REPORTOF THE FIRST SESSION

OF THE PREPARATORY COMMITTEE

OF THE

UNITED NATIONS CONFERENCE

ON TRADE AND EMPLOYMENT

TABLE OFCONTENTS NTS TS7-'--- -'Page

PART I

INTRODUCTION .. .. .. .. .. .. .. .. .. .. .. .... 3

PART IICHAPTER I.-Achievement and Maintenance of Hlgh and Steadily Rising Levels of Effective

Demand, Employment and Economic Actlvlty.. ...... ....4SECTION A.-Relation ai Emplayment to the Purposea, of the Organisation......... 4SECTION B.-The Maintenance of Domestic Employment.... . .... ... 4SECTION C.-The Development of Domestic Resourres and Productivity..........4SECTION D.-Fair Labour Standard .... .. .. .. .. .... ....4SECTION E.-The Removal ai Maladjustmnents ln the Bàalance oi Payments.........5SECTIoN F.-Safeguards for Cauntries Subject ta External Deflatlonary Pressure .. ......SECTION G.-Internatlanal Action ta Maintain Emplayment .. . .. .. .. .... 5SECTION H.-The Punctious ai the Ecanamnic and Sacial Council and the Speclalled Agencles ..... 6SECTION 1,-The Faroi ai the Emplayment Provisions............... 6

CHAPTER 11.-Industrlal Development . . . . . . . . ... 6

SECTION A.-Develapment ai Econamlc Resaurces.. .. .. .......... 6SECTION B.-Adaptation ai Ecanamies.. .. .. ....u. . . . .. 7SECTION C.-Conditions ai Industrial Developmnent.. ........... 7SECTION D.-Provaiain ai Capital ..... .. .. .. .. . .. : : 7SECTION E.-Supplles . .. .. .. .. .. . ........... 7

SECTION F.-Technology and Training .. .. .. ................. 7SECTION G.-:-Mutual Respansibilities . . ...SECTION H.-Markets and Protection .. .. .. .. .. .. .. ..SECTION 1.-Nature ai Protectian... .. .. .. ............8SECTION J.-Allacation ai Functians.. .............8

CHAPTER 11L-OGeneral Coimmercial Policy ... .. .. .. ..g. . .SECTION A.-General Maat-Favoured-Natlon Treatment, Tarifse and Tariff Prelerences, etc.g..SECTION B.--General Commercial Provisions exceptt Most-Favoured-Natian Treatment)-Exceptlons. xiSECTION C.-.-qualltitatlve Reatrictions and Exchange Contrai..n. .... .SECTION.D.-Subsldies .. .... .. .. ....... .. .. ..

SECTION E.-State Trading ..... .. ..à. . ... .. 17SacriaN F.-Relatlona writh Nan-Members ............ .....15s

CHAPTER IV_-~Restrlctlve Business Practices... ........ 18SECTION A.-Palcy'Tawards Restrictive Buainess Practices ... .............SECTION B.-Procedure with Respect ta, Complaints and Conferences ..........ISECTION C.-Studles Relating ta, Restrctive Business Practices ... ... .. ....... 18SEcTION D.-Obligatians ai Membera . . . . . . . . ... 18SECotIO E.-Supplementary Eniarcement Arrangements . . . .. .. 19SECTION F.--Contlnued Effectiveness ai Domestic Measures against Restrictive Business Practices .. 9zSECTIaN G.-Exceptlons ta the Provisions ai this Chapter ..9SECTION H.--General Observations .. .. .. .. 199

CRAPIEER V.-Inter-governnientel CoammodIty Arrangements ... ....g. ..SECTION A.-General Consideratians .. . . .. ..g. .. .. ..1SECTION B.-Inter-gaverinmental Commnadlty Arrangements ln General ........19SECTION C.-Intcr-gavernmental Commaodity Arrangements Involving the Regulatian ai Productian,

Expert, ImportorPricea.la. .. .. .. . . .. .. 2SECTION D.-MlsceUianeous Provislans..... .. .... . . . ix

SDHAPTER VI.-Estabilshment of an International Trade Organlzatlon......... .. 22SECTION A.-General Observations .. . ........ ..... 22SECTION B.-Puwases ai the Organizatian... ..22SECTION C.-Menibership and Functians...22SECTION D.-The Canference .. .... .. .. .. .. .. .. 2SECTION E.-Votlng and Executive Board Membership... ........ .. .. 22SECTION F.-The Executive Board-Procedure. Powers and Duties......... ..23SECTION G.-The Commissons .. .. .. .. .. .. ... .. .. ..2SECTION H.-Tbe Secretariat .. .. .. .. .. .. ... ..... .. 25SECTION L.--Mvseflaneous Provisions......... .... ....... 23

APPENDIX

Charter ai the Internztianal Trade Organizatinn ai the United Nations ....... ....27Annexure ta, the Charter... .. .. .. .. .. .. .. .. .. .. 42

ANNEXlURUSz. Resalutian, ai tiho Ecanamic mand Social Council Regardlng thes CaUIing ai AU International Conferenceoan

Trade and Einployxnent.42...... .. . . . .2. List af Delegates ta, the Preparatory Committea. ai Repreentatives ai Members ai the nted Nations

not inembers af the Preparâtory Committe. and ai Inter-governmnental and Non-gavernmoentalOrganis;ations ........... .. . .... .. ..... 42

3. Agenda ai the Pr paratory Comamittes... .. .. ...... .... 444. RulesofPrccra*'... .... ...... ........... 45

5. Resolution Concernlng the Second Session ai the Preparatory Commlttee .... .... .. 476. Resolution flegardlng the Appointment af a Draiting Cammittees . . ........477. Resolution Regardlng thes Negotiation ai a Multilaternd Trade Agreement Embodylng Tarif! Concessions 47S. Resolution. Regarding Industrial Development .... ......... 48g. Reowlution Relatlng to Inter-governmnental Consltation and Action on C~nommdt'y Problemns Prior ta

thLe Establishument ai thes International Trade Organization. . ......48Io. Multilateral Trade Agreement Negotiatlons-Procedures for Givlng Effect to Certain Provisions ai theo

Charter ai the International Tradte Organization by Means ai a General Agrement on Tarif and TradeAmong the Members of the Preparatory Committos. .. ...... .... ..~ 48

II. Unite States DraftCharter... .. .. .. .. .. .. .. .. .. .. 52

REPORT OF THE FIRST SESSION OF THE PREPARATORYCOMMITTEE OF THE UNITED NATIONS CONFERENCE

ON TRADE AND EMPLOYMENT

PART I

INTRODUCTION

I. At its First Session, held in London in February,1946, the Economic and Social Council, on the motion ofthe representative of the United States of America,adopted a Resolution constituting the Preparatory Com-mittee of the International Conference on Trade andEmployment. The Resolution, after stating that theCouncil considered it essential that the co-operativeeconomic measures already taken be supplemented byfurther international measures dealing directly with tradebarriers and discriminations which stood in the way ofan extension of multilateral trade and by an undertakingon the part of nations to seek full employment, called anInternational Conference on Trade and Employment forthe purpose of promoting the expansion and production,exchange and consumption of goods. The Resolution cn-trusted to the Preparatory Committee the task ofelaborating an annotated draft agenda, including a draftconvention for consideration by the Conference, and sug-gested certain topics to be included in the agenda of thePreparatory Committee.

2. At the Second Session of the Economic and SocialCouncil held in New York the Secretary-Generai of theUnited Nations announced on 31 May, 1946, that arrange-ments were being made for the Preparatory Committee tomeet in London on 15 October.

3. The First Session of the Committee convened inChurch House, Dean's Yard, London, on 15 October, 1946,and concluded on 26 November, 1946. Notifications ofthe conveningof the Preparatory Committee had beensent by the Secretary-General to its eighteen members andail members, except U.oUnion of Soviet Socialist Republics,signified their intention of attending. The Union of SovietSocialist Republics felt unable to participate in the workof the Committee at this stage as it had not at that timefound it possible to devote sufficient preliminary studyto the serious and far-reaching questions which were thesubject of the Committee's discussions.

4. Certain Members of the United Nations, which arenot members of the Preparatory Committee, sent officialrepresentatives to observe the proceedings of the FirstSession Represontatives of certain inter-governmentalorganizations attended the First Session and participatedin proceedings. t Some non-governmental organizationsalso sent representatives to the First Session and theserepresentatives gave the Preparatory Committee the benefitof these organizations' views on certain questions.:

5. Before attempting to outline the work accomplishedat the First Session, it is desirable to emphasise that thisis a " preparatory " committee the task of which is toprepare an annotated agenda for an international con-ference and that it is only at the final stage, that is atthe Conference, that governments will enter upon bindingcommitments. However it is clear that a thorough dis-cussion by the officials of a large number of the world'sprincipal trading nation in advance of the Conference willgreatly facilitate the work of the Conference itself. Thisconception of the task of the Preparatory Committee isessential for a full understanding of the nature and signifi-cance of the Report which follows.

6. The early meetings of the Preparatory Committeewere devoted to a general consideration of the agenda andof the organisation and conduct of the Committee's busi-ness. The discussion of the agenda resulted in the additionto it of first, the question of an international agreementrelating to industrial development and second, thequestion of the inclusion in an appropriate internationalagreement of an undertaking to promote high andsteadily rising levels of effective demand. At a

* These countries were :.-Colombia, Denmark, Poland, Peru,Mexico and Syria.

t The organizations were:-the Food and Agriculture Organ-ition, the International Bank for Reconstruction and Develop-ment, the International Labour Office and the InternationalMonetary Fund.

tThe organizations were:-the International Chamber ofCommerce, the International Co-operative Alliance, the WorldFederation of Trade Unions, and the American Federation ofLabour:

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later stage in the work of the First Session, certain delegatesexpressed the view that questions relating to services, inaddition to those relating to goods, should be discussed.However other delegates were doubtful whether the termsof reference of the Preparatory Committee would permitsuch discussion.

7. The Committee decided that the detailed examinationof the varied items of the agenda should be ent.-usted toa number of working committees, which are describedbelow, and that the. work of theso committees wuuld befacilitated if their proceedings were tonductod in private.On thU other hand, the Commiteo was anxious that puLlicopinion should bo kept fully informed through thc pressand the Secretariat was, therefore, directed to makearrangements for frequent press conferences and eventuallyto publish this Report of proceedings.

8. The following working committees were establishedby thU Preparatory Committee:

Committee 1: Employment and Economic Activity.Commnites Il: General Commercial Policy.Commit.c III: Restrictive Business Practices.Committee IV: Inter-governmental Commodity Ar-

rangements.Committue V: Administration and Organitation.

A sixth committee, thU Joint Committeo on IndustrialDevelopment, was established following a joint meetingof Committees I and II. In addition to theUs workingcommittees an informal committee of heads of delegationsmnet from tUme to time during the First Session and pro-vided tic general ulidance and steering required for thUefficie:,t conduct of the Committoe's business.

9. nIe officials of thU Preparatory Committec at itsFirst Session werc:

Chairman: M. Max Suetens (Belgium/Luxembourg).Firsi Vice-Chairman: M. Z. Augenthaler (Czecho-

alovakia).Second Vice-Chairman: H. E. Sefior Alberto Inocente

Alvarez (Cuba).Committee I

Chairman: H. E. Dr. Wunsz King (China)Vice-Chairman: Mr. S. D. Pierce (Canada).

Committed IlChairman: Dr. H. C. Coombs (Australia).Vice-Chairman: Dr. A. B. Speekenbrink (Nether-

lands).Joint Committea on Industrial Developfnmt--

Chairman: Mr. H. S. Malilcr (India).Vice-Chairman: H. E. Dr. Wunsz King (China).Vice-Chairman: Dr. H. C. Coombs (Australia).

Committee fIIlChairman: M. Pierre Dieterlen (France).Vice-Chairman: Senor don Higinio Gonzélez (Chille).

Committée IVChairman: Mr. J. R. C. Helmore (U.K.).Vice-Chairman: Mr. Melander (Norway).

Committee VChairman: Ur. Ly mn R. Ed sister (U.S.)Vice-Chairman: henbor Helio de Burgos Cabal

(Brasil),,; .IO. Tie various working committees gave detalld

consideration to the appropriate sections of thi agenda,using as a basic document thU draft Charter for an Inter-national Trade Organization submitted by thc delegationoi the United States, together with documents submittedby other delegations including, inter alla, a Draft Chartersubmitted by thc delegation of Brazil, a detailed com-mentary on tic United Statesj>$oppeals submitted byUic delegation of India, a memorandum on employmentpolicy submitted by Uc delegation cf' thU UnitedKingdom and other documents. : A

Ix. There einsued in the CosTuilsittecs au extensivediscussion of the viewpoints oi thse dillerent delegationsand an atteirpt wtW made to arrive ut n statement ofthe points on which a general identity oa view could bcreached. Were difleresîces of views could not bc re-conciled, the Committees contented themselves with astatelnent of the different viewpoints advanced. TiheCommittees also esduavoured so far as possible to preparedralt text for a Charter ci or Articles of Agteement foranu International Trade Organization, giving expression tathe principles upon whlici a brord Identity oa view hadbeen reached. Part 1I of tisis Report, therefore, containsa record ai the discussions in the working committees andIn an Appendix there appear the texte whicb resultedfrom these discussions. These texts are included ir. theAppendix as they do not form an Integral part of thisReport but a'e rather in the nature of a working docu-ment of the Preparatory Committee which will receivefurther effiting, first by a Draiting Comirsittee, which is tomest in New York in January, and î.gain at the SecondSession of the Preparatory Conmmitteè which is at presentplanned to take place in Geneva beginning on 8 April 1947.

4

i2, Reviewing the work of the First Session, it may bojustly Uaimed that good prugress was been made. Thework wln bo carried forward and, it lu bopud, completedat the Second Session in April 1947 whlci; will alsoinclude multilateral negotiations between tie membersof the Preparatory Committee directed towards the reduc-tion of tariffs and the elimination of preferences.* Inorder to prepare the way for tbese tariff discussions thePreparatory Committee elaborated a document on pro-cedures.t It la boped that witn the completion of thetasi aito e Preparatory Committeo at its Second Session,the stage will have been set for the InternationalConference lu the autumn of 1947.

13. In concluding this Introductioa to the Report It lidesired first, to place on record the appreciation of tiePreparatory Committec for the cordial welcome affordedto it by If.M. Government li the United Kingdom, andsecond, to recognize tho great contribution to the Prepara-tory Committee oi the expensive and careful work wshlch theexperts of the United States had done and whicb waeenibodied in the drait Charter for an International TradeOrganization.

PART Il

CHAPTER IAchievement and Maintenance of High ani Steadlly RIslng Levels of

Luective e>emand, Lmployrnent and Economic Actlvity

scTION A

Tsha Relation o! Emp.oyrnmnt to the Purposes of theOrganization

i. In order ta maintain international trade at bigh andstable level, it i necessary to maintain a bigb and stablelevel of demand for goods and services througliout theworld as well as to achieve a reduction in trade barriers.At the same time full and productive employment andthe maintenance of bigh and stable levels of effectivedemand cannot make their maximum contributions taraising standards of living without the reduction ofharmful trade barriers.

z. It is a main purpose of the United Nations, recog-nised in Article 55 of the Charter of the United Nations,ta promote " higher standards of living, full employ-ment, and conditions of economic and social progress anddevelopment." Some discussion took place as to themeaning to bc attached to the phrase " full employment."Tnthe less industrialized countries whose economies aremore assentially based on primary production, a defi-cient demand shows itself not sw much in mass unemploy-ment (thse common form in industrialized countries), asin under-employment or unprofitable employment amongtheir primary producers. For this reason the main objec-tives of employment policy were defined to include theavoidance of under-employment as well as of unemploy-ment.

3. It was pointed out that if the phrase " full employ-ment " were to b. interpreted in the literal sense, namelythat no one able and willing to work should ever beunemployed for however short a period, governmentsmight be seld to be committed to types of action whichthey would not in fact bé prepared to carry out. It should,of course, bc open to any government to adopt as strict aninterpretation as it desires, but for the present purposeit seems appropriate to interret " ful employment" asa condition in which u employment opportunitiesare available to ail those able and willing to work. Itis the maintenance of such a condition and of the highand stable level of demand associated with it which isof real concern from the international point of view.

-SECtON U

The Maintenansc of Domestit,-EmploymentTie Preparatory Committee considers that govern-

ments owe a responisibility not only ta their own citizensbut also to the citizens of other counties ta do all thatis within their power tu maintain full and productiveemployment and hisg and stable levels of demand withintheir own territories. A decline of demand in an importantcountry, by roducing ite imported from other countries orby causing a burdensome surplus in world markets ofcommodities, which it was previously producing for isown consumption, in liable to lead to the spread of unem-ptoyment or under-employment outside its borders. For

this reason governments should agree ta take action doesigned to achieve and maintain full and productive employ-ment of their domestic labour 'tnd high and stable levieof effective domestic demand. 'The type of measure whichmight bc taken for this purpose should, of course, bo loitto the individual decisions of the governments concerned,which must bh freo ta choose the measure which are appro.priate to their own domestic institutions. This choiceshould bu unfettered, although, of course, it is recognizedthat the measures chosen should bc compatible with theother purposes and provisions of the Charter of the Inter-national rrade Organization.

sEotION C

The Development of Domestic Resources and ProductivityFuli employment of labour in any country be not the

sole condition which, in addition' to other actors sucbi asthe level of trade barriers, determines the level ai effectivedemand on the part of that country for the products ofother countries. A country, which fail4 ta develop itsresources effectively or wh ch faibe to take every oppor-tuaity to raise the productivity of its labour, will, in effect,bo failing to expand ta the maximum its effective demandfor gods and services. Accordingly aill governmentsshould recognize that they bave a common interest ln theproductive use of the world's resources,'and shouId agieeto take action designed progrossively to develop thelreconomic resources and to rals their standards of pro-ductivity. Here again the choice of measures should beleft ta tue government of coach individual country, pro-vided that the measures chosen are compatible with theother purposes and provisions of the Charter of the Inter-national Trade Organization.

SECTION DO .

Fair Labour Standas'sz. It is considered that if full employmnent ls;ta make

its due contribution ta the higher. standards of living andconditions of oconomic and social progress to whichArticle 55 of the Charter of thi United Nations refers, itis necessary that a fair share of the product should accrueto the workers. Ail countries have a co:mon interest inthie maintenance of fair labour standards, particulsrlj inthe case of production for expert, sinco otherwise aoncountry's products may be undercut by than oa anotherla which labour is unfairly exploited. Labour standardscannot, of course, bo uniform in anl countries, but mustbc related ta national productivity. But there was widesupport for the view that governments should agre. totake whatever action mligbt be appropriate and feaibloetoeliminate sub-standard conditions of labour ia tiseir'pro-duction for export and generally lraughout theireconomies.

' Seo Annexure 7.t Ses Annexure se.

2. A few delegates expressed some doubt whether anagreement on this subject should be included in employ-ment provisions. These doubt were based on twogrounds:

(a) It would be wrong to attempt to set too high astandard in certain countries, mince this would seriouslyhandicap the expansion of production in these countrieswhich having plentiful supplies of labour but relatively

little capital equipment or industrial skill, must for atime base their development on lower remuneration thanthat in more developed countries.

(b) Since the International Labour Organization is thespecialized agency which has been specifically chargedwith this problem, It would lead to a duplication offunctions to include an agreement on this subject in theCharter of the International Trade Organization.

3. On point (a) the Preparatory Committee agreed that,if any agreement on labour conditions is included in theemployment provisions, it must be made clear that therecannot be any single comprehensive standard of fair labourconditions appropriate to all countries, but that thestandard must in each case be related to the productivityof the country concerned.

4. On point (b) it was generally agreed that the mainwork on this question should continue to be carried outby the International Labour Organization, and that, ifany agreement on this subject is included in the Charter*of the International Trade Organization, those countries,which are also members of the International LabourOrganization, should co-operate closely with that organiza-tion in carrying out the agreement. The reason for pro-posing that some agreement on this subject should,nevertheless, be included is that labour standards in any

country, and in particular in its production for export,are a matter which virtually affect the employment of

labour and the flow of international trade.

SECTION E

The Removal ot Maladjusiments in the Balance ofPayments

I. The Preparatory Committee considers that a country,even though it is maintaining full employment at home.developing its economic resources and raising its standardof productivity and maintaining fair labour standards,may, nevertheless, exercise a deflationary pressure uponother countries. This will be so if it is persistently buyingfrom abroad and investing abroad too littIe l relation toits exports. Indeed its export surplus may be the meanswhereby it is maintaining its own domestic employment.

2. It was not suggested that countries, which areexperiencing difficulties through unfavourable balances ofpayments. may not themselves be partly responsible forthe maladjustments. For example, countries with

adverse balances of payments, whose difficulties are beingintensified by flight of capital from their currencies, mightproperly be called upon to put a stop to such capital

export. But insofar as the pressure on their balancesof payment is due to thefilure of countries with exces-sively favourable balances of payments to spend theirexternal purchasing power on import or to utilize it forproductive investment abroad, the main responsibility for

the necessaay re-adjustment should not fall on thecountries which are faster pressure.

3. In the Preparatory Committee there was wide sup-port for the view that where fundamental disequilibriumin a country's balance of payments involved othercountries in persistent balance of payment dificulties,which affected adversely the maintenance of employmentin those countries, the country concerned should make fullcontribution to action designed to correct the maladjust-ment. The particular measures 'that should be adopted

(e.g., the stimulation of import or the removal of specialencouragements to exports, an appreciation ofthecountry's exchange rate, an upward revision of its internalprice and cost structure, an increase in foreign invest-ment, etc.) should, of course, be left to the governmentconcerned ta detemnimne. The problem here lies in a spherein which tht International Monetary Fund lhas a veryspecial concern. and it.is mount desirable that in`this fieldboth the national governments concerned and theInternational Trade Organization should co-aperate fullywith the Fund.

Throughout this Report and its Appeadix the terrm"Charter" standing alone refer, to the text drafted by thtPrparatory Committee and.ppended to this Report. When theUnited States Draft Chprter or the Charter of the United Nationsare mentioned, they ar referred to by their full titles.

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SECTION rSafeguards For Colintries Subject to External Deflatiollary

PressureI. Alter further consideration of the position of

countries whose economnies are subjected tq de0latlonarypressure as a result of a serious or abrupt decline in theeffective demand of otber countries, the Proparatory Com-initteo concluded that there muât bc aderjuate safeguardsto meet this contingency.

2. In this connection it ws noted that the Articles ofAgreement of the International Manetary Fund contain,for members of the Fund, some important saioguards:

(a) The provisions relating ta exchange contrai permitthe contrai of capital export sa that no country suffer.ing from an external deflationary pressure need lind itstroubles intensifGed by light of capital f.oOI itscurrency.

(b) A country, which finds itself in a ` fundamcutaldisequilibrium " as a result of the maintenance of its owndomestic prices, costs n;nd Incomes in conditions ofexternal deflation, can apply for an appropriate deprecia-tion of the exchange value of its currency and such adepreciation could not be frustrated by competitivedepreciation on the part of other members of the Fund,which are not in a similar " fundamoutal dis-equilibiium." In this regard it was noted that theExecutive Directors of the Interuational Monetary-Fund have interpreted tht Articles of Agreement of theFund ta mean " that steps which are necessary ta pro.tect a member from unmployment of a chronic orpersistent character, arising from pressure on its balanceof payments, are amang the measures necessary tacorrect a fundamental disequilibrium."

(c) If a country or group of countries bas so large anexport surplus that iAt currency becomes ` scarce " inthe Fund, other countries would be permitted ta restricttheir purchases from it ta the necessary degree withoutrestricting their purchases frami each other.3. The Preparatory Committee i of '.bo opinion that

the Charter of the International Trade Organization sb .uldalso contain adequate safeguards. It was In any caseproposed that countries Ln balance of payments diffcultiesshould bc permitted ta impose quantitative resttictions ontheir import, and it was recognized this woald constitutean important saleguard of the type -in question. '. It Issuggested that when these safoguards are dlscussed, ailrelevant parts of tht Charter' of the International TradeOrganization should be carefully examined to ensure thatthere are adequate safeguards for a country subjected topressure as the result of a decline in the effective deonandof other countries.

4. It was generally feit that-the clauses relating directlyta employment should givo general recognition ta this needfor adequate safeguards by requiring the' InternationalTrade Organisation to' have regard, in the exercise of itsfunctions as detlned ini the ather articles of the Charter,ta the need of countries totate action, within the pro.visions of the Charter, ta saélguard their economies aginnatdeflationary pressure in tht event oi a 'seipus or abruptdecline in the effective demand of otiier countries.

secrxai' O '.' ':.International action to maintain employment'.

x. In present circuumstances the direct action neces.ryta maintain full and productive employseut and a highand stable level of eZective d d.must, in tht main,be the sum of individual national efforts.' Nevertheleuthere are certain. ways in whlch tht appropriate inter-'îgovernnmental organizations night, acting witHin theirrespective spheres and consistently writh the terms of theirbasic instruments, nake soane direct contribution to themaintenance oi employment and the s.hbility of worlddemand.

2. It is considered that the.Econornic andl Social Counail,in consultation with the' appropriate' inter-governiental'organizations, might undUly study tht possibilities in thisfidld.In addition to a consideration of the effects onemployment and production 'of a lowering of barriers totrade. such studies might' well cover sucb measuresa astho synchroni"ation of credit policies so as to aise termsof borrowing' over a wide aroa in' lismes of Rwenraldeflationary pressure, arrangements tu promote stbilityin tht incomes, and ao in the buying power, of producersof primary products, the timing of expenditure on inter-national capital projects and the encouragement of a flowof capital in periods of world deflationary. pressure to thosecountries w e balance of payments needs témiporarysupport in order ta enable them to maintain'their domestiepolice fior full and productive emnFaoyment.,' ,

6

SECTION H

The Functions of the Economic and Social Counciland the Specialised Agencies

s, Thi International structure, whieh may b. necessaryto achieve these employment objectives, was considered:Effective action in tfis sphore will involve separate ;"tionby governments and by a number of inter-governmentalorganizations. Yet such action mwst b. properly con-certed, il the national and International measures foroffsetting a general depression are to be properly timedand of the right magnitude.

2. The' Preparatory Committee considers that thereshould, accordingly, bo some international body underwbose sponsor biip governaienta and inter-guvernmentalorganizations can conxuit wtitb a view to concerted actionta maintain employtnent, and the appropriate body forthia purpose would seomi to be tihe conomic and Social:ouneil of the United Nations, together with its Economicand Employment Commission and its dub-commisuions,to whom this task bas already been entrusted.

3. The functions, which, it is thought, the Economicand Social Couneil should elther perform itself or sponsorthrough arrangements with th. appropriate inter-governmental organizations, cover

(i) the regular collection, analysis and exchange ofrelevant information and

(il) the organisation of consultation with a view toconcerted national and international action in the fieldci employment.

In addition to thea. continuing functions. It was consideredtho Economic and Social Council might initiate thosestudies of noasible direct international action, for themaintenance aof employment to whicii reference has beenmade in paragraph a of Section G.

4. The work, which it is suggested, the Economic andSocial Council and the inter-governmental organizationsconcerned might undertake on this subject will b. ofgreat importance. The information which is to b. col-lected should, as far as possible, cover tbe level and com-position of th. national income and expenditure and ofthe balance of payments. as well as statistics of employ-ment, unemployment, production, etc. As far as isappropriate. and practicable, it should cover future pro-grammes snd probable future trends in order that theneed of employaient policy may b. intelligently antici-pated. Close and regular consultation for concertoid actionby governments and inter-governmental organizations willbo necessary in order toue how far national policies (e.g.for expenditure on public works) or any relevant inter-national policies can b. timed so as to make their mosteffective joint contribution to the- maintenance, of worlddemand.

uxsow sThe Fwrm of the Employment Provisiom

s. The Preparatory Committe. hold the view that thesuggestion that tho Economic and Social Council shouldcontinue to full tiiese general ifnctions in employmentpolicy need not conflct witi t.ho special linkt1iat shouldeut between employment and trade. Governments maymd it dhiSicult ta assume the commercial obligations oftht. International Trade Organisation in the absence of

undertakings by then to do their boat to maintain a hlghand stable level' of effectivee dernand and employmentpolicies must ngt conflict wlth cornrrercial obligations.It lu necessary for theso reasons to Ilnk the trudeobliga-tions and the employment obligations closely together.Accordingly It is considered it would probably b. moutappropriate to Include the employment undertaking inthc Charter of th. International Trade Organization.

2. It li thought, however, that there la one aspect ofemployment wbich should probably bc treated differently.ln paragraph 2 of Section G, it la suggested that the.Economic and Social Council and the appropriate inter-governmental organizations should be invited by theUnited Nations Conference on Trade and Employment toconsider what action might b. taken la the internationalfield to asist in maintaining full and productive employ-ment and a high and stable level of world demand. It irthought that this invitation might best be extended ina separate resolution. A draft of ths resolution for theconsideration of the Conference on Trade and Employaientlu set out hn the next paragraph.

3. Text of Draft Resolution on International ActionRelating to Employment.

THIE UNIMD NATIONS CONFZRENCZ ONTRADE AND ZUPLOYSINT

CONS5OERING that 'a signficant contribution can bemade to the rchievement and maintenance of full andproductive cmpeloyment and of bigh and stable levels cfeffective demand by international action sponsored by theEconomic and Social Co4ncil and carried out in collabora-tion with the appropriate inter-governmental organiza-tions, acting within their respective spheres and conaiatkntlywith the terms and purposes of their basic instrumentsHEREBY ASKS the Econaimic and Social Couacil ta under.take at an early date, in consultation with the appro-priate Inter-governmental orgaaiaations, special studiesof th. forn which sucb international action might takeAND sUGGE5TS that, in addition to covering the effect onemployment and production of a lowering of barriers totrade, the studies of thei Economic and Social Councllshould include a consideration of such measures as:

(x) Tii concerted timing, to the extent which may bcappropriate and practicable i the interest of employ-ment policy, cf national and international measares toinfluence credit conditions and tbe terms of borrowing;

(2) National or international arrangements, in suitablecase., to promote due stability In the Incomes of pro-ducers of primary products. having regard equally toth. interests of consuming and producing countries;

(3) Thi timing, to the extent which may b. appro-priate and practicable in the interests. of employaientpolicy, ci capital expenditure on projects which areeither of an international character or are internationallyfinanced;

(4) Tii promotion, under appropriate safeguards, of aninternational flow of capital la periods oa world defla-tionary pressure ta tiose countries whose balance ofpayments needs temporary support' in order to enablethem to maintain domestic policies for mlu and produc-tive employment.

CHAPTER II

The Dev.lopmrnt oftEconomic Resourcest. The Preparatory Committe. feels that there should

b. a clear recognition in the Charterof th. InternationalTrad. OrganlUat tntbat the progrcive development ofeconomic ruoaurces hi a parts of the woîld is not onlydesirable in itself as a means of raiuing living standardsin particular countries, but iu also dexiable as a meansof expanding the. volume of world trade, thus benefiting allcountries interested in international commerce. Improve-ments in standards of productlun and real income in acountry contribute to the achievement and maintenance bythat country of tigh and rising levels of effective demandfor goods and services mi general. thus enhancing thecapacity cf thàt country to participate in woMld tade.

TwsvupsusU;~~~~~ -

Tiio develapient ai economic resources wlfl also havedesirable social conquence by exjanding the rang ciuseful employment opportunities. It lu. thsraoWre, cellr-atle that tiier. siioaald. b. progressive development,especially ia tuoae countries hasoe Industries at proset aeinadequately developed relative ta, their potential

2. It is thought that oneof th. chief gains from develop-ment is found in the resulting greater diverificatlon withinand between rimany naaufacturing and service indus-tries. Such diversification can contribute& to ceaa.dstability in th. economy of a country and confer upon it

at social sud cultural benefits. The development ofmanufacturing industries rill b.oci particular importanceas it is through sucb devdapment that th. guauest meaureai diversification ai production an employment appor-tunities can be aiev.d;

.~.

3. It is desired also to draw attention to a matter ofinterest to all countries, namely, the early economic re-establishment and industrial restoration of those countrieswhose economics have suffered from the direct impact ofwar. These countries have resources so real and importantto the rest of the world that their temporary disappear-ance or decline has been followed by difficulties in parts

of the world far removed from the theatres of war. Theireconomies are in many cases those of already well-

developed countries and are ready for relatively rapid re-

establishment which will put them in a position to makeavailable to other countries materials, equipment and othermanufactured products, which will be needed for economicdevelopment. In these countries there are qualified tech-nicians and experienced artisans already accustomed tomodern industrial technology and ready to undertake thegreat diversity of occupations involved. Once restoredthese war-devastated countries will be in a position to

contribute to technical progress and to the raising of pro-ductivity and living standards. It is believed, therefore,that measures should be taken to facilitate a rapid returnin the devastated countries to the development interruptedby the war and that this will be helpful to the rapid andsound development of other countries.

SECTION a

Adaptation of Economies

I. As the less developed countries progressively under-take the production of a wider range of commodities fortheir domestic markets, it is likely that the more highlydeveloped economies, which formerly supplied the marketsof the less developed countries, will be faced with problemsof adapting their economies to tie changed circumstances.These problems will be minimized, both in degree andduration, if countries are careful to ensure that theirdevelopment.. programmes are soundly based andcarried out.' The Preparatory Committee suggests that,only in this way will the developing country make itsmostefective contribution to its owa economic welfare andto international trade, and only thus will the more highlydevdoped countries b. able to adapt their economies withvesnable prospect of success.

2. On the other hand there will also be problems of'adjustment facing the developin& countries. Theseprobleràs will be mainly associated with the transfer cfworkerss from agriculture and other primary industries, asthe productivity of labour in such industries increases, tomanufacturing and other branches of expanding economicactivity. This transfer may involve a geographical redis-tribution of population with all its attendant problems, as

well as problems of occupational training and retraining.

SECTION C

Conditions of Industrial Deavlopment

In any country the conditions ofthe industrial develop-ment of economic resources include capital, capital goodsand materials markets, an adequate technology,managerialskill and technicians and trained artisans in sufficient num-bers. When any of these conditions are unsuitable, inter.national and domestic action may be taken to modify thesituation. This international action may be such as to

facilitate the supply of capital, capital goodsand materials,to provide skilled management, trained technicians andartisans and to improve technology. Individual countriesmay take action to plan and cary out developmentprojects, to raise standards of industrial management, andto provide for the training of their own nationals astechnicians and artisans, and -subject' to internationalobligations, they may aim by the use of protectivemeasures at *providing a reasonable share of the homemarkets to the commodities being produced in theirown territories.

- SECTION Il

Provision of Capital

1. Capital may beneeded by a country tomodernize andimprove the technology of existing lindstnes, to expandtesting industries or to establish new ones. It may also

b. needed to improve or increase the supply of publicutilities such as transport and communication services,water and powe-r supplies. While projects of the lattercharacter are essential to progressive development, theymay not bc immediately or directly remunerative, andinternational Action may be ail the more uecessazy, Ufthe

supply ofcapital isto bc adequate.* 56308

'72. The *Preparatory Committee feels that the inter-

national supply of capital will be particularly necessaryto the less developed countries and to the countries whichhave suffered from war. The channel for this supply maybe through private investors, through government agencies,or through the International Bank for Reconstruction andDevelopment. in view of the importance of industrialdevelopment to expansion of warld trade, it is fdît that aulmembers of the International Trade Organization shouldrecognize that they have a responsibility to co-operatewithin the limits of their power to do so with appropriateinternational organizations in ensuring that there is aregular flow of capital to those countries in particular whichhave limited capital resources. The International TradeOrganization migbt well participate in discussions with itsown members and with other international organizationsregarding proposals to this end. In addition it is felt thatmembers should undertake not to place any unreasonableimpediments in the way of other members having accessto capital.

3.' A country embarking on a programme of develop-ment involving substantial imports of capital goods maybe faced with the possibility of balance of payments diffi-culties. It ,s considered that if at any time a countryanticipates that sucb difficulties are imminent, it should bepermitted to impose qualitative regulation of its importsso that the appropriate 'balance may be kept between itsimports of capital and consumer goods. Naturally such aregulation of imports will only remain necessary while theprospect of balance of payments difficulties remains.

SECTION z

SuppliesIn all countries there wi!l be a demand for capital

equipment and materials of all kinds arling from pro-grammes of production and development. For mostcountries, including those which are actively promotingtheir industrial and general economic development, thisdemand can only be satisfied by obtaining supplies of onekind or another from other countries. Therefore thePreparatory Committee is of the opinion that membersof the Organization should recognize that they have' anobligation to other members to refrain from placing un.reasonable obstacles in the way of supply of capital goodsand materials of all kinds needed by other members. Thisobligation. of course, would b. undertaken subject tothe other provisions of the Charter. For example, wherespecial shortages occur in the supplying country, par-ticularly in the early post-war transitional period, suckcountries would be free to apply restrictions il the mannerprovided in Article 25 of the Charter. In crhc=mum.stances, however, it is hoped that they would taxe intoaccount the needs of other countries. and hold suchrestrictions to a minimum.

SECTION YTechnology and Training

One of the most important ways in which industrialdevelopment can be promoted throughout the world isthrough the dissemination of knowledge concerningtechniques of production, particularly in countries atpresent inadequately developed relative to their potential.This can be achieved in part by national and internationalaction ta make available as widely as possible (subject toconsiderations of national security), knowledge of newdevelopments in all countries: resulting from- cgingtechnology and scientiSic reseamh, 'and in part by lndi-vidual action by business entities in the less industrializedcountries gaining access to patents, specifications andtechnological developments. This mnaybe accomplished,for example, by such business entities becoming associatedwith more experienced ones in the more highly indus-triaiized countries. Technology can bo improved also iftechnicians and skilled artisans in the more developedcountrilssare encouraged, to go, pemanently -or tempor-arily. to the lers developed countries. On the other bandthé less developed countries should provide for raising thestandard of'technical and technological training' cf theirown nationals and should have opportunities of sendingtheir own nationals'to the more developed countries forinstruction and training.

SECTION GMutual Responsibilities

In the carrying out of programmes of industrial andgeneral economic development. therefore, there will be aninterdependence between the less developed and the morehlghly.developed-counries.:. -Inarelation tothe international --'supply of facilitie.iforeéconifi de.elopment'inclding

A4

8

capital funds, capital goods and materials, equipment.advanced technology and trained personnel, the Prepara-tory Committee is of the opinion that all countries shouldrecognize that they have mutual responsibilities. It hasalready been noted that countries in a position to supplythese facilities should impose no unreasonable impedimentsthat would prevent other countries from obtaining accessto such facilities. It is equally important, however, thatcountries receiving such facilities should treat the supply.ing countries, including their business enterprises andcitizens, in conformity with the provisions of any of theirrelevant international obligations and, in general, that theyshould take no unreasonable action injurious to the interestsof the supplying country.

SECTION 11

Markets and Protection

T. As a general rule newly established industries depend.initially at least, upon. domestic markets for the sale oftheir product. lbe Preparatory Commit"ee is of theopinion. therefore, that where necessary members desiringta promote industrial development should have or shouldbe afforded reasonable freedom to employ protectivemeasures sa that an adequate portion Qf their local marketsmay be assured to the commodities concerned. However,since an unwise use of protective measures by any countryfor the purpose of promoting industrial development placesan undue burden on the economy of that country andimposes unwarranted restrictions on international trade.it is desirable t-at countries promoting development shouldnot lnake immoderate use of such protective measures.

2. The use of dumping policies by other countries mightbe particularly barrmful ta countries wishing ta carry out aprogramme of development or reconstruction. However,special action will bc recommended later to provide againstthis continge!1cy.

3.- Since the comparative development of membercountries is uneven, and since the levels of existing tarifsare unequal, it is considered that account should be takenof these factors by members generally in any tariff negotia-tions and by the Organization should it be called upon todetermine whether a -country has fuIfilled its obligationswith respect to such negotiations.

- SZCEON Z

Nature of Protection

T. Considerable attention was devoted to the questionof the kind of protective measures wbich might be used forpromoting development. It was generally recognized-thatthe Charter provides a substantial measure of freedomto use subsidies and that it also permits-the use of tariffsin those cases where, tariff rates are not bound againstincrease as a result of agreements volunt-a.ily negotiatedby prospective members as contemplated in connection*with the Charter. Discussion of t-bis problem was, there-fore, related principally t-e the means whereby a membermight obtain a limited release from obligations assumed iuthe course of such negotiations witb other members andfrom regulations contained in the Charter governing theust off ormis of protection other than subsidies and un-bound tarifEs.

2. It bas been concluded th-t such releases should bogranted in appropriate circumstances and the procedure.which is described in paragraph (3) of Article 13 of theCharter,' bas been agreed. Sub-paragraph (b) of 'tbat para-graph covers a situation in which permission is sought t-c*ais. a tariff that had been bound as a result of negotia-tions -with 'cther' members, or in which it is desired toimpose sorie other forte' of protection that is otherwise notpermitted by the Charter and that would impair the valueto other members of an agreement negotiated with respectto tarifEs. The somewhat simpler procedure indicatedunder sub-paragraph (c) provides .for cases in whicb releaseis sought from obligations assumed by ratification of theCharter and such release would not impair the result ofprior tariff negotiations. PartF.!ar attention was givento tbe possible use of quantitxtivc remnlation cf imports asa means of protection. 7le Prepaj atory Committee .sof the opinion t-at, subje,-- to the .uggested procedure,this means should bc enmployeu .- where it would place

- a lighter burden on t-be country giving the protection andwere it would be less restrictive of international tradethan would bo the case witb other forms of protection.

3. One- delegate felt-that quantitative restrictions shouldbc recognized as a means of giving protection whicb couldbe used at any time in the early stage of industrial

development by a metnber deeming it absolutely necessary,subject only to the right of any other member to complainto the Organization if such member felt that in any in-stance quantitative restrictions were being used unjusti-fiably. This delegate specifically reserved his position withregard to paragraph (3) of Article x3 of the Charter.

4. A second delegate expressed concern at,.what haregarded ta be the complicated and lengthy character ofthe procedure for obtaining release provided in paragraph(3) of Article 13. He felt the suggested procedure miglitmake it difficult for under-developed countries ta obtain arelease, particularly to use quantitative restrictions. lathose cases in which quantitative restrictions are no morerestrictive than alternative forms of protection, he wouldurge that the procedure adopted by the Organizationshould be less cumbersome, providing for release on t-hebasis of criteria established by the Organization, withoutrequiring prior consultation with other members.Although realizing th-e evils of quantitative restrictions, hobelieved their use for protection should be provided speci-fically in the Charter. However he e;d appreciate thecompromise that had been reached in this matter and didnot at this stage propose any amendsnents, althoughreserving bis position.

5. Despite the proposal, set out in paragrapb (3) ofArticle 13, namely that the Organization should be 'em:powered ta give a release in appropriate circumstances toa member in respect of any obligations under the Charter,onc delegate felt that there should bo more apeci&c p:o-vision for the use of regional preferential arrangements asa means of giving protection and reserved his position onthis point.

SECTION J

Allocation of Functions

x. Careful consideration was given ta the question ofhow the international functions relating to 'industrialdevelopment can best be carried out and to the part whicbthe International Trade Organization should play in theirperformance. It is clear that th-e Internaticsnal TradeOrganization must exercise functions relating to industrialdevelopment at least insofar as measures of commercialpolicy are employed ta foster such development. Fromthe point of view of the purposes of the Charter and theeffective working of the International Trade Organization,there are strong arguments for empowering tho Organisa.-tion to perforai certain positive functions in relation' toindustrial development, particularly in the provision oftechnical aid ta members in the formulation and executionof plans for development. Accordingly thez; bas beonincluded in cie Charter a tentative provision ivhich, ifadopted, would enable the International Trade Organisa-tion within its competence and resources to provide sucbaid.'

2. This task. because of its essentially administrativecharacter, would be appropriate to a specialised agency,and its performance by the International Trade Organiza-tion might provide a useful means of positive co-operationwith menibers. Furthermore it would provide the per-sonnel of the Organization with continuous experience ofthe positive as well as the protective aspects of nationaldevelopment policies and 50 assist them in maintaining'thebalanced-point of view which wilD be essential t-a the wiseexercise cf t-e discretions wbich the' Charter entrwsts tatho Organization. -

3. The Preparatory Committee is aware, however, thatthis problem cannot be looked at solelv from t-he:point ofview of the purposes of thc Charter. There are a'numberof inter-governmental agencies and organizations con-cerned with various aspects of industrial development.These include the ;Sub-Comrission on Economic Develop-ment of the Economic and Social Council, the InternationalBank for Reconstruction and Development. the Inter-national Labour Organization. the Food and AgriculturalOrganization and. the United Nations Educational,Scientific and Cultural Organization. The PreparatoryCommittee assumes that the Economic and Social Councilwill shortly be giving consideration to t-he question of theappropriate division amOnR various agencies of responsi-bilities not yet allocated in the field of economicdevelopment and to the means whereby their activities canbe adequatelv co-ordinated, and that the decisions of 'tbeCouncil on these questions must bo based on other andpossibly wider considerations than'those which faDl withinthe competence of the Preparatory Committee. Accord-

*'Paragraph (3) of Article' sx.

ingly, paragraph (3) of Article Is, by which thtOrganization is empowered te provide technical aid tomembers. has been placed in square brackets as anindication that its inclusion should be regarded as pro-visional until theviews of thoEconomic and Social Councilon this question have been formulated.

4. It is suggested, therefore, that the Economic andSocial Council should bh invited, when examining the allo-cation of functions in relation ta industrial development,to give due weight te the considerations set forth above

and te advise whether the inclusion of paragraph (3) ofArticle II is consistent withtheCouacil's views.*

5. In view of the fact that there are many factors, otherthan those directly relating te the International TradeOrganization, which require te bc taken into considerationin this matter, the Preparatory Committee expresses thehope that tIOse of its members, which arc not alsomernbers of the Economic and Social Council, may beinvited te submit their vicws at the time the Council isconsidering these matters.

CHAPTER III

General Commercial Pollcy

SWCTION 4.

General Most-Favoured-Nation Treatment, Tarifls andTariff Preferences, etc.

z. Most-Favoured-Nation Treatmont

(a) The Preparatory Committee is in agreement withthe principles

(i) that members of the International Trade Organiza-tion should grant each other general unconditional most-favoured-natic.n treaSment in respect of all customsmatters; and

(ii) that existing pre-erences, which are of long stand-ing and which have important effects on the econoMie3of the countries concerned, should be excepted from themost-favoured-nation clause pending their eliminationby negotiations pursuant te the provisions of Article 24.

(b) The most-favoured-nation provisions set forth inArticle 8 of the United States Draft Charter were comparedwith the standard most-favoured-nation clause developedby the League of Nations for inclusion in bilateral agree-ments. It was concluded that there were nO importantdifferences of substance between the two versions and thatthe version incorporated i Article 8 was preferable becauseof its brevity.

(c) The most-favoured-nation clause recommended bythe Preparatory Committee incoLporates certain concepts(for example " the like products ", ` country of origin ",etc.) which have been customarily included in commercialagreements in the past but which have never received aprecise definition.- The Preparatory Committee is oftht opinion that the matter of defining sucb conceptsshould be left for study by the International Trade Organ-Izaotin after its establishment.

(d) The principal differences between tho text of Article8 o! the United States Draft Charter and of that recom-mended by the Preparatory Committee, and the reasonsfor these differences, are as follows:

(i) Under paragraph x of Article 8 of the United StatesDraft Charter the grant of most-favoured-nation treat-mez-t extends te firstly, the awarding of governmentalcontracts for public works and secondly, te the purchaseby goveranrents of supplies for governmental use (i.e.not for, resale)t Under the revision recommended by thePreparatory Committee .these subjects are removed from;the scppe of the,m jt-favoured-nation clause.

-. (ir) th Preparaty Committee is of the opinion thatthe av.r ding of public works contracts is more closely-related to the question of tht treatsnent of foreign

nationals and corporations than te the treatment of thetrade in goods. It is considered that Chapter V of theCharter should be confined to matters affecting trade-and that questions relating to the treatment of nationals,etc., --sheodd be the subject of future agreementsdeveloped under the auspices of the International TradeOrganization as contemp!dted under paragraph (5) ofArticle 6s of the Charter. Under this paragraph aswell as under Article 75, the International Trade Organization can recommend the adoption of special agree.ments dealing with public works contracts.

(iii) The comnmitzment regarding governmental pur-chases of supplies for governmental use was removedfrom the scope of the umost-favoured-nation clausebecause a suitable clause dealing with such governmentalpurchases hà recommended for inclusion in Article 3s(Nor-discriûrinatory Administration o! State-TradingTEnterprises).56308

(iv) The Preparatory Committee considered the pro-vision in Article 9 of the LJnited States Draft Charterfor national, as distinct from rmost-favoured-nation,treatment i; respect of governmental purchases of sup-plies for governmental use. Such provision wouldrequire the elimination of the many "buy-national `laws under which national governments are required togive prefereisce to domestic products in purchasing theiradministrative supplies. As it appears to the Prepara-tory Committee that an attempt to reach agreementon such a commitment would lead to exceptions almostas broad as the commitment itself, the PreparatoryCommittee has omitted this commitmrent.

(v) Under paragraph 2 of Article 8 ci the UnitedStates Draft Charter certain long-standing preferencesare temporarily excepted from the most-favoured-nationclause (i.e., they are excepted pending their elimina-tion by negotiation under Article I8 of that Charter)provided that they were in effect in either 1939 or 1946(whichever date resulted in the lower preferences). Also,under that paragraph the preferences thus excepted werelimited, roughly, te Iniperial or Commonwealth prefer-ences and Cuban-Am2rica.n preferences.

(vi) Under the revision of paragraph 2 of Article 8(Article 14) which is recommended by the PreparatoryCommittee, the preferences excepted from tbe most-favoured-nation clause are those remaining after thenegotiations contemplated in Article.24 rather than thosein effect on a particular date. Alse, the categories ofpreferences thus excepted are broadened te include notonly Imperial and Cuban-Arnerican preferences but alsopreferences in force between neighbouring countries in1946.

(vii) The base dates in paragraph 2 of Article 8 of theUnited States Draft Charter would determine in a preciseway those preferences te be eliminated under the most-favoured-nation clause and those preferences to be sub-ject to negotiations under Article 18 of that Charter,Accordinglv, the removal of the base dates from thisparagraph will require that some other method bofound of establishing a basis for negotiations withrespect te preferences. Recommendations on this pointare included in tbat part af the Report which relatesto the proposed multilateral trade-agreement negotia-tions among members of the Preparatory Comrmnittee.

(viii) In this connection one delegate suggested thatArticles 8 and I8 of the United States Draft Chartershould be interpreted in such a way that, sa long as'apreference remained accordable in ont part of a prefer-ential! systeni specified in paragraph i of Article 8, tbatpart o'f the preferential system according the prefer-ences should be-at liberty' to:extend the same, or a-lessermeasure of preference to any other part of the samepreferential system which at present did not enjoy it.

2. Reduction of Tariffs and Elimination of Preforencos(a) Ganerai Observations

(i) The Preparatory Committee was in general agree-ment with the basic principles that the 'meptbersm of thtInternational Trade Organization should enter into'recip-rocal and mutually advantageous negotiations with eacbother directed te the substantial reduction of tariffs onimparts and exports and te the elimination of iinporttariff preferences, that these negotiations should proceedin accordance witb certain rules and that members, Whichunjustifiably fail te fulfil their obligation regarding tarifsand preferences, should not be entitled to receive thebenefits resulting from, the fuilmont of these obligationsby other members.

