more up to date. Are there any comments on document S8? I take it then that the Committee approves of these two documents? The Delegate of Chile. Mr. A. FAIVOVICH (Chile) (Interpretation): Mr. Chairman, reading through this Report, I would like to know if the final date for the signature of the Agreement is maintained on the 30th September, that is to say, the date on which the Act will be signed and the Agreement will therefore become authen le. The date which has been fixed is the 30th September, and this date is based on the assumption that the tariff negotiations will end on the 10th September, but it seems to me that it is probable that by the 10th September these negotiations will not be concluded. Therefore it is extremely important that a definite date should be fixed for the signature of the Agreement - especially when we consider E/PC/T/TAC/PV/9 2 J. 3 E/PC/T/TAC/PV/9 the case of countries which have to leave Geneva for various parts of the world, and especially if, we consider the shortage of ships and the lack of transport by plane. The same situation will arise, in fact, with regard to the forthcoming Conference in Havana. Therefore, we should now fix a date for the signature of the Agreement, and also fix a date for the end of these tariff negotiations. It seams to me that, in spite of what has been done, some haste ought to be shown here by the countries which are most interested in the conclusion of these tariff negotiations, that is to say, the key countries. We have read in the press various comments which are somewhat pessimistic in tone, and which are pessimistic if we consider the success and final result of these negotiations. Therefore, I think that it would be to the interest of the countries which are most concerned with these negotiations to proceed with the utmost speed to reach a final conclusion of this Agreement. To sum up what I have said, I should like to press the point that a final and specific date should now be fixed for the signature of the Agreement. 4 S E/PC/T/ TAC/PV/0 CHAIRMAN: The Delegate of Chile has proposed that we decide now on a fixed date for the signature of the Final Act. I would like to obtain the views of Members of the Committee with regard to this suggestion. Are there any comments? The Delegate of Czechoslovakia. H.E. Mr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I would like to support the proposal of the Delegate of Chile, because I too would liks a fixed date for signature, especially as I want to have some leave. CHAIRMAN: Are there any other comments? The Delegate of the Lebanon. M. MOUSSA MOBARAK (Lebanon): Mr. Chairman, I am afraid to say it, but the Delegate of Chile has said what everybody in this room is thinking. I would like to thank the Delegate of Chile for being our interpreter in this matter. In fact, what he said about countries far away from here is true, particularly about my own country. Certain Delegations - especially the Heads of Delegations - have to go home in order to discuss the Charter with their Governments. If the beginning of the Havana Conference is to be on November 21 and we are only going to be finished here on October 15, there would be a very short time between the end of the negotiations in Geneva and the beginning of the Havana Conference in which to receive instructions from our Governments and to discuss the various Articles of the Charter. Therefore I think it would be of some interest to try and findnow a definite date for the end of our discussions here. At least it would be worth while to be informed as to the date 5 S E/PC/T/TAC /PV/9 which the various Delegations envisage for the end of these negotiations. I must say that at the present moment I think the most important countries have not yet reached agreement here and that the negotiations have been very limited. There- fore I am afraid that the end of September will arrive without leading us to any real progress, and I believe it would be useful to discuss the matter in a vary frank way, in order to see whether thenegotiations are going to lead us to something or not. CHAIRMAN: Are there any other comments? The Delegate of France. M. ROYER (France) (Interpretation): Mr. Chairmen, first of all I would like to answer the comments which have just been made by the Lebanese Delegate. If the Lebanese Delegate reads carefully the report of the Working Party he will find at the end of this Report sufficiently precise information to show that the parties intend to reach an agreement. (At this point the Delegate for the Lebanon made an observation, to which the French Delegate replied that it seemed these parties had sufficient possibilities of reaching such an agreement). On the point raised by the Chilean Delegate, I do not think we can commit ourselves now to fixing a specific date for the end of the present negotiations. Nevertheless, there are two possibilities. The first one is to sign the Final act and the Protocol without appending the Schedules to the Act and the Protocol at the time of signature. The other alternative is to wait to sign all the documents until the time when all the documents are ready for signature, and then the Delegations should S 6 E/PC/T/TAC/PV/9 entrust their diplomatic or consular representatives in Geneva or Switzerland to affix their signatures to the Act. These are the two possibilities, but I think it would be very dangerous now to set a definite deadline for the con- clusion of the negotiations. CHAIRMAN: Are there any other comments? The Delegate of the Lebanon. M. MOUSSA MOBARAK (Lebanon): Mr. Chairman, we all agree here that we have the best intentions in order to bring these negotiations to an end. In fact, we have a saying in French that "the road to Hell is paved with good intentions." What I think is that it would not be of any value to sign here any kind of Final Act or any Agreement and leave the negotiations for later on, because the main purpose of the Agreement is to include all the negotiations. If the negotiations are not terminated, I do not see any emergency for signing the Agreement itself, If we are delayed here it is only on account of the key countries which have not ended their negotiations in Geneva; they are responsible for the delay and they should hurry to finish off those negotiations if we went to sign here the Final Act. CHAIRMAN: Are there any further comments? The Delegate of the United Kingdom. Mr. J.R.C.HELMORE (United Kingdom): There have been one or two references to the key countries. I do not know whether it is intended that the United Kingdom is regarded as representative of a key country. I think probably it is, when I look at the terms of the last Special Report of the Tariff Negotiations Working Party. E/PC/T/TAC/PV/9 I only want to ask two questions about what has been proposed. The first is specific: we pick the date of September 30, for the sake of example, by which all negotiations must be completed; suppose that negotiations between three or four key countries are not completed? What happens then? Do we all just put our papers away in a large tin box and disappear beck to our capital? If so, whet happens to the agreements that have been made between the key countries and the non-key countries, or between two key countries? I very much doubt whether those agreements would survive. The second question I went to ask is whether there is a suggestion about that these countries whose negotiations are taking longer are delaying matters. I do not myself think there is such a suggestion and it might be useful to remember what the Leader of the United States Delegation said in his speech in the final Plenary Session, that the 1938 negotiations between his own country, mine and yours, Mr. Chairman - only three countries - took a great deal longer than the time we have so far spent in Geneva or are like to spend on the probable result as shown in the last Report. I do not myself think there is occasion for undue alarm about the time these negotiations are taking. I ,uld suspect that within a comparatively few days a geat deal more will happen which will make the picture look much less gloomy than it has been. I believe that even since your last Report was written further negotiations have got to the state when they can be regarded as virtually finished. 7 E/PC/T/TAC/PV/9 Mr. J.R.C. HELMORE (United Kingdom) Mr. Chairman, may I make one comment on the translation? I think there was a reference to Agreements between countries already signed. I said "concluded". It is rather an important difference, in that they have not been signed. CHAIRMAN: The Delegate of Chile. Mr. Angel FAIVOVV--CH (Chile) (Interpretation) Mr. Chairman, I would like to revert now to this question of date, This meeting has been held here now for a period of f ive months and we think that such a conference should know by what date it is going to conclude its work. We have decided here that the Havana Conference should meet on 21 November and therefore it seems to me that position of the countries which have to study the Charter and all the documents which will be submitted to them before the Havana Conference - and I am referring to sixty countries - ought to be able to study those documents in time, and they will not be in a position to do so if we do not fix a date for the conclusion of our work. This Conference reminds me the Congress of Vienna, the "Dancing Congress", but it seems to me that in a way, this is a somewhat "Agonising Congress". If I study the Report of the Working Party it seems to me that this Report lays the burden of responsibility on a certain number of countries which we can call key countries It seems that the are known by preferential régimes which/certain of these countries way somewhat slow down the negotiations, and that those negotiations, for that reason, might be bogged down now. I think we can state that the success or failure of this conference will depend largely on three or four countries. During the five months which have elapsed since the beginning, of this conference, the differences between the different systems of tariffs of the countries have become well known, and in 80 days the Havana meeting is going to 8 P. 9 P. E/PC/T/TAC/PV/9 gather and therefore we ought to fix now the date for the end of our work here. Mr. Chairman, I think that the only solution, as I say, is to fix a date, and if there are any outstanding difficulties then the countries which as I have said have the responsibility for the success or failure of the conference must do their utmost and show the utmost spirit of co-operation and solidarity so as to end successfully our work here. The differences between the tariff systems and between the standpoints of the delegations are well known and I wonder whether anything will happen before the Final Act. But, Mr. Chairman, although I respect greatly the position of those most important countries, nevertheless we ought to fix a date, and our delegations must assume the responsibility for giving their governments time to study the documents and also the other governments of the world which will be represented in Havana. Dr. J.E. HOLLOWAY (South Africa): Mr. Chairman, I want to make a suggestion which might get over the difficulties which have been raised, particularly by the Delegates of Chile and the Lebanon, difficulties which I have, too. The first stage of getting, a document finished is purely certification, simply stating that that is a correct document. Now, you said yesterday, Mr. Chairman, that we should get the text of the document, apart from the Schedules, finished by the end of next week. Whether we finish it then or a little later, that text should in any case be finished well ahead of the final negotiations being finished. Now, what I would suggest is this: that as soon as we have that text a copy should be prepared which immediately lies for signature, that is certification; that when a country has finished with all other countries and it has got schedules, then those schedules simply be initialled between those two countries and given to the Secretariat. Then when you have 10 P. E/PC/T/TAC/PV/9 done that you can say, like Lady Macbeth: "Stand not upon the order of thy going" but go at once. You have finished. And do not disturb other people; let them get on with their job. If a country is not finished to that stage obviously it cannot go away, so no damage is done to it. And if, having done that, something happens here in the latest stages which makes it to impossible for that country/go through, it just does not ratify. So we do not lose anything that way and we can arrange for the people to go away as soon as they have finished. 11 E/PC/T/TAC/PV/9 CHAIRMAN: The Delegate of the United States. Mr. Winthrop BROWN (United States): Mr . Chairman, we fully understand the feelings of she Delegates who have spoken about the desire to know precisely when this meeting will be oncluded, and when they may return home to report to their Governments in more detail on the results of this conference than it has been possible to do by correspondence. On the other hand, it is intensely difficult to fix in advance a firm date on which the highly complicated negotiations which still remain to be conclude ed can be brought to a close. I can assure all the Delegates present that so far as we are concerned, we have an urge to get home which is as intense as that of anyone else here, I am sure, and that we are constantly motivated in our negotiations by the desire to bring them to a speedy conclusion. We sense the same feeling in those with whom we negotiate, and I think there is no doubt whatever that the more complicated negotiations are being pressed as rapidly as possible. Now, when the text of this Agreement is determined by this Committee this week and next week, and when any country has completed the bilateral stage of its negotiations, I think it would be quite possible for some of the Delegation at least - perhaps most of it - to return home for the necessary consultation and explanation with their Governments, leaving technically qualified officers to see that the results of their bilateral negotiations are properly included in the final form of the Schedules, and that the indirect benefits on which they are relying in many cases are also included as a result of the negotiations of other parties. Thus it would be possible, V 12 E/PC/T/TAC/PV/9 when the text of this Agreement is agreed upon, for the Delegations who have completed their tariff work materially to out down their representation here, and to get a large part of their staff home for necessary work. We feel that it is most desirable, in fact essential, to have the signature of the Final Act a complete process which takes into account not only the text but the Schedules, so that we have before us, when we sign, one complete document. CHAIRMAN: I think tht all that has been said here today shows that there is a general desire on the part of all Delegations to finish the tariff negotiations as soon as possible in order that the Delegations may return home to their respective countries. I think that the only reason why certain negotiations are taking much longer than other negotiations is owing to the complicated nature of these particular negotiations - the large number of products that are involved on either side. I know, as Chairman of the Tariff Negotiations Working Party, that in recent days, over since the close of the Charter. discussions, there has been an acceleration of the pace of those negotiations, and a greater determination shown by the countries concerned to complete those negotiations as soon as possible; but I do not think, from what has been said today, that it would be practicable to act upon the suggestion of the Delegate of Chile and fix now a final date for the signature of the Final Act, because it is impossible to predict or estimate exactly the day on which these negotiations will be completed. As both Dr. Holloway and Mr. Brown have pointed out, there should be no reason why any Delegation, after the discussion on the text of the Agreement had been completed and the particular E/PC /T/TAC/PV/9 negotiations in which they are engaged, should not be able to send home the greater part of their Delegation, leaving behind only a few technical officers to see that the final text is in the way they think it should be, and then to authorise their diplomatic representative in Berne or some other capital to sign the Final Act. I think that, in the light of the discussion that has taken place, we cannot very well at this stage set a final date for the signature of the Final Act. OHAIRMAN: The Delegate of South Africa. Dr. J.E. HOLL.OWAY (South Africa): May I point out that my suggestion makes it unnecessary to have technical people in Geneva who are badly required at home, and I think it might be worth while to see whether the suggestion would help the Delegates, by asking for a show of hands. CHAIRMAN: I think that depends on the circumstances in each ease. Some Delegations might not feel it necessary to leave technical officers behind to check the Schedules in order to be quite sure that they are getting all the indirect benefits they wish: that will be up to each Delegation. I think we can only determine that in the light of the circumstances as they arise. M. Angel FAIVOVICH (Chile) (Interpretation): Mr.Chairman, I would just like to say a few words on the comments made by the South African Delegate. I think the proposal made by Dr. Holloway is quite reasonable, and the proposal I made just nowwas only to find a formula which would give satisfaction to all the Delegations and not only to some of the Delegations. V E/PC/T/TAC/PV/9 Therefore, if the Working Party takes into consideration Mr. Holloway's proposal or any other similar proposal, it would enable the larger part of the Delegations to return home once the negotiations of a general character are completed, and once they have completed their work, also, concening bilateral negotiations. I fear that any other formula would have the result of maintaining here for an indefinite period a large number of people who would not be needed here once they had completed their work in connection with their bilateral negotiations. CHAIRMAN: Perhaps it would enable, us to solve our difficulties if the Tariff Negotiations Working Party, at its next meeting, could consider this question in the light of the suggestions made by Dr. Holloway and the Delegate of Chile, and then we could issue a report on what we think might be the best way of meeting the situation of those Delegations who will soon be terminating their negotiations. Is that suggestion acceptable? H.E. Mr Wunsz KING ( China): May I add a word for the information of the Tariff Negotiations Working Party? So far as the Chinese Delegation is concerned, I think that you will appreciate the very special practical difficulties with which we have been faced. We have a limited number of tariff experts. They have been away from China for almost half a year. Their services are urgently .-ided at home, and on account of the special difficulty of arranging transportation facilities, we have to make arrangements at least four or five weeks ahead. As the final date for the conclusion of tariff negotiations has been fixed for 10th september, these experts have made their arrange- ments for their return to China by the middle of this month. Therefore, if by that time we are not able to finish all our tariff negotiations, through no fault of our own, I am very much afraid that we might have to continue our tariff negotiations somewhere else - most likely in Shanghai 14 15 CHAIRMAN: Is the proposal to defer this matter to the Tariff Negotiations Working Party to study the question, taking into account the views expressed at this meeting, approved? Approved. The Tariff Negotiations Working Party will take into account the remarks just made by the Delegate of China. I should also like to make a proposal for speeding up our work, that is, that we should endeavour to make a first run through of the Draft Tariff Agreement as rapidly as possible, settling as many points as we can. We may have to leave any points that give rise to difficulties in abeyance to deal with when we come to the second run through of the Tariff Agreement. I would point out once more that the interpreters are only available until the end of next week, and therefore it is most importantthat we should make as rapid progress as possible. DR. J.E. HOLLOWAY (South Africa): Mr. Chairman, on a point of order, as Part II is a question of whether things are in or out, is it your intention to take Part III before Part II? CHAIRMAN: No, it is my intention to take up Part II after we have finished with Part I, in order to determine which Articles should or should not be included in Part II. I think that is the only way in which we can consider Article XXVII, which relates to the supersession of Part II by the Charter, after we have a better idea of what will be in part II. in the order Therefore, I propose that we take the Articles /in which they appear in the Draft Agreement and that we then take up the Protocol and the Schedules. E/PC/T/TAC/PV/9 J. When we concluded yesterday, I announced that we would take up paragraph 3 of Article I, to which the French and Czechoslovak Delegations have submitted a revised draft. This is given in document E/PC/T/W/317 of September 2nd. I would ask either the French or Czechoslovak Delegation to explain briefly the purposes of their amendment. M. ROUX (France) (Interpretation): Mr. Chairman, the text which you have now before you in document E/PC/T/W/317 is the result of the collaboration between the Czechoslovak and French Delegations - a collaboration which took place during a meeting, because these two Delegations sit at the same end of the table and therefore can maintain good neighbourly relations. Our amendment is the result of very serious consideration of document E/PC/T/189. We think that paragraph 3 which appears in that document does not cover all the practical cases which derive from preference margins. It seems to us that if document E/PC/T/189 does not cover all the cases this is due to the fact that the draft of Article I derives only from Article 16 of the Charter and does not derive from Article 17, where various cases of preferences appear after negotiations. The principle which ought to guide us and which appears in the Charter is that no margin of preference should be increased. Three cases appear in the draft which we have before us now in document E/PC/T/l89, cases which envisage a maximum margin of preference. The first case is that in the tariff schedules, when the most- favoured-nation rate is mentioned and the preference rate, and the margin of preference between these two conventional rates is the differentee. J. 17 E/PC/T/TAC /PV/9 The second case is when, in the tariff schedule, a most-favoured- nation rate is provided for and no preference rate is mentioned. the Therefore, the margin of preference is/difference between the most- favoured-nation rate and the preferential rate which was in force on the 10th April 1947. This was the case which was used as an example in the London Memorandum, when it was stated that the margins of preferences should be reduced. The third case appears when the most-favoured-nation rate is frozen also, and then we also have a reference to the date of the 10th April 1947, but of course that date just happened to be chosen and it could be any other date just as well. We drew the attention of the Working Group, as appears in document E/PC/T/153 on page 4, to the fact that the margin of preference could in certain cases be fixed in the tariff schedules when no rate appeared for the most-favoured-nation rate and when no preference rate appeared in the tariff schedules. It was possible to say, for instance, that a margin of preference should not be greater than X per cent. That is why we took up that case in document E/PC/T/W/287, which appears on page 2 of the English text. Another case which was taken up by the Czechoslovak Delegation, and which resulted in document E/PC/T/W/314, is the case where the most-favoured-nation rate is not mentioned. I think that provision should be made that in no case prior margins of preference should be increased, and that resulted in the document E/PC/T/W/317 under heading (iv), which reads:- "if the most-favoured-nation tariff rate is not specified in the Tariff Schedules, the difference which existed on 10 April 1947 between the most-favoured-nation tariff and the preferential tariff". 18 J. TAC P 9 :~~~~~~~~~~~~~E/P / T/ DC;/JV/V the Therefore, we now have five cases instead of/three mentioned in document E/fC/T/189, but it is possible that we have also forgotten a certain number of aspects of this question, and I am mentioning this because of what the Belgian Delegate said at one stage here. Nevertheless, I think we ought to insert here - and we ought to insert it in gold letters - that the negotiations should not lead to the increase of margins of preference. This appears in Article 17, and it ought to be, and is in fact, our guiding thread to 'his Article. M. R?.J SMICKLE (United Kingdom) Ir. Chairman, I have the impression that this rather elaborate draft which is before us is aeally a seW of rules for conducting negotintions. Iell, surely.that is not the function of this Article at all. It is simply to enshrine the rcz'l'.to of negotiations as they will have emerged by the time that this document is signed. Therefore, it seems to me that all this elaboration - or a good . al of this elaboration - is not necessary>" My impression is that one or two small verbal changes in the existingg text will cover all we need. I do not think it is necessary to go into these now, -but that is my impression - that a very small amount of change would suffice. Thank you. I- __ I- 19 S E/PC/T/TAC/PV/9 CHAIRMAN: The Delegate of the United States. Mr. Winthrop G. BROWN (United States); Mr. Chairman, I think we are all agreed that the purpose of this article is, as the Delegate of the United Kingdom has said, to fix end enshrine the results of the tariff negotiations and be sure that they will take place. It is a very technical bit of drafting. Could we not perhaps appoint a smaller group of technifna.. to agree upon and present a draft to us, because it seems to me that we can spend easily the whole of the rest of the afternoon in this large group, trying to deal with a subject which is, in its essence, a straight drafting job and a particularly technical one at that. CHAIRMAN. I think the Delegate of the United States has just made a very sensible suggestion. I think we are all aggeed as to what we want to say in this paragraph; the difficulty is just to find the words with which to say it. It is a complicated and technical problem and therefore, it could best be dealt with by an ad hoc sub-committee. If that proposal is approved, I will name an ad hoc subcommittee The Delegate of China. H.E. Mr. Wunsz KING (China): Mr. Chairman, without going into the merits of this question, the Chinese Delegation would like to point out that the joint text as shown in Document W/317 seems to be acceptable to us, because it serves to clear up certain points in the original text which are otherwise not so very clear. I feel very much interested in what our French colleague his told us. In the course of tariff negotiations which the Chinese team has had with some of the other teams, we seemed to be confronted with some difficulty in ascertaining what the 20 S E/ PC/ T/ TAC/ PV/3 preferential rates are. As to some of the negotiating teams, the Chin se team felt very grateful to them for having made known to us their preferential rates, but, as to several others, I would like to point out that we have been somehow groping in the dark. Therefore we should feel very grateful to those Delegations which also have preferential tariffs if they would be kind enough to make accessible to the Chinese team their preferential tariffs and the rates, so as to speed up to some extent the work of our tariff negotiations. CHAIRMAN: Is the proposal to set up a drafting sub- committee to consider this question approved? The Delegate of Brazil. Mr. R. ALMEIDA (Brazil): Mr. Chairman, I think the French-Czechoslovak proposal is useful as an elaboration and a clarification of the wording of Paragraph 3. I would accept it, but I do not oppose its further examination by that group, as the United States Delegate has proposed. In respect of the margin of preference and vits defination as the difference between the Most-Favoured-Nation tariff and the preferential rate specified or indicated in the tariff schedules,or existent on 10 April 1947 or on the base dates indicated in Annex G, I wonder if it will not be wise to put an explanatory footnote, setting forth that the difference must be understood, unless otherwise indicated, as the percentage relation between the Most-Favoured-Nation tariff and the preferential tariff, not as the mere subtraction difference. When I said "unless otherwise indicated," I meant the margins which consist of an explicitdifference in percentage ad valorem rates or an explicitspecific rate difference. ? - I- - S 21 E/PC/T/TAC/PV/9 CHAIRMAN: The Delegate of Cuba. Mr. H.DORN (Cuba): Mr. Chairman, I am in agreement with the proposal of the United States Delegate, to set up a small Drafting sub-committee, and I wish only to draw attention to a small drafting point which I think must be taken into account when, considering the proposal, because there is a difference made between the margin and the difference. If I make this distinction under (a) I must make it under (b) too. Therefore I would propose that a small committee take into account the necessity to add, "for products not desribed in the Tariff Schedules, the margin which existed on 10 April 1947, or the difference existing on the same date, between the Most-Favoured- Nation-tariff and the preferential tariff." That is a question of formulation, but I wanted to draw attention to this point. CHAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman, I am in agreement with the proposal to set up a small working group, but I would like to draw the attention of the group to one drafting point which I think is not taken care of either in the existing Paragraph 3 or in the draft submitted by the French and Czechoslovak Delegations Sub-Paragraph (a) (ii) in the draft submitted by the French and Czechoslovak Delegations makes a situation in which no Most- Favoured-Nation tariff is scheduled; neither the margin nor the Most-Favoured-Nation tariff is scheduled, but only the preferential rate. The situation is that only the maximum margin is to be equal to the Most-Favoured-Nation tariff, and the 22 S E/PC/T/TAC/PV/9 scheduled preferential tariff, but if no difference is scheduled then the margin remains practically unlimited, because the Most-Favoured-Nation tariff is not related to any specific date. It could be raised, so no limit is placed on the maximum margin, because the Most-Favoured-Nation tariff referred to in sub-paragraph (a)(ii) is not related to any date; the base date occurs only in (iii) and (iv) and not in (ii)+ Some difficulty arises in the existing Paragraph 3, which states in sub-paragraph (a) that "in respect of any product in respect of which a preference is permitted under Paragraph 2 of this article, the margin of preference shall not exceed the difference between the Most-Favoured-Nation tariff specified and the preferential tariff in force on 10 April 1947," but what happens if no Most-Favoured-Nation tariff is scheduled? Is it to be assumed that the maximum margin in such case is unlimited? Either the Most-Favoured-Nation rate should be required to be scheduled or, where no Most-Favoured-Nation rate is scheduled in respect of the product appearing in the schedule, the rate should be the one ruling on the date stated. 23 p. ~~~~~~~~ACPC/T/TlL/PV/9 CHAIRMAN: There appearg to be Feneral agreement that we should refer this question to a Druftiom Scb-Curmittee who will be able to take into account the various views which have been expressed at this meeting. With regard to the point just referred to ey the Dalegate of Brazil, if I understood him correctly I think he suggested that there should be some arrangement made for a percentage margin of preference rather than the difference between the actual rates. If my understanding is correct, the clear margin of preference has come to be understood to be the difference between the preferential rate and tha Most-FNvoured-Xation rate, by subtracting the one from the other, and that is the basis on which negotiations have been carried on at Geneva. So I fear it would be introducing an element of confuaion if Et this stage we were to introduce percentage rates as a means of introducing percentage ofrgins ! preference. No doubt the Drafting Committee can take into account it this point so that/can be made clear in the drafting of paragraph 3 and gn doinZ that they will no doubt take into account what has been said by the Delegate of Brazil. Aacordingly, I would name the following countries to constitute this Ad Hoc Drafting Sub-Committee to examine the new text for paragraph 3 of Article I: the representatives of Australia, Czechoslovakia, France, the United Kingdom and the United states. This Ad Hoc Drafting Sub-Committee should meet tomorrow morning at 10.30, should elect its own Chairman, and should submit a revised text of the paragraph as soon as possible. The Delegate of the Lebanon. 'M. MouAsAKMOB1R!Uo(Lebancn) (InttrpretabiMr): Ad. Chairman, as Syria/Lebanon have preferences in force, I would wish if possible that a representative of the Customs Union of Syria and the Lebanon should sit on that Sub-Committee. 24 P. E/PC/T/TAC/PV/9 CHAIRMAN: We do not want the Drafting Sub-Committee to be too large, but I am sure the Committee would have no objection to a representative of Syria or the Lebanon being added to the Sub- Committee. Is the composition of the Sub-Committee as I have read it out, with the addition of the Lebanon or Syria, approved? Agreed. yesterday We dealt/with paragraphs 1 and 2 of Article II. We now come to paragraph 3 of Article II. In Document E/PC/T/189; Corrigendum 2, is given a revised text of paragraph 3 which was revised by the Secretariat in the light of the new text of Article 31 of the Charter. Are there any comments on paragraph 3? Mr. R.J. SHACKLE (United Kingdom): Mr. Chairman, I have two minor corrections. Eleven lines from the bottom of the new paragraph, after "stabilization arrangement" there should be a comma instead of a semi-colon; and two lines below that, in the phrase "agreement between countries", the word "the" should be inserted. in front of "countries". Otherwise I have no observations. CHAIRMAN: I take it that there is no objection to the small drafting amendments just proposed by Mr. Shackle. The Delegate of Czechoslovakia. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I would like to state first that this paragraph 3 of Article II goes further than the Charter itself and that is why we would suggest deletion of the whole paragraph 3, for the following reasons: It is meant only for the cases where the country negotiates with another country tariff concessions. At that moment there is no state monopoly. Now, after a certain time, two years, or three years, or God knows when, the Government of that country - you never know with Governments - decides to introduce a monopoly for the - - - - I - 25 respective commodities. Then, if this monopoly is introduced and nothing happens as to the functioning of the monopoly in relation to foreign countries. there is no reason for having here some special provision. Or the country finds it has to introduce, the monopoly for some serious reasons; I suppose that these serious reasons may be connected with a political crisis, because no doubt no country would like to introduce a rmonopoly just for the Pleasure of having monopolies but it is to follow certain politics. In that case I think it would mean that the country receiving the concession was somehow frastrated of the contempalated concession; and in this case the country could come and claim, as provided in paragraph h, that it is not receiving from the other country the concessions as it understood at the moment of negotiations. In this case both countries would have to sit round the table and discuss anew, and if there is really a frastration, then there should be some c. :. tory adjourment of the matter. As it stands here it means that we are binding in future any internal Price politics of a country Then there are some !1]..j)'.' difficulties, for instance, that if the monopoly would buy commodities from different sources, and selling to one single price, it would be, as I understand, countrary. to those provisions. So if, for a :: ustance, a monopoly Should buy some commodity today and the price was 100, then in two monthe this goes up to 200, in this case the monopoly would not be allowed to raise the price to 300, which any , can do and is Then there is no provisions, as there is in the Charter, for other kinds of agreements, but only the price arrangements. I had the honour to state once, I think in Sub-Committee that in countries with planned economies the prices have an entirely different function from in countries with free trade they are P . 26 E/PC/T/TAC/PV/9 a part of the whole economic and social structure of that country; and I am afraid the Czechoslovakian Delegation would be unable to agree to the provisions of this paragraph 3 of Article II. CHAIRMAN: The Delegate of the United States. Mr. John W. EVANS (United States): Mr. Chairman, I have a feeling that Dr. Augenthaler has put the worst light on the possible difficulties that might arise in the application of this Article. I wonder if he has given special consideration to other provisions which I think would permit the hypothetical country he described to operate its emergency price stabilisation scheme without interference from this Article, if an emergency should arise of the kind he has described. I should like to call attention to the wording which appears on page 23 of document E/PC/T/189, paragraph 3 of Article X, which now reads: "Throughout articles X, XI, XII, and XIII the terms 'import restrictions' or 'export restrictions' include restrictions made effective through state-trading operations". Now I submit that one of the purposes for that wording in the original Charter and also in this document was to permit a country which operated its foreign trade through a state-trading organization to use all of the devices which are permitted to countries not using state-trading enterprises under the various exceptions to the Quantitative Restrictions Order. I have a feeling that the study of that will show that the difficulties are not nearly so serious as Dr. Augenthaler has suggested. Now, without further comment on the merits of the point, I do want to take issue with Dr. Augenthaler's statement that this Article as nowdrafted goes further than the wording of the Charter. I was prepared to ask for the floor to complain that it does not go quite as far: and that, I think, is true in two particular respects. E/PC/T/TAC/PV/9 The first has probably already been noticed by most members of the Committee. In the first line of the draft the qualification appears "after the day of signature of this Agreement" ; in other words the Article applies only to a monopoly which was established after the Agreement, even though an existing monopoly might subsequently take actions which would in effect nullify the value of the tariff concession negotiated. Now that wording was clearly avoided in the Draft Charter itself and I think it should be avoided here. I should like to propose the deletion of the words "after the day of signature of this Agreement". The second respect in which this Article does not go as far as Article 30* of the Charter is thet Article 30* of the Charter provides rules covering the case of protective margin through the operation of a state-trading monopoly where no rate has been negotiated. In other words, Article 30* in the Charter has a provision which is comparable to at least the implied obligation elsewhere in the Charter that tariff rates must be published, must be known and made public. That provision then relates the operation of the state-trading monopoly to the provisions elsewhere in the Charter, by requiring that the degree of protection afforded shall not exceed the degree of protection in the declared import duty. Now we have considered suggesting that this Article be revised so as to parallel the Article of the Charter in that respect, but I am not sure that it is necessary in this document and we are not disposed to press that point: but we do consider it very important to make the first correction which I have suggested. * Corrected to Article 31 in following speech (see next page) P. 27 28 E/PC /T/TAC/PV/ 9 Mr. John W. EVANS (United States) (after interpretation): I should like to make two corrections in my own remarks. The first one is a very minor one: I referred to "Article 30", when I should have referred to Article 31. The other correction is much more substantive. I had not noticed - Mr. Shackle has kindly pointed it out to me - that the wording which appeared in document T/189 was changed in the second line and the word "maintains" was inserted. I think that that takes care of my point and would make unnecessary the deletion of the words "after the day of signature of this Agreement", though I am not quite clear what is accomplished by the words "the day after the signature of this Agreement". CHAIRMAN: The Delegate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, I must admit that when the Norwegian Delegation first considered the original draft of the Tariff Negotiations Working Party, we did not discover more than two points on which we would like amendments to paragraph 3; but we have studied this paragraph further, and we feel grave doubts as to the advisability of having it included in Article II at all. The reasons are, to a certain extent, the same as those explained by the Delegate of Czechoslovakia; but there are also other reasons. I think the casiest starting-point to explain our position is this: Article 31 of the Charter says: "If any Member establishes, maintains or authorizes..- a monopoly.... such Member shall....negotiate... .with the object of achieving:" and then states in '"(b): " in the case of an import monopoly, arrangements designed to limit or reduce any protection..." V E/PC/T/TAC/PV/9 Then in paragraph 2 of Article 31, it is 31, "In ..:rdci to satisfy the requirements of sub-paragraph 1(b) of this Article, the Member maintaining a monopoly shall negotiate (a) for the establishment of the maximum import duty...." or "(b) for any other mutually satisfactory arrangement ...". Now, the paragraph here really goes farther than that. The paragraph should, in our view, only refer to the negotiations which have taken place now between Member countries having monopolies in existence, and countries which are interested in having either a price margin fixed or any other mutually satisfactory arrangement. But if a monopoly has not been established and is, in fact, not functioning now in one particular country - for example, Norway, then, of course, we have not conducted our negotiations here on the assumption that if we in future establish an import monopoly the maximum duty which we might have fixed on a particular commodity is fixed once and for all, and that consequently we will not be able to alter that. We have only negotiated on the assumption that insofar as we have monopolies now -for example, wheat or grain monopoly, those margins which the monopoly set out to use on the sale of wheat and other grain,are v und by Agreements reached during the tariff negotiations we have conducted here. But if we introduce this paragraph here, one goes much farther than that. One dees, in fact, limit to a certain extent -perhaps to a very large extent- the freedom or action of a Member country, if in future it decides to establish a monopoly. If a country establishes a monopoly in future, then Article 31 says that in that case that Member is under an obligation to negotiate with the objects either of fixing a maximum import duty or else making any other mutually satisfactory arrangement. V 29 30 V E/PC /T/TAC/PV/9 Now, if we maintain this paragraph 3 in the present form, it also has two other disadvantages as far as we can see. Firstly, paragraph 5 of Article 31, which refers to the point that "due regard shall be had for the fact that some monopolies are established and operated mainly for social, cultural, humanitarian or revenue purposes" is not included at all. Secondly, this paragraph 3, as it is drafted, does not include paragraph 2(b) of Article 31, concerning the possibility of arranging other mutually satisfactory arrangements. It refers only to a price margin. Consequently, we feel that the whole paragraph is very doubtful indeed, sand the result is that the General Agreement as it is now does not include even in Part II the full text of Article 31, because Article 31 in the Charter is not included in Part II - we have only taken out part of Article 31 and included it in paragraph 3 of Article II. Our proposal would be that we delete paragraph 3 of Article II and include the whole of Article 31 in Part II, together, of course, with Article 30 of the Charter, which is already included in Part II of the General Agreement. 