The CHAIRMAN. I think that is true. But is there any governmentally authorized mechanism in this country that gives the consumer an equal voice with the producers in determining the amount of production and the price of it? Mr. PHILLIPS. No, sir; there is not.

The CHAIRMAN. And that is part of the mechanism that we have in this chapter; is that not true?

Mr. PHILLIPS. Yes, sir; certainly in the voting provisions it is.

The CHAIRMAN. You understand that at that point also there is a wide division of philosophy in this country.

Mr. PHILLIPS. Yes, Senator.

The CHAIRMAN. And I develop the point, because it goes to the acceptability of those provisions.

In other words, there are many people who believe that with the exception of pensioners and people who live on dividends, and so forth, the consumers are also producers, and that there is no valid line of distinction. And those people might wonder why we should impose an international standard that draws a line between the consumer and the producer.

I assume, however, that that has all been thought out, and that this is a definite part of State Department policy; am I correct?

Mr. PHILLIPS. Yes, sir. It is not only the Department's policy, but, as you know, it has been approved by the other Government agencies that were engaged in compiling it, getting it together, thinking it out. It has gradually merged over a period of years. This particular chapter first appeared in the proposals; then in the United States suggested charter; then in the London Draft; and more recently in the New York Draft-with, I think, the important provisions unchanged, or relatively unchanged.

The CHAIRMAN. I suggest that this is the first time that the matter has come before the Congress.

Mr. PHILLIPS. That, sir, I cannot answer. You are perfectly right that there have been no formal hearings. There has been consultation, I believe.

The CHAIRMAN. This is the first time the matter has come before the Congress. When did you start your public hearings?

Mr. PHILLIPS. I think February 25, as I recall.

*

EXHIBIT No. 10

REPORT OF THE SECOND SESSION OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT

Geneva, August 1947

(Adopted by the Preparatory Committee 22 August 1947)

Part I-INTRODUCTION

I. ESTABLISHMENT OF THE PREPARATORY COMMITTEE

The Economic and Social Council at its First Session resolved on 18 February 1946 to call an International Conference on Trade and Employment for the purpose of promoting the expansion of production, exchange and consumption of goods. At the same time the Council constituted a Preparatory Committee to elaborate for the Conference an annotated draft agenda, including a draft convention, taking into account suggestions which might be submitted by the Council itself or by any member of the United Nations.

The Council also charged the Preparatory Committee with presenting recommendations regarding the date and place of the Conference on Trade and Employment and which States, if any, non-members of the United Nations, should be invited to the Conference.

2. STAGES IN THE WORK OF THE PREPARATORY COMMITTEE

The First Session of the Preparatory Committee was held in London from 15 October to 26 November 1946. In the course of this Session, a draft Charter

for an International Trade Organization was prepared and embodied in a report which was distributed as document E/PC/T/33 and published.

The First Session appointed a Drafting Committee to meet as soon as possible after the First Session for the purpose of editing the draft Charter produced in London. The Drafting Committee met in New York from 20 January to 25 February 1947 and recorded the results of its work in a report which was distributed as document E/PC/T/34 and later published.

The Second Session of the Preparatory Committee was convened at the European Office of the United Nations in Geneva on 10 April 1947. During the course of this Session, the Preparatory Committee transmitted to the Fifth Session of the Economic and Social Council an interim report indicating the proposed outlines of the annotated draft agenda and convention which were being prepared for the full Conference and presenting recommendations concerning the date and place of the Conference and the non-members of the United Nations which might be invited to the Conference. The relevant sections of this interim report are reproduced in Enclosure 1 to the present Report. The resolutions adopted by the Economic and Social Council relating to the recommendations in the interim report are reproduced in enclosure 2. In accordance with those resolutions, the United Nations Conference on Trade and Employment is to be convened on 21 November 1947 at Havana, Cuba.