- >` ~~See Aunnexre 8;

10

(ii) One delegate while recognizing that the proposednegotiations are to be conducted on a reciprocal andmutually advantageous basis and that the obligationsundertaken pursuant to such negotiations would be sub-ject to readjustment by the International Trade Organiza-tion in accordance with the principles and procedures setforth in Chapter IV (Economic Development), neverthe-less questioned the application to countries in the earlystages of economic development of the principles set forthabove that tariffs should be reduced substantially.

(iii) Another delegate suggested that the rules govern-ing the negotiations should take into account the relativelevels of the tariffs of each country in the light of theposition of those countries which are in the early stagesof industrial development. While making this suggestion,this delegate indicated his willingness to raise with hisGovernment the question whether the principles and pro.cedures recommended in Chapter IV (Economic Develop-ment) do not adequately meet the requirements he wishedto sec satisfied.

(b) Scope of Negotiatioss(i) Under paragraph 1 of Article 18 of the United States

Draft Charter the proposed negotiations would extendto tariffs on imports and exports and import tarif prefer-ences. Under the revision prepared by the PreparatoryCommittee the scope of the negotiations has been broad-ened ta clearly cover charges on imports and export otherthan tariffs. The additional charges in question are in-tended to mean charges analogous to tariffs they arenot,for example, intended to include non-discrlminatoryinternal taxes which are collected at the time of importa-tion.

(ii) The reference to negotiations regarding state-tradingmargin, which appears in paragraph i of Article z8 oftho United States Draft Charter, has been omitted fromthc revision. It was believed that undertakings to nega-tiate with respect to such margins, in the manner speci-fied in the case of tariffs and preferences, were adequatelyprovided in thU revision. (Article 32.)

(c) Rules Governing Nq!oi.ins(i) Certain drafting changes were suggested with regard

to the uiles governing negotiations set foreh in paragraphiof Article 18 of Uic United States Draft Charter. Firstly-Sub-paragraph (a) provides that " Prior internationalcommitments shall 'not be permitted to stand in the wayof action with respect to tariff preferences." It was agreedthat the intention lying behind this provision could bcmore clearly expressed as follows: " Prior inter-national corumitinents shall not be permitted to standin thU way of negotiations with respect to tariffpreferences, it being understood that action resulting raomsuch negotiations shall not require the modification ofexisting international obligations except by agreementbetween the contracting parties or, failing that, by ter-mination of such obligations in accordance with theirterms." Secondly-Sub-paragraph (b) provides that nogo-tiated reductions in most-favoured-nation tariffs shouldoperate automatically to reduce or eliminate margins ofpreferences in effect on I July I939. In view of tae im-practicability of establishing a common base date fornegotiating preferences, the revision recommended by thePreparatory Commrttec omits any reference to a basedate to bo used in applying this rule. Threo delegatesthought that the rule should not operate automatically,but that members should be free to negotiate for areduction in thU preferential rate as well as in the most-favoured-nation rate, provided that thU margin betweenthe two negotiated rates is smaller than that existing ona (prior) date to boagreed upon. Thirdly-An additionalrule bas been included, as sub-paragraph (c) of Article 24,wh-ich provides that during the negotiations the binding

. consolidation of low tariffs or of taritT-free treatmentshall in principle be recognized as a concession equivalentin value to thU substantial reduction of high tarifs or theelimnination of tariff preferences.

(ii) The Preparatory Committee also considered thequestion whcthor a rule should boincluded in Article I8of thU United States Draft Charter ta the effect that thUelimination ofquantitative restrictions (as defined in Article29 of that Charter) on thU Onc hand, and tUi binding ofpreference-free treatment on the other hand, should beconsidered concessions equal in value to the reduction oftariffs or the elimination of preferences. It was agreedthat since preference-frec treatment and quantitativerestrictions were to bedealt with under general rules in-corporated respectively in Article 14 (Most-Favoured-Nation Treatment) .- and. Articles .25-28 (Quantitative:Rcstrictlaoq) oftih. revised tet, tbcy could not properly ba

included in the rules governing selective tarif negotiations.At the saine tins. it was recognized, thàt, in accotdanccwlth the plan for conducting tariff negotlatlons amongthe members of the Preparatory Coailtittee, those countrieswould not be called upon to subsctibe to the most-iavoured-nations and quantitative restrictions provisions untilselective tariff negotiations bad been completed and vice-versa. It was believed that tUis circumstance would assurethat due weight will bo given in the tariff negotiations tothe benefits to bo derived Irom the elimination of quanti-tative restrictions and the general grant of most-favoured-nation treatment.

(d) Withholding ot Tan#f BDoefliu from Members ot theOrganization Which Fail go Carry' Oui Obligations forthe Reduction of Tanif/t and P.itnination oiPreforencea.Several changes were made In patagrapli 3 of Article il

of the United States trait Chatter.(i) Paragraph 3 provides that tihe International trade

Organizatiln may authorize a tbetbbet to withhold tariffreductions iton atiothet metdber which failed tbnogotiate as rquired by patagtaph S. Under therevision the Organîzation can authorize withholding fotfallutre to uiegotiate In accordance with the rules laiddown lIn paragraph (r)" (1.e. lni sulb-paragraphs <a), (b)anti (c) ai paragraph (I)). Thlus, fat example, a coufitryhaving low tarlls CanD0t ho accused under paragraph (3)ai laiIure ta negotiate adequately because ai unwilling-ness ta redore its tariffs substantially. Also, under Uicrevision, a member n bring a complaint before tleOrganization in the event ai another member £ailingto consider reductions of high tariffs in retun for bd-ings of low tariffs. :

(ii) Under paragrapti 3 of the United States DraftCharter the withholding of tariff benefits bymembers isrestricted ta tariffs reductions effected pursuant to nego-tiations under paragraph z. Under the revision membersarc authorized to withhold any tariff benefits, includingbindings, granted pursuant to negotiations. The pur-pose of this change is to assure that low trif countries(which may not have granted many tariff reductions)will not bo placed in aa un£avourable bargainngaPostonin dealing with members of the Organization which maybo reluctant to carry out thU obligations of paragraph(z) of Article 24.

(iii) Language bas been included ta paragraph (3) ofArticle 24 to assure that the Organszation, indeterminating whether a member bas unjustifiably failedto negQtiate adequately as required by paragraph (I),will take into account the situation of Uic member underthe Charter as a whole, including Chapter IV ai theCharter (Industrial Development).

3. Emergency Action in Respect ot Importis a ParticulasrProducts.(a) The Preparatory Committee considers that members

of the Organization, in the event of unforeseen develop-ments and of injurious effects on their trade caused by ortUreatened by reason of the obligations laid downin Chapter V (including tarif[ or preference concessions)should be permitted to withdraw or modify thU obligationsto the extent and for thU time necessary to prevent the in-jurious effects. The Preparatary Cornmittee agreed thatthis right should be subject to adequate safeguards andto thU possibility of counter-action by other members inthe event of the abuse of the right.

(b) Three basic changes have beei incorporated it theirevision of Article 29 of the United Statés Draft Charter.

(i) LangÙIge has beeni paiagrstd. (sS atthe revision (Article 34) which makes it clear that mcn-bers invoking the Article may withdraw or modify con-cessions in respect of proforences as well as concessionsin respect of tariffs and obligations regardlog quanti-tative restrictions etc.

(ii) A provision bas been included under whichrmem-bers may, in critical and exceptional circumstances,modify or withdraw concessions under tise Article, ona provisional basis, without prior consultation with theother interested members of Uic Organization, Providedthat consultation is undertaken immediately followingupon the taking of such action.

(iii) Two delegates questioned the dedirability 'of per-mitting action under tie Article without prior consulta-tion even in emergency circumstances; One of thesedelegates als5 proposed that if action without prior con-sultation was permitted to azmember, immediate counter-'xaction by other affected niembers. shQul4`albe per.

11

mitted, without the delays involved in obtaining thepermission of the International Trade Organization totake such action.

(c) Provision has been made to assure that, ordinarily,counter-action taken under Article 34 will not be dis-proportionate to the provoking action. At the same timothe Organization is authorised to permit severe counter-action in cases of abuse of the privileges granted by theArticle.

4. Consultation-Nullification or Impairment.

(a) The Preparatory Committee agreed that members ofthe International Trade Organization should stand readyto consult with one another regarding any matter affectingthe operation of the provisions of Chapter V of the Charterrelating to trade barriers. It was also agreed that anymember should be entitled to request the Organization toset aside any obligations under Chapter V, and that theOrganization should be authorized to set aside such obliga-tions, in the event of any situation arising. whether ornot caused by action by another member, which wouldnullify or impair any object of the Charter. If a memberis adversely affected by obligations being set aside, itshould be entitled to withdraw from the Organization onshort notice.

(b) Under Article 30 of the United States Draft Chartera member can be authorized by the Organization to sus-pend the application to another member of obligationsunder Chapter V only in the event of the second memberbeing found to have taken some action (whether or not inconfict with Chapter V) which nullified or impaired anabject of Chapter V. Under the revision any action by a.member or the development of any situation, which,impaired or nullified any abject of the Charter (includingany object set forth in Chapter III (Employment)) can bean occasion foi' the lodging of a complaint with theOrganization. Thse Organization can make recommenda,tions ta tbe members concerned and, in serious cases,release any member (and not merely the complainingmember as originally) from its obligations under Chap-ter V. Members adversely r.fiected by the suspensionof obligations on the part of another momber are entitledta withdraw from the Organization on short n.

(c) Two types af cases will illustrate thi action

whicb may be permitted under the revisii- .cie 30)

but which is precluded under the Article .-afted iiu

Uic United States 'Draft Charter.

(i) A member may seek, and obtain from the Organiza-tion, a release from its obligations under Chapter V onthe ground that its economy is suftrnng from deflationarypressures caused by the !ack of effective demand for itsgoods from abroad (possible impairment of the objects ofChapter III). In such cases it is contemplated that theOrganization, before granting any such release, will con-sult with the Economic and Social Council of thc UnitedNations or with other inter-governmental organizat-ons.ta determine whether some ailier remedial action is notopen ta the member seeking the release.

(il) A member importing a particular product may bereleased from appropriate obligations under Chapter Vin order ta adjust competitive conditions between twoexporting countries (for example, in cases in which oneoI the exporting countries is deliberately exploiting sub-standard labour contrary ta the objectives cf Chapter m.)Also, the request for such a release may be made byone ai the exporting countries (in the example abovethe exporting country ,;aiering from unfair competitioncaused by sub-standard labour in the other exportingcountry) rather than by the importing country.

5. Territorial Application of' Chapter V.-Customs Unions-Frontier Traffic.

(a) The Preparatory Committee was in agreement thatthe provisions of the Charter regarding trade barriersshould apply ta each of the custOmS territories under thejurisdiction of members, that an appropriate exceptionta these provisions should be made for advantagesaccorded ta facilitate frontier traffic, for advantages in-cident ta the formation qf a customs union and for newpreferential arrangements approved by the Organizationunder paragraph (2) Article 66 and that suitable defini-tions of customs territories and customs unions should beincluded in Chapter V.

(b) In addition ta certain drafting amendments, thefollowing changes were made in Article 33 of thU UnitedStates Draft Charter:

(i) That Article provides that Chapter V shall notprevent " thU union for customs purposes of any cus-

56308

toms territory and any other customs territory." Underthe revision this exception extends ta - the ponrationof a union for customs purposes, cIc." thus permittingmeasures vr'dich in fact represent a transitional stagetowards a customs union.

(ii) A new paragraph bas been added which recognisesthat new preferential arrangements (for example, thoseof a regional character) may, in exceptional circumn-stances be justified and make st clear that the Organiza-tion will be authorized ta approve such arrangementsunder paragraph (2) of Article 66 of the Charter.(c) Two delegates made reservations with regard ta

preferences of regional character. One of them statedthat sucb preferences have an intrinsic value by them-selves and should not be subject ta the procedure pro-vided in paragraph (2) of Article 66.

6. Subn;ission of Report on Procadures for Proposed Multi.lateral Trade 4greeoncnt Negotiations

(a) The Preparatory Committee bas prepared a reportsetting forth procedures ta be followed in connectionwith the negotiations regarding tariffs and preferencesta bo conducted among its members pursuant ta Article 24uf the Charter and in accordance with its resolution oaNovember 26, 1946,*

(b) It i9 believed that the text of this report is largelysclf-explanatory. It may be noted, however, that theparagraph, which points out the importance of avoidingniew tariff measures which would tend ta prejudice theproposed negotiations, is not, of course, a legally bindingobligation such as might prevent countries from intro-ducing tariff changes regarded as urgent.

(c) With regard ta the proposal in the report that thetariff agreement among the members ai the PreparatoryCommittee should be unilateral in form and in legalapplication, one delegate considered that bilateral tariffagreement or agreements limited ta a small group of coan-tries the benefits of which are generalized under theoperation cf the most-favoured-nation clause would bepreferable because they night be more eaily revisedwhen necessary.

SECTION B

General Commercial Provisions (except most-fr.voured.nation treaiment)-Exceptions

z. A substantial degree of agreement among the membersuf the Preparatory Committee was reached on questionsof the principle underlying these provisions. However,as was ta be expected, there were numerous differencesof opinion, and a number of reservations were made onaccount of national variations in the practice of detailedadministration.

2. Complete reconcmation of views was not possibleta the extent that agreed texts for insertion in the Chartercould be prepared within the time at the disposal of thePieparatory Committee. A greater degree af unasjpitymight have possible if more time had been available.In addition many of the delegates' suggestions weremerely drafting points and it was felt that these shouldbe dealt with by the Drafting Committee.

SECTION C

Quantitative Restrictions and Exchange ControlI. General Elimination of Quantitative Restrictions

(a) There was wide agreement with the proposal for ageneral rule against the use of import and export restric-tions and prohibitions, the rule being subject ta excep-tions permitting thse use ai restrictions in specified circuma-stances and under specified conditions.

(b) The Preparatory Committee agreed that during apost-war transitional period it should be permissible ta usesuch restrictions ta achieve the equitable distributionproducts in short supply, thse maintenance of war-timeprice contrai by countries undergoing shortages as a resultof the war, and the orderly liquidation of temporary sur-pluses of governmnent-owned stocks and of industries,which were set up owing ta the exigencies ai war, butwhich it would be uneconomic ta maintain in normaltimes. These last two exceptions would be subject taconsultation with other interested members and all thessexceptions would be limited ta a spucifled post-war tran-sitional period, which might, however, be subject to someextension in particular cases.'

, See Annexure 7.A 6

* (c) Thiere was wide agreement for anl exception to thegeneral rule against expert restrictions or prohibitions seas te enable a country te take temporary action to relievecritical shortages of foodstufls or other essential products.Thero was aise wide agreement for an exceptional use cfrestrictions te apply standards of classification and grad-ing of commodities in international commerce, subjectte safeguards against their ruisuse for the purpose of givingdisguised protection.

(d) Consideration was given ,o the suggestion tiat thereshould be an exception permitting import iastrictions onagricultural or fisheries products te accompany measuresrestricting the doznestic production or sale of like pro-ducts and to remove a temporary domestic surplus bymeans which involved selling that surplus ut prices belowthe current market price to certain groups of domesticconsumer. heree was wide agreement for the view thata clause on these lines was desirable but two delegatesproposed that, in order to give similar protection te agri-cultural or underdeveloped countries, the exception shouldnot be confined te agricultural and fisheries products. Onedelegate, on the other hand, took the position that theexception should cover only agricultural products. Thorewas wide agreement for the view that any supplies of theproduct which were en route at the time at whicb publicnotice was given of the restrictions should not be excluded,though they might be counted against any quotas in theimporting country. It was generally agreed that this pointshould be covered in this Article unless it were alreadyadequately met in Article 2z.

(e) It was suggested that restrictions insposed under thisexception should not be imposed on seasonal commoditiesat a time when similar domestic products were not avail-able and it was generally agreed that this suggestion mightusefully bh further considered at the. Second Session of thePreparatory Committee.

(t) There wai wide agreement for the view that re-strictions on import, imposed ta match a restriction ondomestic production, should not be such as to reduce theproportion of imports te domestic production below thelevel which might otherwise have been expected te rule,it being necessary te judge the situation not only in thelight cf the position at a privious period but alse in thelight of any changes in conditions which might haveoccurred since that date. The view was, however, ex-pressed thal. such a rule might weigh unduly on thedoinestic producers, since the exporters in other countriesmight be able more readily te find alternative ma kets.

(g) The suggestion was put forward by soma delegatesthat the exception in the case of agricultural productsshould bh widened by permitting restrictions on importwithout restrictions on home production so as to maintaindomestic prices at a level sufficient te cover domesticcosts of production or se as te enable a domestic surpluste bh cleared. It was suggested that thiz could bh accom-plished by deleting the last three sentences of sub-para-graph (2) (c) of Article 25. However, it was felt by otlerdelePtes that such proposals wculd extend the Fcope ofthe exceptionn to an undesirable degree.

(h) Some delegates put forward the suggestion that thewording of the exception in the case of agricultural pro-ducts should be changed se that the words " for instance "would bh inserted after the words " to remove a tom-porary surplus of the like domestic product ". Otherdelegates felt that this suggestion would permit an un-desirable expansion of the exception and, therefore,opposed the suggestion.

(i) There was general agreement that restrictions or pro-hibitions on private trade might bh imnosed in order teprotect the position of stata-trading entierprises operatedunder other articles and that import or export quotas isn-posed under inter-governmentai commodity agreementsconcluded under the Charter might be used.

(j) The suggestion was aiso made that it should be par-missible te use import. restrictions, under proper safe-guards, as an antidumping m.iasure in those cases of inter-mittent dumping in which import duties did not providea suitable instrument of control. After consideration itwas generally agreed that as far as the establishment ofnew industries are concerned, tde position should bh suffi-ciently covered by the provisions of Chapter IV. In re-spect of the threat of intermittent dumping to 'i,blishedindustries, tsera was wide agreement with thi v, .v thtthe petition was probably already adequately Ls-Yeredunder Articl 34 but one delegate remained uncertainwhether tDis was in fact the case.

12

(le) lt was suggested that export restrictions snould bepennitted for the preservation o£ scarce natural resourceseven if thera were not restriction Oc domestic consumption,as required under paragraph j rf Article 32 of the UnitedStates Drait Charter. While it was recognized that theremight be cases in which such action would bu unobjec-tionable, the view was widely expressed that such auexception, unless subject to sufficient safeguards, might un.duly restrict access 1o raw materials. Lt was generallyagroccl that dtc point might usefully be further examinedat the Second Session of the Pruparatory Committoe.

(1) It was suggested by one delegate that restrictions onexports should be permissible for the safeguard of livingstandards, for the facilitation of industrial developmentand for the stabilization of domsnetic prices se as te achievea balanced development of the national economy, and thatimport restrictions should be permissible for the enforce-ment of governmental measures to regulate domestic pro-duction, distribution and consumption so as te maintaina dynamic equilibrium between the diverse economic acti-vities of a nation in the process of industrialitation. Afterdiscussion of this suggestion, tbere was wide agreement inthie Preparatory Commnittec that it was already adequatelycovered in the provisions of Chapter IV and by the pro.posais made with regard te the use of import restrictionsunder Article z6 te safeguard the balance of payments.

(tn) Some delegates announced that, because theythought the procedure laid down in sub-paragraphs (3) (a)and (c) of Article I3 of Chapter IV (Industrial Develop-ment) needed further examination, they might propose anaddition te paragraph (2) of Article 25 to include anotherexception in the following terms: " Import restrictions forthe purpose of economic development as a protectivemeasure provided that they are less restrictive in theireffect than other forms of protection and provided thatUtey are il conformity with the criteria laid down for thepurpose by the Organization." Other delegates, how-ever, considered that the procedure laid down. wari appro-priate.

(n) The Preparatory Committee considered the questionof the treatment of certain existing preferential arrange-ments which were established under international agree-ments but nut elected by the normal method of a difflr-ence in rates of duty. In these special circumstances itis recommended that any such arrangements remainingafter the negotiations te commene on 8 April, 1947 shouldbe dealt with by a provision in ., protocol to the Charteror (pending the conclusion of the Charter) to the GeneralAgreement on Tariffs and Trade to the effect that themember applying these arrangements shall be entitled tocontinue them; or equivalent measures, pending either:

(i) an arrangement under Chapter V, if tbe membersconcerned desire that the product should be made thesubject of such arrangement, or

ii) some other arrangement regarding the matterbetween the members concerned.(o1) t was agreed that only a very limited number of

commodities full under this heading and that the countriesconcerned should establish the facts about them so thatthe above recommendation could be taken into accountin the forthcoming negotiations. It was further recognizedthat the concessions or lack of concessions in respect of theitems concerned would, for purposes of assessing the resultsof the negotiations, stand on tie sarne footing as conces-sions or lack of concessions in respect of particular tarif!or preference items.

2. Restrictions te Saf¢guard the Balance of Paymnents(a) The Preparatory Committee considers that it should

be permissible for a country te restrict imports when suchrestriction is necessary to safeguard its external financialposition, particularly in view of the fact +hat in manycases thera will be domestic employment, reconstruction,development or social policies which result iu creases ilthe demand for import. It was recognized tsat in manycases policies of internal reconstruction and developmentmight bh an essential factor in restoring equilibrium, to acountry's balance of payments on a sound and lastingbasis.

(b) Consideration was given to the best method nfcnsuring that such a safeguard should be available for tiseprotection of a country's external financial position withoivtgiving freedom, for the unnecessary use of import restric-tions. It is thought that countries should undertake toobserve certain principles in the use of such importrestrictions, and that, since thie fundamental objectiveis te safeguard a country's external financial position,these principles should be based upon movements in the

13

country's monetary reserves. Import restriction, it wassuggested, should only be newly imposed or intensifiedin so far as was necessary to stop or to forestall theimminent threat of a serious decline in monetary reservesor, in the case of a member with very low monetaryreserves, to achieve a reasonable rate of increase in itsreserves.

(c) There are, however, many factors to whichdueregard must bc paid in interpreting any suchrules. Theremay bespecial non-recurrent movements of funds affectinga country's reserves, a country may have special creditsoutside its monetary reserves which it might beexpectedto use to a proper extent and at a proper rate to meeta strain on its external position, a country which hashigh reserves may, nevertheless, have high future commit-ments or probable drains upon its resources to meet inthe near future. All such factors will have to be takeninto account in interpreting movements in a country'sreserves.

(d) It . as generally agreed that there should bc anundertakinig to remove or to relax restrictions on thesame general principles, as a country's external financialposition improved.

(e) It was also generally agreed that, in order to avoidunnecessary damage to the commercial interest of othermembers, import restrictions imposed to safeguard amember's external financial position should not be carriedto the point of total exclusion of any particular class ofgoods.

(f) Consideration was given to the relations whichshould exist between members and the Organization inorder to ensure that members should, on the one hand,not be able to abuse the application of import restrictionson these grounds, but sholud, on the other hand, have somecertainty that they could apply them when necessary. Itis considered that for these purposes. there will need tobe arrangements for consultation between the membersand the Organizatios, for complaint to the Organization,and ultimately for the Organization ta recommend thewithdrawal or modification of restrictions if these arebeing improperly applied.

(g) In this whole process of consultation, review andrecommendation, the Organization, it is recognized, willhave to keep in the closest contact with the InternationalMonetary Fund. The Fund is the specialized agency whichdeals with the financial aspects of balance of paymentsproblems and the use of import restrictions to safeguardthe external financial position of members can onIy beproperly considered by the Organization if, at every stage,it invites the Fund to participate in its consultations.

(h) It was widely agreed Lhat a first stage in this pro-cess should be consultation as to the nature of a country'sbalance of payments difficulties, the various correctivemeasures which may be available and the possible effeeà"of such measures on the economies of other members. Etis thougsht fat a member, which was considering theimposition o! restrictions for the first time, sl'culd as a

general rule undertake sudb consultations before imposingUse restrictions and, in cases in whicb prev'ots consulta-

tion is impracticable, soul undertake surih consultationsas soon as possible after imposing the restrictions. TheOrganization should, it is generally timought, bc ile toinitiate consultations witb any member which ha alreadyimposing restrictions on these grounds, and should, in anycase, always initiate such consultations with any memberwhich las found it necessary substantially ta intensify itsrestrictions. It is also tUougbt that the Organizationshould, within two years of its institution, review allrestrictions existing at ifs institution and subsequentlymaintained on the grounds of safeguarding members' ex-ternal financial positions.

(i) Many members, which may find it necessary to im-pose restrictions tu safeguard their external financialposition, may wish to obtain some security fiat therestrictions which they are applying or intend ta apply willnot be challenged or that if their external position becomessufficiently difficult, they will be able tf impose restrictionswhich will not be challenged. For this reason it wasgenerally agreed, a member should have the rigbt taobtain the Organization's previous approval of restrictionswhich it was already applying or irtending tu apply, sothat it could not be challenged by another member whenit applied fiem. It is generally considered that suchprevious approval should relate ta the general extent,degree and duration of the restrictions and siouid not

56308

prevent another member thereafter from bringing a com-plailt to the Organization that the restrictions were beingapplied in a manner wlhich unnecessarily damaged itscommercial interests.

(j) Similarly, a member may seek the previous approvalof the Organization, not in relation tu any actual restric-tion which it is already applying or intending ta apply,but in relation to the contingent future conditions which,if they occur, will justify it applying restrictions. For:xamplc, it may be agreecld bcwcen the member andthe Organization that the member cannot in any circum-stanc#e during ani agreed period ahead be reasonablyexpected to allow its monetary reserves to fall below anagreed figure.

(le) The Preparatory Committee considers that It shouldbe open to any member to bring a complaint ta theOrganization that another member is applying restrictionswhen they arc unnecessary to safeguard its external finan-cial position or that it is doing su in a way which isunnecessarily damaging thc commercial interested of thecomplaining member. In this case the Orgarization, ifit is satisfied that the complaining member has made outa prima facie case that its commercial interests 'areadversely affected, should consider the complP.int. Itshould have power after consultation with the internationalMonetary Fund to recommend the withdrawal or modifica-tion of the restrictions and if the member in question failstu witlldraw or modify them accordingly, such other mem-bers of the Organization will b. released from suchobligations towards the meniber in question as the Organ-ization may specify. The Organization should, however,not be able to recommend he withdrawal or generalrelaxation of restrictions insofar s ii had given previousapproval for them, nor should it be able tu do so on thegrounds that the member's external financial difficultycould be avoided by a change in the member's domesticemployment, reconstruction, development or socialpolicies.

(I) It was generally agreed that a member imposingrestrictions on balance of payments grounds should bcpermitted ta select imports for restriction in such a wayas ta promote its domestic employment, reconstruction,development or social policies, in accordance with itsown judgment as to the essentiality of the products cou-cerned.

(m) The Preparatory Committee agreed that if therewere a persistent and widespread application of restric-tions on these erouads, thero should be a procedurewhereby the Organization in consultation with the Inter-national Monetary Fund should initiate discussions withmembers to consider whether other measures might aotbe taken by the countri-s with favourable or unfavourablebalances of payments or by the Economic and SocialCouncil of the United Nations or any appropriate inter-governmental organization ta remove the underlying dis-equilibriumi.

Wn) The Preparatorv Committee is of the opinion thatthi principles and procedures for restricting imports underprivate trade ta safeguard a memr'jcr's external financialposition should be applied mutatis Y autandis ta tise restric-tion (ta a greater extent thar would otherwise bepermissible) of imports by a state-xrading organization. Itshould, however, bc provided that the disclo3ure of inform-ation, which would hamper the commercial operationsof sucL a state-trading organization, would not b. re-quired.

(o) There was general agreement for the view that iiithe early years after the war the Organization, in ;arryingout its functions under this Article and under Article 28,should pay due regard ta the difficulties of nost-war adjust-ment with which the members would be confronted invarying degrees.

(p) It is ta bc noted that under sub-paragraph (2)(a)of Article 26 a country can apply quantitative importrestrictions ta anticipate the imminent threat of a senousdecline in its monetary reserves. Moreover it is there sug-gested that in interpreting this principle due regardshould be had tu any commitments or other circumstanceswhich may be affecting a country's needs for reserves.It foUows that a country, which is threatened with nserious decline in its reserves and which han heavyexternal payments to meet in the near future, can protectits external financial position by import restrictions.

(q) In paragraph (I) of Article 26 it is recognised thatmembers may need import restrictions as a means nf

safeguarding their external financial position . . . par.ticularly in view of their increased demand for the importsneeded ta carry out their domestic . . . development

A 7

'4

policies" and in sub-paragraph (3)(e) of the samne Article

it la laid down that - the Organization . ., shali notrecommend the withdrawal or gencral relaxation ofrestrictions on the grounds that the existing or prospectivebalance oa payments difficulties ai the member in questioncould be avoided by a change in the member's domestic. . . development . policies ". Thus it is clear thata member cannot bo required to modify its riomesticdevelopment plans on the grounds that they impose a straiaon its balance oa payznents and thus make control aiimports necessary.

(r) ln paragraph (4) of Article 26 it is expressly laid

down that " a Member may select import for restrictionon grounds of essentiality in ;uch a way as to promote its

domestic . . . development . . . policies ", so that amember can, if necessary, restrict tihe iMport of consumergoods without restricting the import of capital goods.

(s) This Article will, however, prevent a member fromapplying restrictions if ibt foreign exchange resources aresufficient for it to finance aU types ai import. In otherwords, tise member will bc permitted under Article 26 torestrict only to the extent necessary to safeguard its mone-tary reserves. Up to this point it will have to admitimported of one class or another. Members wi1l also beunder an cODgation not to apply any restrictions of a selec-tive character in a manner which unnecessariJy damagesthe commercial interests of other members.

(t) Many of the problems which have been exarninedin coa Dection with this Article and with Articles 28 and29 arJ necessarily of very direct concern to the Interna-tional Monetary Fund and, to a less extent, to the Inter-national Bank for Reconstructiou and Development. Traderestrictions applied to safeguard external financial resourceswill inevitably be of common interest to the InternationalTrade Organisation and to the International MonetaryFund. In particular, since it is generally agreed that traderestrictions should bo avoided whenever possible, the ques-tion arises of the possibility of alternative means u ider theprocedures of the Fund and the Bank ior meeting a dis-equilibritlîn in balances of payments.

(u) In considering these pioblcms the Preparatory Com-mittee has been much helped by the benefit of the vic.vsof the observers fiom the Fund and the Bank. It ilgenerally felt that it would bc of great assistance to thework ai the Preparatbry Committee if the Fund and theBank could bh invited to btudy Articles 26, 28 and 29with a view to putting their considered opinions on theseissues before the Second Session of the Preparatory Com-mittee.

(v) One delegate suggested to the Preparatory Comn-mittee that there should bh amendments providing for (a)broadening the criteria under which restrictions could bhimposed for balance-af-payments reasons, (b) eliminatingthe pravisan for complaints by members against such

restriction maintained by other members, and (c) the use

oI quantitative restrictions as a means for creating favour-

able conditions for the industrial development of an

economically undeveaoped country. It was generallyagreed that these proposals to soane extent had been metin Chapter V and in Chapter IV and that further changeswould expand the use oi quantitative restrictions too far.

3. Non-disçciminatory Administration oa QuantitativeRestrictions.

(a) The Preparatory Committee considers that thereshould he a genera; rule for non-discrimination in the useof quantitative restrictions, but that there are certain neces-sary exceptions to this general rule.

(b) In applying the principle of non-discrimination toimport restrictions, it is thought that the following repre-sent a desirable set ai principles which should also applyto tariff quotas:

(i) Wberever possible a global quota should be fixedin advance for the importation oi the product in ques-tion;

(à) Wbere (i) i not practicable. restrictions might bhapplied by import licences without a global quota;

(iii) Whether issued within a global quota or withouta global quota, import licences or permits should, ingeneral, not tie the import to a particular source ofsupply;

(iv) Where (iii) is not practicable, the restrictionsright take the form of a quota allocated among thevarious sources of supply. I this case th,. generalprinciple should bh to alocate the quotas on comersercialprinciples such as price, quality and customary aurcesof supply. These commercial principles might be applied

in principle in either of two ways-firotly, agreementwiglht be sought between the exporter who have a sub-stantial interest in supplying the product, and secondly,where this course is not reasonably practicable. referenceshould be made to shares i» a previous representativeperiod, due account being taken of special factura whichmay have affected the trade ln the product. The mem-ber should make the initial decision about the sharesof such quotas but sliould ti prepared to enter into con-sultations about adjustments;

(v) No conditions should bc imposed such as wouldprevent any member roun making full use of its sharein any quota, subject to importation being made withinany prescribed period to whsch the quota snay relate.(c) It was generally agreed that members should under-

take to suppIy adequate information about the adminis-tration of their import restrictions. In cases in whichimport licences are used, the Preparatory Cornmittee cou-siders information should bh supplied, at the request ofany niernbzr having a substantial interest in the trade,about the administration of the licenceà and about thelicences granted, but there should be no obligation to revealthe names of importing or supplying firms. Were quotasare lixed, public notice should be given in advance of thesize of the quota and where the quota is allocated amongsupplying counties all members having an interest insupplying tIe product should be given prompt notice uothe shares as thc various countries i the quotas.

(d) It was generally agreed that there must Le thefollowing exceptions fromn the general rule of non-discrim-ination n the application ai quantitative restrictions

(i) Members should not be precluded from the im-position of restrictions which have the equivalent effectof the ê.change restrictions whicb a country could im-pose under Section 3 (b)aof Article VIt of the Articlesof Agreement of the International Monetary lFund(scarce currencies clause).

(ài) A group of territories, which have a common quotain the International Monetary Fund, should be able toimpose restrictions agaLnst imports from other countriesin order to protect their common monetary reserves.

(iii) Memberg should bo able to assist, by measuresnot involving a substantial depa-ture from the generalrule of non-discrimination, a country whose econDmyhas been disrupted by wa: but tWs freedom shouldouly extend until 31 Dcctmb-r I951.

(iv) Some element of discrimination in import andexport restrictions may bo needed in order to carry outinter-governmental commodity agreements undor theocommodity policy provisions o! the Charter or in orderto apply the restrictions, wbch bave been suggested forthe post-war transitional period to ensure au equitabledistribution among consuming countries of products inshort supply.'(o) A more difEcult problem arises in the treatment of

inconvertible currencies. It is thought that the objectiveis to establish multilateral trading over as wide an areaas possible and that for this purpose it is desirable thatcurrencies. should become convertible as soon as is safelypossible. Bat so long as some currencies remain in-convertible there is difliculty in reconciling the full applica-tion of the principle of non-discrimination with the coursesof action which are imposed upon members by theirexternal financial situations. This difficulty is oi coursefully recognized, as far as exchange restrictions are c-n-cerned, in the provisions of Article XIV of the Articlesof Agreement of the International Monetary Fund. Theproblem here is to make appropriate provision for thisdifmculty ia the trade field.

(fl The nature of the difficulty may be conveueentlyexpressed by considering the position ai country A, whicgbas a favourable balance of payments, with country Bwhich has an inconvertible oarrency. This favourablsbalance can be settled only by

(i) Accumulation by A of inconvertible balances ofB's currency or by a loan to B in A's currency; or

(li) an increase in A's imported from B; or(iii) a reduction of A's exports to B.

(g) If A ix unable or unwilling to make the appropriateboan under (i) and if the costs of B are too bigh to enableA to accept B's export vrithout infringing the rule ofnon-discrimination, the only possibility is a reduction inA's export to B. It was argued that A can alwaysavoid this difficulty by selling the export, which wouldotherwise have gone to B, to countries with convertible

* See sub-paragraphe (s) (c) and (i) oa Section C.

'5

currencies and there was general agreement that werethe majority of countries had convertible currencies, t1hiswould normally bethe case. It was argued, on the otherhand, that countries, which normally conduct a largeproportion oa their trade with countries whose currenciesare inconvertible, might bc obliged ta restrict their tradesubstantialUy because of the limited import capacity ofcountries with convertible currencies, and that conse-queutly the additional purchase of importsfrom countryB, even on a discriminatory basis, migbt bh less restrictiveof world trade than the full application of non-discrimina-tion. It was furthermor' argued that any provisionsmade ta deal with this general problein should also coverthU problem, of balances of inconvertible currencies accu-mulated before the entry into force oa the Charter.

(h) It was agreed that in any case meinbers should beentitled tu attach such. conditions ta their exports aswould bh necessary. to ensure that an exporting countrywould receive for its exports its own currency or thUcurrency of any member of the International MonetaryFund specified by the exporting country and thus avoidthe danger of being, in effect, compelled ta accumulatedbalances of inconvertible currency.

(t) It is considered that thoro must bh some provisionalsota deal with the corresponding import problomas, butit is felt that there are serious dangers i4 a wideexception from the rule of non-discrimination even duringthe post-war transitional period. If such a period is atail prolonged, it would permit thU establishment ofbilateral patterns of trade and discriminatory practicesgenerally which would effectively prevent the developmentof multilateral trade, a central objective of the Charter.It was argued that such arrangements would tend tabecome self-perpetuating and that their possibility would,in effect, delay the achievement of sound and lastingequilibrium in the balances of payments of the countrieswith inconvertible currencies and would thus postponefor an indefinite period their ability ta make their curren-cies convertible. On the other hand it was argued thatif countries with inconvertible currencies bad ta face thefull rigour of international competition, they would bhforced ta restrict their imports from all sources ta adegree whicb would seriously impair their prospects ofrecovery. It was further contended that the existence ofsane provision ta enable countries with convertible curren-cies ta apply discriminatory restrictions in special circum-stances would encourage countries with inconvertiblecurrencies ta take the risk of accepting convertibilityat an earlier stage than they would have otherwise beenprepared ta do.

(I) It was generally agreed that the difficulty may busolved by permitting discriminatory import restrictionsunder the two following conditions, both of which wouldhave ta be fulfilled:

(i) tiat thU discrimination should increase the mem-her's total imports above the maximum levea whicbwould be possible in the absence oi the discrimination.The intensity of the import restrictions, which a men-ber is per;nitted ta impose under Article 26, iS deter-enined by the pressure upon its monetary reserves. Thisfixes the amount of import which it can afford frontcountries with convertible currencies. The purposeof this condition is ta ensure that a member wiUlpurchase as miech as it can afford from these sources,and that it will not bh permitted to discriminate unlessthis would enable it ta secure additional iraporta fromcountries with inconvertible currencies. It would thusbe impossible for a member ta decrease its total import"front countries with convertible currencies by discrimi-natory restrictions.

(il) that the discrimination should either correspondta exchange restrictions permissible under the Articlesof Agreement of the International Monetary Fund orshould carry with it the approval of the Organizationin agreement with the international Monetary Fund,which is the inter-governmental organisation which iscompetent in this field. The member would not beentitled ta impose discriminatory import regulations.which did not have equivalent effect ta exchange re-strictions permitted ta the member under the Articlesof Agreement of the International Monetary Fund, orunder the terms of a special exchange agreement be-tween the member and the Organizatrnn. If a memberwere nat imposing exchange restrictions, it would bhable ta impose discriminatory import restrictions inspecial circumstances only with the prior approval ofthe Organization in agreement with the Fund.

* See sub-paragra.ph 4 (e) of this Section.

56308

(k) Inview of the advantages, which may be expectedtu accrue ta the trade of ail countries froan the otherprovisions of the Cbarter, it isgencrally considered appro-priate that the discriminatory element in any traderestric-tions applied under this provision (or exchange restrictionshaving equivalent efIect) should, froun the outset, boliable tobe withdrawn or rnodified if the Organization,aiter consultation with the Internatic;nal Monetary Fund,finds that they were being applied inconsistently withthe exceptions provided under this Article or ii a mannerwhich discriminated unnecessarUly against the trade ofanother member. It should, however, always be possiblefor a member ta seek the Organization's prior approvalfor Itt action and in this case it would not beopen tachallenge ta tahe extent to whioh suchapproval was given.Where the member la not imposing exchange restrictions,this prior approval would be obligatory.

(1) It was suggested that if there were an abrupt orserious decline in effective demand by one or moremembers, the imposition of non-discrîninatory importrestrictions under Article 26 by other members might insome cases bh more injurious toworld trade than discrimi-natory restrictions, and that provision should be made inthis Article for permitting such discriminations, if theOrganization considered that this general situation existedand warranted thoir application. After consideradon itwas agreed that the Organization would have adequatepowers under the revised Article 35, taking into accountArticle 8 of Chapter II of the Charter (Employment Pro.visions), tomeet this contingency.

(m) A main objective of the Organiz3tiooai. ta achiethe earliest possible elimination ofalldiscrimi, .;rns -.uuîichrestrict the expansion of world trade. Thc z aiicultieswhicli the Article is designed to meet may bo hoped tonarrow very considerably, as an increasing number ofmembers accept the obligations of Sections 2, 3 and 4 ofArticle VIII of the Articic5 of Agreement of the Inter-national Monetary Fund. It is, therefore, generally agreedthat the provisions of sub-paragraphs (i) (d) (iii) and (iv)of this Article should be reviewed when three-quarters ofthe members of the Organization have made their curren-cies convertible, or in any event, not later than 3ZDecember 195z.

4. Exchange Arrangements(a) The problem of foreign exchange arrangements in

relation to the Organization is a question of great import-ance, since commercial obligations can be fundamentallyafected by such matters as exchange contrai, exchangedepreciation, multiple exchange rates, etc. The Inter-national Monetary Fund is the specialized agency, whichhas been created ta deal with these matters, and it lidesirable as far as possible ta avoid overlapping functionsbetween it and the Organization. Where trade mattersand exchange matters inevitably overlap, it is desirablethat there should bh the maximum consultation and co-operation between the Fund and Organization.

(b) The Preparatory Committee is of the opinion thatmembers should undertake not ta seek by exchange actionta frustrate the purposes of this Charter, nor ta seek bytrade action ta frustrate the purposes of the Articles ofAgreement of the International Monetary Fund.

(c) The problem would be much simplified if all themembers of the Organization were also members of theInternational Monetary Fund. No d cision was reachedon the question of requiring common membership, however,as some delegations felt it may well bh necessary ta allowfreely for independent membership of thc Organization andof the Fund.

(d) Consideration was, therefore, given ta the questionwhether special provision sbould not bh made for a countrywhicb wished to become a member of the Organizationwithout becoming a member if the Fund. It le generaIlyrecognized that soane such provision may prove ta bonecessary, but the Preparatory Committee considers thatexamination of this issue can usefully wait until theprobable membership of the Organization and of theFund become clearer. Pending this further examination,Article 29 has been expressed in a way which impliesthat members of thU Organization would in gezgeral beexpected ta be members of the Fund, but that mearncould bh provided fcr non-.iembers of the Fund to jointhe Organization.

(e) It is thought that if the general principle wereadopted that members of the Organization should alsobo members of the Fund, opportunity must neverthelessbe leit for a member of the Organization to exercise the

A 8

right, which it has under the Articles of Agreement of theInternational Monetary Fund, to withdraw at short noticefrom the Fund-a right which would ho compromised if amember of tho Organization were required to be a nemnberof the Fund, rnd were not free to withdraw from theOrganization at short notice.

(J) It is generally considered appropriate that anymember of the Orgqnization, which is not aléo a uleuberof the Fund, should not have full freedom ii exchangematters, since by exchange arrangements it might Irustrateits trade obligations. There is wide uneasure of agreementfor the suggestion that such a member should enter intoa special agreement with the Organization in exchangematters, which would provide that the purposes commonta the Organization and the Ftind would not be frustratedas a result of action in exchange matters by the memberin question. In such cases the Organization would acceptthe opinion of the Fund whether action by the member inquestion in exchange matters were permissible under theterms of the special exchange agreement and the memberwould undertake to provide the Organization with theinformation necessary for reaching such.a decision.

SECTION »

Subsidiesz. Subsidies on Pritnary Producis

(a) In general the intention of Article 25 nf the UnitedStates Draft Charter is ta give members, whose interestsare prejudiced by subsidization, the right to a full inter-national consideration of their case, to oblige subsidizingmembers to participate in such consideration and to providefor limiting subsidization su that its prejudjSial eflects maybe reduced.

(b) As concerns primary products, the Article recognizesthat, when trade is distorted by the special difficultiesreferred ta in Chapter VI of the United States DraftCharter. The procedures of that Chapter rather than those>f this Article should apply.

(c) In view of thU fact that export subsidies arerecognized as being more likely to distort trade than so-ralled " domestic " subsidies, the Article looks toward theearly elimination of the former in most cases but merelyta the limitation of the latter. Nevertheless it is empha-sized that the Article envisages graduaI rather than suddenmodifications of subsidies in cases where such modificationcalls for substantial economic and social adjustment in theterritories of affected members.

(d) 'Me pc;nts considered by the Preparatory Committeein preparing a revision of the text of Article 25 of theUnited States Drait Charter are indicated below:

(i) Wherever the Draft Charter has words such asinjury to the trade of a member ", it was thought

advisable to say " prejudice ta the interest of amember ". It was felt that this wording would inpractice facilitate application.

(ii) The word " limiting " in the last sentence ofparagraph (z) of the revision is used in a broad sense toindicate maintaining the subsidization at as low a levelas possible, and the gradual reduction in subsidizationover a period of time where this is appropriate.

(iii) One delegate suggested that the Drafting Com-mittee be requested to consider adding, after the words" imports of such product " in the first sentence ofparagraph (z) of the revision, the words " or of closelycompetitive products ". Another delegate declaredthat he was not in a position to judge whether such arequest should be made.

(iv) It is suggested that the Drafting Committeeconsider whether it is necessary to retain the crossreference clauses beginning, " Except as provided " atthe beginninBg f thU same paragraph.

(v) The words added at the end of the second sentenceof paragraph (2) of the revision are designed to makeit clear that payments to producers from the proceeusof domestic taxes from which export products areexempted are looked upon as " domestic" rather thanexport subsidies. The added words, and the sentenceto which they are attached, are essentially explanatoryof part of the first sentence of paragraph (z).

(vi) The. Substitution of the phrase " a completeanalysis of the practices in question and the facts justify-ing them " for the words " an explanatory statement ",in the fourth sentence of paragraph (2) of the revisionis associated with a discussion of possible resu.es of the

determination mentioned in thie following sentence. Itis feit that under certain circumstances some exportsubsidies might bh justified as beinBg consistent with thUobjectives of the Charter.

(vii) It was considered whether tho words " the likeproduct" in thU first sentence of paragraph (2) couldbe construed in such a way as ta permit escaping theprovisions of this paragraph in cases when tUe exportedproduct differs slightly froin a product sold in thedomestic market. It was decided, however, that thlawould be a case falling under the terms of Article 35and thus that thU measure, whether or not in conflictwith the terms of Chapter V of the Charter, wouldirnply? nullification or impairment of the Chapter. Thesubsidizing member would, therefore, bc obliged ta givesympathetic consideration to the views of other lu-t"rested members and, assuming good faith, theproblem could probably bh solved. The implications ofqualifying words, such as " the like or siinilar pro.duct," might bh considered by thU Drafting Committee.

(viii) Certain delegates felt that the period of threeyears prescribed in thU thlrd sentence of paragraph (z)of the revision for giving effect to the provisions oa thatparagraph was unduly long. It was agreed that thequestion of shortening this period should be taken upat a later stagg, after the countries had had the oppor-tunity of considering the effect of such a shortening ontheir domestic legislation.

(ix) One delegate made the following reservation inregard tu paragraph (2): - The adoption or mainten-ance of subsidies or similar measures ta promote theproduction or exportation of certain sp#lcia1 commo-dities in a member country which has suffered from achronic adverse balance o! payments should bh allowednntil such a time as its equilibrium in the balance ofpayments will have been actually attained, when thequestion ai mach measures may bc reconsidered throughconsultation by Uic countries concerned." This dele-gate aisa suggested Uiat paragrapli (3) of the revisionshould ho amended so that "ctbe share of any suchspecial export in world trade, whether or not acquiredas a result of the use of subsidies or similar measures,should not be subject to limitation by its share in worldtrade during any previous representative period, exceDtwhen it is rave ta ho part of a burdensome worldsurplus." Certain delegates, however, advised againstthese amendments because of the adverse effect whichsuch subsidies would have upon tUC trade oa othercountries.

(x) Paragraph (3) would render it possible for in-terested members. in consultation with the Organiza-tion, to operate a domestic stabilization scheme for aprimary product if the stabilized domestic price attimes exceeds the export price and if, through effectiveproduction controls or otherwise, the scheme operatedsu as not ta prejudice the interest of members. Somedelegates thought that this was implicit i paragraph<2) and that the explicit exemption under paragraph (2)might render it more difficult ta apply paragraph (2)so as to cover other legitimate exceptions. Accord-mngty empty square brackets were added at the endof the new paragraph to indicate that suggestionsmay be forthcoming to cover other exceptional cases.

(xi) One delegate raised the question of whether theroraparison made in paragraph (3) should not bsbetween the export price and the price paid to domesticproducers, and requested that a later opportunity b.given ta consider this matter.

(xii) Sub-pazn;raph (4) (a) of the revision indicatesthat thu consultative procedure ai Chapter VII witbrâtcLence to primary products in the case of whichspecial difficulties may arise, may be applied when sub-sidies on such products call for determination by con-sultation under the terms of paragraph (z) or (2). IDthic connection and in relation ta the provisions ofparagraph 3 of the United States Drait Charter, it issuggested that the Drafting Committee consider Article30 in connection with Chapter VII and vith paragrapht6) of Article 66, with a view to sixnplifying the textein question. They are intended to provide firstly, annilorm type of consultative procedure for dealing withprimary comrodities in the case of which special dif5-culties may arise either in the initial period of transitionor thereafter, and secondly, an adequate consultative'procedure for dealing with non-primary productsaccording to the general intentions of Article 30 ex-pressed in the opening sentence of this Section.

17

(xiii) One delegate announced that he would reservehisposition regarding the provisions of sub-paragraphs(4) (b) and (c) of the revision.

(xiv) One delegate expressed the opinion that theDrafting Committue should consider the provisions inArticle II of the United States Draft Charter in con-nection with Article 30. He felt specially that Article11 should, in the same way as sub-paragraph (z) (a) ofArticle 25 does for quotas, provide for the legitimationof subsidies, if these were accepted after consulta-tion by interested members.

2. Subsidies on Manufactured Goods(a) The question of subsidies on manufactured goods

was studied in the light of a document submitted by adelegate when a proposal that the existing provisions ofthe United States Draft Charter be altered so as to pro-vide leeway for the use of measures to assist developingindustries under certain circumstances was being dis-cussed.

(b) It is pointed out in thie document that Article 25of the United States Draft charter " would permit, with-out serious qualification, the use of governmental sub-sidies for the purpose of establishing and expanding amanufacturing industry." The following requirementslaid down in Article 25 in respect of such subsidies, it lustated, are moderate and few:

(i) If the subsidy does not reduce imports, no require-mente are made.

(ià) If the subsidy does reduce imports, the only re-quirement (subject to what is said below) is that it iste be reported to the International Trade Organizationtogether with an indication concerning the probableeffect of ile subsidy and the reason why it is necessary.

(iii) Even if the subsidy should cause serious injuryto international trade, the only requirement lu that themembers granting it discuss with members, whose in-terest is seriously prejudiced, the possibility of limit-ing the subsidy.In view oa these facts no change in the text of the

Article on Subsidies on Manufactured Goods as it appearsin the United States Draft Charter was considered neces-sary.

(c) One delegate drew attention to the fact that oulythe richer countries were able adequately to support theirindustries by means of subsidies.

SEcTION Z

State Trading

r. Non-discrintinaaory Administration ot State-TradingEnterprises.

