procedure set forth in subparagraph 3 (c) of article 26 and to the extent that such approval is given, the discriminations shall not be open to challenge under this paragraph.

3. When three quarters of the Members of the Organization have accepted the obligations of article VIII of the Articles of Agreement of the International Monetary Fund, but in any event before December 31, 1951, the Organization shall review the provisions of this article, in consultation with the International Monetary Fund, with a view to the earliest possible elimination of discriminations under subparagraphs 1 (d) (iii) and (iv) of this article, which restrict the expansion of world trade.

Article 29. Exchange Arrangements

1. The Organization shall seek cooperation with the International Monetary Fund to the end that the Fund and the Organization may pursue a coordinated policy with regard to exchange questions within the competence of the Fund and questions of quantitative restrictions or other trade measures within the competence of the Organization.

2. Members agree that they will not seek by exchange action to frustrate the purposes of this Charter, and that they will not seek by trade action to frustrate the purposes of the Articles of Agreement of the International Monetary Fund.

3. In order to avoid the imposition of trade restrictions and discriminations through exchange techniques, and in order to avoid the danger of conflicting jurisdiction between the Organization and the International Monetary Fund in exchange matters, Members of the Organization shall also undertake membership of the International Monetary Fund; 5

Provided, (that any country which is willing to join the Organization but is unwilling to join the International Monetary Fund may become With respect to this paragraph the Preparatory Committee reported: "It was agreed that the problem would be much simplified if all Members of the Organization were also Members of the International Monetary Fund. The Committee came to no decision on the question of requiring common membership, however, as some of the delegations felt it may well be necessary to allow freely for independent membership of the Organization and the Fund.

"Consideration was therefore given to the question whether special provision should not be made for a country which wished to become a Member of the Organization without becoming a Member of the Fund. It was generally recognized that some such provision might prove to be necessary, but it was thought that examination of this issue could usefully wait until the probable membership of the Organization and of the Fund became clearer. Pending this further examination, the Draft Article 29 in the Appendix to this Report has been expressed in a way which implies that Members of the Organization would in general be expected to be Members of the Fund, but that means could be provided for non-members of the Fund to join the Organization."

a Member of the Organization if it enters into a special exchange agreement with the Organization which would become part of its obligations under this Charter, and Provided further) that a Member of the Organization which ceases to be a Member of the International Monetary Fund shall forthwith enter into a special exchange agreement with the Organization, which shall then become part of its obligations under this Charter.

4. A special exchange agreement between a Member and the Organization under paragraph 3 must provide to the satisfaction of the Organization, in collaboration throughout with the International Monetary Fund, that the purposes common to the Organization and the Fund will not be frustrated as a result of action in exchange matters by the Member in question.

5. A Member which has made a special exchange agreement under paragraph 3 of this article undertakes to furnish the Organization with such information as it may require, within the general scope of section 5 of article VIII of the Articles of Agreement of the International Monetary Fund, in order to carry out its functions relating to this special exchange agreement.

6. The Organization shall seek and accept the opinion of the International Monetary Fund whether action by the Member in exchange matters is permissible under the terms of the special exchange agreement and shall act in collaboration with the International Monetary Fund on all questions which may arise in the working of a special exchange agreement under this article.

SECTION D. Subsidies

Article 30. General Undertaking Regarding Subsidies—
Elimination of Export Subsidies-Exceptions

1. Except as provided in paragraphs 2 and 4 of this article, if any Member establishes or maintains any subsidy, including any form of income or price support, to the domestic producers of any product, which operates to increase the exports of such product from, or to reduce the imports of such product into its territory, such Member shall notify the Organization in writing as to the extent and nature of the subsidization, as to the anticipated effect of the subsidization on the quantity of the product imported into and exported from the territory of the Member, and as to the conditions making the subsidization necessary. In any case in which it is determined that serious prejudice to the interest of any Member is caused or threatened by the operation of any such subsidization, the Member granting such subsidization shall undertake to discuss with the other Member or Members concerned, or with the Organization, the possibility of limiting the subsidization.

2. Except as provided in paragraph 4, no Member shall grant, directly or indirectly, any subsidy on the exportation of any product, or establish or maintain any other system which results in the sale of such product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market, due allowance being made for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability. The preceding sentence shall not be construed to prevent any Member from exempting exported products from duties. or taxes imposed in respect of like products when consumed domestically or from remitting such duties or taxes which have accrued. The use of the proceeds of such duties or taxes to make payments to domestic producers would be considered as a case under paragraph 1. Members shall give effect to the provisions of this paragraph at the earliest practicable date, but in any event not later than three years from the day on which this Charter enters into force. If any Member considers itself unable to make the provisions of this paragraph effecttive in respect of any specified product or products upon the expiration of such period, such Member shall, at least three months before the expiration of such period, give to the Organization a notice in writing to that effect, accompanied by a complete analysis of the practices in question and the facts justifying them and an indication as to the extension of the period desired. It shall then be determined whether the extension requested should be made.