31 J. E/PC/T/TAC/PV/9 M. ROYER (France) (Interpretations: Mr. Chairman, the text of the General Agreement which we first had provided for certain guarantees in view of the possible establishment of certain monopolies. The fact chat some monopolies could be established should not allow certain countries to increase the margin of protection of their industries. Nevertheless, we have been struck by the arguments which have been put forward by the Czechoslovak and Norwegian Delegates. Their arguments tend to point out that there is a difference between the countries which will now adhere to the Agreement and countries which might adhere in the future, because the countries which might adhere to the Agreement in the future will have time to set up new monopolies for adhering to the Agreement. Therefore, they will reserve their right to negotiate with the country the margin of protection before joining in the Agreement. But the countries which now adhere to the Agreement will be deprived of that right. Therefore, we do not think that we should include in Part II only a part of article 31, but the whole of Article 31. We could invert it in a more consise form stating, in so many words, that in the case of the establishment of monopolies, at the request of interested countries, a substantial amount of trade negotiation will take place under the rules set forth in Article 31. Now, the second idea which I am coming to is that we do not think that it would be necessary to specify a definite obligation for existing monopolies. We have no objection to the principle, but it would be difficult for us to accept this principle now owing to certain difficulties which exist in our case. But, going further, I wonder if there is any need at all to specify special rules for existing monopolies, because we can have either of the J. E/PC/T/TAC/PV/9 cases if the commitments have already been taken by the Delegations in the name of existing monopolies - and it is possible that these commitments will differ from the commitments specified in paragraph 3. As the Norwegian Delegate quite rightly pointed out, for instance, the commitments will be not to impose maximum import duty, but the quota of the global purchase made by the monopoly, will be such in specified cases. Therefore, if we also added to this the rules of paragraph 3, this would duplicate in a way the commitments undertaken by the monopolies. There is another difficulty regarding fiscal monopolies, Although I do not agree with the form in which the question of fiscal monopolies is coached in paragraph 6 of Article 31, nevertheless, I think that this paragraph ought to be inserted. I will not stress this point now, but I would like to state that there are three elements to calculate the prices here, and I think that the text which we have before us does not make this idea very clear, and there is something rather doubtful in the conclusion to which one can come. The elements to calculate the prices are the c.a.f. price, the maximum rate of import duty and such charges as transport or internal taxation. If, for the first, we take a price of a hundred, for example, and if we add to this the maximum rate of import duty, that is, forty, we should have a price of 140, but I wonder if, under paragraph 3, it would not be possible to add also -transport fees and internal taxes and other such charges, thus arriving at the price of 200. I think that the Committee will agree on the second solution, that is to say, to have a prize of a hundred only plus forty, but this seems to me rather doubtful if we E/PC/T/TAC/PV/9 look at the terms of paragraph 3. Now, as regards the question of customs duties, in the case of fiscal monopolies, in many cases the customs duties do not amount to much, but if the text here were to be adopted then in certain cases one would have to increase the rate of customs duties on such items or to establish a special internal tax before the sale of such goods. To summarise what I have just said, Mr. Chairman, I adhere to the proposal which was made by the Norwegian Delegate and I think it would be better not to discuss at all the existing monopolies here and to insert, as I have stated, Article 31 as a whole and, in the case of new monopolies being created, to mention the obligation which the country would have to undertake to negotiate in the case of the establishment of new monopolies. CHAIRMAN: The Delegate of the United Kingdom. MR. R.J. SHACKLE (United Kingdom) Mr. Chairman, I cannot help thinking that this Article is not intended to lay down all the rules which will govern state trading monopolies. Its function is to attach certain results which have already come out of the negotiations. In paragraph 1, it attaches the results of the tariff negotiations and the tariff schedules. This paragraph 3 is meant simply to attach in the same way the results that will have already come out of the negotiations where state trading monopolies are involved. That is the whole purpose of this paragraph, and it follows from that, I think, that all we have to do is to make sure that those cases where arrangements, whether they be maximum import duties or other arrangements, have J . 34 J. E/PC/T/TAC/PV/9 been negotiated here are duly picked up and attached. That seems to me to limit very much the scope of what we have to do, and I think that the criticismsmade by Dr. Augenthaler, for example, are largely not criticisms of this Article but of Article 31 ofthe Charter, which does not allow for sufficient stabilization policy. I would be prepared to argue that, but I think that this is not the place to do so, because that is not the purpose of this Article. I think there is perhaps one type of case and only one which is not conditionally covered here, that is, the case where a monopoly is set up after the Agreement has come into force and import duty has been negotiated already, but there may be some reason why it would not be appropriate for that particular monopoly to just pick up the import duty and apply it in the way in which this paragraph indicates. It would be very rare, but there might conceivably be such cases, and I think it may be necessary to make some additional paragraph to cover the case where the nature of the new monopoly is such that it is inappropriate to pick up the import duty already negotiated. We may need to make some provision whereby there should be some new negotiation so that an arrangement of a different type can be made in the place of the import duty, previously operating. My impression is that that is the sole case we need to provide for which is not covered here. As regards the special provisions which occur in article 31 for fiscal and other monopolies, that, as I conceive it, is a rule that due regard is to be paid to the nature of those monopolies when they are negotiating with them. It is not a question of what you do afterwards. As I have said before, all we are here to do is simply to pick up and attach the results of the negotiations that have taken place. 35 J. E/PC/T/TAC/PV/5 I am inclined to think, as regards the question of procedure, that this is probably another case for a small working group which would have to be employed to deal with it. My impreassion is that the area of necessary change is quite small. Thank you. M. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, I think we would all agree with the Delegate of the United Kingdom that this Article is intended to cover. the cases where a rate has already been negotiated, and then it might subsequently be brought within a monopoly. In other words, it is a matter of attaching cases of that nature. I think that what we have to consider, however, is whether it is necessary to make any special provisions such as this, having regard to the other provisions in the Agreement to safeguard a Member's interests, and also whether this particular provision imposes conditions on a Member more onerous than those provided for in the Charter. On listening to the very lucid explanation given by the Delegate for Norway, one comes to the conclusion that this particular paragraph is rather more onerous than the provisions of the Charter. For instance, in paragraph 2 of article 31 there is the provision for a monopoly to negotiate for maximum import duties, and also, *where such negotiations are not possible on the basis of duty, then they could make some other satisfactory arrangement, but there does not appear to be any provision in this paragraph to cover such a situation. I do not think that it was contemplated that we should put into the Agreement more onerous conditions than those provided for in the Charter. Paragraph 4 of Article 2 in the Agreement provides, as the Delegate for Czechoslovakia mentioned, that if any contracting party considers that a product is not receiving from another contracting party the treatment which the first contracting party believes to be contemplated by a concession, they can take up the matter with a view to coming to some arrangement. S 36 E/PC/T/TAC/PV/9 Apart from that, of course, there is always the opportunity for consultation on such matters. It seems to me that the suggestion which has been made by the Delegate of Norway, and supported by the Delegate of France, is quite a reasonable one in the circumstances; that is, that the whole of Article 31 be inserted in Part II of the Charter, I would be inclined to agree with that suggestion. CHAIRMAN: The Delegate of the United States. Mr. John W. EVANS (United States): Mr. Chairman, I am not convinced that this Particle is more onerous than Article 31 of the Charter. My Delegation would have no objection at all to taking up Article 31 of the Charter verbatim, except our desire to see a chronological document. It just does not seem to us any more appropriate to pick up the entire text or Article 31 then the entire text of, let us say, article 17. In spite of that, I do feel there are improvements that could be made in this Article; there are changes which could be made to make it very clear that it is not intended to be more onerous than the terms or Article 31. For that reason, I should like to agree with Mr. Shackle on his proposal. I do want to make one more specific comment. Paragraph 4 of Article II has been referred to by the Delegate or New Zealand as perhaps making unnecesary Article III. I do not think it would take care of the case for two reasons. In the first place, as I understand Paragraph 4, it was written in contemplation of changes in tariff nomenclature - problems having to do with the interpretation of a very specific agreement that has been reached and not to do with the nullification by an unrelated action of a S 37 E/PC/T/TAC/PV/9 tariff concession that has been negotiated. I do not think it is worded in such a way as to take care of the former. I think a more specific wording is required than the general language of Paragraph 4, CHAIRMAN: The Delegate of the United Kingdom. Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman, may I make o, small suggestion about the Working Group. It seems to me it is desirable to have rather limited terms of reference for it, in order to avoid straying into other fields. I would suggest that these terms of reference should be to devise a means of attaching the results of negotiations to State-trading monopolies corresponding to the provisions attaching to the results of tariff negotiations. That, it seems to me, is the whole job of the Working Group, and they should go no farther than that. CHAIRMAN: It is clear to the Chair that there is a difference of opinion in the Committee on this particular paragraph of particle II. Therefore I think the suggestion made by Mr. Shackle, and seconded by the United States Delegate - and also approved by other Delegations - that an ad hoc Working Group be set up to study this question, is the most sensible one if we are to make progress. Mr. Shackle has proposed that the terms of reference of this ad hoc Working Party should be confined to the following: to devise a means of incorporating the results of the negotiations pursuant to Article 31 of the Charter. The Delegate of Syria. S E/PC/T/TAC/PV/9 M. Hassan JABBARA (Syria) (Interpretation): Mr. Chairman, as far as we are concerned, we see no objection to adopting either Article 31 or the draft which appears s in Corrigendum 2, or the initial draft which was presented to us, but there is something which I do not see. When a State establishes a monopoly it is not for the sole pleasure of establishing such monopoly but to raise taxes, and those taxes are essentially internal taxes. Therefore, if a monopolized item appears on the Schedules, and if the duty pertaining to such item has been frozen, then no higher duty will be perceived on such rnonopolized items, Nevertheless, this will not prevent the Government from raising an internal is tax on such item once it is imported. This /in accordance with its needs and the needs of the moment. If the Article which we are adopting here does not prevent this possibility for an interested Government, we have no objection to adopting one or other of the drafts which are now before us. CHAIRMAN: The Delegate of the United States. Mr. EVANS (United States): Mr. Chairman, if I may answer that question, I think the draft of Article 31, and also of the article under discussion, fully takes cars of that point, because among the expenses which you are permitted to use in determining the differential between the import price and the retail price are taxes. May I make one other comment on Mr. Shackle's suggestion for limiting the terms of reference of the ad hoc sub-committee. I think such a limitation is desirable. I think it is essential that we should not stray off into the fields which were explored at great length in the sub-committee which discussed article I. 39 S E/PC/T/TAC/PV/9 But I do not think Mr. Shackle's proposed terms of reference quite cover all the necessary cases. From their inception, the State-trading Articles have included not only provisions for the negotiation of the margin of preference afforded by State-trading, monopolies but also provisions for protecting the tariff concessions which may have been negotiated against nullification through the creation of a subsequent State- trading monopoly and the erection by that State-trading monopoly of other tariff barricrs. Therefore I think Mr. Shackle's proposed terms of reference need to be expanded to include the provision of protection of negotiated tariffs which may have been negotiated, not with a country maintaining a State-trading monopoly at the time; that is, to cover the case where there was a negotiation of a tariff and the subsequent creation of a State-trading monopoly which erected barriers in addition to the tariff barriers on which the negotiations were based. CHAIRMAN: Would the following text for the terms of reference cover the point which has just been raised by Mr. Evans: that the terms of reference of the ad hoc sub-committee should be "to devise a means of incorporating the results of 40 S E/PC/T/TAC/PV/ 9 negotiations pursuant to Article 31 of the Charter and of protecting negotiated tariff concessions from the effects of the creation of a State-trading monopoly"? The Delegate of Czechoslovakia. H.E. Mr. Ze AUGENTHALER (Czechoslovakia); Mr. Chairman, I have no objection against these terms of reference, but I Would like to have added something to them; that is, that the protection of those concessions should be in no way greater than it is in cases of nullification of the effects of tariff concessions by measures like changing the method of determining the value, and other measures of this kind. I do not see why the State-trading monopolies should be treated in different way then nullification of tariff concessions by other means, such as internal taxation, and I do not know what other measures. 41 P E/PC/T/TAC/PV/9 Mr. R. J. SHACKLE (United Kingdom): Mr. Chairman, I should just like to say that I should be very glad to accept Dr. Augenthaler's addition to the terms of reference. I agree with him completely. I wonder whether it would not be covered if we made the last part of the terms of reference read like this: - We start off by saying: "To devise a means of incorporating the results of negotiations pursuant to Article 31 of the Charter .." and go on like this: - and of providing for cases where tariff concessions already negotiated are liable to be affected by the establishment of a state-trading monopoly." I think that would cover the point. CHAIRMAN: Does that meet the point that was mentioned by Dr. Augenthaler? Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I am afraid not, CHAIRMAN: I would like to direct the attention of Dr. Augenthaler to paragraph 2 of Article II, which does deal with determining dutiable value. Then we have Article III which deals with national treatment on internal taxation and regulation, and we have Article VI which deals with valuation for customs purposes. So it can be seen that these points are covered, if not in Article II, then in other Articles of the Agreement. Dr. Augenthaler. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I want only to make one point: that is whether we need at all this P 42 E/PC/T/TAC/PV/9 point 3 here. CHAIRMAN: I wonder if we could not leave it to the Working group to make these terms of reference to cover that point; and if they think it not necessary to cover it, that should be sufficient. Mr. R. J. SHACKLE (United Kingdom) Mr. Chairman, so far as the terms of reference are concerned, surely the words I have suggested are most studiedly neutral. I say "... providing for cases..." Would Dr. Augenthaler say there is no need to make any provision for a case where a tariff concession has led to a binding and then a state-trading monopoly is set up? Is there no need to make any provision for that case at all? I should think that there is. I have not prejudged what the effect would be. I have merely said "liable to be affected". I should have thought the wording I suggested was so colourless and so neutral that it was bound to be all right. CHAIRMAN: The proposal is to set up an Ad Hoc Working Group with the following terms of reference: - "To devise means of incorporating the result of negotiations pursuant to Article 31 of the Charter and of providing for cases where tariff concessions already negotiated are liable to be affected by the creation of a state-trading monopoly." Is that agreed? Approved. I would like to name the following delegations to constitute the Ad Hoc Working Group: Canada, Czechoslovakia, France, Norway, United Kingdom and the United States. This Working Group will meet tomorrow at 10.30 and will P 43 E/PC/T/TAC/PV/9 elect its own Chairman, and will make its report to the Committee as soon as possible. Is that agreed? Approved. I would now like to call the attention of the Committee to a proposal of the Norwegian Delegation on page 2 of document E/PC/T/W/312. The Norwegian Delegation proposes that the following sentence should be added to the end of that paragraph, paragraph 3: - "Due regard shall be had to the fact that some monopolies are established and operated mainly r..r social, cultural, humanitarian or revenue purposes." Would it be sufficient to leave this to the Working Group to deal with this amendment, or would any member of the Committee like to comment upon this proposal? The Delegate of Norway. Mr. J. MELANDER (Norway): Mr. Chairman, I would be quite content to leave that to the Working Group. CHAIRMAN: Is that agreed? We can now leave paragraph 3 and pass on to paragraph 4. The only comment we have on paragraph 4 is given on page 2 of document E/PC/T/W/312:- "The Norwegian Delegation questions whether this paragraph should not contain a provision to the effect that the contracting parties should, as soon as possible, bring their legislation into line with the obligations undertaken." The Delegate of Norway. P 44 E/PC/T/TAC/PV/9 Mr. J. MELANDER (Norway): Mr. Chairman, we do not feel very strongly on this point at all The reason vie have raised it is that we feel that if a Treaty has been concluded and accepted by the parties, surely the principle ought to be that they shall have to bring their legislation into conformity with that Treaty. The solution here is rather the opposite - namely, to amend the Treaty. adjust the concessions. We do not feel very strongly about it, as I say, and the reason we have raised the point is that we would like to know what reasons there are for suggesting this particular proposal. CHAIRMAN: Mr. Brown. Mr. Winthrop BROWN (U.S.A.): Mr. Chairman, this provision is intended to take care of the occasional case which crops up that, after the Trade Agreement has been entered into, there is a judicial decision that the classification which the parties negotiating the Agreement applied to a particular article did not in fact apply to it, and that they were wrong in the assumption on which they entered into the Agreement. It ws as felt only proper that in that case, if one of the contracting parties found that, although the matter had been negotiated in good faith, he did not in fact get what he thought he was getting, he should be entitled to make the corresponding adjustment in what he gave. The situation usually arises in the case of one item, at infrequent intervals, and it is then very difficult for the country where such a decision takes place to correct the matter legislatively, because it would often have the effect that the whole question of the operation of the tariff rates affecting P 45 E/PC/T/TAC/PV/9 the Agreement would be thrown into the legislature and a great deal more difficulty and inconvenience would ensue than by correcting it in this manner. I think that was the reason for making this provision. CHAIRMAN: Does that explanation meet the point raised by the Norwegian Delegate? Mr. J. MELANDER (Norway): Yes, Mr. Chairman. CHAIRMAN: Are there any other comments on paragraph 4 Then I take it that paragraph 4 is approved. It is now six o'clock and therefore too late for us to take up Part II, so we will now adjourn, and meet tomorrow at 2.30 p.m. in the same room. The meeting is adjourned, (The Meeting rose, 6 p.m.)
GATT Library
gb944dk3796
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report of Corrigendum to Eighth Meeting of Commission A (Document E/PC/T/A/PV/8)
United Nations Economic and Social Council, June 12, 1947
United Nations. Economic and Social Council
12/06/1947
official documents
E/PC/T/A/PV/8.Corr.6* and E/PC/T/A/PV.8-11
https://exhibits.stanford.edu/gatt/catalog/gb944dk3796
gb944dk3796_90240082.xml
GATT_155
126
922
UNITED NATIONS NATIONS UNIES RESTRICTEDNTIS ECONOMIC CONSEIL RESTRICT3. AND ECONOMIQ8.UE E/PC/T/A/PV/ Corr.6* SOCIAL COUNCIL ET SO9CIAL 12 June 147 ENGLISH ONLY _ SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITEDADE KMTIONMS T'ONFERENCE ON TRREILO5~N VERBATI1REPORT OF CORRIGENDUM TMO EIGHTH MEETING OF COMISSION A !"Document E/PC/T/A/PV/8) The following corrections should be made in the statements made by the Chairman (H.E.Erik Colban): Paz 25, fourth paragraph, first line: The Word "four" should be deleted. Paz 40, ninth line: The word "need" should be deleted and the words "meet with" should be inserted in its place. In the same line, the word "from" should be deleted and the word "in" should be used instead. * Corrigenda 4 and 5 'were issued in French only. lED aN1TI~ON'S TIONS UNIES
GATT Library
wx725pm4556
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Second Meeting held on Friday, 11 April 1947 at 10.30 a.m. in the Palais Des Nations, Geneva
United Nations Economic and Social Council, April 11, 1947
United Nations. Economic and Social Council
11/04/1947
official documents
E/PC/T/PV2/2 and E/PC/T/PV2/1-3/CORR.1
https://exhibits.stanford.edu/gatt/catalog/wx725pm4556
wx725pm4556_90260189.xml
GATT_155
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UNITED NATIONS ECONOMIC .;AND SOCIAL COUNCIL SECOND SE OF TEE UNITED NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL E/PC/T/PV2 /2 SSIONHOF TEE PREPARATORY COMMITTEE PATIONS CONFERENCE ON TRADE AND YMPELONEMNT VBATIM REPORT SECOMD BEETING HELD ON FRIDAY, 11th APRIL, 1947 At 10.30 A.I. N THE PALAIS DES NANS,IOt GENEVA. ; E/PC/T/PV.2/2 CHAIRMAN: (Interpretation): The meeting is called to order. We shall now continue with the list of speakers and the general debate. The first speaker on my list is the first delegate of Canada. HON. L.D. WILGRESS: (Canada): Mr. Chairman, we are gathered together in Geneva for the second session of the Preparatory Committee of the United Nations conference on Trade and Employment A great responsibility has been placed upon the seventeen countries represented here and, like all the other delegations, the Canadians intend to play their part in making the second session a success. It is fitting that we should be holding this conference in Switzerland, a country that has contributed so much to the cause of peace. Before the war Switzerland always worked among the first half dozen countries with the highest volume of trade per capita. Liberty and a high standard of living for the individual are combined. Here diverse racial groups have contributed their best qualities in a successful co-operative effort which we all might emulate, and it seems all together fitting that we should be meeting in this beautiful country to put the finishing touches to a Charter on International Trade. The Canadian delegation, Mr. Chairman, is gratified that at this second session we shall continue to have the benefit of your long experience and your unfailing tact which contributes so much to the success achieved at the first session. We combine great encouragement in the large measure of success that has been achieved so far. I have been reading over the opening and closing statements made on the occasion of the first session held in London towards the close of the last year. I have been impressed by the spirit of optimism revealed in the opening statements and by the general note of satisfaction on which the session terminated. ~~~ i. -I- E/PC/T/PV.2/2 This satisfaction was fully justified. The delegations represented on the Preparatory Committee approached the problems contronting them in a spirit of compromise and good will. All points of view expressed were carefully considered and discussed. The task had been facilitated greatly by the commendable. initiative of the United States government in drawing up the draft of a Charter as a basis for discussion, but the draft Charter that emerged from the deliberations of the first session represented a considerable advance along the road to the realization of an International Trade organization. It embodied a substantial measure of agreement among all the Members of the Preparatory Committee. It incorporated many of the ideas evolved out of the discussions at the first session and provided for the solution of problems that at one time appeared difficult of solution. Since the meeting in London the work has been carried further along the road to success by the admirable work of the Drafting Committee which met in New York during the winter. They have put refinements to what was done in London and have even gone some distance to fill in some of the gaps that could not be attended to in London. They have brought us up to the final stage in the work of the Preparatory Committee upon which we are now to embark. This stage will not be an easy one. There are further obstacles ahead just as there have been obstacles to be surmounted on the road we have traversed so far. The Canadian delegation is confident that these obstacles too will be surmounted successfully if we continue to apply to our tasks the same determination and the the same spirit of compromise and good will that have characterized the proceedings of this Preparatory Committee up to now. - 3- l ] ]~~~~~~~ ! s~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 II *6 E/PC/T/PV. 2/2 At this session we shall have to embark upon the laborious task of negotiating mutually advantageous tariff concessions. This will be the first occasion upon which a multilateral trade agreement has been attempted on this scale. The very magnititude and unique character of our task demand vision, patience, and continuous co-operation but also should provide the incentive to an achievement that will be of lasting value. It is in this spirit that the Canadian delegation proposes to enter into this phase of the proceedings of the second session a phase that may not be spectacular in its character but will involve much detailed and painstaking work. In considering the granting of tariff concessions we must not overlook the restrictive character of some forms of customs regulations. A reduction in a rate of duty would be of little practical significance if too great latitude was still left with the customs administration of the importing country to impose restrictive regulations on the importation of the goods in question. Let us, therefore, direct our attention to the liberalization of customs procedure at the same time as we are discussing concessions in respect of rates of duty. Besides bringing about a multilateral trade agrement this second session of the Preparatory Committee has to complete the drafting of the Charter for the International Trade Organization and to prepare the ground for the holding of an international conference. This conference of all the United Nations, we hope will, confirm all that the Preparatory Committee has done and is about to do at this Second session. That will be the last stage on the road to bringing into being the international Trade Organization. It is difficult to exaggerate the importance to the world -4- t I ~~~~~~~~~~~~~~~i E/PC/T/PV*2/2 of such an organization. It will play its part in the field of trade comparable to that played by other specialized agencies of the United Nations in other branches of international economic co-operation. It is indeed the keystone of the arch of international economic co-operation without which the two bases - the International Monetary Fund and the International Bank for Reconstruction and Development - would be left incomplete and unable to fulfil effectively the functions for which they were established. We have only to think how valuable it would have been if we had had an organization of this kind established when the economic blizzard struck us nearly two decades ago. Since then the war has brought further complications into the whole basis of international economic relations. If trade is to function with smoothness in the future it is essential that there should be a body through which international co-operation can be effective If this is not the case the attainment of higher standards of living for the individual is impossible. Never before have the problems of international economic co-operation been approached in such a comprehensive manner. The attempt to find solutions on a piece-meal basis has been one of the reasons for failure in the past. The achievement of an expanding volume of trade and rising standards of life throughout the world call for effective international co-operation in respect of each of the important phases of economic policy concerning employment, economic development, commodity arrangements, restrictive business practices, state trading, customs administrations, as well as the level of the more direct barriers to trade. One of our principal tasks will be to maintain the consistent purpose throughout this wide and complex field of international collaboration. While we - - ~~~~~~~~~- 5.-_ ~~~~~~~~~~~~~~~~~~~~ I |~~~~~~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV/2/2 should, as far as possible, seek to accommodate the differing situations and the legitimate aspirations and needs of the various nations of the world, we must not, on the other hand, resort to expedients and indulge in incompatibilities which would destroy our general objective. No country in the world has a more vital interest in the success of our deliberations than Canada. We have been blessed by nature with an abundance of natural resources which the industry and skill of our people have developed to create surpluses of which the whole world stands in need. From our prairies, our mines, and our forests, from our farm lands, our orchards, our fisheries and our factories we are producing commodities far beyond our own requirements which we desire to exchange for the products of other countries. It is only through the co-operation of other countries that we can assure our people of a better way of life by exchanging our surplus products for those surplus to other lands. In this way also we can make our contribution to a better way of life for the people of these lands. Canada has stood for the fullest possible.co-operation between nations to assure the maintenance of international peace and security. Co-operation in the political sphere would be of little avail if there is not at the same time economic. co-operation between nations. We, therefore, look upon what we are doing here as the culmination of a whole series of efforts that have been made since the signing of the Atlantic Charter to give full effect to the principles enunciated in that Charter. All forms of co-operation between nations conflict to some degree with sovereignty. This is so whenever any two countries conclude any sort of agreement with one another. -6- Cl E/PC/T/PV2/2 The world is becoming smaller as new forms of transport are developed, and each decade increases the complications in inter- national relations. This situation necessitates co-operation among nations and there is no field in which that co-operation is more essential than in that of trade. There must therefore be a spirit of give and take and a mutual readiness to accept sacrifices to the degree necessary to achieve that measure of co-operation among nations that is required for the good of all nations. It is with these thoughts in mind that the Canadian Delegation is anxious to make its full contribution towards the success of this Conference. This is the unequivocal mandate which we have received from our Government. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. D.1 E/PC/T/PV. 2/2 CHAIRMAN (Interpretation) I call upon the first Delegate for China. H.E. Dr. WUNSZ KING (China): Ladies and Gentlemen, after a recess of six months we meet here to-day in Geneva for the purpose of completing the Draft Charter of which certain provisions have been agreed upon. In addition to this important and difficult task, we are also to start multilateral negotiations on tariff reductions and a discussion of related matters so as to implement one of the principles embodied in the Charter. Never before has such an attempt been made on such a scale, although suggestions of multilateral negotiations for tariff matters were made at the international conferences after the first world war. Inregard to this aspect of our work, some people would like to lay emphasis on the importance of bringing about a general state of economic stability prior to making any attempt at the lowering of tariff walls, while others tend to take a different view. Mindful of the disasterous consequences in the economic field during the decade following the termination of World War No. 1, they feel that no time should be lost in endeavouring to make the necessary tariff arrangements which would in turn, it is hoped, help to put right economic chaos and dislocations caused by the war. The Chinese delegation attaches equal importance to tariff negotiations and the drafting of the Charter as a whole, but if our delegation feels able to associate itself with the new school of thought by which tariff disarmament, if I may be permitted to coin this new term, should. precede the stabilisation of general economic conditions, it is only because we believe that the new experiment will be made on no less than three assumptions. -8- ~~~~~~~~~~~~~~~~~~~~~ - 8I ~~~~~~~~~ * i D.2 E/PC/T/PV. 2/2. In the first place it is to be assumed that the sellers' market will shortly shrink and the conditions of acute shortages will soon improve; for otherwise the channel of trade will continue to be blocked as it has been blocked not so much by tariff walls as by the lack of means of payment. But is is likely that these conditions will persist during the life of the general agreement on tariffs. It follows, therefore, that countries with the sellers' market at their command and with terms of trade in their favour. under these conditions and with manufacturing ,industries geared up to full production should have a.greater share or responsibility in bringing about the successful conclusion of these negotiations than have the other countries. Secondly, it is also to be assumed that the concessions to be made and gained will balance each other. In this connection, however, we must realise that in balancing a scale, the weights used are not of uniform size. It is our view that the yard stick should be such as will measure not only the mutual benefits which the negotiating parties will have from the bargain, but also the extent of sacrifices country makes in relation to its stage of economic development. Other.factors which we have to take into consideration in weighing the scale should include among other things the low level of existing tariffs, the degree of recovery from war devastation and the severity of economic dislocation. Lastly, it is also to be assumed that the tariff policy which we are pursuing is an integral part of the plan for the re-establishment of an expanding world economy. Whether the tariff policy will lead to an expansion of world trade depends to ~~~I I D. 3 E/PC/T/PV/2/2 a large extent upon the progress we can make in other directions. It is obvious that, with the festering wound of war devastation on world economy still unhealed, our hope for an expanding world trade will be, I am afraid, short-lived. It is equally obvious that the expansion of world trade will be greatly accelerated by the pace with which industrial development is realised in a number of countries. Industrialization is a process which will take its own course, whether aided or unaided , but with international - investments and other forms of international assistance, this process can be quickened. Of course, I have to content myself with the reasons which are closely connected with the questions of economic stability. It goes without saying that this stability is intertwined with that of the general political situation. It is the view of the Chinese Delegation that, since we are to project into the future an agreement to reduce trade barriers and since we cannot foresee at this moment all the factors which will contribute to the successful operation of such an undertaking, the tariff arrangements which we are making should in no case run for more than three years, as had been suggested, so as to afford an opportunity to the signatory parties to re-examine their position in the changing circumstances during the interval. M. le President, if I refrain from dealing with those aspects of the Charter other than tariff matters, it is because these matters will be the immediate concern of this second session of our Committee, and I wish to assure you, Ladies and Gentlemen, it is certainly not because we, the Chinese delegation lack interest or enthusiasm of the Charter or the future ITO. On the contrary the Chinese delegation is second to none in wishing to see our efforts crowned with success, so that the way will be - 10 - D. 4 E/PC/T/PV.2/2 cleared for the calling of the proposed international conference on Trade and Employment, and the foundations laid for the creation of the new international organization. Let us hope therefore that animated by the same spirit of understanding, co-operation and good will in which the proceedings of the first session of the Preparatory Committee at London, and also of the Interim Drafting Committee at New York were conducted, this second session will not fail to achieve the purposes for which it has been convened. Ladies and Gentleman, I am sure I am only interpreting the feeling of this gathering when I say that under the wise and able leadership of our Chairman, M. MAX SUETENS, who is the embodiment of wisdom, tact, and last but not least, has a sence of humour, and in collaboration with all the members of this Committee this Conference cannot and will not fail. - 11 - E/PC/T/PV2/2 CHAIRMAN ( Interpretation ): I call on the Delegate of France. E/PC/T/PV.2/2 CHAIRMAN: (Interpretation): The meeting will be adjourned immediately after the interpretation of the French delegate's speech has been given. The afternoon meeting will start at 3 o'clock to day with the speech which is going to be given by Sir Stafford Cripps. M. ANDRE PHILIP: (France) (Interpretation): Mr. Chairman, ladies and gentlemen. The task upon which this conference is now engaged was undertaken on the initiative of our friends from the United States. Even before the war was over President Roosevelt thought before anybody else of the need of preparing conditions which would allow of world economic unity and which would make possible the basis essential for international peace. Even in the first Lend Lease Agreements which his administration concluded, economic clauses were foreseen which were later taken up in the draft which our American friends submitted, and which was studied by our conferences both in London and later re-drafted in New York. Our American friends understood that the political solidarity which they pursued throughout the work between various nations, must rest on the basis of an economic unity established in the economic field. They understood that even the very wide home market of the United States was not sufficient for them. They understood also that for their own very prosperity the United States must develop and increase and improve economic bonds with other countries and their commercial relations with outside countries. From the very start France gave its unqualified approval, to such a policy and we took steps which were reassumed recently in May 1946 in Washington between Secretary Byrnes and President Leon Blue. In London we also expressed unqualified approval for that new policy which meant a return to - 13 - :~~~~~~~~~~~~~~~~~~~~~~~ E/PC/T/PV. 2/2 bi-lateral trade in the world and to an ever increasing volume of international exchanges. We realise of course that the task which we have undertaken is a very long one. The world is now in a state of economic destruction. Even before the war after the crisis through which we had gone, we went through a period of protectionism and autarchy which not only separated national economies one from the other but also set up one country economically against the others. Experience has shown that such a policy could only lead to a general lowering of a standard of living, to an increase in the poverty of everybody and to economic difficulties of all sorts which were in their turn bound to lead to political friction and thereby create a serious danger for the world's peace. We are now in a position when we must rebuild the world with what fragments are left. We realize that it is only step by step, stage by stage that we can slowly move towards the economic unity which we want to reach. From the very start France agreed to that policy because that policy is a very condition of its own existence. We import a very large quantity of the raw materials which we need for our industry. One third of the coal we burn, all the oil, 90% of non-ferrous metals, a very large proportion of.cotton, textiles, wood paste etc., and much of that comes from overseas countries. Therefore, we must export similar quantities of values so as to reach a satisfactory balance of payment. Now, the very geographical position of France makes it the natural intermediate between countries from across the Atlantic and countries in Europe. Here after what we have done in London, we are going to face two different tasks. First of - 14 - . .