(a) The provisions of Article 26 of the United StatesDraft Charter are, on the whole, acceptable to the Pre-paratory Committee, subject to the following modifica-tions:

(i) It was considered that this Article, in conformitywith certain others in that Charter, should be modifiedso as to refer to goods only. Hence the words " orservices " were deleted in the first paragraph.

(il) In paragraph (z) of Article 31 the words " dis-tribute or produce " in the first sentence have beenplaced in square brackets because certain delegates con-sidered that it should be possible for a member govern-ment to confer exclusive or special privileges upon cer-tain types of enterprise (e.g. for carrying on certain typesof manufacture), without at the same tirne exercisingeffective contrai over the trading operations of suchenterprises. In order to make their point of view clearthese delegates wished to add in square brackets thewords " and exercises effective control over the tradingoperations of such enterprise,". Other delegates, how-ever, considered that in such circumstances it wt.ald beproper that the government conferring the exclusive orspecial privileges should assume the responsibility ofexercising effective control over operations affecting theexternal trade of such enterprise.

(iii) The illustrative examples of " commercial con-siderations " by which the state-trading enterprises ofa member should be guided in fulfilling their obligationof non-discriminatory administration. were supple-mented to include " differential customs treatment ".

(iv) Attention was paid to the nature of the " specificand detailed information " which the member maintain-ing a state enterpris- was required to provide by theterms of the Charter in order to make possible a deter-

. mination whether the trading operationss of the enter-

56308

prise fulfilled the requirements of paragraph (z). It wasargued that such an enterprise should not bu calleilupon toprovide more information thau a private enter-prise trading under the sarne or similar conditions.Accordingly, the last sentence of paragraph (i) wasamended sa as to faul in line with the provisions ofArticle 35 of the Charter.

(v) Sinceparagraph i of Article 8 ofthe United StatesDraft Charter had been atuended by deletion of the pro-vision relating to governm ntal contracts, it was faitnecessary to ilsert a new paragraph in Article 3Ideal-itig with the subject. A distinction was made as betweengovernmental purchases for resale, which are coveredby this paragraph, and purchases for governmental useand not for resale. The discussion on this latter pointwas prom ted by the consideration that in soma coun-tries purrcases of industrial and other equipment of

various types from abroad might well bc effected throughthe medium ofstate enterprise and that, while it mightbe difllcult in certain circumstances to observe the ruleof ` commercial considerations" for sucb purchases,it was at least necessary to provide that the rule of`fair and equitable treatment" should apply but thatin applying it full regard should br given to all rele-vant circumstances. The question was raised whetherpurchases on the basis of the so-called " tied loans"would be considered to conforni with this rule. Theview was generally held that a country receiving a loanwould bu free to take this loan into account as a"commercial consideration" wheu purchasing its ro-quirements abroad. The position oi countries makingsuch " tied loans" was another question.

(vi) Two changes were made in the definition of astate enterprise in the last paragraph of this Article.For greater clarity, the word " directly or indirectly"were deleted and the words " effective control " weresubstituted for the terni " a substantial measure ofcontrol

(vii) It was agreed that when marketing boards buyor sell they would come under the provisions relatingto state-trading; where they lay down regulationsgoverning private trade, their activities would becovered by the relevant Articles of the Charter. Itwas understood that the tornm " marketing boards"is confined to boards established by express govern-mental action.

2. Expansion of Trade by Étale Monopolios of IndividualProducts.

(a) The principle underlying Article 27 of the UnitedStates Draft Charter, beang the counterpart of para-graph I of Article i8 of that Charter, is generally accept-able to the Preparatory Committee. The principal changes,which are recommended and which are listed below, servemainly two purposes-firstly, to provide a more accuratebasis for the determination of the " negotiable margins ",and secondly, to take into account the special nature offiscal monopolies.

(b) The references to Article 33 of the Charter in thefirst sentence was provisionally removed.

(c) The terni " landed coFe, before payment of anyduty, of such products purchased by the monopoly fromsuppliers in member states" was substituted for the words"the prire at which such product is offered for sale tothe monopoly by foreign suppliers," since it la consideredthat a mere offer doas not provide a firm basis for thecalculation of the margin. A similar change was madein respect of exports. Moreover, since in certain coun-tries imports by state monopolies are subject to customduty, it was considered appropriate to choose a definitionwhich, while taking Into account all costs up to themoment of entry, excluded duties and other charges (e.g.internal taxes, transportation and distribution). The Pre-paratory Committee agreed, however, that it would beopen to countries to negotiate, if they wished, a marginrepresenting tbe difference between the total cost of aproduct (i.e. including internaI taxes, coits of distribu-ion and transportation etc. and, wbeze appropriate, pro-

fit) and the xrr-apoly's first-hand selling price in the homemarket.

(d) It li considered that, when calculaing the mareinunder (b) of Article 27 of the United States Draft Charter.allowance should be made for a margin of profit. Thatmargin, however, should not be so excessive as to restrictthe volume of trade in the product concerned. Accord-ingly the word " a reasonable margin of profit" wereadded.

Ag

18

(e) lt was considered appropriate that, in applying theinargin detorminod by negotiation, landed costs and soli-lng prices might be averaged over a recent period of years,and a sentence to that eHect was added.

(f) The roferonce ta Section C (Quantitative Restric-tions) was deleted and the words " subject to the otherprovisions of this Charter " substituted. A further modi-fication was made no nsa to permit of account being taken,in the casm of import, of rationing of the product toconsumer, and in the case ai exports, of the quantitiesavailable for export.

(g) Attention was paid ta the special position oa mono-palies operated for revenue purposes. It was contendedthat their profit (and consequently the mnargins Lbetween

eir " landed casts" snd seliJng prices), had ta be re-garded as a form of internal taxation. A new paragraphwas added to cover the case of sucb monopolles.

(h) Ote delegate wished ta reserve bis position generallyupon this Article.

3. Expansion of Trado by Complet. State Monopolies ofImport Trade.

Although the substance oa Article g8 of the United StatesDraft Charter was not discussed, the Preparatory Com-snittee bas decided that Jt should remain provisionallyas it appears.

SltCTION P

RelaSions with Non-Membersl'ho Preparatory Committeo considered Article 31 of the

United States Draft Charter which is concerned with thissubject but decided to leave the question for considerationat a later stage.

CHAPTER IV

Rlestrlctive Business Pructices

SECTION A

Policy towards Restrictive Businoss Practicesz. The Preparatory Committoe bas not attempted tu

define precisely what is meant by restrictive businesspractices but has taken thu phrase to mean broadly thosepractices in international trade which restrain competition,limit access to markets, or fostdr mouopollstic controland thus substitute the decisions of single enterprises orgroups of enterprises acting in concert and exercising mono.polistic power for the forces of the market in the determina-tion of price levels, volume of production and distributionof products. It was found convenient to refer to the listof such practices 'n paragraph 2 of Article 34 of theUnited States Draft Charter, which, though not exhaustive,includes the mont common types of such practices.

2. In preliminary exchanges of views it was found onthe one hand that soue delegates regarded these practicesas invariable and autouiatic barriers to a free and expand-ing system of international trade and in conflict with theobligations wbich it w.s1 proposed members of theOrganization would assume under other chapters of theCharter. On the other hand some delegates pr .eivedconsiderable advantages in their wise use, particularly inintroducing stability in industries requiring large invest-ment and depending mainly on external markets. It wasalso urged that restrictive agreements were frequentlyaccompanied by exchanges of technical information whichfacilitated establishment of new industries in îie lessindustrialized countries.

3. It was found, however, that, despite this widedivergence of view on the significance of these practices,there was a unanimous belief that they vere capable ofhaving harmful effects on the expansion of production andtrade and the maintenance in ail countries of high levelsot real income and on the other purposes of the Organiza-tion, whether, as some felt, by their very nature, or asothers maintained. only in their wrongful use. Accord-ingly it was agreed that ail members oa the Organizationshould undertake to take aU poasibre steps within theirjurisdiction to prevent restrictive practices having barmifuieffects on the purposes of the Organization.

4. It was clear tu aUl delegates of thu Preparatory Com-mittee that governments would be unlikely ta agree iltheir judgment of the effect of particular practices andthat an undertaking of thu kind just referred to wouldleave open the possibility of one member allowing orapproving a monopolistic arrangement or practice, whichwould be felt by another member to injure the purposesof the Organization. Accordingly it was agreed that theOrganization should be empowered tu receive complaintsaud to investigate them. It was fedt that this was thimost important function which the Organization coulddischarge in this field.

5. It was agreed that thu procedure of complaint andinvestigation should apply equally whether tie practiceswere pursued by private or by public (i.a. government-owned or controlled) enterprises or by a mixture of thetwo, so far as agreements are concerned, but thu procedureshould apply to the practices of single monopolistic enter-

prises only when these are privately owed. The problemof the public enterprise acting independently should, it isthought, bo dealt with under the provisions governing

state-trading. Care will have ta bo taken ln any event thatultinaLtly the provisions regarding restrictive businesspractices and regarding state-trading are in harmony.

SECTION B

Procedure with Respect to Complaints and Confevencesr. The Preparatory Committeo considers that complaints

ebho'ld be received and examined by the Organizationwhether tley come from members or from affected por-sons, organizations or business enterprises, provided inthe latter cases that the responsible government approvestce consideration of the complaint by the Orgamzation.The ste s, which the Organization should take, should buon the rouowing lines:

(a) At the request of a member it should. at its dis-cretion, bu free ta arrange conferences between membersto consider a specific practice whichr the member fuelsbas or is about tc have a barmful effect on the purposeof the Organization.

(b) It should consider written complaints, obtainminimum information both from the complainant andfromn other inembers concerned and then determinewhether a further investigation il necessary.

(c) If it is satisfied that thero i a prima face casefor further consideration, then it should obtain informa-tion from ail members which wisb ta subinit sucbinformation, and it should aford opportunity for anymember and for the commercial enterprises alleged tohave been zngaged in the pract'f e to bu heard by it ifthey so wisb.

(d) The Organization should then determine whetherthe practice complained of ias the harmful effect fearedand, if so, it should report to all members !ts findings,requesting theem ta take action; to prevent the coû-tinuance or recurrence of the practice and at iLs dis-cretion recommend specific remedial measures. Eachmember would, of coure, take action in accordancewith its own laws and procedures.

(e) The Organisation should then prepare a reporton the case.

SECTION C-tudies relating to Restrictive Business Practices

z. It was fait that it was necessary that the Organizsa-tion should give further study ta the subject, as it- wasclear that it was one of extreme difficulty on which other.was no unanimity of opinion among the various countries.It is considered, therefore, that the Organization shouldstudy types of restrictive practices, and conventions, lawsand procedures relevant ta these practices. It shouldobtain information from members to assist It in its studies,and it should bu at liberty to maie recommendations con-cerning conventions, laws and procedures so far as theseare relevant to the obligations which members will undor-take.

2. The Organization shouJd also be empowered toarrange conferences at the request of members fer generalconsultation on thu problem.

SETIaON DObligations of Members

Tire Preparatory Committec agreed that mumberashould take ail possible steps to prevent commercial enter-prises within their jurisdiction from engaging in practices

having harmful effects on the purposes of the Organiza-tion. Members should also conduct investigations in orderto be able to furnish information requested by the Organ-ization in connection witb complaints, though thcy shouldbe free to withhold confidential information affectingnational security or production techniques. It vas felt,however, that in the obligation reimiring members tofurnish this information, there should be some provisionwhereby the legitimate business interests of particularenterprises should be safegua;dcd as far as feasible frompossible injury, which might arise if detailed informationwere to fall into the hands of their competitors or otherprivate persons. In considering the initiation of actionappopriate to their system of law and econonlic organize.tion memberss should also talce the fullest account of anyrecommendations made by the Organtization following onits investigation of a particular complaint. They shouldreport to the Organization what actions have bueen taken.

SECTION E

Supplemnentary Enforcament ArrangementsThe Preparatory Committee recognizes that members

may co-operate with each other in assisting the enforce-ment of any provision made by other members in further-ance of the general objectives. There should be no specificobligation on member to take such action, but it shouldbe made clear that they are free to adopt this courseif they wish, provided that they notify the Organization.

SECTION F

Continued Eftectivciiess of Domestic Jfeasures againstRestrictive Business Practices

It was recognized that the responsibilities of the Organi-zation in this field should not affect the national laws

I9

under which some countries have made general provisionfor the prevention of monopoly or restraint of trade.

SrCTION OExceptions to Provisions of this Chapter

The Preparatory Committee considers that the procedurepreviou:ily described should not apply to inter-govern-

rmental conmmodity agreements made under t;he arrange-ments specified in Chapter VU1 of the Charter or inter-national agreements of the kind described in Article 59of the Charter, though tihe Organization should, at itsdiscretion, be empowered to maIke recommendations to

*members and to appropriate international organizationsconcerning any features of such agreements which mayhave harinful effects on the purpose of the Organization.

SECTION lGeterail Observations

I. Three delegates suggested that the provisions ofChapter VI (Restrictive Business Practices) should beextended to cover services. One delegate stated that theChapter would have no meaning, if the question of re-strictive business practices relating to se-vices such asshipping, insurance and banking were excluded.

2. Two delegates suggested that consideration should begiven to the possibility of establishing some form of pro-cedure for the registration with the International TradeOrganization of international combinations, agreementsor other arrangements as defined in sub-paragraph (2) (a)of Article 39. One delegate felt, moreover, that somedegree of publicity should be given to the results of sucha procedure.

CHAPTER VInter-Governmental Commodity Arrangements

SECTION A

General Considerations

s. The Preparatory Committee recognizes that the con-ditions of production and consumption of certain primarycommodities are such that international trade in thesecoamnodities is subject to special difficulties not generallyassociated with manufactured goods. These difficultiesarise fiomn inelasticities of supply and demand, often in-volving the accumulation of surpluses, which cause serious

hardship particularly to small producers. Experience hasshown that such difficulties have been greatly accentuatedby booms and slumps. To the extent, therefore, that apolicy of high and stable employment is successful on aninternational scale, the fluctuations in primary productionand consumption are likely to be reduced, and the specialdifficulties of primary commodities correspondingly eased.On the other hand the achievement of greater stabilityin the real income of primasry psc'ducers will in its turnassist in the general maintenance of high and stable levelsof employment. Nevertheless, in the case of particularcommodities, the root causes of difficuLies will remain,and it is necessary, in the interests of producers andconsumers alike, to provide methods for dealing with themxin a manner consistent with the mainte-ance of a lightlevel of worîd trade.

2. It was agreed that, in the absence of provisions forbroad international action, countries might bu driven, asin the past, to resort to action restrictive of world tradeand production. The Preparatory Committee thereforerecognizes the need, in certain circumstances, for inter-governmental commodity arrangements and for agreementon the general principles-to govern their use. It is con-sidered unwise to deal with the great variety of specialdifficulties peculiar to individual commodities and wita.particular methods appropriate to each and, therefore,tae Preparatory Committee's app vach to the problemwas rather one of developing broad general principles tocover as many types of circumstances as possible.

3. In connection with the scope of the provisions re-garding special commodity problems that should be in-cluded in the Charter of the International Trade Organiza-tion, it was agreed that, subject to certain limitedexceptions, they should apply solely to primarycommodities. A primary commodity is taken to be anymineral or agricultura.l product, including foodstuffs andforestry products. It is suggested that the Drafting Com-mittee might «amine the use of the teris, " primary

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" agricultural ", " mineral ", " commodity " and " pro-duct" throughout the Charter in order to ensure uni-formity and consistency in their application. One dele-gate made a reservation that the term " agriculturalproducts' in this context should not include fish orfisheries products.

4. It was considered that a statement covering inter-governmental commodity arrangements should include theobjectives of such arrangements, the procedure for initiat-ing and establishing them. -nd the broad principles whichshould apply to them. This statement should also coverthe special circumstances in which agreements might beused for regulating production, trade or prices and thespecial principles that should apply to those operation andadministration of such regulatory agreements.

5. There was general agreement that the objective ofintr-governmental commodity arrangements should be to,alleviate the difficulties which arise, where. adjustments inproduction or consumption cannot be effected as rapidly.as the circumstances require, by the free play of marketforces alone. Such arrangements may aix to facilitateeconomic adjustments designed to promote the expansionof consumption or a shift of resources aud manpower outof over-expanded industries into new and productive occu-pations. They mnay aso aim to moderate pronouncedfluctuations in prices, to provide for increased productionto muet serious shortages and to maintain and developthe natural resources of the world and protect them fromunnecessary exhaustion.

6. With regard to this last objective. the attention ofthe Drafting Committee is called to tthe fact that thewording may requiro further examination. It is not in-tended, for instance, that the arrangements envisaged byChapter VII should apply to international fisheries conven-tions.

SECTION aInter-Governmental Commodity Arrangenments in General

s. The Preparatory Committec considers that inter-gov-erumental commodity arrangements should not bc madeuntil there s been full study and discussion of the prob-lems relating to the conumodity ia question. It was, there-fore, agreed that, where a commodity is experiencing, oris expected to experience, special difficulties, a studygroup =&ay bu formed to examine the problem. If the

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study group concludes that an inter-governmental com-modity arrangement would be desirable, it should be fol-lowcd by a Commodity Conference to discuss the appro-priate measures to meet the special difficulties Where itis agreed that adequate information is already availableabout a coinniodity, a Conference mnay bc convened by theOrganization without the prior formatioa of a study group.

2. The general procedure unvisager by '!Ie PreparatoryCommittee is that the lirst stcp in the developnicnit of acommodity arrangement wouid be th_ calling of a studygroup, the second, the convening of an International Comu-modity Conference, and finally the formation of a govern-ing body to administer the arrangement agreed upoil. Thestudy group frun thse outset should consist oa countriessubstantially interested in the production, consumptionor trade of the crmmnodity concerned. Alter this stagethere would be increasing participation by interested coun-tries. Finally, when the commodity arrangement has beenagreed upon, it should be open initially to participation byany member. It should also be open to such iion-menmbersas may be invited by the Organization, since, if thearrangement is to ne both comprehensive and effective, itmust, of necessity, include substantially interested non-member countries. Attention was drawn to paragraph 2 ofArticle 3I of the United States Draft Charter, whichappears to be inconsistent with the participation of non-member countries in the benefits of commodity arrange-ments. It is recomn;euded that the Dra'ing Committeeshould specify arrangements under Chapter VI as an ex-ception ta the operation of paragraph 2 of Article 3I.

3. The question of the relationships between the Organ-ization and specialized agencies in:erested in particularcommodities was discussed. The Preparatory Coinmitteeagreerl that the competent specialized agencies, such asthe l'uod and Agriculture Organization, should be entitledto submit commodity studies to the Organization or askthat a otudy of a primary commodity be made. They mayalso be requested by the Organization to attend or takrepart in the work of a study group or a Commodity Con-ference. It was further agreed t,;at when a commodityarrangement is eventually agreed upon, any competentspecialized agency may be invited by the Organization tonominate a non-voting member to the governing body.

4. There was agreement on certain general principleswhich should apply to all inter-goveramental commodityarrangements in order that they may conform with thepurposes of the Organization. In particular the Prepara-tory Committee considers that there should be adequaterepresentation of importing and consuming countries aswell as of exporting and producing countries. It wasagreed, however, to ask the Drafting Committee to givefurther consideration to the text of this provision in thelight of the Preparatory Committee's desire to give appro-priate voice to:

(a) countries substantially interested in the produc-tioir and consumption of a commodity but not in itsimport or export; and

(b) countries which are both large exporters and im-porters of the commodity.5. In regard to voting on substantive matters almost

unanimous agreement was reached. The PreparatoryCommittee is of the opinion that without prejudice to theright of the countries referred to in the preceding sentenceta an appropriate voice, the voice of importers and ex-porters should be equal. It is felt that this was the onlyway in which the interests of both importers and expor-ters could be adequately protected. One delegation wasstrongly of the opinion, however, thbet equality of voicebetween importers and exporters should not be required,but that importera should have - a number of votesequitably proportionate ta the number of votes of the ex-parting countries, in order that the interests of exporteraand importers shall be duly protected."

6. The Preparatory Committee stresses that cormmodityarrangements should provide, where practicable, formeasures designed to expand world consumption. This isparticularly desirable when the need for a commodityarrangement arises from the existence of a burdensome sur-plus, or where increased consumptiaio would result il animprovement in general well-being, as, for example, inhigher standards ai nutrition.

7. It was agreed that aU inter-governmental commodityarrangements, proposed or concluded, should be given fullpublicity, so that ail interested parties may bh fully in-formed of the measures taken and of the progress achievedin the correction of the underlying difficulties.

* Soe Article 36 of the Charter.

SECTION C

Iu er-Governzmanitai Coininodity Arrangents involvingtha Reguiation of Production, Expori, Import or Prices.

: A distinction is drawn between those inter-govern-miiental coramiodity arranggements, which involve the regu-lation of export, import, production or prices, and thosewhich do not. The former are referred to as regulatoryagreements. It was feit that regulatory agreements shouldbu used only in certain defined circumstances arising outof difficulties which would not be corrected by normalmarket forces alone, when a burdensome surplus existsor is expected to develop, causing hardship to producers,many of whom are srnall producers, or where special diffi-culties have given rise, or are expected to give rise, towidespread unemployment. In this connection it is desiredthat - unemployment - be taken in a wide sense to include" under-employment ". It was agreed that in exceptionalcircumstances regulatory agreements might also be appliedto manufactured goods. The Preparatory Committee in-tends that one effect of this provision should be to permitthe inclusion of appropriate synthetic products within thescope of particular commodity agreements.

2. The Preparatory Committee discussed whether regu-latory agreements miglit bu used to deal with shortages.It was generally agreed that such agreements, which weremade in those cases in which a burdensome surplus was" expected to develop ", could appropriately take intoaccount shortage difficulties. The history of some com-modities shows that there may bh recurring periods ofburdensome surplus and shortage which need to be con-sidered. Some delegates would have preferred to men-tion this specifically in the circumstances governing the useof regulatory agreements, but it was generally felt that thiswas unnecessary. It was furthermore agreed that arrange-ments relating exclusively to the distribution of commodi-tics in short supply should be exempted from the provi-sions governing commodity arrangements, and, therefore,could be concluded outside their framework. In this con-nection, the attention of the Draiting Committee is drawnto the discussion of the Preparatory Committee on thissubject.

3. Agreement was reached that in addition to thegeneral principles applicable to all inter-governmental com-modity arrangements, regulatory agreements should bcsubject to certain additional principles. The PreparatoryCommittee wishes to ensure that restrictive measures inregulatory agreements should be used only when essentialto prevent or remedy serious dislocation or hardship, thatthey should not lead to unreasonable prices and that theyshould not afford permanent shelter to thc less effective andeconomic sources of supply. The additional principlesfor regulatory agreements concern such matters as pro-cedure, relations between countries participating in agree-ments and countries not participating, the assurance ofadequate supplies to meet world demand at reasonableprices and the provision of increasing opportunities tomnet world needs from the most effective and economicsources of supply. In relation to the phrase " reasonableprices" it was felt that this term should not be rigidlydefined for all agreements, as the individual CommodityCouncils would wish to decide this matter according tothe conditions relating to the particular commodity.Certain delegates asked for further clarification of thUterm, and it is suggested that the Drafting Committeeshould consider this matter. One delegate suggestedthat the question of the attaLinment af a " reasonable " or- just" price should be included among the objectivesof inter-governmental commodity arrangements. Anotherdelegate thought that, in determining tUe " mosteffective and economic sources of supply," due considera-tion should bh given " to tUe historian position of thesupply areas which are members of the Organization."

4. The Preparatory Committee considers that everyregulatory agreement should provide for a governing body(Zommodity Council) and each participating countryshoula-be entitled to be represented thereon and to vote.Subject to--ihe Principles referred to in paragrapS 4 ofSection B, vutng power may be distributed among coun-tries according to the nat'.re and extent of their individualinterests. It was understood that regulatory agreementsmight if desired provide for qualified majorities on specificmatters. Each Commodity Council should work withinthe framework of the International Trade Organization,which may appoint son-voting members of the Council

* Sec Verbatim Record of the Eighth Meeting of Com-mittee IV.

and, if so requested, a non-voting chairman. The rulesand regulations of the Councils should bc subject to theapproval of the Organization.

5. The Preparatory Committee agreed that regulatoryagreements should be subject to periodic review. Theyshould be effective for not more than five years subjectto renewal. Where the operation of an agreement hasfailed to conform to the agreed principles, it should berevised accordingly. If this is not possible, it should beterminated.

6. It was agreed that there should be provision for thesettlement of disputes, and it was thought desirable thatthis should be uniform through the Charter. The Prepara-tory Committee, therefore, is of the opinion that disputesarising out of inter-governmental commodity agreementsand not settled in the Commodity Council should be sub-ject to Article 86 of the Charter.

SECTION D

Miscellaneous ProvisionsI. In order to bring existing arrangements as far as

possible into line with the general provisions, the Prepara-tory Commîttee agreed that members should inform theOrganization about their participation in commodityarrangements existing at the time their obligations underthe Charter come into force, and that they should acceptthe decision of the Organization on whether their con-tinued participation is consistent with those obligations.A similar principle should apply to commodity arrange-ments which are in process of negotiation at the timeobligations under the Charter come into force. One dele-gate proposed that any member should be free to with-draw from the Organization if it considers it impossibleto be guided by the decision adopted by the Organizationin these matters and if, on appeal, the Organization doesnot modify the decision in question.

2I

2. The Preparatory Committee considers that all mem-bers of the Organization, whether party to a particularagreement or not, should undertake to give the mostfavourable possible consideration to any recommendationby a Commodity Council for expanding the consumptionof the primary commodity concerned.

3. Agreement was reached on certain categories of inLer-governmental commodity arrangements which would notbe subject to the provisions agreed for general applica-tion. In particular this applies to inter-governmental com-modity arrangements previously mentioned which relatesolely to the equitable distribution of commodities in shortsupply. This would not, of course, preclude other inter-governmental arrangements from dealing with shortagesas part of their operations.

4. The Preparatory Committee discussed the generalquestion of escape clauses. It is though that, wherethere is unreasonable delay in the proceedings of a studygroup or Commodity Conference, members miy proceedby direct negotiations to the Conclusion of an agreement,provided that it otherwise conforms to the agreed provi-sions. One delegate wished to go further and felt thatthere should be specific permission for vitally interestedmembers to proceed, where the Commodity Conferencefails to make a recommendation in favour of an agree-ment.

5. The Preparatory Ccmmittee also discussed the wayin which the various functions outlined in the previousparagraphs should .be allocated to the various organs ofthe Internalional Trade Organization, and agreed on sug-gestions for the consideration of the Draiting Committee,which is requested to prepare the appropriate text.

6. Appearing hereunder are certain suggestions for theassignment of functions and organizational relationshipsas regards inter-governmental commodity arrangements,which have been prepared by the Preparatory Committee.

ChapterVII FunctionChapter VIIArticle 48,. Invitation to certain members and non-members

Paragraph (2). ta appoint representatives to a study group.

Article 48, The study group makes recommendations toParagraph (3). the Organization as to how best to deal with

difficulties.Article 49, Convening of Commodity Conference ... ...

Paragraph (I).Article 49,

Paragraph (2).Article 50,

Paragraph (r).Article 50,

Paragraph (2).Article 51,

Paragraph (z).

Article 51,Paragraph (2).

Article 52,Paragraph (3).

Article 54,Paragraph (3).

Article 54,Paragraph (4).

Article 54,Paragraph (5).

Article 54,Paragraph (6).

Article 54,Paragraph (7).

Article 55 ...

Article 57,Paragraph (I).

Article 57,

Invitation to non-members ta participate inCommodity Conference.

Receipt of studies, or of request for studies,from specialized agencies.

Requests to specialized agencies to take part inthe work of the Commodity Conference.

Determination of whether terms are " no lessfavourable ". Approval of terms of subse-quent participation.

Invitation to non-members to participate inarrangements.

Decision whether exceptional circumstancesexist which would justify a regulatory agree-ment for a non-primary commodity.

Appointment of non-voting members to Com-modity Council.

Nomination of non-voting Chairman at requestof Commodity Council.

Consultation regarding Secretariat ... ...

Approval of rules of procedure ... ... ...

Receipt of reports from Commodity Council,and requests to latter for special reports.

Preparation and publication of a.. review ofoperations of an agreement.

Disposal of archives, etc., on termination of anagreement.

Receipt of information regarding existing com-modity arrangements; review and decisionregarding continued participation.

Similar function in connection with negotiations

Suggested Authority within Organization

Executive Board on the recommendation of theCommodity Commission; the latter willcarry out actual administrative arrangementsfor the study group.

Recommendations received by Commodity Com-mission and transmitted to members of theOrganization through Executive Board.

Executive Board.

ditto

Commodity Commission.

Executive Board on the recommendation of theCommodity Commission.

Executive Board on the recommendation of theCommodity Commission.

ditto ditto

Executive Board advised by the CommodityCommission, subject to procedures establishedby the Conference.

Executive Board on the recommendation of theCommodity Commission.

Commodity Commission (Ref. paragraph 8 ofArticle 66, of U.S. Draft Charter).

ditto ditto

Commodity Commission (Ref. paragraph 7 ofArticle 66, of U.S. Draft Charter).

Commodity Commission (Ref. paragraph 9 ofArticle 66, of U.S. Draft Charter).

Preparation by the Commodity Commission;publication by authority- of the ExecutiveBoard.

Documents in charge of Director-General.

Executive Board (subject to approval of theConference) upon recommendation of theCommodity Commission.

Executive Board (subject to approval of theParagraph (2). Conference) upon recommendation of the

Commodity Commission.General matters not specifically referred to in the Charter which involve the Organization will normally fall

within the province of the Commodity Commission in its advisory capacity to the Executive Board.

* With reference to paragraphs (z) and (2) of Article 52 it would appear that the determination whether thecircumstances in fact exist in which a regulatory agreement may be used will be made - by consultation among themembers having an important interest in the trade in the product concerned ". See paragraph (6) of Article 66 of theCharter, read together with paragraph (3) of Article 66 and sub-paragraph 2 (b) of Article 45 of the United States Drat

...Charter.

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CHAPTER VIEstablishment of an International Trade Organization

SECTION A

General ObservationsIt will be appreciated that this part of the work of the

Preparatory Committee depended very largely on the out-corne of other work which was being done simultaneously.For this reason it was impossible to carry many mattersconcerning administration and organisation to an advancedstage of discussion.

SECTION BPurposes of the Organization

The Preparatory Committee considers that any discus-siou on this subject should be postponed until the struc-ture of the Organization cani be seen as a whole.

SECTION CMembership and Functions

J. The provisions of the United States Draft Charterrelating to membership of the Organizstion were generallyapproved. It was agreed that the original members ofthe Organization should be those countries representedat the United Nations Conference on Trade and Employ-ment which accept the Charter by a given date or, inthe event of the Charter not being brought into force bythat date, the countries which agree to bring the Charterinto force among themselves. With reference to the ad-mission of new members, however, the Preparatory Com-mittee considers that the authority of the Conference toact in this matter on its own initiative should be madeclear and that while such admission might be sponsoredby the Executive Board, the prior recommendation of

the Board should not, as in the case of the SecurityCouncil of the United Nations, be a pre-requisite toapproval by the Conference.

2. In considering the functions of the Organization thepoint was made that it might prove necessary to amplifyor expand the provisions of the relevant Article of theUnited States Draft Charter to correspond with possiblenew chapters of the Charter dealing respectively with em-ployment policy and industrial development. One dele-gate considered that the implications of the provision con-cerning technical advice and assistance to members andto other international organizations were not sufficientlyclear and entered a reservation that, at the appropriatetime, the responsibilities to be undertaken by the Inter-national Trade Organization in this respect would need tobe more precisely determined. It would have to be de-cided, for example, whether the intention was that theInternational Trade Organization should employ a largestaff of technical experts or whether it should act merelyas a clearing house to which governments could turn forassistance and advice.

3. There was general agreement to a proposal that theInternational Trade Organization should not onlyendeavour to bring about international agreements onmatters within its competence, but should actively pro-mote their acceptance by members.

4. It was explained that the term arts " in the Charterwas intended to be interpreted broadly and to includecopyright for designs of many kinds. Bilateral agree-ments under this provision would certainly not be barredbut for the most part the widest possible application wasdesirable. It was emphasized that the provision concern-ing co-operation with the United Nations in the restora-tion and maintenance of international peace and securitywas specifically intended to ensure that the Organizationwould possess allthe constitutional authority necessaryto enable it to assist the Security Council, if called uponto do so. Emphasis was given also to the desirableof co-operating closely withthe United Nations and otherspecialized agencies in achieving an economy of effort inthe carrying out cfthe functions ofthe Organization.

SECTION D

The Conference

I. The provisions of the United States Draft Charterrelating to membership of the Conference, sessions, pro-cedure and officers were approved without change. Con-sideration was given to the question whether the Presi-dent of the Conference should beelectedannually or foreach session, the majority opinion favouring the former

arrangement on the grounds that procedural delays wouldthereby be avoided in the event of special sessions beingconvened. The Preparatory Committee recommnds thatwhen the rules of procedure of the Conference aie beingdrafted, consideration should be given to the possibilityof including some appropriate provision which would en-able a special session to be called at the request if lessthan a majority of the numbers. Such a provision mightapply, for example, in connection with appeals againstdecisions of the Executive Board.

2. In discussing the powers of the Conference to sus-pend, in exceptional circumstances, obligations under-taken by members under the general commercial policyprovisions of the Charter, it was suggested that this powerright be extended to cover all obligations under theCharter. It was stressed that the waiving of such obliga-tions was intended to apply only in cases of au excep-tional nature, involving hardship to a particular member,which were not covered by specific escape clauses. It wasfinally agreed that all the obligations undertaken by mem-bers, pursuant to the Charter, should come within the pur-view of this general provision.

3. As regards the apportionment of expenses some dele-gates urged the adoption of the same relative scale of con-tributions as used in the c-se of the United Nations, onthe grounds that the difficulties attendant upon the work-ing out of a new scale would this be avoided. How-ever, as the decision on the United Nations scale of con-tributions has not yet been made known and tie ques-tion of voting in the Organization and of membershipof the Executive Board has then still to be decided, thePreparatory Committee considers it impossible to do moreat this stage than recommend that, in the absence ofany other agreed arrangement, apportionment of expensesshould follow the general principles adopted by the UnitedNations.

4. In discussing the powers of the Conference to esta'lish the procedures required for making the determintions and recommendations provided in the Charter, elsedelegate desired that a two-thirds majority should bcrequired in important matters. However it was agreedthat it would be best to adhere to the broad principlethat all decisions, except possibly those of a very im-portant nature, should be voted by a simple majority.

5. Since it was agreed that one of the functions of theOrganization should be to make recommendations forinternational conventions and agreements on matterswithin its competence, it seemed desirable that a provisionto this effect should be included among the powers andduties expressly conferred upon the Conference. To thisend agreement was reached on a provision (based on thecorresponding article of the Constitution of the WorldHealth Organization) authorizing the Conference todevelop and recommend conventions and agreements formembers' acceptance, and requiring members to give muchrecommendationsdue consideration and to decide, withina reasonable time, e-ther to accept or to reject them.

SECTIONE

Voting and Executive Board Membership.r. Inthe discussion on voting divergent schools of thought

emerged as to whether some formal provision should bemade in the Charter whereby differences inimportance ininternational trade of individual members would be re-flected in the measure of control they would exercise overthe affairs of the internationall Trade Organization. Oneschool maintained that the democratic approachto theproblem was to allow an equal voice and vote to allmembers and that the successful functioning of the Confer-ence would depend in large measure upon a feeling ofequality. Certain delegates, however, contended thatbecause the International Trade Organization willbe afunctional rather than a political body, it would not bedemocratic to permit those with a smaller proportionateshare of international trade to overrule those whose sharewas much larger, merely by virtue of their larger numberof separate votes.

2. It was also suggested that it would beanomalous tohave only one vote for countries having responsibilityfor dependent territories, th e economies of which differedradically from their own and some of which had an effec-tive measure of autonomy in matters covered by theOrganization. The majority of delegates favoured in'principle the system of one country-onevote, but several

who did so, expressed willingness to consider alternatives.In the course of discussion many shades of opinion werediscernible, but it is was generally agreed that at thisstage a full exchange of views was more desirable than anyattempt to reach final agreement.

3. Two broad alternatives to the United States DraftCharter were advanced-a system of weighted voting in theConference and permanent seats on the Executive Board.The interdependence of these two possibilities wasrecognized by discussing them in conjunction.

Weighted Voting

4.-(a) Several delegates declared their difficulty in ex-pressing any definite views on the subject of weighted vot-ing without considering concrete schemnes. A paper wassubsequently circulated suggesting that considerationshould be given to a weighted system of voting both inthe Conference and Executive Board, chased on a formulawhich provided for

(i) a basic number of votes for each country, and(ii) a number of votes based on total external trade,

plus perhaps(iii) a number of votes based on national income.

(b) It was also suggested that the incidence of votingshould be revised periodically to take account of thechanging relative position of members-a factor whichsome delegates thought might be provided for bycriteria measuring potential development. A ceiling forthe number of votes which any one country might havewas subsequehtly proposed. In advancing these proposalsthe arrangements made in connection with the Inter-national Labour Organization, the International MonetaryFund, the International Bank for Reconstruction andDevelopment and thc Provisional International CivilAviation Organization were quoted as precedents for adifferential system in connection with membership of theGoverning Body. The arrangements of the InternationalLabour Organization were explained by a representativeof that organization. Certain delegates thought that someof these precedents were irrelevant and stressed the diffi-culty of reaching any kind of formulae which would b.acceptable ta all potential members, together with theprotection afforded to members by the requirement of anaffirmative vote of two-thirds of the Conference for decisionson crucial issues.

(c) Otber delegates only discussed the proposaIs on thehypothesis of a weighted system being adopted, withoutprejudice to their preference for the one nation-one voteprinciple. The criteria put forward were criticized on thefollowing grounds:

(i) Undue weight would b. given to small countrieswith a large external trade at the expense of countrieswith a large population whose external, as comparedwith internal, trade is relatively small.

(ii) From the democratic point of view populationshould be given the greatest weight.

(iii) National wealth would be a preferable criterionto national income.

(iv) Count-ries, relatively more dependent on inter-national trade than others, should have extra votingstrength accordingly.

(v) National income would weigh voting in favourof members whose international trade was relativelyless important to themselves.

(vi) The interests of less developed countries would beinsufficiently safeguarded.

(vii) The methods of estimating the figures on whichthe criteria depended differed considerably fromcountryto country.

(viii) The proposals were not clear as far as votingon the Executive Board was concerned.

(d) This question is referred to the Drafting Committeefor the formulation and exposition of alternative schemesof weighted voting which governments might consider(although there in some doubt whether this function fallswithin the Commitee's terms of reference).

Executive Board-Membership.

5.-(a) Many members of the Preparatory Committee.including among their number both the sponsors and oppo-nents of weighted voting, felt that there should be pro-vision for permanent seats on the Executive Board formembers of chief economic importance. Several delegates,though favouring equality of voting in the Couference,were ready to support the principle of permanent seatson the Board, largely on the grounds that the continuous

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support and participation of these countries was essentialto the success of the International Trade Organization.It was suggested on the other hand that any special pro-vision was superfluous because the re-election of thesecountries was always virtually certain.

(b) A variation of the idea of permanent seats wasproposed by which membership of the Executive Boardwould rotate, but with a certain number of countrieseligible for immediate re-election. This would avoid anynecessity for formal mention of permanent seats in theCharter.

(c) It was suggested that it would bc better to establishcriteria for selecting permanent members rather than taname them in the Charter, though the latter procedurewas mentioned as a possibility. Various alternatives wereadvanced. While some delegates thought that tests ofeconomic importance such as external trade and popula-tion should be applied, others maintained that wider con-siderations than purely economic ones should be takeninto account. Some delegates thought that geographicalcriteria should be applied in conjunction with economic.A scheme was submitted by which the seats would beallotted for five year terms with eligibility for immediatere-election, to the most important trading countries withinthe geographical areas of Europe (2), North America (2),Latin America (z), Asia (2), Oceania (r) and America (I)This was opposed on the grounds that the only justificationfor permanent seats was the difference in importance of

*members in international trade, a factor which was in-depeudent of location. It was suggested, however, thatgeographical considerations might be applied to non-permanent seats.

(d) The number of permanent and non-permanent seatswas also considered. An increase of the total from fifteen,as proposed in the United States Draft Charter, to twentywas advocated by some delegates, though others thoughta membership of twenty too large for the smooth workingof an executive organ.

(e) The opinion was also expressed, however, that theBoard would need to work largely tbrough sub-committeesin any case. Importance was attached to the need forrelating the number of seats on the Board to the numberof members of the Organization. Some thought that theposition should be left elastic until this was known.Various proportions of permanent to non-permanent seatswere tentatively mentioned without any particular pro-position receiving detailed consideration or wideacceptance.

6. The conclusions which emerged from the PreparatoryCommittee's deliberations on the subject of Voting andExecutive Board Membership may be briefly stated asfollows:

(a) The majority of delegates favoured the principleof one country-one vote in the Conference and in theExecutive Board.

(b) A minority desired detailed examination of pos-sible schemes for weighted voting, but not necessarilyat this stage.

(c) The principle of permanent seats on the ExecutiveBoard in some form is acceptable to most delegates.

(d) The three-year period of membership of the Boardset out in the United States Draft Charter was largelyunquestioned.

(e) No useful purpose would be served by attemptingto produce a definitive draft covering these particularprovisions, until such time as the substantive issuesinvolved bave been more completely resolved.

7. No firm conclusions ware reached on the followingmatters:

(a) The number of seats on the Executive Board.(b) The relative number of permanent seats (if any)

and non-permanent.(c) Rotational membership of Executive Board.(d) The criteria for electing members of the Executive

Board, either for permanent or non-permanent seats.

SECTION f

The Executive Board-Procedure, Powers and DutiesJ. The text of the United States Draft Charter, insofar

as it concerns the powers and duties of the ExecutiveBoard. was accepted with only two amendmnents both ofwhich, however, were indicative of two basic concepts,shared by the majority of delegates, as to the general

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24

statue and authority of the Executive Board vis-à-vis theConference on the one hand, and the Commissions, onthe other. The first amendment was to make permissiverather than mandatory, the power of the Board to recom-mend to the Conference the admission of new members,thus emphasizing what most delegates felt should be theclearly subordinate position of the former. Similarly itwas thought that the Commissions, in turn, should bedefinitely subordinate to the Board and to give addedemphasis to this principle it was decided that the lattershould " supervise " and note merely " review " theactivities of the former.

2. There was a disposition, however, to allow a maxi-mum of latitude to the Board in d-awing up its ownrules of procedure and electing its officers, though certainspecific suggestions were made in this regard to whichit was hoped due consideration would be given. Theseincluded proposals that in certain circumstances it shouldbe possible for a minority of members of the Board or for aspecified number of members of the Organization notrepresented on the Board, to convene a session. Indiscussing the term of office of the Chairman, the desir-ability of providing for a reasonable measure of continuitywas stressed by several delegates. Whilst, on the whole,the advantages of annual election were deemed to out-weigh the disadvantages, a satisfactory compromise wasfound by specifically providing that the Chairmnan andother officer should be eligible for immediate re-election.A reservation concerning the reference to " other officers "was withdrawn on the understanding that the term re-ferred only to members of the Board themselves and notto officials of the Secretariat. A proposal that theChairman of the Board should be able te participate inthe deliberation. of the Conference in his capacity ofChairman, though without the right to vote, found gener-1acceptance. It was, of course, recognized that the Chair-mau of the Executive Board would probably attend theConference as a representative of his government. Never-theless it was thought desirable to cover the contingencyof his not attending in such representative capacity andthat in any case, he should be entitled, under the Charter,to at least the same rights with respect to participationin tihe Conference as are accorded chairmen of commissions.

3. Agreement was reached alse on the desirability ofincluding in the Charter a provision under which anymember of the Organization would have the right toappear and effectively present its case before the Execu-tive Board, when a matter of particular and substantialconcern to that member was under consideration. Theprovision, as accepted, is based on Article 3 1 of theCharter of the United Nations but is somewhat moreprecisely drawn in that it grants to the member con-cerned, all the rights of members of the Board excep'the right to vote. At least one delegate, however, ex-pressed serious misgivings lest this arrangement shouldhamper and embarrass the Board by precluding it fromholding confidential discussions on any subject or fromdealing effectively with matters of general application.Another delegate suggested that the Board should not beunder any firm, obligation to invite members te attend itssessions but should do so at its discretion.

SECTION G

The Commissions

z. The Preparatory Committee discussed the Commis-sions in general terms, particular attention being paid totheir composition and procedure. The desirability of estab-lishing commissions as an essential part of the structureof an International Trade Organization to perform certainspecialized tasks was in no way questioned. There wasa tendency to treat the matter rather tentatively, largelybecause most delegates felt that the structure, functionsandstatus of commissions and the manner in which they wouldoperate, could net at present be foreseen in much detail.Various views were expressed however, as to the moreimportant considerations to be borne in mind.

2. The Prepartory Committee is of the opinion thatthe Commissions should be subordinate te the ExecutiveBoard. The extent to which they should operate otherthan in a strictly advisory capacity is, however, a ques-tion which it is felt cannot be fully resolved at present.Some delegates expressed the opinion that the Commis-sions should not be called upon te undertake responsibilitiesof a semi -judicial natureand considered that, this

respect, the wording of Articles 64, 65 and 66 of theUnited States Draft Charter raised certain doubts as tothe functions it is intended the Commissions shouldperform. It was argued in support of this view that onlyrepresentatives of governments, not experts in their ownright, should be directly responsible for important execu-tive and judicial decisions.

3. There was general agreement with the proposal thatthe Commissions should consist of outstanding experts ofhigh prestige in their own fields who would operate in-dependently of their governments. One delegate, thoughagreeing in principle with this proposal, was of the opinionthat the governments concerned should in all cases beconsulted regarding appointments to commissions aad thatit should be expressly provided that not more than onenational from any country should serve on any one Com-mission. The majority of delegates. however, felt that ingeneral these conditions would, in fact, be complied withand that it was unnecessary and undesirable, therefore,to write them inter the Charter itself.

4. The Preparatory Committee considers that in appoint-ing members of commissions due regard should be paidto the importance of selecting personnel on as wide ageographical basis as possible. In this connection it wasagreed that the desirability of having different types ofeconomies represented, particularly in the case of the lessdeveloped countries, should also be borne in mind. Variousopinions were expressed as to whether some or all the mem-bers of Commission:; should serve on a part time or fulltime basis. While certain delegates anticipated that thework of at least some of the Commissions would be soheavy and continuous that full time service might beessential, others thought that, by becoming permanent in-ternational officials, the individuals concerned would tendto lose much of their intimate contact with current affairsin their own countries and that this would greatly lessentheir value to the Organization. In this respect no ncedwas felt for changing the text of the United States DraftCharter which did, in fact, leave the matter to be decidedby the Conference. There was considerable support forthe idea that the Chairman of eacb Commission might serveon a full time basis, and it is, therefore, recommendedthat provision be made accordingly in the rules of pro-cedure to be drawn np by each Commission.

S. The question of relationship between the personnelof Commissions on the one band, and the Director-Generaland the personnel of the secretariat on the other, gave riseto a certain amount of concern. While it was acknow-ledged that the secretariat should serve the Commissions,it was suggested by a number of delegates that the respec-tive functions, responsibilities and status of the Director-General and of members of commissions would need to bemore carefully defined, particularly in cases where the latterwere to become permanent officials of the Organization.The desirability of the Commissions having access to theExecutive Board directly rather than through the Director-General is particularly stressed. At the same time, how-ever, serious misgiving was expressed lest two separatebodies of officials of differing status should be created withinthe one Organization thus opening up the possibility ofdivided authority with attendant friction and confusion.The difficulty of attracting, on a permanent basis, personsof the calibre required and the possible expense which thiswould involve were also pointed out.

6. The Preparatory Committee is of the opinion thatthese questions cannot profitably be pursued further untilthe structure of the Organization as a whole begins to takeshape. Moreover the number and nature of the Commis-sions, which might ultimately be required, cannot now beforeseen. Agreement was reached, however, on certainminor amendments to the relevant provisions of the UnitedStates Draft Charter, the general purpose cf which is togive to those provisions a somewhat greater measure ofelasticity, having regard to the uncertain requirements ofthe future. Subject to the views expressed being givenproper consideration when appropriate action is taken, theCommittee regards the amended provisions as incorporatedin the agreed text as satisfactory.

7. These provisions of the United States Draft Charterdealing with the functions of the Commissions on Commer-cial Policy, Business Practices and Commodities respec-tively were discussed in general terms. These particularprovisions willbe examined more fully at the Second Ses-sion of the Preparatory Committee. A proposal was sub-mitted calling for the establishment of an additional com-mission to deal with the " Expansion of Production,

* of. Article 76 of the Charter.

25

Industrialization and Employment." In view of the resolu-tion regarding international action in the field of employ-ment drafted bv the Preparatory Committee for the con-sideration of the United Nations Conference on Trade andEmployment,* consideration of this matter is deferreduntil a later date.

SECTION 11

The SecretariatI. The Preparatory Committee feels that the struc-

ture of the International Trade Organization includ-ing the secretariat, should be brought into the closestpossible relationship with the United Nations, for reasonswhich include economy, the shortage of skilled personnel,co-ordination of policy, prevention of overlapping, andthe avoidance of any possible separatist tendency. Thenecessity of ensuring proper co-ordination with theEconomic and Social Council itself, in order to avoid need-less duplication of work on identical or closely relatedproblems, was particularly stressed. Common servicesand staff conditions for the various international economicsecretariats now being built up or in contemplation wereadvocated wherever possible.

2. Some delegates thought that, with respect ta certainphases of its work , the International Trade Organiza-tion might make appropriate use of the economic secre-tariat of the United Nations, and that it would be anadvantage from this viewpoint if the International TradeOrganization were located in the same place. Most dele-gates, however, were not prepared to offer any definiteviews on the question of the site at this stage.

3. In general it was agreed that detailed considera-tion of this question of interlocking stafI arrangementswould be premature and that the Secretariat of theUnited Nations should be asked to furnish relevant infor-mation and suggestions for consideration at the appro.priate time. Certain preliminary observations and pro-posais concerning the co-ordination and integration ofservices and activities of secretariats were subsequentlycirculatedd in response to this request. Several delegatesindicated that the cost ai maintaining a multiplicity ofseparate international organizations was already showingsigns of assuming considerable proportions and that theexpenses of the International Trade Organization should,therefore, be kept to the minimum consistent withefficiency.

4. The principle was generally accepted that provisionsrelating to the organization of the secretariat should beas flexible as possible, particularly with reference to thenumber, status and powers of Deputy Directors-General,and that, as a corollary, the Director-General should begiven all the authority and freedom of action necessaryfor carrying out his responsibilities. Most delegates agreedthat the position of the Director-General should be madeas strong as possible in relation ta that of other officialsof the secretariat, and that any specific reference in theCharter to either the number or functions of DeputyDirectors-General should consequently be omitted. Thisdecision was felt to be justified on the grounds, firstly, thatif their status and powers were to be derived directly fromthe Charter, the relative authority of the Director-Generalwould be lessened, and secondly, that it should be leftta the Director-General to appoint only such numberof deputies as are in fact needed. Appointments shouldin any case be in accordance with regulations approvedby the Conference. A proposal that the Director-Generalbe ex-officie non-voting Chairman of the Executive Boarddid not win favour.