The Second Session of the Preparatory Committee continued the preparation of the draft Charter or convention. The draft adopted by the Preparatory Committee at the Second Session as a basis for discussion at the World Conference appears as Part II of the present Report. Although the Preparatory Committee has reached a large measure of agreement on the text to be recommended to the full Conference, it will be noted that the text is accompanied by a number of notes indicating the reservations which have been made and the interpretations of the text which are thought necessary in order to make the exact intention clear. Some of the latter notes enabled reservations to be withdrawn.

In view of the fact that changes have been made in the text of the draft Charter as it has progressed through the Preparatory Committee, and particularly in view of the fact that the order of the articles has been rearranged, the present report contains as Enclosure 4 tables setting forth in parallel columns the identifying numbers of comparable provisions in the versions of the draft Charter issued by the New York Drafting Committee and by the Second Session of the Preparatory Committee in order to facilitate a determination of the relationship between the present text and the earlier version.

In its present Report, the Preparatory Committee has refrained from enunciating in detail the principles underlying the draft Charter. It was felt by the Preparatory Committee that the observations presented in Part II of the Report of the First Session represented a general statement of the guiding principles which have been followed and developed in the work of the First Session, the Drafting Committee and the Second Session. Although the Report of the Second Session will constitute the agenda and basic "working paper" at the World Conference, the two earlier reports will be regareded as essential parts of the annotation thereto. It has seemed unnecessary to restate in the two later reports the principles set forth in the Report of the First Session or to indicate at length the alterations which were made during the Drafting Committee stage or during the Second Session, in order to take account of new considerations and to reconcile conflicting points of view.

Considering that the objectives underlying the endeavour to set up the I. T. O. would be promoted if concrete action were taken by the Members of the Preparatory Committee (which account for approximately 70% of world trade) to enter into reciprocal negotiations directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of preferences on a mutually advantageous basis, the governments represented on the Preparatory Committee adopted a resolution at the First Session regarding the carrying-out of such negotiations under its sponsorship in connection with, and as a part of, the Second Session. The governments represented at the Second Session of the Preparatory Committee are, at the time of the issuance of this report, in the final stages of the negotiations foreseen in the above-mentioned resolution. It is expected that the concessions resulting from these negotiations, together with such other provisions as may be appropriate, will shortly be incorporated in a General Agreement on Tariffs and Trade.'

1 In view of the existence of a Customs Union between Syria and Lebanon, a Syrian delegation has taken part in the tariff negotiations and has been regarded as a contracting party in the General Agreement on Tariffs and Trade.

3. PARTICIPANTS IN THE WORK OF THE PREPARATORY COMMITTEE

All members of the Preparatory Committee, with the exception of the Union of Soviet Socialist Republics, took part in the work of the First and Second Sessions and of the Drafting Committee. The Union of Soviet Socialist Republics indicated that it did not feel able to participate in the work of the Preparatory Committee as it had not found it possible to devote sufficient preliminary study to the important questions which were the subject of the Committee's discussion. Two specialized agencies' and two other intergovernmental organizations * were actively associated with all the proceedings and many members of the United Nations non-members of the Preparatory Committee and some non-governmental organizations in Category "A"" sent observers who from time to time gave the Committee the benefit of their views.

4. ELECTED OFFICERS OF THE SECOND SESSION

Chairman: H. E. SUETENS (Belgium).

Vice-Chairmen :

First Vice-Chairman: H. E. Erik COLBAN (Norway).
Second Vice-Chairman:

Sir Raghavan PILLAI (India).

H. E. Dr. Zdenek AUGENTHALER (Czechoslovakia).
Mr. Sergio I. CLARK (Cuba).

Hon. L. D. WILGRESS (Canada).

Chairman: H. E. SUETENS (Belgium).
Vice-Chairmen :

H. E. M. Erik COLBAN (Norway).

H. E. Antonio DE VILHENA FERREIRA BRAGA (Brazil).

Commission B:"

Chairman: Hon. L. D. WILGRESS (Canada).
Vice-Chairman: M. J. ROYER (France).