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~W E/PC/T/PV.2/2 all we want to bring down as much as possible tariff barriers and second we want to prepare a draft possibly a final of the Charter of our organization. Those two tasks are really closely inter- dependent. We cannot meet the requirements of the Charter if all nations do not bring about real substantial and permanent reduction of their own tariffs as compared with those obtained before the war. Similarly if we do not bring down such tariff barriers we shall not be able to reach a satisfacotry balance of payment and therefore the Charter cannot actually be put into effect. Also if we do not bring the tariffs down to a sufficient extent, if we cannot agree on the very basic concept of international trade as we view it, if we cannot subscribe to mutual obligations such as those that are at present envisaged, we shall never be able to reach effective co-operation. We must realize further, that the abolition of barriers and obstacles, even to a very large extent, enough will not be/because if we were content with that we should merely come back to the old system of free trade which leads us again into the periods of prosperity and the depressions and slumps with which we were so familiar before the war. Therefore it is necessary that in addition to the minimizing of those obstacles and barriers we should simultaneously create international bodies and build the practical basis for economic co-operation. H . - 15 - ~~~~~~~~~~~~1 H1 E/PC/T/PV2/2 This of course we all realise must be done by successive stages. Our world has now been thrown completely out of balance. It is at present split into all sorts of fragments which differ widely from each other, but we must attempt loyal and effective co-opera- tion. This was clearly understood by those of us who sat in London and New York and we all realise that from the very start we must agree on some relative equivalence of the conditions of production so as to lead to an equivalence of fair competition. We must for that take into account not only the conditions of countries whose economies were practically destroyed but must be reconstructed but also those new countries to which our Chinese colleague alluded and which have to build up their own economic system anew. France, and that also applies to many other countries in Europe, is in a condition which we know to be non-permanent, to be passing, but which must be taken into account. Our economy was wrecked, our industry w.s destroyed, not only through the fighting which took place on our territory and through the bombing to which we were subjected, but also because our industrial plant is very largely obsolete; not only was the material not properly kept in good condition but it was also not replaced and kept up to date. We also suffered from having been isolated for a number of years from the outside world. For those countries which are in the same condition in which we are ourselves, it is absolutely necessary that some plan should be adopted and put into practice for reconstruction and re-equipment of our industry. Since the French territory was liberated, our country has made an effort, which is probably without precedent in our history, for rebuilding our industry and for bringing it up to date. This of course entails very heavy sacri- fices for the bulk of our population, since our industrial needs had to be taken care of, with priority over consumer goods and the raising of the actual standard of living. For those reasons, -16- E/PC/T/PV2/2 it is necessary for us that for a period to come we shall still have a definite program of imports and a definite programme of exports to balance them. We must choose what we are going to import so as to bring our equipment back into shape as soon as possible and we must export whatever products may be acceptable to those countries from which we import the material we need and this must go on to some extent until we have reached more or less lasting equilibrium in order to balance payments. This same condition applies also to other countries which have to be rebuilt and reconstructed. It applies also to those new countries which have to build up their economy anew. Of course we all realise that there no longer is at present the hard and fast line with which we were familiar between importers of industrial products and exporters of the same products. Now all countries are either actually or potentially industrial countries and the exchanges of industrial products must be considered on an entirely new basis, but there is a need of a sort of transitory period for such cases, during which we must determine, according to our own needs the conditions of pro- duction and the conditions of our own trade. During that period a few unavoidable preferences have to be respected. For instance, in the case of countries which, although geographically distant, are very closely bound economically because they are also bound politically, imperial preferential treatment must be respected for some time to come. As a matter of fact, we must realise that a general world improvement can only be made possible if we respect the existing economic bonds between countries with which we are politically tied together, and we should not attempt to break up those bonds, to break up existing units for the sake of getting more rapidly into a world wide organisation. In the French Union, where we have such bonds, with due respect to the needs and privi- leges of local units inside that Union, we must realise that those -17- I I H2 E/PC/T/PV2/2 bonds must be kept for some time to come, although arranged in such a way of course as not to be prejudicial to trade with outside. To sum up this particular point, we must confirm that principle of imperial preference but we must reduce the volume of its application. I want to say a few words now on the problem of bilateral agreements. Of course we all realise that multilateral agreements are more preferable and that our final ultimate aim must be world wide agreements, in which all countries are included. But the experience acquired during the last two years has shown us that with the world in its present condition it is not bad to start by making up fragmentary agreements and it is in that spirit that France has concluded arrangements with Belgium, with Switzerland, with the Netherlands, with Sweden, in order to rebuild trade currents which existed before the war and which are still absolutely necessary. The results of those agreements are that the volume of goods exchanged between the signatory countries has gone up substantially. We should therefore be very careful not to hamper the application of the development of such agreements to any extent and France hopes to conclude similar agreements soon with other countries. We must realise that any widening of an existing customs union and any widening of existing markets can only be helpful for international exchanges as a whole, and the French Delegation hopes that in the final text of the charter provision will be made to respect customs unions in process of formation or development and that they will be allowed to grow until the fruit is actually ripe and becomes palatable for everybody . This same remark ,applies also to international agreements. Before the war we had a number of painful experiences with those agreements and we felt that in many cases they followed a Malthusian policy, in a decrease in -18- !~~~~~~~~~ i H3 E/PC/T/PV2/2 production and increase in obstacles put in the way of foreign trade. The United States will certainly remember the bitter experience they had in that respect and they are certainly keen to prevent a repetition of such experiences. The French Delegation feel that such agreements, however, can play a useful part and that to a certain extent they may compensate the too narrow markets from which certain small countries suffer. We should not, as a matter of principle, oppose any intermediary stage between the national economic unit and the world-wide unit which we are aiming at, but we must take certain precautions. We may ask, for instance, that full publicity should be given to such agreements. We may oppose any abuses to which they might leads. We may ask that a measure of international supervision should be set up and also make sure that such agreements, with a view to reaching a collective international policy, have not only the advantage of private entries to whatever they are. I Want to add a few words on the necessary liaison which will have to be established between the new organisation we are setting up and the other world economic organizations. That was provided for already in the Treaty of Versailles, which in Part k3, setting up the International Labour Organisation, stated very clearly that labour was not to be treated as merchandise and that conditions have to be provided for which would allow for satisfactory labour conditions and fair competition. Now we have not only the I.L.O but we have the Food and Agriculture Organisation and a numberof others which either have been set up or are now being organised. We certainly believe that the one which we are setting up here should be given its due importance and should be given whatever economy may be necessary for it so that it can play a very positive part in the establishment and improvement of international economic relations. That co-operation must be regular, continuous, and effective between all nations, so as to load to the desirable and -19- I :'~~~~~~~~~~~~~ H4 E/PC/T/PV2/2 desired increase in permanent international trade. On the other hand, we must realise also that many countries have now found it necessary to prepare national economic planning but perhaps that sort of planning should not be exclusively on a national basis. France, for instance, which has had to resort to planning, has opened relations on that very subject with Great Britain and explained fully the French plan, with a view to trying to harmonise it with the corresponding plans in Great Britain. In Europe, in its present dilapidated condition, such plans may be needed in a great many countries, but we must see to it that those plans are not drawn up absolutely independently from each other but that they are orientated in the sane spirit and that in each one due account is taken of the conditions of the other. Similarly, our organi- sation must certainly lead all nations towards more intensive inter- national exchange, because we want to prevent those periods of depressions and slumps which periodically followed, before the war, periods of prosperity, and unless we prepare for some common action now we cannot take any decisions which would be of a permanent character, as all the bodies which we could possibly set up would simply fade out if we came into a slump such as the ones through which the world went in 1929. We must plan right now some common effective positive co-operation through international bodies and we must/immediate provision for the calling of an international con- ference should conditions arise similar to those which led to the 1929 slump, so that we can take common action. For that reason it is necessary that the premanent body which we are setting up should be open to all countries and should also gain the confidence of all nations. Here we are working on very divergent bases in our respective countries. The economic structure of our countries is very different and would seem to be in direct opposition to each other, but we shall succeed in our efforts here exactly in the -20- E/PC/T/PV2/2 measure in which we can prove that countries working on that collective economy - those with a liberal economy, those with a planned economy - can work together and co-operate in their trade policy because they have one aim which is common, which is world-economic unity, the prerequisite for reaching an increase in the standard of living for all and which can provide the only possible basis for international peace. VICE-CHAIRMAN: The Session is adjourned. The meeting rose at 12.30 p.m. I - 21 - H6
GATT Library
vg940bg7776
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Second Meeting of Commission A held on Tuesday, 27 May 1947, at 3.0 p.m., in the Palais des Nations, Geneva
United Nations Economic and Social Council, May 27, 1947
United Nations. Economic and Social Council
27/05/1947
official documents
E/PC/T/A/PV/2 and E/PC/T/A/PV.1-3
https://exhibits.stanford.edu/gatt/catalog/vg940bg7776
vg940bg7776_90240058.xml
GATT_155
10,594
64,490
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/A/PV/2 27 May 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT SECOND MEETING OF COMIMSSION A HELD ON TUESDAY, 27 MAY 1947, AT 3.0 P.M., IN THE PALAIS DES NATIONS GENEVA M. MAX SUETENS (Chairman) (Belgium) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). - 2 - E/PC/T/A/PV/2 CHAIRMAN (Interpretation): Gentlemen, the Meeting is called to order. As I told you this morning, we will start our afternoon meeting with discussion of a paper, E/PC/T/78, which is the Second Report of the Drafting Committee on Charter Nagotiations. Would the Chairman of this Committee like to add some comments on the Report? Mr. E.T.HAWKINS (Chairman, Charter Steering Committee): Mr. Chairman, I do not think much is needed in the way of comment. All the Committce has done is to schedule the meetings for Chapter VIII and Chapters I and II. In doing this, it has set the date for the discussion rather late, in the hope that Committee B, to which the discussion will be assigned, will have completed its work on Chapter VII by the time the new matter is taken up. We thought probably that would be more practicable. CHAIRMAN (Interpretation): Does anybody wish to speak on this Report? M. Baradue. M. PIERRE BARADUC (France) (Interpretation): I am sorry, Mr. Chairman, that I myself was not at the Committee meeting, but from discussions I had this morning I realise that a certain number of Delegations would not be able to conduct, as speedily as suggested here, simultaneous discussions on tariff negotiations and on the Charter. I believe it is necessary to take into account the small Delegations, for which this time-table would present certain difficulties. I would suggests for example, that in the mornings we should discuss the Charter and that we should leave every afternoon free for the tariff negotiations. This is simply a suggestion on my part. S E/PC/T/A/PV/2 As far as we are concerned, we should probably be able to do the two things at the same time, but I have heard from other Delegations that they could not keep up such a pace. I Would also like to ask the representatives of the United States and of the United Kingdom if they have not heard similar criticisms on this scheme. CHAIRMAN: The Delegate of Cuba. Dr. GUSTAVO GUTIERREZ (Cuba): When the discussion of this time-table was taken up with the Steering Committee, we co-operated with other Members of that Committee in framing it At the same time we thought that too many things were included in this short amount of time. We did not raise any formal objection because we thought we oould push ahead with the work in the time allotted and at the same time undertake the tariff negotiations. We have also found it impossible to attend at the same time several meetings of the different negotiating teems, the different sub-Committees and special committees; it is really more than we can do. We know that several other Delegations are in the same difficulty, so we second the proposal made by the French Delegate. We could go ahead with the schedule as it is, but try to have the morning dedicated to the Charter discussions and the afternoon for the tariff negotiations. S - 3 - E/PC/T/A/PV/2 4 _ J1 ./( V/U Mr. JT. CP'IN (China): The Chinese delegation supports the proposals put cforward by the Frenh and Cuban delegations. As a matter of fact we think that it is utterly impossible for our delega tion to do this double work as it is scheduled. CHAIRMAN (Interpretation): I believe that I should not allow this disc.ussion to go astray We are not discussing our time-table proper, the whole of our time-table, but Mr. Hawkins has proposed dates for the Study of Chapters VIIIof, II, and I. I, course, realise the difficulty mentioned by Mr. Baraduc and other delegates but I tbvhink t has always n arranged that we should begin by following the order of our time-tablef and see, after a ew days, whether it is possible for us to keep to the time-table or not. But today is the first day and I think it is a bit too early to decide. I think we should lolok at the time-tabe circulated, and if you look at it you will see that Thursday, Friday and Saturday have been left without any maatter to discuss, nd I suggest that these days could But in any case, be usefully ocupied in discussing tarif f negotiations. /I suggest that we do. not immediately discuss tehe question of th time-table but merely decide now whether we agree to the date fixed for discussion of Chapters VIII, II and I, and if after a while, we consider that we cannot follow the time-table or that some delegations are unable to adhere to it, then we can always revise it. :-CGn'tr.':tc ) (latei pedion: Mr.Cehairman, th( Cuba delegation have no objection of course to disposing first of the sauggestions mde as to the setting out of the work, but they reserve the right teo state the ase immediately afterwards about the time- table because, up to this time, we have already started and we have found that woit does not rk. - E/PC/T/A/PV/ 2 Mr. BARADUC (France) (Interpretation): I apologise: when I opened this debate I did not intend in any way to slow down our discussions here, but when this morning I was told that some of the tariff negotiations had to be suspended or adjourned in view of the discussions taking place on the Charter I wondered whether it was a good idea to adjourn temporarily the discussions on tariffs. But, of course, I agree with you that the situation will not arise this week, in view of the fact mentioned by you that we have three days free. But in future I wonder whether it would not be a good idea for the two Working Parties, those working on the Charter and those working on Tariff Negotiations, to come together and have some sort of agreement and hear the complaints of some of the smaller delega- tions. CHAIRMAN (Interpretation): I think the suggestion just made by the delegate for France is an excellent one and that the two Steering Committees might meet and hear the complaints of the delegations which find themselves overworked by the time-table. This being said, are all delegations in favour of the Report? The Report is adopted. E/PC/T/A/PV. 2 CHAIRMAN (Interpretation) (Contd.): We resume the discussion on Article 9 of the Charter, it being understood that vwe reserve until tomorrow any discussions on the United States amendment regarding capital Investments. I will remind the Committee that in addition to that amendment, the United States delegation submitted four more amendments, which are all more or less substantial amendments. I would ask the delegate for the United states to explain to us the consequences of his amendment. MR. C. WILCOX (United States): Mr. Chairman, the amendments that are suggested for the first sentence in Article 9 on Economic Development - the first proposal is the addition of the term "countries or dependent territories". The purpose, there is to give recognition as to the desirability of promoting the development of dependent countries as well as the development of self-government. The second amendment proposes the deletion of the phrase "contribute ultimately to economic stability." Delegates will remember that this point was discussed by the Committee in London in connection with the report on this Chapter. The phrase was deleted from the report, but by inadvertence, I believe, it was allowed to remain in the text of the Charter. What the phrase says is that highly industrialised countries have greater economic stability than undeveloped countries. If the Committee wishes it to go on record in support of this statement as a matter of principle, I think it may raise some question concerning some of the statements that are made in connection with Chapter III, where the suggestion is clear that highly developed countries are susceptible to considerable instability. A third amendment proposes the substitution of the phrase "standards of living" for "levels of real income'. This is in line, J. - 6 - E/PC/T/A/PV/2 I believe, with the suggestion made by Mr. Nash in an earlier statement to this Committee. It was our view that "Standards of living" is more generally understood and less susceptible of misinterpretation. We are not insistent on this point. The fourth amendment suggests dropping the phrase "thus strengthening the ties of international understanding and accord". This suggestion does not involve any lack of enthusiasm for international understanding and accord, but on reflection it seemed to as that this was the purpose of the whole Charter that this phrase as it appears probably belongs in Chapter I rather than in this Chapter, and appearing in this context it involves, perhaps, unnecessary ornamentation. On this point,. also, we are not insistent. MR. J. HELMORE (United Kingdom): Mr. Chairman; if I might refer to the first of the .amendments put down by the United States delegation, which is to add the words "or dependent territories", I would like to say that in the view of my delegation this discloses a fault in the drafting of this Chapter as a whole, or rather a fault which ocouredd because this Chapter was inserted at a later stage than the developments of the other parts of the Charter, particularly in Chapte. V. In Chapter V, Article 38 there is a paragraph which is called. Territorial Application of Chapter V, and there it is said that "if there are two or more customs territories under the jurisdiction of any Member, each such customs territory shall be considered as.though it were a separate Member for the purpose of interpreting the provisions of Chapter V". J. G. -- 8 - E/PC/T/A/PV/2 Now if you look at Article 13 of the Chapter we are now discussing, it provides that Members may take protective measures in certain circumstances. Well clearly "Member" there is intended to mean separate customs territories. A separate customs territory is the only separate entity which can take a protective measure in this contect, but it is nowhere provided in Chapter IV. That "Member" does, even in that Article, even refer to a separate customs territory; and that seems to me to point to the need for looking at the whole of this Chapter and seeing whether the words "Member", "Country", "Territory", "Dependent Territory" and. so on are rightly used.; and. I am not sure that the Preparatory Committee will really be able to do that properly until it has considered Article 88(4), which refers to a particular class of territory which is, as it were, neither independent nor dependent. It is self-governing in respect of matters covered by the Charter, that is to say, it is self-governing in respect of its plans and aspirations and projects for industrial development, and therefore it seemed to us that there is some further complication to be worked out there, and indeed, it might require to be looked at in relation to the definition of who can become Members of the Organisation in Chapter 2. I use the opportunity of the introduction of the words "dependent territories" here to point out those matters which really, it seems to us, require clearing up. Whether it is profitable to try to clear them up at this stage in the consideration of Chapter 4 is a matter on which I would. welcome the views of the Committee. As for the insertion of "dependent - 9 - E/PC/T/A/PV/2 territories" here, I think it is undoubtedly true that a dependent territory - that is to say, one that is not at all self-governing in these matters - is likely indeed to be relatively under-developed; but that is not because being in a state of dependence has kept it under-developed, it is because its political and economic development go together, and as countries become politically developed they tend to become industrially developed or economically developed - or the other way about. So I am not at all sure whether it is right or wrong to put this in here. On the whole I think it is wrong, in that the implication is that dependence has in some way retarded economic development. One might just as well say that a lack of economic development has retarded political development. On the whole I think it is better to leave the words as they were - just refer to countries as yet relatively undeveloped. not 1 am/sure that that question can be finally settled until we know what are going to be the exact provisions about the territorial application of this Chapter. With regard to the other Amendments which the United States Delegation has mentioned, I do not think we have any strong views on the particular questions of drafting. On one point, I hope of correction: I heard the Interpreter say that I had made this series of remarks "pour clarifier la situation". If I did so, say I was making a series of remarks in order to clarify the situation, I withdraw it unreservedly CHAIRMAN (Interpretation): Mr. Helmore, the Delegate of the United Kingdom, has raised a question already dealt with in a ._curment which has been circulated. Document 110, circulated on 23rd May, 1947. Mr. Helmore himself pointed out that he did not G. - 10 - E/PC/T/A/PV/2 believe we should now attempt to solve this problem. I believe myself that we should take up the question in connection with Chapter 8, and more particularly with Article 88, paragraph 4. If the Committee is in agreement with what I have just said, I propose we leave Article 9 as it stands, as far as the United States Amendment is concerned, and that we take up the matter again, if necessary, when we discuss 88. - 11 - E/PC/T/A/PV/2 Mr. AUGENTHALER (Czechoslovakia): Mr. Chairman, I should say that I agree entirely with your proposal that this question should be discussed later, especially as Czechoslovakia has no trouble with her dependent territories. As to other amendments of. the United States delegation, we agree entirely that there is no need to leave in this Article 9 "contribute ultimately to economic stability",and in the last amendment "thus strengthening the ties of international understanding and accord". As to the point of "real income," of standard of living,. I would like to point out that this question is discussed, as far as I know, in the Sub-Committee for the interpretation of Articles 3 and 4, so I think that would be better left until the formulation could be found. There is one more point. I would like to know why, in this Article, the words "increased demand for goods and services" are used, while in other parts of the Charter the word "services" is no more employed, especially in part 6 of the Charter. So I wonder if it would not be better to leave "goods and services" throughout the whole Charter. M. BARADUC (France) (Interpretation): I do not want, Mr. Chairman, to start a lengthy discussion on the French text. I have said this morning that I would agree to the United States amendments, provided that the French text be amended to "territoires en dépendent". I know that the distinguished interpreters have, from time to time, adopted the Secretariat version and sometimes my version. I would like the French translation section to be informed so that there should be no ambiguity in the text. ER - 12 - E/PC/T/A/PV/2 Mr. L.C. WEBB (New Zealand): Mr. Chairman, the New Zealand delegation would submit that the words "ultimately to contribute to economic stability" have a useful place in this Article because they express a truth of some importance that undeveloped economies are dependent on a small range of products, and that usually those products are primary products which are less stable in the world's markets than manufactured products. Furthermore, we do not see any inconsistency with Chapter III if this phrase is left in Article 9, because there are, of course, other. sources of economic instability. CHAIRMAN (Interpretation): If no other delegation wishes to speak, I think we can refer the amendment to the Sub-Committee. We now pass on to Article 10. On this Article we have an Australian amendment which consists of replacing the words "within their jurisdiction" (and putting them in other places) by the following sentence: "Members within their respective jurisdiction and the Organization generally shall take .. etc." I would ask the delegate for Australia to explain his amendment. S -13 - E/PC/T/A/PV/2 Mr. E. McCARTHY (Australia): Mr. Chairman, the object in suggesting that the words "within their jurisdictions" be moved from where they are in the existing draft to the earlier position we suggest, is that it is really a drafting amendment. As it stands now, it suggests that the object is to raise standards of productivity within their jurisdictions. We can assume that the objective is that "action designed pro- gressively to develop," and so on, should be taken within their jurisdictions. We thought the words "and the Organisation generally" followed upon the decision of the Economic and Social Council, which was circulated on 25th April, Docuc nt T.45. The particular section of Article 11. which was referred to the Economic and Social Council appears as Article 11 (2) and the decision of the Council, as set out in that circular, was that reference should be made to the fact that the Organisation could take part or could take the initiative in plans for economic development. That decision also appears in Article 11 and we suggest, in article 11 or 11(1), the insertion of the words,"with the Organisation" after the words "shall co-operate with one another." As the words come into both Articles 1O and 11, Mr. Chairman, should we take these Articles together or should we wait and deal with Article 11 separately? CHAIRMAN (Interpretation): I fully agree that in the case of this problem we should discuss articles 10 and 11 together. The Australian amendment to Article 11, Paragraph 1, would consist in adding the words "with the Organisation" to the part of the sentence reading as follows: "Members shall E/PC/T/A/PV/2 co-operate with one another, with the Organisation and with the Economic and Social Council" and so on. Mr. E. McCARTHY (Australia): Mr. Chairman, it also raises the question of Paragraph 2 of Article 11, and we would raise the question - we have not made a proposal in this case - whether at the end of Paragraph 2 we night add: "In carrying out this function, the Organisation shall co-operate with the Commissions, sub-commissions and specialist agencies of the Economic and Social Council." That arises out of the last sentence of the communication of the Resolution of the Economic and Social Council. That is all we have to say on it. I think in the case of an addition to Paragraph 2 of Article 11, the sub-committee which is looking into it might like to consider it. CHAIRMAN (Interpretation): It is indeed an important question but one which could be dealt with in Plenary Session only with great difficulty. If the australian Delegate is in agreement, I therefore suggest we refer it to the sub-committee. The Delegate for Brazil. Mr. J. G. TORRES (Brazil): Mr. Chairman, the Brazilian Delegation wishes to support the amendments put forward by the Australian Delegation, for the reasons already advanced by them. We attach great importance to this whole Chapter and we think it would be considerable improved if these amendments were accepted, especially in view of the Resolution of the Economic and Social Council already referred to. CHAIRMAN: Mr. Helmore. S - 14 - S - 15 - E/PC/T/A/PV/2 Mr. J. R. C. HELMORE (United Kingdom): Mr. Chairman, I just want briefly to put forward one question for the consideration of the sub-committee: that is, that whilst I entirely agree with the spirit of the Australian amendment, it might be a pity to destroy the particular point and punch of article 10 by inserting the words "and the Organisation generally," It seemed to us that it was much more valuable to leave in Article 10 a definite obligation on Members to take action within their own jurisdictions to develop and to raise standards of productivity. It seemed to us that the question of co-operation on this matter between Members inside the Organisation with the Economic and Social Council and with the other specialised agencies was more appropriately dealt with according to the plan of this Chapter that we developed in London in Article 11. On my suggestion, Article 10 would then read "Recognising that all countries. Members shall take actions . within their respective jurisdictions designed progressively to develop industrial and other economic resources," and so on. We could then go on in Article 11 to lay down the obligations. E/PC/T/A/PV/2 Mr. J.H.G. PIERSON (United States): I hardly need to speak to this question because I was going to raise the same point as Mr. Helmore has just raised. We are fully in agreement with the intent that action taken to develop industrial and other economic resources should be within the jurisdiction of the countries just as well as action to raise standards of productivity. We also fully agree with, and would second the suggestion that in Article 11, paragraph l, / lembers should oooperate with the Organization as well as with other Bodies. We do foel, however, some doubt about the ad- visability of introducing into Article 10 a statement of obligation of the Organization, when it had seemed to us that this Article very clearly and uniquely referred to the obligation resting upon a Member country. Therefore we would be inclined to suggest that the drafting Sub-Committee give considerable thought to the advis- ability of not bringing the Organisation into Article 10 but making the other changes which have been suggested. Mr. R,L. FRESQUET (Cuba): Mr. Chairman, we follow the view already expressed by Mr. Helmore and Mr. Pierson: we are already establishing here in Article 10 an undertaking for members to develop industrial and other economic resources and we agree to that: but we cannot go as far as to allow the Organization to impose any economic plan of that kind upon the Members. CHAIRMAN: (Interpretation): May I ask the delegate for Australia what are his views on what the delegates of the United Kingdom, the United States and Cuba have just said? Mr. E. McCARTHY (Australia): We rather think there is some- thing in what has been said. We had no particular objective in suggesting it other than that, as we were proposing an amendment in another form, in another direction, it seems to follow that, arising P. P. E/PC/T/A/PV/ 2 -17 - out of the resolution of the Economic and Social Council this adjustmtent ought to be made in both. Could I suggest that when the Drafting Committee is looking at Article 11, they look at this Article 10 too, and we would probably if take the view that/ is covered sufficiently in Article 11, we would then let it go in Article 10. CHAIRMAN (Interpretation): I think therefore that the time has come to refer this question to a sub-committee which will take into account all the opinions expressed, and in particular the last remark made by the delegate of Australia. Mr. L. GOTZEN (Netherlands): There is only a small ques- tion at wording which I should like to raise now. Throughout the Chapter when we speak about that matter, we speak about measures consistent" with the other provisions of this Charter. Now, only in this Article we use the word "compatible." I do not know whether that is quite the same, but if it is not, perhaps we had better use the word "consistent" CHAIRMAN (Interpretation): I believe that such a question is precisely the kind of question to be solved by the sub-committee. I therefore think that we can - leaving out the first amend- ment of the Australian delegation which has been referred to the Sub-committee, and also the second amendment in paragraph 1, that is the one proposed by the United States delegation which deals only with a small matter of drafting, replacing the word "and" by the word "with" in another part of the Article - we can pass on to paragraph 2 of Article 11 immediately. - 18 - E/PC/T/A/PV/2 CHAIRMAN (Interpretation): We therefore pass on to paragraph 2 of Article 11. I will remind you that Article 1l has already a long history. Originally, as you may remember, Article 11 consisted of three paragraphs. The drafting committee in New York deleged paragraph 3 and incoorporated it as the first sentence of paragraph. 2 of the same Article. However, the Drafting Committee cautiously put between square brackets that part of paragraph 2 pending the decision to be made by the Economic and Social Council. Such decision was therefore made on 29th March, 1946 and you can find it in document 55, dated 5th April, 1947. This decision should enable us now to delete the square brackets, but it might necessitate some alteration to the paragraph. On that particular paragraph there are four amendment, one of which comes from the Secretariat. We should take up now the first amendment which is submitted by the Cuban delegation, and which consistss in adding the words "specially as for the ways and means of financing, said plans". That part of the sentence would come at the end of the first sentence. I wonder, however, in view Of the discussion which took place this morning on Movement and Investment of Capital if it is still necessary to have this amendment, and whether it might not be better to reserve its discussion until after the discussion of Capital Investment. BR. R. L. FRESQUET (Cuba): Mr. Chairman, we were aware that we would be suspected of being too specific with our amendment and but now I am aware that our amendment may be misunderstood/'we are not concerned about the actual financing, but also with the plans and ways and means of finance. It is useful, in the case of small countries who do not have enough research personnel to plan in the proper way either the finances or the actual engineering or execution of economic plans, so we insisted on that in order to J. E/PC/T/A/PV/2 - 19 - benefit also from the advice that such an organization as the ITO may give to the small countries. Thank you. CHAIRMAM (Interpretation): In that case, it might be found. that the Cuban amendment is closely related with one of the United States amendments, which explained the term "technical assistance". We have a United States amendment, it may be different but it stresses also the same point and reads as follows "and. assist in the procurement of appropriate engineering and other technical assistance". I now recommend that the two amendments should ultimately be put together and be made into one single drafting. I will thus refer the question to the sub-committee. MR. J.R.C- HELMORE (United Kingdom): Mr. Chairman, I am not absolutely sure which was the other amendment, besides the Cuban, which you are proposing to send to the sub-committee. CHAIRMAN (Interpretation): The amendment I referred to was the United States amendment which is on page 4 of document 125. It consists in adding at the end of the first sentence of paragraph 2 "and aesist in the procurement of appropriate engineering and other technical assistance". This amendment, though different in form, is similar in spirit and has pursued the same idea as the Cuban amendment. It has been said, if there is any doubt, in the Commentary that "the term 'technical assistance' has been widely mis- understood to mean that the ITO proposes to establish industrial and scientific research laboratories, execute construction projects, and. generally go into the business of providing industrial technology". Mr. J.R. C. HELMORE (United Kingdom): Thank you very much Mr. Chairman, I take it we are not leaving the subject of the first part of the United States amendment? G. E/P C/T/A/PV/2 20 Mr. AUGENTHALER (Czechoslovakia): I think we are in full agreement with the United. States proposal for the wording of this paragraph 2. I suppose, of course, it means that the Organisation is not entitled. to take any initiative as to the countries, but that the words "upon request of each Member" are binding towards the whole of the Article. Therefore, we thought that it would be better, maybe, to put "That Member", rather than to express the same idea in the second paragraph: "The Organisation may, etc." We would put "That Member may make a Recommendation". CHAIRMAN (Interpretation): This seems obvious, Mr. Delegeate. Mr. HELMORE (United. Kingdom): Mr. Chairman, I am not quite sure how one gets at that interpretation - I have understood the point of the Czechoslovak Delegate rightly. The paragraph now begins by saying "the Organisation upon the request of any Member may advise such Member" - and that goes down to the end of the first sentence, with which, I imagine, most Delegates here are in agreement. Then, a new sentence: "the Organisation may in accordance with the principles of this Chapter consult with and make Recommendations to Members and appropriate inter-Governmental Organisations relating to the encouragement of the industrial and general economic development of Member countries". How the Organisation may on the request of a Member make Recommendations to appropriate inter-Governmental Organisations about the general economic development of Member countries, I am not quite sure; and. I was going to raise the question whether the New York Drafting Committee in transferring that sentence from another Article altogether have not made a mistake, and that it would be better G. - 21 to revert to the London text and leave the general proposition for the consulting and making Recommendations in the general powers of the Organisation as we had it in London. Mr. FRESQUET (Cuba): I wondered if the objections to the New York wording can be overcome. If we may make a separate paragraph of the last sentence of paragraph 2. CHAIRMAN (Interpretation): So that in a sentence, "It may, in accordance with the principles of the Charter, consult and make Recommendations to appropriate inter-Governmental Organisations". I think that we can consider the Debate ended on this question, and that the Sub-Committee may profit by the views expressed on it. Mr. NAUDE (South Africa): As a Member of the Drafting Committee at the beginning of its work, while there may be possibly very sound sense in what you said, the only point we are interested in at the moment is, how are the words "in accordance with the principles of this Chapter" interpreted in connection with a situation such as one can conceive? Is the Organisation to be entitled to advise a Member of the ITO that its general economic development in a certain direction is unwise - or that it would be wise to develop a high productive power? I throw out the question because it seems to me there is a certain doubt about what precisely the Organisation may do in the framing of that sentence. I do not know whether the Sub-Committee you have mentioned can also solve this, but it is a matter of principle,and it seems to me to need some attention. E/PC/T/A/PV/2 22 CHAIRMAN (Interpretation): It would be difficult for me to answer this question, but I am sure there is in this room someone who attended the meeting of the Drafting Committee either in London or New York, and would be able .to explain the exact meaning of that sentence, and whether it should be interpreted as the South African Delegate has just suggested it. In any case, when I read the text of this paragraph, it seems to me that it is clear sense. It is said "the Organisation may in accordance with the principles of this Chapter consult with and make Recommendations to Members" and so on. It seems clear the Organisation is entitled to advise the Members in regard to the encouragement of the industrial and general economic development. Mr. NAUDE (South Africa): I do not think the Drafting Committee in New York - speaking as a Member of it - discussed this matter au fond, as you suggested. I was not present in London when this particular subject was discussed; but nevertheless the phrase "in accordance with the principles of this Chapter" reminds