5. While delegates agreed that efficiency, competenceand integrity should be the paramount considerations inrecruiting personnel for the secretariat, many thought thatadequate geographical representation and familiarity withdifferent kinds of economic conditions and interests,should also be taken substantially into account. ThePreparatory Committee drafted a provision which isintended to give effect to this principle, and toconform to the corresponding provision in the Charterof the United Nations. Some delegates suggested thatpersonnel of the secretariat and Commissions should berecruited only from members of the International TradeOrganization. Others considered that such a provisionwould be unduly restrictive, and that employment shouldbe open to nationals of all members of the United Nationssubject, perhaps, to some measure of preference beinggiven to nationals of the members of tl Organization.

* See Chapter 1. Section L56308

The Preparatory Committce also considers that specificprovisions regarding nationality should not be includedin the Charter, thus leaving the way open for the occa-sional recruitment of exceptionally qualified persons, whootherwise would not be eligible, if, in the Director-General's opinion and subject to such consultation as hemay deem advisable, the services of such persons wouldbe of special value to the Organization.

SECTION

Miscellaneous provisions

r. Relations with other Organisations(a) Those provisions of the United States Draft Charter,

which deal with questions of relationship between theInternational Trade Organization and other internationalorganizations found ready acceptance. The useful partwhich these organizations, both inter-governmental andnon-governmental, might play is helping to promote theobjectives of the International Trade Organization isgenerally recognized.

(b) Although many delegates were willing to leave to theDirector-General the negotiation of a formal agreementwith the United Nations according to the precedent setby other specialized agencies, the opinion was also ex-pressed that the provisions of such an agreement shouldbe worked out in detail beforehand, with a view to theirbecoming operative as soon as the International TradeOrganization comes legally into existence. All delegatesagreed, however, with the general proposition that inthe interests of economical and efficient administration,and for the purpose of avoiding inconsistent and evenconflicting policies, it was of the greatest importance thatthe closest relationship with the United nations, andparticularly with the Economic and Social Council, shouldbe specially developed.

(c) There was general agreement, to, with the viewthat it would be undesirable to refer specifically to anyparticular organisation in the provision of the Charterdealing with relations with other inter-governmentalorganizations in view of the fact that the activities andresponsibilities of a number of these organizations willbe of special importance from the point of view of theInternational Trade Organization. The importance of theFood and Agricultural Organization, of the InternationalMonetary Fund, of the International Bank for Recon-struction and Development and of the InternationalLabour Organization in relation to the work of the Inter-national Trade organization is particularly stressed.2. Legal Capacity, Privildges and ImmunitiesThe provisions of the United States Draft Charter deal-

ing with the legal capacity, privileges and immunities ofthe Organization were approved without change. In viewof the fact that the Secretary-General of the UnitedNations is under instructions from the General Assemblyto consult with specialized agencies on the subject of privi-leges and immunities with a view to ensuring a reason-able degree of uniformity in the arrangements made forall inter-governmental organizations, the Preparatory Com-mittee feels that the provisions of the Charter relatingto these matters sbould be expressed in general ratherthan specific terms, leaving the formulation of theirdetailed application to the Conterence.3. Payment of ContributionsThe Preparatory Committee considers that a penalty

clause with reference to non-payment of contributionsshould be incorporated in the Charter. Some discussiontook place, however, as to the appropriate place in theCharter for a provision of this nature, the natter beingfinally left to the decision of the Draiting Committee. Inorder to bring the procedure of the International TradeOrganization into line with that adopted by the UnitedNations, a suggestion that the wording of this particularprovision should conform to that used in the Charter ofthe United Nations met with general support.4. Amendments

(a) While it was generally recognized that the Organiza-tion should be 50 constituted as to allow it to meet cou-stitutional changes of a minor kind without undue diffi-culty, severa! delegates thought that a member not accept-ing amendments, which involve new obligations wouldbe in an anomalous position in its relationship to theOrganization, if it were not permissible for the memberto withdraw.

(b) It was, therefore, felt that provision should bemade whereby the Conference might decide that a non-accepting member would be compelled to withdraw or, in

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26

the absence of such a decision, whereby such amembermight be enabled voluntarily to withdrawn, notwithstand-ing anygeneral provisionscontainedof where in theCharter limiting theright of withdrawal.

5. WithdrawalIn considering withdrawal and termination accountwas

taken of thenecessity of giving the Organization a fairchance at its inception to becomefinally established. Itwas felt, nevertheless, in view of the fact that thetradeagreements legislation of the United States wouldnotpermit that country to enterinto tariff commitments ofmore than three year' duration, that the period imme-diately following the adoption of the Charter, withinwhichnow ithdrawalsshould take place, shouldlikewisebe three years,instead of five as proposed in the UnitedStates Draft Charter. It was alsofelt that sixmonths'notice of intention towithdraw,rainerthan one year(as in the United States Draft Charter), would be adequate.Thus, a member would be able to withdraw at the end ofthree years, by giving notice- at the end of two and ahalfyears. Special provision wasalso madeto caver certainoverseas territoriesof members.

6, Interpretation and Settlement of Disputes(a) It was agreedto make the English.Chinese, French

and Spanishtexts of the Charter equally authoritative,The question cf providing also a Russian text did notpresentitself at the First Session.

(b) Attention was calledto the possibility of a specia'.chamber for commercial cases being established underArticle 26of tbe Statute of the International Court ofjustice. There wassome doubt, however, as to whetherits existence might not detractfrom the prestige of theInternational Trade Organization. Several delegatesthought that the jurisdiction of the Organization shouldbe final in administrative matterscoming within its pro-vince and that only legal issues shouldbe referred tocourts. politico-econc micdecisions beingrecognized as theOrganization'sown responsibility. Although it wasgenerally agreed that the Executive Board,where appro-priate, could refer disputesto the Commissions for pre-

liminary report,some disapprovalwas voiced at the ideaof Commissions beingformally regarded as courtsof firstinstance.

(c) Considerable discussion took place on whetherappealsto the International Court.ofJustice from rulingsof the Conference on justiciable issues should be subjectto the consentof the Conference. It was argued that samelimitation was necessary both ta keep the prestige of theInternational Trade Organization high andto avoidover-loading the International Court. The contrary view wasthat only justiciable matters were involved in which theInternational Trade Organization was not expert, and that,in practice, countries would only appeal on issues whichthey regarded asrerally important. Some compulsorydelay was also suggested.

(d) The Praparatory Committee eventually agreed thatthe rightof appeal should be subject to procedures estab-lisbed by the Conference, and that indetermining theseprocdures consideration should be given to incorporatingas a pre-requisite an affirmative vote of at least one-thirdof themembersof the Conference. The absolute rightof appeal to the International Courtof Justice in securitymatters, as setout in the United States Draft Charter,was not called into question.

(e) All delegates thought that the authority of theInternational Trade Organization to seek advisory opinionsfrom the International Court ofJustice should be continu.ing and not subject to reference to the General Assemblyaf the United Nations on each occasion. The Articleconcerned was redrafted te accord with the language ofthe Charter of the United Nations. Although the inter-pretation of this wording was open to question, it wasthought that the matter could bc clarified in the agree-ment to be concluded under Article 57 of the Charterof the United Nations.

(1) It was agreed to refer to the Registrar of the Inter-national Court of Justice the question whether complica-tions would be likely to arise from asking the Courtfor an advisory opinion on a matter which might sub-sequently become the subject of a case before it.

(g) It was agreed also that in view of paragraph 2 ofArticle 34 of the Statute of the International Court ofJustice, the rules of the Conference should enable theDirector-Genesal to represent the Organization before theCourt.

(h) The introduction of detailed discussion on arbitrationraised considerable difficulty because delegates were by numeans clear as to what kind of issues were appropriate forarbitration. A Iengthy discussiontook place whether ad-

ministrative as well as legal questionsshould be referredto arbitration, whether the Executive Board should awaitthe consent of the parties concerned and whether thearhitrators' decisionshould befinal (mostdelegates agreedthat itshould). An amendment was agreed upon whichwouldpermit the Executive Board. witn the condent ofparties concerned,to refer to arbitration for final decisionany matter arising out of the operation of the Charter.

(i) Certain delegateswished the provisions in regard toarbitration and the International Court of Justice to beexpandedand made more specific and theyundertook toprepare amemorandum setting out their views. TheDraftingCommittee is asked to consider theseviews inconjunction withthe verbatini report of CommitteeV'sdiscussion . of this subject.

7. Entryinto Force:a) One delegate suggested that, instead of requiring a

membership oftwe nty to bring the Charter into force,analternative methodmight be to provide for itstakingeffect when a certain proportion of would trade wascovered bycountries accepting its provisions,so thattheentryof the Charter into forceshouldnot bedelayedalter inacaceptance by the most important trading coun-tries. Various objections to this procedurewere voicedby other delegates.

(b) In general theprocdures suggested in the UnitedState- Draft Charter for bringing the Charterinto forceare regarded as satisfactory by the Preparatory Committeesubject tothe amendment that any instrumen.of accept-once deposited withthe Secretary-Generalof the UnitedNations is tobe taken ascoveringboth procedures, unlessit expressly provides to the contrary or is withdrawn.

(c) This was intended to cver the sitation that mightarise when one or moregovernments,having depositedtheir acceptances before a given date (pursuant to para-graph (2)of Article 88) mightnotfeel inclined to jointhe Organizationshould it subsequently come into exist-ence as a resultof agreement onthe partof a relatively

limited numberof Governmenis (pursuant te the provisoto paragraph (3)of Article 88), butmight neverthelesswish their acceptance to take effect whenthe member-ship reaches twenty or more.

(d) With reference to the suggested provisionunderwhich each government accepting the Charter would doso in respectof all dependent territories, attention wasdrawn tothe fact that certain overseas territories were insaying degreesof development and, in sooure cases, were

self-governingin matters provided forin the Charter. Tomeet this situation aless rigid provision was agreed upon,the purpose of which is ta permit a measureoi discretionta the governments concerned with respect to their accept-anceof the Charteron behaveof territories for which theyhave international responsibility. Reservations regardingthis provision were entered by there delegates.8. Interim Tariff Committed

(a) At its Second Session at which tariff concessions willbe discussed, the Preparatory Committee hopes that certainreductionsof tariffs orother concessions will be agreed. Ifso, the Committee considers that it might be desirableto bring these reductions or concessions into effect assoonas possible, without necessarily waiting upon the entryintoforce ofthe Charter. It would be for the negotiatingcountries themselves to decide the tire. When theOrganization is set up it is hoped that the countries,which have reduced their tarifs, will join it. Thesecountries would then become the nucleus of the InterimTariff Committee, w'hich would be supplemented by othercountries joining the Organization, and which themselveshave made equivalent tariff concessions to the satisfactionof the Committee. When two-thirds of the members ofthe Organization become members of the Committee, thefunctions of the latter will vést in the Conference.

(b) The Preparatory Committee is of the opinion thatfor countries making reductions membership of theInterim Tariff Committee should be compulsory.

(c) A reservation was made regarding the position ofmembers which did not desire to join the Committee.

(d) A suggestion was made that if weighted voting wereintroduced, it might be applied in the case of the InterimTariff Committee.

(e) A provisional view was expressed that the imple-mentation of tariffagreements and of the Charter shouldbo interdependent.

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APPENDIX

Charter of the International Trade Organization of the United Nations

ESTABLISHMENTThe International Trade Organization of the United

Nations is hereby established and shall operate in accord-ance with the provisions which follow.

CHAPTER IPURPOSESARTICLE I

General Purposes of the Organization.To be considered and drafted at a later stage.*

CHAPTER IIMEMBERSHIPARTICLE 2

(I) The original Members of the Organization shall bethose countries represented at the United Nations Con-ference on Trade and Employment which accept theprovisions of this Charter by 3I December, I94, .. or,iii the event that this Charter has not entered into forceby that date, those countries which agree to bring thisCharter into force pursuant to the proviso to paragraph (3)of Article 88.

(2) Membership in the Organization shall be open tosuch oilier countries as accept the provisions of thisCharter, subject to the approval of the Conference.

(3) The Conference shall establish procedures that willopen a membership in the Organization to the UnitedNations on behalf of the trust territories for which theUnited Nations is the administering authority.

CHAPTER IIIEMPLOYMENTARTICLE 3

Relation of Employmnent to the Purposes of the Organisa-tion.(I) Members recognize that the avoidance of unemploy-

ment or under-employment through the achievement andmaintenance of each country of useful employmentopportunities for those able and willing to work and of highand steadily rising effective demand for goods and servicesis not of domestic concern alone, but is a necessary con-dition for the expansion of international trade and, ingeneral, for the realization of the purposes of the Organiza-tion. They also recognize that measures ta sustain demandand employment should be consistent with the other pur-poses and provisions of the Organization, and that in thechoice of such measures, each country should seek to avoidcreating balance of payments difficulties for othercountries.

(2) They agree that, while the achievement and main-tenance of effective demand and employment must defendprimarily on domestic measures, such measures should beassisted by the regular exchange of information and viewsamong members and, so far as possible, be supplementedby international action sponsored by the Economic andSocial Council of the United Nations and carriedd out incollaboration with the appropriate inter-governmentalorganizations, acting within their respective spheres andconsistently with the terms and purposes of their basicinstruments.

ARTICLE 4The Maintenance of Domestic EmploymentMembers shall talk, action designed to achieve and

Maintain full and productive employment and high andstable levels of effective demand within their own juris-diction through measures appropriate to their political andeconomic institutions and compatible with the other pur-poses of the Organization.

ARTICLE 5The Developmeut ofDomestic Resources and ProductivityMembers, recognizing that all countries have a common

Interest in the productive use of the world's resources,agree to take action designed progressively to developeconomic resources and to raise standards of productivitywithin their jurisdiction through measures compatible withthe other purposes of the Organization.

* See Part II, Chapter VI, Section B.56308

ARTICLE 6

Fair Labour Standards

Members, recognizing that all countries have a commoninterest in the maintenance of fair labour standards relatedto national productivity, agree to take whatever actionmay be appropriate and feasible to eliminate sub-standardconditions of labour in production for export and generallythroughout their jurisdiction.

ARTICLE 7

The Removal of Maladjustments in the Balance of Pay-"ments

Members agree that, in case of a fundamental dis-equilibrium in their balance of payments involving othercountries in persistent balance of payments difficulties,which handicap them in maintaining employment, theywill make their full contribution to action designed tocorrect the maladjustmrent.

ARTICLE 8

Safeguards for Countries subject ta External DeflationaryPressure

The Organization shall have regard, in the exercise ofits functions as defined in the other articles of this Charter,to the need of Members to take action within the provisionsof the Charter to safeguard their economies against de-flationary pressure in the event of a serious or abruptdecline in the effective demand of other countries.

ARTICLE 9

Consultation and Exchange of Information on MattersRelating to EmploymentMembers agree ta participate in arrangements under-

taken or sponsored by the Economic and Social Councilof the United Nations, including arrangements with theappropriate inter-governmental organizations

(a) for the regular collection, analysis and exchangeof information on domestic employment problems,trends and policies, including as far as possible in-formation relating ta national income, demand, and thebalance of payments; and

(b) for consultation with a view ta concerted actionon the part of governments and inter-governmentalorganizations in the field of employment policies.

CHAPTER IV

ECONOMIC DEVELOPMENT

ARTICLE 10

Importance of Economic DevelodpmentMembers recognize that the industrial and general

economic development of aIl countries and in particularof those countries whose resources are as yet relativelyundeveloped will improve opportunities for employment,enhance the productivity of labour, increase the demandfor goods and services. conutribute to economic stability.expand international trade and raise levels of real income.thus strengthening the ties of international understandingand accord.

ARTICLE sPlans for Economic Development

(x) Members undertake to promote the continuing Indus-trial an general economic development of their respectivecountries and territories in order to assist in relizingthe purposes of the Organization.

(2) Members agree that they will co-operate through theEconomic and Social Council of the United Nations andthe appropriate inter-governmental organizations in pro-moting industrial and general economic development.

(3) [The Organisation, at the request of any Member,shall advise such Member concerning its plans foreconomicc development and, within its competence andresources, shall provide such Member with technicalassitance in completing its plan and carrying out itsprogrammes.]*

See Part II. Chapter II, Section T, paragraph 5.

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ARTICLE I2

Means of Econonmic Development

(I) Members recognize that progressive economicdevelopment is dependent upon the availability oladequate supplies of

(.2) capital funds; and

(b) materials, equipment, advanced technology,trained workers and managerial skill.

(2) Members agree to impose no unreasonable impedi.ments that would prevent other Members from obtainingaccess to facilities required for their economic development.

(3) Members agree to co-operate within the limits of

their power to dose, with the appropriate international

organizations of which' they are members in the provision

of such facilities.

(4) Members agree that, in their treatment of otherMembers, business entities or persons supplying then withfacilities for their industrial and general economic develop-ment not only will they conform to the provisions of

their relevant international obligations now in effect or

which they may undertake pursuant to Paragraph (5) ofArticle i56 or otherwise, but also that in general they willtake no unreasonable action injurious to the interests of

such other Members, business entities or persons.

(S) The Organization shall receive from any affectedMember or with the permission of that Member frombusiness entities or persons within its jurisdiction, com-plaints that action by another Member is inconsistent withits obligations under paragraphs (2), (3) or (4). In theevent of such complaint, the Organization may, at itsdiscretion, request the Members concerned te énter into

consultation with a view to reaching a mutually satisfac-tory settlement and may lend its good offices to this end.

ARTICLE 13

Governmental Assistance to Economic Development

(i) Members recognize that special governmental assist-ance may be required in order to promote the establish-ment or reconstructior. of particular industries and thatsuch asistance may take the form of protective measures.

(2) Members recognize that an unwise use of such pro-tection would impose undue burdens on their owneconomies and unwarranted restrictions on internationaltrade and might increase unnecessarily the difficulties of

adjustment for the economies of other countries.

(3) (a) If a Member, in the interest of its programmeof development, proposes to employ any protectivemeasures- which would conflict with any of its obligationsunder or pursuant to the provisions of the Charter. it shallinform the Organization, and shall transmit to the Organiza-tion any finding in support of this proposal. The Organiza-tion shall promptly inform those Members, whose tradewould be substantially affected by the proposal and affordthem an opportunity to present their views. The Organiza-tion shall then promptly examine the proposal in the lightof the provisions of this Chapter, the findings presented bythe applicant Member, the views presented by Members

substantially affected and of such criteria as to produc-

tivity and other factors as it may establish, taking into

account the stage of economic development or reconstruc-

tion of the Member.

(b) If. as a result of its investigations pursuant to sub-paragraph (a), the Organization determines upon anymeasure, which would be inconsistent with any obligationthat the applicant Member has assumed through negotia-tion with other Members pursuant to Chapter V or whichwould reduce the benefit to such other Members of any

such obligation, the Organization shall sponsor and assistin negotiations between the applicant Member and theother Members substantially affected, with a view toobtaining substantial agreement. Upon such agreementbeings reached, the Organization may release the applicantMember from the obligation in question or from any otherrelevant obligation under the Charter, subject to suchlimitations as the Organization may impose.

* (c) If. as a result of its investigations pursuant to sub-paragraph (a), the Organization concurs in any measureother than those covered in sub-paragraph (b), whichwould be inconsistent with any obligation assumed underthis Charter, the Organisation may, in its discretion,release the applica it Member from the obligation in ques-tion, subject to such limitations as the Organisation mayimpose.

CHAPTER V

GENERAL COMMERCIAL POLICY

Section A.-General Commercial Provisions, Most-Favoured-Nation Treaiment. Tariffs and TariffPreferences etc.

ARTICLE 14

General Most-Favoured-Nation Treatment

(I) With respect to customs duties and charges of anykind imposed on or in connection with importation or

exportation or imposed on the international transfer of

payments for imports or exports and with respect ta the

method of levying such duties and charges and withrespect to all rules and formalities in connection with

importation or exportation and with respect to all mattersaffected by the provisions relating to national treatment

in Article I5, any advantage, favour, privilege or immunitygranted by any Member to any product originating in or

destined for any other country, shall be accorded immm-diately and unconditionally to the like product originatingin or destined for all other Members.

(2) The provisions of paragraph (r) shall not be construedto require the elmination of any preferences iu respectof customs duties and other charges imposed on importa-tion, which do not exceed the preferences remaining alterthe negotiations contemplated in Article 24 and which

fall within the following descriptions:

(a) Preferences in force exclusively-

(i) between territories in respect of which there

existed on 1 July 1939, common sovereignty or

relations of protection or suzerainty, or

(ii) between the territories comprised in Annexure A

to this Charter. Each Member to which provision (i)

applies shall provide a list of sub territories, which

lists shall be incorporated in a further annexure.

(b) Preferences in force exclusively between the United

States of America and the Republic of Cuba.

(c) Preferences in force on 1 JuIy 1946, exclusively

between neighboring countries.

ARTICLE 15

*National Treatment on lnternal Taxation and Regula-tion,

ARTICLE 16

*Freedom of Transist

ARTICLE 17

'Antidumping and Countervaing Duties.

ARTICLE :8

'Tariff Valuation.

ARTICLE 19

Customs Formalities.

ARTICLE 20

*Marks of Origin.

ARTICLE 2;

*Publication and Administration of Trade Regulations-Advance Notice of Restrictive Regulations.

ARTICLE 22

information, Statistics and Trade Terminology.

Boycotts.ARTICLE23

Section B-Tariff and Tariff PreferencesARTICLE 24

Reduction of Tariffs and Elimination of Prefereces(z) Each Member, other than a Member subject to the

provisions of Article 33, shall, upon the request of anyother Member or Members, enter into reciprocal andmutually advantageous negotiations with such other Mem-ber or Members directed to the substantial reduction oftarifs and other charges on imports and exports andto the elimination of import tariff preferences. Thesenegotiations shal proceed in accordance with the followingrules:

(a) Prior international commitments shall not be per-.mitted to stand in the way of negotiations with respectto tariff preferences, it being understood that actionTo b. considered further and drafted at a later stage-see

Part Il, Chapter III, Section B.

29

resulting from such negotiations shall not require themodification of existing international obligations, exceptby agreement between the contracting parties or, failingthat, by termination of such obligations in accordancewith their terms.

(b) All negotiated reductions in most-favoured-nationimport tariffs shall operate automatically to reduce oreliminate margins of preference.

(c) The binding or consolidation of low tariffs or oftariff-free treatment hall in principle be recognized as aconcession equivalent' in value to the substantial re-duction of high tariffs or the elimination of tariffpreferences.

(2) Each Member participating in negotiations pursuantto paragraph (r) shall keep the Organization informed ofthe progress thereof and shall transmit to the Orgaznizationa copy of the agreement or agreements incorporating theresults of such negotiations.

(3) If any Member considers that any other Memberhas failed, within a reasonable period of time, to fulfilits obligations under paragraph (t), such Member mayrefer the matter to the Organization, which shall makean investigation and make appropriate recommendationsto the Members concerned. The Organization, if it findsthat a Member has, without sufficient justification, havingregard to the provisions of the Charter as a whole, failedto negotiate with such complaining Member in accordancewith the requirements of paragraph (z), may determinethat the complaining Member, or Ln exceptional cases theMembers of the Organization generally, shall, notwith-standing the provisions of Article I4, be entitled to with-hold from the trade of the other Member any of thetariff benefits which the complaining Member, or the Mem-bers of the Organization generally as the case may bu,may have negotiated pursuant to paragraph (I). If suchbenefits are in fact withheld so as to result in the applica-tion to the trade of the other Member of tariffs higherthan would otherwise have been applicable, such otherMember shall then be free, within sixty days after suchaction is taken, to withdraw from the Organization uponthe expiration of sixty days from the date on whichwritten notice of such withdrawal is received by theOrganization. The provisions of this paragraph shalloperate in accordance with the provisions of Article 67.

Section C-Quantitative Restrictions and ExchangeControl

ARTICLE 25

General Elimination of Quantitative Restrictions(i) Except as otherwise provided in this Charter, no

prohibition or restriction, other than duties, taxes or other

charges, whether made effective through quotas, import

licenses or other measures, shall be imposed or maintainedby any Member on the importation of any product ofany other Member or on the exportation or sale forexport, of any product destined for any other Member.

(2) The provisions of paragraph (s) shall not extendto the following:

(a) Prohibitions or restrictions on imports or exportsimposed or maintained during-the early post-war tran-sitional period, which are essential to

(i) the equitable distribution among the severalconsuming countries of products in short supply,whether such products are owned by private interestsor by the government of any Member: or

(il) the maintenance of war-time price control bya country undergoing shortages subsequent to thewar; or

(iii) the orderly liquidation of temporary surplusesof stocks owned or controlled by the government ofany Member or of industries developed in the territoryof any Member owing to tho exigencies of the war,which it would be uneconomic to maintain in normalconditions:

Provided that restrictions- under (iii) of this sub-paragraph may be imposed by any Member only afterconsultation with other interested Members with a viewto appropriate international action. Import and exportprohibitions and restrictions imposed or maintainedunder this sub-paragraph shall be removed as soon asthe conditions giving rise to them. have ceased, andin any event, not later than I July 1949Provided that this period may, with the concurrence

of the Organization, be extended in respect of anyproduct for further periods not ta exceed six monthseach.

,56308

(b) Export prohibitions or restrictions temporarilyimposed to relieve critical shortages of food-stuffs orother essential products in the exporting country.

(c) import and export prohibitions or restrictionsnecessary to the application of standards for the classi-fication and grading of commodities in internationalcommerce. If, in the opinion of the Organization, thestandards adopted by a Member under this sub-para-graph are likely to have an unduly restrictive effect ontrade, the Organization mav request the Member torevise the standards.Provided that it shall not request the revision of

standards internationally agreed under paragraph (6)of Article 22.

(d) Export or import quotas imposed under inter-governnental commodity agreements concluded inaccordance with the provisions of Chapter VII.

(e) Import restrictions on any agricultural or fisheriesproduct, imported in any form, necessary to the en-forcement of governmental measures which operate

(i) to restrict the quantities of the like domesticproduct permitted to be marketed or produced; or

(i) to remove a temporary surplus of the likedomestic product by making the surplus available tocertain groups of domestic consumers free of chargeor at prices below the current market level.(f Any Member imposing restrictions on the impor-

tation many product pursuant to sub-paragraph (e)shall give public notice of the total quantity or valueof the product permitted to be imported during dspecified period and of any change in such quantity orvalue Provided that any supplies of the product inquestion, which were en route at the time at whichpublic notice was given, shall not be excluded but maybe counted, so far as practicable, against the quantitypermitted to be imported in the period in question].'Moreover any restrictions imposed under (i) of sub-para-graph (e) shall not be such as will reduce the total ofimport relative to the total of domestic production,as compared with the proportion which might reason-ably be expected to rule between the two in the absenceof the restrictions. In determining this proportion theMember shall pay due regard to the proportion pre-vailing during a previous representative period and toany special factors which may have affected or maybe affecting the trade in the product concerned. TheMember shall consult with any other Members whichare interested in the trade in question and which wishto initiate such consultations.

(g) Import and export prohibitions or restrictions im-posed on private trade for the purpose of establishinga new or maintaining an existing monopoly of tradefor a state-trading enterprise operated under Articles31, 32 and 33.

ARTICLE 26

Restrictions to Safeguard the Balance of Payments(z) Members may need ta use import restrictions as a

means of safeguarding their external financial position andas a step towards the restoration of equilibrium on asound and lasting basis, particularly in view of increaseddemand for the import needed to carry out their domesticemployment, reconstruction. development of socialpolicies. Accordingly, notwithstanding the provisions ofArticle 25, Members may restrict the quantity or valueof merchandise permitted to be imported insofar as thisis necessary to safeguard their balance of payments andmonetary reserves. The use of import restrictions underthis paragraph shall conform to the conditions and re-quirements set out in paragraphs (2), (3) and (4).

(2) Members undertake to observe the following prin-ciples in the use of such restrictions:

(a) To refrain froms imposing new or intensifyingexisting restrictions except to the extent necessary(having due regard toany special factors which may beaffecting the level of the Member's reserves, to anycommitments or other circumstances, which may beaffecting its need for reserves, or to any special creditsor other resources which may be available to protectits reserves

) to stop or to forestall the Imminent threat ofa serious decline in the level of monetary reserves; or

* The words in square brackets should be retained only if thematter is not fully covered in Article 22.

A 15

30

(ii) in the case of a Member with very low mone-tary reserves to achieve a reasonable rate of increasein its reserves.(b) To eliminate the restrictions when conditions

would no longer justify the imposition of new restric-tions under sub-paragraph (a), and to relax them pro-gressively as such conditions are approached.

(c) Not to carry the imposition of new import re-strictions or the intensification of existing restrictionsunder sub-paragraph (a) to the point at which it in-volves the complote exclusion of imports of any classof goods.

(3; (a) Any Member which, wbile not imposing restric-tions under paragraphs (I) a-d (2), is considering the needfor the imposition of restrictions, before imposing suchrestrictions (or, in conditions in which previous consulta-tion is impracticable, as soon as possible after imposingsuch restrictions) shall consult with the Organization asto the nature of its balance of payments difficulties, thevarious corrective measures which may be available andthe possible effects of such measures on the economies ofother Members. The Organization shall invite the Inter-national Monetary Fund to participate in such consulta-tions. No Member shall be required during these discus-sions te indicate in advance the choice or timing of anyparticular measures which it may ultimately determine teadopt.

(b) The Organization may at any time invite any Mem-ber which is .imposing import restrictions under paragraphs(I) and (z), to consult with it about the form and extentof the restrictions and shall invite a Member substantiallyintensifying such restrictions to consult accordingly withinthirty days. Members agree to participate in such discus-sioni when so invited. In the conduct of such discussionsthe Organization shall consult the International MonetaryFund and any other appropriate inter-govenmentalorganizations, in particular in regard to the alternativemethods available to the Member in question of meetingits balance of payments difficulties. The Organizationunder this sub-paragraph shall, within two years of itsinstitution, review all restrictions existing at its institutionand subsequently maintained under paragraphs (I) and (2).

(c) Any Member applying or intending to apply restric-tions on imports under paragraphs (i) and (2) may, if itse desires, consult with the Organization with a view toobtaining the previous approval of the Organization forrestrictions which it intends to maintain or to impose orfor the maintenance or imposition in the future of restric-tions under specified conditions. The Organization shallinvite the internationall Monetary Fund to participate inthe consultations. As a result of such consultations theOrganization may approve in advance the maintenance,imposition or intensifcation of import restrictions by theMember in question insofar as tthe general extent, degreeand duration of the restrictions are concerned. To theextent to which such approval has been given, the actionof the Member imposing restrictions shall not be open tochallenge under subparagraph (d) insofar as it relates toaction taken in conformity with paragraphs (r) and (2).

(d) Any Member, which considers that any other Mcm-ber in applying import restrictions under paragraphs (z)and (2) in a manner inconsistent with the provisions ofthose paragraphs or of Articles 27 or 28, or in a mannerwhich unnecessarily damages its commercial interests, maybring the matter for discussion to the Organization. TheMember imposing the restrictions shall then participate indiscussion of the reasons for its action. The Organiza-tion shall, if it is satisfied that there is prima facie casethat the complaining Members interest are adverselyaffected, consider the complaint. It may then, after con-sultation with the -International Monetary Fund on anymatter falling within the competence of the Fund, recom-mend the withdrawal or modification of restrictions whichit determines are being applied in a manner inconsistentwith the provisions of paragraphs (I) and (2) or of Articles27 or 28 or a manner which unnecessarily damages thecommercial terests of another Member. If restrictionsare not with drawn or modified in accordance with the re-commendation of the Organization within sixty days,such other Members shall be released from such obligationsIncurred under this Charter towards the Member apply-ing the restrictions as the Organization may specify.

(e) The Organization in reaching its decision under sub-paragraph (d), shall not recommend the withdrawal orgeneral relaxation of restrictions on the ground that theexisting or prospective balance of payments difficulties ofthe Member in question could be avoided by a change in

that Member's domestic employment. reconstruction, developmeut or social policies. Members agree,, however,that in carrying out such domestic policies they will paydue regard to the need to restore sound and lasting equili-brium in their balances of payments.

(4) In giving effect to the restrictions on imports im-posed under this Article, a Member may select importsfor restriction on the grounds of essentiality in such away as to promote its domestic employment, reconstruc-tion, development or social policies. ln so doing the Mem-ber shall avoid all unnecessary damage to the commer-cial interest of other Members and will accept an invita-tion to consult with any other Member which considers itsinterests to be so damaged.

(t) If there is persistent and widespread application ofquantitative import restrictions under this Article, indi-cating the existence of a general disequilibrium which isrestricting international trade, the Organization shall seekconsultation with the International Monetary Fund. TheOrganisation may then, in collaboration throughout withthe International Monetary Fund, initiate discussion teconsider whether other measures might not be taken, eitherby those countries whose balances of payments are underpressure or by those countries whose balances of paymentsare tending to be exceptionally favourable, or by atyappropriate inter-governmental agency or organizationto remove the, underlying causes of the disequilubrium.Members agree that they will take part in such discussions.

(6) Throughout this Section the phrase " quantitativeimport restrictions" includes the restriction of importsby state-trading organizations to an extent greater thanthat which would be permissible under Article 32 [pro-vided that no Member shall be required to disclose infor-mation which would harper the commercial operationsof such a state-trading orgarnization].

(7) Members recognize that in the early years of theOrganization all of then will be confronted, in varyingdegrees, by problems of economic adjustment resultingfrom the war. During this period the Organization shall,when required to take decisions under this Article orunder Article 28, take full account of the difficulties ofpost-war adjustment.

ARTICLE 27No Discriminatory Administration of Quantitative Restric-

tions(z) Subject to the provisions of Article 28, no prohibi-

tion or restriction shallbe applied by any Member pur-suart to this Section on the importation of any product ofany other Member or on the exportation of any pro-duct destined for any other Member unless the importationof the like product of all third countries or the exporta-tion of the like product to all third countries, is similarlyprobibited or restricted.

(2) Pursuant to the principle set forth in paragraph (z),Members undertake in applying import restrictions teobserve the following provisions:

(a) Wherever practicable global quotas (whetherallocated among supplying countries or not) should befixed, and notice given of their amount in accordancewith sub-paragraph (3) (b).

(b) Where global quotas are not practicable, importrestrictions may be applied by means of import licenceswithout a global quota.

(c) Import licences or permits which may be issuedin connection with import restrictions (whether or notwithin the limits of global quotas) shall not, save forpurposes of operating quotas allocated in accordancewith subparagraph (d), require or provide that thelicence or permit utilized for the importation of theproduct concerned from a particular country or source.

(d) In cases where these methods of licensing are foundimpracticable or unsuitable, the Member conce.-ned mayapply the restrictions in the form of a quota allocatedamong supplying countries. In that event the shares ofthe various supplying Members should in principle bodetermined in accordance with commercial considera-tions such as, e.g., price, quality and customarv sourcesof supply. For the purpose of appraising such commer-cial considerations, tie Member applying the: restric-tions may seek agreement with respect to the alloca-tion of shares in the quota with all other Membershaving a substantial interest in supplying the product* The phrase inter-governmental agency or organizations

intended to include the Economic and Social Council of theUnited Nations.

t The words in square brackets should only be remainedin thematter is considered not to be adequately covered inthe Articlesdealing with state-trading organizations.

31

concerned, In cases where this method is not reason-ably practical, the Member concerned should allot toMembers having a substantial interest in supplying theproduct shares b4sed upon the proportions of the totalquantity or value of the product supplied by such Men-bers during a previous representative period, due accountbeing taken of any special factors which may haveaffected or bc affecting the trade in the product.

(e) No conditions or formalities shall be imposed,which would prevent any Nember from utilizing fullythe share of any such total quantity or value which hasbeen allotted to it, subject to importation being madewithin any prescribed period to which the quota mayrelate.

(3) (a) In cases where import licences are issued inconnection with import restrictions, the Member applyingthe restriction shall provide, upon the request of anyMember having an interest in the trade in the productconcerned, all relevant information as to the administra-tion of the restriction, the import licences granted over apast recent period and as to the distribution of suchlicences among supplying countries Provided, however,that there shall be no obligation to supply information asto the names of importing or supplying enterprises.

(b) In the case of import restrictions involving the fixingof quotas (whether or not allocated among supplyingcountries), the Member applying the restrictions shall givepublic notice of the total quantity or value of the productor products, which will be permitted to be imported duringa specified future period and of any charge in such quan-tity or value.

(c) In the case of quotas allocated among supplyingcountries, the Member applying the restriction shallpromptly inform all other Members having an interest insupplying the product concerned of the shares in the quota,by quantity or value, currently allocated to the varioussupplying countries.

(4) With regard to restrictions imposed in accordancewith sub-paragraph (2) (d) or under sub-paragraph 2 (e)of Article :5, the selection of a representative period forany product and the appraisal of any special factors affect-ing the trade in the product shall be made initially bythe Member imposing the restriction Provided that suchMember shall, upon the request of any other Memberhaving a substantial interest in supplying that product orupon the request of the Organization, consult promptlywith the other Member or with the Organization regardingthe need for an adjustment of the base period selectedorfor the re-appraisal of the special factors involved.

(5) The provisions of this Artilce shall apply to anytariff quota established or maintained by any Member.

ARTICLE 28

Exceptions from the Rule of Non -Discrimination

(Q) The provisions of this Section hall not preclude(a) restrictions with equivalent effect to exchange

restrictions authorized under Section 3 (b) of Article VIIof the Articles of Agreement of the International Mone-tary Fund;

(b) prohibitions or restrictions in accordance with sub-paragraphs (2) (a) (i) or (2) (d) of Article 25

(c) conditions attaching to exports which arc necessaryto ensure that an exporting country receives for itsexports its own currency or the currency of any memberof the International Monetary Fund specified by the ex-porting country;

(d) restrictions in accordance with Article 26 which. either

(i) are applied otherwise consistently with Article 27against import from other countries by a group ofterritories with common quota in the InternationalMonetary Fund or

(ii) assist in the period until 31 December 1951,by measures not involving substantial departure from,the provisions of Article 27, a county whoseeconomyhas been disrupted by war.or both(ii) provide a Member with additional imports

above the maximum total of import which it couldafford in the light of the conditions in paragraph (2)of Article 26, if its restrictions were consistent withArticle 27, and

(iv) have equivalent effect to exchange restrictions,which are permitted to that Member under the Articlesof Agreement of the'International Monctary Fundor under the terms of any special exchange agree-ment, which may have been made between the Mem-ber and the Organization under Article 29.

Provided that a Member, which is not imposing restric-tions on payments and transfers for current internationaltransactions, may apply import restrictions under (iii)of this sub-paragraph in special circumstances and onlywith the prior approval of the Organization in agree-ment with the International Monetary Fund.(2) If the Organization finds, after consultation with

the Internationai Monetary Fund on matters within thecompetence of the Fund, that import restrictions or ex-change restrictions on payments and transfers in reconec-tion with imports are being applied by a Member in adiscriminatory manner inconsistent with the exceptionsprovided under this Article or in a manner which discrim-inates unnecessarily against the trade of another Mem-ber, the Member shall within sixty days remove the dis-criminations or modify them as specified by the Organiza-tion

Provided that a Member may, if it so desires, consultwith the Organization to obtain its previous approval fordiscriminations, under the procedure set forth in para-graph (3) (c) of Article 26 and to the extent that suchapproval is given, the discriminations shall not be opento challenge under this paragraph.

(3) When three-quarters of the Members of the Organ-ization have accepted the obligations of Article VIII ofthe Articles of Agreement of the International MonetaryFund, but in any event before 31 December 1951, theOrganization shallreview tne provisions of this Article,in consultation with the International Monetary Fund,with a view to the earliest possible elimination of dis-criminations, under sub-paragraphs (z) (d) (iii) and (iv)of this Article, which restrict the expansion of world trade.

ARTICLE 29

Exchange Arrangements(r) The Organization shall seek co-operation with the

International Monetary Fund to the end that the Organ-ization and the Fund may pursue a co-ordinated policywith regard to exchange questions within the com-petence of the Fund and questions of quantitative restric-tions or other trade measures within the competence ofthe Organization.

(2) Members agree that they will not seek by exchangeaction to frustrate the purposes of this Charter and thatthey will not seek by trade action to frustrate the purposesof the Articles of Agreement of the International Mone-tary Fund.

(3) In order to avoid the imposition of trade restric-tions and discriminations through exchange techniquesand in order to avoid the danger of conflicting jurisdictionbetween the Organization and the International MonetaryFund in exchange matters, Members of the Organizationshall also undertake membership of the International Mone-tary Fund Provided (that any country, which is willingto join the Organization but unwilling to join the Inter-national Monetary Fund, may become a Member of theOrganization if it enters into a special exchange agreementwith the Organization, which would become part of ibtobligations under this Charter, and Provided further] thata-Member of the Organization, which ceases to be a mem-ber of the International Monetary Fund, shallforthwithenter into a special exchange agreement with the Organisa-tion, which shall then become part of its obligations underthis Charter.

(4) A special exchange agreement between a Memberand the Organisation under paragraph (3) must provideto the satisfaction of the Organization, in collaborationthroughout with the International Monetary Fund, thatthe purposes common to the Organization and tho Fondwill not be frustrated as a result of action in 'exchangematters by the Member in question.

(5) A Member, which has made a special exchange agreement under paragraph (3) of this Article, undertakes tofurnish the Organisation with such information as it mayrequire, within the general scope of Section 5 of ArticleVIII of the Articles of Agreement of the InternationalMonetary Fund, in order to carry out its functions relatingto this special exchange agreement.

(6) The Organization shall seek and accept the opinionof the International Monetary Fund whether action bythe Member in exchange matters is permissible under theterms of the special exchange agreement and shal act,in collaboration with the International Monetary Fund onall questions which may arise in the working of a specialexchange agreement under this Articie.

* See Part II, Chapter IIISection sub-paragraph4 (d).As4

32

Section D.-SubsidiesARTICLE 30

General Undertaking regarding Subsidies-Elimination ofExport Subsidies-Exceptions

(I) Except as provided in paragraphs (2) and (4 ) of thisArticle, if any Member establishes or mai stains any sub-sidy, including any form of income or price support, tothat domestic producers of any product, which operates toincrease the experts of auch product from or to reducethe import of such product into, its territory, suchMember shall notify the Orgaznization in writing as to theextent and nature of the subsidization, as to the anticipatedeffect of the subsidization on the quantity of the productimported into and exported from the territory of the Mem-ber and as to the conditions making the subsidizationnecessary. In may case in which it is determined thatserious prejudice to the interest of any Member is causedor threatened by the operation of any such subsidization,the Member granting the subsidization shall undertaketo discuss with th. other Member or Members concernedor with the Organization the possibility of limiting thesubsidization.

(2) Except as provided in paragrapb (4). no Member shallgrant, directly or directly, any subsidy on the exporta-tion of any product or establishedor maintain any othersystem, which results in the sale of such product for expertat a price lower than the comparable price charged for thelike product to buyers in the domestic market, due allow.ance being made for differences in conditions and terms ofsale, for differences in taxation and for other differencesaffecting price comparability. The preceding sentenceshall not be construed to prevent any Member fromexempting exported products from duties or taxes imposedin respect of like products when consumed domestically orfrom remitting such duties or taxes which have accrued.The use of the proceeds of such duties or taxes to makepayments to domestic producers would b. considered as acase under paragraph (i). Members shall give effect tothe provisions of this paragraph at the earliest practicabledate, but-in any event not later than three years from theday on which this Charter enters into force. If anyMember considers itself unable to make the provisions ofthis paragraph effective in respect of any specified productor products upon the expiration of that period, such Mem-ber shall, at least tree months before the expirationof that period, give to the Organization a notice in writingto that effect, accompanied by a complete analysis of thepractices in question and the feets justifying them and anindication as to the extension of the period desired. Itshall then be determined whether the extension requestedshould be made.

(3) A system for the stabilization of the domestic priceof a primary product, which sometimes results in the saleof the product for export at a price lower than the com-parable price charged for tht like product to buyers in thedomestic market, may be determined by the Organizationnot to be a subsidy on exportation under the terms ofparagraph (2). if it has at times resulted in the sale of theproduct for export at a price higher than the comparableprice changed for the lilke product to domestic buyers andif the system is so onerated, either because of the effec-tive limitation of production or otherwise. as not to undulystimulate exports or otherwise seriously prejudice theinterest of other members. [.**

(4) (a) In.any case of subsidization of a primary com--moditv. whether falling under paragraph(I) or paragraph

(2). If a Member considers that its interest is seriouslypreduced by the subsidy or if the Member granting thesubsidy considers itself unable to comply with the rro-visions of paragraph (2) within the time limit laid downtherein. the difficulty mav be deemed to be a specialdifficult of the kind referred to in Chapter VIT. and inthat event. the procedure laid down in that Chapter shallb. followed.

(b) If it is determined that the measures mentioned insub-paragraph (a) have not much suceeds or do not promiseto succeed. within a reasonable period of time. in removing,or preventing the development of a burdensome worldsurplus of the primary product concerned. the requirementsof paragraps (i) and (2)shall cease to appIy in respectofsuch product as from the effective date of such determina-tion. and shall not be re-applied in respect of such productunitl a date determing in accordance with proceduresapproved by the Organization.

(c) Notwithstanding the provisions of paragraph (2) andsub-pragraph (4) (b), no Member scuh grant any subsidyon the exportation of any primary product, which bas theeffect of acquiring for that Member a share of worldtrade in that product in excess of the share which it badduring a previous representative period, account beingtaken in so far as practicable of any special factors whichmay have affected or may be affecting the trade in thatproduct. The selection of a representative period for anyproduct and the appraisal of any special factors affectingthe trade in the product shall be made initially by theMember granting the subsidy Provided that such Membershall, upon the request of any other Member having animportant interest an the trade in that product. or uponthe request of the Organization, consult promptly with theother member or with the Organization regarding the needfor an adjustment of the base period selected or for there-appraisal of the special factors involved,

(5) Any determination required by or appropriate tothe operation of this Article shall be made under proceduresestablished by the Organization in accordance with para-graph (6) of Article 66.

Section E. State TradingARTICLE 31

Non-discriminaatory Administration ot State-TradingEnterprises

(z) If any Member establishes or maintains a state enter-prise, wherever located, which imports, exports, purchases,sells or distributes any product or if any Member grantsexclusive or special privileges, formally or in effect. to anyenterprise to import, export, purchase, sell. [distribute,or produce]* any product. [and exercises effective controlover the trading operations of such enterprise],* the com-merce of other Members shall be accorded treatment noless favourable than that accorded to the commerce of anycountry, other than that in which the enterprise is located,ini respect of the purchase or sale by such enterprises ofany product. To this end such enterprise shall in makingits external purchases or sales of any product. be in-fluenced solely by commercial considerations. such asprice. quality, market-ability. transportation and otherterms of purchase or sale and also differential customtreatment. The Member maintaining such state enterpriseor granting exclusive or special privileges to an enterpriseshall make available such information as may b. appro-priate in connection with the consultation provided inArticle 35.

(2) The foregoing provisions of this Article relate topurchases by state enterprises for re-rale. With respect topurchases by state enterprises for governmental use andnot for re-sale, Members agree ta accord ta the commerceof other Members fair and equitable treatment having fullregard to all relevant circumstances.

(3) For the purposes of the Article a state en' enterprise shallbe understood to be any enterprise over whose operationstho government of a Member exercises effective contol-

ARTICLE32Expansion of Trade by State Monopolies of Indidudivual

Products(z) If any Member [other than a Member subject to the

provisions of Article 331 t establishes. maintains orauthorizes, formally or in effect, a complete or substantiaIlycomplete monopoly of the importation of any product,such Member shall, upon the request of any other Memberor Members having an interest in trade with that Memberin the product concerned. enter into negotiations with scuhMember or Membrs, -in the manner provided for inrespect of tarifs under Article 24. with regard to-

(a) in the case of an import monopoly, the maximummargin by which the prnce for an imported productcharged by the monopoly in tbe home market mayexceed the landed cost, before payment of any duty,of such product purchased by the monopoly from sup-pliers in the territories of Members; or

(b) in the case of an export monopoly, t-e maximummargin by which the price for a product charged by themonopoly to purchasers in the territories of such Mem-bers may exceed the price for such product chargedby the monopoly in the home market

after due allowance in either case for internal taxes, trans-portation, distribution and other expenses incident to pur-chase. sale or further processing and a reasonable margin

* See Part I. Chapter. III. Section E, paragraph (ii) of sub-paragraph X (a). *.

t See Pat II, Chapter II. Section B. sub-paragraph2 (b).* See Part II. Chapter III. Section D, paragraph (x)of sub-

paragraph z (d). '

33

of profit. For the purpose of applying these marginsregard may be had, in respect of imports, to averagelanded costs and selling prices of the monopoly and, inrespect of exports, to average prices charged by the mono-poly for exports and sales in the hume market respectively,over recent periods.

(2) Members newly establishing any such monopoly inrespect of any product shall not create a margin as definedabove greater than that represented by the maximumrate of import or export duty which may have beennegotiated in regard ta that product pursuant to Article 24.With regard to any monopolized product in respect -ifwhich a maximum martin has been established pursuantto this Article, the monopoly shall as far as practicable endsubject to the other provisions of this Charter

(i) import from Members and older for sale at pricescharged within such maximum margins such quantitiesof the product as will be sufficient to satisfy the fulldomestic demand for the imported product, accountbeing taken of any rationing of the product to con-sumers which may be in force at that time: and

(ii) in the case of an export monopoly, offer for saleto purchasers in the territories of Members at pricescharged within such maximum margins quantities ofthe product to the fullest extent that they can be madeavailable for exportation.(3) In applying the provisions of this Article, due regard

shall be had for the fact that some monopolies are estab-lished and operated solely for revenue purposes.

ARTICLE 33

{Expansion of Trade by Complete State Monopolies ofImport Trade*

Any Member establishing or maintaining a complete orsubstantially complete monopoly of its import trade shallpromote the expansion of its foreign trade with the otherMembers in consonance with the purposes of this Charter.To this end sucb Member shall negotiate with the otherMembers an arrangement under which, in conjunction withthe granting of tariff concessions by such other Members,and in consideration of the other benefits of this Chapter,it shall undertake to import in the aggregate over a periodproducts of the other Members valued at not less than anamount to be agreed upon. This purchase arrangementshall be subject toperiodic adjustmentt]

Section F. Emergency Provisions-ConsultationARTICLE 34

Emergency Action on Imports of Particular Products(i) If, as a result of unforeseen developments and of the

effect of the obligations incurred under or pursuant to thisChapter. any product is being imported into the territoryof any Member in such increased quantities and undersuch conditions as to cause or threaten serious injury todomestic producers of like or similar products (or, in thecase of a product, which is the subject of a concessionwith respect to the preference, to producers in a territorywhich receives or received such preference), the Mem-ber shall be free to withdraw the concession, or suspendthe obligation, in respect of such product, in whole orI part, or to modify the concession to the extent and forsuch time as may be necessary to prevent such injury.

(2) Before any Member shall take action pursuant tothe provisions of paragraph (f), it shall give notice inwriting to the Organization as far in advance as maybe practicable and shall afford the Organization andthe other Members having a substantial interest as ex-porters of the product concerned, a i opportunity to con-sult withit in respect of the proposed action. In criticaland exceptional circumstances such action may be takenprovisionally without prior consultationProvided that consultation shall be effected immedi-

ately following upon the taking of such action. If agree-ment among the interested Members with respect to theaction is not reached, the Member which proposes to takeor continue the action shall, nevertheless, be free to doso, and if such action is taken or continued the otheraffected Members shall then be free, not later than sixtydays after such action is taken, to suspend. upon theexpiration of sixty days from the date on whicb writtennotice of such suspension is received by the Organization,tbe application to the trade of the Member taking suchaction, of such substantially equivalent obligations orconcessions under this Chapter the suspension of whichthe Organization does not. oppose. In serious cases theOrganization may authorize an affected Member tosuspendconcessions or obligations in addition to those which maybe substantially equivalent to the action originallytaken.