PART II-THE DRAFT CHARTER

CHAPTER I.-PURPOSE AND OBJECTIVES

ARTICLE 1

RECOGNIZING the determination of the United Nations to promote peaceful and friendly relations among nations,

THE STATES parties to this Charter undertake in the fields of trade and employment to cooperate with one another and with the United Nations For the Purpose of—

The members are: Australia, Belgium-Luxemburg Economic Union, Brazil, Canada, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Netherlands, New Zealand, Norway, Union of South Africa, Union of Soviet Socialist Republics, United Kingdom, United States of America.

The Food and Agriculture Organization and the International Labour Organization. The International Bank for Reconstruction and Development and the International Monetary Fund.

Colombia, Denmark, Mexico, Peru, Poland and Syria sent observers to the First Session; Colombia and Mexico to the Drafting Committee, and the following countries to the Second Session,in addition to those represented at the First Session: Afghanistan, Argentina, Ecuador, Egypt, Greece, Iran, Saudi-Arabia, Siam, Sweden, Turkey, Uruguay, Venezuela, Yugoslavia.

The

The organizations were: American Federation of Labor, International Chamber of Commerce, International Co-operative Alliance, World Federation of Trade Unions. International Federation of Agricultural Producers also submitted its views on certain points to the Second Session of the Preparatory Committee. The International Federation of Christian Trade Unions and the Interparliamentary Union were also invited to be represented.

In order to facilitate simultaneous discussion, the Preparatory Committee at the Second Session was divided into two commissions, each of which consisted of representatives of all Delegations. Commission A, and its sub-committees, prepared texts for consideration by the Preparatory Committee relating to the chapters on Employment and Economic Activity, Economic Development and General Commercial Policy (with the exception of the Articles relating to Subsidies). Similarly, Commission B prepared draft texts relating to the chapters on Purposes, Organization, Restrictive Business Practices and Inter-governmental Commodity Agreements, as well as the Articles on Subsidies. Each Commission established sub-committees for the further study of individual Articles or groups of Articles (see Enclosure 3). All drafts were reviewed at the final plenary meetings of the Preparatory Committee.

REALIZING the aims set forth in the Charter of the United Nations, particularly the attainment of the higher standards of living, full employment and conditions of economic and social progress and development, envisaged in Article 55 (a) of that Charter.

TO THIS END they pledge themselves, individually and collectively, to promote national and international action designed to attain the following objectives:

1. To assure a large and steadily growing volume of real income and effective demand, to increase the production, consumption and exchange of goods, and thus to contribute to a balanced and expanding world economy. 2. To foster and assist industrial and general economic development, particularly of those countries which are still in the early stages of industrial development, and to encourage the international flow of capital for productive investment.

3. To further the enjoyment by all countries, on equal terms, of access to the markets, products and productive facilities, which are needed for their economic prosperity and development.

4. To reduce tariffs and other barriers to trade and to eliminate discriminatory treatment in international commerce.

5. To enable countries, by increasing the opportunities for their trade and economic development on a mutually advantageous basis, to abstain from measures which would disrupt world commerce, reduce productive employment or retard economic progress.

6. To facilitate through the promotion of mutual understanding, consultation and cooperation the solution of problems relating to international trade in the fields of employment, economic development, commercial policy, business practices and commodity policy.

ACCORDINGLY they hereby establish the INTERNATIONAL TRADE ORGANIZATION through which they shall co-operate as Members to achieve the purpose and the objectives set forth in this Article.

CHAPTER II-EMPLOYMENT AND ECONOMIC ACTIVITY

ARTICLE 2. IMPORTANCE OF EMPLOYMENT, PRODUCTION, AND DEMAND IN RELATION TO THE PURPOSES OF THIS CHARTER

1. The Members recognize that the avoidance of unemployment or underemployment through the achievement and maintenance in each country of useful employment opportunities for those able and willing to work and of a large and steadily growing volume of production and effective demand for goods and services is not of domestic concern alone, but is also a necessary condition for the realization of the general purpose and the objectives set forth in Article I of this Charter, including the expansion of international trade, and thus for the well-being of all other countries.