one of a great deal of rather general language in this Chapter unspecifically, and I am doubtful whether all Members would be willing to give the ITO the power on its own initiative to make Recommendations to Members of the Organisation as to economic development and as to the direction. I do not press the point - it can be left right where it is. It can be left to the Drafting Committee to solve. ER - 23 - E/PC/T/A/PV/2 Mr. HELMORE (United Kingdom): I cannot remember very accurately what took place in London, but perhaps I can try and deal with the point underlying the South African delegate's question which I think is the same point which worried the Czechoslovakian delegate, and indeed myself when I spoke. It seems to me that in Chapter IV we are in the prooess of constructing obligations and right's for members and that if this sentence appears here in this context, though it only says "consult with and make recommendations" there is an implication that, having made a recommendations to one, under powers conferred in the Chapter that cons-.ructs obligations, there is some particular necessity to take notice of that, recommendation, either to adopt it or to feel slightly red in the face if one has to explain why one does not adopt it. What we did in London when a sentence was not clear, was, first of all, to construct this Chapter and then to look at the first Article dealing with the functions and structure of the Organization, and we wrote a paragraph under functions to conform to this Article. Clearly the Organization does have a function to perform in connection with all the economic developments on the Article, and there we said it should be the functions of the Organization to consult with and to make recommendations and reports to members regarding any matter relating to the purposes of the Organization or the operation of the Charter including the following which is sub-paragraph (d) : "recommendations as to measure for implementing the objectives of the Organization in e. ouraging and assisting the industrial and general economic development of members. I think the sense of those words is very much less ER E/PC/T/A/PV/2 24 specific and direct and that if they appear there, they do allow the Organization to perform the useful functions which is to say from our central position we use this happening in the field of industrial development and we wonder whether it is right or we wonder whether it is going too slowly or too fast, but it does not put into this Chapter, with its obligation on members, the opportunity for the Organization to make direct recommendations about the development or reconstruction plans of individuals. Mr. NAUDE (South Africa): Mr. Chairman, I might just add this. If the general interpretation of the London Report was borne in mind by the Drafting Committee, I think the matter might be dropped. S - 25 - CHAIRMAN: Dr. Augenthalor. H. E. Dr. Z. AUGENTHALER (Czechoslovakia): Mr. Chairman, I have a small remark to make. When I was in London, I saw a play "Is your Honeymoon really necessary?", and now I am wondering if the words "the Organisation" are really necessary in this part of this Article. There is something in human nature in general which tends to give good advice to others. It is always rather difficult to give good advice to one's own Government, but to other Governments it is extremely easy (Laughter), especially if the Government is far removed and there are no direct dangers of complications. That is why I thought maybe this part of this Article is not so necessary here at all. In practice, it would probably be that some countries would be introducing some now breach of industry. For this new branch they would require some technical or financial aid; they would approach the Organisation, possibly, and request this aid. In this case the question would be discussed and probably the Organisation might make certain recommendations to the Member requesting this aid, or might make recommendations to some other organisations, for instance; to the International Bank. But I cannot see how the Organisation, on its own initiative, could deal with the problems of the internal plans of any country. CHAIRMAN: The Delegate of Brazil. Mr. J.G.TORRES (Brazil): Mr. Chairman, if I remember correctly, the idea of putting this paragraph in Article 61 was to give to the Organisation some function that would make it the business of the Organisation to advise on specific projects S - 26 - E/PC/T/A/PV/2 of industrialisation or other economic development. In New York it was deemed advisable to make Article 61 more general and to transfer this particular part of 61 to that part of Chapter IV that seemed to be consistent with what we had in mind. I think it would be very desirable to bear this thought in mind and provide for such functions upon the request of the interested Member. I see, for instance , in the American amendment - with which we are in general agreement - that the word "shall" was substituted for "may" and I wonder whether that does not somehow weaken the Article or the Paragraph, because if it is true that the matter does not concern the I.T.O. alone, we want to make sure, on the other hand, that, whatever concerns the I.T.O. , the I.TO. should have the obligation to do it. On the specific amendment of the Secretariat, I wonder again whether it is advisable to insert the expression relating to the Economic and Social Council, because, as it is an operative paragraph or Article, it seems to us that it would make it more involved. Unless this point is made clear to me, I do not know whether or not it is necessary to consult the Economic and Social Council on these specific projects. CHAIRMAN (Interpretation): Gentlemen, we all agree that Paragraph 2 of Article 11 is to be referred to the sub- committee, but before doing so I would like to have the opinion of the Committee on the two amendments already submitted - that of Czechoslovakia, which I understand is only a drafting amendment and should not take us a very long time, and that of the United States, which consists of the substitution of the word S - 27 - E/PC/T/A/PV/2 "powers" for the word competencee". I would ask the Delegate of Czechoslovakia if he has anything to say on. his amendment, and then I will give the floor to the Delegate of the United States. H.E. Dr. Z. AUGENTHALER (Czechoslovakia) (Interpretation): Mr. Chairman, I fully agree with the text submitted by the Delegate of the United States. Mr. J.H.G.PIERSON (United States): Mr. Chairman, with regard to the word "powers" as a substitute for the word competencee", I will not detain you long. Our thought there was that the word "competencee" might be ambiguous; it might refer to ability, in which case the word "resources" already covered the idea and that if what we meant - and we believe we did mean - was legal right, the word "powers" was the more accurate word for expressing the idea that we all had in mind. Our suggestion that the word "'may" be substituted for the word "shall" arose out of our interpretation of the reply that the Economic and Social Council gave to the question asked by the Preparatory Committee following its London meeting. P. E/PC/T/A/PV/2 28 The Economic and Social Council indicated that it was in difficulty with the language which the Preparatory Committee had adopted in London but it wished to have the Preparatory Committee take into account in the final draft of this Article the powers and obligations of other specialized agencies already in existence or to be estab- lished. Our feeling is that if the word "shall" is retained there is the danger that, by appeal to this Organization the exclusive responsibility might be established upon this Organization to assume all the duties in connection with advice concerning economic develop- ment, and from that pointeof view it seemed to us that a more accurate reflection of the situation as it has been left by the reply of the Economic and Social Council would be given by the use of the word "may". Dr. P.S., LOKANATHAN (India): Mr. Chairman, we have some difficulty in accepting the amendment proposed by the United States delegation. As far as the substitution of the worde "powers" for "competence" is concerned, we see no objection, but as regards the change of the word "'shall" to "may", we feel some real difficulty; beceuse although there will be the danger of making this obligatory on the Organization, still we feel that if it is replaced by the word "may" the Organization may not staff itself with sufficient personnel to do the thing which we wanted it to do. That, combined with the latest amendment proposed by the United States delegation, namely the substitution of, the words: " .... may advise the Member concerning its plans or arrange for the provision of such assistance and assist in the procurement of appropriate engineering and other technical assistance." These two taken together. in our opinion, seriously detract from the positive functions which the countries want the I.T.O to undertake. P. 29 E/PC/T/A/PV/2 In this connection may I refer to page 8 of the London Report where the Committee that is responsible for the drafting of these Articles definitely indicated the scope of the I.T.O. in respect of these Chapters. It is there pointed out in Section, para- graph 1:- "From the point of. view of the purposes of the Charter and the effective working of the International Trade Organization, there are strong arguments for empowering. the Organization to perform certain positive functions in relation to industrial development, particularly in the provision of technical aid to members in the formulation and execution of plans for development. " In the seoond paragraph, the matter has been even more clearly stated: "This task, because of its essentially administrative character, would be appropriate to a specialised agency....... Furthermore it would provide the personnel of the Organization with continuous experience of the positive as well as the protective aspects of national development policies and so assist them in maintaining the balanced point of view which will be essential to the wise exercise of the discretions which the Charter entrusts to the Organisation." We are quite aware, Sir, of the danger which you yourself just now pointed out, of the misunderstanding which the existing draft may lead to: that is to say, there might have been created in the minds of several countries the idea that the I.T.O. is going to have a large staff of engineering, technical and financial experts, who try to replace their private firms, and so on. I quite agree that we should. guard against that misunderstanding, but it would be an error if we fall into the opposite extreme and make this I.T.O. just a sort of advisory body which may or may not undertake, at its own option, the functions which we want assigned to it. P. 30 E/PC/T/A/PV/ 2 I think the drafters of these articles in London at least believed that it was the duty of the Organization to have a nucleus staff, an advisory staff, which would be able to talk matters in hand. If any particular country has any definite plan, those plans, at their own request, would be referred to this I.T.O., and the I.T.O. should have a personnel to deal with those plans, to consider them, to vet them, and, if they find that there is a prime facie case for the going forward of those plans, then the. I.T.O. should be able to procure the services. There are really two facts. One is that the I.T.O. should have some administrative personnel. If the United States amend- ment means that it will not have that administrative personnel, may I say, with all diffidence, that that is not the spirit in which this Article was drafted in London. I personally was responsible for at least a little of the drafting and we know what we were lead- ing to Maybe that is not acceptable to this meeting but that is another matter. But so far as the idea behind this Article is concerned, we are quite certain that, while it is true we do not went the I.T.O. to have all sorts of staff which are envisaged by the Chapter, we did mean that the I.T.O. should have an advisory per- sonnel which would be able to throw light upon the plans and to advise countries on those particular plans. And if, as I say, the I.T.O. felt that some help, some assistance, should be rendered, then the I.T.O. should provide the necessary technical, engineering and other assistance. For these reasons, Mr. Chairman, I feel that, in the way the United States amendments have been drafted, we should find it rather hard to support them. J. 31 E/PC/T/A/PV/2 MR. J.G. TORRES (Brazil): Mr. Chairman, we appreciate the explanation given to us by the United States delegate for this substitution of "may". However, if it is true that we do not want to create future difficulties and conflicts between the ITO and other inter-governmental organizations, it is also true that throughout the Charter we provide for consultation, and we show that we are quite aware that this should not occur. I think that we should not worry very much about this possibility, especially because if we retain the second sentence of paragraph 2 that provides for this very same consultation, it will be taken care of It is just a matter of writing it outin the proper way in a very adequate manner. CHAIRMAN: Monsieur Freaquet. M. R.L. FRESQUET (Cuba): Mr. Chairman, we associate ourselves with the words expressed by the delegate from England and the delegate from Brazil, and consequently we do feel strongly tagainst the substitution of the word "shall" for "may". We think that in a way we have framed into words the idea that we tried to express here, that is, if we say that the organization will act within the powers and resources of the organization. We do not see how, in that way, the action of the organization will go over, the recommendation of the Economic and Social Council, and the substitution of the word "shalll" for "may" may take completely out of the text or the Article the security of the under- developed countries who have always the advice and recommendations of the ITO in such a matter. 32 E/PC/T/A//PV/2 Mr. PIERSON (United States): Mr. Chairman, although Dr. Lokanathan has left the room, I should. like just very briefly to comment on certain of his remarks, because I have the feeling that actually there is not much - perhaps not any - difference between his conception of the intent of this part of the Chapter and that of my Dlelegation. We fully subscribe to the idea that technical aid. should. be provided. by thoroughly competent people, but the point that we have in mind is that this Article should be drafted so as to avoid the implication that the ITO itself would act as an entrepreneur, would. itself construct public works and development projects. We believe that technical aid. should be provided., but we want to make it clear that the ITO would act in an advisory capacity. Now it may not always be possible further ITO, even though it has personnel working on economic development - it may not always be possible for the ITO to have on the premises the engineering and other experts who would go out and undertake a particular survey or a particular job of assistance for a particular country. We feel that it should be the function of the ITO to assist in the procuring of the proper technical assistance of the proper calibre to undertake advisory work. I think that leaves us in a position that is very close indeed to that expressed. by Dr. Lokanathan with respect to technical aid. CHAIRMAN (Interpretation): The Delegate of the United. Kingdom. Mr. HELMORE (United Kingdom) : I wonder if I could. say a word. on the question of this suggestion, that we should delete " shall " and substitute "may". As the lndian Delegate read two paragraphs of our London Report, I think perhaps it would be fair to begin by reading the following paragraph, which said.: 33 E/PC/T/A/PV/2 . "The Preparatory Committee is aware, however, that this problem cannot be looked at solely from the point of view of the purposes of the Charter. There are a number of inter-Governmental agencies and organisations concerned with various aspects of industrial development. These include" (and then follows a list of seven of them) '- and. then the Report goes on, "The Preparatory Committee assumes that the Economic and Social Council will shortly be giving consideration to the question of the appropriate division amongst various agencies of responsibilities not yet allocated in the field of economic development, and to the means whereby their activities can be adequately guaranteed"- and the decisions of the Council on these questions must be based on other, possibly wider, considerations than those that fall within the competence of the Preparatory Committee. Now I am sure the words of that Report were within the knowledge of the Economic and Social Council when it considered its reply to cur question, and. they have sent us a polite reply, which does not tell us how to do our own drafting, but I am assured by a Member of my own Delegation who was on the Committee of the Economic and Social Council which drew up that reply, that the only reason they did not suggest the substitution of "shall" by "may" was that they felt it would. be more polite to leave us to do it for ourselves. If we leave in "shall" it seems to me inescapable that we can have, and shall have, before long, over-lapping between the agencies. It is quite true there is provision for consultation between the agencies and with the Economic and Social Council later on, as has just been said; but these words are extremely direct. The Organisation, if a Member asks, has to take on the job of advising. There is no let-out there. it is quite G. E/PC/T/A/PV/2 mandatory on the Organisation, and if a particular Member chooses to ask two Organisations, both of which have such words in its Charter, then both the Organisations would. have to do the advising and that seems to me to be rather a ridiculous result. On the other hand, I think we can all understand the anxieties expressed by various Delegations about the apparent weakness of using the word "may", and I wonder whether it would be possible for the Drafting Committee to look out a form of words which would express more closely what we really mean. What we mean, I think, is this. That if people ask for advice they ought to get it, provided that it is right for the idea that we should give it, and that it is not for some other agency to give it; and if it is possible to express that thought more closely than by using the word. "may", which leaves the conditions to be understood, perhaps we should be wise to think of it. I have not really had time to work out the words, but some thing like "The Organisation, upon the request of any Member. shall, unless it determines that the matter falls within the competence of another Charter or Organisation" - or whatever the words shall be . Those words might help to solve the problem. ER - 35 - E/PC/T/A/PV/2 Mr. J.G. TORRES (Brazil): I beg to be excused for coming back on this matter for the third time. However, we would, of course, welcome any new drafting that may make this paragraph more explicit and that may do away with the fears of the delegations who are concerned with the possible dangers of this that substitution. May I, however, point out that the words/follow such expression already qualify the conditions under which the Organization may give this advice because it says here that the Organization, upon the request of any member, shall advise such member concerning the latter's plans for economic development within the powers and resources of the Organization. This seems to cover already, the point, as we have already decided, that we do not have any objection to finding a better drafting - at least from the standpoint of the other delegations. CHAIRMAN (Interpretation): I believe that we can consider the discussion on this Article as closed and refer this Article to the Sub-Committee. We pass on to Article 12. There are two amendments, one presented by the United States delegation and one by the Cuban delegation. Are these delegations willing to speak on their amendments? Mr. J.G. TORRES (Brazil) : Mr. Chairman, here again we are in general agreement with the amendment of the United States. If I may call the attention of the Committee however, to the question of the title and if this is under discussion I would like to .suggest whether we could word the title of Article 12, instead of " Means of Economic Development and their Promotion", "Means of Promoting Economic Development". I am not, of course, very well ER E/PC/T/A/PV/2 36 versed in the English language, but it seems to me it accomplishes the same purpose and possibly in a better wording. Regarding the text itself,we would like to hear the explanation of the United States delegate. Mr. CLAIR WILCOX (United States): Mr. Chairman, the first three suggestions for the amendment in the Article are formal. The first is to add the words "among other things" because the list does not seem to be entirely complete. It does not refer, for instance, to such matters as fuel, power and transportation and markets and so on. It is suggested that the word "advanced" be dropped because we are not advanced technologists, but need to know about elementary technology as well. The one important suggestion here is the insertion of the words "on equitable terms" which seems to us to make a stronger and more specific commitment that would be involved in the absence of those words. - 37 - E/PC/T/A/PV/2 CHAIRMAN: The Delegate of China. Mr. J. T. CHWANG (China) asked permission to make a remark, but later apologised for having misunderstood the number of the paragraph which was under discussion. CHAIRMAN (Interpretation): In this case, I think we could refer to a sub-committee the two amendments on Paragraph 1. The Delegate of Brazil. Mr. J.H.G.TORRES (Brazil): Mr. Chairman, there is just a minor point of drafting here. I wonder if this expression "on equitable terms" would look more adequate after "obtaining." The paragraph would then read: "Accordingly, the Members shall impose no unreasonable impediments that would prevent other Members from obtaining any such facilities for their economic development on equitable terms, and shall co-operate," etc. CHAIRMAN: Mr. Helmore. Mr. J.R.C. HELMORE (United Kingdom): Mr. Chairman, on the United States amendment, I only want to say that we agree with the insertion of the words "among other things", but it does seem to us to make the drafting very clumsy. If the Drafting Committee would make the phrase so that it reads: "depends, among other things," or, if the Committee would agree to it, it would be better if the words could be "requires, among other things." I think I can refresh Mr. Wilcox's memory as to the origin of the suggestion regarding the use of the word "personnel." S - 38 - E/PC/T/A/PV/2 There are two possible ones: one is that it was done especially to get the United Kingdom Delegation into trouble, because we have a Member of Parliament who always complains if we use the word "personnel" in a document; the other is that it is generally believed that managers do not work. (Laughter). Before you pass both amendments to the Drafting Committee, Mr. Chairman, I wonder if we could have some oxplanation from the Cuban Delegation of the amendment which appears at the top of Page 5. CHAIRMAN: Mr. Fresquet. Mr. R. L. FRESQUET (Cuba): The Cuban Delegation thought that the word "unreasonable", at least in Spanish, had such an uncertain connotation that the idea would be better covered by using this longer but more specific phrase, but it is the same idea, I think. CHAIRMAN: Mr. Wilcox. Mr. CLAIR WILCOX (United States): With respect to the amendment suggested by the Delegate for Cuba, if the word "unreasonable" were to be dropped in favour of something more explicit and detailed, I think we should have to have further consideration. 1 recall, for instance, that in discussing this matter in London, it was clear in the minds of the Delegates and the Sub-committee that the word "unreasonable" would cover, for instance, measures that were taken in the interests of national security. I think probably the word "unreasonable" is a better word than the substitution that has been suggested. 39 It seems to me that excellent suggestions have been offered by the Dolegates of Brazil and the United Kingdom with respect to changes in the drafting of this Article, and I shall be happy to leave those matters to the Sub-committee without further comment. There is one matter, however, that does require some comment. I should not like to let it stand on the record that the Delegation of the United States was motivated, in introducing the word "personnel", by any desire to provide embarrassment for the Delegation of the United Kingdom. Our solicitude for the mental composure of the Delegation of the United Kingdom knows no bounds. (Laughter). CHAIRMAN: The Delegate of South Africa. Dr. W.C.NAUDE (South Africa): I take it, Mr. Chairman, that that particular point is exhausted now (Laughter). I am reminded, Mr. Chairman, by the discussion here on the title of this Article by a suggestion made by the South African Delegation in New York - it did not receive any popular support - and that was that there is an advantage in the dropping of titles of Articles from the whole Charter. I only hope the Drafting Committee will bear that in mind. We could avoid an awful lot of argument by simply dropping the titles of Articles - I am not saying Chapters, but Articles. I may add, Mr. Chairman, that we have a sacrosanct example. In the United Nations Charter itself 'there are no titles to the Articles. E/PC/T/A/PV/2 S P. E/PC/T/A/PV/ 2 40 CHAIRMAN: (Interpretation): I think that it would be in certain cases extremely easy to satisfy this requirement by dropping all the titles. Mr. J.G. TORRES (Brazil): Just two words to correct what I think was an error in translation, and for the benefit of our fellow French-speaking delegates. My second suggestion was that the expression "equitable terms" came after "obtaining", and also I understood Mr. Wilcox to say that he was favourable to suggestions which the translator apparently overloaded. Mr. L. GOTZEN (Netherlands): Mr. Chairman, on the Cuban amend- ment, I was just wondering if the word "unnecessary' would not give more short expression to the thought which moved the Cuban delega- tion in submitting their amendment. M. ;cri.-: (Interpretation):. Mr. Chairman, I see that in the French text there is no translation of the word. "unreasonable ", or "unnecessary", and I will recall the words of Mr. Wilcox when he said that it might be necessary in some cases for some countries to restrict the assistance to be rendered to other countries in view of the obligation of international defence, etc. in agreement with the Security Council. Therefore we wish to have also in the French text something to qualify, as it is done in the English text. CHAIRMAN (Interpretation) It seems to me, gentlemen, that it is very difficult to go any further with this Article 12. You will see that on paragraph 2 there are very r:merous amendments, two of which propose to change drastically the drafting of the paragraph as it stands - I mean the amendments of the delegations of India and the United States: and further as in the United States draft the question of investment and movement of capital is mentioned, a 41 question which we have reserved until tomorrow, I think it would be wiser to reserve paragraph 2 and its discussion to tomorrow's meeting as well. Tomorrow Mr. Chundrigar, Chief of the Indian delegation who has to leave Geneva, will make a statement on the views of his delegation as to Chapter IV. We shell therefore begin our meet- ing by his statement. I think before we part it will be a good idea to appoint the members of the sub-committee. We never know - they might wish to start their work even tonight: In any case I cannot lose the opportunity. I suggest that the sub-committee be composed as follows: the United States, India, France, Chile, Australia, the United Kingdom, and Brazil. Does everyone agree with this proposal? (The proposal was agreed). I would ask this sub-committee, when the time comes, to call upon another French speaking delegate, other than a representative of France, to assist in putting into shape the French text. Mr. WYNDHAM WHITE (Executive Secretary, Preparatory Committee): Mr. Chairman , following the intervention by the delegate of France at the beginning of this meeting on the difficulty which was being experienced by certain delegations to provide representatives at the same time for Charter discussions and for Tariff negotiations, I have been in touch with the Chairman of the Charter Steering Committee and the Tariff Working Party, and they have agreed to hold a joint meeting tomorrow afternoon. However, I think that that meeting can hardly yield the best results unless the delega- tions which are experiencing these particular difficulties could let the Secretariat know by noon tomorrow what their difficulties E,/PC/T/A/PV/2 P. 42 are, so that we can make arrangements for these to be brought before the Joint meeting and in appropriate cases for those delegations to present their views to the joint meeting and to discuss their difficulties with the two steering Committees. CHAIRMAN (Interpretation): Tomorrow morning, after the state- ment by the Chief Delegate of India, we shall study the amendments to this Article. We shall, however, leave over the amendments dealing with the investment and movement of capital which will be discussed in the afternoon. The Meeting is adjourned. (The Meeting rose et 6 p.m.) E/PC/T/A/PV/2 P.
GATT Library
cr092xr5418
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Second Meeting of Commission B held on Thursday, 29 May 1947, at 3 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, May 29, 1947
United Nations. Economic and Social Council
29/05/1947
official documents
E/PC/T/B/PV/2 and E/PC/T/B/PV/1-3
https://exhibits.stanford.edu/gatt/catalog/cr092xr5418
cr092xr5418_90250065.xml
GATT_155
10,272
62,195
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL RESTRICTED ECONOMIQUE E/PC/T/B/PV/2 ET SOCIAL 29 May 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT SECOND MEETING OF COMMISSION B HELD ON THURSDAY, 29 MAY 1947, at 3 p.m. IN THE PALAIS DES NATIONS, GENEVA HON. L. D. WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office Room 220 (Tel. 2247). NATIONS UNIES G. 2 - E/PC/T/B/PV/2 CHAIRMAN: The Meeting is called to order. Before we adjourned for lunch the Commission had a very thorough discussion of the question of the inclusion or the exclusion of services in the scope of the Draft Charter. We stopped at Chapter 6. The way the situation appears to the Chair is that there are three propositions now before us. The proposition which has been before the Preparatory Commission for the longest period of tile is the reservation of certain Delegations who wish to have services included in Chapter 6. The next proposal in point of time is that of the United Kingdom, who wish to have services excluded from the scope of Chapter 6. We have also this morning listened to the proposal of the Delegation of India, who wish that services should neither be specifically included nor excluded. If, therefore, these propositions can be put to a vote I propose we should first of all vote on the proposal of the Delegation of India; secondly I propose that we vote on the proposal of the Delegation of the United Kingdom; and then, if neither of these are carried, on the proposal of the Delegations who are proposing that services be specifically included. But before putting the matter to the vote I would like to know if any Delegation has any proposal to put forward which may be a means of reaching a satisfactory settlement to which the majority of Delegations can subscribe. E/PC/T /B/PV/ 2 E/PC/T/B/PV/2 CHAIRMAN: The Delegate of Cuba. Dr. Gustavo GUTIERREZ (Cuba): Mr. Chairman, after having a talk with some of the Delegates who presented a dissenting view of the criterion of the British Delegate this morning, we wondered if it would be a wise procedure to start now with a discussion of Chapter VI following the Articles in the order in which they are, beginning with Article 39 and eventually arriving at Article 45; and we will try in the meantime to draft a formal paragraph that incorporates the views of all those participating in the matter, not only of his side of the table but also those of the Delegates of India and Great Britain. In that manner we think we can expc~iite the work of the Commission and in the meantime try to find a way of satisfying every one of the views expressed here this morning. CHAIRMAN: The Delegate of the United States. Mr. Robert P. TERRILL (United States): Mr. Chairman, I was about to make a suggesstion similar to that which the Cuban Delegate has mado. I think.that before any opinions are d definitely carystallised here by way of a vote, the situation should be clarified. Some of the issues, to say the least, are not at present crystal clear to us as to the meaning of these alternatives. I would like to suggest that the Commission considers the possibility of approprietely modifying the original provision contained it tha United States suggestions for the Draft Charter in Article 40. Those provisins, together with the suggestions, perhaps, of the Indian Delegate, and the V. -4 - E/PC/T/B/PV/2 Delegate of the United Kingdom, might form an appropriate basis. I need hardly add that this would not be an appropriate task for Commission B as a whole, but would be more appropriately assigned to a sub-Committee as its first order of business. CHAIRMAN: The Delegate of the United Kingdom. Mr.. S.L. HOLMES (United Kingdom): Mr. Chairman, I was very interested to hear the proposal of the Cuban Delegate, and I think that it probably holds the possibility of a settlement of this important question by agreement. I confess to a lively curiosity as to the exact rabbit which M. Gutierrez is going to produce out of his hat: but I still think that it is certainly not beyond combined ingenuity basing ourselves on the various proposals that have been made, and I think we might also arrive at an arrangement on the text of our own proposed revision of Article 45. I had felt before that the matter was perhaps not quite appropriate for sub-Committee treatment, as there seems to be rather a wide gap between us, but I myself would be happy to fall in with the suggestion made by the Cuban Delegate that we should proceed with the other Articles and. allow ourselves a little time to see what could be produced by way of an agreed text for Article 45. CHAIRMAN: It has been proposed by the Delegate of Cuba that this matter be deferred until we come to consider Article 45. To that proposal an amendment has been made by the Delegate of the United States, seconded by the Delegate of the United Kingdom, that this question of the inclusion or exclusion of services be referred to a sub-Committee. I will first put to the Committee the proposal of the United States Delegate that this question be referred to a sub-Committee. Does that meet with approval? V. E/PC /T/B/PV/2 The Delegate for New Zealand. Mr. G. LAURENCE (New Zealand): Mr. Chairman, in the event of the subject being referred to a sub-Committee, would those countries who are not represented on the Committee have access to the proceedings of that Committee, and if desired, have the opportunity to present a statement to the sub-Committee? CHAIRMAN: It is the, same procedure as in the case of the sub-Committee of Commission A. The Delegations can express their desire to be heard, and they can be invited to express their views. I take it that the proposal to refer this matter to a sub-Committee is approved. I would, therefore, like to nominate now the following Delegations to constitute the sub- Committee, the Delegations of Cuba, Czechoslovakia India, the Netherlands, United Kingdom and the United States. If the composition of the sub-Committee is approved, I would suggest that the sub-Committee meet tomorrow morning whilat Commission A is meeting, so that they can have their first meeting and deal with this subject before we have to refer other questions to a sub-Committee. - 5 - ER E/PC/T/B/PV/2 Mr. C.H. CHEN (China) The Chinese delegation wishes to make a suggestion to the Sub-Committee. CHAIRMAN: I am sure the view of the Chinese delegation will be taken into account by the Sub-Committee, and the Chinese delegation will be invited to express their suggestion. We now pass to the next point on our Agenda. On page 2 of document W/132 we find that there has been a reservation regarding compulsory /registration of restrictive businesspractices. This reservation is made by the delegates of Brazil and Chile, seconded by the delegation of Czechoslovakia. I propose, however, that we discuss this subject when we come to paragraph 1 of Article 39, because the Brazilian delegation have already submitted their amendment regarding this particular subject. We will then take up paragraph 1 of Article 39. There have been two proposals in relation to this paragraph. The Canadian delegation have proposed the revision of this paragraph, and so have the delegation of Belegium. Are there any delegates who wish to speak regarding these two Proposals? Mr. F.*.. McGREGOR (Canade): Mr. Chairman, the delegates will observe that the proposals we have offered in connection with Article 39 paragraph 1 are more or less drafting chances. I will call attention to two or three proposed alterations that are not purely drafting ones. On the first page of the Canadian document you will see that we have attempted to reorganise paragraphs 1, 2 and 3, and for this reason paragraph 1 in the New York draft includes reference to the type of practice - that is, practices which restrain competitive access to markets, or foster monopolistic control. The next part refers to the harmful effects. ER 7 E/PC/T/B/PV/2 Then later, in paragraph 2 (a) you have a reference to the type of organization - "the public or private commercial enterprises" - but in between 1 and 2(a) you have paragraph 2, which says that practices that are referred to here shall be subject to investigation. That is the vital part of that second paragraph. What we have attempted to do here is to put, in paragraph 1, a statement that members shall take appropriate measures to prevent business practices affecting international trade. These are the words that are used here: "whenever such practices (a) limit access to markets or foster monopolistic control or otherwise restrain competition in international trade ... etc." We could keep the same order: "which restrain competition, limit access to markets, or foster monopolistic control", and we think it is a neater way of doing it. S - 8- E/PC/T/B/PV/2 The next are two types of effects that it is desired to prevent. The third is when they are engaged in or made effective by one or more public or private commercial enterprises. That is an exact transcript of the rest of that paragraph except that at the end we say "and if such commercial enterprises", and there we take the language of Paragraph 2(b) - "if such commercial enterprises, individually or Collectively, substantially control or influence trade among two or more countries in one or more products." I should have inserted a footnote of comment after the changes suggested at the end of that paragraph. The suggestion that the words "possess effective control of" be replaced by the words underlined on that page, "sub- stantially control or influence" is made in order to make it clear that an international combination or monopoly can be subject to investigation, even though it does not have complete or absolute control of world trade. Effective control could be interpreted as complete control. The word "effective" does not limit the word "control"; it rather expands its meaning and suggests an overall domination that could be possessed by very few combinations of commercial enterprises engaged in inter- national trade. If I were to say that I had control over the Delegate for the United Kingdom - I could not possibly have, of course; he is uncontrollable - it would mean a less degree of control than if I said I had effective control over him. We have suggested also "two or more countries" instead of "a sumber of countries." One country should have facilities to safeguard its interests from the operation of a monopoly S - 9 - E/PC/T/B/PV/2 in another country. If you have to prove a number of countries, I think you have to prove too much. It may mean world-wide control and that, I think, was not the idea generally in mind at our London Conference. I submit this very modestly for the consideration of the other Delegations. I am not too happy about "substantially"; I am not happy about "effective"; I um not happy about "influence", but I want to bring up the question of changing the words "possess effective control" to something that would be more satisfactory. Then as to the next paragraph - Paragraph 2, which is the one that now appears as Paragraph 3 - I think it is desirable to place it next to the types of practice that we are declaring to be undesirable., CHAIRMAN: I would prefer, Mr. McGregor, that you confine your remarks to Paragraph 1 at the present time. We can deal with Paragraph 2 at a later stage. P. E/PC/T/B/PV/ 2 CHAIRMAN: As the Canadian delegate has observed, most of the changes which he proposed are matters of drafting, but there could be certain points of substanc which arise out of the Canadian proposal and also out of paragraph 1 of the text of the New York draft. If any members would wish to discuss questions of substance with relation to paragraph 1, I should be glad if they would indi- cate their desire. The delegate of the United States, Mr. ROBERT P. TERRILL (United States): Mr. Chairman, I rather regret that the Chair considers it necessary to confine the discussion on the Canadian amendment to Article 39 to paragraph 1. My reason f or that is that, as I see this re-drafting, it consists of substituting a completely new framework for the entire Article and at first sight (we have had only four or five days on this ; we have no clear draft as yet) :.t is very difficult to road the present draft. Nevertheless, I think it has some very ingenious and important advantages to offer. The former, the original Article, is highly confusing when you start to analyse it. Para- graph 1 of the original draft contains a general and very sweeping obligation on the members. The second part of that Article con- sists of paragraphs 2 and 3 and relates to the procedures which the Organization will undertake by way of investigation upon complaints, but the second part, consisting of those two paragraphs 2 and 3, is in no way clearly related to the first part, that is to the first paragraph. This has been a source of constant confusion to all of those -b whom we in the United States have tried to explain this Article and we think we have become somewhat confused ourselves, but we di.4-~.t: have the wit to recast the Arti-:,;tin proper form to pro- vide continuity in all the paragraphs so that they clearly related to each other and so that the obligations of the Organization were parallel to those of the Members concerned. - 10 - - I ----- - 11 - P. E/PC/T/B/PV/2 Therefore it seems to me that the real question to decide is whether this re w framework which includes all the paragraphs of Article 39 is a suitable vohicle, or, at least, is preferable to the framework that we originally had. I might add, by way of a side-remark that may not be entirely relevant, we are not wholly convinced that the obligation has not been somewhat watered down in the process of this revision, but we could take that matter up when we come to it in due course. CHAIRMAN: I very much regret that it was necessary for me to interrupt the delegate in the course of his discourse, but I felt that he was going into details in his proposed relation to paragraph 2 and I wished him to confine his remarks for the present to para- graph 1. I realise, however, that the Canadian proposal goes much beyond this and was really a rearrangement of the whole article. If the Canadian delegate would like to add anything to what he has said with regard to the purpose of the rearrangement I will be very glad to give him the floor now. Mr. F.A. McGREGOR (Canada): Merely this, Mr. Chairman: that in paragraph 1 - this may be a repetition, but it is clear that paragraph (a) relates