See Part II, Chapter III, Section E, paragraph 3.56308

ARTICLE 35Consultation-Nullification or Impairment

(z) Each Member will accord sympathetic considerationto, and will afford adequate opportunity for consultationregarding, such representations as may be made by anyother Member with respect to the operation of customsregulations and formalities, quantitative and exchangeregulations, state-otrading operations, sanitary laws andregulations for the protection of human, animal or plantlife or health, and generally all matters affecting the opera-tion of the Chapter.

(2) If any Member should consider that any otherMember has adopted any measure, whether or not itconflicts with L.e term of this Charter, or that any situa-tion has arisen, which has the effect of nullifying or impair-ing auy object of this Charter, the Members concernedshall give sympathetic consideration to such written repre-sentations or proposals as may be made with a view toeffecting a satisfactory adjustment of the matter. Ifno such adjustment can be effected, the matter may bereferred to the Organization, which shall, after investi-gation, and, if necessary, after consultation with theEconomic and Social Council of the United Nations andany other appropriate inter-governmental organizations,make appropriate recommendations to the Members con-cerned. The Organization, i' it considers the case seriousenough to justify such action, may authorize a Membe;or Members to suspend the application to any other Mem-ber or Members of such specified obligations or conces-sions under tais Chapter as may be appropriate in thecircumstances, If such obligations or concessions are infact suspended, any affected Member shall then be free, notlater than sixty days after such action is taken, to with-draw from the Organization upon the expiration of sixtydays from the date on which written notice by theOrganization of such withdrawal is received,

Section G. Relations with Non-MembersARTICLE 36

Contractual Relations with Non-Members-Treatment ofthe Trade of Non-Members

This subject will be further considered at a later stage

Section H. General Exceptions

ARTICLE 37To be considered and drafted at a later stage

Section I Terrtorial ApplicationARTICLE 38

Territorial Application of Chapter V-Customs Unions-Frontier Traffic

(z) The provisions of Chapter V shall apply to thi cus-toms territories of Members. If there are two or morecustoms territories under the jurisdiction of any Member,each such customs territory. shall be considered as aseparate Member for the purpose of interpreting the pro-visions of Chapter V.

(2) The provisions of Chapter V shall not b. construed toprevent

(a) advantages accorded by any Member to adjacentcountries in order to facilitate frontier traffic; or

(b) the formation of a union for customs purposesof any customs territory of any Member and any othercustoms territoryProvided that the duties an other regulations of com-

merce imposed by any such union in respect of tradewith other Members shall not on the whole be higher ormore stringent than the average leved of the duties andregulations of commerce applicable in the constituentterritories prior to the formation of such union.(3) Any Member proposing to enter into any union

described in sub-paragraph (2) (b) shall consult with theOrganization and shall make availableto the Organizationsuch information regarding the proposed union as willenable the Organization to make such reports and recom-mendations to Members as it may-deem appropriate.

(4) The Members recognize that there' may in ex-ceptional circumstances be justification for new preferentialarrangements requiring an exception to the provisions ofChapter V. Any such exception shall be subject toapproval by the Organization pursuant to paragraph (2) ofArticle 66.

* See Part Il. Chapter ITI. Section F.f See Part II, Chapter III, Section B.

A17

34

(5) For the purpose of this Article a customs territoryshall beunderstood to mean any area within which separatetariffs or other regulations of commerce are maintainedwith respect to a substantial part of the trade of sucharea. A union of customs territories for customs purposesshall be understood to mean the substitution of a singlecustoms territory for two or more customs territories, sothat all tariffs and other restrictive regulations of com-merce as between the territories of members of the unionare substantially eliminated and substantially the sametarifs and other regulations of commerce are applied byeach of the members of the union to the trade of territoriesnot included in the union.

CHAPTER VI

RESTRICTIVE BUSINESS PRACTICESARTICLE 39

Policy Toward Restrictive Business Practices(r) Members agree to take appropriate measures, indivi-

dually and through the Organzation, to prevent in inter.national trade, business practices which restrain com-petition, limit access to markets or foster monopolistic con-trol whenever such practices have harmful effects on theexpansion of production and trade and the maintenancein all countries of high levels of real income, or on anyof the purposes of the Organization set forth in Article r.

(2) Without limiting the generality of paragraph (x),Members agree that the practices listed in paragraph (3)below, when they and engaged in or are made effec ive by

(a) an international combination, agreement or otherarrangement among commercial enterprises, includingsuch an arrangement among private commercial enter-prises, among public commercial enterprises (i.e., trad-ing agencies of governments or enterprises in which thereis effective government control), or between private andpublic commercial enterprises;

(b) one or more private commercial enterprisesand when such commercial enterprises, individually orcollectively, possess effective control of internationaltrade, among a number of countries or generally in one ormore products, shall be subject te investigation, in accord-ance with the procedure provided by the subsequentArticles of this Chapter, if the Organization considersthem to have or to be about to have such harmful effectas are described in paragraph (I).

(3j The practices referred to in paragraph (z) are asfollows:

(a) fixing prices or terms or conditions to be observedin dealing with others in the purchase, sale or lease ofany product;

(b) excluding enterprises from any territorial marketor field of business activity, allocating or dividing anyterritorial markets or field of business activity, allocatingcustomers, or fixing sales or purchase quotas;

(c) boycotting or discriminating against particularenterprises;

(d) limiting production or fixing production quotas;(e) suppressing technology or invention, whether

patented or unpatented; *(t) extending the use of rights under patents, trade

marks or copyrights to matters not properly within tisscope, or to products or conditions of production, useor sale which are not the immediate subjects of theauthorized grant.

ARTICLE 40Procedure With respect to Compiaints and ConferencesMembers agree that the Organization shall:

(a) Arrange, if it considers such action to be justified,for particular Members to take part, in a conferencerequested by any -Member :which considers that anyspecific practices exist which have or are about to havethe effect described is paragraph (r) of Article 39.

(b) Consider each written complaint submitted by anyMember or, with the permission of a Member, sub-mitted by any affected person, organisation or businessentity within that Member's jurisdiction, claiming thatspecific practices exist which have or are about to havethe effect described in paragraph (r) of Article 39, andprescribe the minium information to be included insuch complaints.

(c) Request each-Member concerned to obtain suchinformation as the Organization may deem necessary,

including for example, statements fromcommercialenterprises within its jurisdiction and then determinewhether further investigation is justified.

(d) If it is considered that further investigation isjustified, notify all Members of each such complaint,request the complainant or any Member to provide suchinformation relevant to the complaint as it may deemnecessary and conduct or arrange for bearings at whichany Member and the iparties alleged to have beenengaged in the practice will have opportunity to beheard.

(e) Review all information and come to its findingswhether the practices in question have the effectdescribed in paragraph (r) of Article 39.

(t) Report to all Members the findings reached andthe information on which such findings are based. Ifit finds that the practices have had the effect described inparagraph (r) of Article 39, request each Member con-cerned the take every possible action to prevent the con-tinuance or recurrence of the practices, and at its dis-cretion recommend to the Members concerned remedialmeasures to be carried out in accordance with theirrespective laws and procedures.

(g) Request all Members concerned to report fullythe action they have taken to achieve these results.

(h) Prepare and publish, as expeditiously as possibleafter enquiries have been completed, reports on all com-plaints dealt with under sub-paragraph (d), showingfully the findings reached, the information on whichsuch fings are based and the action which Membersconcerned have been recommended to take Providedthat publication of such reports or of any portionthereof may be withheld if it deems this course justifiedProvided also that the Organization shallnot, if aMember so request, disclose to any person confidentialinformation furnished by that Member which wouldmaterially damage the legitimate business interests of acommercial enterprise.

(i) Report to all Members and make public if it isdeemed desirable, the action which has been taken bythe Members concerned to achieve the results described.in sub-paragraph (j).

ARTICLE 41

Studies Relating to Restrictive Business PracticesThe Organizatian shall be authorised to

(a) Conduct studies, either on its own initiative orat the request of any Member, or of the United Nationsor of any specialized agency relating to

(i) types of restrictive business practices in inter-national trade;

(ii) conventions, laws and procedures such as thoseconcerning incorporation, company registraion,' in-vestments, securities, prices, markets, fair trade prac-tices, trade marks, copyrights,, patents and the exchange and development of technology, in so far asthey are relevant to restrictive business practices, andto request information from Members = connectionwith such studies;(b) Make recommendations to Members concerning

such conventions, laws and procedures as are relevantto their obligations under this Charter;,

(c) Arrange conferences, when requested by Mem-bers, for purposes of general consultation on any mattersrelating to restrictive business practices.

ARTICLE 42

Obligations of Members(y) In order to implement she preceding .Articles of

this Chapter, each Member undertakes to(a) Taie all possible steps by legislation or otherwise

to ensure that private and public commercial enter-prises within its jurisdiction do not engage in prac-tices which have the effect described in paragraph (I)of Article 39; and

(b) to take the fullest account of his Organization'sfindings, requests and recommendations made undersub-paragraph (f) of Article 40, in the light of its obliga-tions under Article. 39, in considering thd initiation ofaction in accordance with its system of law and economicorganization to prevent within its jurisdiction the con-tinuance or recurrence of any practices. which theOrganization finds to have had the.effect described. inparagraph (r) of Article 39

35

(2) Establish procedures to deal with complaints, con-duct investigations, prepare information and reportsrequested by the Organization and generally assist inpreventing practices which have the effect described inparagraph (z) of Article 39. these measures to be takeninaccordance with the particular system of law andeconomic organization of the Member concerned.

(3) Conduct such investigations as may be necessary andpIacticable to secure information requested by the Organi-zation or to prevent practices which have the effectdescribed in paragraph (z) of Article 39.

(4) Purnish to the Organization, as promptly as possibleand to the fullest extent feasible, such information as isrequested by the Organization under sub-paragraphs (c),(d) and (g) of Article 40 and under sub-paragraph (a)of Article 4i, provided that confidential information affect-ing national security or production technique may be with-held,

(5) Report as requested by the Organisation under sub-paragraph.(g) of Article 40, the action taken, indepen-dently or in concert with other Members, to implementrecommendations made by the Organization under sub-paragraph!.() of Article 40, and, in cases in which noaction is taken, to explain to the Organization the reasonstherefor and discuss the matter further with the Organiza-tion if requested to do so.

(6) Take part in conferences upon the request of theOrganisation in accordance with sub-paragraph (c) ofArticle 4 .

ARTICLE 43

Supplementary Enforcement Arrangments(z) Members may, by mutual accord, co-operate with

each other in prohibitive, preventative or othermeasures for tho purpose of making more effective anyremedial order issued by a duly authorized agency of anyMember in furtherance of the objectives of this Chapter.

(2) Members participating in such co-operative actionsshall notify the Organization.

ARTICLE 44

Continued Effectiveness of Domestic Measures againstRestrictive Business Practices

* Any act or failure to act on the part of the Organizationshall not preclude any Member from enforcing anynational statute or decree directed towards preventingmonopoly or restraint of trade.

ARTICLE 45

Exceptions to the Provisions of the Chapter(z) The undertakings expressed in this Chapter shall

not apply to(a) inter-governmental commodity agreements meet-

ing the requirements of Chapter VII;(b) the international agreements excepted in Article

59.(2) Notwitbstanding the foregoing the Organization may

in its discretion make recommendations to Members andto appropriate inter-governmental organizations concern-ing any features of the agreements referred to in sub-paragraph (z) (b) which may have the effect describedin paragraph (z) of Article 39.

CHAPTER VIIINTER-GOVERNMENTAL COMMODITY ARRANGEMENTS

Section A. General ConsiderationsARTICLE46

General Statement on Difficulties Relating to PrimaryCommodities

Members recognize that thre relationship between produc-tion and consumption of some primary commodities maypresent special difficulties. These special difficulties aredifferent on character from those which manufactured goodpresentgenerally. They ariseout of such conditions as thedisequilibrium between production and consumption, theaccumulation of burdensome stocks and pronounced fluc-tuations in prices. They may have a seriously adverseeffect onthe interest. of both producers and consumers.Moreover they may have widespread repercusions whichwould jeopardize the general policy of economic expansion.

ARTICLE 47

Objectives of Inter-governmental CommodityArrangements

Members agree that inter-govermmental commodityarrangements may be employed to achieve the followingobjectives:

(I) To enable countries to find solutions to the specialcommodity difficulties referred to in Article 46 withoutresorting to action inconsistent with the purposes of theCharter.

(2) To prevent or alleviate the serious economicproblems which may arise when production adjustmentscannot be effected by the free play of market forces asrapidly as the circumstances require.

(3) To provide, during the period which may henecessary, a framework for the consideration anddevelopment of measures which will have as their pur-pose economic adjustments designed to promote theexpansion of consumption or a shift of resources andmanpower out of over-expanded industries into new andproductive occupations.

(4) To moderato pronounced fluctuations in the priceof a primary commodity above and below the level whichexpresses the long term equilibrium between the forcesof supply and demand.

(5) To maintain and develop the natural resourcesof the world and protect them from unnecessaryexhaustion.

(6) To provide for expansion in the production of aprimary commodity which is in such short supply asseriously to prejudice the interests of consumers.

Section B. Inter-governmental Commodity Arrangementsin GeneralARTICLE 48

Special Commodity Studies(z) A Member or Members substantially interested in the

production, consumption or trade of a particularprimary commodity shall be entitled, if they consider thatspecial difficulties exist or are expected to arise regardingthe commodity, to ask that a study of that commoditybe made.

(2) Unless it resolves that a prima facie case has notbeen established, the Organization shall promptly invitethe Members substantially interested in the production,consumption or trade of the commodity to appoint repre-sentatives to a Study Group to make a study of thecommodity. Non-Members having a similar interest mayalso be invited.

(3) The Study Group shall, in the light of an investiga-tion of the root causes of the problem, promptly reportits findings regarding the production, consumption andtrade situation for the commodity. If the Study Groupfinds that special difficulties exist or are expected to arise,it shallmake recommendations to the Organization as tohow best to deal with such difficulties. The Organisationshalltransmit promptly to Member any such findings andrecommendations.

ARTICLE 49

Commodity Conferences(z) On the basis of the recommendations of the Study

Group or on the '. ,is of information about the rootcauses of the problem agreed to be adequate by theMembers sabstantiallyinterested in the 'production, con-sumption or trade if a particular primary commodity,the Organisation shall promptly at the request of aMember having a substantial interest, or may, on its owninitiative, convene an inter-governmental conference -forthe purpose of discussing measure designed to meet thespecial difficulties which have been found to exist or areexpected to arise.

(z) Any Member having a substantial interest in theproduction, consumption or trade of the commodity shall*be entitled to participate in the Conference, and non-Members having a similar interest may be invited be theOrganization to participate.

(3) If the Conference recommends to Members the adop-tion of any type of inter-governmental commodityarrangement, such arrangement shall conform to theprinciples stated in Article 51..

36

ARTICLE 50

Relations with Specialised Agencies

(z) Competent specialized agencies, such as the Foodand Agriculture Organization, shall be entitled-

(a) to submit to the Organization any relevant studyof a primary commodity:

(b) to ask, that a study of a primary commodity bemade.

(2) The Organization may request any specializedagency, which it deems to be competent, to attend or takepart in the work of a Study Group or of a CommodityConference.

ARTICLE 51

General Principles of Inter-governinental CommodityArrangements

Members undertake to adhere to the following principlesgoverning the operation of all types of inter-governmentalcommodity arrangements:

(z) Such arrangements shall be open initially to par-ticipation by any Member on terms no less favourablethan those accorded to any other country party theretoand thereafter upon such terms as may be approvedby the Organization.

(2) Non-Members may be invited by the Organiza-tion to participate in such arrangements, and the provi-sions of paragraph (x) shall apply to any non-Membersso invited. 1

(3) Such, arrangements shah] include provision foradequatte participation of countries substantiallyinterested. in.the importation or consumption of thecommodity as well as those substantially interested in itsexportation or production.

(4) ln such arrangements participating countries,which are largely dependent for consumption on importsof the commodity involved shall, in determinationsmade relating to substantive matters, have together avoice equal to that of those largely: interested inobtaining export markets for the commodity, providedthat those countries, which are largely interested in thecommodity but which do not fail precisely under eitherof the above classes, shall have an appropriate voice.

(5) Such arrangements shah provide, where practic-able, for measures designed to expand world consump-tion of the commodity.

(6) Members agree that full publicity shah be giventa any inter-governmental commodity, arrangement pro-posed or concluded, to the statements of considerationsand objectives advanced by the proposing Members, tothe operation of the arrangements and to the natureand development of measures adopted to correct thethe underlying situation which gave rise to the arrange-ment.

Section C.-Inter-Govermental Commodity Agreementsinvolving the Regulation of Production, Trade or Prices

ARTICLE 52

Circumstances Governing the Use of Regulatory Agree-ments

Members agree that regulatory agreements may bo em-ployed only when

(x) A burdensome surplus of a primary commodity hasdeveloped or is expected to develop, which, because asubstantial reduction in. price does not readily lead toa significant-increase in consumption nor to.a signifi-cant decrease. in the production of that commodity,would not, in the absence of specific governmentalaction, be corrected by normal marketing forces alonein time to prevent serious hardship to. producers amongwhom are smallproducers who account for a substan--tial portion of the totjl output; or

(2) Widespread unemployment i connection with aparticular primary commodity, arising out of difficultiesof the kind referred to in Article 46, has developed oris expected to develop, which, in the absence of specifcgovernmental action, would not be corrected by normalmarketing forces alone in time to prevent widespreadand undue hardship to workers because, in the case ofthe industry concerned, a substantial reduction of price

does not lead to a significant increase in consumption

but to the reduction of emploment, and because areas

in which the commodityis produced in substantial quan-

tity do not afford alternative employment opportunities

for theworkers involved; or

(3) The Organization finds that, for a commodity otherthan a primary commodity, exceptional circumstancesjustify such action.

Such agreements shall be subject not only to the pri-cipls set forth in this Cbapter but also to any otherrequirements which the Organization may establish.

ARTICLE 53

Additional Principles Governing Regulatory AgreementsMembers undertake to adhere to the following principles

governing regulatory agreements in addition to those statedin Article 5I:

(x) Members agree not to enter into any new regula-tory agreement unless it bas been recommended by aConference called in accordance with Article 49. Never-theless Members substantially interested in the produc-tion, consumption or trade of a particular primary com-modity may proceed by direct negotiation td the con-clusion of an agreement, provided that it conforms tothe other provisions of this Chapter, if there bas beenunreasonable delay in the proceedings of the StudyGroup or of the Commodity Conference.

(2) Under such agreements participating countriesshah afford equitable treatment as between non-partici-pating Members and participating countries, givingequitable advantages in return for the observance ofequitable obligations.

(3) Participating countries shah. in matters the sub-ject of such agreements, alford non-participating Mem-ber countries treatment no less favourable than thataccorded to any non-Member country which does notparticipate in the agreement.

(4) Such agreements shallbe designed to assure theavailability of supplies adequate at all times' for worlddemand at reasonable prices.

(5) Such agreements shall, with due regard tothe needduring a period of change for preventing serious econo-mic and social dislocation and to the position of pro.ducing areas which may be suffering from abnormaland temporary disabilities, make appropriate provisionto afford increasing opportunities for satisfying worldrequirements from sources from which such requirementscan b. supplied most effectively and economically.

(6) Participating countries shah formulate and adopta programme of economic adjustment believed to b.adequate to unsure substantial progress toward solutionof the problem within the time limits of the agreement.

ARTICLE 54

Administration of Regulatory Agreements.(r) Each regulatory agreement shafl provide for, a

governing body, hereinafter referred to as a CommodityCouncil.

(2) Each of the countries participating in an agreementshall be entitled to b. represented by a.member on theCommodity Council. These m-mbers alone shah bave theright to vote. Their voting power shahl be determined insuch a way Rs toconformn with the provisions of paragraph(4) of Article s -.

(3) The Organization shall b. entitled to appoint-a non-voting member to eacb Commodity Council and'may 'i-vite any competent specialized agency to nominate anon-voting member for appointment to a CommodityCouneil.

(4) Each Commodity Council shalhave a non-votingchairman who, if the Council so reqùestsi shaU] be noml-nated by the Organisation.

(S) The secretariat of each Commodity Counaci shallb.appointed by the Council after. consultation with theOrganization.

(6) Each Commodity Council shaU adopt appropriaterules of procedure and regulations regarding its activities.These rules and regulations shall be subject to the ap-proval of the Organization.

(7) Each Commodity Council shah] make peiodic re-ports to the Organization on the operation of.the agre.ment which it administers. In addition it shaU make suchspecial reports as thie Organization may specify or asthe Council itself considerstobe qi value tothe,.Ogania.tion.

(8) The expenses of a Commodity'Ctincilaban boboniby th. participating countries.

37

ARTICLE 55Provision for Initial Terms, Review, and Rsnewal of

Regulatory Agreements

Regulatory agreements shall remain in effect for notmore than fivo years. Their renewal shall be subjectto th. principles stated elsewhere in this Chapter. Periodi-cally, at intervals no greater than three years, the Organi-zation shall prepare and publisb a review of the operationcf each agreement in the light of the principles set forthin this Chapter. Moreover each commodity agreementshall provide that if its operations have failed substantiallyto conforna to the principles laid down in this Chapter,

participating countries shall revise';he agreement to con-form to tue principles or shall t6rminate -t. Wben anagreementis terminated, thU Organization shall take chargeover archives, statistical material and other possessionsof the Commodity Council.

ARTicLr6

Settlement'f Disputes

Any question or difference concerning the interpretationregulatory

discussed

tien shall be referred ta tb Commodity Commission for

examination and recommendation to the Executive Board.

The Executtive Board shall then issue a rulingsubject to

thi provisionsof Article 71.

Miscllaneous Provisions

ARTICLE 57

Obligationsof Members regarding Existing and ProposedCommodity Arrangements

(x) Menmbers undertake to transmitto the Organizationthe full textof each inter-governmental commodityarrangementin which they are participating at the tineofthe cominginto forceof their obligations underthisCharter. Members also agree to transmit to thc Organi-zatizn appropriate information regarding the formulation,

provisions and operation cf such arrangements. Members

agree toconforma withthc decisionsmade by the Organi-

sation regarding their continued participation in any such

later-governmental commodity arrangement which,after

review bythe Organization,shall have been found te be

inconsistent witho te intentions cf tuis Chapter.

() Members undertake ta transmit tathe Organization

appropriate information regarding any negotiations,

looking ta tue'conclusion cf an inter-governmental com-

modity arrangement, in whicittey are participating at

tuetiee cfthe cominginto force cf tueir obligations under

this Charter. Members also agree ta conform with de-

cicions made by tue Organisation regarding tucircontinufn

participation in anysscu negotiations. The Organization

maydeclare thatsuch negotiations conform tothe require-

ments for a Study Group or a Comanodity Conference as

tue case may be.

ARTICLE .58

Gosnral UndertaMng by Members

Membomb not partiesto a particular commodity

arrangement undertake e ta give tuemos t favourable pas-sible consideration ta any recommendation by aCom -

