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1 Exports to the Virgin Islands of the United States have been deducted from the reported totals for 1934 to permit comparisons with the later years. * Decrease. * Preliminary. Source: Compiled from official statistics of the U. S. Department of Commerce.

Mr. KNUTSON. At this point the chairman wishes to have inserted in the record an article on the World Trade Charter.

(The information is as follows:)

(American Affairs, April 1947)


(By Garet Garrett) WASHINGTON, D. C. The proposed International Trade Charter has run into weather. We left it on its way home from London, where the experts of 17 nations had been working it over to make it fit a totalitarian economy like Russia's, a socialist economy like Great Britain's, and the one great capitalist economy surviving in the world; namely, our own. When it got home it was longer and, except at one point, more obscure.

The State Department published the revised draft. The authorship of the new writing was not indicated, nor could you expect it to be, for if it were people might

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try to trace the threads of national selfishness or to discover secret motives and reservations, instead of regarding the work as a meeting of expert minds on how the commerce of the world shall be controlled and regulated by international authority for the good of all alike. To write an International Trade Charter that shall confer its benefits impartially upon the weak and the strong, the privileged and thę underprivileged, the advanced and the backward, deficit people and surplus people, creditor and debtor nations—that is an inventive feat of almost unimaginable difficulty and the experts must be permitted to work it out first in their own language with perfect freedom of anonymity. Nevertheless, there is one place where the new writing is unmistakably British and that happens also to be one place where clarity is added.


Ever since the Atlantic Charter was signed by President Roosevelt and Winston Churchill "somewhere in the Atlantic, on August 14, 1941, while this country was still supporting the fiction of neutrality, a certain troublesome subject has been in controversy—the question being: Was Great Britain morally committed to give up her famous system of imperial preference?

That is the system under which members of the British Commonwealth and the colonies of the Empire trade with one another under special terms. The Atlantic Charter was a joint statement of peace aims between the United States and Great Britain. Article 4 declared that all States, great or small, victor or vanquished, should have access on equal terms to trade and to the raw materials of the world, subject only to the qualifying phrase, "with due respect for existing obligations." Mr. Churchill afterward said that he put the qualifying phrase in and that he had to fight for it and that he did it to save imperial preference even at a time "when it was hard to see how the war could be won.” The same question arose again over article 7 of the master lend-lease agreement, which declared that the ultimate settlements should be made with a view "to the elimination of all forms of discriminatory treatment in international commerce and to the reduction of tariffs and other trade barriers.”. That seemed to bode ill for the British system of imperial preference; but Mr. Churchill said he had received from President Roosevelt explicit personal assurance that the British "were no more committed to abandon imperial preference than was the United States to abolish tariffs." Yet there was an obvious discrepancy between the writing and the verbal assurance, and the controversy went on.

Then after the war came the American loan of 334 billion dollars to Great Britain. All during the negotiations the British made a point of saying that if they didn't get the loan they would be obliged to hold fast to their system of imperial preference in self-defense. And at the same time the American proponents of the loan made much of saying that if we didn't lend them the money the world would find itself divided in two great trading blocs, one the dollar bloc and one the sterling bloc, and that we should be forcing our best customer to discriminate against American exports. The loan was made. On receiving it the British Government signed a paper saying it would enter at once into negotiations relating “to tariffs and preferences, quantitative restrictions, subsidies, state trading, cartels, and other types of trade barriers treated in the document published by the United States and referred to above."

This document was the white paper pinned to the Anglo-American loan agreement by the State Department. It contained the original American Proposals for an International Trade Organization. When the Anglo-American loan agreement was laid before the British Parliament, the debate on it revolved around that one sore question. Had not England's negotiators at last signed away British preference, if not actually at least morally? Lord Keynes said no. Going back over the history of the Atlantic Charter and the master lend-lease agreement, Mr. Churchill said no; he was sure the British had reserved both latitude and judgment.