2. The Members recognize that, while the avoidance of unemployment or under-employment must depend primarily on domestic measures, such measures should be supplemented by concerted action under the sponsorship of the Economic and Social Council of the United Nations in collaboration with the appropriate inter-governmental organizations, each of these bodies acting within its respective sphere and consistently with the terms and purposes of its basic instrument.

3. The Members recognize that the regular exchange of information and views among Members in indispenstable for successful cooperation in the field of employment and economic activity and should be facilitated by the Organization.

ARTICLE 3. MAINTENANCE OF DOMESTIC EMPLOYMENT

1. Each Member shall take action designed to achieve and maintain full and productive employment and large and steadily growing demand within its own territory through measures appropriate to its political, economic, and social institutions.

2. Measures to sustain employment, production, and demand shall be consistent with the other objectives and provisions of this Charter. Members shall seek to avoid measures which would have the effect of creating balance-of-payments difficulties for other countries.

ARTICLE 4. FAIR LABOUR STANDARDS

Each Member, recognizing that all countries have a common interest in the achievement and maintenance of fair labour standards related to productivity, shall take whatever action may be appropriate and feasible to eliminate substandard conditions of labour in production for export and generally throughout its territory. Members which are also members of the International Labour Organization shall co-operate with that organization in giving effect to this undertaking.

ARTICLE 5. REMOVAL OF MALADJUSTMENTS WITHIN THE BALANCE OF PAYMENTS

1. In the event that a persistent maladjustment within a Member's balance of payments is a major factor in a situation in which other Members are involved in balance-of-payments difficulties which handicap them in carrying out the provisions of Article 3 without resort to trade restrictions, the Member shall make its full contribution, while appropriate action shall be taken by the other Members concerned, towards correcting the situation.

2. Action in accordance with this Article shall be taken with due regard to the desirability of employing methods which expand rather than contract international trade.

ARTICLE 6. EXCHANGE OF INFORMATION AND CONSULTATION

1. The Members and the Organization shall participate in arrangements made or sponsored by the Economic and Social Council of the United Nations, including arrangements with appropriate inter-governmental organizations:

(a) for the systematic collection, analysis and exchange of information on domestic employment problems, trends and policies, including as far as possible information relating to national income, demand and the balance of payments.

(b) for consultation with a view to concerted action on the part of governments and intergovernmental organizations in the field of employment policies. 2. The Organization shall, if it considers that the urgency of the situation so requires, initiate consultations among Members with a view to their taking appropriate measures against the international spread of a decline in employment, production or demand.

ARTICLE 7. SAFEGUARDS FOR MEMBERS SUBJECT TO EXTERNAL DEFLATIONARY

PRESSURE

The Organization shall have regard, in the exercise of its functions under other provisions of this Charter, to the need of Members to take action within the provisions of this Charter to safeguard their economies against deflationary pressure in the event of a serious or abrupt decline in the effective demand of other countries.

CHAPTER III-ECONOMIC DEVELOPMENT

ARTICLE 8. IMPORTANCE OF ECONOMIC DEVELOPMENT IN RELATION TO THE PURPOSE OF THIS CHARTER

The Members recognize that all countries have a common interest in the productive use of the world's human and material resources, and that the industrial and general economic development of all countries, and particularly of those in which resources are as yet relatively undeveloped, will improve opportunities for employment, enhance the productivity of labour, increase the demand for goods and services, contribute to economic balance, expand international trade and raise levels of real income.

ARTICLE 9. DEVELOPMENT OF DOMESTIC RESOURCES AND PRODUCTIVITY

Members shall within their respective territories take action designed progressively to develop, and where necessary to reconstruct, industrial and other economic resources and to raise standards of productivity through measures consistent with the other provisions of this Charter.