II. Summary of Detailed Provisions Chapter I. Purposes [Chapter I sets forth the broad purposes of the ITO. These are: to promote the cooperative solution of trade problems; to expand opportunities for trade and economic development; to aid the industrialization of underdeveloped countries; and in general to promote the expansion of the production, exchange and consumption of goods, the reduction of tariffs and other trade barriers and the elimination of trade discriminations.] Chapter II. Membership Chapter II looks toward broad membership in the Organization. It provides for two general categories of members: original members and other members. Original members would be all those countries which are represented at the proposed international Conference on Trade and Employment and which accept the ITO Charter by a certain date. Other countries would be brought in with the approval of the Organization after it had become established. Chapter III. Employment Chapter III recognizes that the maintenance of employment and of a high and rising demand for goods and services is essential to achieve the purposes of the ITO and, reciprocally, that measures to promote employment and demand should be consistent with these purposes. Accordingly, each Member of the ITO would agree to take action designed to achieve and maintain employment and demand within its own jurisdiction through measures appropriate to its political and economic institutions; and to participate in arrangements for the collection, analysis, and exchange of information on employment problems and in consultations on employment policies. The Economic and Social Council would have the responsibility for furthering the employment objectives of the Charter. These matters are placed under the Economic and Social Council rather than under the ITO because the Council has been given the broad function of promoting full employment by the Charter of the United Nations, and also because the Council, by virtue of its authority to coordinate the many specialized international agencies whose activities contribute to the maintenance of employment, is better fitted for this work than the ITO. Chapter III also provides that Members will take action designed to develop their economic resources and raise their standards of productivity; will take such action as may be appropriate and feasible to eliminate substandard labor conditions; and will cooperate in action designed to remove fundamental maladjustments in balances of payments. Chapter IV. Economic Development Chapter IV recognizes the importance of bringing about the industrial and general economic development of all countries, particularly underdeveloped countries. Accordingly, Members would undertake to promote their own development and would agree to cooperate, through the Economic and Social Council of the United Nations and by other means, to promote industrial and economic development generally. Members would agree on the one hand not to put any unreasonable restraints on the export of facilities, such as capital and equipment, which are needed for the economic development of other countries, and, on the other hand, not to take any unreasonable action injurious to foreign investors who are supplying facilities for development. It would be recognized that governmental assistance, including protective measures, may be needed in some cases to promote the establishment of particular industries; at the same time it would also be recognized that the unwise use of protection will frustrate sound development and damage international trade. Protective measures which run contrary to the provisions of chapter V of the Charter (relating to the relaxation of trade barriers) may not be used except with the specific approval of the Organization and, in appropriate cases, with that of countries whose trade may be directly affected. Chapter V. General Commercial Policy Chapter V, the longest in the Charter, provides for the reduction or elimination of governmental barriers to international trade. Broadly, these barriers take the form of excessive customs regulations of all kinds; tariffs; embargoes and quotas; exchange restrictions on trade; governmental subsidization of production or exports; restrictive practices by state-trading enterprises; and the discriminatory application of trade barriers and controls generally. Chapter V contains provisions relating to all these types of trade barriers and to connected matters. The chapter is divided into ten sections, as follows: Section title Short description of section Section A (General Com- Establishes equality of treatment in trade genmercial Provisions) erally. [Eliminates or regulates various administrative devices which hamper imports or discriminate in trade. Requires full publication of trade regulations and advance notice of restrictive regulations.] Section B (Tariffs and Pref- Requires reciprocal negotiations for the substantial erences) reduction of tariffs and for the elimination of import tariff preferences. Section title Section C (Quantitative Restrictions and Exchange Restrictions) Section D (Subsidies) Section E (State Trading) Section F (Emergency Provisions Consultation Nullification or Impairment) Short description of section Eliminates quotas and embargoes on trade in general, but permits them for agreed purposes under defined circumstances. Provides that ex change restrictions on trade shall not be permitted to frustrate the ITO Charter. Requires that subsidies affecting trade be reported to the ITO; that those seriously prejudicing trade be subject to negotiated limitations; and that export subsidies in general be eliminated except under defined circumstances. Requires that state-trading enterprises be operated in a nondiscriminatory manner; that state monopolies of individual products negotiate for the reduction of protection afforded to domestic producers; [and that complete state monopolies of all foreign trade agree to maintain total imports of all products at a level to be negotiated periodically]. Permits withdrawal or modification of tariff or other concessions in case of serious injury to domestic producers; provides for consultation with ITO on all phases of chapter V; permits Members to withdraw concessions from countries which do not live up to obligations of Charter. Section G (Relations with [Prohibits agreements with non-members promisNon-Members) Section H (Exceptions) ing them benefits of Charter; prevents Members, after an initial period, from