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MEMBERSHIP AND PARTICIPATION BY THE UNITED STATES IN THE INTERNATIONAL TRADE ORGANIZATION

WEDNESDAY, APRIL 19, 1950

HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,

Washington, D. C.

The committee met, pursuant to call, at 10:45 a. m. in the Foreign Affairs Committee room, United States Capitol, Hon. A. S. J. Carnahan presiding.

Mr. CARNAHAN. The committee will come to order.

We have before us this morning, House Joint Resolution 236 which provides for membership and participation by the United States in the International Trade Organization, and authorizes an appropriation therefor. Without objection, House Joint Resolution 236 will be included in the record at this point.

(H. J. Res. 236 is as follows:)

[H. J. Res. 236, 81st Cong., 1st sess.]

JOINT RESOLUTION Providing for membership and participation by the United States in the International Trade Organization, and authorizing an appropriation therefor. Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That this joint resolution may be cited as the "International Trade Organization Act."

SEC. 2. The President is hereby authorized to accept membership for the United States in the International Trade Organization by appropriate procedures under paragraphs 1 and 2 (a) or (b) of article 103 of the Havana Charter for an International Trade Organization (hereinafter called the Charter) annexed to the final act of the United Nations Conference on Trade and I'mployment, signed March 24, 1948, and deposited with the Secretary-General of the United Nations.

SEC. 3. The President, by and with the advice and consent of the Senate, shall designate such representatives and alternates as he may determine, consistent with the Charter and the rules of procedure of the Organization, to represent the United States in the Conference and on the Executive Board of the Organization. The President may from time to time designate or provide for the designation of, such other persons as he may deem appropriate to represent the United States on any subsidiary organs or bodies of the Organization on which the United States is entitled to representation. Such representatives to the Conference and to the Executive Board shall each be entitled to receive compensation at a rate not to exceed $12,000 per annum and such alternates thereto and such representatives to subsidiary organs or bodies shall each be entitled to receive compensation at a rate not to exceed $10,000 per annum for such period or periods as the President may specify, except that no Member of th Senate or House of Representatives or officer of the United States Government who is thus designated shall be entitled to receive such compensation.

SEC. 4. There is hereby authorized to be appropriated annually to the Department of State, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for the payment by the United States of its share of the expenses of the Organization, including those incurred by the Interim Commission thereof, as apportioned by the conference in accordance

with articles 77 and 91 of the Charter of the Organization, and for all necessary salaries and expenses of the representatives and alternates provided for in section 3 hereof, and of their appropriate staffs, including personal services in the District of Columbia and elsewhere, without regard to the civil-service and classification laws; travel expenses without regard to the Standardized Government Travel Regulations, as amended, and without regard to the rates of per diem allowances in lieu of subsistence expenses under the Subsistence Expense Act of 1926, as amended, and section 10 of the Act of March 3, 1933, as amended, and under such rules and regulations as the Secretary of State may prescribe, travel expenses of families and transportation of effects of United States representatives and other personnel in going to and returning from their post of duty; allowances for living quarters, including heat, fuel, and light, as authorized by the Act approved June 26, 1930 (5 U. S. C. 118a), cost of living allowances for personnel stationed abroad under such rules and regulations as the Secretary of State may prescribe; communications services; stenographic reporting, translating, and other services, by contract; hire of passenger motor vehicle and other local transportation; rent of offices; printing and binding without regard to section 11 of the Act of March 1, 1919 (44 U. S. C. 111); all without regard to section 3709 of the revised statutes, as amended (41 U. S. C. 5); cfficial entertainment and representation allowances; and such other expenses as the Secretary of State deems necessary to participation by the United States in the activities of the Organization.

SEC. 5. Nothing in this joint resolution shall authorize the President or any person acting on behalf of the United States to accept any amendment to the Charter under paragraph 2 of article 100 thereof without the authorization of Congress.

SEC. 6. The President may from time to time prescribe such rules and regulations as he considers required or appropriate to carry out the provisions of this joint resolution.

Mr. CARNAHAN (presiding). We also are in receipt of Senate Document No. 61, a message from the President of the United States submitting to us the charter for an International Trade Organization. This will appear in the record at this point.

(The document referred to is as follows:)

[S. Doc. No. 61, 81st Cong., 1st sess.]

MESSAGE FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING THE CHARTER FOR INTERNATIONAL TRADE ORGANIZATION, PREPARED BY A CONFERENCE OF THE UNITED NATIONS, HABANA, 1949, TOGETHER WITH A MEMORANDUM FROM THE SECRETARY OF STATE

To the Congress of the United States:

I submit herewith, for the consideration of the Congress, the Charter for an International Trade Organization, prepared by a conference of the United Nations which met in Habana in 1948, together with a memorandum from the Secretary of State.

The Charter is designed to do two things: to establish a code of international conduct to guide nations in dealing with the fundamental problems of world trade, and to create an agency, within the framework of the United Nations, to help implement this code.

We have learned through bitter experience how necessary it is for nations to approach jointly the task of improving the conditions of world trade.