modityCouncci for expandingconsumption ofthocom-

modityinquestion.

- ~~~~ARTICLE 59

ExcePtionsto .Prot. 'ns Relating gte nter-governm tai

Commodity Arrangements

(z) Tii. provisionsofChapterVVI arenntdesigned ta

rover iater-goveramental commodity arrangements, which

relate solelyta'tueequitable distribution cf commodities

la short supply, or tarover'tuao provisions of inter-

govenrnnental commodity arrangements wiichi appro-

priately relatetothe protection of public marais or tue

protection cf iuMa.n, animal or plant life or bealtu

Provided tuatsncc arrangements arennt used taaacom-

ppisiresults inconsistentwith tue objectives cfChapter

VI or ChapterVII. Membersageeo net ta participate la

sscb arrangements ifthey involve tue regulation cf pro-

duction, trade or prices, unlessthey areauthorized or

provided i1c by amuftilateral convention subscribed ta by

a majority> ofth'e nations affiorunlessoprnie erated under

tue Orgainistion.

(.) NOneOf tue foregoing provisionsofChapter VII are

ta beinterpreted as applying ta arrangementsrelatingto

isasionable materials,toth e trai c inann s, ammunitiann

andimplemeots'fwwr and ta such tsaircinothergpods

and materials as is carried on for the purpose of supplyinga military establishment or, in time of war or otheremergency in international relations, to the protection ofthi essential security interests of a Member.

ARTICLE 60Definitions

(T) For the purposes of this Chapter a primary com-modity is auy agricultural product or mineral which enterworld trade in substantial volume in a form customarilycalled primary. The tern "primary commodity " mnayinclude a primary co:nmodity on which minor processingbas been performed in preparation for export. It mayalei issclude agroup of primary commodities which are soaclosely rela-.ad te,onc another that they can convenientlybe dealtwith in a single arrangement. Such a group may,subject to paragraph (3) of Article 52, include appropriatenon-primary commodities.

(2) For the purposes of this Chapter the termMember " or" non-Member " shall, where itis appro-

priate, be taken to mean a Member or non-Member withits dependent territories. If a Member or non-Memberand its dependent territories form a group. of which oneor more units are mainly interested in the exportof acommodity and one or morein the import of the com-modity, there may be either joint representation for al)the associated territories or, where it is so desired, separaterepresentation for the territories mainly interested in ex-port and separaterepresentation for the territories mainlyinterested in import.

(3) An inter-governmental commodity arrangement itany accord between two or more governments relating toa commoodity other than an accord relatingto the purchaseand saleof a commodity falling under Section EofChapter V.

(4) A reçulatory agreement is an inter-governmentalcommodity arrangement involving regulationofthe pro.duction, export or importof a commodity or regulationof prices.

CHAPTER VmORGANIZATION

Section A.-Functions and Structure of the OrganisationARTSCLE61

Functions(z) It shall b.the functionofth. Organizationto

collect, analyse and publish information relatingto inter-national trade,including information relatingtc com-mercial policy, business practices and commodity problemsandto industrial and general economic development.

(2) To provide technical assistance and advicetoMembers andtothe United Nations and other internationalorganizadôns,including g such assistance and advice as maybe appropriatein connection with specific projectsof in-dustrialization or other conomie development.

(3) To consult with, and ta make recommendations andreportsto Members regarding any matter relating tatthpurposes cfthe Organization or the operation cftbisCharter, including tiifollowing:

(a) Recommondations or determinations relating tethe dischargeo fthe responsibilities cf the Organization,or cftho Members, under Chapter V.

(b)Reco mmendations as ta measures for lmplementlngt-hh objectives witii regardt t- restrictive businesspracticee set forthin Chapter VI.

(c) Recommendations regarding tii applicationntcommodity arrangements under consideration byMembers cf the principlesgoverning commodity arrange-ments set forthin Chapter. VII and recommendationsinitiating proposals for newcommodity arrangements,or proposingsuci modifications, includingtermination

` cfcommodity arrangements alreadyconcluded, as mayb. deemed appropriate under thecommoodty principlesand intho general interest.-

(d) Recommendations as ta measures for implenientingUiobjectives cfthe Organizatatnin encouraging and

assistingth e industrial and generaleconomic de velop-

mentenofMmbesbsrs(4) Toco nsult witb Members regardingdiputeos grww.

ing out cftih provisions cfthisCharter:andto provide fortii eteme nt cfsuchdisputes.- :es.

(( ) To maike recommendationsfor, andpromoettiioacceptanceby Membersof, international agreementJdesigned tamroehipre.iebasescftradeandto assurejustandequitable treabnentfortiioenterprises;skinus,capital,

3&

arts and technology brought from one country to another.including agreements on the treatment of foreign nationalsand enterprises, on the treatment of commercial travellers,on commercial arbitration and on the avoidance of doubletaxation.

(6) To achieve an economy of effort in the performanceof the functions set out in this Article and to co-operatewith the United Nations and with other inter-governmentalorganizations enerally in the attainment of the economicand social objectives of the United Nations and in therestoration and maintenance of international peace andsecurity.

(7) Generally to advise and to make recommendationsto Members and other international organizations and toperform any other function appropriate to the purposesof the Organization.

ARTICLE 62StructureThe Organization shall havoc as its principal organs a

Conference, an Executive Board, Commissions as estab-lished under Article 72, and a Secretariat.

Section B-The Conference

ARTICLI 63Membership

(z) The Conférence shall consist of the representatives ofthe Members of the Organization.

(2) Each Member shal1 have one representative and mayappoint alternates and advisers to its representative onthe Conference.

(3) No representative on the Conference may representmore than one Member.

sARTICLE 64

voting(z) Each Member shall have one vote in thie Conference.(z) Except as may b. othenvise provided in this

Charer, decisions of the Conference shall bo taken by amajority of the Mejnbers present and voting.

ARTICLE 65Sessions, Procedure and Officers

(z) The Conferente shaU meet i regular annual sessionsand in such special sessions as occasion may require.Special sessions shall bo convoked by the Director-Generalat the request of the Executive Board or of a rnajorityof the Members.

(2) The Conference shall adopt its own ruies of proce-dure. It sshall annually elect its President and otherofficers.

ARTICLE 66Powers and Duties

(z) The Conference shall have final authority to deter-mine the policies of the Organisation. It may make recom-mendations to the Members of the Organization and toother international organizations rgarding any matterpertaining to the purposes of the Organization.

(2) Th. Conference may, by the affirmative votes oftwo-thirds of its Members, determine criteria and set upprocedures, for waiving, in exceptional circumstances,obligations of Members undertaken pursuant to thisCharter.

(3) The Conference may delegate, to the ExecutiveBoard authority to exercise or perform any of the powersand duties of the Conference, except such specific powersand duties as are expressly conferred or imposed upon the.Conference:

(4) The Conférence shal1 approve the budget of theOrganization, and shall' apOrtion the expenses of th.Organization among the Members.

(5) The Conference may develop and, by the airmativevotes of two-thirds of its Members, recommend for theiracceptance", conventions and agreements with -respect toany matter within the comp ce of tihe Organization.Bach Member undertakes that it will, within eighteenmonths after snch recommendation,by tha Conference,make a decision upnt.FLac Momber shall notify theDirector-General of thoaction taken and, in th. event ofrejection of such recommendation, shah furnish a state-ment of th. reasons therefor...

(6) The Confeorence shall establish, procedures for makingtho determinations provided for in Article 30 and in para-grapi (3) of Article 52, whereby any such determinationssha be made through the Organizsation by consultationamong thu Mombers having an important interest in thetrade in the product concerned.

(7) The Conference shall establish procedures for makingthe determinations and recommendations provided for insub-paragraph (3) (d) of Article 26, paragraph (z) ofArticle 34 and Articl" 35.

(8) Thi Conference may, by the affirmative votes oftwo-thirds of its Members present and voting, adopt th.standards, nomenclature, terms and forms described inparagraph (7) of Article 22.

(9) The Conference shall determine the site of theOrganization and rhall establish such branch offices as itmay consider de!,rrable.

Section C-Intrim Tarif Committ -ARTICLE 67

(I) Tlere shall be an Interim Tarff Committee whichshall act temporarily on behalf of the Organisation la themaking of recommendations and determinations pursuantto paragraph (3) of Article 2s.

(2) The Committee shall consist originally of thoseMembers of tho Organization which shall have made effec-tive the General Agreement on Tariffs and Trade dated................... .i,194 . Any other Member of theOrganization shal b. a member of the Committee when,in the judgrnent of the Committee, that Member shallLave completed negotiations pursuant to paragraph (Z) of'Article 24 comparable la scope or effect to those completedby the crigil members cf tho Committee. When thenuzaber cf Members cf the Organisation, which aremembers of the Committee, shal constitute two-thirds ofthe total number of Members of the Organization, thieCommnittee shall terminate and its functions shall be trans-ferred to the Conferenc.

(3) Eaeh member of the Commiittee shall have onevote.

(4) Decisions of the Committee shall be taken by amajority of th. members present and voting.

(5) The Committeo shal adopt its own rules of pro-cedure, including provision regarding the election of Itàofficers.

Section D.-The Ex#cutive BoardARTICLE 68

MembershipFirst Alternative

(i) The Executive Board shall consist cf fifteen Memzbersof th. Organisation elected by the Conference.

(2) Subject to the provisions of paragraph (3) ono-thirdof thie members of te Executive Board shall be electedeacb year for a term of three years. A retiring membershall be eligible for immediate re-elction..

(3) At the first election fifteen members of the ExecutiveBoard shall) be chosen. The term of office of five membersshall expire at the end of one year' and of five othermembers at the end of two years, la accordance witharrangementsrmade by the Conference.

(4) Each member of the Executive Board shal have onerepresentative and may appoint alternates and advisersto its representative.

Second Alternative(z) The Executive Board shala consist cf fifteen menàbem

of the Organisation elected by the Conference, five of wihomshall b. eligible for immediate re-election.

(2) Subject to the provisions of paragraph (3) on-thirdof the members of the Executive Board shah be dlectodochi year fora term of three yeass.

(3) Same as first alternative.(4) Same as first alternative.

Ihird alternative.(I) The Executive Board shal1 consist of ffteen Members

of the Organization elected by the Conference. :,.By virtueof their economic importance, six Members.?shal beappointed as permanent members; nine' otle1r.Membersshall be granted non-permanent seats. The toal'numberof seats may b. increased by a'decision of the'Confereacetaaen with a two-thirds majority of its. mmbers.

59(2) The non-permanent members of the Executive Board

shall be chosen for a period of three years. At the firstelection of the non-permanent members, three membersshall bc elected for a term of one year and three others fora term of two years. A retiring member shall not beeligible for immediate re-election.

(3) These elections shall take place in accordance witharrangements to be approved by the Conference by a two-thirds majority of its members.

(4) Each member of the Executive Board shall haveone representative who may appoint alternates andadvisers.

Fourth Alternative

(I) The Executive Board shall consist of twenty Membersof the Organization.

(2) Subject to the provisions of paragraph (3), one-halfof the members of the Executive Board shall serve for aterm of five years and shall be appointed by the Membersof the Organization having the largest share in the worldtrade and, belonging to the following trade groups: Europe(two Directors), North America (two Directors), LatinAmerica (two Directors), Asia (two Directors), Oceania (OneDirector) and Africa (one Director). Any change in therelative position in world trade of members shall be takeninto consideration at the end of each term of five years.

(3) One-half of the members of the Executive Board shallbe elected annually by members of the Conference otherthan those entitled to appoint a member of the Board inaccordance with the provisions of paragraph (2). A retir-ing member shall b. eligible for immediate re-election.

(4) The Conference, upon the recommendation of theExecutive Board, shall establish procedures for the purposeof carrying out the provisions of this Article.

(5) Each member of the Executive Board shall have onerepresentative and may appoint alternates and advisers teits representatives.

ARTICLE 69Voting

(I) Each member of the Executive Board shall have onevote.

(2) Decisions of the Executive Board shall b. made bya majority of members present and voting.

ARTICLE 70Sessions, Procedures and Oficers

(z) The Executive Board shall adopt its own rules ofprocedure, including rules concerning the convening of itssessions.

(2) The Executive Board shall annually elect its Chair-map and other officers, who shallboeligible for re-election.

(3) The Chairman of the Executive Board. as such, shallbe entitled to partiçipate, without the right tovote, inthedeliberations of the Conference.

(4) Any Member of the Organization, which is not amember of the Executive Board, shallb. invited tosend arepresentative to any discussion by the Board of a matterof particular and substantial concern to that Member.Such representative shall, for the purpose of such discus-sion, have all the rights of members of the Board exceptthe right to vote.

ARTICLE 71Power and Duties

(z) The Executive Board shall be responsible for theexecution of the policies of theOrganization and shall exer-cise the powers delegated to it by the Conference. It shallsupervise the activities of the Commissions provided for inthis Charter and shall take such action upon their recoin-mendations as it may deem appropriate. It shall provideadequate machineryto review thework of the Organizationrelating to industrialization and general economic develop-ment.(2) The Executive Board may make recommendations

to the Conference, tothe Members of th. Organization, orto other international organizations, on any subject fallingwithin the scope of theOrganization, and shallapprove thepreliminary agenda of the Conference.

'.3) The Executive Board may recommend tothe Confer-ence the admission of new Members of theOrganization.

(4) The Executive Board may refer tothe Commissionssuch questions as it may deem appropriate.

Section E.-The CommissionsARTICLE 72

EstablishmentThe Conference shall establish a Commission on Commer-

cial Policy, a Commission on Business Practices and aCommodity Commission and may establish such othercommissions as may be required. Commissions shall beresponsible to the Executive Board.

ARTICLE 73Composition and Procedure

(z) Commissions shall bo composed of persons invitedby the Executive Board and qualified by trainingor experience to carry out the functions of the Com-missions in accordance with the purposes of theOrganisation.

(2) The number of members of each Commission audthe conditions of service of the members of each Com-mission shall b. determined in accordance with regulationsprescribed by the Conference.

(3) Each Commission shall elect its Chairman and shalladopt its own rules of procedure, subject to approval bythe Executive Board.

(4) The Chairmen cf Commissions shah bc entitled toparticipate, without the right. to vote, in the deliberationsof the Executive Board and of the Conference.

(5) As set forth more fully in paragraph (2) ofArticle 8 , the Organization may make arrangements forrepresentatives of other inter-governmental organizationshaving a special interest la the activities of any of theCommissions to participate in the work of such Com-missions, pursuant te agreements with these organizations.

ARTICLE 74General FunctionsThe Commissions shall have the functions set forth in

Articles 75, 76, and 77, and shall perform such otherfunctions as the Conference or the Executive Board mayassign to then, including such functions as the ExecutiveBoard may deem appropriate in connection with thesettlement of disputes.

ARTICLE 75Functions of the Commission on Commercial PolicyTo be considered and drafted at a later stage.

ARTICLE 76Functions ot the Commission on Business PracticesThe Commission on Business Practices shall have the

following functions:(z) In accordance with Article4. to

(a) Arrange, at the request of a Member, consul-tative conferences with other Members and makeappropriate reports- for communication at the dis-cretion of the Executive Board to all Members;

(b) Receive and consider written complaints con-cerning restrictive business practices in internationaltrade;

(c) Prescribe minimum information required la suchcomplaints

(d) Notify Members of complaints received andrequest information relative to such complaints;

(e) Request further data from Members and con-duct or arrange for hearings;

(1) Report to the Executive Board-Its findings andits recommendations of remedial measures;

(g) Request reports from Members on the actiontaken as a result cf recommendations made to themby the Executive Board; and

(k) Prepare report for publication by theExecutive Board.(2) In accordance with Article 41, and subject to the

approval of the Executive Board, to conduct studiesrelating to business practices which restrain competi-tion, restrict access to markets or foster monopolisticcontrol in international trade, or relating to inter-national conventions or national laws and proceduresdesigned to carry out the objectives of Article 40 or tothose which may effect .such objectives, and to makerecommendations when appropriate to the ExecutiveBoard for action by Members.

40

(3) To advise the Executive Board as ta informationand other materials ta be obtained from Members orother sources in the discharge of the duties andresponsibilities of the Commission.

(4) To perform such other functions, pursuant to theobjectives of Chapter VI as may be assigned to it fromtime to time by the Executive Board.

ARTICLE 77Functions of the Commodity CommissionTo be considered and drafted by the Drafting Com-

mittee.

Section F.-The SecretariatARTICLE 78

Composition(I) The Secretariat shall consist of a Director-General

and such staff as may bo required.

(2) The Director-General shall have authority toappoint such Deputy Directors-General as he deemsnecessary. Such appointments shall be made inaccordance with regulations approved by the Conference.

ARTICLE 79The Direçtor-General 7

(e) The Director-General shall be appointed by theConference upon the recommendation of the ExecutiveBoard. His powers, duties. terms and conditions of officeshall be in accordance with regulations approved by theConference. He shall be the chief administrative officerof the Organization, subject to the general supervisionof the Executive Board.

'(2) The Director-General or a deputy designated by himshall participate, without the right to vote, in all meetings'of the Conference, of the Executive Board, of the Com-missions and of the committees of the Organization. TheDirector-General shall have authority to initiate proposalsfor the consideration of any organ of the Organization.He shall make an annual report to the Conference andto the Executive Board on the work of the Organizationand shall prepare the annual budget for submission tothe Conference.

ARTICLE 80Employment of Staff

(x) The Director-General shall appoint the staff of theSecretariat and fix its duties and terms and conditions ofservice in accordance with regulations approved by theConference. The paramount consideration in the employ-ment of the staff and in the determination of its con-ditions of service shall be the necessity of securingthe highest standards of efficiency, competence andintegrity, due regard being paid to the importance ofrecruitment on as wide a geographical basis as possible.

(2) The conditions of service, such as the provisionsgoverning qualifications, salary, tenure and retirement ofmembers of the Secretariat shall be fixed, so far as prac-ticable, in conformity with those for members of theSecretariat of the United Nations and of other specializedagencies which have been or may be brought into relation-ship with the United Nations as provided in Article 57 ofthe Charter of the United Nations.

Section G.-Miscellaneous Provisions

ARTICLE 81

Relations with other Organizations(I) The Organization shall be brought into relationship

with the United Nations, as soon as practicable as oneof the specialized agencies referred to in Article 57 of theCharter of the United Nations. This relationship shallbe-effected through an agreement with the, United Nations:nder Article 63 of the Charter of the United Nationswhich agreement shall be concluded by the Director-General and approved by the Conference. The agreementshall provide for effective co-operation between the twoOrganizations in the pursuit of their common purposes.and at the same time shallrecognize the competence ofthe Organization within its jurisdiction as defined in thisCharter. Notwithstanding the provisions of Article 85, anychanges in this Charter required under the agreementwhich do not involve new obligations by Members, shallbe effective on approval of the agreement by theConference.

* See Part Il, Chapter V, Section V, Paragraph 6.

(2) The Organization shall co-operate with other inter-goveramental organizations whose interests and activitiesare related to its purposes. Effective working relation-ships with such organizations, which may include theestablishment of joint committees or provision for re-ciprocal representation at meetings or such othermeasures as may be necessary ta assure effective co-operation, may be established by the Director-General.Formal arrangements for co-operation with suchorganizations may be made by the Executive Board.

(3) The Organization may make suitable arrangementsfor consultation and co-operation with non-governmentalorganizations concerned with matters within its com-petence and may invite there to undertakre specific tasks.

() Whenever the Conference of the Organization andthe competent authorities of any other internationalorganisation, whose purposes and functions lie within thecompetence of the Organisation, deem it desirable toeffect a transfer of its resources and functions to theOrganization, to incorporate it into the Organization orto bring it under the supervision or authority of theOrganization, the Director-General, subject to theapproval of the Conference, may enter into mutuallyacceptable arrangements for this purpose. ThisOrganization may acquire such resources and assumesuch functions of, or incorporate or exercise such controlover, such other organizations as may be provided byany convention or agreement appropriate to the purpose.In accordance with their respective constitutional pro-cedures, the Members shall take such step as the Con-ference may determine to integrate such other inter-national organizations into the structure of theOrganization.

ARTICLE 82International Responsibilities of Personnel of the

Organization

(e) The responsibilities of the members of the Com-missions provided for in Article 72, of the Director-General, of the Deputy Directors-General and of the staffshall be exclusively international in character. In thedischarge of their duties they shall not seek or receiveinstructions from any government or from any authorityexternal ta the Organaization. They shall refrain fromany action which knight prejudice their position asinternational officials.

(2) Each Member of the Organisation undertakes torespect the international character of the responsibilitiesof these persons and not to seek to influence them. in thedischarge of their duties.

- ARTICLE 83Legal Capacity of the OrganizationThe Organization shall enjoy in the territory ofeach

of its Members such legal capacity as may be necessary forthe exercise of its functions' and for the fulfilment of itspurposes.

ARTICLE 84

Privileges and Immunities of the Organisation(I) The Organisation shall enjoy in the territory of each

of its Members such privileges and immnunities as are ncces-sary for the fulfilment of its purposes.

(2) Representatives of the Members of the Organizationand its officials shall similarly enjoy such privileges andimmunities as are necessary for tha independent exerciseof their functions in connection with the Organization.

(3) The Conference may make recommendations witha view to determining the details of the application ofparagraphs (e) and (2) and may propose conventions tathe Members for this purpose.

' ARTICLE 85

Amendments to the Charter'(r) Amenments tothis 'Charter shall become effective

upon receiving the approval of the Conference by theathrmative votes of two-thirds of its members.

(2) Notwithstarding the provisions of paragraph (x)those amendments, which involve new obligations on thepart of the Members of the Organization, shalltake effectupon acceptance on the part of two-thirds of the Membersfor each Member accepting the amendments and there-after for each remaining Member on acceptance by it. lnsuch cases the Conference may determine that anyMember, which was not accepted the amendment, within

a period specified by the Conference, shall thereupon beobliged to withdraw from the Organization. In the absenceof a determination that a Member shall be obliged to withdraw, a Member shah, notwithstanding the provisions aparagraph (z) of Article 89, have the right to withdraw,on due notice, as provided in paragraph (2) of tUiiArticle.

(3) The Conference shall, by the affirmative votes citwo-thirds of its Members, adopt raies of procedure foicarrying out the provisions of this Article.

ARTICLE 86Interpretation and Settlement of Disputes

(i) The Chinese, Englisa, French and Spanish texts ofthis Charter shall be regarded as equally authoritative.

(2) Any question or difference concerning thU inter-pretation of this Charter or arising out of its operationshall bh referred to the Executive Board for a rulingthereon. "The Executive Board may decide either to givea ruling on the matter itself or to refer it, with the con-sent of the parties, to arbitration upon such terms asmay be agreedbythe parties. Any ruling of the ExecutiveBoard shall, upon the request of any Member directlyaffected or, if the ruling is of general application, uponthe request of any Member, be referred to the Conference.

(3) Aay justiciable issue arising out of a ruling of theConference with respect to the interpretation of sub-paragraphs (c), (d), (e), or (h) of Article 37 or of paragraph(z) of Article S9 may be submitted by any party to tuidispute to the International Court of Justice, and anyjusticiable issue arising. out of any other ruling of theConference may, in accordance with such procedures at theConference shallestablish, be submitted by any party tothe dispute to the International Court of Justice. TheMembers accept the jurisdiction of the Court in respect ofany dispute submitted to' the Court under this Article.

(4) The Organization may, in accordance with para-graph 2 of Article 96 of the Charter of the United Nations.request from the International Court of Justice advisoryopinions on legal questions arising within the scope of itsactivities.

ARTICLE 87Payment of ContributionsEach Member undertakes to contribute promptly to the

Organization its share of the Oganization's expenses asapportioned by the Conference. A Member of theOrganization, which is in arrears in the payment of its*financial contributions to the Organization, shall nave novote in the Conference, if the amount of its arrears equalsor exceeds the amournt of the contributions due from itfor the preceding two full years. The Conference may,nevertheless, permit such a Member to vote, if it is satisfiedthat the failure to pay is due to conditions beyond thecontrol of the Member.

..ARTCLE 88Entry into Force

(M) The original of this Charter, as set forth in the FinalAct of the United Nations Conference on Trade andEmployment.' shall be deposited with the Secretary-General of thc United Nations, who will furnish certifiedcopies thereof to allinterested governments.

41

(2) Each government accepting this Charter shall depositoan instrument of acceptance with the Secretary-General

of the Unitcd Nations, who will inform all governmentsrepresented at the United Nations Conference on Trade

and Employment and ail other Members of the UnitedNations which were not represented at that Conference,of the date of deposit of each instrument of acceptanceand of the date on which this Charter enters into forceunder paragraph (3).

(3) This Charter shallenter into force of the sixtiethday following the day on which the number of govern-ments represented at the United Nations Conference onTrade and Employment, which have deposited acceptancepursuant to paragaph (2), shall reach twenty, and theacceptance of each other accepting government shall takeeffect on the siutieth day following the day on which theinstrument of such acceptance is deposited Provided that,if this Charter shall not have entered into force by3i December 194 , any of the governments which havemade effective the General agreement on Tariffs andTrade dated ....... ..... .. , togetherwith any other governments represented at the UnitedNations Conference on Trade and Employment, may agreeto bring this Charter into force among themselves inaccordance with managements which they may agreo upon.Any instrument of acceptance deposited witb theSecretary-General of thc United Nations shall be taken ascovering both procedures for bringing this Charter intoforce, unless it expressly provides to the contrary or iswithdrawn.

(4) Each government accepting this Charter does so inrespect of its metropolitan territory and the overseaterritories for which it has international responsibility withthe exception of those territories which are self-governingin respect of matters provided for by thc Charter. EachMember shall notify the Secretary-General of the UnitedNations of its acceptance of the Charter on behalf of anysuch self-governing territory willing to undertake theobligations of the Charter, and upon such notification theprovisions of the Charter shall become applicable to thatterritory.

ARTICLE 89Withdrawal and Termination

(I) AJy Member of the Organization inay withdrawfrom the Organization, either on its own behalf or on behalfof an oversea territory, which Is self-governing in therespect mentioned in paragraph (4) of Article 88, at anytime after the expiration of threo years from the date ofthe entry into force of this Charter under the provisionsof Article 88, by written notification addressetl to theSecretary-Gentralof the United Nations in accordancewith the provisions of paragraph (2). The' Secretary-General will immediately inform all other Members of theOrganization.

(z) The withdrawal shall take effect six months fromthe date of the receipt of the notification by the Sccretary-General Provided that the notification may be withdrawnat any tirne during that period.

(3) This Charter may bo terminated at any tiine byagreement of three-fourths of the Members of the'Organisation.

- WANNEXURE A

* Lists of Territorles referred to in sub-paragraph (2) (a) (ii) of Article 14.

s. Countries qf t'he Bitiss Commonwealth of Nations.The United Kingdom of Great Britain and Northern

Ireland and its dependent territories,Canada;The Commonwealth of Australa and its dependent

territories,New Zealand and its dependent territories,

The Union of South- Africa and South West Airica,Ireland,Newfoundland,Southern Ehodesia,Burma, -'Ceylon.

42

ANNEXURE 1

ECONOMIC AND SOCIAL COUNCIL

Resolution Regarding the Calling of an International Conference on Trade and Employment.

The Economic and Social Council, considering itessential that the co-operative economic measures alreadytaken bo supplemented by further international measuresdealing directly with trade barriers and discriminationwhich stand in the way of an expansion of multilateraltrade and by an undertaking on the part of nations toreek full employment

z. DECIDES to call an Interrational Conference onTrade and Emplnyment, in the latter part of x946, forthe purpose of promoting the expansion of production,exchange and consumption of goods;

2. CONSTITUTES a Preparatory Committee to elaboratean annotated draft agenda, including a draft convention,for consideration by the Conference, taking into accountsuggestions which may be submitted to it by theEconomic ana Social Council or by any Member of theUnited Nations;

3. SUGGESTS, as a basis of discussion for the Prepara-tory Committee, that the agenda include the followingtopics:

(a) International agreement relating to the achieve-ment and maintenance of high and stable levels of,employment and economic activity.- (b) International agreement relating to regulations,restrictions, and discriminations affecting internationaltrade.

(c) International agreement relating to restrictivebusiness practices.

(d) International agreement relating. to inter-governmental commodity arrangements.

(e) Establishment of an international trade organiza-tion, as a specialized agency of the United Nations,having responsibilities ia the fields of (b), (c) and (d)above;

4. REQUESTS the Preparatory Committee, when na-sidering the foregcing items, to take into account thespecial conditions which prevail in countries whose manu-facturing industry is still lu its initial stages of develop-ment, and the questions that arise in connection withcommodities which are subject to special problems ofadjustment in international markets;

S. REQUESTS the Preparatory Committee to report toa subsequent session of the Council recommendations re-garding the date and place of the Conference and theagenda including a draft convention) and also whatStates, if any, not Members of the United Nations, shouldbe invited to the Conference on Trade and Employment;

6. APPOINTS as Members of thc Preparatory Commit-tee the representatives of the Governments of the followingcountries: Australia, Belgium, Luxembourg, Brazil,Canada, Chile, China, Cuba, Czechoslovakia, France,lndia, Lebanon, Netherlands, New Zealand, Norway,South Africa, USSR, the United States of America andthe United Kingdom.

ANNEXURE 2

List of Delegates to the Preparatory Commltee and of Representatives of Members of the UnltedNations not members of the Preparatory Committee, of Inter-goveramental and

Non-governmental Organizatlons.

AUSTRALIADr. H. C. Coombs (Head of Del gation), Director-General, Dept. of Post-War Reco;struction.

Mr. E. McCarthy, Secretary, Department of Commerceand Agriculture.

Mr. C. E. Morton, Assistant Comptroher-General' (Tariffs), Departnent of Trade and Customs.Mr. J. Fletcher, Chief, Trade Relations and Trade

Treaties Branch, Departainent of Trade and Customs.

BELGIUM -LUXEEMBURGBelgiumMr. Van de Kerckhove d'Hallebast, Minister Plenipotea-

tiary (Head of Delegation).Mr. A. Le Boii. Director-General of Customs.Vicomte du Parc, Principal Inspector, Minktry ofEconomics.

Mr. G. Mostin, Director, Ministry of Agriculture.Mr. C. Roger, Belgian Economia Mission in London.

LuxembourgMr. P. Bastian, Delegate accredited to Uie Belgo-Luxembourg institute.

Mr. C. Calmès, Attaché, Ministry of Foreign Afairs.

H. E. Senhor Maxio Moreira da Silva, Head of Delega-tion, Envoy Extraordinary and Minister Pleaipoten-tiary of Brazil in Berne.

CANADAMr. H. B. McKinnon, Head of Delegatien, Chainran of

Tariff Board.Mr. D. Sim, Deputy Minister of Customs and Excise.Mr. L. E. Couillprd, Department o! Trade and Commerce.Mr. J. J. Deutsch, Director cf Economic Relations, Dew

partmnent of Finance,Mr. H. R. Kemp, Director, Commercial Relations andForeign Tariffs Division, Department of Trade andCommerce.

Mr. F. A McGregor, Commissioner of Combines, Depart-ment of Justice.

Mr. S. D. Pierce, Head of Economic Division of Depart-ment of External Affairs.

CHILSH. E. Senor don Manuel Bianchi, Head of Delegation,

Chilean Ambassador in London.Senor don Higinio Goazales, Commercial Counseèlor,

Chilean Embassy.Senor don Humberto Videla,, Consul-General of Chie.Senor don Manuel Merino, Director of tih Agricultural

Senor don Manuel Fredes, Secretary-Genczal cf theChilear Development Corporation.

Senor don Raul Fernandez.Senor don Harold Biggs.

43

CHINAH. E. Dr. Wunsz King, Ambassador to Belgium.Mr. T. T. Chang, Director, Department of ForeignTrade, Ministry of Economic Amairs.

Mr. How Ben, Member, Economic Planning Committeo,Ministry of Economnic Affairs.

Mr. C. L. Tung, Counsellor, Ministry of Finance.Mr. K. S. Ma, Member, Tariff Commission, Ministry

cf Finance.CUBA

H. E. Senor Alberto Inocente Alvarez, Minister of Statefor Foreign Affairs.

H. E. Sanor G. de Blanck, Cuban Minister in London.Senor Rufo Lopéz Fresquet, Representative of theTreasury in the National Economic Board, TechnicalAdviser to the Ministry of Finance.

Senor Jose Antonio Guerra, Representative of theTreasury in the National Economic Board andStatistical Adviser to the Finance Ministry.

CZECOSLOVAKIAH. E. Zdenek Augenthaler, Envoy Extraordinary and

Minister Plenipotentiary Czechoslovak Ministry ofForeign Affairs, Chief of Economic Department.

Mr. Max Bitterman, Czechoslovak Ministry of ForeignTrade, Chief of Planning Department.

Mr. Lucian Benda, Secretpry of Legation, CzechoslovakMinistry of Foreign Affairs, Economie Department.(Acting also as Secretary te the Delegation.)

Mr. Otto Benes, Counsellor, Czechoslovak: Ministry ofFinance, Tariff Departrnent.

Mr. Augustin Sobol, Counsellor, Czechoslovalk Ministr1.of Industry, foreign Trade Department.

Mr. Zdenko Blazej, Czechoslovak National Bank, Chie!of Research Departmnent.

Mr. Jaroslav Kopec, Counsellor, Czechoslovak Ministryof Agriculture, Foreign Trade Departaent.

MUr. Karel Ba1a, Managing Director, CzechoslovakSupply Company in London.

Mr. Otakar Vojta, First Secretary to the CzechoslovakEmbassy in London.

Mr. Bohumil Bayer, Counsellor, Czechoslovak Ministryof Foreign Trade Planning Dept.

Mr. Eugen Gaser, Counsellor, Slovak National Council.Mr. Peter Zatko, Counsellor, Slovak National Council,Mr. Mikulas Viest, Czechoslovak Supply Company,

Agricultural Adviser.FR.ANCE

M. Hervé Alphand, Head of Delegation, Director-General, Ministry for Foreign Affairs.

M. Roger Nathan, Direetor of Foreign Economie Rela-tions, Ministry of National Economy.

M. Pierre Baraduc, Chief of Service, Ministry forForeign Afairs.

M. Robert Marjolin, Assistant Commissioner forEconomic Planning.

M. Roger Joffet, Director of Eceonomie Affairs, Ministrycf Agriculture.

M. Peter, Director of Economie Affairs, Ministry ofAgriculture.

M. Jean Richard. Deputy Director, Ministry of NationalEconomy.

M. Jean de Sailly, Commercial Adviser, FrenchEmbassy, London.

M. Pierre Calvet, Financial Attache, French Embassy,London.

M. Olivier Woramser, First Secretary, Fsench Embassy,London.

M. Pioure Escoube, Technical Adviser. Ministry ofNational Economy.

M. Ernest Lecuyer, Ministry of Foreign Affairs.M. Charles Igonet, Chie. of Service, Ministry for Indus-

trial Production.M.Theodule Bossuat. Director-General of Customs.M. Louis Roux, Administrator of Customs.M. Pierre Dieteren. Ministry of National Economy.M. Emile Royer, Ministry cf National Economy.M. Alexandre Kojeve, Ministry of National Economy.M. Gaston Donne,. Ministry of National Economy.M. P. Demondion. Ministry of Labour.

rs'n

Mr. (R. K. Nehru, I.C.S.. Joint Secretary to Governmentof India.

Mx. B. N. Adarkar, M.B.E., Deputy Economic Adviserto Government of India.

Mr. P. S. Lokanthan, Editor cf Eastern Economist.Mr. B. N. Ganguli, Professor of Economics, DeUli

University.

Dr. A. I. Qureshi, Economic Adviser to the Governmentof Hyderabad.

Mr. H. S. Malik, C.I.E., I.C.S., Prime Minister ofPatiala State.

Mr. D. G. Mulherkar, Sccretary ci the Federation ofIndian Chambers of Commerce and Industry.

L.EBANONMr. George Hakim, Alternate Delogate te Economic and

Social Council.Mr. Nadim Dimechkie, Commrercial Counsellor toLebanese Legation, London.

NETHERLANDSDr. A. B. Speekenbrink, Head of Delegation, Ministry

of Economic Affairs, The Hague.Dr. L. J. Gotzen, Ministry of Overseas Territories, TheHague.

Mr. W. H. van den Berge, Ministry of Finance.Mr. A. Van Kleffens, Ministry of Economie Affairs.Mr. Phoa Liong Gie, Ministry of Overseas Territories.Mr. C. N. Pool, Ministry of Agriculture, Fisheries andFood.

Professor Dr. J. Tinbergen, University ci Rotterdam,Director of Central Planning Board.

Baron S. J. van Tuy van Serooskerken, Ministry ofForeign Affairs.

Professor Dr. E. de Vries, Ministry ci Overseas Terri-tories.

Mr. J. de Waarx, Ministry of Overseas Territories.Baron C. A. B'"tinck, Administrator, Ministry ofOverseas Territories.

Mr. W. G. F. Jongejan, Chairman of the Council forCommercial'Enterprise, Netherlands East Indies.

Mr. E. D. M . Koning, Director for Commercial andIndustrial Policy of the Ministry of Economic Affairs.

Dr. S. Korteweg, Administrator, Directorate-Generalfor Foreign Economic Relations.

Dr, C. C. L. J. M. Eygenraam, Agriculâtral Counsellor,Aetherlands Embassy, London.

Mr. D. M. de Smit, Commercial Counsellor, NetherlandsEmbassy, London.

Dr. A. Treep, Financial Counsellot, NetherlandsEmbassy, London.

Mr. P. H. Westermann, Trade Commissioner for theNetherlands East Indies, c/o Netherlands Embassy,London.

NEW ZEALANDMr. J. P. D. Johnsen. Assistant Comptroller of Customs.Mr. G. W. Clinkard, Secretary of Industry andCommerce.

Mr. H. E. Davis, New Ze3land Marketing Department.Mr. F. W. Lawrence. O2icial Representative in London

of the N.Z. Customs Department.Mr. G. Laurence (Secretary to Delegation), Departrent

of Industry and Commerce.

NORWÂYH. E, M. Erik Colban, Head of Delegation, NorwegianAmbassador in London.

Mr. J. Melander, Commercial Counsellor to the RoyalNorwegian Emnbassy in London:

Mr. Johannes Brunaes, President of the Federation ofNorwegian Industries.

Mr. Ering Steen, Former President of the Norwegianfederation for Trado and Comerce.

Mr. Bjarne Boerde, Director of the Norwegian ExportCouncil.

Mr. Johannes Dannevig, Directer of Customs and Excise.Mr. Bjarne iRobberstad, Chief f Division in theNorwegian Ministry cf Supply.

Mr. Thor Skrindo. Chief cf Division in the Directorateof Employment.

Mr. Harald Elstad, Chief of Division in the Directorateof Price Control.

bir. Arne Jebsen.

UNION OF SOUTH AFRICAMr. A. T. Brennan, Head of Delegation, Head of UnionSupply Mission in Washington.

Mr. A. P. van der Po*t, alternate Head of Delegation,Trade Commissioner in the United Kingdom.

MIr. G. J. F. Steyn, Departmnent of Commerce andIndustries.

Dr. A. J. Beyleveld, Department of Agriculture.Mr. J. G. Cherry, Department of Customs and Excise.Mr. W. C. Naudé, Economic Adviser to the High Com-

missioner in the United Kingdom.

UNITEDSTATESMr. Clair Wilcox, Head of Delegation, Director, Office

International Trade Policy, Dcpartment of State.Mir. Harry C. Hawkins, Alternate lead of Delegation,Counsellor for Econornic Affairs, American Embassy,London.

Mr. Ly~nç R. Edminister, Vice-Chairman U.S. TariffComm.zcon.

Mr. Frank M. Shields, Chief, Commercial Policy StaffOffice International Trade, Department of Commerce.

Mr. Robert B. Schwenger, Chief, Division InternationalEconornic Studies, Office Forcign AgriculturalRelations, Department of Agriculture.

Mr. John Pierson, Consultant, Division Post-WarEmployment Problems, Department of Labour.

Mr. John W. Gunter, U.S. Treasury Representative,American Embassy, London.

Mr. William R. Johnson, Commissioner cf CustomsDept. of Treasury.

UNITED CIGDOMMr. H. A. Marquand, M.P.Mr. J. R. C. Helmaore, C.M.G.Mr. E. L. Hall-Patch, C.M.G.Mr. J. E. Meade.Sir Gerard Clauson, K.C.M.G., O.B.E.

REPRESENTATIVES OF COUNTRIES MEMBERS OF riEUNITED NATIONS

ColombiaDr. José Enrique Gaviria, Commercial Counsellor,Colombian Embassy.

Senor Don José Medina.

DenmarkMr. Anton Vestbirk, Danish Consul General in London.Mr. Hoelgard, Vice Consul and Commercial Secretary inLondon.

PolandDr. Lychowski, Chief Polish Observer.Dr. Alexandrovitch, Financial Counsellor, PolishEmbassy.

.r. Tusrkiewicz, Commercial Attaché, Polish Embassy.

44

PeruSenor Don Alberto Pérez Saez, Consul General for Peru.

41exicoDr. F. Cuevas Cancino, Attaché, Mexican Embassy.

SyriaM. Said Raid.

REPRESENTATIVES OF INTER-GOVERNEMENTAL ORGANIZATIONSFood and.Agriculture Organization

Dr. S. L. Louwes, Special Adviser to the Director.General, F.A.O.

International BankMr. Ansel Luxford, Assistant General Counsel.Mr. Walter Hill, Assistant Director of Research.

International Labour OfficeMr. D. C. Tait.

International Monctary FundMr. George Luthringer, Alternate Execv'tive Director forthe United States.Mr. Walter Gardner, Chief of Balance of PaymenthDivision.Mr. Ernest Sturc, Chief of the Central and EasteruEuropeian Division.Professor A. C. B. Fisher.

REPRESENTATIVES OF NON-GOVERNMENTAL ORGANIZATIONSInternational Chamber of Commerce a

Mt. Wallace B. Phillips, President, American Chamberof Commerce, London.

International Co-operative AllianceLord Rusholme, President, International Co-operativeAlliance.

World Federation of Trade UnionsM. Jean Duret, Director Economic Bureau C.G.T.American Federation of Labour

bIr. Thomas J. Kennedy.

ANNEXURE 3

Agenda of the Preparatory Committee

r. Opening of the Session by the 1.emporary President.2. Remarks by the representative of the host Governrnent.

Adoption of Uic provisional rules of procedure.Election of the Chairman.Election of the First Vice-Chairman.Election of the Second Vice-Chairman.

7. Adoption of the Provisional Agenda.e.

9-

General discussion of the scope of the work of thePreparatory Committee.

Establishment of Committees.so.-(a) International agreement relating to tic achieve-

ment and maint-eancc of high and steadily risinglevels of effective demnand, employment andeconomic activity.

(b) International agreement relating to industrial develop-ment

(c) International agreement relating to regulations, re-strictions and discriminatfons affecting internationaltrade.

(d) International agreement relating to restrictive businesspractices.

(e) International agreement relating to inter-governmentalcommodity arrangements.

(J) Establishment of an international trade organization,as a specialized agency of the United Nations, havingappropriate responsibilities in the above fields.(Article 3 of the Council Resolution;)

zI. Elaboration of annotated draft agenda, including adraft Convention, for consideration by tho Inter-national Conference on Trade and Enaployment.(Article 2 of'the Council Resolution.)

z2. Date and place of the International Conference onTrade and Employment. (Article 5 of the Cou:ncilResolution.)

I3. Determination of what States. if any, not Mermbers ofthe United Nations, should be invited to the Con-ference on Trade and Employment. (Article 5 ofthe Council Resolution.)

x4. Final consideration and adoption of reports ofCommittees.

zs. Adoption of the report of the Preparatory Committeefor submission to the Economic and Social Councilon agenda items 10, 1I, I2 and 13 in accordancewith the Economic and Social Council's Résolutionof I8 February 1946, setting up the PreparatoryCommittee.

I6. Other iteem.

3.4.5-6.

45

ANNEXURE 4Rules on Procedure

CHAPTER.-AGENDARule sThe provisional agenda for each meeting shall be drawn

up by the Executive Secretary in consultation with theChairman and shah be -rommunîcated to the representativesas soon as possible aster its preparation.

RuleThe first item upon the provisional agenda of any

meeting shallbe the adoption of the agenda.

Rule 3The Preparatory Committee may decido to review, add

to or delete front the agenda.

CHAPTERII-REPRESENTATION AND CREDENTIALSRuls 4Each member of thePreparatory Committee shall be

represented by an accredited representative.

Rule 5Each representative may be accompanied by such

alternate representatives and advisers as he may require.

Rule 6 tThe credentails of representatives and the names of

alternate representatives and advisers shallbe submittedto the Executive Secretary within one week of the openingmeeting of the Preparatory Committee. The Chairmanand the Vice-Chairman shallexamine the credentials ofrepresentatives without delay and submit a report thereonto the Preparatory Committee for apprc'. al.

CHAPTER IIICHAIRMAN AND VIC -CHAIRMANRule 7Tho Preparatory Committee shallelect from its repre-

sentatives a Chairman, a First Vice-Chairman and aSecond Vice-Chairman, who shallall hold office for theduration of the present session of the PreparatoryCommittee.

Rule 8If the Chairman is absent from a meeting, or any part

thereof, the First Vice-Chairman, or in the latter's absence,the Second Vice-Chairman, shaU preside.Rule g

If the Chairman ceases to represent a member of thePreparatory Committee, or is so incapacitated that he canno longer hold office, the First Vice-Chairman shaU becomeChairman. If the First Vice-Chairman ceases to representz member of the Preparatory Committee, or is so in-capacitated that he can no longer hold office, the SecondVice-Chairman shalltake his place.

RuIe 10A Vice-Chairman acting as Chairman shall have the same

powers and duties as the Chairman.

Rule IXThe Chairman or a Vice-Chairman acting as Chairman

shall participate in the meetings of the ?reparatory Com-mittee as such and not as tie representative of the memberby whom he was accredited The Preparatory CommitteoshaU permit an alternate representative to represent thatmember in thc meetings of the Preparatory Committee andto exercise its right to vote.

CHAPTERIV.-SECRTARIATRule 12The Executive Secretary shallact in that capacity at all

meetings of Preparatory Committee and its committees.He may appoint another member of the staff to take hisplace at any meeting of Preparatory Committee or ofits committees.

Rule 13The Executive Secretary shah provide and direct such

staff as is required by the Preparatory Committee or byany of its committees or sub-commnittees,Rule 14The Executive Secretary, or his deputy acting on his

behalf, may at any time upon the invitation of the Chair-man of the Preparatory Committee or of the chairman ofa committee or sub-committee. make either oral or writtenstatement coeng any question under consideration.

Rule 15The Executive Secretary shail bo responsible for making

alh necessary arrangements for meetings of the PreparatoryCommittee and of its committees and sub-committees.

CRAPTER V.-CONDUCT OF BUSINESSRule 16A majority of the members of the Prtparatory Com-

mittee shall constitute a quo.um.Rule 17

In addition to exercising the powers conferred upon himelsewhere by these rules, the Chainman shall declare theopening and closing of each meeting of the PreparatoryCommittee, shall direct the discussion, ensure theobservance of these Rules, and shall accord the right tospeak, put questions to the vote and announce decisions.The Chairman may aiso cali a speaker te order if bisremarks are not relevant to the subject under discussion.

Rule 18The chairman of a committee or a rapporteur appointed

by a comrmittee to present its report may be accordedprecedence for the purpose of explaining the report.

Rule 19During the discussion of any matter a representative

may aise a point of order. In this case the chairman shallimmediately state his ruling. If it is challenged, thechairman shah forthwith submit his ruling to the Pre-paratory Comrittee for decision and it shall stand unlessoverruled.

Rule 20During the discussion of any rnatter a representative

may move the adjournment of the debate. Any suchmotion shall have prior.ty. In addition to the proposerof the motion, one representative may be allowed to speakin favour of, and one representative against the motion.

Rule 21A representative may at any time move the closure of

the debate whether or not any other representative hassignified his wish to speak. Not more than two representa-tives may be granted permission to speak against theclosure.

RuIe 22The Chairman shall take the sense of the Preparatory

Committee on a motion for closure. If the PreparatoryCommittee is in favour of the closure, the Chairman shahdeclare the debate closed.

Rule 23The Preparatory Committee may limit the time allowed

to each speaker.

Rule 24Proposed resolutions, amendments and substantive

motions shall be introduced in writing and banded to theExecutive Secretary who shall circulate copies to therepresentatives. Unless the Preparatory Comitteedecides otherwise, no such proposal shll be discussed orput te he vote at any meeting of the Prepartory Com-mittce unless copies of it have been dishe' .ed to therepresentatives at least twenty-four houià before liemeeting concerned.

Rule 25Proposed principal motions and draft resolutions shall

have precedence in the order of thear submission.

Rule z6Parts of a proposed motion or of a draft resolution shall

be voted on separately at the request of any representative,unless the mover of the motion or resolution objects.

Rute 27When an amendment revises, adds to or deletes from

a proposal, the armendment shall be put to the votefirst, and if it : adopted, the asnended proposal shal.then be put to the vote.

Ruls 28If two or more amendments are moved to a proposal,

the Preparatory Committee shall vote first on the amend-ment furthest removed in substance from the originalproposal, then on the amendment next furthest removedand so on, until all the amendments have been put tothe vote.

Rule 29It shall not be necessary for any proposed motion or

draft resolution submitted by a representative on thePreparatory Committee to b. seconded before being putto a vote.

CHAPTER VI-VOTINGRule 30

Each member of the Preparatery Committee shall haveone vote.

Rule 3IDecisions of the Preparatory Committee shall be made

by a majority of the members present and voting.

Rule 32

The Preparatory Committee shall normally vote byshow o' bands except when any representative requests aroll call which shall then be taken in the English alpha-betical order of the names of the members.

Rule 33The vote of each i ,mber pa-tic pating in any roll call

and any abstentions shall be inserted in the record.

Rule 34When the Preparatory Committee is deciding a

question relating to individuals, a secret ballot shall betaken.

Rule 35If, when only one member or person is to be elected,

no candidate obtains in the first ballot the majority re-quired, a second ballot shall be taken confined to the twocandidates obtaining the largest number of votes. If,in the second ballot, the votes are equally divided, thechairman sLall decide between the candidates by drawinglots.

Rule 36If the Preparatory Committeo is equally divided when

a vote is taken on a question other than an election,a second vote shall be taken at the next meeting. Ifthe Preparatory Cournmittee is then again equally divided,the proposal shall b. regarded as rejected.

CHAPTERVII -LANGUAGS

Rule37Chinese, English, French, Russian and Spanish shail

b. the official languages of the Preparatory Committee,and English and French the working languages.

Ruie 38Speeches made in dither of the working languages shall

be interpreted into the other working language.

Rule 39Speeches made in any of the other three official

languages shall be interpreted into both workinglanguages.

Rule 40

Any representative May make a speech in a languageother than an official language. In this case he hinIselfmust provide for interpretation into one of the workinglang-ages. Interpretation into the other workinglanguage by an inte;preter of the Secretariat may bebased on the interpretation given in the first workinglanguage.

Ruie 41Verbatim records shallbe drawn up in the working

languages. A translation of the wholl or any part ofany verbatim record into any of the other officiallanguages saali be 'furnished if requested by any repre-sentative

Rule 42Summary records shall be drawn up in the working

languages. A translation of the whole or any part ofany summary record into any of the other officiallanguages shall be furnished if requested by any repre-sentative.

Rule 43The Journal of the Preparatory Commlttee shall bc

issued in the working languages.Rule 44

All resolutions, recomnmendations and other formaldecisions of the Preparatory Committee shall be madeavailable in the official languages. Upon ihe request ofany representative, any other document of the Prepara-tory Commit-tee shall bo made available in any or ailof the official larnguages.CHAPTER VIII-REPRESENTATION OF MEMBERS OF THEUNITED NATIONS NOT MEMBERS OF THE PREPARATORYCOMMITTEE AND OF SPECIALIZED INTER-GOVERNMENTAL

AGENCIES AND NON-GOVERNMENTAL ORGANIZATIONSRule 45

Representatives of the International Labour Organiza-tion, the Food and Agricultural Organization, the Inter-national Monetary Fund and the International Bank forReconstruction and Development may attend meetingsof the Preparatory Committee and of its committees- andparticipate without vote in their deliberations withrespect to items on their agenda relating to matterswithin the scope of their respective activities.Rule 46The provisions of the Report of the Committee of the

Economic and Social Council on Arrangements for Com-sultation with Non-Governmental Organizations,approved by the Cauncil on 21 June I946, shall pplyto the meetings of the Proparatory Committee asappropriate. The committees of the Preparatory Com-mittee may consult with the World Federation of Trp.deUnions, the international Co-operative Alliance, theAmerican Federatiorn of Labour and the InternationalChamber of Commerce either directly or through com-nittees established for the purpose. Such consultationsrnay be arranged on the invitation of the working com-mitteeor on the request of the organization.Rule 47The representatives of governments, who arc not

members of the Preparatory Committee but who areMembers of the limited Nations, can take part asobservers at all meetings of the Preparatory Committeeand of its committees and sub-committees.

CHAPTER IX-RECORDSRule 48Summary records of the meetings of the Preparatory

Committee and its committees shall bc kept by theSecretariat. They shall be sent as soon as possible to allrepresentatives who shall inform the Secretariat notlater than twenty-four hours after the circulation of the.summary records of any changes they wish to havemade.Rule 49Verbatim records of the meetings of the Preparatory

Committee and its ccnmnittees shall be kept by theSecretariat. One copy of the record of each meeting shallbo sent as soon as possible to ail representatives.Rule 50The verbatim records of public meetings shah b. avail-

able to the public. The verbatim records of privatemeetings shall be avaiable to Members of the UnitedNations and to specialized inter-governmental agencies.

CHAPTER X-PUBLICITY OF MEETINGSRule 51The meetings of the Preparatory Committeo shall be

held in public unless the Preparatory Committee decidesthat a meeting shall be held in private.Rule 52The meetings of the committees of the Preparatory

Committee shall ordinarily b. held in private. Eachcommittee may decide that a particular meeting -r meet-ings shall be held in public.

47

Rule 53 Rule 58The meetings of sub-committees shall bo held in The provisions of rules 17 and 40 inclusive shall be

private. applied in the proceedings of committees and sub-Rule 54

After a private meeting has been held, the Executive-Secretary, with the approval of the body concerned,may issue a communiqué to the Press.

CAPTER XI-.COMMMITEES AND SUB-COMMMITEESRule 55The Preparatory Committee may set up such com-

mittees and sub-committees as it deems necessary forthe performance of its functions.Rule 56Each committee and sub-committee shall elert its own

ofEicers.Rule 57A chairman of a committee or a vice-chairman acting

as chairman shall participate in the meetings of the com-mittee as such and not as the representative of a member.The committee shall permit another representative torepresent that member in the meetings of the committeeand to exercise the member's right of vote.

Rule 59A majority of the members of a committee or sub-

committee shah constitute a quorum.

Rule 6oA committee or sub-committee may appoint a

rapporteur to present its report or for any other purposeit deems fit and necessary.

Rule 6ICommittees and sub-committees may, by agreement

decide to adopt rules of procedure regarding in.erpreta-tions or translations of a moe simple character thanthose laid down in these Rules.

Rule 62Sub-committees shall decide, in consultation with the

Secretariat, upon the former of their records and the pro-cedure to be followed with them.

ANNEXURE 5Resolution concerning the Second Session of the Preparatory Committee

Wheroas the Economic and Social Council on i8'Febru-ary 1946, decided to cahl an International Conference onTrade and Employment and constituted a PreparatoryCommittee to draw up an annotated draft agenda includinga draft convention for consideration by the Conference

And whereas it has not been found practicable to com-plete the work of the Preparatory Committee at its FirstSession

The Preparatory' Committee of the International Cozq-ference on Trade and EmploymentHereby resolves to convene a Second Session at Geneva

on 8 April 1947, which shall consider, inter alia, Item,11, 12, 13 and 15 of the Agenda of the Preparatory Com-mitteeAnd instruts the Executive Secretary to communicate

with the member Governments to make the necessaryarrangements foo. such Second Session to commence on8 April 1947.

ANNEXURE 6Resolution regarding the appointment of a Drafting Committee

Whereas the Preoaratory Comnmittee has decided to con-vene a Second Session at Geneva on 8 April 1947.And whereas it is desirable that further drafting be done

on the basis of the work carried out at the First Sessionbefore the Commencement of the Seccnd SessionThe Preparatory Committee of the international Con-

ference on Trade and EmploymentHereby appoints a Drafting Committeo consisting of

representatives of members of the Preparatory Committeeto meet in New.York beginning 20 January 1947, for thepurpose of preparing a Draft Charter based upon thereport and other documents of the First Session of thePreparatory Committee,

It is resolved thats. It will be the function of the Drafting Committee to

prepare a Drait Charter or Articles of Agreement, editingfor clarity and consistency the portions of the text onwhich the Preparatory Committee has come to a substan-tial identity of views, preparing alternative drafts of those

portions on which there reman a division of generalviews and preparing suggested drafts covering suchuLncompleted portions as are referred te it by the Pre-paratory Committee, together with sncb explanatory notesand commentaries as theo Drafting Commnittee may considerdesirablA and useful..

2. The Drafting Comrittee should prepare a report forconsideration by the Preparatory Committee at Its Seonc.Session.

3. The Drafting Comittee should complete its workwith all possible despatch and in any case not hater than28 February 1947, in order that its report may be for-warded to governments for consideration in advance of theSecond Session of the Preparatory Commnittee.

It is suggested that members appoint to the DraftingCommittee not more than two or three technical expertsdrawn as far as possible from the.delegation which haveparticipated in the work of the First Session of the Pre-paratory Committee.

ANNEXURE 7Resolution Regajding the Negotlation of a Multilateral Trade Agreement

Embodying Tarif ConcessionsWhereas the Resolution of the Economic and Social

Council on I8 February I945, decided to call an Inter-national Conference on Trade and Employment for thepurpose of promoting the expansion of production,exchange and consumption of goods, constituted this Com-mittee to elaborate an annotated draft agenda, includinga drait convention, for consideration by the Conference,and suggested that the Agenda of this Committee includeamong its topics " International Agreement relating toregulations, restrictions and discrimination affecting inter-

national trade ", and "Establishment of an InternatioialTrade Organization " and

Whereas the United States Govemrnent had invited thegovernments appointed by the Economic and Social Councilas members of this Committee to meet to negotiate con-crete arrangements for the relaxation ôf tarifs'and tradebarriers of all kinds and the invitation lias been acceptedby the governments attending 'he present session of the.Preparatory Committee and

48Whereas the task of the Conference will be facilitated

if concrete action is taken by the principal trading nationsto enter into reciprocal and mutually advantageous nego-tiations directed to the substantial reduction of tariffs andto the elimination of preferencesThe Preparatory Committee of the International Con-

ference on Trade and EmploymentHereby recommends to the governments concerned that

the meeting of members of the Preparatory Committee

envisaged by the invitations sent out by the United StatesGovernment should be held under the sponsorship of thePreparatory Committee in connection with, and as a partof, the Second Session of the Committee, conducted inaccordance with the procedures recommended in theMemorandum on Procedures approved by the PreparatoryCommittee at its current SessionAnd invites the member governments to communicate

to the Executive Secretary their views on this recom-mendation.

ANNEXURE 8Resolution Regardlng Indust:lal Development

Whereas it is anticipated that -the Economic and SocialCouncil will shortly consider the question of dividingresponsibilities not yet allocated in the field of economicdevelopment among the various agencies concerned andof co-ordinating these activities.And whereas the Preparatory Committee at its First

Session bas discussed the positive functions in relation toindustrial development which might be exercised by theInternational Trade Organization, particularly the furnish-ing of advice to members concerning their plans and,within its competence and resources, the provision of tech-nical aid in the formulation and execution of such plans.And whereas so that the Preparatory Committee rnay

further carry out its terms of reference as regards indus-trial development, it is desirable for it to have the guidance

of the Economic and Social Council upon the views whichwere exchanged at the First Session.The Preparatory Committee of the International Con-

ference on Trade and EmployaientHereby requests the. Executive Secretary to draw the

attention of the Economic and Social Council to thoseportions of the Report of the Preparatory Committeewhich are concerned with the possible performance by theInternational Trade Organization of functions in relationto industrial development and to ask the Economic andSocial Council to state, before the commencement of theSecond Session of the Committee, whether paragraph (3)of Article Il of the Charter included provisionally in theChapter on Economic Development is in accordance withthe Council's views on the appropriate allocation of func-tions relating to economic development.

ANNEXURE 9Resolution Relating to Inter-Governmental Consultation and Action on Commodity Problems Prior

to Establishment of the International Trade Organlzation

Whereas certain difficulties of the kind referred to inthe Chapter on Inter-governmental Commodity Arrange-ments of the Charter appended to the Report of the Pre-paratory Committee have already occurred in respect ofcertain primay commodities and the Government con-cerned are already taking action on the general linesproposed in that Chapter andWhereas similar di-Sculties may occur in respect of other

primary commodities andWhereas the Preparatory Committee is agreed that it

is desirable that action taken in respect of such comn-modities should. proceed on the general lines proposed inthe Chapter abovementionedThe Preparatory Committee of the International Con-

ference on Trade and EmploymentRecommends that, insofar as inter-governrnental con-

sultation or action in respect of particular commodities

is necessary before the International Trade Organizationis established, the Governments concerned should adoptas a guide the Chapter on Inter-governmental CommodityArrangements of the Charter appended to the Report ofthe Committee andRequests the Secretary-General of thi United Nations,

pending thd establishment of ths. International TradeOrganization, to appoint au Interimr Co-ordinating Commit-tee for International Commodity Arrangements, to consistof the Executive Secretary of the Proparatory Cormitteofor an International Conference on Trade and Employmentas Chairman, a representative from thd Food and Agricul-ture Organisation to bo concerned with agriculturalprimary commodities, and a person ta bo selected at thediscretion of thd Secretary-General to bo concerned withnon-agricultural primary commodities, this Cogunittee takeep informed cf inter-governmnental consultatidaor actionladntis fied and ta facilitate by apprapriato means sucbconsultation or action.

ANNEXURE 10

MULTILATERAL TRADE-AGREEMENT NEGOTIATIONS

Procedures for Giving Effect to Certain Provisions of the Charter of the InternationalTrade Organization by Means of a General Agreement on Tariffs and Trade Among the

Members of the Preparatory Commlttee- .;Section A.-Intioduction

The Preparatory Committee has resolved to recommendto the governments conceded that the Committee sponsortraffic and preference negotiations among its members to beheld in Geneva commencing 8 April, x947.* Upon the comn-pletion of these negotiations the Preparatory Committeewould be in a position to complete its formulation of theCharter and approve and recommend. it for the considera-tion of the International Conference on Trade and Employ-ment which would be in a position to consider the Charteri3 the light of the assurance afforded as to the implementa-tion of the tariff provisions.

* See Anuexuàre

Section B.-Propose4 Negotiations amongM embers ofPreparatory Committee

GeneralTme results of thd negotiations among the members of the

Preparatory Committec will need ta be fitted intoa theframework of the International Trade Organization afterdie Charter bas been adopted. The negotiations must,therefore, proceed in accordance with the rele-rant provi-sions of die Charter as already provisionally formulatedby the Preparatory:Committee. In the Iight of theseprovisions, the comments and explanations which followmay be useful as a guide to the negotiations.

General ObjectivesAn ultimate objective of the Charter, elaborated

Article 24, is to bring about the substantia1 reductiof tarifs and tha elimination of tariff preferences. Thenegotiations among the members of the Preparatory Com-mittee should, therefore. be directed to this end and eveeffort should be made to achieve as much prcgress towathat goal as may be practicable in the circumstances, haveregard to tae provisions of the Charter as a whole.

Section C.-General Nature of Negotiationsa. Article 24 of the Charter provides that tar

negotiations shall be on a " reciprocal" and " mutualadvantageous " basis. This means that no country woube expected to grant concessions unilaterally, withoutaction by others, or .o grant concessions to others whichare not adequately counterbalanced by concessionsreturn.