3. A system for the stabilization of the domestic price of a primary product, which sometimes results in the sale of the product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market, may be determined by the Organization not to be a subsidy on exportation under the terms of paragraph 2 if it has at times resulted in the sale of the product for export at a price higher than the comparable price charged for the like product to domestic buyers and if the system is so operated, either because of the effective limitation of production or otherwise, as not to unduly stimulate exports or otherwise seriously prejudice the interest of other members.

4. (a) In any case of subsidization of a primary commodity,

The Preparatory Committee reported that "the new paragraph 3 would render it possible for interested Members, in consultation with the Organization, to operate a domestic stabilization scheme for a primary product if the stabilized domestic price is at times below the export price and if, through effective production controls or otherwise, the scheme operated so as not to prejudice the interest of Members. Some delegations thought that this was implicit in paragraph 2 and that the explicit exemption in paragraph 3 might render it more difficult to apply paragraph 2 so as to cover other legitimate exceptions." Hence the Preparatory Committee indicated in its report that suggestions might be forthcoming to cover explicitly other exceptional cases.

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whether falling under paragraph 1 or paragraph 2, if a Member considers that its interest is seriously prejudiced by the subsidy or if the Member granting the subsidy considers itself unable to comply with the provisions of paragraph 2 within the time limit laid down therein, the difficulty may be deemed to be a special difficulty of the kind referred to in chapter VII, and in that event, the procedure laid down in that chapter shall be followed.

(b) If it is determined that the measures provided for in subparagraph (a) have not succeeded, or do not promise to succeed, within a reasonable period of time, in removing, or preventing the development of, a burdensome world surplus of the primary product concerned, the requirements of paragraphs 1 and 2 shall cease to apply in respect of such product as from the effective date of such determination and shall not be re-applied in respect of such product until a date determined in accordance with procedures approved by the Organization.

(c) Notwithstanding the provisions of paragraph 2 and subparagraph 4 (b), no Member shall grant any subsidy on the exportation of any primary product which has the effect of acquiring for that Member a share of world trade in that product in excess of the share which it had during a previous representative period, account being taken insofar as practicable of any special factors which may have affected or may be affecting the trade in that product. The selection of a representative period for any product and the appraisal of any special factors affecting the trade in the product shall be made initially by the Member granting the subsidy;

Provided, that such Member shall, upon the request of any other Member having an important interest in the trade in that product, or upon the request of the Organization, consult promptly with the other Member or with the Organization regarding the need for an adjustment of the base period selected or for the re-appraisal of the special factors involved.

5. Any determination required by or appropriate to the operation of this article shall be made under procedures established by the Organization in accordance with paragraph 6 of article 66.

SECTION E. State Trading

Article 31. Nondiscriminatory Administration of State-Trading

Enterprises

1. If any Member establishes or maintains a state enterprisewherever located, which imports, exports, purchases, sells, or distributes any product, or if any Member grants exclusive or special privileges, formally or in effect, to any enterprise to import, export,

purchase, sell, (distribute, or produce)' any product, (and exercises effective control over the trading operations of such enterprise) the commerce of the other Members shall be accorded treatment no less favorable than that accorded to the commerce of any country other than that in which the enterprise is located in respect of the purchase or sale by such enterprises of any product. To this end such enter⚫prise shall, in making its external purchases or sales of any product, be influenced solely by commercial considerations, such as price, quality, marketability, transportation, and other terms of purchase or sale, and also differential customs treatment. The Member maintaining such state enterprise or granting exclusive or special privileges to an enterprise shall make available such information as may be appropriate in connection with the consultation provided for in article 35.

2. The foregoing provisions of this article relate to purchases by state enterprises for re-sale. With respect to purchases by state enterprises for governmental use and not for re-sale, Members agree to accord to the commerce of other Members fair and equitable treatment having full regard to all relevant circumstances.

3. For the purposes of this article, a state enterprise shall be understood to be any enterprise over whose operations the government of a Member exercises effective control.

Artide 32. Expansion of Trade by State Monopolies of Individual

Products

1. If any Member (other than a Member subject to the provisions of Article 33) establishes, maintains or authorizes, formally or in effect, a complete or substantially complete monopoly of the importation or exportation of any product, such Member shall, upon the request of any other Member or Members having an interest in trade with that Member in the product concerned, enter into negotiations with such Member or Members, in the manner provided for in respect of tariffs under article 24, with regard to:

(a) in the case of an import monopoly, the maximum margin by

'The words "distribute, or produce" are placed in parentheses for the reason that certain delegations considered that it should be possible for the government of a Member country to confer exclusive or special privileges upon certain types of enterprise without at the same time exercising effective control over the trading operations of such enterprise. The clause "and exercises effective control over the trading operations of such enterprise" is also included in parentheses so as to make the point of view of those delegations clear. Other delegations, however, considered that in such circumstances it would be proper that the government conferring the exclusive or special privileges should assume the responsibility of exercising effective control over operations affecting the external trade of such enterprise.

The clause in parentheses, referring to art. 33, was provisionally removed since the Preparatory Committee postponed consideration of art. 33.