But when, later, the State Department sent the draft of the International Trade Charter to the London Conference of Experts, the British were taking no more chances. To settle the thing once for all they wrote their imperial preference system into it and now it is explicit there. The revised Charter reads that paragraph 1, article 14, section A, chapter V, forbidding any member nation to grant any exclusive advantage, favor, privilege, or immunity to the trade of any other member nation shall not apply "between the territories comprised in annexure A to this Charter" and annexure A reads as follows:

"ANNEXURE A "List of Territories Referred to in Subparagraph 2 (a) (ii) of Article 14 "1. Countries of the British Commonwealth of Nations.

"The United Kingdom of Great Britain and Northern Ireland and its dependent territories, “Canada, "The Commonwealth of Australia and its dependent territories, "New Zealand and its dependent territories, "The Union of South Africa and South West Africa, "Ireland, "Newfoundland, “Southern Rhodesia, “Burma,

"Cevlon." In neither the summary of the revised Charter that was published by the State Department nor the summary issued by the Department of Commerce do you find any reference to this interesting addition. You have to read the complete text to find it. Both summaries say of chapter V that it "provides for the reduction of governmental barriers of all kinds and for the elimination of trade discriminations.” To say that of a chapter that explicitly exempts the British system of imperial preference is brevity by omission. However, it would have been very awkward to say of chapter V, in a summary, that it provides for the reduction of governmental barriers of all kinds and for the elimination of trade discriminations-except British imperial preference.

The experts had their troubles. The.fiction that they were thinking only of the world and not of their own countries first was always in danger of breaking down. The British kept saying to the Americans: “You except Cuba, don't you? You write in your own charter that preferences in force exclusively between the United States and Cuba shall be immune." This the Americans had to admit. "Well, then,” said the British, "why shouldn't the preferences exclusively in force within the British Empire be immune also? Anyhow, we will write it in."

COMPROMISE ON STATE TRADING One of the extremely touchy subjects was State trading. To begin with, the State Department regarded State trading as one of the barriers to international trade that ought to be negotiated away, and it was definitely so defined in a joint statement of the United States and Great Britain on the American proposals when the Anglo-American loan agreement was signed.

Nevertheless, when it came to writing the original charter, the State Department decided that State trading had to be accommodated, because otherwise it would be impossible ever to get Russia in, since with Russia all foreign trade is an absolute State monopoly. And secondly, the socialist government of Great Britain was heavily and perhaps irrevocably committed to State trading, as, for example, in cotton, wood, food, and foreign exchange. The original State Department draft of the charter, therefore, provided for State trading in four paragraphs which aimed to mitigate and isolate, if possible, an evil that was already existing and perhaps could not be got rid of, certainly not all at once.

But in the revised charter as it comes back from London, State trading is treated as if it were the new way of the world and such counterweights as a capitalist country might have been expected to devise are eased away. This is done by a few deft touches made by some anonymous expert's pen. For example, in the original draft that went to London the charter said that any member maintaining such State enterprise, or one granting exclusive or special privileges to any enterprise at all, "shall upon the request of any other member

* provide such specific and detailed information as will make possible a determination as to whether the operations of the enterprise are being conducted in accordance with” the letter and spirit of the charter. The revised version as it comes back from London reads as follows:

"The member maintaining such State enterprise or granting exclusive or special privileges to an enterprise shall make available such information as may be appropriate.

The difference here is simply between what other people want to know about your State trading and what you want them to know.

Of all the new subjects in the field of social theory the one that has produced the most controversy and the most literature is the responsibility of Government to provide full employment for its people.

Two years ago, even before the socialists took over, Great Britain adopted the doctrine that full employment is a responsibility of Government. In this country a diluted version of the same doctrine was adopted in the form of the Employment Act of 1946.

Naturally, therefore, that was an idea that had to be embodied in the American proposals for an International Trade Organization; and all the more so because now when a nation like the United States exports its surplus to other countries it may, without intending to do so, be exporting unemployment. How? Well, for example, if the American motorcar industry, which is the most powerful in the world, exports motor vehicles to Australia or South America or to England it may be displacing British-made motorcars. For that reason the employees of the British motorcar industry may be idle or on part-time, while the automobile workers of America are busy. On the other hand, if we did not export our motorcars, all the workers of the British motorcar industry might be busy, and some of our own automobile workers idle.