During the 1930's many nations acted independently, each attempting to gain advantage at the expense of others. The result was a vicious circle-with restrictions by one nation provoking more serious restrictions by other nations in retaliation. The end result was a tremendous drop in the volume of international trade which made the general depression worse and injured all countries.

Since the recent war, though some nations have again acted unilaterally, there has been a general resolve to prevent the vicious circle of restrictions and to achieve progressively freer trade. To gain this objective, action by many nations is necessary. No one nation alone, and no small group of nations, can have enough impact on the network of obstructions that has been built up.

The United States program of reciprocal trade agreements has been a shining beacon of cooperative action to reduce tariff barriers, and it is vitally necessary that the Reciprocal Trade Agreements Act be extended in full force.

But it is clear that trade agreements alone are not enough. These agreements do not touch certain important obstacles to the expansion of world trade. Subsidies, cartels, and many other devices have important effects in limiting trade or creating disadvantages for one country as compared with another. What is needed is cooperative action to attack the whole range of obstacles that stand in the way of broadening international trade.

The Habana Charter is a major step toward achieving that objective. It was agreed upon by the representatives of 54 nations after more than 2 years of preparatory study and negotiation.

The Charter establishes an international organization, which is essential to continuous and effective international cooperation in the field of trade. The nations accepting membership in the International Trade Organization commit themselves to abide by fair and liberal principles of trade. They agree to take no action which may injure another nation without first making a genuine effort to reach a constructive solution through consultation either directly between themselves or through the Organization. They agree to work together continuously to achieve progressively greater trade and to settle differences with respect to national policies that affect the flow of international commerce.

The Charter is the most comprehensive international economic agreement in history. It goes beyond vague generalities and deals with the real nature of the problems confronting us in the present world situation. While it does not include every detail desired by this Nation's representatives, it does provide a practical, realistic method for progressive action toward the goal of expanding world trade. The United States can be proud of its leadership in this constructive action to help the nations of the world work their way out of the morass of restriction and discrimination that has gripped international trade ever since the First World War. The alternative to the Charter is economic conflict and shrinking international trade.

This Charter is an integral part of the larger program of international economic reconstruction and development. The great objectives of the European recovery program will be only partially realized, unless we achieve a vigorous world trading system. The economic advancement of underdeveloped areas likewise depends very largely upon increasing the international exchange of goods and services. Thus the Charter is an effective step toward improved standards of living throughout the world, toward the growth of production, and toward the maintenance of employment and economic stability. It is fundamental to the progressive, expanding world economy so vital to the increasing welfare and prosperity of the people of the United States.

The great structure of international cooperation that is being erected through the United Nations must rest upon a solid foundation of continuous cooperation in economic affairs. The Charter for an International Trade Organiaztion is a necessary part of that foundation, along with the special arrangements that have been made in the fields of money and credit, transportation and communications, food and agriculture, labor and health.

As an essential forward step in our foreign policy, I recommend that the Congress authorize the United States to accept membership in the International Trade Organization.

THE WHITE HOUSE, April 28, 1949.

HARRY S. TRUMAN.

Memorandum for the President.

DEPARTMENT OF STATE, Washington, April 27, 1949.

Subject: The Charter for an International Trade Organization.

On March 24, 1948, after more than 2 years of public discussion and international negotiations, the representatives of 54 nations, assembled at Habana, completed a Charter for an International Trade Organization for submission to their respective governments. This Charter establishes a code of principles to be accepted in the conduct of international trade and an organization to help make them work. The Organization would take its place with the International Bank and the International Monetary Fund and the Food and Agriculture Organization as a specialized agency of the United Nations.

THE ECONOMIC WORLD TODAY

The world economy is still seriously out of joint. The aftermath of 6 years of struggle, with its depletion of financial and material resources and its distortion of the apparatus for the production and distribution of goods, is still

with us. There are pronounced imbalances of trade not only between the United States and most of the rest of the world but between other countries.

Despite constructive efforts to cope with these problems, there is still a widespread feeling in the world of economic and political insecurity. Nations face the problems of increasing production and distribution of goods, of finding ways and means to bring the industrialized nations of the world back into full productivity and stability, and of developing and bringing into the area of productive trade the underdeveloped nations of the world.

In such a situation there is a clear need for a body in which policies in the field of trade can be continually discussed, questioned, explained, adjusted, and harmonious agreement reached. The ITO Charter provides such a body.

ORIGINS OF THE CHARTER

Even while hostilities were still going on, many persons in the United States began to think of how we could reach international agreement after the war which would avoid the mistakes and economic conflict of the interwar period and set the course of international trade along expanding and liberal lines. The Atlantic Charter enunciated the principle of equal access for all to the markets and the raw materials of the world. Article VII of the Mutual Aid Agreements laid down the principle of negotiation for the reduction of tariffs, for the elimination of preferences, and for the removal of discriminatory practices in international trade. As early as 1943, consultation began with representatives of the British and Canadian Governments to develop agreement on principles which ultimately emerged refined and sharpened in the ITO Charter.