to the type of practice; (b) to the effects, (c) to the kind of people who are engaged in the practices. Then in paragraph 2, formerly 3, we would amplify or give examples of the type of practice that is referred to in 1(a) of this draft: limit access to markets and otherwise restrain competition. We would say that the practices referred to in paragraph 1 (a) shall include the following: ( it is not intended that these shall be the only practices but they shall include these.) P. - 12 - E/PC/T/B/PV/2 Then in paragraph 3 we take over paragraph 2 of the Now York draft. I have to tried to get rid of what we thought of as a rather legalistic phrase without limiting the generality of paragraph 1 and substitute for it a direct statement: "Any practices which are alleged, under Article 40 ...... "( that means that they must be practices which members or other parties are entitled to com- plain about). " Any practices which are alleged under Article 40, to be as described in paragraphs 1 and 2 of this Article shall be subject to investigation, in accordance with the procedure regarding complaints......" - 13 - E/PC/ T/B/PV/ 2 Mr. F.A. McGREGOR (Canada) (Contd.): The next part of it has been stolen from the United States, and perhaps it might be better if the United States would speak about their own property, except that I have added to their phrase in the second underlined line "whether these or related practices are as described", when we read that these practices shall be subject to investigation in order that the Organization may determine, in any particular instance, whether these or related practices are as described in this Article. I think it is desirable to have the Organization empowered to examine related practices when they are investigating practices that have been complained about. If the complaint is about one particular practice and in the course of the investigation the Organization observes that other related practices have been engaged in, it surely should not be necessary to go through all the procedure, to go back to the complainee to ask him if he would like to have that included too. The Organization should be empowered to carry on with that. Those are all my comments on that paragraph. Mr. Chairman, in spite of my last sentence, may I make a comment on line three of page 2 which suggests that if this wording is adopted it might be bettor to change the words "individually or collectively" and to put them after the word "if" to read: "if individually or collectively such commercial enterprises substantially control. ". One of the delegates has suggested that it is bad musically to say "individually or collectively substantially". CHAIRMAN: Are there any other comments with regard to the Canadian proposal? J. J. - 14 - E/PC/T/B/PV/ 2 MR. W. THAGAARD (Norway): Mr. Chairman, on behalf of the Norwegian delegation I will Gtrongly support the amendments proposed by the Canadian delegation. It seems to me that these amendments givv the Article as a whole a much better form than in the Draft Charter, and I will especially stress the point that these amendments make it quite clear that the International Trade Organization should limit its activities in these fields to the control of real international trusts and cartels. It means that the Organization shall not interfere with Nember countries in internal trust and cartel policy, even if some of the national cartels might have some slight influence on the international trade. The condition is that the cartels or trusts which substantially control or influence trade among two or more countries shall be a substantial control or influence. It seems to me that that is the right way to go. I shall not prolong the debate, it seems to me that the Canadian delegate has very thoroughly given his reasons for these amendments which are proposed. CHAIRMAN: The delegate of Belgium. - 5- E/PC/T/B/PV/2 Mr. THILTGES (Belgium) (Interpretation): Mr. Chairman, in the opinion of the Belgian Delegation, although certain proposals might meet with the agreement of the Commission and. ameliorate the Draft (and I am speaking of the Canadian proposals), they still present an aspect which somewhat frightens the Belgian Delegation, because it might lead to a new beginning of discussions which have been so difficult to conclude. Indeed, the Canadian proposal contains the engagement for the Members to take steps when certain practices are applied, oven if these practices do not lead to effects which may bear a certain prejudice. This is contained in Article 39, paragraph 1 (a). Now the second point which gives rise to doubts are certain precisions which are brought in by the Canadian Draft and which concern effective control. The Canadian proposal. suggests to introduce the words "to an appreciable measure"; but this is not fully satisfactory. For instance, a firm which controls a certain trade - let us say to 20 per cent. of its complete extent - controls the trade in an appreciable measure, but not completely, and it does not exercise the uttermost influence on this trade, although the control is appreciable. Furthermore, the.Canadian Draft contains the deletion of any reference to at least one objective of the Charter. This is not specifically alluded to. However, I would like to mention it, because this gives me the opportunity to explain the Belian Amendment. Article 39 contains a reference to Article 1, and Article 1 enumerates the various aims of the Charter. Now many countries have proposed either the deletion or the omission or the addition of certain aims of the Charter. A Delegate has proposed a specific addition of a certain aim of the Charter; but I would call your attention to the fact that the text of Article 1 G. - 16 - E/PC/T/B/PV/2 has not been discussed. Article 1 has not been yet fully discussed, and until the text is fully established, it seems to us impossible to establish a certain order of priority. It seems to us impracticable to establish an order of priority of the aims of the Charter - of its objectives - until those objectives are fully determined. CHAIRMAN: The Delegate of the United Kingdom. Mr. HOLMES (United Kingdom): Mr. Chairman, like some previous speakers, I should like to say that in general the Canadian re- arrangement of the Article seems to us to have a good deal of logic and convenience, but I do not intend to be entirely intimidated by Mr. MacGregor, and I would feel with our Belgian colleague, for instance, that we should have to look rather carefully at some of the Amendments of wording which the Canadian Amendment introduces - that is apart from the general structure. I would feel, for instance, much sympathy with what the Belgian Delegate has said in regard to substantial control or influence. We should think that in attempting, perhaps, greater precision, the Canadian Draft really fails in its object. Would not, for instance, the word "influence" lead to a good deal of discussion? It is not even clear, according to the words, whether the word "influence" is governed by the word "substantially". So, as Mr. Macgregor explains, he has a' -ered "a number of" to "two or more countries". Now unless we are going to spend a very great deal of time on this revision, we should feel that there was much to be said for adhering as closely as possible to the text established in London. One could point out that two is a number - more than two is a number - but is that alteration really necessary? 17 - G E/PC/T/B/PV/2 I had also something to say about the proposal 1 (a) of the Canadian text. Here I think Mr. MacGregor indicated that he would be prepared to revert to the original order; perhaps he would also which be prepared to drop the word, otherwise has now crept in - a word which, I think, does imply a certain judgment and really adds very little to the sense of the text. I have also a point to make on paragraph 2, or rather paragraph 3 of the Canadian text, but perhaps that can wait for the moment. - 18 - V E/PC/T/B/PV/2 CHAIRMAN: The Delegate of South Africa. Mr. A.P. VAN DER POST (South Africa): I will not detain tho Commission long. In general, I think that tho Canadian proposal is to be welcomed as a great improvement on the New York Draft, it makes for clarity; but we have, I find, a number of other amendments to consider on the New York Draft Article 39. It is very difficult to consider these and give fair treatment to these various amendments. We seem to be more or less generally agreed that the Canadian text is an improvement on the original, but we have got to discuss this on the basis of the original, and I would suggest for the consider- ation of the Commission that before entering into the merits of the wording and so forth, we might accept the Canadian draft as a basis for further discussion in that order, because in principle it does not affect the proposals of 39, but it is bettar to relate the rest of the discussion and the other amendments to a basic draft, otherwise we have to relate the Canadian draft and the other amendments to the original Article 39. If the Commission would agres that the Canadian order is a better order, than the original one, I suggest that we night uize that a basic for discussion. CHAIRMAN: The Delegate of Brazil. M. Monteiro de BARROS (Brazil) (Interpretation): Mr. Chairman. in principle the Brazilian Delegation is inclined to accept the text submitted by the Delegate of Canada. as a basis for discussion instead of the New York Draft; but in this connection tho Brazilian Delegation would like to make two comments. Our first remark concerns economic development. Already in London we have introduced our amendment in this connection, and we suggested the explicit mention of the economic development in - 19 - V E/PC/T/B/PV/2 paragraph 1 of Article 39. However, at that stage it was pointed out that economic development was anyway implicitly included since it was proposed to mention it explicitly in sub-paragraph 3 of Article 1. We discuss now Article 39 before the draft of Article 1 is definitely established, and therefore we would like to mention again our desire to see an explicit reference to the economic development of the less industrialised countries, if this economic development is not explicitly mentioned in the final draft of Article 1. Our second comment conccrns public enterprise. We have formulated a reser;ation in London and the Brazilian Delegate still fully abiUes by this reservation. CHAIRMAN: WIth regard to: the remarks of the Brazilian Delegate, I would like to point oat that for the purposes of our discussion of Chapter VI, we have to assume that Article 1 will be accepted in the form in which it is now. As the Brazilian Delegate knows, it will be Home little time before the preparatory Committee comes to consider Article 1. Therefore, for the purposes of our discussion, we have to take it in the form in which it is in the Report of the Drafting Committee. If, however, later on thers should be a change in Article 1, we can always come back to Article 39 and make the appropriate changes or consider the appropriate changes, suggested by the Delegate of Brazil. - 20 - E/PC/T/B/PV/2 M. LECUYER (France) (Interpretation): The representative of Canada, Mr. McGregor, said modestly that he wishes to present some observations to the Commission. It seems to me that Mr. McGregor should not be so modest - in fact, the proposal submitted by the Canadian delegation is a complete structure in itself, worked out very carefully from the judicial point of view, and it proposes in fact, not only drafting changes, not only changes in the form of the Article, but also some changes in the substance of these provisions. It seems to me that it would be premature now to discuss the substance of the Canadian proposal, but in view of the remarks made by the representatives of Belgium and the United Kingdom, I should like to draw the attention of the Commission to certain risks which we would run if we accepted the Canadian proposal as such. For instance, with regard to the point concerning the various restrictive practices, there may be some additional consideration to be presented, and if you take the Canadian draft as such, we might re-open the previous London discussions. I thought at first sight that we might take up for instance paragraph 1 of the Canadian proposal, but I discovered immediately that paragraph 1 was closely linked with paragraph 2, paragraph 2 with paragraph 3 and that in fact, as soon as one begins to analyse the Canadian proposal, not only the whole Article 39 but indeed the whole Chapter VI is involved. This goes to show how carefully we should proceed in examining the Canadian proposal. Mr. McGregor did the work of a distinguished legal expert, and it seems to me that an element of art is present in his work, and I should. like to compare it with the work of an architect. It reminds me, for instance, of a considerable work ER 1 E/PC/T/B/P?V/2 which was undertaken at the Paris exhibition of 1937. At this time, as it is well known, the old Palais de Trocadero was entirely transformed and out of the building which was constructed in accordance with the style of 1860, came out a brand new palace, although some parts of the previous structure remained. In fact, changes were operated which went very deeply in the structure of the building. Therefore, I think that the Canadian proposal, which may be compared to such an artistic work, should be considered very carefully. As the representative of the United States said, the text has been submitted to us very recently, and there is another consideration which was not mentioned by the United States representatives, and that is that we have also before us a United States proposal which, on some points, deals with the same question as the Canadian proposal. Therefore, I think that we should study them with all the care and attention they deserve to confront the views in order to try to reach a final and satisfactory solution, but I think that it would be difficult to take the Canadian proposal as the basis of our discussion before we have studied the question of the differences which it might contribute from the outset as compared with the original text, and I submit that question to the Commission. 22 CHAIRMAN: It has been proposed by the Delegate of South Africa that we should take the Canadian proposal as the basis of our discussion and I take it that the Delegate of France is of tho view that we should consider the text as given in the New York Draft as the basis of our discussion. The Canadian proposal has had very general support regarding it being an improvement in arrangement. Certain Delegates have expressed doubts as to certain changes in substance. I think, therefore, it is the feeling of the Committee that the Canadian proposal, along with the proposal submitted by the United States and Belgium in regard to Article 39, should form a proper subject for detailed study by the Sub-committee. Therefore I would like to propose that in due course these provisions proposed by the Canadian Delegation, the Belgian Delegation and the United States Delegation be referred to the Sub-committee, but before making that proposal I would like to have the feeling of the Committee as to whether we should proceed now on the basis of the original New York Draft in considering the other amendments which have been proposed, or whether we should take the Canadian proposal as a basis for our discussion. Does the South African Delegate still wish to sustain the proposal that we take the Canadian proposal as a basis for discussion? MR. A. P. VAN DER POST (South Africa); Mr. Chairman, I do not see that there is much difference in principle between the Canadian proposal and the original New York Draft and I would suggest that we take the Canadian proposal as the basis, E/PC /T/B/PV/2 S E/PC/T/B/PV/2 CHIRMAN: Is that agreed? The Delegate of France, M. LECUYER (France) (Interpretation): Mr. Chairman, it seems to me advisable to avoid taking as abacis for dis- cussion a proposal which has not been fully studied here and which, on the other hand, is somewhat parallel with a proposal submitted by the Delegation of the United States. As you have pointed out, both proposals could be considered on their merits and conciliated within the Sub-committee, but it seems to me that the text established in New York could usefully be taken as the basis for discussion, with any modifications which will be brought later during the course of the discussion, modifications which are necessary and which we all recognise as such after studying the American and Canadian proposals. It seems to me that the New York text could, for the time being, be taken as the basis for discussion without prejudice to any re-organization of the text which may prove necessary during the course of the consideration of this text, CHAIRMAN: The Delegate of the Netherlands., Dr. P.. LEENDERT (Netherlands): Mr. Chairman, it is not very clear to me which proposal is to be taken as the basis for discussion, and we may not be in the technical sub-committee which may tackle the subject. I do think, however, that there are one or two points of fundamental interest in the new Draft proposed by Mr. McGregor which have a much wider importance than merely a matter of drafting and wording, Is it your pleasure that these things should be discussed here now or left to the Technical Sub-committee, in order to be discussed later on in full committee? S 23 S 24 E/PC/T/B/PV/2 CHAIRMAN: I do not think the details of the Canadian proposal are suitable for discussion in full committee, They had much .better be considered by the Sub-Committee. But any questions of principle arising out of the proposal would be a proper subject for comment in the Committee. I .ust confess that I have a great deal of sympathy with the point of view just expressed by the Delegate of France, and that is that we should stick to the New York Draft as the basis of our discussion, as that is the Draft which was approved for submission to the Preparatory Committee, and that would be without any prejudice to the Canadian proposal, because any amendments we might discuss on the basis of the New York Draft could later on be fitted into the Canadian proposal, for, as the Delegate for South Africa has mentioned, there is really no particular difference in essentials between the two proposals; it is more a matter of re-arrangement. P 25 E/PC/T/B/PV/2 Has the delegate of South Africa any solution? Mr. A.P. van der POST (South -Africa): Yes, Mr. Chairman, if you are willing: I would only point out that so far as have not discussed the original text at all. CHAIRMAN: The procedure that we propose is to take the text as it is and consider any amendments or reservations. We have before us the Canadian proposal which is an amendment to Article 39 I think we can agree that the Canadian proposal is a subject better suited for disoussion in a Sub-committee than a full Commission. Unless any delegations have any further comments of a general charactor to make with regard to the Canadian proposaI I propose that it be left over to the and of today's Session when I propose it be referred to sub-Committee. Mr. A.P. van der POST (South Africa): Mr. Chairman, when I spoke reoently it was only with the intention of raising a question of procedure; it was not a question of examining principle and I do not intend to do so now as this will go to a sub committee. I merely want to explain that in principle, too, the Canadian order of the draft t is welcome to us. There may be perhaps some parts of it wiih which we do not agree altogether, but 1 would point out, for example, that The wording "two or more" is welcome to us because it relieves two of our doubts as to whit the meaning of the word "monopolistic" is, as to how far that does extend. This clearly indicates that the Article has r reference to international cartels, and not to action which may be taken in the local interest of a cer- tain industry. P. 26 E/PC/T/B/PV/2 CHAIRMAN: Are there any other comments. with regard to the Canadian proposal and the Belgian proposal in relation to paragraph 1? If not, we will then pass on to paragraph 2. On page 3 of document W. 132 there is a reference to words in paragraph 2 which were inserted by the Drafting, Committee. Those words are: "in accordance with the procedure with respect to com- plaints provided by the relevant Articless in this Chapter." Those words were inserted on the motion of the delegate of France by the Drafting Committee in order to make it clear that the investigation procedure provided for in Article 40 should only follow upon specific complaint in accordance with Article 40 and not as a consequence of steps undertaken by the Organization in accordance with Article 41. The Drafting Committee was not certain whether this condition con- stituted a substantive change or not, because it limited the authority of the Organisation to investigate restrictive business practices on its own issue. The Drafting Committee decided to include the sentence but to refer the question of any substantive change to the second session of the Preparatory Committee. It would now like to know the sense of the Commission as to whether this change which has been adopted by the Drafting Committee may be approved. Mr. S.L. HOLMES (United Kingdom): There is only one point as regards Article 1 which we have not in fact touched on, I think. It may be that it is your intention that a sub-committee should deal with it. It is one of the proposals by the Belgian delegate in W. 130, at the bottom of page 2 of W.132. J. . 27 E/PC/T/B/PV/2 CHAIRMAN: Yes, I-mentioned that. In dealing with paragraph 1 I said that that proposal of the Belgian delegation was to be referred to the sub-committee. There being no objections, I take it the changes made by the Drafting Committee are approved, We have a reservation by the United Kingdom with regard to the insertion of the words "public or" in paragraph 2(b). Does the United Kingdom still wish to maintain that resolution? Mr. S.L. HOLMES. (United Kingdoma): Mr. Chairman, I think it is paragraph 2(a), is it not? We should feel it very difficult. to. withdraw our reservation on this point. We feel that to include these new words (that is to say, new in the London text) would probably lead to confusion, and we cannot feel that anyone would be in any way injured if the London test is reverted to. Article 39, paragraph 1 as it stands will give sufficient pretaction to Members against the possible conduct of a public monopoly acting independently. In a case of that sort the proper course for Members would be under Article 35. We quite appreciate that here logic may demand that everything is put on the same level, but we feel that this is one of the cases where logic can be a little misleading, and the question is really fully covered by Article 35 which allows for a general complaint against nullification. CHAIRMAN: Reservations have also been made regarding the inclusion of "public commercial enterprises" in paragraph 2(a) by the delegates of Brazil and China. Do these delegations still wish to maintain these reservations? 28 E/PC/T/B/PV/2 M. T.M. de BARROS FILHO (Brazil) (Interpretation): Mr. Chairman, the Brazilian delegation is not in a position to withdraw its reservation. MR. C.H. CHEN (China): Mr. Chairman, the Chinese delegation wishes to say that their reasons are very similar to those given by the delegate of the United Kingdom, The United Kingdom reservation is to omit these words "public or", while our reservation is to omit three words "public commercial enterprises", because we are thinking that there are three Articles dealing with state trading under Section E of the same Charter, so it is quite easy for us to have any other special measures in Articles 31, 32 and 33 dealing with State Trading. We have laid down this principle to admit of state enterprise and also any other measures, whish is quite sufficient for the interests of other nations concerned., so we think it is quite unnecessary to include "public commercial enterprises" in this paragraph. CHAIRMAN: The delegate for Czechoslovakia. J. r IPr /r Pu I G. 29 E/PC/T/B/PV/2 Mr. MINOVSKY (Czechoslovakia) (Interpretation): The Delegation of Czechoslovakia, Mr. Chairman, wishes to support those statements and shares the views of the Delegates of the United Kingdom, Brazil and China. Mr. TERRILL (United States): The United. States Delegation expressed its views on this subject at some length in London. I refer the Commission to those views. The substance of them was that if public enterprises were not subject to this Charter, we would in fact be setting up two standards of commercial morality in world trade. We feel that it would be a distinctly backward step in the Charter to change the text as it now appears. It would have unfortunate psychological consequences in the first place, and in the second place, we agree it would be incorrect in principle. Our reason for that, I think, is that Article 35 relates to the impairment of the Charter as an act for which a Member Government is responsible. It was argued in London at great length and. very conclusively by many Delegations whose countries operate industry wholly or partially on a State basis that these enterprises which had been nationalised or were otherwise under public control were operating in accordance with commercial principles. Now if that is so, I hardly believe that the contention which the United Kingdom Delegate has brought forward, and which was aupported by other Delegations, can be sustained. As to the State-trading section, to which the Delegate from China referred, only Article 31 is of significance, I think, for this particular point which is at issue. Mr. MINOVSKY (Czechoslovakia) (Interpretation): If we want to avoid a double morality we must also alter the Article which G. 30 E/PC/T/B/PV/2 concerns State enterprise, since they are subjected to different regulations than a private enterprise, Therefore, if we want to avoid a double-deal, we must also alter the Article concerning State enterprise. Mr. McGREGOR (Canada): All this phrase says is that if it is thought that public enterprises are engaged in harmful practices they should be subject to investigation. Surely that is not too much to impose in this Chapter. The phrase "public commercial enterprises" is defined in a (a) as meaning trading agencies of Governments for enterprises in which there is effectiva public control. What we are concerned about, for one thing, is the possibility of a commercial enterprise securing immunity from this Article and this Chapter by securing the sanction of the Government of the country in which it is ope rating. Before the war we all know of instances where particular enterprises were sponsored by the State and engaged in practices which were definitelyharmful. If we do not include it here, then such private commercial enterprises may secure public sanction and work very very serious damage. If there were a State in the Organisation which controlled all traders - each of the commercial enterprises operated by the State - then that State would. not be subject to the provisions of this whole Chapter. Mr. TERRILL (United States): I just want to extend what I said very slightly, because I think there may be a misunderstanding in the mind of my Czechoslovak colleague. What I meant to imply was that under Article 31 State-control enterprises are to be operated in accordance with commercial principles. If that is the case, and an enterprise is operating entirely in accordance with E/PC/T/B/PV/2 . commercial principles, it might nevertheless engage in a number of restrictive business practices. -It might, either singly or in combination with other firms situated in other countries... Therefore, it is perfectly clear that the sort of commercial activities contemplated in Chapter VI are not covered at all under Article 31, and that is the reason why, if State trading enterprises or national enterprises were not included in Chapter VI you would have them running, in effect, Scot free; or at least not subject to any of the provisions of this Charter, except those to which the United Kingdom Delegate has called attention. I think, therefore, it is warrantable to say that if we do not include State controlled enterprises within this Chapter we will be setting up a double standard now - whether it is one of morality or not I would not want to dispute - but there would at least be two standards in the world. V. - 32 - E/P/ T/ B/PV/ 2 CHAIRMAN: The Delegate or the United Kingdom. Mr. S.L. HOLMES (United Kinggdom): Mr. Chairman, if a Government decides to become a Member of the Organization, it will have acceptec, among otner things, paragraph 1 of Article 39 in this or some substantially similar foum. Iz a Government engages in a public enterprise and allows that public enter- prise to indulge in practices which are fundamentally contrary to Article 39, thlen it seems to me that we are up against a situation in wiach the good faith of a Govenment is involved, That would be a fairly utrious matter, and we should feel that that would be a matter where complaints under Article 35 would be appropriate. That is, aa we -W it, a simple statement of the difficulty. A Government should know what its public enterprises are coinc. It is true that they are to conduct themselves on commercial lines for certain purposes elsewhere mentioned here, but we should say that under Article 39 a Government is bound to see that its public enterprises conduct themselves on good commercial lines. CHAIRMAN: The Delegate of China. Mr. C.H. CHEN (China): Mr. Chairman, we are inclined to think that state trading is not purely for commercial pur- poses. It may be for physical purposes or for social purposes. For instance, Article 32, paragraph 4, states "In applying the provisions of this Article, due regard shall be had for the fact that some monopolies are established and operated mainly for revonue purposes". Such physical monopolies exist even now in China. We have a tobacco monopoly, and so forth, and the Government fix the prices. Similar treat- ment cannot be afforded to nationals of other countries. Than there are also other undertakings purely for social purposes. We think that in some enterprises under private management, the profit may be enjoyed only by the few capitalists so it is better to have enterprise under State management. In that case; I think there are some special considerations to keep in mind, ER - 33 - E/PC/T/B/PV/2 so we are still inclined to think that Article 31, 32 and 37 are not quite sufficient to deal with State enterprises. Concerning these so-called practices, it is definite to state in that/paragraph 3 of Article 39 - that is (a) , (b) , (c) and (d) - there is a point concerning fixing prices where we are inclined to think that in government enterprises in many cases the prices which are fixed sometimes by law, sometimes by administrative order, are not competitive prices. We cannot avoid that. Then, concerning paragraph 3(b), in some case we have territorial market limitations even within the country. For instance, in China we produce sugar in the West and also in Formosa. If the Formosa sugar is allowed to have free expansion then the sugar industry in Western China will be killed entirely. The same is true in the salt industries. So we have territorial limitations of different kinds of salt or sugar industries . Concerning limited production in paragraph 3(d), it is also that quite natural/if we have social or physical monopoly we often limit the quantity produced. In the case of luxury or tobacco, we do not want to have an unlimited production. We have even specified the process to raise tobacco and so on. So only in the case of (c), that is ndiscriminating against partbau'lXr enterprises whether by boycott or otherwise", it seems such practices are, of course, against the international morality and to the detriment of the country and the interests of others, and therefore it should be excluded. We quite agree with the opinion expressed by the United Kingdom delegation, that is that the state should know - that is the government which has such public enterprises should know - what the proper practices which will not be inconsistent with the provisions of this Chapter, are. ER E/PC/T /B/PV/2 34 CHAIRMAN: It appears that there is a considerable lot of difference of opinion regarding the subject of the inclusion of public commercial enterprises. I would therefore like to propose that this subject be referred to the Sub-Committee which I am going to nominate at the end of this session, to deal with the other proposals and the other amendments. Is that agreeable to the Commission? S 35 B/PC/T/B/PV/2 Mr. F.A.McGREGOR (Canada), Mr. Chairman, before we leave this subject may I just make one comment, to make clear the remarks of the Delegate of China. I gather that he is of the opinion that State control of domestic trade would come under this Article. Even in Canada we have State control of certain products and they will not be affected. If the Delegate of China will refer to the statement con- tained in the Canadian draft/of Article 39, he will see that such monopoly as we have in mind must affect international trade and must limit access to markets, and it must have certain harmful effects. It must also substantially control trade among a number of countries in one or more products. Mr. C.H.CHEN (China): Mr. Chairman, the Chinese Delegation also finds some difficulty in interpreting this.. Articles For instance, in the passage concerning State enterprises, we say that such enterprises may establish a monopoly in certain commodities which of course affects international trade to a certain extent. You could interpret this as the enforced monopoly of State control. That might be interpreted as a violation of the Charter, but, on the other hand, in another section State monopolies are permitted. I do not know how these two provisions can be reconciled. CHAIRMAN: We will leave it to the Sub-committee to endeavour to reconcile the differences of views which have been expressed on this particular subject, in order that they may explore the possibility of reaching a solution. The next item on our Agenda is a reservation by the Delegate of Chile with regard to the changes which were made in Paragraph 2 by the Drafting Committee, Does the Chilean Delegation wish to make a statement on that question? E/PC/T/B/PV/2 Mr. Harold Briggs VALENCIA (Chile): We withdraw our reservation. CHAIRMAN: Thank you very much. We now have a proposed revision of Paragraph 2 by the Delegation of the United States. This revision will also be referred to the Sub-committee, but I would like to ask the Delegate of the United States if he wishes to make any remarks on this proposal. Mr. Robert Pe TIRRELL (United States): Mr. Chairman, I think that this revision is adequately explained in the comments that are to be found on page 1 of Document E/PC/T/W/122 of 24th Ma.y, All I can say is that it amazes me that so many people could have gone over an Article so many times and not noted this rather glaring lack of logic. CHAIRMAN: Are there any comments on the United States proposal? Dr. P. LEENDERTZ (Netherlands): It is going to be brought to the Sub-committee too, Mr. Chairman. If so, we might perhaps leave it to them. CHAIRMAN: We will therefore refer the proposal of the United States Delegation to the Sub-committee, We come next to the proposal of the Canadian Delegation with regard to Paragraphs 2 and 3. I take it, Mr. McGregor, that you have already made all the comments necessary in regard to that part of your proposaI ? Mr. F.A.McGREGOR (Canada): S 36 Yes, I have. S 37 E/PC/T/B/PV/2 CHAIRMAN: The Canadian proposal with regard to Paragraphs 2 and 3 will therefore be referred to the Sub-Committee. Mr. S. L. HOLMES (United. Kingdom): I would like to say, if I may, that this seems to us to be a case where it is not merely a Matter of drafting but rather that an important question of principle has been introduced. I am in your hands entirely as to whether I explain what the point is or whether our representative on or at the Drafting Committee which you propose to appoint should make the point. 38 CHAIRMAN: I think this is the place in which to make any comments with regard to the substance pertaining to any of the proposals which have been submitted to the Commission. MR. S.L. HOLMES (United Kingdom): Mr. Chairman, I should like to be as brief as possible but it will, I think, not escaped Members' notice that the Canadian draft is really very much wider than what we had before. It is wider in, I think, two instances. Before, we were dealing with a particular complaint about a particular practice. Here, we are dealing with practices alleged to be as described in the earlier parts of this Article, but are giving the ization power to determine whether those or related practices are as described in any particular instance. We do not quite understand what the significance is of the phrase "in any particular instance". We would have expected to see "in this particular instance", but in any case we do feal that the addition of the words "or related practices" represents a fairly wide new concept. CHAIRMAN: Mr. McGregor. MR. F.A. McGREGOR (Canada): The United States is the father of the phrase "any particular instance". I shall leave it for the United States to speak on that. I acknowledge parentage of the words "or related practices" and I did attempt to explain that when I commented on that particular paragraph before. I think it is desirable that when the Organization is investigation a particular practice that has been complained of, and when it finds during the course of that investigation other practices that are related practices that must be of the type that we have described in the earlier part of J. E/PC/T/B/PV/2 J. E/PC/ T//B /PV/ 2 39 the Article, the Organization should be empowered to carry on with the inquiry into these other related practices, rather than have to go back to the original complainant and ask him if he would authorise the Organization to go ahead with that. It just seems commensense, when you are making an inquiry and there is another practice which is forbidden in the Charter, to go ahead and complete the investigation in that too. That is the purpose I had in putting that in Mr. R.P. TERRILL (United States): Mr. Chairman, I am happy to report that an ambiguity of the English language has been cleared up. The delegate of the United Kingdom called attention to the possible meaning of the phrase "in any particular instance", which the United States reviewed in Cocument 122. It is one that is connected with the clause "in order that the Organization may determined in any particular instance, whether such practices have are or/about to have any of the effects described". The purpose of insertion "in any particular instance" was to narrow down tho Organization's function ocyond equivocation. That is to say, the Organization would not come out with the conclusion, let us say, that suppression of technology is always bad. It would be bad in this particular instance that it had under examination as result of complaint. I assumc that it has a limiting significance in that context as well as in the context in which Mr. McGrergor use, it. Mr. McGregor admits to being something of a cannibal, and he has cannibalised my modest suggestion to put into his new edifice which the delegate of France has described so adquately. However, there might still be some ambiguity, and it has been suggested to me by my learned colleague from the United Kingdom that this could be removed by substituting the word "the" for the word "any" in the phrase in question. It would then read "in order that the Organization may determine, in the particular instance,". I think his suggestion is entirely acceptable to the United States. G 40 E/PC/T/B/PV/2 Mr. McGREGOR (Canada): Mr. Chairman, in denying the American phrase I did not want to imply that I disliked the child, I thought well of it. I am afraid, though, in yielding to the influence of his next-door neighbour, the Delegate of the United States has made it difficult for my child to live. CHAIRMAN: No doubt all these alterations will be taken into account by the Drafting Committee. Mr. THILTGES (Belgiuzm) (Interpretation): I think that after the discussion to find out the 'paternity', I partly agree with the United Kingdom representative; and on the first point I am particularly happy with the explanation supplied by the United States re.presentative. Now as regards the extension of investigations to related practices on which no complaint has been lodged, I must make formal reservations on the part of my Delegation, and my Delegation cannot agree with this new procedure. CHAIRMAN: There being no further comments, I propose that this Canadian proposal be referred to the Sub-Committee. Well, the time is getting late and I would just like to deal before we close with the amendment proposed by the Delegation of Czechoslovakia to delete the words "or to be about to have" in line 7 of the New York text of paragraph 2. Mr. MINOVSKY (Czechoslovakia) (Interpretation): The Delegation of Czechoslovakia, Mr. Chairman, is of the opinion that any investigation undertaken by the Organisation should bear on facts only. If the words to which we object with regard to practices - "or to be about to have" - are excepted, the result may be that the Organisation will be engaged too often in a sort of 41 E/PC/T/B/PV/2 guesswork, and too many useless investigations may take place. Also there is a danger that if these words are adopted there will be too much room for wide interpretations of para. 3 of Article 39. We think that if it is our desire to have in the future careful investigations conducted by the Organisation with sufficient facts to support them, we must exclude any possibility for investigations to be undertaken on the basis of imaginary complaints, or misunderstandings, or perhaps even, in some cases, of bad faith. If we were to call a fireman every time there is the possibility of a fire starting, we would never have enough firemen. CHAIRAN: The Delegate of South Africa. - Mr. Vi0 DER POST (South Africa): co this nnection I would say that Article 2 as drafted in New York in effect forces the ITO to pre-judge the c se, and, the words "or to be about"to havel are not in my opinion satisfactory, and should be removed - the words "to have or to be about to have"; but fortunately both Amendments - that of the United States and of Canada - provide for that improaement, End the Organisation will then be placed in a position to decide what the actual positann is, emd not to pre- JuAge it. Ls it originally reads it would. moreover, have to assume-that that is the case and therefore provided and in that respect, of course, I agree with the Delegate for Czecioslovakla. But fortunately, as I eec thesL two prmposed Aeendichtc wht h our Committee will consider, it removes that objection. CH.IRMEN: These words occur in a number of different places, and I think it will be the function of the Sub-Committee to consider changes in these words whenever they appear. G. E/PC/T/B/PV/2 Therefore, if the Commission agrees, I propose that the amendment of the Czechoslovak Delegation be referred to the Sub-Committee. Agreed. Well, I think we have come to the end of our labours. We have not made as much progress as I had hoped. I wanted to see us cane to the end of Article 39, and we have not been able to do so; but I hope we will be able to work more speedily to-morrow afternoon. The next meeting of this Commission will be held at 3 o'clock to-morrow. In the meantime, I wish to make an announcement with regard to the composition of the Sub-Committee to which we will refer the Amendments proposed by the Delegations of Canada, Belgium, the United States and other questions which we referred to the Sub-Committee this afternoon - that is, other than the question of services. We will therefore have two Sub-Committees - one will be Sub-Committee No. 1; which we appointed earlier this afternoon, to teal with the question of services. That Sub-Committee should meet to-morrow morning. The second Sub-Committee, which I propose to nominate now, should meet on Monday; as it may be overlapping representation on the two Sub-Committees it would be desirable for Sub-Committee No. 1 to finish its deliberations before Monday. The following are the Delegations which I propose to constitute Sub-Committee No. 2: Belgium, Brazil, Canada, France, United Kingdom and the United States. The Meeting rose at 6 p.m.