extending tariff concessions to non-members without ITO approval.] [Excepts from chapter V measures usually excepted from commercial agreements (e.g. sanitary regulations, traffic in arms, and the like).] Section I (Territorial Ap- Applies chapter V to customs territories of Memplication) bers; permits special advantages to promote frontier traffic or arising out of customs unions. Chapter VI. Restrictive Business Practices Under chapter VI Members of the ITO would agree to take appropriate individual and collective measures to eliminate restrictive business practices in international trade whenever they have harmful effects on the expansion of trade or on any of the purposes of the ITO. The chapter specifies certain practices which would be subject to investigation with a view to their elimination. Among these practices would be those which fix prices, allocate markets or customers, boycott or discriminate against enterprises outside the arrangement, limit production, suppress technology, and improperly use patents, trade-marks, and copyrights. In order to carry out this policy a complaint procedure would be set up for taking action against particular instances of restrictive business practices. Under this procedure the ITO would receive complaints from a Member, or from persons or business organizations within a Member's territory, that a particular business arrangement is restricting international trade with harmful effects. If the ITO found that the complaint was justified, it could recommend that Members take appropriate remedial action. Members would agree to cooperate with the ITO in eliminating restrictive business practices. Among other things, they would agree to obtain and furnish to the ITO information needed by it in connection with particular investigations; to consult with the ITO regarding complaints which had been filed; and to take fullest account of ITO recommendations in initiating action to eliminate particular restrictive arrangements. Chapter VII. Intergovernmental Commodity Arrangements Chapter VII recognizes that in the case of certain commodities, usually primary agricultural products, special difficulties, such as a world surplus, may arise which would warrant the adoption of intergovernmental commodity agreements, including those which regulate production, trade, or prices. Such agreements would have to be consistent with certain general objectives and would need to satisfy certain conditions. Regulatory commodity agreements would be justified if necessary 1) to enable countries to solve difficulties caused by surpluses without taking action inconsistent with the purposes of the Charter, 2) to avoid the serious distress to producers or labor caused by surpluses when production adjustments cannot be made quickly enough because of the lack of alternative employment opportunities, and 3) to provide a working arrangement for a transitional period during which measures may be taken to increase consumption of the surplus product or to facilitate the movement of resources and manpower out of the production of the surplus product into more remunerative lines. It would be required that the Members concerned must formulate and adopt a program of economic adjustment designed to make progress toward solving the basic problem which gave rise to the proposal for a regulatory commodity agreement; that such agreements be open initially to all ITO Members on equal terms and that they afford equitable treatment to all Members (including those not participating in the agreement); that they provide for adequate representation by Members primarily interested in the commodity as consumers, and give consuming countries an equal vote with producing countries in deciding matters such as the regulation of prices, trade, production, stocks, and the like; that, where practicable, they provide for measures to expand consumption of the commodity in question; that they assure supplies of the product adequate to meet world demand at reasonable prices; and that they make appropriate provision to satisfy world consumption from the most effective sources of supply. Provision is made that full publicity must attend all important stages in the making of intergovernmental commodity agreements. Chapter VIII. Organization Chapter VIII of the Charter sets forth the functions and structure of the ITO and relates them to the substantive undertakings of Members provided for in the earlier chapters. Functions. The functions of the ITO largely relate to its responsibilities in connection with chapter V (Commercial Policy), chapter VI (Restrictive Business Practices) and chapter VII (Commodity Agreements). In addition to functions of this kind, the ITO would be authorized to provide assistance and advice to Members and other international organizations in connection with specific projects of industrialization or other economic development; to promote international agreements such as those designed to facilitate the international movement of capital, technology, art, and skills, and those relating to commercial travelers, commercial arbitration, and the avoidance of double taxation; and to cooperate with the United Nations and other organizations on economic and social matters and on measures to maintain peace and security. Structure. The principal organs of the ITO would be a Conference; an Executive Board; a Commission on Commercial Policy, a Commission on Business Practices, and a Commodity Commission; and a Secretariat. The Conference. The governing body of the ITO would be the Conference on which each country belonging to the ITO would be represented. The decisions of the Conference on most matters would be taken by a simple majority vote of the Members present and voting, each country casting one vote. The Conference would have final authority to determine the policies of the ITO. It would be authorized to make recommendations regarding any matter relating to the purposes of the ITO and to elect the members of the Executive Board. Interim Tariff Committee. An Interim Tariff Committee within the ITO would be charged with the function of authorizing Members to withhold, if necessary, tariff reductions from other Members which failed to meet their obligations to negotiate for the substantial reduction of tariffs and the elimination of preferences. The Committee would consist of those Members of the ITO which had already fulfilled 1 A minority of the Preparatory Committee favored the use of a system of weighted voting in the Conference. |