2. The proposed negotiations are also to be conductedon a selective, product-by-product basis which will affordan adequate opportunity for taking into account thecircumstances surrounding each product on which a co.cession may be considered. Under this selective procedurea particular product may or may not be made the subje,of a tarifE concession by a particular country. If itdecided to grant a concession on the product, the conce.sion may either take the form of a binding of the tariagainst increase or a reduction of the tariff. If the tarion the product is reduced, the reduction may be madin greater or lesser amount. Thus, in seeking to obtaithe substantial reduction of tariffs as a general objectivethere is ample flexibility under the selective procedure fctaking into account the needs of individual countries anindividual industries.

3. The same considerations and procedures would apple:in the case of import tariff preferences, it being understood that, in accordance with the principles set forth iArticle 14 of the Charter (Most-Favoured-Nation Treatment) any preferences remaining after the negotiations masnot be increased.

4. The various observations in this report regarding thenegotiation of tariffs and tariff preferences should be readas applying (mutatis mutandis) to the negotiation o.state-trading margins under Article 31 of the Charter.

Section D.-Gen-ral Rules to be observed inNegotiations

Paragraph (I) of Article 24 of the Charter sets forth thefollowing self-explanatory rules to be observed during thenegotiations:-

" (a) Prior International commitments shall not bepermitted to stand in the way of negotiations withrespect to tariff preferences, it being understood thataction resulting from such negotiations shall not requireta. modification of existing international .obligationsexcept by agreement bet been the contracting parties or.facing thant by termination such obligations in accord-ance with their terms.

(b) Ai negotiated reductions in most-favoured-nationimport tarifs shall operate autonatically to reduce oreliminate margins of preference.

(c) The binding or consolidation of low tarifs or oftariff-free treatment shall in principle be recognized as aconcession equivalent in value ta ta. substantial reduc-tion of high tfs or tae elimination of tariff prefer-ences."

Section E.-MiscellaniousRules for Guidance

Theroare a number of additional questions which shouldbeborne in mind in preparing for the proposed tariff nego-tintions among taemembers ofthePreparatory Committee.

Base Date for Nogoliationsz. Paragraph (i) of Article 14 of the Charter would

except from the most-faveured-nation provisions prefer-ences " which do not exceed the preference remainingafter . . . negotiations." This means that all margins ofprefbrencc remaining. after negotiations woul- be boundagainst increase. Alio, as explained above, Article 14 re-quires tint reductions, most-favoured-nation rates ofduties shah operate autosatically to reduce or eliminatemarginal cf prcferenco.2. In order to determine what residual preferences shal

be bound against increase under Article 14. and in order todetermine what preferences shal be reduced or eliminatedautomatically'under Article 24, it is necessary to establisha date which willfix theheight ofthe preferences in effectprior to thenegotiations.

493. It would be desirable for such purposes to fix a single

in date, common to all the countries participating in thr.on negotiations. However, the discussions during the Firsthe Session of the Proparatory Committee indicate that then-

establishment of ai common date presents certain difficul-ties and may not be practicable. It is. therefore, suggested

rd that immediately following the close of tie First Session* each member of the Committee concerned should inforrn

the Secretariat of the United Nations as to the date whichit proposes to use as the base date for negotiations withrespect to preferences. The Secretariat will promptlyinform, the other members. The base date for negotiations

iff established by any country granting preferences should'Y hold good for its negotiations on ail products with allid other members of the Preparatory Committee, and shouldIt not vary from member to member or from product toch product.in

Avoidance of Now Tarif or other Restrictive Measuresed It is important that members do not effect new tariff'd measures prior to the negotiations which would tend tohe prejudice the success of the negotiations in achieving pro-

gress toward the objectives set forth in Article 24, andthey should not seek to improve their bargaining position

,t by tariff or other restrictive measures in preparation foris the negotiations. Changes in the form of tariffs, or changes

in tariffs owing to the depreciation or devaluation of thecurrency of the country maintaining the tariffs, which do

if not result in an increase of the protective incidence of thatariff, should not be considered as new tariff increases underthis paragraph.

Principal Supplier Rule. It is generally agreed that the negotiations should

proceed on the basis of the" principal supplier " rule, asdefined in this paragraph. This means that each country

- would be expected to consider the granting of tariff orpreference concessions only on products of which the other

- members of the Preparatory Committee, are, or are likely, to be, principal suppliers.

2. In determining whether, on the basis of the " principalsupplier " rule, a product is to be included in tha negotia-

I tions, reference should be had not merely to whether af particular member of the Preparatory Committee is, or,

may become, a principal supplier, but to whether the mem-bers of the Comuilttee, talien as a whole, supply, or arelikely to supply, a principal part of the product in question.

3. Iu other words, if a principal part of total importsof a particular product into the territory of a particularmember is supplied by the other members of the Prepara-tory Committee taken together, then tha importing member

e should, as a general rule, be willing to include that producth in the negotiations, even though no single other member

of tha Committee, taken by itself, supplies a principalpart of tha total import of the product.

4. In estimating the future prospects of a member, orthe members taken together, to become a principalsupplier of a product, consideration should be given to theprobable disappearance of e-enemy countries as supplier0f certain products and af tac the. chLanges in the, current

rof trade created by tii. war.

Form of Tarif Sch.dulesz. It is contemplated that the tarif negotiations among

the members ai the Preparatory Committee will be multi-lateral, both ir. scope and in legal application. Thus, therewould result from the negotiations a total of sixteeaschedules of tariff -rcessions, each schedule setting fortha description of t., products and of the maimum (con-cession) rates ai ('t'y tabreon which would be applicablein respect of the imports into a particular country. In thisway each meirber of the Committee would be contractu-ally entitled, in its own right and independently ci thamost-favoured-nation clause, to each of tha concessions ineach of the schedules of the other members.

2. The multilateral form of the tarif schedules ia designedto provide more stability than haæ exasted in the past underbilateral tarifE agreements, to assure certainty of broadaction for tha reduction of tarifs and to give to countriesa right to tarif concessions on particular products wnhichsuch countries might wish to obtain, but could not obtainunder bilateral agreements, because of-their relatively lesuimportant position as a supplier of the product concerned.

* If thc principles indicated in Article 33 of ta. Drait Chartershould provo acceptable to th. Soviet Union, these nay inaddition. be a schedule relating to an undertaking by the SovietUnion to purchase annually products valued at not less than anaggregate amountto b. agreed upon.

50

The multilateral fors also gives expression to the fact thateach country stands to gain when another country grantstariff reductions on any product, even though primarilysupplied by a third country. This point can be finallysettled when the negotiations have proceeded sufficientlyto enable all the varying factors to be taken into account.Status of Proferential Raies of Duty

z. Th. formulation by each member of the PreparatorrCommittee of a schedule of tariff concessions, which wouldapply to all other members, raises a question as to themethod of relating to such schedules preferential rates ofduty, which have been negotiated, as well as preferentialrates on products for which most-favoured-nation rateshave been negotiated. There appear to be two methodswhich might b. followed:

(a) Such preferential rates might be incorporated inth. multilateral schedules, qualified by the requirementthat they apply only to the products of the countriesreceiving prc.,Led treatment.

(b) Such preferential rates might b. incorporated inseparate schedules which would apply only to the pre-ferred countries.2. It should b. left to the country concerned to deter-

mine which of the two methods indicated above it desiresto follow. However a single schedule containing bothmost-favoured-nation and preferential rates would seen tofaclitate the work of both traders ard governments.

Section F.-Procedures for Conducting Negotiations amongthe Members of the Prepcratory Committec

z. It is believe that the tariff negotiations arnong 'themembers of the Preparatory Cornmittee can best bh con-ductel in four stages:

First Stage. (a) Each member should transmit t0 each

other member, from which it desires to obtain tariff con-cessions, as soon as possible an d preferably not later than3I December 1946, a preliciinary list of concessionswhich it proposes to request o:. such father member. Thislist should set forth for each product concerned

(i) an indication of the existing rate of duty (whereknown) and

(ii) an indication of the requested rate of duty.Thîrty copies of this list shi uld be sent simultaneouslyto the Secretariat of the Vanited Nations, which willtransmit onc copy ta each af the other members of thePreparatory Com;nittee.(b) In order to facilitate th. negotiations, each mernber

of the Preparatory Committee should transmit ta theSecretariat of the United Nal ions, as soon as possible andpreferably not later than 3I December 1946, .thirtycopies of its' customs tariff showing the rates of dutycurrently applicable. The Secretariat will promptlytransmit ane copy to each of the other members of theCommittee.

Second Stage. At the opting of th. Second Sessionof the Preparatory Com'nittte each member should sub-mit a schedule of the proposed concessions which itwould be prepared to grant ta all other members in thelight of the concessions it would have requested fromeach of them.

Third Stage. (a) Notwithstanding the multilateral,haracter of the negotiatiors., it willusually be fundWhat only two or three countries will be directly andprimarily concerned in the'concession on a particularproduct, and thatthe interest: of other countries, althoughinaterici, will be secondary.

(b) It is, therefore, propoa4sd that the third stage of th,negotiations will ordinarily consist of discussions on par-ticula;r products between two, or possibly three or fourcountries. Accordingly for the purpose of engaging insuch negotiations, cadi camtry should to thie extentpracticable bave separate groups persons competent tonegotiate withi cf the' ather countries with whiidimportant negotiations are .ukly to bh conducted.

(c) The number of negotiating groups required byeach country will, of course, tend te vary with thescope of its trade relations. In the case of large tradingcountries having important trade relations with mostor all of the other members of the Committee, a largenumber of negotiating groups will be required.- Ia thecase of countries having less extensive trade relations,a smaller number of negotiating group will be sufficient.

(d) In any event the timing of negotiations betweenparticular groups will need to be scheduled, and inorder that the United Nations Secretariat may haveadequate notice to prepare for such scheduling, It wouldbe desirable for each member of the Commi- ee ta notifythc Secretariat, as far in advance as may be practicable,of the number of negotiating groups. which the memberproposes to send ta the negotiating meeting, and of thecountry or countries to which each negotiating grouprelates.Fourth stage. (a) The progress of the negotiations

should be subject ta general review by the Committeeas a whole periodically during the negotiations and alsoin the final stage. General review by the Committeo asa whole will enable cach member ta assess the benefitswhich it is likely to receive from th. series of negotia.tiens in the light of its total contributions, and willoffset the tendency toward limiting concessions whichresults from a comparison of benefits exchangedbetween two countries alone.

(b) It is clear that the general review by the Cam-mittee as a whole cannot take the form of a detailedexamination of each concession. Rather the Com-mittce would review the general level of tariff reductionachieved as indicated in summary reports. At the sametims each member should be entitled to receive, onrequest, detailed information as to the status of nego-tiations on particular products between other membersin order that it may be in a position to assert aninterest hn such negotiations.2. In order that the negotiations may proceed in an

orderly fashion, it is desirable that a Steering Committeobe established as soon as the various delegations haveassembled at the Second Session.

Section G.-Result of the NegotiationsIf the tariff negotiatioans proceed successfully along the

lines set forth above, there should emerge from the nego-tiations a tariff schedule for each member, each schedulecontaining concessions granted to all of the other membersin their own right. These schedules might be identifiedas follows:

*Names of Country.Australia ... ...Belga - Luxembourg - NetierlandsCustoms Union, Belgian Congoand Netherlands Overseas Terri-tories ... ... ... ...

Brazil ... ...Canada ... ...Chile ... ...China. ... ...Cuba.Czechoslovakia ... ... ...France and French Union ...India ...New ZealandNorway ... ... ...

Syro-Lebanese Customs Union ...Union of South AfricatUnion of Soviet SociaList RepublicsUnited. Kingdom and the overseas

territories for which it has inter-national responsibility ...

United States

Schedule.Sciiedule I

Schedule IISchedule mSchedule IV

Schedule VSchedule VISchedule VIISchedule VIIISchedule IXSchedule XSchedule XI,Schedule XIISchedule XMSchedule XIVSchedule XV

Schedule XVISchedule XVII

Section H.-Gevzral Agreement on Tariffs and, Tradei. Once agreed upon the tariff schedules resulting from.

.the negotiations among the members of the PrepariatoryCommittee cannot easily b. held in abeyance pen*igaction by the International Conference on Trade andEmployment and the adoption of the Charter by nationallegislature.

2. It is, therefore, proposed thatthe tariffschedules b.eincorporated in an agreement among the members ofthc. PIreparatoy Committeu which worold also contain,

*Separate. or possibly sub-divided, schedules may be noces-sary in the case of certain countries in order to provide adequatelyfor certain overseas territories.;

t If the principles indicated in Article 33 of the Charter.should prove acceptable to the Soviet Union. this schedule wouldrelate, not to tariff concessions, but to anundertakingto purchaseannually products valued at not less than an aggregate amountto be agreed upon.

51

either by reference or by reproduction, those generalprovisions of Chapter V of the Charter considered essen-tial to safeguard the value of the tariff concessions andsuch other provisions as may be appropriate. The Agree-ment should contain a provision under which the signatorygovernments could make any adjustments in the Agree-ment which niay be desirable or necessary in the light ofthe action talren by the International Conference on Tradeand Employnient on the Charter. A draft outline of aGeneral Agreement on Tarifa and Trade appears lnSection I. The Drafting Committee should consider bisoulin. and prepare a more complete draft for the con-sideration of the Preparatory Committee at its SecondSession.

3. The General Agreement on Tariffs and Trade shouldbe signed and made public at the close of th. tariff nego-tiations. The Agreement should be legally independent ofth. Charter and should. be brought into force as soonas possible after its signature and publication. Countriesshould be free to withdraw from the agreement at theend of tree years or thereafter on giving six months' priornotice. This will provide an opportunity for a reviewof the Agreement and any adjustment of the tariffschedules which may bc considered desirable.

4. Ti. Agreement should conform in every way to theprinciples laid down in the Charter and should not containany provision which would prevent the operation of any,provision of th. Charter.

5. The tariff concessions granted under the Agreementshould be provisionally generalized to th. trade of othercountries pending the consideration by the InternationalConference on Trade and Employment of the questionwhether benefits granted under the Charter should beextended to countries which do not join the InternationalTrade Organization and which, therefore, do not acceptth. obligations of Article 24.

Section I.-Creation of a Provisional Agency pending theEstablishment of the International Trade Organiza-tion

Certain of the provisions of the General Agreement onTarifs and Trade, for example, those incorporatingArticle 34 of thi Charter (Emergency Action on Importsof Particular Products) and Article 35 of the Charter(Nullification or Impairment), will require for theirsuccessful operation the existence of an international body.It is proposed, therefore, that the members of the Prt-paratory Comrnittee, which make effective the GeneralAgreement on Tariffs and Trade, should create a pro-visional international agency for this purpose. Titisprovisional agency would go out of existence upon theestablishment of the International Trade Organization.Section J.-Relation of the General Agreement on Tariffs

and Trade to the International Trade Organizationafter its Establishment

Interim Tariff Committecz. The Charter as now formulated provides in Article

67 that the countries which make effective the GeneralAgreement on Tarifs and Trade shall constitute theoriginal members of the Interim Tariff Committee to beset up within the International Trade Organization afterthe International Conference on Trade and Employmentbas met and the Organization has been established.

z. The Interim Tariff Committee wlll have the func-tion of determining whether (with respect to any nego-tiations subsequent to those culminating in the GeneralAgreement on Tarifs sud Trade) any member of theOrganization bas failed to live up to its obligations regard-ing tariff negotiations and, under paragraph (3) of Article24 of the Charter, of authorizing compElining membersto withhold tariff benefits from offending members. Thefollowing points should be' noted with regard to thsfunction:

(a) A member of the Organisation may be admittedto membership in the Committee when the member bascompleted tarif negotiations "

comparable scope or

effect " to the negotiations already completed by theoriginal members of the Committee. Thus, what isachieved by way of tariff action in the General Agree-ment on Tarifs and Trade will become the standard

-'to which members of the Organization will be expectedto conform in order to obtain membership of the-Interim TarifE Committee. In applying itis standardthe- Committee should have regard to the provisions ofthe Charter as a whole.

(b) Since it is agreed that the original members ofthe Interini Tariff Committee will have taken adequatesteps toward fulfilment cf the tariff obligations of tie

Charter in respect of negotiations among themselves (se.Article III of tho draft General Agreement on Tarifand Trade), the Committee may not authorize oneoriginal member of the Committee to withhold tariffconcessions from another original member of the Come-mittee.0 This would bc without prejudice, of course,to any decisions reached, under the auspices of th.Organization, regarding a second series of tariff nego-tiations among the members of the Committee.

(c) Members of the Interim Tariff Committee must,in negotiations with members of the Organization whichare not members of the Committee, be prepared toconsider concessions on products of apterest to thelatter wbich were not dealt with in tho originalnegotiations. Refuse to negotiate on such productsmight warrant a legitimate complaint. Accordinglythe Committee could in such cases authorize a memberof the Organization, which is not a member of theCommittee, to withhold, tariff benefits from a memberof the Committee. However, the extent to which amember of the Organization, which is not a memberof the Committee, might withhold tariff benefits froma member of the Cominittee would be limited only totariff concessions which the former had already madepursuant to Article 24 and general tariff! penaltiescould not bo applied.

(d) The authority of the Committee would ia aelcases be limited to granting permission to a memberof the Organization to withhold tariff benefits fromanother member. In no event could the Committeocompel a member to withhold benefits.

Procedure for Broadening Membership in the InterimTariff Committec through Additiono TariffNegotiations.

z. Procedures must be developed for assuring, bynegotiation, action for the reduction of tarifs and theelimination of preferences by members of the Organiza-tion, which are not parties to the General Agreementon Tarifs and Trade and hence would not be originalmembers of the Interinm Tariff Comnittee. The followingalternative procedures are suggested for consideration:

(a) The original members of the Interim Tariff Com-mittee would negotiate separate bilateral agreementswith members of the Organization, which are not mom-bers of the Committee, and the latter would negotiatesuch agreements between themselves. Th. Committeewould judge as to when a particular county had com-pleted enough such agreements. to entitle it to member-ship in the. Committee.

(b) A member of the Organization, which is not anoriginal member cf the Committeo, might offer to nego-tiate with the Conunittee a multilateral schedule of con-cessions similar ir scope and legal application to theschedules appende i to the General Agreement on Tariffsand Trade concluded among the original members ofthe Interim Tariff Committee and the original membersof the Committee would agree to amend the multilateralschedules appended to the General Agreement on Tarifsand Trade to the extent necessary to assure appropriate-concessions on products of which the country, not amember of the Committee, was a principal supplier.z. Whatever procedure is adopted, due weight should

be given in the negotiating process te concessions alreadymade as a result of prior negotiations.Section K-Tentative and Partial Draft Outline of Geieral

Agreement on Taiiffs and TradeThe governments in respect of which this Agreement is

signed:Having been named by th. 'Economic and Social Council

of the United Nations to prepare, for the consideration ofthe Internatinal Conference on Trade and Employmentla Charter for an International Trade Organisation cf thoUnited Nations;

Having, as the Prepasatory Com-iittee for theConference, recommended to the Conference the provisionsof such a Charter, the test of which is set forth in theReport cf tho. Preparatry Committee; and -

Being desirious of furtring the, objectives of the Con-ference by providing an example of concrete achievementcapable cf generalization to all countries on .quitableterms;Have,,through their respective Plenipotentiaries, agreed

as follows:'It should beneted that the Organization, as distinct Iom thio

Committee, could authorize an original member of the Committeeto withhold benefits from another original member of theCommittee under certain other provisions of the Charter.

52

ARTICLE 1z. During the life of the Agreement each signatory

government shall make effective in respect of each othersignatory government the provisions described below ofthe Charter for an International Trade Organization ofthe United Nations recommended in the report of thePreparatory Committee.

[There would follow a list of the articles to be includedin the Agreement.]

2. Functions entrusted to the proposed InternationalTrade Organization under any of the provisions of theCharter incorporated in this Agreement by virtue ofparagraph of thisArticle shall, pending the establishmentoftheOrganization, be carried out by a provisional inter-national agency consisting ai delegates appointed by thecignatory governments.

ARTICLSE IIWith regard to Articles 24, 32 and 33 of the Charter,

which relate to negotiations fori. The reduction of tariffs and the elimination of tariff

preferences, and2. Parallel action by state-trading enterprises,

the signatory governments declare that they have, byvirtue of Article m of this Agreement, taken this steptowards fulfilment of the obligations of these Articles inrespect af themselves and that they stand ready, in con-farmity witii the spirit of these Articles, to undertakesimilar negotiations with such other governments as maydesire ta become members iof the International TradeOrganization.

ARTICLE IIIEach signatory government shall accord to th. com-

merce of the customs territories of the other signatorygovernments tho treatment provided for in the appropriateSchedule annexed to thus Agreement and made an integralpart thereof.

ARTICLE IV(This Article would set forth the general exceptions

provided for in Article 37 of the Charttr.)ARTICLE V

(This Article would reproduce the provisions ofArticle 38 of the Charter relating to territorial application.)

ARTICLE VI(This article would permit revision of the Agreement, by

agreement among the signatories, if necessary or desirablein order to take account of changes in the Charter effectedby the International Conerence on Trade and Employ-ment.)

ARTICLE VIl(This Article would provide for the entry into force of

this Agreement, its duration, and its termination. TheAgreement would remain initially in force for three years.If not terminated at the end of the three-year period(which would require six months' prior notice), it wouldremain in force thereafter, subject to termination on sixmonths' notice.There would be a number of purdly technical and oa

purely legal provisions.)

ANNEXURE 11

United States Draft Charter

FOREWORDIn December I945 the Government of the Unired States

published and transmitted to other governments for theirconsideration a document entitled Proposals for Expansionof Word Trade and Employment.These Proposals put forward the idea that there should

be established an International Trade Organization of theUnited Nations, the members of which would agree toconduct their commercial relations in accordance with rilesto be set forth in the Charter of the Organization. TheProposals contained suggestions for rules to govern tradebarriers, restrictive business practices, intergovernmentalcommodity arrangements, and the international aspects ofdomestic employment policies and outlined a suggestedstructure for the International Trade Organization itself.Tie governments of several other countries have expressedtheir general agreement with these suggestions.

In February 1945 the Economic and Social Council of theUnited Nations, at its first meeting, adopted a resolutioncalling for an international conference on trade and em-ployment to consider the creation of an International TradeOrganization. It also established a Preparatory Committee

of Ig countries to arrange for the conference and to preparea draft Charter for such an Organization. The PreparatoryCommittee is to meet in London in the fall of 1946.

In preparation for the conference, the Governceat of theUnited States has prepared an elaboration of its Proposalsin the form of a suggested Charter for the InternationalTrade Organization. Copies of the suggested Charter havebeen transmitted to the Secretary-General of the UnitedNations and to the other governments named by theEconomic and Social Council to serve on the PreparatoryCommittee.The suggested Charter is the work of many persons of

competence and experience in the departments and agenciesof the United States Government. It is put forward, how-ever, as a basis for discussion and not as a document-expressing the isxed or fnal views of this Government. Th.draft should clarify possible obscurities and remove anymisunderstandings to which the condensed language oa theProposals may have given rise.

W. L. CLAYTON,Under Secretary of Statefor Econoenic Affairs.

CONTENTS

Establishment provisions ... ... ... ...

.CHAPTER I. PURPOSESArticle z. General purposes e& the Organization.

CHAPTER II. MEMBERSHIPArticle 2. Membership . ... ... ... ...

'CHAPTER m. EMPLOYMENT PROVISIONSArticle 3. Relation of employment to purposes

Organization ... ...Article 4. General undertaking to promote full employnuArticle 5. Avoidance of certain employment measuresArticle 6. Consultation and excbangc of information

matters relating to employment ...Article 7.Assignament of functions to Economic and Soc

Council ... ... ... ... ...

Pagc- Page53 CHAPTER IV. GENERAL COMMERCIAL POLICY

SECTION A. GENERAL COMMERCIALPROVISIONSArticle 8. General most-favoured-nation treatment -5

-53 Article 9. National treatment on internal ta.xationandregulation ...4

Article 10. Freedom of transit .. 5453 Article ri. Antidumping and countervailing-duties *54

Article i2. Tarif valuation ....Article 13. Customs formalities ... . ...Article 14. Marks of ongi a.-......

of Article 15. Publication and administrtion of trade regula-...53 tions-advance notice of restrictive regulations 5

e 5tS4 Article 16. Information, statistics and trade terminology ... 5654 Article 17. Boycotts ... .. - -. ... 56

on SCTION B. TARSPFS ANDTARIFF PREFERENCEArticle 18. Reduction of tariffs and elimination of

54 preferences ....

53

SECTION C. QUANTITATIVE RESTRICTIONSArticle 2g Generâl elimination of quantitative restrictionsArticle 2o. Restrictions to restore equilibrium in the balance

ai payment ... ... ...Article ai. Nondiscriminatory adnmInistration oa quantitative

restrictions ... ... ... ... ...Article a2. Exceptions from rule of nondiscrimination ...

Article 23.

Article 24.

Pagc

57

57

5858

.5858

SECTIOND. EXCHANGE CONTROLElimination of exchange restrictions in relationto current commodity transactions ... ...

Nondiscrimntry administration of exchangerestrict ons ... ... ... ... ...

SECTION E. SUBSIDIESArticle 25. General undertaking regarding subsidies-elim-

ination of export subsidies-exceptions ... 58SECTION F. STATE TRADING

Article 26. Nondiscriminatory administration of state-trading enterprises *-. *-- .- .-- S9

Article 27. Expansion of trade by sta'e monapolies ofindividual products ... ... ... ... 59

Article a8. Expansion oa trade by complete state monopoliesof import trade ... ... ... ... ... 59

SECTION G. EMERGENCY PROVISIONS-CONSULTATION-NULLIFICATION OR IMPAIRMENT

Article 29. Emergency action on imports of particularproduct ..- ... ... ... ... 59

Article 30. Consultation-nullification or impairment ... 60SECTIONH. RELATIONS WITH NON-MEMBERS

Article 31. Contractual relations with non-Members-treatment of trade of non-members ... ... 60SECTION I. GENERAL EXCEPTIONS

Article 32. General exceptions to Chapter IV. ... ...

SECTION J. TERKITORIAL APPLICATIONArticle 33. Territory application of Chapter IV-eustoms

unioans-frontier trailc ... ... ... ...

60

60

CHAPTER V. RESTRICTIVE BUSINESS PRACTICESArticle 34. Policy toward restrictive business practices ... 6oArticle 35. Procedure with respect to complaints ... ... 61Article 36. Studies and conferences relating to restrictive

business practices ... ... ... ... 6iArticle 37. Obligations of Members ... ... ... ... 6rArticle 38. Supplementary enforcement arrangements ... 6rArticle 39. Continued effectiveness of domestic measures

against restrictive business practices ... ... 62Article 40. Exceptions to provisions of Chapter V ... ... 62CHAPTER VL INTERGOVERNMENTAL COMMODITY

ARRANGEMENTSArticle 41. General statement regarding intergovernmental

.commodity arrangements ... ... 6zArticle 42. Special commodity studies .62Article 43. Commodity conferences ... 62

Article 44.Article 45-

Article 46.

Article 47.Article 48.

Article 49.

PageObjectives of intergovernmental commodityagreements ... ... ... ... ... 62

Principles gove.ning the institution of inter-goveramental commodity agreements ... 6«

Principles and requirements of intergovern-mental commodity agreements ... ... 62

Commodity Councils ... ... ... ... 63Additional obligations of Menmbers in respect ofintergovernmental commodity agreements ... 63

Exceptions to provisions relating to intergovern-mental commodity agreements ... ... 63

CHAPTER VII. ORGANIZATIONSECTION A. FUNCTIONS

Article 5o. Functiosis of the Organization ... ... ... 63

SECTION B. STRUCTUREArticle S-. Structure of the Organizatioa ... ... ... 64

Article 52.Article 53.Article 54.Article 5S-Article 56.

Article 57.Article 58.Article 59.

Article 6o.

Article 6r.Article 62.Article 63.Article 64.Article 65.Article 66.

Article 67.Article 68.Article 69.Article 70.

Article 71.Article 72.

Article 73.Article 74.articlee 75.Article 76.Article 77.Article 78.Article 79.

SECTION C. THE CONFERENCEConferenco-membership ... ...Conference-voting ... ... ...Confereace-sessions, procedure and officersConference-powers and duties ... ...Interim Tariff Committee ... ...

SECTION D. THE EXECUTIVE BOARDExecutive Board-membership... ...Executive Board-voting ... ...Executive Board-sessions, procedureolficers ... ... ...

Executive Board-powers aîîd duties ...

6404G46464

... 64

... 64and

... 6S

... 6S5SECTION E. TaE COMMIssIONS

Establishment of commissions. ...Composition and procedure of commissions ...General functions of commissions ... ...Functions of Commission on Commercial PolicyFunctions of Commission on Business PracticesFunctions of Commodity Commission...

SECTION F. TuE SECRETARIATComposition of Secretariat ... ...Director General ... ... ... ...Deputy Directors General ... ...Secretariat staff ... ... ... ...

6s65656s56s65

... 66... 66... 66... 66

SECTION G. MISCELLANEOUS PROVISIONSRelations with other organizations ... ... 66International responsibilities of personnel ofOrganization ... ... ... ... ... 66

Legal capacity of Organization ... ... .. 66Privileges and immunities of Organization ... 66Amendments to Charter ... ... ... ... 67Interpretation and settlement of legal questions 67Contributions of Members. 67Entry into force .61Withdrawal and termination ... ... 6;

SUGGESTED CHARTER FOR AN INTERNATIONAL TRADE ORGANIZATIONOF THE UNITED NATIONS

ESTABLISHMENTThe International Trade Organization of the United

Nations is hereby established and shal operate in accord-ance with the following provisions:

CKAPTER I.-PURPOSESARTICLE I

General Purposes of the OrganizationThe purposes of the Organization shall be:

(I) To promote the solution of problems in the field ofinternational commercial policies and relations throughconsultation and collaboration among Members.

(2) To enable Members to avoid recourse to measuresdestructive of world commerce by providing, on a re-ciprocal and, mutuafly advantageous basis expandingopportunities for their trade and economic development.

(3) To encourage and assist the industrial and generaleconomic development of Member countries, particularlyof those still in the early agess of industrial development.

(4) In general, to promote national and international-action for the expansion of the production, exchange andconsumption of goods, for the reduction of tariffs andother trade barriers, and for the elimintion of all forms

- of discriminatory treatment international commerce;thus contributing to an expanding world economy, to theestablishment an maintenance all countries afhio h

levels of employment and real income, and to thecreation.of economic conditions conducive to the main-tenance of world peace..

(t) To provide a centralized agency for the coordina-.tion of the work of MIembers to fthe above ends.

CRAPTER II.-MEMBERSHIPARTICLE 2

Mlernbershipz. The original Members of the Orgamization shall be

those countries '.represented at the United Nations Con.ference on Trade and Employment which accept the provi.sions of this Charter by 31st December, sg.4, or, in thtevent that this Charter has not entered into force by thatdate, the countries which have agreed to bring this Charterinto force pursuant to the proviso to paragraph 3 oiArticle 78.-

2. Membership in the Organization shail be open to sncbother countries as accept the provions of this Charter,subject to the approval of the Conference on recommendation of the Executive Board. :

3. The Conference shal establish procedures that wMopen a membership in the Organization to the UnitedNations on behalf of the. trust territories for which theUnited Nations is the administering authority.

CERaa Im.-EUPLOaYUr PROVISIOaSARTICLE3

Relation of Bmpioyment to Purposes of OrganiszationThe Members recognize that the attainnent and main-

tenance of useful employment opportunities for those ablewlfllng,; and seeking ta work are essential to the full realize.tion of the purposes af the Organiatian. .They also recog-nize that damec prgram ta maintain or expandemployment should b`e conuistènt wit these purposes.

54

ARTICLE 4

General Undertaking to Promote Full EmploymentEach Member shall take action designed to achieve and

maintain fuil employment within its own jurisdictionthrough measures appropriate to its political and economicinstitutions.

ARTICLS 5

Avoidance of Certain Employment MeasuresIn seeking to maintain or expand employment, no

Member shall adopt measures which would have the effectof creating employment in other countries or which areincompatible with undertakings designed to promote anexpanding volume of international trade and investment.

ARTICLE 6Consultation and Exchange ut Information or Matters

Relating to EmploymentThe Members agree that they will: (I) make arrange-

ments for the collection, analysis, and exchange of informa-tion on employment problems, trends, and policies and forthe submission at regular intervals of reports on themeasures adopted to give effect to Article 4; (2) consultregularly on employment problems; and (3) hold specialconferences in case of threat of widespread unemployment.

ARTICLE 7Assignment of Functions to Economic and Social Council

In accordance with the Charter of the United Nations,the Economic and Social Council will be responsible forfurthering the objectives of Chapter III and supervisingthe fulfilment of the obligations assumed under Article 6.

CEAPTER IV.-GENR.AL COMMERCIAL POLICYSection ;4.-General Commercial -Provisions

ARTICLE 8

Gentrai ltost-Favored-Nation TreatmontI. With respect to customs duties nnd charges of any

kind imposed on or in connection with importation orexportation or imposed on the international transfer ofpayments for imports or exports, and with respect to themethod of levying such duties and charges, and withrespect to ail rules and formalities i connection witbimportation or exportation, and with respect to all mattersrelating to internal taxation or* regulation referred to inArticle g, i ny advantage, favor, privilege or immunitygranted by any Member. country to any productoriginating in or destined for any other country, shall beaccorded immediately and unconditionally to tue likeproduct originating in or destined for ail other Membercountries. The principle underlying this paragraph shallalso extend- to 'the awarding by Members of govern-mental contract for public works, in respect of whicheach Member shall accord fair and equitable treatmentte the commerce of the other Members.

2. The provisions of-paraçraph I of this Article shallnot be construed to require. the eimintion of anypreference in the rate of ordinary import customs dutywhich does not exceed the preference i force in anyMember country on I Joly, :939, and which falls withinthe descriptions set forth in (a) or (b), below, but suchpreferences shall in no event be increased above theirlevel on I July, I9g46, and shall be subject to processesof elimination pursnant to the provisions of Article s8:

(a) Preferences in force exclusively between territoriesin respect -of which there existed on 1 July. I939,common sovereignty or relations of protection orsuzerainty. ' Each Member toe which this provisionapplies shall provide a list of snch territories in respectof which preferences were in force on that date, whichlists shall be incorporated in an annex to this Charter.

(b) Preferences in force exclusively between theUnited States of Armerica- and the Republic of Cuba.

ARTICLE 9National Treatm"st on Intea Taxation and Regulation- . The products of any Member country imported into

any other Member country shaUbe exempt from, internaltaxes and other internal charges higher than those im-posed on like products of national crigin, and shall beaccorded treatment no less favorable than that accordedlike products of national origin lin respect of ahl internallaws, regulations or requirements affecting their sale,trasrtation or distribution or aifecting their mixing,

processing, exhibition or other use, including laws andregulations governing the procurement by governmentalagencies of supplies for publie use other than by or forthe military csta bishment. The provisions of this para-graph shall b. u2derstoOd to precude the application ofintornai requments restricting the amount or proportionof an importubd product permitted to bomixed, processed,.exhibited or useod.

z. The Members recognize that the imposition of in-ternal taxes on the products of other Member countries,for the purpose of affording protection to the domesticproduction of competitive products, would bo contraryto the spirit of this Article, and they agreo to taire suchmeasures as may b. open to thera to prevent in thefuture the adoption of new or higher taxes of this kindwithin their territories.

ARTICLE 10Freedom of Transit

r. There shall b. freedom, of transit through theMember countries via the routes. mort convenient forinternational transit for traffic in transit to or from otherMember countries.

2. Any Member may require that traffic in transitthrough its territory be entered at the proper custom-house, but, except in cases of failure to comply withapplicable customs laws and regulations, such tragiccoming from or going to other Member countries shallbe exempt frora the payment of any transit duty, customsduty, or similar charge, and shal not be subject to anyunnecessary delays or restrictions.

3. All charges and regulations imposed by Members ontraffic in transit to or from other Member countries shallbe reasonable, having regard to the conditions of thetraffic.

4. With respect to ai! charges, rules, and formalities inconnection with transit, each Member shall accord 'totraffic in transit to or from. any other Member country-treatment no less favorable than the treatment accordedto traffic in transit to or from any other country.

5. Each Member shall accord to products which havebeen in transit through any other Member country treat-ment no less favorable than that which would have. beenaccorded to such products had they been transported fromtheir origin to their destination without going throughsuch other Member country.

6. Persons, baggage and goods, and also vessels,coaching and goods stock, and other means of transport,shall be deemed to be in transit across the territory of aMember wben the passage across such territory, with orwithout transshipment, warehousing, breaking bulk, orchange in the mode of transport, is only a portion of a

Complete journey, beginning and terminating beyond thefrontier of the Member across whose territory the transittakes place. Traffic of this nature is termed in thisArticle " traffic in transit."

ARTICLE II

Antidumping and Countevailing Duties-r. No antidumping duty shall be imposed on any

product of any Member country imported into any otherMember country in. excess of an amount equa; to themargin of dumping under which such product is beingimported. For the purposes of this Article, the marginof dumping shal be understood to mean the amount bywhich the price of a product exported from one countryto anote.er la less than (a) the comparable price chargedfor the like or similar product tobuyers in the domesticmarket of tho exporting country, or, (b) in th. absenceof such domestic price, the highest comparable price' atwhich the like or similar product is sold for export to anythird country, or (c) in the absence of (a) and (b), the.cost of production of the productln the country of origin;with due allowance in'each case for differences la con-ditions and terrs of sale, for differences in taxation; andfor other differences affecting price comparability.-

2. No countervailing duty shahl be imposed on anyproduct of any Member country imported idite any otherMember country in excess of an amount equal to theestimated bounty or subsidy ascertained to have beengranted, directly or indirectly, on the production or exportof such product in the country of origin or exportation.

3. No product of any Member country imported intoany other Member country sha1l' be subject to anti-dumping or comntervailing duty by reason'cf the exemp-tion of such product from duties or taxes imposed i thecountry of origin or exportation upon the like productwhen ronsumned domestically.

554..N oproduc t of any Member country imported into

aaay other Member countryshall be subject ta bath anti-dumping and countervailing duty ta compensate for thesame situation of dumping or export subsidization.5. Each Member undertakes that as ageneralrule it

wwil not impose any antidumping duty or countervailingduty on the importation cf any product ofoth er Membercouatries unless it determines that the dumping or sub-

sidization, as thecase maybb, underwhich such productis imported, is such as te injure or threaten to injure adomestic industry, or is sucb as to prevent the establish-ment cf a domestic.industry.

ARTICLE 12

Tarif ValuationI. Members undertake towork toward the standardiza-

tion,insofar as practicable, ofdefinitions of value and ofprocedures fordetermining the value of products subjecttecustomm duties or other restrictionsbased upon orregulated in any manner by value. With a viewtofurthering such cooperation, the Organization is authorizedto investigate and recommend to Memberssuch bases andmethods for determining the value of products as wouldappear to be best suited to the needs cf commerce and

most capable of widespread adoption.2.The Members recognizethe validity of thefollowing

general principles oftariff valuation, and theyundertaketo give effect to sucb principles,in respect ofall productssubject to dutybased upon or regulated by value, at the

earliest practicable date:(a)The value for duty purposes of imported products

should be based on the actual value cf thekind of

imported merchandise on which dutyis assessed, or thenearest ascertainableequivalent of such value, andshould not b. based on the value cf products of national

origin or on arbitrary orSctitious valuations.(b) The value for duty purposes of any imported

product should net include the amount cf anyinternaltax, applicable within the country cf origin or expert,from whichthe imported product bas been made exempt.

(c)In converting the valueof any imported productfrom one currency ta another, for the purposeof assess-ing duty, the rateof exchangetobe used shouldbefixedin accordance with prescribed standardsto reflecteffectively the current valueof each currencyin com-mercial transactions, and until the eliminationof duaor multiple ratesof exchangeeither one or more thanone rate for each dual- or multiple-rate currency maybe so fixed.

(d) The bases and methods for determiningthe valueof products subjectto duties regulated by value shouldb. stable and should b. pubishedin full detail,in orderthat traders may be enabled to estimate, with a reason-able degree of certainty, the amountof duty likely tobe imposed..

ARTICLE 13Customs Formalities

z. The Members recognize the principle that subsidiaryfees and charges imposed on or in connection withImportation or exportation should be limitedin amount tethe approximate cost of services rendered andshould notrepresent an indirect protection to domestic products ora taxationof imports or exports forfiscal purposes. Theyalso recognize the need for reducing the number and

diversity cfsuch subsidiary fees and charges, for mini-mizing the incidence and complexity cf import and exportformalites, and for decreasing and simplifying import andexport documentationrequirements.

2. Members undertake ta review their customs laws andregulations with a view to giving effect to the principlesand objectives of paragraph of this Article at the earliestpracticable date and shal reportto the Organization fromtimo. te tire on the progress made. The Organization isauthorized to request such reports of Members and to assistand cooperate with then in carrying ont the provisions ofthis paragraph.

3. Greater than nominal penalties shall net b. imposedby any Member connection with the importation of any

product cf any other Member country because of errorsdocumentation which are obviously clerical in origin or

with regard to which good faite can be established. More-over. Members shall remit any penalty imposed on or inconnection with the importation of any product of anyother e er country if it is officially found teat thepenalty mas been imposed. because of actions which resultedfrom errors-or advice of responsible customs officials.

4. The provisions cf this Article shall extend t'Ofees,charges,ffrmaities and requirements relating taaalcustoms matters, including

(a) Consular transactions;(b) Quantitative restrictions;(c) Licensing;(d)Exchangg regulations(e) Statistical services;(f) Dcuments, documentation andcertnction;ton(g) Analysis and inspection; and(k) Quarantine, sanitation and fumigation (plantanimal andhumann.

ARTfICLMark of Origin

x. The Membersagree that in adopting and implementinglaws and regulations relating ta marks of origin, thedifflculties and inconveniences which such measures naycause ta the commerce and industry of exporting countriesslxoud bc reduced ta a -inimum.

2. Each Membershall accordto the products of eachother Member country treatment with regard tamrkinngrequirements no less favorable than thetreatmentc ccordedlike products of any third country.

3. Whenever administratively possible, Members shaUpermit required marks cf origin ta be imposed at the timeof importation.

4. The laws and regulationsoftho Members relating tathemarking cfimported productsshall be such as tapermitccompiancewithout seriously damaging the pro-ducts,or material reducing their value, or unreasonablyincreaslngtheir cost.

5. Members shall exempt from their marking require.mentsthe following products:

(a) Products incapableof being marked;(b) Products which cannotbernarked except at un-

reasonable expense;(c)Products in transit and their containers;(d) Products in bond and their containers;(e) Samples and products without commercial value

and their containers;(t) Containersof properly marked productsof a type

notordinarily imported and sold at retail in scalericontainers;(g) Productsof a type ordinarily imported and sold

at retailin sealed containers, provided such containersare properly marked;

(h) Products over 20 yearsold and their containers;(i) Products intended for the personal useof theim-

porter orhis family or for use inhisfactory or placeofbusiness, and not intended for sale, and the containersof such products;

(j) Crude substances and raw materials; and also thecontainersof such products if the products areintendedfor use by the person for whom the importation is made,or forhis accountin manufacturing new and differentproducts.6. No special duty or penalty shall be imposed byaiy

Member for failure to comply with the parking require-ments prior to importation unless corrective marking basbeen unreasonably delayed or faise marks have beenintentionally afiixed or the required marking bas beesintentionally omitted.

ARTICLE 15Publication and Administration of 'Tade Regtdations-

Advance Notice of Restndcive Regulationsi. Laws, regulations, decision of judicial authorities

and administrative rulings of general application madeeffective by any Member, pertaining to the classificationor valuation of.products for customs purposes, orto ratesof duty, taxes- or other charges, or to requirements,restrictions or prohibitions on imports or exports or on thetransfer of payments therefcr, or affecting their sale ordistribution, or affecting their. warehousing, inspection,exhibition, processing, fixing or other use, shal be pub-lished promptly in such a manner as to enable tradersand governments to become acquainted with them.Agreements in force between the government or agovernmental agency of.:any Member country and thegovernment or a governmental agency of any other country.affecting international trade policy shal also be published.Copies of such laws. regulations, decisions, rulings and'

56agreements shall be communicated promptly to thoOrganization. This paragraph shall not require anyMember to publish administrative rulings which woulddisclose confidential information, impede law enforcement,or otherwise be inimical to the public interest.

2. Members shall administer in a uniform, impartial andreasonable manner all laws, regulations, decisions andrulings of the kind described in paragraph I of this Article.Moreover, they undertake to raaintain, or to establish assoon as practicable, for the review and correction of ad-ministrative action relating to customs matters. judicial oradministrative tribunnas which arc in fact independent ofthe agencies entrusted with administrative enforcement.Finally, each Member will enforce all measures necessaryto suppress and prevent the exaction of charges and theprescription of requirements in respect of internationaltrade which are not provided for in its published laws orregulations.

3. No law, regulation, decision or ruling of any Membereffecting an adv-ance in a rate of import or export duty orother charge under au established and uniform practice. orimposing a new or more burdensome requirement, restric-tion or prohibition on imports or exports or on the transferai payments therefore, sh*all, as a general rule, be appliedta products af any other Member already en route at thetisne af publication thereof ia accordance with paragraph Iai this Article: Provided, That if arny Membcr customarilyexempts from such new or increased obligations productsentered or withdrawn from warehouse for consumption, orcleared for export, during a period of thirty days after thedate of such publication, such practice shall be consideredfull compliance with tais paragraph. The provisions ofthis paragraph shall not apply to antidumnping orcountervailing duties.

ARTICLE I6Information, Statistics and Trade Terminology

I. Members agree to make available promptly to theOrganisation, in as detailed and accurate a manner aspracticable, such statistics relating to their foreign tradeas the Organization deems necessary in connection withthe fulfilment of its functions, including as the minimumessential to the effective discharge of its duties data onthe following subjects:

(a) Exports and imports of merchandise, distinguishingin so far as possible the movement of transit trade, andtaking into acco rce desirability of uniformity ininternational trade a.

(b) Governmental revenue from import and exportduties and from other taxes imposed on products movingin international trade, and subsidy payments affectingsuch trade.2. Statistics of exports and imports of merchandise

furnished to the Organizationashall so far as practicable berelated ta tariff classifications and shall be in such form asto reveal the operation of any restrictions on importationor exportation which are based upon or regulated in anymatter by quantity or value, or by amounts of exchangemade available.

3. Members agree to make available to the Organization,in as detailed and accurate a manner as practicable. suchstatistics on other economic subjects as the Organizationdeems necessary in connection with the fulfillment of itsfunctions, and in particular statistics relating to balancesof payments and prices, so far as the statistics are not beingfurnished to any other international organization havingfunctions to which the statistics are more particularlyrelated and from, which the Organization can obtain therequired information.

4. The Organisation shal act as a center for the collec-tion and exchange of statisfical and other informationrelating ta intemnaffoanal trade, thus facilitating thU pre-paratian ai studio designed -to assist Yembers indeveaping policies which further the purposes of thisCharter. The Organizatian shallmake such data availableta thc Economic and Social Council of the United Nationsand to other interested international organizations andshall, in cooperation with these organizations, seek tobring about improvements in the methods of collecting,analyzing and publishing economic statistics, particularlythose relating to international trade, and to promote theinternational comparability of such statistics, including theinternational adoption of standard commodity classifica-tions. The Organization shall also, in cooperation withsuch other org nations, compile and publish summarycomparative statistics rating ta Uhe subjects specified inparagraph of this Article. -

5. Members agree to publish the statistics referred to inparagraph iof this Article promptly and in as much detailas practicable and to cooperate with the Organization incarrying out the objectives of parag-aph I of this Article.

6. Members undertake to co-operate with the Organiza-tion in promoting the international adoption of standarddefinitions of terms customarily used in commercialpractice, and in developing standards to which goods maybe manufactured or graded. Members undertake tocooperate in introducing such standards as are found to bedesirable and practicable to encourage the freer movementof goods in international trade.

7. The Organisation, in cooperation with the otherorganizations referred to in paragraph 4 of this Article,'may adopt standards, nomenclature, terms and forms to beused in official documents and statistics of Members in thefield of international trade. Such standards, nomenclature,terms or forms shall automatically become effective as toall Members of the Organization after notice has beengiven oftheir adoption by the Organization, except for suchMembers as may notify tUc Director General of rejectionor reservations within the period stated in the notice,which period shall be not less thai six months.

ARTICLE 17BoycottsNo Member shall encourage, support or participate in

boycotts or other campaigns which are designed to dis.courage, directly or indirectly, the consumption within itsterritory of productsai other Member countries on groundsai origin, or the sale ai products for consumption withinother Member countries an ground iof destination. More-over, cai Member shall discourage, by such means as maybc available to it, such campaigns by political entitieswithin its jurisdiction.

Section B.-Tariffs and Tariff PreferencesARTICLE 18

Reduction of Tariffs and Elimination of PreferencesEach Member, other than a Memnber subject to the

provisions of Article 28, shall, upon the request of anyother Member or Members, enter into reciprocal andmutually advantageous negotiations with such otherMember or Members directed to the substantial reductionai tarifac (or ai marginal ai protection afforded bly statetrading) on imports and exports, and to the eliminationi airport tarif preferences. These negotiations shall pro-ceed in accordance with Uie following rules:

(a) Prior international commitments shal not be per-mitted to stand in the way of action with respect totariffpreferences.

(b) AUl negotiated reductions in most-favored-nationimport tariffs shall operate automatically to reduce oreliminate marginal ofpreference. so that, inrespect ofanyproduct on whichUi most-favored-nation rate ofduty isreduced or bound against increase pursuant to the nego-tiations, the margin of preference which may apply tosuch product may not exceed the margin by which themost-favored-nation rate, as rtduced or bound againstincrease, exceeds the preferential rate in force onIJuly, 1939.

2. Each Member' participating in negotiations pursuantta paragraphs aif thia Article shall keep the Organisationinformed ai Uic progress t'sereof and shall transit to-SheOrganisation a copy ai Uie agreement or agreements incor-poratingUic résulta ai suchnegotiations. --3. If any Member considers that any other Member las

failed, within. a reasonable period of. time, to fulfill itsobligations under paragraphi ofthis Article, suchMembermay refer Uie matter to the Organization, which shalinvestigate thematter and niale appropriate recommenda-tions to Utic Members concerned. The Organization, if itfinds that a Member bas, without sufficient justification,failed to negotiate withsuchcomplaining Member as .re-quiredby paragraph I of this Article, may determine thatthe complaining Member, or in exceptional cases theMembersof the Organisation generally, shall, notwithstand-ing the provisionsaf Article 8, beentitledtowithhold fromthe trade of the other Member any ofthe tariffreductionswhich the complaining Member, or the Members of theOrganization generally, as the case .may be, may havenegotiated pursuant to paragraph.i ofthis Article. and ifsuch reductions are in. fact withheld, such other Membershalh then be free, within sixty days after such action istaken, to withdraw from the.Organisation.on sixty days'written notice tothe Organization. The provisions of thisparagraph shalloperate in accordance with the provisionsof Article 56.

57

Section C.-Quantitative RestrictionsARTICLE 19

General Elimination of Quantitative Restrictionss. Except as otherwise provided elsewhere in this

Chapter,* no prohibition or restriction other than duties,taxes or other charges, whether made effective throughquotas, licenses or other measures, shall be imposed ormaintained by any Member country on the importationof any product of any other Member country, or on theexportation, or sale for export, of any product destined forany other Member country.

2. The provisions of paragrapb I of this Article shall notextend to the following:

(a) Prohibitions or restrictions on imports or exports,imposed or maintained during tho early post-war transi-tional period, which are essential to (i) the equitabledistribution among the several consuming countries ofproducts in short supply, whether such products areowned by private interests or by the government of ansMember country or (ii) the orderly liquidation of tem-porary surpluses of stocks owned or controlled by thegovernment of any Member country: Provided, Thatretrictions under (ii) of this subparagraph may bc im-posed by aay Member only after consultation with otherinterested Members with a view to appropriate inter-national action. Import and export prohibitions andrestrictions imposed or maintained under this sub-paragraph shall be removed as soon as the conditionsgiving rise to them have ceased to exist and, in anyevent, not later than z July, 1949: Provided, That thisperiod snay, in extraordinary and abnormal circum-stances, and with thb concurrence of tho Organization.be extended in respect of any product for. furtherperiods not to exceed six months each.

(b) Export prohibitions or restrictions temporarilyimposed to rehieve conditions of distress which are localto the exporting country and which are caused by severeshortages of foodstuffs or other essential products.

(c) Import and export prohibitions or restrictionsnecessary to the application of standards for the classifi-cation and grading of commodities in internationalcommerce.

(d) Export or import quotas imposed under inttr-govermnental comnrodity agreements concluded inaccordance with the provisions of Chapter VI.

(c) Import restrictions on any agricultural product,imported in any form. necessary to the enforcement ofgovernmental measures which operate (Î) to restrict thequantities of the lilke domestic product permitted to bemarketed or produced, or (ii) to restricta temporarysurplus of the like domestic product by making the sur.plus available to certain groups of domestic consumersfree of charge or at prices below the current market level.Any Member imposing restrictions on the importationof any product pursuant to this subparagraph shall givepublic notice of the total quantity or value of the productpermitted to be imported during a specified future periodand of any change in such quantity or value. Moreover,any restrictions isnposod under (i) of this subparagraphha not be such -as will reduce the total of imports

relative to the total of domestic production, as comparedwith the proportion between the two prevailing duringa previous representative period, account being takenin so far as practicable of any special factors which mayhave affected or may be affecting the trade la the pro-duct concerned.

ARTICLE 20

Restrictions to Restore Equilibriurt in the Balance ofPaymenas-

1.Notwithstanding the provisions of Article I9, any.Member confronted with an adverse balance of inter-national payments may, as an aid to the restoration ofequilibrium therein, impose or maintain restrictions on thequantity or value of merchandise permitted to be imported.The imnpositon or raintenance of restrictions under thisparagraph shal conform tothe conditions and requirementsset forth in paragraphs 2 or 3 of this Article, as the casemay ho.

2. Any Member which considers such action necessaryto restore equi llbrium la its balance of international pay-ments shallbe entitled to impose or maintainquantitative

See parapaph 2 of Article19; Article 20; .paragraph 10Article 22-andArticle 29.

import restrictions under paragraph i of this Article until31December, 1949: Provided, That any Mcmber availingitself of the privileges of this paragraph shall consult,through the Organisation, with the other Members affectedwith a view to assuring that the effects of such restrictionson their commercial interests are minimized to the fullestpossible extent compatible with the safeguarding of thebalance of payments of the Mcmber inmposing the restric-tions. Any Mcmber still maintaining such restrictions on3I December, I949, shall complete arrangements so thatno such restrictions shall remain in force on or after theexpiration of six months from that date.

3. Notwithstanding the provisions of paragraph 2 of thisArticle, any Member shall be entitled to impose balance-of-payments restrictions, whether during or after the transi-tional period provided for in paragraph 2 of this Article,subject to the following conditions:

(a) No Member shall impose such restrictions underthis paragraph unless such action is necessary (i) to arresta long continuing or large deficit in the Member's balanceof payments, or (i) la the case of a Member with verylow monetary reserves, to forestall a large deficit in theMember's balance of payments. Such restrictions under(i) shall be progressively relaxed -.;th the reduction ofthe deficit la the Member's balancee of payments and shaJbe completely removed upon the elimina tion of thedeficit in the Member's balance of payments. Suchrestrictions under (il) shall be progressively relaxed withimprovement in the Member's monetary reserves, andshal hccompletely removed with the attainment by theMember of adequate monetary reserves. The deficitor surplus in a Member's balance of payments shall beunderstood to mean its deficit or surplus on currentaccount, as defined in Article XIX (i) of the Articles ofAgreement of tho International Monetary Fund. AMembers monetary reserves shall bo understood tomean its reserves as defined in Article XIX(e) of theArticles of Agreement of the International MonetaryFund.

(b) Any Member imposing new restrictions, or con-tinuing beyond the transitional period restrictions im-posed pursuant to paragraph 2 of this Article, sha1 entermnto consultation with the Organization within thirtydays after the imposition of new restrictions, or afterthe expiration of the transitional period, as the casemay be. The Organization shall seek consultation withthe International Monetary Fund in reviewing, in thelight of the criteria set forth in (a) above, the balanceof payments or monetary reserves of any Member avail-ing itself of the privileges of this paragraph.

(c) Any Member which considers that any otherMember is applying import restrictions under this para-graph contrary to the letter or spirit of the undertakingsin this Charter with respect to such restrictions, or ina manner tending to impair the commercial relationsbetween the two Members, shall be entitled to brnngthe matter before the Organization for discussion, andthe Memnber imposing the restrictions shall undertakiein these circumstances to enter into discussions with aview toa mutually satisfactnry settlement of the matter.The Orgarization may determine that such restrictionsare not in harmony with the principles set forth in thisparagraph and in the event appropriate action fs nottaken within tL*irty days after such determinationany Member which considers that such restrictions haveimpaired its commercial relations with the Member im-posing the restrictions shal be freo, within sixty daysafter the date cf such determination, to suspend onsixty days' written notice tothe Organization the appli-cation to the trade of such Member of any of theobligations or concessions under this Chapter the suspen-sion of which the Organisation does not recommendagainst.

4.Restrictions maintained or imposed imder this Articleby any Member shall be so administered asæ to avoidunnecessary dislocation to the. trade of other Membershaving an interest in the exportation o£particular pro-ducts. To this end the Member maintaining or imposingsuch restrictions shaUapply thur to aUimportant productsin a manner as nearly uniform as practicable and shallin no event apply them in such-a manner as would pre-vent the continuous importation in minimum commercialquantities of any product (a) if imports of the productare supplied principally or in important part by any otherMember or Members, or (b) if.imports o! the product areimportanttothe maintenance of the economy of anyotherferaber engaged in exporting the .product thtee Membermaintaining or imposing such restrictions:

58ARTICLE 21

Nondiscriminatory Administration of QuantitativeRestrictions

1. No prohibition or restriction shall be imposed byany Member pursuant to this Section on the importationof any product of any other Member country, or on theexportation of any product destined for any other Membercountry, unless the importation of the like product of allthird countries, or the exportation of the lilo product toall third countries, respectively, is similrly prohibited orrestricted. In order to facilitate observation of the opera-

tion of the provisions of this paragraph in so far as they

relate to import restrictions, Members undertake that inthe application of such restrictions they will employ theuse of quotas, and will avoid the use of licensing or othernon-quota methods of restriction, to the fullest practicableextent.

2. In the case of import restrictions imposed in the formof quotas, the Member imposing such restrictions shallgive public notice of the total quantity or value of theproduct or products permitted to be imported during aspecified future period, and of any change il such quantityor value. If any Member imposing such quotas allots ashare of the total quantity or value to any other country,it shall allot to the other Member countries havingan important interest in the trade in the product withrespect to which an allotment has been made, shares basedupon the proportions of the total quantity or value suppliedby such Member countries during a previous representa-tive period, account being taken in so far as practicableof any special factors which may have affect or whichmay be affecting the trade in that product. No conditionsor formalities shall be imposed which would prevent anyMember country from fully utilizing the share of any suchtotal quantity or value which has been allotted to it. Theprovisions of this paragraph shall also apply to any tariffquota established or maintained by.any Member.