GATT Library
qs566pc7490
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Second Meeting of the Tariff Agreement Committee held on Wednesday, 6 August 1947, at 10.30 a.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, August 6, 1947
United Nations. Economic and Social Council
06/08/1947
official documents
E/PC/T/TAC/PV 2 and E/PC/T/TAC/PV/1-4
https://exhibits.stanford.edu/gatt/catalog/qs566pc7490
qs566pc7490_90260005.xml
GATT_155
7,948
48,783
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/TAC/PV 2 6 August 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT SECOND MEETING OF THE TARIFF AGREEMENT COMMITTEE HELD ON WEDNESDAY. 6 AUGUST 1947. AT 10.30 A.M. IN THE PALAIS DES NATIONS, GENEVA Hon. L.D. WILGRESS (Chairman) (Canada) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel: 2247). Delegates are reminded that the texts of interpretations, which do not pretend to be authentic translations, are reproduced for general guidance only; corrigenda to the texts of interpretations cannot, therefore, be accepted. NATIONS UNIES CHAIRMAN: The Meeting is called to order. We shall resume the Debate on the Report of the Tariff Negotiations Working Party on the General Agreement on Tariffs and Trade. I think that it would be of assistence in clarifying the situation pertaining to the time-table if Members in speaking on the general principles underlying the Report of the Tariff Negotiations Working Party would give some indication as suggested yesterday by the Delegate of the United States as to whether or not they believe their Government would be prepared to sign the General Agreement on Tariffs and Trade on September 30th, presuming the Tariff negotiations be completed by September 10th. As we were adjourning yesterday, the Delegate of Chile asked for the floor, and if he so de res I shall give him the floor first. The Delegate of Chile. E/PC/T/TAC/PV/2 - 2 - G S 3 - E/PC/T/TAC/PV/2 Mr. F. Garcia OLDINI (Caile) (Interpretation): Mr. Chairman, I would like to refer to the remarks I made yesterday, to which you gave an answer before the closing of yesterday's session. You ~told us that Articles I and II, as well as the Article which reproduces Article 38 of the Charter, are characteristic Articles which can be found in all agreements, You are quite right, Mr. Chairman, but the difficulty lies in the fact that we are to agree on these Articles before their final form is decided and this, I submit, is precisely the difficulty which we envisage. This plays an important part in our present discussion. As to my other remarks concerning the difficulty of the provisional application of the Agreement, as well as my remark that we provisionally reserved the position of our Delegation, I want to observe that we would like to wait for a further suggestion concerning the possibilities of surmounting the difficulties which I pointed out and other difficulties which have not yet been discussed. CHAIRMAN: Perhaps the point which has been raised by the Chilean Delegate, and which I think has can be met if, after the general discussion of the Report of the Tariff Negotiations Working Party - I hope that this general discussion will be concluded this week - we first of all take up the detailed consideration of Part III, because most of the Articles of Part III do not reproduce Articles of the Charter and we could only take up detailed consideration of Part I, and afterwards of Part II,. at a later stage, by which time no doubt the Preparatory Committee will have established a definitive text of the Charter. I take it that this will meet the point raised by the Delegate of Chile, and I hope that the other Members of the Committee will be in accord with this suggestion. S - 4 - E/PC/T/TAC/PV/2 The Delegate of India. Mr. B.N.ADAKAR (INDIA): Mr. Chairman, we are trying to think how best to deal with the two or three questions which were posed yesterday by the Delegate of the United States. Like Australia and other Delegations which expressed views on the subject yesterday, we would also need some time to study the General Agreemant as a whole after the main features of it are decided, It seemed to us, on a prime facie consideration of this document which has been prepared, that if a country needs time for consultation after the negotiations have been completed, then it could, if its name is not mentioned in Article XXXII, sign the Agreement at Geneva but take the necessary time for consideration by delaying its ratification, because it would appear from the wording of ArticXXXII that for any country whose name is not mentioned in Paragraph 1 of that Article signature would not involve the necessary undertaking to give provisional application, It seems to us, however, that although ArtiXXXII is worded in this way, it will still, in fact, be necessary for every country signing the Agreement to give provisional application. The need for that arises from the fact that those countries which will give provisional application will probably find it necessary, before they give that application, to publish the General Agreement as a whole, along with all the Schedules of tariff concessions attached to the Agreement. If they do that, then they will be giving publicity to the tariff concessions which have been agreed to by countries which have not found it possible to give provisional application. In that case, once the tariff S E/PC/T/TAC/PV/2 -5- concessions promised by a country are published, it will be very difficult for that country to delay bringing those tariff concessions into efftect. Once the importers know that a duty on a certain article is going to be reduced, it is going to be very difficult to delay reduction of that duty without completely demoralizing the trade, because it will be in the interests of the importer to delay his imports until the reduction comes into effect. ER E/PC/T/TAC/PV/2 -6- Therefore, the fact that the provisions of this Article are going to be given simultaneous publicity on a date to be determined, actually leads us inevitably to the conclusion that that will be the date on which provisional application will have to be given, not merely by the countries mentioned here, but by all countries which have signed the Agreement. Therefore, if any country needs time for studying the Agreement as a whole, the maximum period of time that it gets for study or consultation is the time between its signature of the Agreement and the date that will be fixed for provisional application, that date being the deadline for giving provisional application. I quite understand that provisional application is subjected to the proviso that it can be withdrawn at sixty daysr notice. Even so, certain countries will find it necessary to have time for study and consultation before giving application whether on a provisional or definitive basie. Well, that being the case, a country which needs time for study and consultation cannot hope to get that time by delaying application, because application is subject to a deadline. Therefore, it will be necessary for a country in that position to have the necessary time before giving its signature, because signature in fact implies provisional application. Therefore, countries in that position will find it to their advantage, if the facts are as stated, to delay that signature and thus to obtain the necessary time. India is in that position, and therefore, on this understanding - if this understanding is correct, that, when the Agreement will be published, the countries giving provisional application will publish all the schedules and not merely the schedules relating to countries which have agreed to give provisional application, but schedules of all countries which are attached to the Agreement, which have signed the Agreement - if that understanding is correct, then it is in the interest of a country such as India to delay its signature to some -7 - -_ ., _,-- - _,- such date as that indicated by the De.legate for Australia yesterday, If, onn nathe other hand, tat understing is not co.rectjLnd the countries which want to give provisional application will agree to .ublish only those scheduntriwhich relate to other cour.:ies which have agreed to giveping provisional application, keethe schedules of countries which are not expected to give provisional application in suspense, then the situation would be different. But I doubt whether that procedure is at all practicable, because, from the point of view of oublic.ty, and from the point of view of the psychological erpixssion which it is interl^d to make on other countries not represented here,rperhaps publicity of that so-t may not be convenient. The answer to the quesfion -oset. by the Delegate o the Uni-ed States is that, like Australia, India would like to defer her signatume so this Agreement until sore uuch date as that suggested yesterday. Thile I am speaking on thIs subject of the timetable, r would like to offer one other suggestion. There are mary features in this Agreemere which are particulandmentu.Ls concerning the amexllnt and the witcdrawal of other clauses whiuh will create very grave uncertainty in the mnds of the nations which will be assembled at the World Conference as to whether beis Agreement will at all b6 substituted by an International Trade Organization Charter, when it comes into effecm, or 'whether a whtchtion nay not arise in Wticn this Agrmementmand the ITO Charter iay rerain simultaneously in operation. That wiIL be a verydoncotvenient position. I QO no wish to dwell ot those featureup perhaps Zhey will come U. for d scussion in the course of- this debate, and perhaps those features, howeper undesirbble they may ajpear, may De accepted by the delegations here preshat as inevitable; bhut peri-ps the effec, - te slightly un.leasant eefecr - created by those f atu:es might be mitigated if the signatories to this Agreement agree beforehand that E/:C/T/TAC/PV/, ER E/PC/T/TAC/PV/2 they will not give definitive application to this Agreement until they see the result of the World Conference. I believe that this is necessary in order that the nations/present at the World Conference may not feel/that we are presenting them with an accomplished fact, in order also that the main intention behind this Article XXXII on Provisional Application, may be fulfilled. I have not been able to discover anything in this Agreement which indicates definitive delay until the end of the World Conference. The is, of course, recognition in the Protocol, in paragraph 2, that the signatory countries "gree that the objectives laid down in the preamble to the Agreement can best be attained if the proposed United Nations Conference on Trade and Employment adopts a Charter for the International Trade Organization." I should think that it is Implied in this undertaking that the signatory countries should agree here, at this Conference, that they will not bring this Agreement definitively into force until they see the result of the World Conference, because, otherwise, the effect of paragraph 4 of Article XXIV is that 30 days after acceptances have been deposited with the Secretary General on behalf of territories which account for 84% of the total trade of signatory countries, the Agreement will come into force. There should be some understanding here on that point. 8 ER J. E/PC/T/TAC/PV/ 2 CHAIRMAN: The Delegates of New Zealand. MR. J.P.D. JOHNSEN (New Zealand); Mr. Chairman, the position of New Zealand is that an agreement cannot be made effective even provisionally until ratified by Parliament . Although there has been constant communication with the the Government in connection with negotiations; there is a difficulty at t his distance, when communications must be confined almost entirely to cables, of keeping then fully informed on all points. Furthermore, full details of items of interest in a multilateral Agreement which will require to be considered in weighing up the proposals will probably not be available until completion of the negotiations. In the circumstances, my Government would, I feel sure, desire to have an opportunity to consider the complete proposals in their final form before coming to a decision regarding signature. In that respect our position is much the same as that of Australia, and a procedure along the lines of that suggested by Dr. Coombs would probably be most acceptable to New Zealand. We are in complete accord with the suggestion that the Agreement should remain strictly confidential until published simultaneously at a prearranged date by each party to the Agreement. The date on which New Zealand might give Provisional Application to the Agreement would be dependent on whether, at the time of publication, Parliament happened to be in Session and was able to pass the necessary legislation. In that connection, the point raised by the Delegate of India - that it would be necessary to give the Agreement Provisional Application as soon as possible after publication- might give us some concern because I think that there is the aspect that if provisional Application is delayed there will probably be some disturbance of trude, and that is a matter 9 J. 10 E/PC/T/TAC/PV/2 which will give as some concern. As to the question which has been raised as to whether at this stage General Provisions should be included in the Agreement, this necessarily involves the question of reservations to any Article which it might be proposed to insert in the Agreement. It would seem, therefore, rather premature perhaps at this point to attempt to determine that matter. Thank you. 11 E/PC/T/TAC/PV/2 Dr. J.E. HOLLOWAY (South Africa) Mr. Chairman, our legislation requires ratification wherever duties are below the intermediate column of our tariff, and as we have agreed to numerous reductions below the intermediate column, the General Agreement would have to be ratified by our Parliament before it could be brought into force. Our Parliament generally meets in January. As for the Agreement, when the document is ready to be signed or initialled, we propose to sign it ad referendum. Our Government has had the Agreement in bits and pieces, and, after all, Ministers are also human beings, and ought to be given at least the opportunity of seeing what they have to put their signatures to, especially as they are likely to be criticised very severely in Parliament if they put their signatures to something which an Opposition can criticise. There is only one other point I wanted to mention: the point raised by the Delegate of India. We are not at all concerned with advance notice, though we agree there should be simultaneous notice. On the contrary, when it comes to a reduction in tariff we prefer to give advance notice so that merchants can lay off their stocks of goods on which higher duties have been paid before the new goods come in. If there is a material reduction in duty, you may even cause very aevere losses to, merchants by bringing in the reduction of duties immediately. I do not know whether the Delegate of India did not, perhaps, have at the back of his mind the position that develops when there is an increase in duties, when, of course, you want to prevent certain people from forestalling you and making quite un justifiable profits at the cost of the general taxpayer. V E/PC./T/TAC /PV/2 CHAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman, may I add just one word of comment to the question raised by the Delegate of South Africa just now? It is quite true that when there is al increase of duty it is necessary to give effect to it immediately, in order to prevent forestalling. When there is a reduction in duty, some advance notice may be permissible in order to enable traders to work off their stocks; but the point I was going to make was not that no notice should be given, but that an unduly long period should not be allowed to elapse between publication and enforcement in the case of a reduction of duty, because if such a period is allowed, stocks may be running low, and after the stocks have been exhausted a situation of scarcity will develop - the importer will necessarily defer importation till the reduction comes into effect. Therefore, once publication is given to any tariff reduction, a definite time limit should be established as to when the tariff reduction is to be brought into effect. 12 V E/PC/T/TAC/PV/2 CHAIRMAN: Any other speakers? The Delegate of Czechoslovakia. Mr. STANISLOV MINOVSKY (Czechoslovakia) (Interpretation): Our Delegation, Mr. Chairman, has already said in this Conference that it was impossible for us to sign this agreement without the approbation of our Assembly. In particular, if we consider the case of Section II and of certain articles in Sections I and III, these Articles may lead us into terrible difficulties; and it is not clearly stated that the question here is of a provisional signature. In fact, there is in this text a certain provision which is not in agreement with our legislation. It is not possible for us to sign it even for one day, and we consider that it is impossible to put into practice this Agreement before the end of the world Conference. In particular, if we consider Article XXIX dealing with certain very particular obligations of the Members, it is very difficult to accept provisionally those obligations. Article XXIX says that the contracting parties shall take all necessary steps to terminate any prior international obligations with any non-contracting party which are inconsistent with this Agreement. I think that the fact of signing a Text including such provisions may imply very great difficulties for our country, and, of course, it may be said later on that we might come back to this particular provision and say that we signed it by mistake; but we consider it is not possible to submit a certain text to our Parliament on a certain date and. come back with another text later on. Therefore, we believe that a detailed discussion of this Agreement. should be postponed until a definite Text of the Charter has been adopted. CHAIRMAN: The Delegate of Cuba. G 13 G 14. E/PC/T/TAC/PV/2 Mr. FRESQTUET (Cuba): In our case, Mr. Chairman, the Agreement as a whole must be ratified by the Higher House, and in the case of changes in the tariff they should be approved, in ordinary law, by the whole Government. The Executive Branch of our Government will do their best to speed up the procedure, but, of course, we cannot commit curselves to any fixed date to put into force the Agreement. 15 S E/PC/T/TAC/PV/2 CHAIRMAN: The Delegate of Syria, Mr. Hassan JABBARA (Syria) (Interpretation): Mr. Chairman, the Syrian Delegation is not represented here as a Member of the Economic and Social Council but because it has a Customs Union with the Lebanon. Moreover, Syria is a Member of the United Nations and as such will be called upon to examine the Draft Charter with the other Members of the United Nations and adhere to it after the discussion and examination of the provisions of the Draft Charter. As far as the present agreement is concerned, we meet with very much the same difficulties for its application as those which have been mentioned by the other Delegates who took the floor. We believe that these difficulties arise from the fact that at the same time as the Draft Charter was being examined it wes desired to provide for a multilataral agreement which embodies the main provisions of the Charter, which is still under discussion. This has resulted in an impasse. If we sign the Agreement we automatically subscribe to the Charter and find ourselves bound, although certain. points of the Charter are not yet definitely agreed upon. In this connection, Mr. Chairman, we submit a proposal which will perhaps show a way out f- the present difficulty. The customs agreement must, in our opinion, remain a customs agreement and therefore ought not to include Section II of the Report, nor ought it to include Article I of the present Report, which reproduces Article 14 of the Charter, which is still under there discussion. Nor should we find/Article XXII, which reproduces Article 38 of the Charter, which has not yet been finally adopted. S E /PC/T/TAC/PV/2 If we free the Agreement from provisions which are still under discussion, and provision which will again be discussed by all the Members of the United Nations in November, then the situation will be clarified and it will be easier to find a procedure for a provisional application of the Agreement and so help world trade until the final provisions come into force. If this point of view is not accepted by the Committee, the Syrian and Lebanese Customs Union can only repeat their reservations concerning certain Articles, which were reserved by them and which are still under discussion, until the Charter is adopted, Moreaver, we are of the opinion that the provisions which are embodied in the Agreement ought to be valid only until the final adoption of the Charter and that all modifications which might be undertaken at the date of the adoption of the Charter should be automatically applicable to the Agreement t which will be signed now. CHAIRMAN: Are there any other speakers? We have now heard from 14 Delegations on the question of the time-table to be followed regarding the signing and bringing into force of the General Agreement on Tariffs and Trade, and it is clear that we cannot arrive at any conclusion at this stage, because I have the impression that in a number of cases Delegations wish to consult their Governments on various points. Therefore I think it would be better to leave over the further consideration of the time-table until we come to the detailed consideration of Part III of the General Agreement on Tariffs and Trade. That part includes the Articles providing for the entry into force, also the signature of the Agreement, and that would give another occasion on which to examine more closely the time-table which will be adopted. I therefore E/PC/T/TAC/PV/ 2 suggest that the remainder of this general debate be now devoted to more general qucstions in relation to the Report of the Tariff Negotietions Working Party and that we take up the question of the time-table, again when we consider the Articloswhich will deal with the entry into force of the Agreement. I would like to take this opportunity of making an announcement with regard to the submission of amendments on Part III of the General Agrement. As I stated earlier, Part III contains those provisions which are independent of the the submission of Charter and we can now fix the closing date for/amendments on Part III. I would propose that this closing date for amendments on Part III should be noon on Monday next, August 11, That would then enable us to take up later in the week the detailed consideration of Part III. I shall be glad to know if this proposal meots with the approval of the Committtee. S 17 ER 18 E/PC/T/TAC/PV/2 Is that proposal agreed? It is agreed. Well, we will now regard Monday, August 11th, noon, as the closing time for the submission of amendments on Part III of that Agreement. The debate will now be continued on the report of the Tariff Negotiations of the Working Party. Dr. H.C. COOMBS (Australia): Mr. Chairman, when I spoke previously I confined my remarks exclusively to the timetable implied by the General Agreement, but there are one or two other matters to which I would wish to refer. It is not my intention to comment upon the contents of this Draft General Agreement produced by the Tariff Steering Committee, but there are certain problems raised by the contents which I wish to refer to, so that it will be clear, when we as to come to consider the individual parts of the Agreement,/the point of view from which our criticism will be directed. We have indicated at various times, that we believe those two parts of those negotiations to be very closely inter-related, not merely that the Tariff Negotiations are closely interlocked with the discussions of the Charter, but the proposal of the ITO and the various parts of the Charter are, themselves, very closely inter-dependent and that it would be, in our opinion, difficult, if not unwise, to accept obligations in relation to the reduction of tariffs and in relation to commercial policy unless we are confident that other countries are simultaneously a cepting obligations of the kind embodied in the more positive parts of the Charter, and that we are reasonably confident that our position is carried out. prefer We would, therefore,/an arrangement which would enable the tariff schedules and the Charter as a whole to be dealt with and adopted simultaneously. We recognise that there are difficulties in that approach; the difficulties may, in fact, be so acute that it is impossible for them to be dealt with in that way; but we must make E/PC/T/TAC/PV/2 quite clear the fact that we may be prepared to accept a programme which envisages the various parts of this whole being dealt with separately, but they are none the less parts of a whole, and that action taken at the outset is on the assumption that action will be taken by other people on the parts which have to be dealt with later. This is very important, when we come to consider the contents of the General Agreement. It would best meet our requirements if the General Agreement contained the whole of the Charter in its present draft form, and if it were clearly understood that, when the Draft Charter ceased to be a draft and became a final document, it as a whole replaces the general Articles of the Agreement. Since it appears that some countries are not in a position to adopt the whole of the Charter provisionally in the General Agreement, at we must look/what parts of the Charter as a whole are being included and what parts are being omitted. The Steering Committee on Tariffs has suggested the device of the Protocol for dealing with those parts of the Charter which are not embodied in the General Agreement itself, and I have payed tribute before to their ingenuity. I agree that that is an honest attempt to meet our point, but I think delegates will agree that it is not entirely a satisfactory answer to our-problem, and that, if we accepted it, it would be in the confident expectation that it will be replaced by complete action as early as practicable. If we accept that, however; we come back to the position that the contents of the General Agreement, so far as the general articles are concerned, should be limited to the obligations which are absolutely necessary to protect the schedules of tariff reductions which have been negotiated. Otherwise, there is no reason for including for any of the obligations in the Charter being a based on/different basis from those which at present are covered by the Protocol. To include any of those obligations in the General Agreement beyond what is absolutely necessary for the protection of the tariff schedules implies a distinction between some of the obligations in the Charter and others. 19 ER 20 J. E/PC/T/TAC/PV/2 I have made this point, Mr. Chairman, because, to be perfectly frank,we are not entirely satisfied that the Articles which it is proposed to include in the General Agreement are only those which are necessary for the protection of tariff schedules themselves. We are not in a position at the moment to give details of our doubts in the various Articles - we will do that when the detailed discussion on the General Agreement is undertaken - but I would wish to refer to one .article in particular, since this Article is, to some extent, fundamental, and it is a matter to which I referred earlier in the discussion of the Draft Charter. I would like to remind delegates, Mr. Chairman, that when article 14 of the Draft Charter was under discussion, that is, the Most-Favoured-Nation clause, I said something to the following effect:- It is not our intention, that is, the intention of the Australian Delegation, to accept the obligations implied by any one of the Articles of the Charter unless there is substantial evidence that the other purposes of the Charter are receiving attention which gives us reason to anticipate that agroed act :^ will be taken and will prove effective. It will, therefore, not be possible for a final judgment to be made by the Australian Government as to whether the unconditional Most- Favoured-Nation principle should replace the preferential basis on which its commercial policy has been construacted in the past until we have made substantial progress,not merely in the discussions of tho Charter, but in other parts of the work being carried out in Geneva, and until other matters, which are primarily matters of domestic policy of the countries concorned, are determined. E/PC/T/TAC/PV/2 As I pointed out there, the acceptance of the Most-Favoured- Nation principle is, for those countries which are members of a preferential system, a fundamental change in the character of their commercial policy. It is a change which in our opinion is justified only by the whole content of the Charter, and the change in commercial and domestic policies which are implied in all parts of that Charte. We will, therefore, be unwilling to accept the obligations implied in Article 14 until the whole of the Charter is adopted. It is not our opinion that it is necessary for as to accept the Most-Favoured-Nation principle for other countries to be satisfied that the tariff reductions which we have negotiated and which are embodied in the schedule will be protected against abuse by other aspects of Australian commercial policy. We are not convinced, therefore, that it is necessairy for Article 14, the Most-Favoured- Nation clause, to be embodied in the General Agreement on Tariffs and Trade at All. To as, it is part of the general structure of the Charter, which should be dealt with along with the other parts of the Charter which are not regarded as absolutely essential to protect the schedules of reductions. The other point which I wish to deal with specifically, Mr. Chairman, is the provision in the Draft Agreement relating to the replacement of its general Articles by the Articles of the Charter when the Charter is agreed to. The provision at present is a strange one. We have understood that the purpose of thase negotiations was to reach agreement about the content of the Charter, and also to bring about reductions in tariffs, and that when both parts of this job have been done the commercial policy provisions would ba those of the Charter. It is proposed in here that the 21 J. 22 General Articles of the Agreement should be replaced by the Charter only if two-thirds of the Members agree. Now, that seems to w; to be a strange provision. In our opinion, the replacement of the General Articles by the Charter ought to be automatic unless there is good reason to the contrary. A more reasonable provision would be to provide that the General Articles of the Agreement would be replaced by the content of the Charter unless a substantial majority of the Members agree otherwise. The reason that I refer to this, Mr. Chairman, is that we are somewhat concerned about certain elements in the Draft Generl agreement which appear to us to imply some doubts as to whether the Charter will, in fact, become operative, and correspondingly there is a desire to construct the General agreement not a provisional document which will be replaced by the Charter but as something which will stand alone in the event of agreement failing to be reached on the Charter. Now, we have no objection, obviously, to the possibility of such failure beirg provided for, or for a provision ueing included which would permit the parties to the General Agreement to confar, in the event of failure to reach an agreement about the Charter, so that they could decide then what right replace on a permanent basis the Charter. which we anticipated would form the casis for this permanent agreement. We are distressed at the suggestion that it is necessary to establish here in the General Agreement, something which, by its structure, appears designed to continue in the form in which it is agreed upon hero rather than to be quito clearly regarded as something provisional to fill in the gap between the time when it is necessary to operate the tariff reductions and the time when we have a Draft Charter which will act adequateIy and satisfactorily as the General Tariff Articles of such ariffs Agreements. E/PC/T/TAC/PV/ 2 J. E/PC/T/TAC/PV/2 CEAIRMAN: The Delegate of India. Mr. B.N. ADAKAR (India): Mr. Chairman, we have listened with great attention to the illuminating remarks made by the Delegate of Australia. So far as the provisions of this agreement concerning amendments are concerned, the Indian Delegation had occasion in the past to draw the attention of the Tariff Steering Committee to the sort of inconvenient situation that is likely to arise if slightly more than one-third of the contracting parties decide not to replace the General Agreement by the provisions of the I.T.O. Charter, and the possible adverse effect which this might have from the point of view of making this Agreement and the Charter acceptable to the nations attending the World Conference. However, we recognize that this situation cannot be altogether avoided, though it has to be modified somewhat. We do not, therefore, for that reason asso ciate ourselves completely with the suggestions made by the Delegate of Australia. The Delegate of Australia suggested that one way of getting out of this difficulty would be to provide that the General Agreement should replace automatically the I.T.O. Charter unless a substantial majority of the countries decided otherwise. We would think that procedure extremely risky and dangerous. We are signing an Agreement for a definite period of three years. We should not be asked to make a leap into the dark. We should not, therefore, be expected, at the time when we sign the Agreement, to commit ourselves beforehand to accepting anything without our own consent during the period of the Agreement. If a provision, is inserted to the effect that the general Agreement will be automatically replaced by the Charter, when we V 23 V 24 E/PC/T/TAC/PV/2 do not know what the future Charter is going to contain, we shall be accepting an undefined and vague commitment. It is highly necessary that when we sign the General Agreement we should know precisely what our obligations are, and if there is going to be any change in those obligations, each change, before it is applicable to us, should have our consent. It is, therefore, necessary that we should maintain the provisions which at present exist in paragraph 1 of the Article on amendments (Article WAII ), and that the question of replacing Part II of the General Agreement v, the corresponding provisions of the Charter should not arise unless all the contracting parties to this Agreement have accepted the I.T.O. Charter. G 25 E/PC/T/TAC/PV/2 That seems to us to be very necessary. If any country does not join the ITO Charter but has signe. the General Agreement, then any modifioation in the terms of the General Agreement in order to bring it into line with the ITO Charter should be carried out only in the process of the Amendment; and as provided for in paragraph 2 of the Article on Amendments, any such Amendment should be effective only in respect of those contracting partics which accept the Amendment. If any of the contracting parties chooses not to accept a particular Amemdment, then that Amendment should not be effective with respect to that contracting party. This is very fair, because as I pointed out at the start, it is necessary for every country that signs the agreement to know precisely what its position is going to be through this period of three years; and it is especially necessary, because there is no provission in the Agreement at all whereby a country can withdraw from the Agreement before three years. At the same time, I would like to draw the attention of the Committee to a pravis ion which exists in paragraph 3 of this Article on Amendments. In the second sentence of this paragraph it reads, "The Committee may decide that any contracting party which fails to accept an amendment which has become effective other than an amendment to Part I of this agreement, or to the provisions of this Article, shall cease to be a party to this Agreement for such period as the Committee may specify." That is to say, in the first place, in para 2 we are giving the contracting party the right to decide which particular Amendment will become effective with respect to his country, and in para. 3, we take away that right by telling the country that if the Amendment it does not accept becames effective, then the country is liable to be dismissed from this Tariff clause. 26 E/PC/T/TAC/PV/2 The right to 2 is taken away by 3. It is highly Desirable that a country signing the Agreement should not be placed in that position. The country should know that nobody has the right to impose fresh obligations on it, so it is not likely to be dismissed. For that reason, we would suggest a definite deletion of the second sentence of para. 3 of the Article on Amendments . One more word. Although India is a country which has in the past given ant enjoyed preferences, although we have taken due care in the course of the deliberations of this Conference to safeguard the rights at present enjoyed both by India and other countries to which India gives preferences to the extent to which it was necessary to do so, we would not support any suggestion that Article 14 be left out of the General agreement. We regard the Most-Favouread-Nation principle as essential to, the success of this Conference, and if Article 14 and the principles embodied in that article are left out of the General Agreement, the Agreement will lose much, in faot the whale, of its value. We would. therefore strongly oppose the suggestion to leave out Article 14. S 27 E/PC/T/TAC/PV/2 CHAIRMAN: The Delegate of the Netherlands. Dr. R.S.SPEEKENBRINK (Netherlands): Mr. Chairman, as I said on another occasion, when we discussed the Report of the Tariff Negotiations Working Party with regard to the progress of negotiations, the real difficulty with many of our negotiations is that we do not know exactly which are the underlying clauses of our negotiations. That shows quite clearly how much worth we attach to a number of Articles of the Charter which are necessary to protect the concessions we give with regard to tariffs, and I think that is the reason why we must have a certain number of these Articles in the General Agreement on Tariffs and Trade; otherwise we shall have traded away certain safeguards to our own economy without knowing that, on the other hand, we shall have the advantage of stipulations which are intended to free international trade from many of these obstacles. We consider these particular Articles as absolutely necessary for real agreement on tariffs and trade, so that I am fully in agreement with the Delegate of India when he says that to delete Article 14 for instance, from the General Agreement on Tariffs and Trade goes too far. I consider that a very sweeping change which might unbalance the whole thing. We should therefore, in our opinion, decide which Articles really need to be included in this General Agreement, and no doubt it will be possible in this connection to come to an agreement amonst ourselves. But to delete all these Articles and have only a fsw provisions standing to put into effect these tariff reductions at a certain date with no other safeguards at all, would be unacceptable to us, I think. ER - 28 E/PC/T/TAC/PV/2 I will then come to another argument which has been made with regard to Amendments - Article XXVII. Here again, our position is that these Articles are a very important part of the General Agreement on Trade and Tariffs, and we must see to it that we do not adopt such a position that the World Conference will say to us: "Well now, you have drawn the thing up in such a way that the only thing for us to do is to take it, or leave it." I have always regarded paragraph 3 of Article XXI Iin that light, that if we Ssa that we can have no changes in Part II of the General Agreement we do, in effect, without the consent eof ll the parties, what many of the delegates have warned us against. I would, therefore, welcome a clarification of the meaning of this clause, and I do not doubt that we will come to an agreement there. Then, there is a third point of greater importance which is our whole position with regard to the General Agreement, and here I mean the possible consequence of the Resolution of the Economic and Socail Council with regard to the invitation of non-Members. I will not go into that - I welcome very much the opportunity that tomorrow we will hate a discussion of the Heads of Delegations and the report of the Chair-mn of this Committee on this point, but the position is bEeig studied at home, and I only would like to point out here that that amendment might create very serious difficulties for us. J. 29 E/PC/T/TAC/PV/2 CHAIRMAN: The Delegate of the United States. MR. W. BROWN (United States): Mr. Chairman, I simply want to address myself to the first point made by the Delegate for Australia in which he questions the desirability of including in the General Agreement on Tariffs and Trade the principle of the Most-Favoured-Nation Treatment. That principle seems to us to be an absolutely fundamientaI principle which is essential to the Agreement. We have been proceeding, I thought, on the basis that that was our principle of approach in these tariff matters We have recognised that there have been exceptions to it in established preferential systems, but one of the objectives of this Conference has been, by the process of negotiation to reduce or are eliminate the discriminations which/inherent in those systems. E/PC/T/TAC/PV/2 It seems to us absolutely essential that in this Agreement we undertake to give each other most-favoured-nation treatment with the exceptions which are provided for in Article 14 (2). We regret those exceptions, but they are there and we all accept them. But we would feel that if that principle were to be omitted from this Agreement, it would be a tremendous step backwards by the Conference, because it would amount to a declaration by the nations represented hero that they did not consider the principle of the most-favoured-nation treatment to be sufficiently important to include in this Trade Agreement. I should have thought that the point made by the Delegate of Australia would be met by the provisions of paragraph 2, in which the existing preferences which have not been modified or eliminated by the negotiations here would be preserved. I wonder if he would care to clarify that point. CHAIRMAN: The Delegate of Australia. Dr.H. C. COOMBS (Australia): Mr. Chairman, I am glad of the opportunity to explain a little more a point I have made in relation to the preferences. I agree that paragraph 2 of the existing Article saves those preferences which come out of the negotiations; but the Delegate of the United States will realize that they are bound - not only the cm s which were negotiated, but the others also. That is the difference. The point I want to make on this matter is not an attempt either to suggest that the most-favoured -nation principle is not a very important part of the Charter, or that we would not wish to accept it as part of the Charter, but that it is not necessary to protect the tariff reductions negotiated here. We agree that it is important, but it is no more important to us V 30 V E/PC/T/TAC/PV/2 than the undertaking to maintain high levels of employment or to take action designed for that purpose. We are leaving that one to the Charter. Therefore, the importance of these Articles is not the basis for deciding whether they go into the General Agreement or not. The choice between whether they go into the General Agreement, or whether they are left untill the Charter and only covered in the meantime by the Protocol, depends upon whether they are necessary to protect the tariff reductions. Now if any Delegate, the Delegate of the United States, the Netherlands, or the Delegate for India, or any other Delegate, can show us how in the absence of the Most-Favoured-Nation Clause we can evade or reduce the value of tariff reductions we have negotiated here, we withdrew our opposition to the inclusion of Article 14 in the General Agreement. Chairman: The Delegate of Belgium. E/PC/T/TAC/PV/2 M. Pierre FORTHOMME (Belgium) (Interpretation): Mr. Chairman, the Belgian Delegation simply wishes to affirm that it fully associates itself with what has been said by the Delegate for the Netherlands. We consider that the provisions of the tariff negotiations must have full effect in the framework which has been worked out for the Tariff Agreement. We agree that the provisions of the Charter might supersede the provisions of the Agreement, provided they remain in the framework of this Agreement. We do not wish to commit ourselves beforehand in this respect if we do not have the assurance that the new provisions of the Charter do not correspond to the framework of the concessions which have been worked out for the Tariff Agreement. (M. Forthomme intimated that he wished to make a correction in the interpretation): I would prefer to say, instend of "the framework", the general set of conditions in which the concessions will be operative. I would be willing for the provisions put into the General Agreement to be replaced by the ones in the Charter, on condition that the general set of conditions would be similar and not afford less protection than the ones we have agreed to here, CHAIRMAN: We have now come to the time at which we should adjourn so I suggest that we postpone the debate until our next meeting. Unfortunately, it will not be possible for this Committee to meet tomorrow. It has been decideed to give right of way to the Sub-committee on Chapter IV, which is the Sub-committee most behind in its work. 32 S S The Secretariat have arranged, in consultation with the Tariff Steering Committee, that we should have the right of way on Monday next, It is therefore proposed that we meet on Monday morning and also on Monday afternoon, which I think will give us an opportunity to conclude this general discussion on the Report of the Tariff Negotiations Working Party. The next meeting will therefore take place at 10.30 a.m. on Monday. I should like to remind Members of the Committee once more of the deadline which we have fixed for the submission of amendments to Part III of the General Agreement. It will only be possible for us to consider amendments which have been submitted in writing when we cane to the detailed consideration of Part III. Therefore all Delegations should submit amend- ments before noon on Monday, August 11. There being no further business, the Meeting is adjourned. The Meeting rose at 1 p.m.