When the Bretton Woods Conference completed its labors in establishing the Charters of the International Bank and the International Monetary Fund, the delegates recognized that their work was not complete. They realized that action by nations in the field of the international exchanges and in the field of international investment required complementary action in the field of trade. In the final act of that Conference, therefore, they called upon the member nations to continue to work to

"(1) reduce obstacles to international trade and in other ways promote mutually advantageous international commercial relations;

"(2) bring about the orderly marketing of staple commodities at prices fair to the producer and consumer alike;

"(3) deal with the special problems of international concern which will arise from the cessation of production for war purposes; and

"(4) facilitate by cooperative efforts the harmonization of national policies of Member States designed to promote and maintain high levels of employment and progressively rising standards of living."

When the Congress accepted membership for the United States in the Bretton Woods organizations, it said:

"In the realization that additional measures of international economic cooperation are necessary to facilitate the expansion and balanced growth of international trade and render most effective the operations of the fund and the bank, it is hereby declared to be the policy of the United States to seek to bring about further agreement and cooperation among nations and international bodies, as soon as possible, on ways and means which will best reduce obstacles to and restrictions upon international trade, eliminate unfair trade practices, promote mutually advantageous commercial relations, and otherwise facilitate the expansion and balanced growth of international trade and promote the stability of international economic relations."

Further agreement has now been reached in the ITO Charter.

The basic ideas of the Charter were set forth in the United States Proposals for the Expansion of World Trade and Employment, placed before the peoples of the world for their consideration in December 1945. It was at the suggestion of the United States that the Economic and Social Council of the United Nations at its first meeting in February 1946 appointed a committee to prepare the agenda for an international conference on trade and employment, the Conference which took place at Habana in 1948 and produced the ITO Charter. When that Preparatory Committee met for the first time in London in October 1946 it had before it and adopted as its basic working document a suggested Charter for an International Trade Organization proposed and prepared by the United States. A second meeting of the Committee was held in Geneva in 1947.

After the London meeting, the resulting draft Charter was published. Public hearings were held upon it in seven cities in the United States. Extensive hear

ings were also conducted by the Finance Committee of the United States Senate. Most of the suggestions which were developed at those hearings ultimately found their way into the Charter.

SCOPE OF THE CHARTER

The Charter is comprehensive and detailed. It is a code of principles designed to guide action. It contains commitments covering a wide range of trade relations. It stands in contrast to the resolutions and recommendations of international economic conferences between the two World Wars, which were uniformly in such general terms and so lacking in substantive content as to have little or no practical effect upon the activities of nations. The Charter leaves the world of pious generalities and addresses itself to the more thorny task of providing a guide for action in dealing with specific problems in international trade.

Equally important, the Charter provides a mechanism for continuous consultation between nations on policies affecting world trade. It establishes the obligation and the mechanism of consultation and adjustment before action, rather than retaliation after it.

We are pledged to unfaltering support of the United Nations in the conviction that international differences of opinion can best be composed around the conference table. The International Trade Organization will provide the conference room for discussion of problems of international trade. Its rules for action, its means for consultation, will together provide a method of meeting world trade problems as they arise and of helping to maintain economic peace.

OBJECTIVE OF THE CHARTER

The objective of the Charter can be simply stated. It is to contribute to higher standards of living, to greater production and wider distribution and consumption of goods and services, and thus to economic and political stability throughout the world. It seeks to do this, first, by reducing public and private barriers which restrict and divert trade, second, by establishing the objective of multilateralism and nondiscrimination in international trade and by providing means and fostering conditions under which this objective can be achieved as rapidly as possible; third, by providing a means for dealing with problems arising out of surpluses of primary commodities; fourth, by promoting the economic stability and the maintenance of employment so essential to liberalization of trade policy; and, fifth, by advancing the economic development of underdeveloped areas, which have so great a contribution to make to their own welfare and that of the world.

THE SUBSTANTIVE COMMITMENTS OF THE CHARTER

Many of the substantive commitments of the Charter are based on familiar principles of United States policy. Others are of a pioneering character.

In the first group are:

(1)

(a) The commitment that member nations will stand ready to negotiate for the reduction of tariffs and the elimination of tariff preferences. This is simply international acceptance of a policy long followed by the United States under the Hull reciprocal trade agreements program. So far as the United States is concerned, this commitment will be carried out under the authority and procedures of the Reciprocal Trade Agreements Act.

(b) Commitments designed to limit the use of indirect forms of protectionism, such as discriminatory internal taxes, mixing regulations, and arbitrary and concealed barriers in the guise of customs regulations. The principal effect of these commitments will be to concentrate charges upon imports at the customs frontier, to make it widely and definitely known exactly what those charges are, to simplify as much as possible the binding red tape of customs administration and to secure a wider degree of uniformity in such administration. The provisions of the Charter dealing with this subject represent the widest area of detailed agreement yet reached internationally in this complicated and highly important field.

(c) A condemnation in principle of the use of quantitative restrictions, a limitation of their use in practice to specified situations in which all nations are agreed that their use is permissible, and a commitment to keep their usẹ subject to international scrutiny and control.

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