-3. In the case of import restrictions for which quotadeterminations have not been made, the Member imposingthe restrictions shall provide, upon the request of any otherMember having an interest in the trade in the productconcerned, aUl relevant information as to the administra-tion of the restriction, including information as to theimport licenses granted over a past recent period and thedistribution of such licenses. Restrictions under this para-graph shall in no event be applied by sources of supplyand no import license or permit utilized in connection withsuch restrictions shal require or provide that the licenseor permit utilized for the importation of the productconcerned from a particular country.

4. With regard to restrictions imposed in accordancewith paragraph 2 of this Article or under paragraph 2(e)of Article ig, the selection of a representative period forany poduct and the appraisal of any special factors affect-ingth trade in the product shall bh made initially by theMember imposing the restriction: Provided, That suchMember shall, upon the request of any other Memberhaving an important interest in the trade in that product,or upon the request of the Organization, consult promptlywith the other Member or with the Organization regthe need for an adjustment of the base period selected or

for the reappraisal of the special factors involved.

AICLE 22

Exceptions From Rule of Nondiscrimination

.. Members which are members of the InternationalMonetary Fund shall not be precluded by this Section fromapplying quantitative import restrictions (a) havingequivalent effect to any exchange restrictions which theMember is authorized to impose in conformity with ArticleVII of the Articles of Agreement of the InternationalMonetary Fund, or (b) essential to the maintenance, underArticle XX, Section 4(g) ofthat Agreement, of the commonpar value of the currencies of territories having a commonquota in the Fund.

2. The provisions of paragraphs 1, 2 and 3 of Article 21shallnot apply (a) in cases in which their application

would have the effect of preventing the Member imposingthe restrictions referred to in those paragraphs from utiliz-ing, for the purchase of needed imports, inconvertiblecurrencies accumulated up to 31 December, 1948, whichare inconvertible at the time of their use, or (b) to pro-

hibitions or restiction imposed- underza() (s) or (d) Article 19.

Section D.-Exchange ControlARTICLE 23

Elimination of Exchange Restrictions in Relation toCurrent Commodity Transactions

t. In order to avoid the imposition of trade restrictionsand discriminations through exchange techniques, theMembers agree that they will impose no restrictions on themaking of payments and transfers for such current inter-national transactions as consist of payments due inconnection with the importation of any product:Provided, That this obligation shall not prevent anyMember .'- imposing such restrictions on transactionswith non-M embers unless the Organization finds that suchrestrictions prejudice the interests of other Members.

2. The obligations of paragraph r of this Article shallnot prevent any Member which is a member of the Inter-national Monetary Fund from imposing restrictions inconformity with the Articles of Agreemeont of the Inter-national Monetary Fund: Provided, That no Member ofthe Organization shall invoke or continue to invoke theprovisions of Article XIV, Section 2, of the Articles ofAgreement of the International Monetary Fund for thepurpose of imposing restrictions on the making of pay-ments and transfers in connection with the importationof any product of any other Member, except suchexchangerestrictions as complement and correspond to quantita-tive restrictions authorized by, and meeting the require-ments set forth in, Articles 20, 21 and 22 of this Charter:And provided further, That the provisions of this para-graph shall not be construed to authorize any Memberof the Organization to impose restrictions on transactionswith any other Member by virtue of Article XI, Section 2,of the Articles of Agreement of the International MonetaryFond.

3. The Organization shall respect the authority and juris-diction in respect of exchange matters assigned to theInternational Monetary Fund by the Articles of Agree-ment of the International Monetary Fund and shall seekto cooperate with the Fund to the end that the Fundand the Organization may pursue a common policy withregard to exchange questions within the competence ofthe Fund and questions of quantitative restrictions orother trade measures within the competence of theOrganization.

4. This Article shall become effective upon the expira-tion of six months from the day on which this Charterenters into force.

,ARTILE 24

Nondiscriminatory Administration of Exchange Restric-tions

Members maintaining or establishing exchange restric-tions shall accord to the trade of other Members theequality of treatment with respect to allaspects of suchrestrictions required of members of the Fund under theprovisions of the Articles of Agreement of the Inter-.ational Monetary Fund, or, in cases in which the approvalof the Fund is required, the equality of treatment pre-scribed by the Fund after consultation with the Organisa-tion.

Section E.-SubsidiesARTICLE 25

General Undertaking Regarding Subsidies--Elimiiation ofExport Subsidies-Exceptions.. -

z. Except as provided in paragraph 2 and 3 of thisArticle, if any Member establishes or maintains anysubsidy. including any form of income or price support, tothe domestic producers of any product, which operates toincrease the exports of such product from, or to reducethe imports of such product into, the territory of the Mom-ber, such Member shal notify the Organisation in gas to the extent and nature of the suidization, as ta theanticipated effect of the subsidization an the quantity ofthe product imported into and exported from thete.rrtryof the Membor, and as to the conditions making the sub-sidization necessary. In any case in àhich it is deter-mined that serious injury ta the trade of any Member iscaused or threatened by the operation of any such subsi-dization, the Member granting such subsidiation shallundertake to discusswith the other Me«ber or Membersconcerned, or with the Organiation, the. possibilty oflimiting the subsidization.

592. Except as provided in paragraph 3 of this Article, no

Member shall grant, directly or indirectly, any subsidy onthe exportation do any product, or establish or maintainany other system which results in the sale of such productfor export at a Price lower than the comparable pricecharged for the like product to buyers in the. domesticmarket, due allowance being made for differences in con-ditions and ternis of sale, for differences in taxation, andfor other differences affecting price comparability. Thepreceding sentence shall not b. construed ta prevent anyMemberfrom exempting exported products from duties ortaxes imposed in respectt of like products when consumeddomestically or froma remitting such duties or taxes whichhive accrued. Members shall give effect te the provisionsof tus paragraph at th. earliest practicable date, but inany event not later than Shree years from th. day unwhich tis Charter enters into force. If any Member con-ulders Itself unable to makethe provisions of this paragrapheffective In respect of any specfied product or productsupor the expiration of such period, such Member'shall, atlsist three months before tieexpiration of such;'period,give to the Organisation a notice in writingto that effect,accompanied by an explanatory statement and an indica-tion as ta the extension of the period desired. It shallthen bedetermined whether such period should beextendedfor'the. Member desiring an extension in respect of theproduct or products concerned.

3. (a) Inany case in which it is determined that a speci-fied product is, or is likely ta become, in burdensome worldsurplus, tthe Members which are substantially interested inthe production, trade or consumption of such product shall,upon thi invitation of the Organization or of any suchMember, consult with each other with a view tothe adop-tion of measures to increase consumption and to reduceproduction through the diversion of resources fromuneconomic production, or with a view te seeking, if neces-sary, th. conclusion of an intergovernmental commodityagreement in accordance with the provisions of Chapter VIof this'Charter.

(b) If zt is determined that the measures provided for insubparagraph (a) of this paragraph have not succeeded, ordo not promise to succeed, within a reasonable period oftime, in removing, orpreventing the development of, aburdensome world surplus of the product concerned, thirequirements of paragraphs 1 and 2 of this Article shallceaseto apply inrespect of suchproduct as of the effectivedate of suh determination and shall not be reapplied inrespect of such product until a date determined un accord-ancowith proceduresapproved by the Organization.

(c) Notwithstanding the provisions of paragraphs 2 and3 (b) of this Article, no Member shall grant any subsidyon the exportation of any product whichhas the effect ofacquiring or that Member a share of world trade in thatproduct inexcess of the sharewhichit had during a previousrepresentative period, account being taken in se far aspracticable of any special factorswhichmay have affectedtionmay b. affecting the trade inthat product. The selec-tion of a representative period for any product and theappraisal of any special factors affecting the trade in theproduct shall b made initially by tho Member grantingthe subsidy: Provided, That suchMember shall, upon therequest of any other Member having an important interestin the trade in that .product,. or upon the request of theOrganization, consultpromptly with the other Member orwith the Organigation regarding the need for an adjust-ment cf thc liase period elected or for the reappraisalcf the~ upeclâl ftôi i-olved..4.Any determlnation requiré-oror appropiat to theopration of this Article shallbemade under proceduresestablishedbytheOrganization inaccordance with para.

graph6 ocf Article 5-Section F.-State TradingARTICLE 26

Nondiscriminarory Administration of State.Tradings.If any Member estabishes or maintains a state enter-

prse, wherever located, which imports,exports, purchases,sells, distributes or produces any product or service, or ifanyMemier grants exclusive or special privileges,.formallyor in effect, toaey enterprise te import. exports purchasesell, distribute or produceany product orservice.tie com-merce of each of the, otherMembers shall beac cordednoudiscminatory treatment, as compared withthie treat-'

ment accorded totie.commerce of any country other thanthatlu which ti, enterprs. is located iu respect of theaseoK silo vfybsu'c.i.ost cf. anrproduct or

service. To this ,nd such enterprise gjafl, in makgits external purchases"or sales of any product or servicebe influenced solely by commercial considerations, suclas price, quality, marketability, transportation and ten aof purchase or sale. The Member maintaining such stateenterprise, or granting exclusive or special privileges te anenterprise, shail, upon the request of any other M-mberhaving an interest in the trade in the product or serviceconcerned, or upen tho request cf tho O)rganization, pro-vide sucii speciSc and detalod information as will makepossible a doternination as te whether the operations ofth. enterprise are being conducted in accordance with therequirements cf this paragraphs.

2. For the purposes of this Article, a s.ate enterpriseshall b. understood to bo any enterprise over whoseoperations a Member' government exercises, directly orindirectly, a substantial measure of control.

ARTICLE 27Expansion of Trade by State Monopolies of Indiir.dua2

ProductsIf any Member, other than a Member subject.ta the

provisions of Article 28, establishes, maintain orautiiorises, formally or in effect, a complete. or sub-stantially complete monopoly of the importation orexportation of any product, such Member shall enter intonegotiations with otier Members, in the manner providedfor in respect of tarils under Article I8, with regard te(a) in the case of an import monopoly, th. maximummargin by which th. price for an imported productcharged by the monopoly in ethoe ome market may ex-ceed the'price at wwhicb suci''product is offered for saleto the monopoly by foreign supplier, or (b) in thi casef an expert monopoly, t maximum margin by which

tho efor a product offered for sale by th. monopolyte foreign purchasera may exceed thi price for mucisproduct charged in tii. home manrkot; after due allow-ance ineitier case for internal taxes andfor transportation,distribution and other expenses incident te purchase, saleor further processing. Members newly establishing anysuci monopoly mi respect of any product aiall not createa margin as defined above greater than the maximum rateof import duty (or, in the case of an expert rnonopolyvgreater than the maximum rate of export duty) whichmay have been negotiated in regard to that productpursuant to Article s8. With regard to any monopolizedproduct in respect of whici a maximum marWin has beenestablished pursuant to this Article, th. monopoly shahlsubject to tu, provisions cf Section C of this Chapter,import and offer for sale (or, in:the case of an exportmonopoly, effer for sale ta foreign purchasers) sucbquantities of tue product as will be sufficient ta satisfy thefull domestic demand for tue imported product (or, in thecase of an expert monopoly, tue full foreign demand forthe product) at the prices charged under such maximummargins.

ARTCLE z8

Expansion tf lrade by Complte State MJlopolies ofImport Trade

Any Member estabUsising or'nialtalning a complete orsubstantiadly complet. monopoly cf its import frade shapromote tute exasion cf ita foreign fad^e witha tue otherMembers nu consonance with tue purposes cf tua Charter.To this end sucbMember-al negtiate with the otherMesnbers an arrangement unter whicn,lu conjunctionwith thie granting of tarif concessions by such otherMembers, and in consideration of tiiether benefits of thisChapter, 'it 'hall undertake to import in the aggregateover a pod--products' f th. other Membeas valued atnet less than an amount te beagreed.upon. This purciiaioarrangement shall besubject topedlodic adjustment.

Section G. Emergency Pros C statiosNt Uitpc-tien or Imparm-et

: .: ~ARziOL 29 .Emergescy Action on Imporis or Partkcular Prodisct

x. If, as a result of unforeseen developments and of theeffect of the obligations incurred under 1his Chapter, in-cluding the tarif concessions granted pursuant te Articlesô, any product isbeing imported into the'territory of anyMember in suciincreased quantifies aad under such con-ditions as te cause or threaten serious injury to domesticproducers of like or simUarproducts, the Member sabl befree ta withdraw the concession, or suspend th. obligation,in respect of such product, lin whole or in part, or 0modify the concession to tke extent and -for suchi time s*may b. necessary tqcprevehtsch injury..:.

60

2. Before any Membershall takea

action pursuant ta theprovisions of paragraph Iof this Article. itshall give

in writing to the Organization asfar in advance as

maybe practicable and shall afford theOrganization, andthe other Members having a substantial interest as ex-

porters the product concerned, an opportunity ta consultwith it in respectof the proposed action. If agreement

among the interested Members with respect ta the pro-posed actionsnot reached, theMember, which proposes tatake the actionshall, nevertheless, befreeto do so, andifsucc action is taken the otheraffected Mombersshallthenbo free, within sixty days after such action istaken,ta suspend on uixtydays' written notice ta theOrganiza-tion the application ta the trade the Member takingsuch action, any the obligations or concessions underthis Chapter the suspension af which theOrganizationdoesnat recommendagainst.

ARTICLE 30

Consultation-Nullifcation or ImpairmentEach Memberwil l accord sympathetic consideration to

and willafford adequate oportunity for consultationregarding,such representations as may b.made by any

other Member with respectto theoperation customsregulations and formalities, quantitative and exchange

regulations, state-trading operations, sanitary laws andregulations for the protection human, animal or plant

life orhealth,and generally ail matters affecting theopera-tionthis Chapter. Moreover, if any Member shouldconsider that any measure adopted by any other Member,whether or not it conflictswith the term sof this Chapter,bas the effect of nullifying or impairing any abject

this Chapter,such other Member shall give sym-

pathetic consideration to such written representationsproposalsas may bemade with a view to effecting a

mutually satisfactory adjustment of the matter. If no

such adjutstment to effected. either Membershall l befreeto torfer the master tothe Organization, whichshallinvestigate themaster and make apprapritterecrm-mendations ta the Members concerned. The Organiza-

tion, if it considers the case serious enoughto justifysuch action.may determine. that the complainingMember is entitled suspend the applicationtothe otherMember specified obligations or concessions under thisChapter,and ifsuch obligations or concessions are

factsuspended, such other Member shall thenbe free,withinsixty daysaftersuch action is taken, to withdraw

fromhe. Organization on sixty days' written notice tothe Organization.

Section H.-Relationswith Non-MembersARTICLE 31

Contractual Relations with Non-Members-TreatmentofTrade ofNon-Membersz.No Member shallbe seek exclusive or preferential

advantages for its tradein the territoryof any non-Memberwhich would result.directly or indirectly, indiscrimination,in that territory against the tradeof anyother Member.

2. No Member shallbe a party to any agreement or

other arrangement with any non-Member under whichsuch non-Membershallbe contractually entitled to any

of the benefits under this Charter.3. With regard.to countries which. althnugh eligible for

membership. have not become Members orhave with-drawn from the Organization, no Member shall. exceptwith the concurrence of the Orzanization. apply tothetradeof such-countries the tariff reductions effected bysuch Memberpursuant to Article 18. This paragraph

shall become effective upon the expiration of one yearfrom the date on which the Organization is established:Provided, That this period may be extended by theOrganization for further-periods not to exceed six monthseach.

4. Members undertake to review any internationalobligations they may have whicb would prevent themfrom giving.full effectto paragraphs r and 2 of thisArticle and, if necessary for that purpose. to terminatesuch obligations either by agreement or in accordancewith their terns.

Section I. .-General ExceptionsARTICLE 32

General Ercextions to'. Chapter lyNothing in Chapter IV of this Charter shallbe con-

strued, to prevent the adoption or enforcement by anyMember of measures

(a) necessary to protect public morals

(b)necessary to protect human,animal or plantlif eorhealth;

(c) relating tofissionable materials:(d) relating to the trafficin arms, ammunition and

implements of war andtosuchtraffic in othergoodsand materials as is carried on for the purpose ofsupplying a military establisbment;

(e) in time of war or other emergency in inter-national relations, relating to the protectionof theessential securityinterests of a Member;

(f) relatingto the importation or exportation ofgold or silver;

(g) necessary to induce compliance with laws orregulationswhich are not inconsistent with the pro-visions of Chapter IV, such as those relating tocustoms enforcement, deceptive practices, andthoprotection of patents, trade-marks and copyrights;

(h) relating to prison-madegoods;(() imposed for the protection of national treasures

of artistic, historic or archaeological value;(j) relating to the conservation of exhaustible natural

resources if suchmeazwes are taken pursuant to inter-national agreements or are mode effective in conjunc-tion with restrictions on domestic production orcongumption;

(k) undertakenil pursuanceof obligations under theUnited Nations Charter for' the maintenance or

restorationof international peace and security; or(1)imposedin accordance with adetermination or

recommendationof the Organizationformulated underparagraphs 2, 6or 7oa Article 55.

Section J.-Tenritorii ApplicationARTICLE 33

Territorial Applicaîionoa ChapterIV-CustomsU nions-FrontierTraffics. The provisions of Chapter IV shallapply to the

customs territoriesof the Member countries. If there antwo or more customs territoriesunderthe jurisdiction ofany Member, each suchc ustom s teritory shallbe con-sidered as aseparate Membercountryfor thepurposeofinterpreting the provisions.of Chapter IV.

2. The provisionsof Chapter IV shall notbe construedto prevent,

(a) advantages accorded by any Member country toadjacent countriesinorderto facilitatefrontier traffic;or

(b)the union for'customs purposesof any customsterritory of any Member country and any.. othercustoms territory: Provided,. That the duties and otherregulationsof commerce imposed by any such-unionin respectof trade withother Member countries shallnot on the whole be higher or more stringent than theaverage level ofthe duties- and regulations of com-mere applicable in the constituent territories prior tothe formationof such union.3. Any Member proposing to enter into any union

described in paragraph 2;(b)of this Articleshall consultwith the Organization and shall .avilabIe available'to the'Organization such iujormation -regarding the proposeduniona, wliU enn.hie theOrganization"to make suçb ra-oorts and rcaommedations 'to*Me es as .itr may<eem. appropriate..

. For' the'prpuses of;thisArtile'-i',. pFritonsh1lie understoo'dd'tomëa.a:aY area& twbin cseparate tariffs' other regulationss ofcommerce aremaintained with respect to a substantial part of thetrade of such area. A union of customs territories forcustoms purposes shall be understood to mean the sub-stitution of a single customs territory for two or morecustoms territories, so that all tarifb anddother. re-strictive regulations of 'commerce as between th'eterritories of members of the union are substantiaUyeliminated and the same tariffs and other regulitions ofcommerce are applied by each of the members.of theunion to the trade of territories nat included,in- theunion. -

CHAPTER V.-RESTRICTIVEBUSINESSPRACTICESARTICAL34

Policy Toward- Restrictie Business' Practicesz. 'Membet agree to-take`appropriate individual and

collective measures to prevent business practices among

6zcommercial enterprises which restrain competition, re-strict access to markets or foster monopolistic control ininternational trade, and which thus have the effect offrustrating the purpose of the Organization to promoteexpansion of production and trade and the maintenancein al countries of high levels of real income. The term" commercial enterprises " as used in this Chapter shallmean all persons and entities conducting business. in-cluding such entities in which there is a governmentinterest as well as agencies of government conductingtrade.

2. Without limiting the generality of paragraph s.Members agree that among the practices which shal:be presumed, unless shown to the contrary in a specificcase, to have the effect specified in that paragraph arecombinations, agreements or other arrangements which

(a) fix prices or terms or conditions to be observedin dealing with others in the purchase or sale of anyproduct or service;

(b) exclude enterprises from any territorial marketor field of business activity, allocate or divide anyterritorial market or field of business activity, allocatecustomers, or fix sales or purchase quotas, exceptas such arrangements are only a part of regularmarketing arrangements between a particular enter-prise and its distributors with respect to its own pro-ducts and are not designed to reduce competitionbetween that enterprise and its competitors:

(c) boycott or discriminate against particular enter-pnses;

(d) limit production or fix production quotas;(e) suppress technology or invention, whether

patented or unpatented;(J) extend the use of rights under patents. trade-

marks or copyrights to matters not properly withintho scope, or to products or services which are notthe immediate subjects, of the authorized grant.

ARTICAL35

'Procedure With Respect to ComplaintsIn order to implement Article 34, the Organization

shall:(s) Receive and consider written complaints from

any Member that a particular practice or group ofpractices has the effect described in paragraph I ofArticle 34.

(2) Receive and consider similar complaints fromi- persons or business entities or organizations represent-

ing them: Provided, That if any Member bas estab-lished procedures for- the filing of complaints bypersons, business entities or organizations under itsjurisdiction, such complaints shall have conformed tosuch procedures.

(3) Presecribe minimum information to bo includedin complaints received under paragraph s and 2 oft:is Article; notify Members of complaints received;and in its discretion call upon the complainant or anyMember to provide further information relevant tosuch complaints.

(4) When it deems that a complaint deserves furtherexamination, receive pertinent testimony and requestother data, conduct appropriate hearings, review all in-

.,formation and determine whether thet questionedpractices odst 'and whether they have tht effect

!nb. paragrapli ai Article 34.

(sj) Wen it finds that a particularpractice or groupof practices exists and has the effect, described in para-grapb of Article 34, make. recommendations to the

,-Members concerned for appropriate remedial measures,including but not limited to abrogation and termina-tion of. agreements and arrangements; dissolutions.reorganizations, business divestitures, and licensing ofpatents. to be implemented in accordance with theirrespetive- laws'and procedures.

(6) Request reports from Members as te their actionsin implementing its recommendations.

(7) Prepare and publish reports concerning com-plaints, findings therein. recommendations, aid actionstaken on such recommendations.

(8) Arrange special consultative conferences amongparticular Members relative to particular coplaints,wb.i deemed: necessary,.,and participate in such con-ferences..

(g) Assist in arranging consultations, as requested byMembers, as provided in paragraphl of Article 37, andparticipate in such consultations.

ARTICLE 36

Studios and Conferences Relating to Restrictive BusinessPractices

s. The Organiz ition is authorized to request informationfrom Members and to conduct studies, father on its owninitiative or at the request of any Member, the UnitedNations or sr-ecialized agency of the United Nations.relating to business practices which may restrain com -tition, restrict access to markets or foster monopolisticcontrol in international trade; or relating to internationalconventions or national laws and procedures designed tocarry out the objectives of Article 34 or to those whichmay affect such objectives, such as conventions, laws orprocedures concerning incorporation, company registration,investments, securities, prices, markets, fair trade practices,trade-marks, copyrights, patents and the exchange anddevelopments of technology; and, where appropriate, tomake recommendation for action by tht Members.

2;. The Organization is authorized to call general con-sultative conferences of Members and to carry out suchadditional functions, within the scope of this Chapter, asmay from time to time be assigned to it.

ARTICL. 37Oflieaions of Membersin order to imnplement tht preceding Articles in this

Chapter, each Member undertakes to:(I) Transmit to the Organiation, upon its request

and as promptly as possible, information caIle4 for bythe Organization pursuant to paragraph 3 of Article 35and such other information as the Member may deempertinent. To this en1, each Member shall carry on suchinvestigations within its own judiseietion as may b.necessary for tht collection and compilation of suchinformation.

(2) Furnisb sucli information and data as may benecessary in accordance with paragraph 4. of Article 35.

(3) Consult, Upon the request of the Organization inaccordance with paragraphs 8 of Article 5, with respectto activities which are tht subject of complain;tsiledwith the Organisation. ;.

(4) Notify the Organization of consultations to be heldwith another Member for tht purpose of dealing withparticular restrictive business practices, in order thatthe Oarganization may assist in arranging such consulta-tions and participate in them, pursuant to paragraph gof Article 35.

(S) Take action, after recommendation by theOrganisation, to terminate and prevent the recurrenceofai a particular restrictive business practice or group ofpractices which hasbeen thefou nd Organization

to havetheeffct describe inpargrph I of Article 34..These measures will be taken in accordance with theparticular system of law` and economic organisation oftht Member concerned.;

(6) Report as requested by the Organisation underA paragraph 6 of Article 35 upon any action taken i-a

dependently or in concert with other Members inimplementing the recommendations made by: théOrganisation pursuant to paragraph S of -Article 35.

(7) Furnish, to tht extent feasibl,. information re-quested by the Organization in its conduct oi studiesauthorized by paragraph s of Article 36.-

(8) Participate in conferences sponsored by theOrganization in furtherance of tht purposes oa this.Chapter.

â.TcLK 38Supplementasy Enforcement Arrangements: *..

-s. Members may, by mutual accord, cooperate with eachother in prohibitive, preventive or other measures for thtpurpose of making more effective any remedial order,issued by a duly authorized agency oa.any- Member infurtherance of tht objectives of this Chapter. ; *

'2. Members participating in such ca-operatve actionsshall notify tht Organization.

62

ARTICLE 39Continued Effectiveness of Domestic Measures Agaisst

Restrictive Business PacticesAny act or failure to act on the part of the Organiza-

tion shall not preclude any Member from enforcing anynational statute or decree directed toward preventingmonopoly or restraint of trade.

ARTICLE 40Exceptions to Provisions of Chapter V

s. The undertakings expressed in Chapter V shal notàpply to.

(a) inter-goveramental commo. y agreements meut-*ing the requirements of Chapter vI;

(b) the international agreements excepted inArticle 49; or

(c) agreements or understandings concerning railwaytransportation, aviation, shipping and telecommunica-tions services.2.- Notwithstanding the foregoing, the Organigation may

its discretion make recommendations to Members andto appropriate international agencies concerning anyfeatures of the agreements referred to in (b) and (c) ofparagraph s which may interfere with the achievementof the purposes of the Organization.

CHAPTER VI.-INTER-GOVERNMENTAL COMMODITYARRtNIExxLNTs

ARTICLE 4zGentral Statement Regarding Inter-govermmental

Commodity Arrangements.The Members recognize that in the relationsbip between

production and consumption of some primary commoditiesthe.- may arise special dificulties different in characterfrom those which generally exist in the case of manufac-tured goods and that these special difficulties, if serious,may have such widespread repercussions as to jeopardisethe effectuation of the general policy of economic

expansion.

ARTICLE 42Special Commodity Studies

x. Members' substantially interested in the production,consumption or trade of a particular commodity shallbeentitled, if they consider that special difficulties exist orare expected to arise regarding a commodity, to ask thata study of that commodity be made, and the Organization,if it finds that these representations are well founded, shall'invite the Members principally interested in the produc-tior, consumption or trade of that commodity, and mayinvite non-Members having a similar interest, to appointrepresentatives to a Study Group to make a study of the

commodity.2. The Study Group shall, in the light of an investiga-

tion of the root causes of the problem, promptly reportits ndtings regarding -the production, consumption and

trade situation for the'commodity. If the Study Group£inds that special difficulties exist or are expected to anse,it shall make recommendations to the Organization as tohow best to deal with sùcb difficulties.

ARTIcLE 43Commodity Conferences

If the Organization concludes that measures not invol-

ving thq regulation of production, trade or prices are

unikely to operate quickly enough in solving the problem,It may convene au inter-govermental conference for the

purpose. of naming an inter-'govenmental commodityagreement for the commodity concerned, in conformitywith the principles set forthila Article 45

ARTICLE 44

Objectives of Inter-governmental Commodity Agreements'The Members agree that the regulation of production,trade or prices' through 'inter-governmental cor.'aodityagreements' is justified in the circumstances' stated inArticle 3'te' aciievé the following objectives:

(r) To enable countries to find solutions to specialcommodity difficulties without resorting to unilateral

cation that.tends-to shiftthe burden of.their problemteg cou tries. '; :

(2) To prevent or alleviate the serious economicproblems which may arise when,owing to the difficultiesof finding alternative employment, production adjust-ments cannot bc effected by the freo play of market

Fiorccs as rapidly as the circumstances require.(3) To provide, during a transitional period, a frame-

work for the development and consideration of measureswhich will have as their purpose economicadjustmentsdesigned to promote the expansion of consumption ora shift of resources and manpower out of over expandedindustries into new and 'productive occupations.

ARTICLE 45Prmncses Governing theInstitution ofIrtegovement4lCommodity AgreementsMembers undertake to adhere to the following principles

governing the institution of intergovernsental commodityagreesaçts involving the regulation of production. tradear pric:

(z) ,AnyMember having a substantial interest in theproduction, consumption or trade of any commodity forwhich an intergovernmental commodity agreement isproposed shal be entitled to participate in the considera-tion of the proposed agreement. The Organization may'invite the participation of non-Member countries havinga similar interest.

(z) Members agree not to enter intointergovernmental.commodity agreements involving the regulation of pro-duction, trade or prices. except after

(a) investigation by the Study Group of the rootcauses of the problemwhich gave risoto tth proposal;(b) determination. usrder procedures established by

the Organization in accordance with paragraph 6 ofArticle 55, either

(z) that a burdensome surplus of the product con-cerned has developed or is developing in inter-national trade and such burdensome surplus would,in the absence of specific governmental action to

prevent it, be accompanied by widespread disixesto small producers accounting for a substantialportion of the total output and that these conditionscannot be corrected by the normal play of competi-tive forces because, in the case of i product con-cerncd, a substantial reduction of pricu leadsnetherto a significant increase in consucnption uor to a

significant decrease in production; or

(2) that widespread unemployment. unrelated togeneral business conditions, has developed or. isdeveloping in respect of the industry-concerned, andthat suci unemploymentL: nmot be corrected by thenormal play of competit. forcess rapidly enough toprevent widespread and undue hardship to workersMause, in the case of .be industry concerned, (i)a substantial reduction of price does not lead to a

significant increase in consumption but leads, 'in-stead, to the reduction of employment, and (i) the.resulting unemployment cannot boe rreedied bynormal reemployment processes;(c) formulation and adoption by Members of a pro-

gram of economic`adjustment believed to be adequateto insure Substantial progress toward solution of theprolilem ithin the rime limit of the'agreement.(3) Intergovernmental commodity agreements inv.olv-ing the regulation. of production, trade or prices in aspectof other than primay products shah not bl resortodto

unless the Organization finds'that. exceptioial circum-stances' justify such action. Such agreements shall besubject to the principles set forth'in this Chapter 'and,in addition, to any other requirements which the Orgaii-zation may estabilsh.

ARTICLE 4

Pràtdples and Requirements of Intergovemmetod Com-modity Ageenet,U

Members undertake te adhere to'ie foflowing principlesand- requirements governing the operation cf intergovemq-mental commodity agreements:

(z) Such agreemnt's dabll be open initiaUly to participa-.tion..by any Member on terms no lesifavorable'thotfiose accorded to any other country party thereto andthereafter upon such terms as may be approved by theOrgani-ation.(s) Such agreements shal piovide for adequate repre-sentation of-Menmbers substantially :interested. ian'theoimportation or consumption.of the commodity

63

(3) In such agreements countries which are largelydependent for consumption on imports of the commodityinvolved shaLI, ln determinations made relating to theregulation of prices, trade, stocks, production or othersubstantive matters, have together a voice equal to thatof those largely interested in obtaining export marketsfor the product.

(4) In order to minimize the need for production re-striction such agreements shall provide, where practice.able, for measures designed to expand world consump-tion of the conmodity, consideration being given to thepossible effect onD competing products.

(S) Such agreements sha1, with due regard to thotransitional need for preventing serious economic andsocial dislocation, maake approprate provision to affordincreasing opportunities for satisfying world requirementsfrom sources from which such requirements can be sup-plied most effoetiveiy.

(6) Under such agreements the treatment with respectto the imports or export of the commodity acc6*ded byanypartieipating country to any Member sixl 'not,

ulsagreedby the Organization. :be lessfavorable than that accosted o any other country.

(7) Such agreements shall be designed to assure theavailability of supplies adequate at ail times for worldconsumption requirements at reasonable prices.

(8) Such agreements shall contain provision foradministration by Commodity Councils set up inaccordance with the provisions of Article 47, exceptthat in the case of existing agreements this require-ment may be waived by the Organization.

'(g) Such agreements shall not remain initially in defectfor more than five years. The renewal of an agree-ment. shall be subject to the principles governing newagreements set forth in Article .45. At the end of eachive years of the continuancee of such an agreementte Organisation shall prepare and publish a reviewof the operation of the agreement in. the light of theprinciples set forth in Article 45. If the operation isfound to have failed substantially ta conform to theseprinciples,. and particularly if it is found not to havernade substantial progress toward a solution of theunderlying commodity problem, the Organization shallprovide for termination of the agreement or for re-vision believed adequate to make it effective for thatpurpose.

(xo) Members agree that full publicity shall be givento any inter-governmental commodity agreement pro-posed or concluded, to the statements of considerationsand objectives advanced by the proposing Members,to the operation of the agreement, and to the natureaud development of measures adopted to correct theunderlying situation which gave rise to the agreement.

ARTICLE 47Commodity Counc*s

z. A Commodity Council shall be established under eachinter-governmental commodity agreement involving theregulation of production, trade or prices of that commo-dity. - ..-

z.- The voting membership of each Commodity Councilaa consist of the representatives of the countries par-ticipating: in the inter-governmental commodity agre.-ment concerned, and voting power shal be determinedin such'a way that the participating countries which arelargely dependent for consumption on import of the com-modity involved sball, in' determztnations'.made relatingto the regulation of prices, .trade, stocks, production orother-substantive matters, have together a voice equal to.that of those. largely ..interested in obtaining exportmarkets for the product.E.ah Commodity. Council sha,. subject to thi

approval of the'Commodity Commission, adopt suchrules of procedure and regulations regarding its activitiesas it'mnay deem appropriate..4. Each Commodity Council shal have a non-voting

Chairman provided by theCommodity Commission.5 Each Commodity Council slmake periodic reports to

the CommodityCommission as totheoperation of the inter-governmental.commodity agreement which it administers,-and shall makre such other special reports as the Com-mission. may specify or as the Council considers to bo ofvaluste the Commission., :.6. The Secietarat of each Commodity Council shall be'

provided by the Commodity Commission from tie Secre.taiat of the Organi2ation.

ARTIdJZ48Additional Obligations of Members in Respect o Inter-

governmental Commodity AgreementsMembers uxriertake to transmit to the Organization the

full text of each intergovernmental commodity agree-ment in which they are participating at the time-of thecoming into force cf their obligations under thio Charter.MIemabers niso agreo ta transit to the Organization appro-priate information regarding the formulation; provisionssnd operation cf such agreements. Members agree taconform w;th the decisions made by the Conference, upontheorecommendation of the Commodity Commission, regard-ing their continued participation in any sucr intergovern-mental commodity agreement which, aiter review.by theOrganization, shall have been found to be inconsistent withthe principles of this Charter.

ARTICLE 49

Exceptions to Provisions Relating to IntergovernmentalCommodity Agreements

z. The provisions of Chapter VI are not designed tocover those provisions of iatergovernmental commodityagreements which appropriately relate to the protection.of public morals; the protection of human, animal or plant:life or health; the conserve in of reserves of exhaustiblenatural resources; the equitable distribution of coramodi-ties in short supply; or ia general to intergovernmentalcommodity agreements not regulating production, tradeor prices: Provided, That such agreements are not usedto accomplish. results inconsistent with the objectives ofChapter V or Chapter VI. Members agree not to partici-pate in such agreements if they involve the regulation ofproduction, trade or prices unless tiey are authorized orprovided for by a multilateral convention subscribed to bya majority of the nation . fected, or unless operated under.the Oranisation,

2. None of the foregoing provisions ot Uiapter VIis to be interpreted as applying to agreements relatingto fissionable materials; to the trafc in arma, ammunitionand implements of war and to such traffic in other goodsand materials as is carried on for tie purpose of supply-ing a military establishment; or, in time of war or otheremergency in international relations, to the protection ofthe essential security interests of a Momber.

CHAPTEi VII.-ORGsAiZArONSection A.-Functions.

ARTICLE 50Functions of the Organirati .. ..

Itsall be the function ofthe Organization:(z) To collect, analyze and publish information relat-

ing to international trade, including information relatingto commercial policy, business practices and commodityproblems, and to industrial: and general' economicdevelopment.

(z) To provide technical assistance and advice toMembers and to other international organiations, in-.cluding such assistance and advice us may be appropriatein connection with specific projectN of industrialisatioor other economic development.

.() To consult rith, snd to make recommendationssudn reports to, Membera -regarding any matter relatingta tlte purposes cf tho Organisation or tie operation cfthis Charter, lacludlag the followving:-.: --

(a) Recommendations ordéterm ationsridating tathe discharge of .the responsibilitiés of,.ho Orianz-

* tion under:C4apterIV . - :--(b>:Recommendations as to measures for imple-

menting the objectives with regard to restrictive .busi-ness practices, set forthin Chapter, V.

(c) Recommendations regarding the application tecommodity arrangements :under consideration by*Member of the principles governing commodityarrangements set forth in Ciapter VI; and rt»in-mendations initiating proposals. for new commiodityarrangements, or proposing sucb modifications, in-cluding termination, cf commodity arrangementsaL-eady concluded, as may ho deemed appràpriateounder tLte commodity principles .or: in te general interest.

64

(d) Recommendations as to measures for imple.menting the objectives of the Orginization inencouraging and asusting the industrial and generaleconomic development cf Mombers countries.(4) To consult with Mombers regarding disputes

growing out of the provisions of this Charter and toprovide a mcisanis for the setUlement of sicii disputes.

(S) To make recommendations for international agree-mcats designed ta improve the basis of trade and toassure just and equitalile treatment for the enterprises,skills, capital, arts and technology brought from onecountry to another, including agreements on the treat-ment of foreign nationals and enterprises, on th.treatment of commercial travellers, on commercialarbitration, andon the avoidance of double taxation.

(6) Te cooperate with the United Nations and witi

other pecialzedd international oraations in theattainment of the economic and social objectives of theUnited Nations and in the maintenance or restorationdf international peace and security.

(7) GeneraUy te adviz. and to make recommendationsto Members and other international organizations, andto perform any other function appropriate to the pur-poses of the Organization.

.Section B.-Structure

ARTICLE 5rStructure of the.Organization

T.he Organization shall have as its principal organs: aConference, an. Executive Board, a Commission onCommercial Policy, a Commission on Business Practices,a Commodity Commission and a Secretariat.

Section C.-The ConftrenceARTICLE 52

Conference-lembership-r. The Conference shabl consist of thei representatives

of tho Mcmbers of the Organization.2. Each Member ihall have one representative and may

appoint alternates and advisers to its representative onthe Conference.

3. No representative On the Conference may representmore than one Member.

ARTICLE 53

Ccnferenc-oting

z. Eacli Member shall have one vote in .the Conference.2. EXcept as may b. otherwise provided for in tuIs

Charter, decisions of the Confererce shall be taken by amajority of the.Members present and voting.

ARTICLE 54.Confsrence-SessionS. Procedure and Officers.

r. The Conference shal! meet in regular annual sessionsand in such special' sessions as occasion may require.Special sessions shall b. convoked by the Director Generalof the Organization at the request cf th. Executive Boardor of a majorityaof the Members.

2. The Conference shalladopt its own rules of procedure.It shall annually dlect its President- and other officers.

ARTICLE 55

Conference-Powes antd Dutiesz. T.heCoanference shall have Sinal authority tu deteraine

the. policies of th. Organization. It may raake recom-mondations to Members of the Organization and te otherinternational organizations r.gardg any matter pertain-ingta the purposes of the Orgaization.

2. e. Conference my, by a vote of taro thirds cf itsMembers, determine critein and set uF procedures, forwaiving, in exceptional circumstances, obaigations-of Mesu-bers undertaken pursuant to Chapter rt of this Charter.

3; TheConference may delegate to the Executive Boardauthority to exercise or perfonn any of the powers andduties of the-Conference, except such specific powers andduties as are expressly conferred or impose upon th.Conference under the provisions of Chaptess II ai VII.

pprove the budget of thetite expenses of the Organ.

izabiozamong the.Members.

5. The Conference shall eloct t!; members of tiheExecutive Board, and on the recommendation of theExecutive Board, shall appoint the Director.General ofthe Organization.

6. The Conference shall establish procedures for makingtho determinations provided for in Article 25 and in para.graph 2(b) of Article 45 whereby any such determinationsshal! bc made through the Organization by consultationamonq thoe Members having an important interest in thetrade m the product coucernod.

7. Thi Conference shal establish procedures for makingtho determinations and recommendatipas provided for inparagraph 3(c) of Article 2o; paragraph 2 of Article 29; andArticle 3o.

8. Tie Conference may, by two-thirds majority of thevotes cast, adopt the standards, nomenclature, terms andforms described in paragraph 7 of Article i6.

9. The Conference shall determine the site ^f the Organ.itation "and shaUl establish such branch offices as it mayconsidâ'desirable.

ARTICLE 56Intenm Tariff ComMittge

z. There shaUl be an Interim Tariff Commitf-e whichshall act temporarily on behalf of th. Organization in themaking of recommendations and determinations pursuantto paragraph 3 of Article x8.

2. The Committeo shah consist originally of those Mom-bers of the Organ0zation which sball have made effectivethe General Agreement on Tarifs and Trade dated . . .

.....1194 . * Any other Member of the OganizatinnshaU be entitled to b, a member of the Committee when, inthe judgment of the Committe., that MemberbshlU havecompleted negotiations pursuant to pragraph x of Articler8 comparable in scopos or .fect te those completed by theoriginal members cf the Committoe. When the numbercf Members cf the Organization which are members qfthe Committee siall constitute two tiiirds of the, totalnumber of Members of the Organimation, the Committee.shall terminate and its functions shall b. transferred tothe Conference.

3. Each member of the.Committee'shall have one vote.4. Decisions of the Committee shall be taken by a

majority of the members present and voting..T.Th. Committee shall adopt its own rulesof procedure,

including provision for the election of its oficers.

Section D.-The Executive Board

ARTICLE. 57Executive Board-Membership

r. The Executive Board shall consist of fifteen Memberoof the Organization elected by the Conference. -

2. Subject. to the provisions cf paragraph 3 of thisArticle, one third of the membersip of the ExecutiveBoard abl be elected each year for a tern of thrve years;A retiring member sha,, b. eligible for imnediat. re-election.

3. At the first election, fifteen members of the ExecutiveBoard shall be chosen. TIbe telm c office of fivo membersshal expire at th. end of one year; and of five bther memn.bers at the end of two years, in accordance'w-ith amingements mad. by the Conference.

4. Eraci member of the Executive Board shallhave onerepresentative and may appoint alternates and advi5erute its representative.

2utIcLexocutiva Board-Voting --

s. Eah member of tie Execmtive Board shall bave onevote. -

2. Decisions of the Executive Board shal b smade bya majority of the members present and voting.-

This Agreement -f«rs te the proposed angement for theconcerted reduction-ao tarifs and trude briers among thecountriesinvited b the United States to enter into negotiationsfor this purpose. It s contemplated that the agreement wouldcontain schedule of tariff concesiionsa-nd'would incorporatecertain of the- provisions of 'Chapter IV of the Charter(e.g.'tie'provislons'relating to most-favored;nation treatment,to national treatment on interrl taxes an'd regulations, toquantitative restrictions, ete.).

65

ARTICAL 59Executive Board-Sessions, Procedure and Officers

s. Tho Executive Board shall meet as required lnaccordance wlth its rules, which shall include provision forconvening on the request of a majority of its members.

2. The Executive Board shabl adopt its own rules ofprocedure. It shall annually elect its Chairman and otheroficers.

ARTICLE 60

Exceutivé Board-Powers and Dutiess. The Executive Board shall be responsible for the

execution of tho policies of the Organization and shallexercise the powers delegated to it by the Conference.It shaU review the activities cf the Commissions providedfor in this Charter, and shall take such action upon theirrecommendations as it may deem appropriate. It shallprovide adequate machinery to review the work of theOrganization as it relates to industrialization anq generaleconomic development.

2. The Executive 'Board may make recommendationsto tlie Conference, to Members of the Organization, or tuother international organizations, on any subject fallingwithin the scope cf the Organization, and shall approvethe preliminary agenda of the Conference.

3. The Executive Board shah recommend to the Confor-ence the admission of new Menrbers of the Organization.

4. The Executive Board may refer to the Commissionssuch questions as it may; deem appropriate.

Section E-The CimnmissionsARTICAL 61

Establishment of CommissionsThe Conference shall establish a Commission on Com-

mercial Policy, -a Commission of Business Practices, anda Commodity Commission, and may establish sucb othercommissions as may be required. These Commissionsshall be responsible to the Executive Board.

ARTICLE 62Composition and Procedure cf Commissions

x. The Commissions shall be composed of personsappointed by the Executive Board who are qualified bytraining or experience to carry out the functions of theCommissions i accordance with the purposes of theOrganisation.

2. Mie number of members of each Commission and theconditions of office of the members of each Commissionshall be determined in accordance wite regulations pro-scribed by the Conference.

".Each Commission shall lect its Chairman and adopttits own rules of prnxedure, subject to approval hytheExecutive Bsard.

4. The Chairmsan of tlee Commissions shall ho ontstled teparticipate, without tee right cf vote, tee deliberationscf tee Excecutive Board and cf tee Conference.

5. As set forth more fully Article 71, the Organizationmay malce arrangements for representatives cf other publicinternational organizations having a special interest intee activities of any of the Commissions to participate intee work of such Commi;csions, pursuant to agreementswith these organizations.

ARTICAL63General Functions of CommissiowsThe Commissions shal1 have the functions set forth

in Articles 64, 65 and 66, and shal perform sucb otherInnctions as the Conference or the Executive Board mayassiga to thom, including such functions as the ExecutiveBoard may- deem«appropriate -in connection wite thesettlement of disputes.

.ARTICALFunctiomns cf Commissio on Commercial PolicyThe Commissionr Comt Po'icy shall have

oflowing fonactions: d(s) To islv gate and tg advise the Executive Board

regarding the operation of treaties, agreements, prac-tices and policies aflécting international trade.:(2) To investigate and to advise the Executive Board

regarding economic `aspectsof specific proposals

involving tho exorcise by tho Organization of the func-tions described in paragraph 3 ,a) of Article Se andparagraph 2 of Article SS.

(3) To investigate and to advise tho Executive Boardregarding tho economic aspects of proposed customsunions.

(4) Te develop and to recommend to the ExecutiveBoard' prograsis designed te further the objectives cfthe Organization in the geners field of commercialpolicy, including cooperative projects of a technicalrsature in the fidd cf commercial policy.

ARTICLE 65Functions of Commission on Business PracticesThe Commission on Business Practices shall have the

following functions:(s) To receive and consider written complaints ceon-cerning restrictive business practices in international

trade, as provided in paragraphs s and 2 of Article 35;to prescribe and calls for information relative to suchcomplaints and to notify Members of complaintsreceived, in accordance with paragraph 3 of Article 35;to request data, conduct heanngs and mako determina-tions in accordance with paragraph 4 of Article 35 andon thé basis thereof to refer to the Executive Boardits recommendations for appropriate remedial measures,pursuant to paragraph S Of Article 35; and to requestreports from Members, and to prepare reports for pub-lication by the Executive Board, ain acordance withparagraphs 6 and 7 of Article 35-

(2) To arrange special consultative conferences betweenparticular Members and to assist in arranging consulta-tions as requested by Members relative to particularcomplaints, as provided in paragraphs 8 and 9 ofArticle 35, and to make appropriate reports or recom-mendations to the Executive Board with reference tothe results thereof.

(3) To conduct studies relating te business practiceswhich restrain competition., restrict access to marketsor foster monopolistic control in international trade, orrelating to international conventions or national lawsand procedures designed. to cury out the objectives of,Article 34 or to those which may affect such 'objectives,pursuant to paragraph s of Article 36; and to makerecommendations, when appropriate, to the ExecutiveBoard for action by Members.

(4) To advise the Executive Board as to information,:data, and other materials te be obtained from Membersor other sources, required in the discharge cf thc ties,and responsibilities of the Commission.

(5) To. facilitate intergovernrmentaI arrangements forthe international exchange, on a non-discrlminatorybasis, of technological information not involving nationalsecurity.

ARTICAL66Functions of Commodity CommissionThe Commodity Commission shall have. the fIolowin'gfunctions:

(s) To investigate commodity problem- and arrange-monts proposed for solving them.(2) To recommend to the Executive Board appsepriate courses of action relating to commodity problems,including recommendations for the establishment of':

Study Groupe fer particular commodities. Such StudyGroup shall be established, pursuant to paragraph" z -

cf Article 42, by the Executive Board, upon the recom-mendation cf the Commodity Commission, ferfthpurpose of investigating problems with respect to par-ticular commodities. The Study Gropsdaclude,in addition te representatives cf interested counfes,.one or more memhessof.the Commodity Commision oroteerpcaons designated by thepComission.:

(3) To advise the Executive Board whether a particu-lar commodity is -in burdensome surplus; suhjoct eto.such procedures as rnay be established under paragraph6 of Article-.5-;(4) To recommend to the Executive Board whether

an ntergoverrmental conference should be convenedpurssant to Artile`43.

(S)To. designate members cf tho Commission, or.others. te-partidipate la an advisory capaeity- in tho-formulation cf intergoverumeatal commodity agre.-:

ments.-:

(6) To advise the Executivc-Board whether or notintergovernmental commodity agreement under con-sideration by Members conformn to tha principles setforth in Chapter VI and to make recommendations tothe Executive Board thereon.

(7) To approve the rules of procedure governing theactivities of each Caommodity Council.

(8) To Jesignate the Chairman and provide the Sec-retary for any Commodity Council established toadminister an instergovernmental commodity agreement.

(g) To receive reports from Cominodity Councils tomaintain continuous review of the operation oi inter-governmental commodity agreements in the light of theterms of the agreements, the commodity principles inChapter VI of this Charter, and the general welfare;to investigate such matters in tnis conectian as it maydeem appropriate; and to make recommendations to tnieExecutive Board with. regard thereto.

Section F-The SecretariatARTICLE 67

Composition of SccretariatThe Secretariat shall consist of a Director General, there

*.--or more Deputy Directors General, and such staff as =mybe required.

ARTICLE 68

Director Generali. The Director General shall be appointed by the Con-

ference upon the recommendation of tae Executive Board.His powers, duties, terms and conditions of office shallbe in accordance with regulations approved by tha Con-ference. Re shall be eligible for reappointment. He shailbe tha chief administrative officer of the Organization.subject to the general supervision of the Executive Board.

z. The Director General or a Deputy Director Generaldesignated by hiun shall participate, without tha right tovote, in all meetings of the Conference and of the Execu-tive Board. TMe Director General shall have authorityto inititè proposals for the consideration any organof tce Oiganization. He shall make an annua; report totac Conference and to the Executive Board on tae workof tha Organization and shall prepare the annual budgetfor submission to the Conference.

ARTICLE 69

Deputy Directors General

s. Deputy Directors General shall be appointed by thaDirector General in accordance with regulations approvedby the Conference. They shall be eligible for reappoint-ment.

2. Deputy Directors General shall be ex officiomembers, without tae right to vote, respectively of theCommission on Commercial Policy, tie Commission onBusiness Practices, and the Commodity Commission,and shall, respectively, have charge of the work of theSecretariat relatedto the activities of these Commissions.

ARTCLE70Secretariat Staff

z. The Director General shall appoint the staff of theSecretariat and fix its duties and terms and conditionsof service. The paramount consideration in the employ-ment iof tha staff and in the determination of its con-ditions of service shall be the necessity of securing thehighest standards of efficiency, competence and integrity.

2. The conditions. of service, such as the provisionsgoverning, qualifcations, salary.- tenure and retirementof members of tae staff of the Secretariat shah! be fixed,so far as practicable, in conformity with those formembers of the SecretaTiat of. the United Nitions andof other specialized agencies which may be brought intorelationship with the United `Nations, as provided. inArticle 57 of the Charter of the. United Nations.

S Section G.-MiscellneousProvisions

ARTICLE 71

Relations With Other Organizationsz. The rgistion shall be-brought into relationship

withthe Unitod Nations, as soon as practicable. as oneof tha spclized agencies referred to in Article.57 cfthe Charter of the United Nations. This relationship

66

shall be effected through an agreement with the UnitedNations under Article 63 of the Charter of the UnitedNations, which agreement shall be concluded by theDirector General and approved by the Conference. Trheagreement shall provide for ellective cooperation betweenthe two organizations ia the pursuit oi their commonpurposes, and at the same time shall recognize the com-petence of the Organization within its jurisdiction asdeclined in this ChartIr. Notwithstanding tho provisionsof Article 75, any changes in this Charter required underthe agreement which do not involve new obligations byMembers shall be effective on approval of the agreementby the Conference.

2. The Organization shall cooperate with other inter-national organizations whose interests and activities arerelated to its purposes, with particular reLerence to theimportance oa food and agriculture in relation to thesubjects dealt with in Chapter VI. Effective workingrelationship 'with such organizations, which may includethe establishment of joint committees or provisions forreciprocal representation at meetings, or such othermeasures as may be necessary to assure effective co-operation, nay be established by the Director General.Formal arrangements for cooperation with such organiza-tions may be entered into by the Executive Board.

3. The Organization may make suitable arrangementsfor consultation and cooperation with nongovernmentalorganizations concerned with matters within its com-petence, and may invite them to undertake 'specifictasks.

4. Whenever the Conference of this Organization andthe competent authorities of any other internationalorganization whose purposes and functions lie within thecompetence of this Organization, deem it desirable toeffect a transfer of its resources and functions to thisOrganization, to incorporate it into this Organization, orto bring it under the supervision or authority of thisOrganization,' the Director General,. subject to theapproval of the Conference, may enter into mutuallyacceptable arrangements for tais purpose. This Organi-zation may . acquire such resources and assume suchfunctions of, or incorporate or exercise such control over,the other organization as may be provided by any con-vention or agreement appropriate to tha purpose. Inaccordance with their respective constitutional pro-cedures the Members shall take such steps as the Con-ference may determine to integrate such other inter-national organizations into the structure of thisOrganization.

ARTICAL 72

Intenationl Respoibilities of Persosnel of OrganisationThe responsibilities of the Members of the Com-

missions provided for in Article 6r of this Charter, ofthe Director General, of the Deputy Directors Generaland of the staff shall be exclusively international in'character. These persons may be appointed withoutregard to their- nationaUity.' In tha discharge' of 'theirduties they shall not seek or receive instructions fromany government or from any authority -external to theOrganisation. They shall rcErain irom any action whichmight prejudice their position as international officials .Each Member oi the Organisation undertakes the repecttac international character of the responsibilities of thesepersons. and not to seek to influence them in the dis-charge of their duties.

ARTICLE 73Legal Capacity of. OrganizationThe Organization shall enjoy am.c territory ai'each

of its Members' such legal capacity as may be necessary£or the exercise of its fuanctions and. the fulfillment,o£ itspurposes.

ARTICLE 74Prnilaeges and Immunities of Organisation

-. The Organization shail enjoy in the territory of eahof its Memnbers snuch privileges and immunities as arcnecessary fôr. the fulfilment of its purposes.-

2. Representatives of the Members cif the: Oiganizationand its officials shal im;larly enjoy such privileges andimmunities as are necesary for the independent exerciseof their functions in connection, with the Organiation.

3. The Conference may make recommendations with aview to determining the details of the application of para-graphs x and 2 of this Article and may propose conven-tions to the Members for this purpose.

ARTICLE 75

Amendments to Charterz. Amendments to this Charter shall become effective

upon receiving the approval of the Conference by a voteof a two-thirds majority of its Members: Provided, Thatthose amendments which involve fundamental alterationsin the objectives of the Organization or new obligationsby the Members shall take effect upon acceptance on thepart of two thirds of the Members for each Member accept-irg the amendment and thereafter for each remainingMember on acceptance by it.

2. The Conference shall, by a two-thirds majority of theMembers, adopt rules of procedure for carrying out theprovisions of this Article.

ARTICLE 76

Interpretation and Settlement of Legal Questionss. The English and French texts of this Charter shal be

regarded as equally authoritative.2. Any question or difference concerning the interpreta-

tion of this Charter shall be referred to the ExecutiveBoard for a ruling thereon. The Executive Board mayrequire a preliminary report from any of the Commissionsin such cases as it deems appropriate. Any ruling ofthe Executive board shaU, upon the request of any mem-ber directly affected or, if the ruling is of general applica-tion, upon the request of any Member, be referred to theConference. Any justiciable issue arising out of a rulingof the Conference with respect to the interpretation of sub-paragraphs (c) Id), (o) or (k) of Article 32 or of Para-graph 2 of Article 49 may be submitted by any Party tothe dispute to the International Court of Justice. and anyjusticiable issue arising out of any other ruling of theConference may, if the Conference consents. be submittedby any Party to the dispute to the International Courtof Justice. The Members accept the jurisdiction of theCourt in respect of any dispute submitted to the Courtunder tuis Article.

3. The Organisation may, with the authorization of theGeneral Assembly of the United Nations, refer any ques-tion concerning the interpretation of this Charter to theInternational Court of Justice with a request for anadvisory opinion thereon.

4. The iDirector General, or his representative, mayappear before the Court on behalf of the Organizationin connection with any proceeding before that Court.

ARTICLE 77

Contributions of Membersacih Member undertakes to contribute promptly to the

Organization its share of the Organization's expenses acapportioned by the Conference. The right of a Member tovote in the Conference shalt automatically be suspended

if such Member £ails for two successive year to meet itsfinancial obligations to the Organization: Provided. Thatthe Conference may, in exceptional circumstances, waivesuch suspension.

ARTICLE 78

Entry Into Force.i. The original of this Charter. as set forth in the Final

Act of the United Nations Conference on Trade and Em-ployment, shall be deposited with the Secretary Generalof the United Nations, who will furnish certified copiesthereof to all interested governments.

2. Each government accepting this Charter shall depositan instrument of acceptance with the Socretary Generad ofthe United Nations, who will inform ail governments repre-sented at the United Nations Conference on Trade andEmployment and ail Members of the United Nations ofthe date of deposit of each instrument of acceptance andof the date on which this Charter enters into force underparagraph 3 of this Article.

3. This Charter shail enter into force on the sixtietbday following the day on which the number of govern-ments represented at the United Nations Conference onTrade and Employment which have deposited acceptancespursuant to paragraph 2 of this Article shall equal twenty,and the acceptance of each other accepting governmentshall take effect on the sixtieth day following the day onwhich the instrument of such acceptance is depo-ited: Pro-vided, That if this Charter shaU not have entered intoforce by December 3I, 194 , any of the governmentswhich have made effective the General Agreement onTariffs and Trade dated , s94 ,* togetherwith any other governments which have already depositedtheir acceptances, may agree to bring this Charter intoforce among themselves in accordance with arrangementewhich they may agree upon.

4. Each government accepting this Charter does so inrespect of all territory in which it bas authority to makethe provisions of this Charter effective.

ARTICLE 79

Withdrawal and TerminationI. Any Member of the Organization may give notice

of withdrawal from the Organization at any time afterthe expiration of five years from the date of the entry into*force of this Charter under the provisions of Article 78by wi' ten notification addressed to the Secretary Generalof the United Nations, who will immediately inform allother Members of the Organization.

2. The withdrawal shall take effect one year from thedate of the receipt of the notification by the SecretaryGeneral: Provided, Tbat the notification may be with-drawn at any time during that period.

3. This Charter may be terminated at any time byagreement of three fourths of' the Members of theOrganization.

* See footnote to the reference to thisAgreement in paragraph2 of Article 56.

'oSrl Wt P. 2743- DJ-- C. 344