GATT Library
zd961vp7938
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment : Verbatim Report. Seventeenth Meeting of Commission A held on Tuesday, 24 June 1947 at 2.30 p.m. in the Palais des Nations, Geneva
United Nations Economic and Social Council, June 24, 1947
United Nations. Economic and Social Council
24/06/1947
official documents
E/PC/T/A/PV/17 and E/PC/T/A/PV.15/CORR.1-17/CORR.4
https://exhibits.stanford.edu/gatt/catalog/zd961vp7938
zd961vp7938_90240108.xml
GATT_155
14,217
85,937
UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED E/PC/T/H/PV/17 24 June 1947 SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT. VERBATIM REPORT SEVENTEENTH MEETING OF COMMISSION HELD ON TUESDAY, 24 JUNE 1947 aT 2.30 P.M. IN THE PALAIS DES NATIONS, GENEVA DR. E. COLBAN (Chairman) (Norway) Delegates wishing to make corrections in their speeches should address their communications to the Documents Clearance Office, Room 220 (Tel. 2247). NATIONS UNIES G 2 E/PC/T/A/PV/AYG CHIRMAN: Well, it is a quarter past the time for the opening of the Meeting, and although some Delegations have not yet arrived, I wonder whether we should not start work. I understand that we are in the middle of a discussion on article 32, and that so far the discussion has dealt indisoriminately with all the paragraphs of that Article. The last speaker on the 20th was the Delegate of the Netherlands. I understand that he has something to say about his own Amendment, so I call upon him. Mr. BOGAARDT (Netherlands): Mr. Chairman, during the last Session I already defended the Amendment proposed by the Netherlands Delegation. I do not think I find much to add now. I made clear that according to our point of view you have to distinguish two meanings of negotiations about the maximum price margins. The first one is on the bilateral base, on the same meaning provided for in respect of tariffs. The second one only applying to primary products ought to be on a multilateral base, according to the procedure laid down in Chapter VII. Our Amendment intended to make that clear, and therefore we paid due attention to the procedure laid down in the Article regarding subsidies, in which the same definition is made. CHAIRMAN: The Delegate of the United Kingdom. Mr. SHAKLE (United Kingdom): I would like to say in regard to this Amendment that our conception of this Article 32 looking at it in its existing form is that it is a counterpart - 3 - of tariff negotiations. In other words, it is bilateral in its conception, and we feel that it would be introducing a a very considerable obligation if the procedure cf Chapter VII - the multilateral procedure of Chapter VII - were to be introduced in this place. We feel it may call for a very definite procedure, and for that reason we should prefer to see the Article maintained on its simple, as it were, bilateral base as at present. Thank you. CHAIRMAN: The next speaker on my list is the Delegate of South Afri ca. Dr. HOLLOWAY. (South Africa): Mr. Chairman I would like to make just one point in support of the U. S. Amendment. The main object of this Article is to provide for negotiation of State-tradling matters in the same way as we have negotiation on tariff matters; but it seems to me that having provided for that in Paragraph, the New York Draft immediately proposes to limit the freedom of negotiation in Paragraph 3 by dealing with one particular aspect of negotiation and laying that down as a general rule. - 4 - E/PC/T/A/PV/17 I do not think that any purpose is served when you get two countries together to negotiate in limiting their procedure to the sort of procedure that might be perfectly fair in one particular instance, but might be entirely inapplicable in another instance. Paragraph 3 lays down the condition that the state trading organisation should offer for sale,. and so on and so forth; but the state trading organisation might be the only organisation that is interested in the import, and therefore does not offer it for sale to anybody. New, why a condition which does not apply should be an essential condition--so essential that it is written into the Charter--.I just cannot.see. The American amendment,.gives more latitude, and I think that,if two countries come together, the one that is negotiating with the state trading country naturally goes out for the best it can get, and the bigger latitude there is for bargaining, the more prospect there is that one will get liberalization of trade. As soon, on the other hand, as you lay down an arbitrary condition that does not apply to the particular trade, but is a condition enforceable under the Oharter, you are undoing in paragraph 3 the very thing that you set out to do in paragraph 1. M. C. IGONET (France) (Interpretation): Mr. Chairman, I would like to state a concrete example in order to make quite clear what we had in mind when we made that reservation last week, in support of the caution which was advocated by my colleague from Czechoslovakia. Well, this is the example which I would choose in order to make our position quite clear, and it is drawn from our experience in France. At present we have, in France, groups which are called Groupements d'Importation et de Repartition, otherwise groups for import and distribution. They are not state institutions but groups representing different branches of our trade and industry, and they benefit from importing monopolies for certain categories of products. They were instituted at the beginning of the war in order to meet the difficulties which prevailed at that time in procuring some necessary supplies, and they are still maintained because these difficulties have not been completely over- come yet. Therefore, these groups are empowered to make purchases both in foreign and, in some instances in domestic, markets, and they are not entitled to any benefits under our present legislation. Therefore, the re-sale price to the consumer on the French market is approximately equal to the average purchasing price of the same goods. We have, for instance, one specific Groupement for nickel which make its purchases abroad and also in some cases in France. Now, we have one nickel plant which cannot function over a certain capacity for reasons which are not technical and which are not connected with any currency problems either. The only reason is that this plant needs a particular mind of nickel which is imported from New Caledonia, and New Caledonia at present cannot produce this nickel type of/goods, because it does not receive a sufficient quantity of coke from Australia. These, of course, are exceptional circumstances because even if the currency was available the coke still could not be procured. Therefore, this nickel producing plant has to work - 6 - E/PC/T/A/PV/17 with a reduced activity and under very unfavourable conditions. Cur desire is to maintain a moderate level of protection for nickel in France, but at present we have a domestic price for nickel which is abnormally high as compared to the price of nickel abroad. In order to have an equal re-sale price to the consumer, as our legislation provides for, we have to introduce an equalising element. Well, this example that I have just stated may be useful in explaining to some of my colleagues the difficulty there might be in approving immediately and without any qualifications, the kind of institution which is provided in Article 32. Of course, if might be objected here that a solution might be fund in granting subsidies to the national production which is at present under difficulties, but we know from our own experience, that it is very hard to obtain the said subsidies from our Parliament because they are not regularly incorporated in any budget, and therefore it is sometimes difficult to obtain them. The point I was driving at is that it is necessary to provide some alleviating measure for the temporary difficulties such as those I have just stated. This is why, Mr. Chairman, I believe it is necessary to make this kind of reservation to Article 32 in order to cover precisely this kind of position, and I think my colleague from Czechoslovakia might bear me out with some examples stated from their economy. Mr . J.A. MUNOZ (Chile ): Mr. Chairman, at the end of our debate last Friday we heard two very impressive speeches made by the-- delegates of the United Kingdom and Canada, against ethm aenedmnt pro- which the Utnied States delegation has/posed. Therefore, I am most anxious to hear MrE. va'ns considereod pionnii n his answer. Inhe t meantime, M r.Chairman, I would like to state briefly what ,we are really considering in this articleW. e are particulary concerned with istAh rticle insofar as it relateso t pexort monopolies, thats i paragraph 1 and sub-paragraph (a). iWhle we do not objecto t the -7 - E/PC/T/A/PV/17 general principle set forth in this paragraph, we do feel that the said provisions should only apply when a substantial proportion of the monapolised product in relation to the total production is consumed in the country of origin. That is, we consider that the provisions of paragraph 1 (a) should not apply if the total exports of the monopolised product exceeds 90% of the total output. If such a high percentage as 90% of the total production of the monopolised product is freely exported, we do not see how any member having, a substantial interest in the trade of the product concerned, could be affected if, as regards only 10% of the total production, domestic users are given price protection. We therefore would suggest that this proposal, which we consider entirely justifiable, be given full consideration when the Sub-Committee meets. E/PC/T/A/PV/17 -8- CHAIRMAN: The delegate of the Netherlands. Dr C.H. BOGAARDT (Netherlands): Mr. Chairman, I want briefly to reply to the observations made by the United Kingdom representative. He described the Netherlands amendment as having introduced a cumbersome element which would provide for very lengthy and perhaps not very useful discussions. I might point out, Mr. Chairman, that if you want to have any negotiations at all as regards the maximum margin, I am afraid you have to resort to the multilateral method of negotiations. I mean this: all price stabilisation schemes work like that - that you fix the difference between a world market price and a stable inland price; that is to say that you must know the amount of the world market price and you must know your ow- stable inland price. If you do not know the limits between which the world market price can rise and fall it is absolutely impossible to fix your maximum margin. I gave last session the instance of wheat. In this example the wheat price rose in seven years from 85 cents to 3 dollars a bushel. I think it is quite clear that it is absolutely impossible to fix any margin in view of the fact that the world market price is unstable like that, so I am afraid that, however cumbersome this element may be, you cannot avoid resorting to these means of negotiations. CHAIRMAN: The delegate of the United Kingdom. Mr. R. J. SHACKLE (United Kingdom) Mr. Chairman, if I may add just one word on the point raised by the Netherlands delegate:- In the first place we contemplate averaging over time. That is contemplated by the last sentence of paragraph 1 of this Article 32 - "regard may be had to average landed costs and selling prices of the monopoly over recent periods." We quite appreciate, of E/PC/T/A/PV/17 course, that that would not mean absolute stabilisation. It would mean that your stabilisation would be a relative stabili- sation by which, as the world price wont up and down, your domestic price would, to some extent follow, but so to speak, the curve would be very much flattened. That was the conception we had in mind.~ CHAIMRAN: The delegate of Norway. M. T. OFTEDAL (Norway) : Mr. Chairman, as stated on a previous occasion the Norwegian Deleagtion feavours the New York draft of Artcile 32 with a minor cahneg in paragarph 4. Article 32 sets forth taht state monopolies should negotiate maximum price margins for the products involved. Such negotiations will have to take place on the same basis for all kinds of monopolies, except that due eragrd should be had to the fact that certain monopolies are established mainly ofr revenue purposes s provided for in patagraph 4. The Norwegian Delegation believes it to be of importance that the provisions of Article 32 take into account that mono- polies may be established for purposes which are different in their scope. Some monopolies may be established solely for protective reasons. Others may be established for purposes which are of a non-commercial nature. The New York draft recog- nizes one such category namely revenue monopolies, as I have already mentioned. However there are others which should be recognized also, for example, monopolie s established by a govern- ment in order to promote its social welfare policy. The Norwegian Delegation is of the opinion that separate rules should apply to monopolies of a non-commercial nature and that appropriate provisions should be included in article 32 to this effect. We have therefore proposed an amendment where we suggest that mono- polies established for cultural, humanitarian and social welfare P. E/PC/T/A/PV/17 -10 - purposes should be included in paragraph 4. To illustrate our point of view I should like to mention that we in Norway at present have two State trading enterprises, one belonging to the first, the other to the second category. They are the State Grain Corporation and the Wine and Liquor Monopoly; both of which were established by Act of Parliament. The State Grain Corporation has as its main purposes the securing of adequate supplies and the protection of the domestic producers. It may be mentioned in this connection that Norway produces only about 20% of her consumption of bread grains and is therefore more Dependent on grain imports than most countries. The protection to the domestic producers is afforded through paying them a higher price for their grain than the world market price. Another feature of the Corporations activity is to stabilize the price of grain and the price of flour to the consumer and thereby also bread prices. The Grain Corporation has worked to cur full satisfaction. However, we concede that the Corporation is protective in nature and we are prepared to negotiate for an average protective margin in accordance with the provisions of Article 32. The Wine and Liquor Monopoly, on the other hand, cannot be regarded as a commercial protective measure as it was established for and is operated mainly for social welfare reasons. There seems to exist in the Northern European countries a somewhat different attitude towards alcoholic beverages than in countries of milder climates, an attitude which other countries may have difficulty in understanding. - 11 - L. E/PC/T/A/PV/17 The free sale of alcoholic beverages created so many serious social problems that it became necessary to regulate the sale in some way or another. For the past twenty years such regulation has been done through the price policy of the Wine and Liquor Monopoly. If we should negotiate the price policy of this monopoly in accordance with the provisions of the New York draft, it would mean that the social welfare policy of Norway would be subordinated to its com- mercial policy, which would not be in the spirit of the Charter. The solving of social welfare problems is very much in the foreground in the political life of the northern countries. I am speaking only on behalf of Norway, but when I refer also to the other northern countries it is because practically identical conditions prevail in Sweden, Iceland and Finland. The Norwegian delegation raised the same question at the first session of the Preparatory Committee. What we propose is a minor change which as far as we can see would not weaken the Charter in any respect. To us this change is important, and the Norwegian delegation trusts that the Sub-Committee, which this section probably will be turned over to, will give the Norwagian proposal careful con- sideration. CHAIRMAN: Before we hear the United States delegate I would like to say this is somewhat outside the discussion. I would like to finish the discussion of paragraphs 1, 2 and 3 Article 33. before eventually taking a discussion on paragraph 4, where also the Czechoslovakian delegation has made a proposal. . L. . - 12 - E/PC/T/A/PV/17 Mr.aOHN W. EVANS (United St.es): In asking for the floor, I inteeneded to stik to the Nqh&lands ame ndment on paragraph 4,so tt I shall. e very glad to wait until lclater if you wish to dLr up the earlier paragraphs. dMlAg ?M The iclet of Canada. MrXJ jEDUTSH (ICanada): 1 wated to speak also on the points raioseedi by the Nrwgan and the Netherlands delegates. CAIPAU e Are thore ay further orators on paragraphs 1, 2 and 3? J. e . . - 13 - C A/P 1/P}/T/4-l2V/l7 KLEM. R.J. ZIh (United IKindom): Mr. Chairman, I am not an orator, but I have a few things to say. Inthe first plmace, I aiinclined to think after listening to this debate that 3Article 2, particularly paragraph 1(b), may be rather too tightly drawn at present. It may be too narrow and too detailed ein its trms, and I would therefore like to suggest cfor theoosideration of tchme sub-giittewee that vmight consider some rather broadera formultion whseich, esntially, would run to sometheing lik ethi'. We might start s oingff byay, ratheer in th terms of the openi pfart ol he UnSiateseamd dm6tt~.ieat,ce tht oaain arrangements shall be negotiated feor th purpose of limiting orc rgeduin the protection affordeodg thruh, the operation ofm the onopoly to domestic ceprodurs of rtduche pote. On would then go on to say that for that purpoMesee mbrs shegalla notite on the relatioanshi between the lanrdced pie eof th product eand, itheer on of two things - the price at which the product is re-sold to the home mcons.r, or the seconde.alt native is the price paid to thme hon producer. That gsbrin v .suggestion whichi .h was made by the Canadian delegate on the last occasion when wscussed die tmhis atter: that the epric to the home producer might b e aenaltrneativ test to the price charged to thme,e h consumer. I woulde lik to suggest that the sumb-comittee should think of some simplified formulation with those anlteratives. I think we might very well omigt a reat deal of detail ifd we o that - details about subsidies, about profim,rgat insa, nd so on. I would like to mmerecond thatgf suenstio teo th csumb-omiitte. There is just on other point tIhat would like to manke ad that relates to paragraph 3. The poointa f paragrph 3, as I - 14 - understand it, is not a rule for negotiating at all. It is a rule to be observed by the monopoly, and the idea of it is that the monopoly shall, broadly speaking, satisfy domestic demand. The point of that, as I understand it, is that if the Monopoly does not satisfy domestic demand it will be in a position, as it were, automatically to apply quantitative restriction. It does not need to do anything beyond that. Therefore, I think it is necessary, if your are to prevent a kind, of quantitative restriction being applied almost automatically by monopoly, to lay down that the monopoly shall satisfy domestic demand. That is how I understand paragraph 3, and I do not read it as bearing upon the process of negotiation. Thank you very much. CHAIRMAN: The delegate of Canada has asked to speak. Is that on the same point? MR. J.J. DEUTSCH (Canada): Yes. Mr. Chairman, at our last session it was thought by some that the requirement of article 32, paragraph 1, where you have to negotiate the margin between the buying price and the selling price, was somewhat too restricted, and in that connection I suggested at the same time that we might include also the margin between the buying price and the price paid to home producers. I felt that if that addition were made it would take care of many of the technical difficulties that are associated with negotiating the margin between the buying price and the selling price, and for that reason I very much support the definite proposal that has now been made by the Member for the United Kingdom. I, like him, feel that with that addition the provisions of this paragraph will take care of the technical difficulties that have been raised, and I, like him, agree that this matter should E/PC/T/A/PV/17 -15 - E/PC/T/A/PV/17 be closely examined by the sub-committee. In saying that, I realise that this does not include a number of the provisions of the American proposal, namely, the negotiation of the total quantity, or the negotiation of any other method, and that it is not including Mr. Shackles proposal. It is those two aspects which I took particular objection,to, and I still maintain my objection to the introduction of the negotiation of quotas in this section for the reasons stated the other day. Mr. Shackle 's proposal would retain this paragraph as an exact parallel, or a parallel, to the tariff negotiations, which is what we should try to do here. Mr. Shackle 's proposal would maintain that parallel. G - 16 - E/PC/T/A/PV/17 Furthermore, in respect of paragraph 3, I also agree that in this we have a paragraph containing the principle enunciated here -State-trading organisations could automatically use quantitative restrictions by simply adjusting their purchases according to the quantities which they wish to import. That means that they are at liberty to use what is equivalent to a quantitative restriction. Now quantitative restrictions are rule out with respect to items in which State-trading does not take place. That is, rule out in so far as the exceptions are not applied; and we feel that if the proper balance is to be maintained in the Charter, the use of quantitative restrictions must apply equally regarding State-trading enterprises. For that reason we also feel we need something along the lines of the present paragraph 3. Thank you, Mr. Chairman. CHAIRMAN: The Delegate of Australia - Mr. Mc CARTHY (Australia): Mr. Chairman, the problem one fines in examining this particular Article or Section is the endeavour to introduce something which will take the place of the negotiations on tariffs in the one case, and the quantitative restrictions in the other; and we feel that in Article 32 the best that can be done pretty well has been done. We can see that in certain transactions it will be possible to negotiate margins, that is, margins between the landing cost of the imported goods and the price at which they are distributed - the values at which they are distributed relative to the values of the home-produced goods; but in others it will be - 17 - extremely difficult, and the more detail you put in, and the more criteria you endeavour to set down, we think the greater difficulty you will have in getting a result. I think it is quite conceivable, in the case of wheat, for instance, or sugar, or butter, that a long-term contract between sellers, or a seller and a State trader importing, could be negotiated pretty thoroughly, even though the mixing of the home produced product with the imported product is, quite extensive. There you have got a standardised criterion and it will be possible to trace the margins, identify them, and then possibly negotiate them; but there are other products which after landing go through various processes and where the actual capacity to compare those products with the competitive products within the country is extremely difficult. Meat, I believe, would be quite Difficult; because you have got different classes, you have got the different processes, and the replacement of some form of comparison between the states which the meat goes through between the imported product and the home product, or the replacement of any such processes by other processes, would be extremely difficult; so therefore we rather take the view that Article 32 should stand with certain Amendments on the lines of making clear to the objectors. If it is states clearly what is desired to do, to actually replace any other protective measures that stand in the case of a private transaction by such an examination as will enable the margins of difference to be negotiated, then I think it will be found, according to the different products, that a quite different process of examination will be imposed, and you will be in the position of doing the best you can. G. - 18 - E/PC/T/A/PV/17 Now the suggestion of Mr. Shackle and Mr. Deutsch - the comparison of the imported price with that of the home produced article - would be, I think, quite applicable in some cases. In. others, it would be four difficult. Also, the other point mentioned, that of, I think, the prices at which the product is re-sold to the home consumer, would in some cases be easy and in other cases difficult. The next other point we wish to mention is the suggestion by the American Delegation: the total quantity of a commodity which the Member maintaining a monopoly shall agree to import from all sources. We find difficulty in seeing the point in that, and in seeing that it would be of any great value, unless you have a thorough-based arrangement on quotas. The interest of a untry selling to an importer would be in the quantity which he wished to sell himself, if he were dealing in quantities. If he were able to sell all that he had to sell, he would not be very interested in the total imports of that country. If, however, the importing country said, Well, we cannot take any more from you than the hundred thousand units or whatever it was because of the requirements, or the quantities that we want to take from somebody else, the seller then would be interested in saying, "But what are your total imports?". The next point would be, having arrived at that, what has happened to the balance; and the balance would be that sold by other countries. So there I think you would depart entirely from the bilateral element, in the transactions visualised in this, and go into the multilateral field. E/PC/T/A/PV/17 That take you to the Netherland idea of employing the provisions of Chapter VII. There, I think, you are undertaking something which would have to be very carefully worked out. Chapter VII, as it stands now, would, to my mind hamper very much the activities of state traders: so much so, that I think it would be found that they would either have to depart from their state trading or declare their inability to meet the conditions of ChapterVII. It does not follow at all that there is not something in it. In fact, the negotiations which recently took place on wheat indicate how far state trading can be introduced into/Chapter VII agreement, but, without going into the details, it would take a long time. I think it can be said that wheat is an exceptional case. It is exceptional in its susceptibility to an international arrangement, and in the fact that, at the present time, importers are more eager than they normally are to commit themselves so far ahead; but the arrangement which was recently discussed and carried well forward in draft form would really amount to a multilateral state trading transaction. However, the detail that was covered in those negotiations indicates that, it would not be practicable to cover many state trading transactions by a multilateral agreement under Chapter VII. Our conclusion, then, would be that this suggestion which is in the American proposal to negotiate totals does involve rather closely the negotiation of quotas over a number of countries, and that could not be done except by a detailed multilateral negotiation, which we think is not contemplated under this Chapter and would not be practicable. If it were introduced into Chapter VII, then Chapter VII would have to be amended to remove or adjust some of the conditions already laid down. CHAIRMAN: There are two speakers on paragraphs 1, 2 and 3, and three speakers on paragraph. 4, and we must finish our work today, so I hope all the Delegates will be as short as possible. The first speaker is the Delegate of China. VI ER - 20 - Dr. T.T. CHANG (China): Mr. Chairman, we have not yet taken up the Chinese proposal in connection with paragraph 1, Article 32. Do you think we could discuss it now? If so, we shall proceed with the explanation of our Proposal, which is to delete, in the first lines sentence of sub-paragraph (a), part of line 13,/14, 15 and part of line 16, which read: "to limit or reduce the protection afforded through the operation of the monopoly to domestic users of the monopolised product or... " We propose to delete these words be cause we feel that it is already provided in this paragraph for arrangement, designed to assure export of the monopolised product in adequate quantities at reasonable prices. It should be equally sufficient for our proposal here, and there appears to be no need or justific- ation to interfere in matters of purely domestic concern, as more of that will only complicate matters and make negotiations between the members concerned considerably more difficult. Therefore we think that the lines in question are not necessary, and that it is desirable to delete them. Now, may I say a few words in connection with the question of margin. Much was said last Friday and today both against and for the inclusion of the margin in this Article. Just now I do not have very strong views on this question. However, should it be finally decided to retain these lines in this Article in connection with margins, we would like to see a reference made regarding a margin of profits. In the London Session it was considered desirable to make allowance for a reasonable margin of profits, and we would like to see the London position maintained. Mr. L.C. WEBB (New Zealand): Mr. Chairman, I think this is an appropriate time to say that we support the Czechoslovak delegations draft of Article 32, because it seems to us to have the benefit of establishing a procedure which is in conformity with/economic reality and administrative reality. We feel that this attempt to establish ER - 21 - E/PC/T/A/PV/17 here an exact parallel to the tariff negotiations is pursuing the idea of equity to a rather unreal extreme. We seem to be in the position of people who built a stable to accommodate horses and were suddenly faced with the problem of accommodating elephants, and we decide that equity is the only way to treat the elephants the same as horses. It seems to be ignoring the facts of life. We feel that in some case the procedure of negotiating margins may be possible. It is equally demonstrable that in other cases it is just not possible. In connection with Article 32, we are also worried by another point and it is roughly this, that very often where you have state trading monopolies the operation of those monopolies enters very intimately into domestic policy, and the instance we have in mind concerns (a) in Paragraph 1, which imposes an obligation in the case of an export monopoly to negotiate regarding the protection which may be afforded to the operation of a monopoly to domestic producers of the monopolised product. New we have certain export monopolies which both export and supply the local market, and we also have an overall system of price control which is particularly designed to stabilise the cost of living, and on that policy or basis of stabilising the cost of living we base a wages policy, and on the whole it works very well. Now, it seems to me that we will be involved in a negotiation which may have serious consequences on our whole domestic stabilisation policy and our Wages policy because the principle which operates throughout price control with us, is the principle that the producers of the commodity for the local market are entitled to the cost of production in a reasonable margin, and we feel that there would be very great difficulties in any system which involves - as this system seems to involve - the price of the commodity on the local market following overseas prices, even though, as Mr. Shackle said, the curves in the case of the local market might be somewhat flattened. In many cases since the abandonment of wartime price controls, prices in the world market for certain commodities has gone up to somewhere about three times the domestic price of the commodity in New Zealand. P.~~~~~2 - 22 -E/PC/T/A/PV/1 7 an we would find it very difficult to contemplate a stcep whia would in effect involve allowing fluctuations in overseas prices, very often very violent fluctuationsp, to uset our whocle prie stabilisation policy. I would like in conclusion just to ask one question, Mr. Chairman, and that is a question in relation to Article 31. I merely wish to ask whether it is proposed, as apparently it was originally proposed, that this Commission should discuss the joint draft of Article 31 which I undersstand i being prepared by the Czevchosloak and American delegations, or whether it is proposed to send that directly to the Sub-Committee without further discussion here. ANC.I, In reply to that question, I would say that this oint proposal has not yet been sent to the Secretariat and, as- we shall probably not have time today, even if we had it distri- buted, today, to discuss it, I propose that it should go direct t the Sub-Committee, but should be distributed to all the delegations as an ordinary Preparatory Committee paper, so as to enable any onoe f them who might be interested to appear before the Sub-Committee when the question is discussed there. The delegate of thee Ntherlands. DR. C.H. BOAGD.RTN (etherlands): Mr. Chairman, I associate myself with the words omf y New Zealand colleague when he said that thiAs rticle constituted a very considerable interference in internal affairs. The Netherlands, just like New Zealand, has a stabilisation scheme which attempts, by controlling inland prices, to control the cost of living and wages. Therefore, Mr. Chairman, I think thAe ustralian delaegte is wrong when he said that the procedure i^Qdown in Chapter TVI would prove extremely difficult for stat -trading countries. I cited the instance of the Wheat P. - 3 _ E/PC/T/A/PV/17 Agreement we tried to conclude in London. One of the main items of the Wheat Agreement was to stabilise the wheat price at certain level. Therefore, if we had succeeded in coming down to an agreement we should have contemplated fixing a maximum margin, that is to say, to fix tho difference between the world market price and the stabilisation inland. Netherlands price. Furthermore the Australian delegate remarked that only for wheat would the multilateral negotiations and commodity agreement prove successful. I wish to draw your attention to the Agreements on tin, rubber and sugar. The Sugar Agreement contains many provisions which you can find, also in Chapter VII, Moreover, the Netherlands and the overseas territories, both state-trading territories, participate with much pleasure and much success in the operation of that agreement. As regards the provision about average landed costs, to which my British colleague referred, I think that as long as the limits between world market prices are so wide, it is not worth while to fix a maximum margin, which must reflect this fluctuation on the world market. Moreover, we advocate that a study of the roots of the causes to which this excessive fluctuation is due should accom- pany these negotiations. This all can be embodied in commodity agreement which provides for reasonable prices for consumers and producers alike, I think that the ,troubles of this unhappy world are caused by Instability of prices and economy which has reflections on all aspects of human life. One of the means to alleviate this burden, we have in the commodity agreements. The commodity agreement disposes, at one and the same time, of all questions about subsidies, countervailing duties and so on. To finish, may I once more draw your Attention to the same procedure as proposed in our amendment, laid down in Article 30. E/PC/T/A/PV/17 CHAIRMAN: I call on the delegate of Chile. We have one more amendment to take and I hope it will be the last. Mr. J.A. MUNOZ (Chile): I could like to add a few words only. I understand the sub-committee on Chapter VII is dealing with this question of the reference. of Section E to Chapter V. We are even playing with the idea of eliminating any reference at all to the section in Chapter V; I therefore think we should discuss here the nuance between these two things, and it would be much. better left to the sub-Committee to see what happens after the deliberations of the sub-Committee on Chapter VII,and what conclusion they arrive at. CHAIRMAN: The delegate of Czechoslovakia has something to say. Mr. B.J. BAYER (Czechoslovakia): As at the previous meeting of this Commission I gave a broad outline of the general position of my country with regard to Article 32, I do not wish at this stage to make a long comment and go into many details which otherwise might be desirable in order to support the amendment we submitted in docu- ment no, W/187. On the other hand, I wish to say that the provisions contained in Article 32 are very important for my country. That is why we have gone into them, and that is why we want to have the provisions contained therein as clear as possible, and in the first place, more adjusted to realities, and more fitted to face the present problems. It has been pointed out earlier in this discussion that under many circumstances it is not practicable to negotiate a margin between the landed costs and the selling price. I will mention only the reasons the delegation for the Netherlands and the delegate for New Zealand gave this afternoon. We are facing the same problems with regard to negotiating the margin in those articles which are L. -25- E/PC/T/A/PV/17 subject to a price stabilisation policy at home. I will point out some other difficulties. We have, for in- stance, a monopoly on cinematograph films in my country, I can hard- ly imagine how a monopoly of films could negotiate a margin in between the landed costs and what might be the price of the tickets to the consumers, the visitors to the performance. Wo have amplified the text of Article 32, a text which consists primarily in the provision to assure export or import of the mono- polised products in adequate quantities at reasonable prices. We have also in this connection drawn the attention of the Preparatory Committee to a statement made recently by the International Chamber of Commerce: "This Article, by attempting to establish principles for the price policies of State monopolies of individual products, enters into a very difficult and controversial field, and estab- lishes rules which will inevitably become the object of future controversy . The International Chamber of Commerce considers it preferable to limit the Charter's provisions concerning the behaviour of State monopolies: of individual products to simple general rules leaving the detailed interpretation and administra- tion at those rules to the I.T.O. itself.." You are very well aware of the difficulties which may arise in the future and the possibilities of controversy. We have studied the amendment submitted by. the United States delegation, and although we are not in a position to commit ourselves at present as to our position with regard to the whole Article 32 as proposed by the united States, we may say that we are in favour of the substance contained therein, because the underlying idea is the same as the idea which governed our own amendment. -26- J. E/PC/T/A/ PV/17 I may take this opportunity to answer the question raised by the New Zealand delegate with regard to the proposed joint amendment of Article 31. We have discussed Article 31, but we were not so far able to submit a complete draft. We thought that, with the permission of this Commission, we may submit it to the sub-committee as you, Mr. Chairman, said it would be distributed to all the members of the Preparatory Committee. CHAIRMAN: This closes the discussion on Article 32, paragraphs 1, 2 and 3. MR. J.W. EVANS (United States): Mr. Chairman, 1 am sorry but earlier I asked for the floor and relinquished it because I thought that paragraph 4 had not yet been reached.. CHAIRMAN: We have not reached it yet. MR. J.W. EVANS (United States): I am sorry, but I thought you said we had finished the discussion on article 32. CHAIRMAN: No, only paragraphs 2 and 5. We now pass on to the consideration of paragraph 4 and the first speaker is the delegate of the United States. MR. J.W. EVANS (United States): Mr. Chairman, under the circumstances, I should be extremely embarrassed to re-open the discussion on earlier paragraphs, so that some remarks which I would have made about recent discussions on the American amendment I will reserve for a later date. I do want to speak though to the Netherlands delegation's proposed amendment to paragraph 5. It seems very difficult for us to see what part Chapter VII could possible play in the kind of negotiation which is contemplated in Article 32. As we understand - 27 - Article 32; its intent is to set up an obligation on the part of the country which maintains a state trading enterprise to negotiate in a manner which would be comparable with the negotiation required of a country with private trading with respect to tariffs. Presumably, that visualises a situation in Which a exporting Member would like to see the conditions in the importing country for the import nation of his products improved ;... It soto us teo bc a ituation which is definitely bilateral; situation in which the principle supplying country has sotme hing to ask of the importing country concerned. The only difflicuty involved, presumably, isetho difficulty created by any empmei ant which the impongii; country ray have placed on the free imtor ation of the product of the exporting country. That does notemeoa to us to be at all the kind of difficulty that is contemplated in Chapter VII, nor does theocercceur3 of Chapter VII involve a very long drawn oat ;ndaeliboeato procedure for developing the interesas ;ndetho views all_11 exporting cunteics anall2.mii.orting countries of the cmomrdity concerned. It does not smea to be in any way appropriate for the tepo of negotiation contemplated hero. Our difficulty, though, im iore than miLply that logical one, If there ia _n obgae;tion on eho part of the importg .cosu ntry to negotiate, it seems to us that that obligation would be very seriously diluted and impeded if, by the simple device of suggesting procedures under Chapter VII, the importing country could postpone doing anything for an mlnost indefinite length of mein. 'j feel,ufarermoiero, that in those cases wherc there is a genuine problem of ehki,dn. for which Chapter VII has been drawn up there is no necessityo far ny mention of it in the State Trading "ticles of the Chratvr. Chapter VII, internally in its own terms, - 28 - E/PC/T/A/PV/17 would permit the opening of the kind of discussion which apparently the Netherlands delegation has in mind. Therefore, the United. States delegation would object to the introduction, not only of this specific amendment suggested by the Netherlands delegation, but to any variation on that amendment which would tend to transfer the negotiation contemplated in Artiole 32 into the procedures contemplated in Chapter VII. E/PC/T/A/PV/17 CHAIRMAN: 'The Delegate of the United States said some time ago he wanted to speak on the Norwegian proposal. Mr. EVANS (United States): If I did, Mr. Chairman, I think I must have misspoken, and had in mind the Netherlands Amendment. CHAIRMAN: I thought so. The Delegate of Canada also wanted to speak on the same subject. Mr. DEUTSCH (Canada): I wanted to speak, Mr. Chairman; on the Norwegian proposal. That is in order? CHAIRMAN: Please. Mr. DEUTSCH (Canada): I think the Norwegian proposal is in principle a logical one, and. for my part I would support it in principle and hope that the Sub-Committee will look into the matter of the exact wording. I am not entirely happy about the exact wording here, but I think the main point he wishes to make is acceptable to us. CHAIRMAN: Does the Delegate of Czechoslovakia want to speak on the same paragraph? Mr. BAYER (Czechoslovakia); Mr. Chairman, I do not want to add much to what has been said with regard. to the proposed amendament of paragraph 4, in the light of the amendament made by the Delegation of Norway. I may say that we have been led, more or less by the same considerations in submitting our own Amendment, In our view, the paragraph 4 does take due regard of the fact that some monopolies G : - 29 - - 30 - --, -,/--, that have been established are being operate maheinly for t purposes other than economic. We think, therefore, that besile the revenue purposes, which are the collection of taxes Sir, other purposes - dith regarC to culture, national health, ant so forth - might be puat on the sme level. Of course, we are aware of the fact that the final outcome of paragreph 4 might depend upon the solution of the first three paragraphs. Thank you. CEIIRMAI: The Delegate of the Netherlands. DMr. BOG.1JT (Netherlands): Mr. Chairman, peyhaps I mae refer very briefly to taedNetherdapnts amenlment, I know that you closet the Discussion, but I hope you will give me the opportunity to answer very briefly. I fut deny, maMr. Chairr, very strongly, that our Delegation tries to obstruct the nnegotiatios about tariffs. 1 think it is a more or less serious charge against our country, which tries to conform as much ad it coul5 to the rules of procedduwnre laid o for tariff negotiations. We are peafectly hippy to negotiate, but we find. it impossible to negotiate about price margins, which cannot be define;, because one of the necessary factoks is lacding. This factor can be provided bdia commo.-ty agreement Furthermore, negotiations on a bilateral base imply a tremendous lot of negotiations, as not only the principal supplier but all suppliers have to negotiate about a margin, as all prices have to be increase to the existing general inland prices. COLIZ : The Delegate of the Uniteo. Kingdam. A//P/1T I'PV A7 G. G. - 3l - E/PC/T/A./PV/17 Mr. SHACKLE (United Kingdom): Mr. Chairman, I would just like to say a word about the Norwegian Amendament. It does seem to us in its object it is entirely right. It does occur to us that possibly ihe same Amendment rather bears on article 37 - the Exceptions Article - which already has some except ions concerning the protection of public health and morals, and that that might conceivably be more appropriate than this Article; but we think the obvious principle of the Norwegian Amendament is certainly right. CHAIRMAN: The Delegate of Chile. Mr. MUNOZ (Chile): Mr. Chairman, I concur with the remarks made by the Delegate of Canada. As regards the Norwegian Amendment, I think it is a very good and useful one, but again I feel it could be left very safely in the hands of the Sub- Committee. V - 32 - E/PC/T/A/PV/17 CHAIRMAN : - This., I think. terminates the examination of Articles 31. and 32, and I propose, after having heard the views of certain Delegates, that we should appoint an ad hoc sub-Committee for these two Articles alone and another sub-Committee for Article 33. As members of this sub-Committee for Article 31 and Article 32, I would suggest the Delegations of Czechoslovakia, the United States, Canada, Norway, France and the United Kingdom ; and I would like to add that everyone who feels interested in the work of the ad hoc sub-Committee is, of course, free to attend and to explain his viewpoint in the sub-Committee. The Delegate of Czechoslovakia. M. B.J. BAYER ( Czechoslovakia): Mr. Chairman, I-understand that the New Zealand Delegation is interested in the provisions of Articles 31 and 32. May I suggest that this Delegation, if it wants to, be added to the list of members of the sub-Committee? CHAIRMAN: The Delegate of Chile. M. J.A . MUNOZ (Chile): Mr. Chairman, I do not know whether I am in order or not, but we have presented an amendment to Article 31, paragraph 3, and we are really also very interested in both Articles 31 and 32. Therefore , I am sorry, but I would like to propose ourselves to be on the sub-Committee; otherwise it is going to very difficult for us. CHAIRMAN: Well, I have, of course, no other interest than to keep the sub-Committee as restricted in membership as possible; but, on the other hand, I quite appreciate the desire of those who have presented amendments to be members of the sub-Committee. V. -33 - With regard to New Zealand: the New Zealand Delegate is particularly interested in Article 335 and if I should then be in the Chair I will certainly propose his Delegatior as a member of the sub-Committee for Article 33. Whether the New Zealand Delegate has any real interest in being a member also of the sub-Committee for Articles31 and 32, I cannot tell. His Delegation will, of course, always be entitled to send some- body to attend the sub-Committee and to express his views on a footing of complete equality with other members. My own conclusion in order to keep the sub-Committee down to reasonable limits, would be to add the Delegate of Chile, but not the name of New Zealand, for the reasons I have explained. May I ask the Delegate of New Zealand whether that suits him? The Delegate of New Zealand. Mr. L.C. WEBB (New Zealand): Well, Mr. Chairman, you put me in a difficult position. I would say immediately that we are very keenly interested in Articles 31 and 32 for the obvious reason that practically the whole of our export trade is conducted by the method of state monopoly. However, I realise the extreme difficulty you are in, and I would like to make just one observation which I think might, perhaps, find a way out. I have had some experience of acting as an observer at the proceedings of a Committee, and I hope it will not be inter- preted as a criticism if I say that, in fact, although we receive every possible assisstance from the Chairman and the members of the Committee and from the Secretariat, nevertheless the way most Committees are functioning at the present time, I think, it has to be said that an observer under present circumstatces E/PC/T/A/PV/17 - 33 - V. - 34 - E/PC/T/A/PV/17 is at a very considerable disadvantage, owing to the over-crowding of the rooms and the frequent fact that full supplies of papers are sometimes available to members of the Committee but not always readily available to observers; and I was wondering whether, in view of the very keen interest there is in this particular article, it could not be arranged for the Committee to meet in rather more comfortable circumstances. To mention just one point: observers at a Committee meeting usually have to sit along the wall, they have no table to work at, no table for their papers. I would be suite happy if those physical disadvantages which affect the work of observers could be overcome. CHAIRMAN: The Delegate of New Zealand said that I was in a rather difficult position. I am not, because I am in the hands of the Commission, and if the Commission will, as an exceptional measure, agree to set up an ad hoc sub-Committee that is somewhat larger than usual, I think it would be very easy to add the name of the New Zealand Delegate to the list of regular members. we may defend it, because really this has proved to be a very important and very difficult matter. We have discussed it at the whole of the meeting of the 19th, the whole of the meeting of the 20th, and now for two-and-a-half hours today, so I think that is justification enough for setting up a sub-Committee on which all the most interested Delegations are represented. Is that agreed? (Agreed) We now pass on to Article 33. E/PC/T/A/PV/l7 -35- The Chair was now taken by M. MAX SUEPENS (Belgium) in place of Dr. E. COLBAN. CHAIRMAN (Interpretation): Now we pass on to the discussion o: Article 33: Expansion of Trade by Complete State Monopolies of Import Trade. I will remind the Commission that the Drafting Committee did not discuss this Article at the First Session in London, but left it for a later stage. We have th. > amendments on this Article; by the United States delegation proposing to delete this Article; by the Czechoslovak delegation; and finally an amendment by the New Zealand delegation. I will give the floor in succession to these three delegates. First of all the delegate for the United States. Mr. JOHN W. EVANS (United States): Mr. Chairman, our proposal that Article 33 be deleted is necessarily closely related with our proposals for Articles 31 and 32. The Canadian and the United Kingdom delegates have indicated, with a good deal of force, a great many objections to the negotiations of global purchase oommitments in individual products, and it has been our feeling for some time that those arguments can be applied even more forcibly to the sort of negotiation that was contemplated in the draft of Article 33, the negotiation and that was by the importing country of all of its imports from member countries. We felt that it was not a practical provision net one that could be very useful. I think, judging from the discussion of our amendment to Articles 31 and 32, that there will be very substantial changes made particularly in Article 32, some of which at least, I am sure, will be proposed by ourselves. But if Article 32 retains one basic principle which we attempted to write into it, andthat is a provision for some additional sort of negotiation, at least an additional negotiation different from the one on marginal mark-up, in those cases where the nature of the E/PC/T/A/PV/17 jmporting countries and the nature of their economy is such as to make the .marginal mark-up unworkable and rediculous, then we feel that there is no further necessity for an Article 33. Mr. B.J. BAYER (Czochoslovakia): Mr. Chairman, we have actually made no amendment with regard to the proper text of ArticIe 33. We had already the opportunity to state that we are not having the complete monopoly of foreign trade and our domestic economy is not concerned by the text of Article 35. At the same time, we expressed our view that the text of this Article might be delt with at a time likely when the countries complete monopoly of foreign trade and -. *.\. ;t;,'.: mbers of the Organization, might be present. I wonder, Mr. Chairman, whether I should comment now on the amendment which is listed in the document 198; page 12, or should I refer to it later or . CHAIRMAN (Interpretation): I would prefer that the Czechoslovak delegation make their comments now on the text of their amendment. Mr. B.J. BAYER (Czechoslovakia): Mr. Chairman, we suggested that, in connection with Articles 31 and 32, the following lines be added: "If representations according to Article 35 are made in respect of state trading operationst), the ember may withhold confidential information, relating to its national security or which, if disclosed, would materially damage the legitimate interests of the enterprise concerned". As the delegates will remember , there is nothing which has not been discussed in the course of the Sessions. It was talked over in London, and first of all it was included in Article 31. It was during the conference of the Drafting Committee in New York that it was decided to transfer it from Article 31 to Article 35, and finally it did not remain fully in Article 35. I can only say we feel very strongly about its inclusion. - 37 - E/PC/T/A/PV/17 CHAIRMAN: I call upon the delegate for New Zealand. Mr. L.C.WEBB (New Zealand): Before I state the case for our amendment, I would like to refer to the suggestion of the United States delegation that Article 33 be suppressed. We opposed that suggestion but not because Article 33 is one on which we have chosen to 'hang our hats'. Our chief delegate, Mr. Nash, referred to this matter in a speech which he made before the Executive Session, and I can only say that our view is that this Charter should make it perfectly explicit and not merely inferential, that a country which maintains a complete State trading monopoly is a country which may enter the International Trade Organisation. As to our own amendment, it is obviously the most important amendment which the New Zealand delegation has to propose at this Conference. Before his departure, Mr. Nush explained in general the nature of our problem and the nature of our economy, and the sort of accommodation we desired in the Charter. I wish toadd some words to that. In its present form the Draft Charter has in our view serious gaps, At the one extreme it provides for a system called liberal trade, and at the other extreme it provides for a complete monopoly of foreign trade. In between it provides for nothing. There is no provision in the Charter for a country like New Zealand-which desires to plan its trade according to its own desire,-to establish a complete State monopoly. We have been told the reason for that is that controls are of their nature restrictive, and that of all controls the quanti- tative restriction is the most restrictive. There are two answers to that proposition. If this is true, we ought to be consistent and shut out a country which maintains a complete monopoly of its foreign trade, because there is quantitative restriction operating in its most extreme and complete form. L . - 38 - E/PC/T/A/PV/ l7 The main argument that the proposition is inherently restrictive is not true; it is merely an analysis of cause and affect. Quantitative restriction came in during the economic depression of the thirties and was the result and not the cause of that depression. Furthermore, this Charter not only admits, but says that control can be used for the expansion of world trade. The whole of the Chapter on International Commodity Agreements is a Chapter providing for the expansionist use of controls, or, at any rate, it contemplates the expansionist use of controls. In particular, it contemplates the expansion and use of the method of quantitative regulation. We believe, and our belief is supported in Chapter IIIof this Charter, that the volume of world trade does not depend primarily on whether tariffs are high or low, or on the method by which States organise their trade. It depends on whether the peoples of the world want to buy goods and can buy them. In the language of the Charter it is "effective demand which determines the volume of world trade", and if there is a collapse of effective demand then the abolition of trade barriers, as they are called, will have no effect whatsoever. The key Article in this Charter is, after all; Article 4, paragraph 1 of which says: "Each Member shall take action designed to achieve and maintain full and productive employment and high and stable levels of effective demand within its own jurisdiction through measures appropriate to its political, economic and social institutions." I want to call particular detention to the method by which the Charter enjoins us to maintain effective demand. In Article 3, paragraph 2, we agreed that the maintenance of effective demand must depend primarily on domestic measures and later we say that those measures should be appropriate - indeed, we say they must be appropriate- to the political, economic and social institutions of the Members con- oerned. L. - 39 - E/PC/T/A/PV/17 This seems to me to mean,and I think it should mean, that Members pledge themselves to attempt to reach certain objectives, and are left free to carry out their pledges by the methods suited to their particular circumstances and internal organisation, provided these measures do not injure the interest of other Members. That seems to me to be sensible and to support a statement made by Mr. Wilcox which has been discussed before at these meetings, the statement that the I.T.C.does not impinge upon the sovereignty of Member States. But when we come to examine the practical effect of the Charter, we find that in the case of certain economies - and our own economy is an example - the liberalism of Chapter III as to methods is com- pletely contradioted. A country which sets out to achieve high levels of effective demand and full employment by planning its trade is told that it must abandon that system or not join the international Trade Orinisation. Yet we are told that the International Trade Organisation has no powers which impinge upon the sovereignty of the Member States. Now there can only be one valid reason for the Charter's absolute rejection of quantitative regulation as a normal instrument of economic policy. That reason could only be that when a. country uses that method, they are in fact using a method which makes it impossible for them to achieve the objectives of the Charter. - 40 - Then, if anyone is prepared to maintain that point, we would ask to be judged by results. New Zealand was practiging and preaching the theory of full employment and high levels of effective demand before this Charter was even a project. We have gone further in the application of that theory, we believe, and we have learnt more about the practical problems which are involved in carrying out that theory than most countries which are represented here. I do not say that as a matter of. self congratulation, it merely happens that very often a small country has much better opportunities for carrying out social experiments than large- countries. Controls are, on the whole, easier to administer, and the effects easier to observe. I would say that as far as the commitments of the Charter concerning effective demand and full employment, which I think most of us recognise to be the critical commitments in the Charter, are concerned, we know, Mr. Chairman, that we can carry out those objectives. If we turn to the other main objective of the Charter, which is the promotion of international trade, then I have only one thing to say:- In proportion to our size, we are the worlds best trader. In setting out the objectives of this Charter, we have rightly placed first the achievement of higher standards of living, full employment and conditions of social and economic progress, and we feel entitled to say that our type of economy is already making a contribution to the realization of those objectives, and it seems to us that it is going to be a very strange and, indeed, a devestating irony if this Charter is going to be so framed as to exclude us. Now, it has been suggested, Mr. Chairman, that we are being a little difficult in forcing this issue in this particular way. We have been told that if we would look at the escape clauses we would find that, in fact, we are accommodated, and in particular we have been invited to look at the balance-of-payments provisions in Artical 26. Now, we have looked very carefully at Article 26 and we have come to the conclusion that this is not our approach, We have rejected that approach because it does not seem particularly honest or in the best interests of the International Trade Organization. The balance-of-payments provisions do not accommodate, I think, except by subterfuge, an economy of our type, and on that point I would refer to the London Draft on page 12, where the objectives of Article 26 are quite clearly set out. Mr. Chairman, we desire to come into the International Trade Organization by the front door, We do not desire to climb in by a back window which is sometimes rather insecurely locked. That is why we put our amendment where it logically belongs, into that part of the Charter which provides for the type of economy whose trade is completely in the hands of the state, and in seeking a place for ourselves there, we have kept in mind, as we believe the idea that has very often been enunciated here - that in this Charter we must have a balance of obligations. This amendment would impose on economies which control their foreign trade completely, the obligation to expand this trade in accordance with the purposes of the Charter, and what we, mean by that is made clearer in the later clauses. Briefly speaking, states who wish to avail on the selves the provisions of this amendment must pledge themselves to make available for imports in any given period the whole of the balance of the current proceeds of their external trade, after making due allowance for what are called invisible . We provide further that there must be consultation with the Organization is to the period. We have said that we would be willing to take a period of a year, but we think E/PC/T/A/PV/17 r/,i V . - 42 - /=wI lf S~vr .V that it would be, persaps, oiger to spdciWy aome lunEer perio%. e; have alsolagreed that there shou.d be consultation with the Organization in order to determine wha is a reasonable level. of monetary reserves. Finally,gahere is a provision a63inst disorimination and the sources of uaply of imports, cand. Llso a reqcirementitgat LMembers oontrollln6 the r foreign trade should. have due regard for Mhe interests of other Yembers. paragraph 2(b) makcs clear tgat a Member oonsiderin6 it self adversely affected by the operation of these controlA inctee terms of this ,rtiOlo can avail itself of the very adequatedremedies which are lait down in Artiole 35. Now, Mr. Chairman, we regard hese obligations - and. particularly 2( a)ii) (U) an ose in paragraph 2t id sub-par-meaphs -d of our a mndment as being weigWey obligations. ;. theng that they ;are woijhtier than most of the obligations which are imposed in other parts of 1his Charaer, We thigk th;t they are weiihtier than the obligations imposed. on countries which, through their persistently favomrable blanee-of-payients, are creation difficulties for world traded in general. 5e believe, also, that an exoansion in the use 1f controls, such as is cmantmmplated in ouc axndrent ineconjunotion with tho other obligations asIImed under Chaptyter tiI, can be a ve powerful factor in the expansion of world trade. I.T G E/PC/T/A/PV/l7. Now it has been objected that the provisions which we seek to insert in the Charter are capable of misuse and will open a way for other Members to escape from the obligations which they have assumed. Now I do not believe that is true. But I will confine myself for the moment to one observation. This Charter is not a set of iron-clad rules. There are escape clauses all though it, there is not a single general rule which has not a string of escape clauses attached to it; and any State which joins the Organisation in bad faith will if it wants to find a way of evading its obligations, If the Organisation does succeed, it will not be because it can compeI Members to obey the rules of the Charter. It will be because the great majority of the Members realise that by carrying out their obligations they are, in fact, promoting their own best interests. I would say this in conclusion. We have come deliberately, and as a result of experience, to the conclusion that the objectives which have been written into this Charter. which have been also for years the objectives of our own national policy - that is, full employment, high levels of effective demand and economic development - seem to us to require some degree of State planning of economic activity. Now I do not presume, Mr. Chairman, that this Conference would consider writing into the Charter a complete veto on all forms of economic planning. If we did that we would make ourselves absurd, because we would be doing something which runs clean counter to the whole trend of economic development throughout the world; but I suggest to this Conference that we are doing something even more absurd, or in danger of doing something, even more absurd, than writing in a G E/PC/T/A/PV/17 -44- complete ban on economic planning. We seem to say in this Charter - we do say in this Charter as now drafted - that it is permissible to plan your economy as long as you stop short of planning your external trade, and I believe, Mr. Chairman, that that is an absurdity which ought not to be tolerated, and will not be tolerated. Thank you. ER Mr. B.J. BAYER (Czechoslovakia): Mr. Chairman, in the course of the immediately preceding meetings of this Commission, we already had the opportunity to explain in broad details the objectives we are having in mind, while looking for a solution of the problems contained in the whole Section E of Chapter V. We did not want to hide the fact that the way we shall be able to solve them is of great importance to us as we have to consider them fundamental for our economy. In our mind, the constructive work of the Preparatory Committee can be seen in the common aim of all of us to achieve a universal draft of a Charter, a document which would have full regard to various economic structures, problems and systems of all countries. There is, therefore, the general intention of all of us to make the Charter a perfectly balanced document, a document which would harmonise the various interests of the members and thus make it acceptable to all of them. We think that this is the only way to create such an instrument for the conduct of the world trade in the future which we all desire to have. It seems to us, therefore, quite clear that the Charter should be such as to enable all states, whatever their political, economic and social structure might be, to co-operate peacefully and, through the expansion of foreign trade as well as through the other means contained in the Charter, attain the purposes -which, as we all know, are stability in world economy, high and still rising levels of living and full employment of inhabitants. Having this in mind, we think that the Charter should neither impose excessive burdens upon any country and thus force it to fundamental charges in its economic or social structure, nor bring about unjust advantages to other countries. It is for this main underlying idea of the Charter, that we consider the amendment made - 46 - by the delegation of New Zealand a very good contribution towards the improvement of the Charter with regard to the aim we have already mentioned, and which is to create a well-balanced document, fair to everybody and liable to survive for years to come. We think that this amendment deserves that a special attention be given to it when all its aspects, in full details, will be discussed in the particular Sub-Committee. While dealing with this amendment in the particular Sub-Committee, the Czechoslovak delegation will be glad to give all the necessary explanation with regard to its own views on the merits of the New Zealand amendment. Mr. JOHN W. EVANS (United States): Mr. Chairman, the Brazilian delegate has mentioned the reason for choosing this particular part of the Charter for the introduction of their amendment. I confess that I am still puzzled as to the precise effect of the proposed amendment in this place. It clearly does not relate directly to state trading, but I gather it has been placed in Section E because of the certain analogy between the countries which completely control their trade and a similar control which could be exercised by countries which carry out all of their commerce through state enterprise. I think, though, that our understanding of the proposed amendment would be improved if it were considered in connection, not the with/state trading section, but rather with the quantitative restriction portion of the Charter to which it seems to be more closely related. If I have understood the amendment correctly, its intention seems to be to set up a complete exception in the case of a country which completely controls its trade to the provisions relating to quantitative restrictions - an exception which would not be parallel like the other, with any similar exception for a country E/PC/T/A/PV/17 ER E/PC/T/A/PV/17 which only controls part of its trade through quantitative restriction. Perhaps I have misunderstood the intention of the amendment, and if I have I should like very much to have a further explanation from the Brazilian delegate. Assuming that I am right, however, it seems to lead to a very serious difficulty. It seems to me that it vitally effects the entire balance of the Charter as it has been drawn to date. Mr. Webb, I think, with considerable eloquence, has pointed out that it may be that the greatest value of the Charter lies in the influence that it will have over members, and in the fundamental desire of the members to go on co-operating with each other, rather than in the specific obligations laid down in the Charter. - 48 - L . . E/PC/T/A/PV/ 17 That certainly is a reasonable approach. There are one or t wo approaches which necessarily had to be considered when the first draft of the Charter was prepared. One approach was to include in the Charter various specific obligations; the second approach was the one chosen for better or for worse - I believe for better . But it is quite clear that if at this stage of the game we decide to depend simply upon the general desire of Members not to injure other Members in their trade, instead of to specific obligations in the Chapter, we have very radically altered the basis on which the Charter has been drafted up to this time. In this connection. I am sure most of us will remember the address given by Mr.Wileox very recently before this Commission, when he considered the Paper which had been submitted by the Belgiun delegate concerning the progress of the Conference and the develop- ment which had taken place in the Charter. During that debate Mr. Wilcox said a great many amendments has been submitted; some of them were fairly important to the countries submitting them, but did not fundamentally destroy the structure of the Charter. On some it was a question of compremise; he added,"there are, I believe, certain amendments which if passed would destroy the whole adifise we have sought to construct and against these we must stand like a wall of stone, " In saying that the New Zealand amendment is the sort of amend- ment Mr. Wilcox was speaking of, I feel I ought to make it clear that when I criticise an amendment because of its possible result, I am not criticising the motives of the country which is submitting their amendment. I say that because I feel the Netherlands delegate mis- understood an earlier remark of mine. I am sure it isnot the intention of the New Zealand delegate to destroy the structure of the Charter; I am sure they have as much desire we have to make the Charter work, but I to think it is necessary to analyse the effect. L. - 49 - E/PC/T/A/PV/17 I find it hard to escape the conclusion that the exception which I gather New Zealand would take to the quantitative restrictive Articles of the Charter, would make possible a complete development of the protection of all domestic industries, with the only restraint on that development resting in the will of the country which con- trols its trade. A comparable provision to cover countries who do not completely control their trade, would, it seems to me, be an exception which would leave theprovis ions of Article 15 on internal regulations, Article 24 on negotiation of tariffs, -. Articles25, 26 and 27 on quantitative restrictions, and Article 30 on subsidies - would leave the interpretation of those obligations clearly up to the Member who had undertaken the obligation, and in fact would relieve him of any obligation whatever under those Articles unless he should decide that they injured the interests of other Members of the Organisation. I have no intention of carrying on the analysis indefinitely, but it seems clear that there is set up here a complete exception to the specific obligations of the Charter, an exception which does not exist anywhere in the Charter for any of the other Members. The only logical situation if we accept it, would be to strike out all of the Chapters in the Charter with the exception of Chapter VIII and possibly Article 35, and simply establish the Organisation to do what it could in the future for the stimulation of world trade. That is an approach which is not acceptable to the United States. I sympathise with the delegation of New Zealand when it feels that the Charter should be written in such a way as to permit New Zealand to be a Member of the Organisation. I sincerely hope that we have drafted such a Charter. The United States delegation will certainly consider very sympathetically any specific proposals to correct any difficulty in the draft of the Charter which makes that impossible, but we still feel the Charter must be drafted in such a way that the United States could become a Member, and I do not believe that would be possible if the amendment were accepted. J. E/PC/T/A/PV/17 CHAIRMAN (Interpretation): Before oontinuing, I would like to know whioh delegates wish to speak today, because if there are many, it is obvious that we will have to provide for an extra meeting tomorrow. Seeing that there at least five speakers plus Mr.Webb, who will obviously want to answer them, it will be necessary to hold a meeting tomorrow. I will however give the floor to one more speaker now, namely, Dr. Holloway. G. - 51 - E/PC/T/A/PV/17 CHAIRMAN : The Delegate of South Africa. Mr. HOLLOWAY (South Africa): I think I must join issue immediately with the representative of the United States when he says that the New Zealand Delegation's Amendment would tend to destroy the whole structure of the Charter as drafted . Maybe the Charter as drafted seeks to cover too wide a field, but as it stands the New Zealand Amendment is a good deal less drastic than is the Article 33 that we have now. So we may be trying to cover too big a field. We admit that a country may protect its industries, but it must protect them on the principle of non-discrimination. Non-discrimina- tion is the main purpose of the Charter. At the same time we do not want to exclude any important trading countries on the ground of their own political philosophy. Now it may be that they cannot be brought under the same cover as non-discrimination, because non- discrimination postu- lates whet I may perhaps call in a special sense, the rule of lae. Other countries are toId beforehand exactly where they stand and what they can rely on, and when you have an authoritarian system which depends on planning - on giving preference to certain things - very naturally there cannot be non-discrimination, because the very element of the thing is discrimination. But I contend that the Charter as drafted tries to get something, of both concepts in by compromising between the two: by saying, in effect, " We shall not push the principle of non-discrimination to its logical conclusion, which will throw out authoritarian systems, but we will try to get as much as we can of both systems, so as to keep one unity in - 52 - world trade by following the principle that where non- discrimination cannot be fully applied we shall seek some other limitation. We shall seek some other limitation on the countries which cannot give us the full benefit of non- discrimination" . Now when you get to applying that, first of all, complete non-discrimination, then subsidies - where you have to put on certain limitations, certain conditions under which subsidies may be applied - when you come to State trading, mixed up with other things you lay down certain rules there. When you come to quantitative restriction you lay down certain rules. In all those cases you find some way of limiting the method in which those things can be used. Now the proposal of the New Zealand Delegation no doubt as Mr. Evans has said goes a bit beyond all those. Those rules which I have laid down there cannot be applied except with the goodwill of the country applying the New Zealand system; but it still lays down a limitation. The country itself would be limited to the conditions which are given in the New Zealand Amendment, conditions which make it possible for other countries to test, as a matter of fact, whether that country is, although it is applying discrimination, doing as much as it ca-n to improve international trade; and when it does that inside the limit left over it can still apply non-discrimination. That goes a good deal less for article 33 as it stands here. Now it is true that the United States Delegation has proposed the elimination of Article 33; but the elimination of Article 33 has been suggested by the U.S. Delegation on the grounds that article 32 can be so drafted as to cover Article 33, E/PC/T/A/PV/17. G -53 - E/PC/T/A/PV/17 not because they are in disagreement with the idea, but you must still try and make it possible for all trading countries to play ball in this game that we are trying to play. In Article 33 the country can do what it likes. It has a complete State monopoly of its foreign trade, it can apply discriminations and quantitative restrictions - there is very little that the Organization can say to it except that it can say, "You must do a certain amount of trade". The other Members are not protected nearly to the sane extent as the New Zealand proposal proposes to give them protection. In Article 33 as it stands now, whereas under the New Zealand Amendment there are certain objectives, if we apply the rule throughout that there is a limitation of the freedom to use any particular device, which is the idea that has been followed throughout the Charter, in order to make all countries come in, the New Zealand proposal seems to me to be much nearer the main objective than 33 as it stands. And it has this further advantage, that comparatively few countries can apply it except by going very much further. It requires a fairly simply economy with the export trade limited to a comparatively small number of Articles, otherwise it breaks down - otherwise control it not enough. You have got to go in for a complete monopoly, like you do in a completely authoritarian system. Thank you, Sir. - 54- CHAIRMAN (Interpretation): Gentlemen, we shall adjourn our discussion until tomorrow at 2.30 p.m. The first speakers on my list are the representatives of Canada, Australia, and the United Kingdom; but before we adjourn the Meeting I have two announcements to make. Commission A (that is, our Commission) will convene on Saturday morning in order to examine the Report on Technical Articles. Commission B will convene on Monday, 30th June, at 2,30 p.m, to examine the Report of the sub-Committee on Chapter VII. This means a simultaneous Meeting with Commission A, which will examine on the same day Articles 25 and 26. For this decision, gentlemen, I need your approval. It is deplorable that both Commissions must sit simultaneously. However, this cannot be avoided, since the experts on Chapter VII must leave Geneva for Paris on 31st June in order to attend the Rubber Conference. Do you agree, gentlemen? (Agreed). The Meeting stands adjourned. The Meeting rose at 6.40 p.m. E/PC/T/A/PV/17 V.