In the London Conference on the Charter there was trouble with this subject. Some of the experts, especially those representing the British point of view, were for raising a declaration of full employment policy to the plane of universal economic dogma; others were for writing into the Charter a paragraph that would call for penalties and sanctions against any member nation that should fail to impose upon its own economy a proper full-employment policy, like England's. The American experts were unwilling to go the whole way and the result was & compromise. The old text and the new are reproduced below.



From the original Charter The revised draft as it came back from

London "The Members recognize that the "1. Members recognize that the attainment and maintenance of useful avoidance of unemployment or underememployment opportunities for those ployment through the achievement and able, willing, and seeking to work are maintenance in each country of useful essential to the full realization of the employment opportunities for those able purposes of the Organization. They and willing to work and of high and also recognize that domestic programs steadily rising effective demand for to maintain or expand employment goods and services is not of domestie should be consistent with these pur- concern alone, but is a necessary condiposes.

tion for the expansion of international trade and, in general, for the realization of the purposes of the Organization. They also recognize that measures to sustain demand and employment should be consistent with the other purposes and provisions of the Organization, and that in the choice of such measures, each country should seek to avoid creating balance-of-payments difficulties for other countries.

“2. They agree that, while the achievement and maintenance of effective demand and employment must depend primarily on domestic measures, such measures should be assisted by the regular exchange of information and views among Members and, so far as possible, be supplemented by international action sponsored by the Economic and Social Council of the United Nations, and carried out in collaboration with the appropriate inter-governmental organizations, acting within their respective spheres and consistently with the terms and purposes of their basic instruments.


From the original Charter The revised draft as it came back from

London "Each Member shall take action de- “Members shall take action designed signed to achieve and maintain full em- to achieve and maintain full and producployment within its own jurisdiction tive employment and high and stable through measures appropriate to its levels of effective demand within their political and economic institutions. own jurisdictions through measures ap

propriate to their political and economic institutions and compatible with

the other purposes of the Organization. "In seeking to maintain or expand “Members, recognizing that all counemployment, no Member shall adopt tries have a common interest in the measures which would have the effect of productive use of the world's resources, creating unemployment in other coun- agree to take action designed progrestries or which are incompatible with sively to develop economic resources and undertakings designed to promote an to raise standards of productivity within expanding volume of international trade their jurisdiction through measures comand investment.

patible with the other purposes of the

Organization. "The Members agree that they will: Members, recognizing that all coun(1) make arrangements for the collec- tries have a common 'interest in the tion, analysis, and exchange of informa- maintenance of fair labour standards tion on employment problems, trends, related to national productivity, agree and policies and for the submission at to take whatever action may be approregular intervals of reports on the meas- priate and feasible to eliminate subures adopted to give effect to Article 4; standard conditions of labour in produc(a) consult regularly on employment tion for export and generally throughout problems; and (s) hold special confer- their jurisdiction. ences in case of threat of widespread unemployment.

"In accordance with the Charter of “Members agree that in case of a the United Nations, the Economic and fundamental disequilibrium in their balSocial Council will be responsible for ance of payments involving other counfurthering the objectives of Chapter III tries in persistent balance of payments and supervising the fulfillment of the difficulties which handicap them in obligations assumed under Article 6." maintaining employment, they will

make their full contribution to action

designed to correct the maladjustment." The last paragraph in the new writing is important, and yet for too many readers it will be obscure. Economists seldom know how difficult their idiom is. “Balance of payments” means what one nation owes to another from having bought more than it could afford to buy or more than it could pay for.

And a "fundamental disequilibrium” means either that the creditor nation cannot collect or that the debtor nation cannot pay, either way you like to look at it. And whereas formerly a "disequilibrium” was regarded as an economic problem, it comes now to be thought of as a social problem. The idea is that when a nation sells more to a people than it buys from them it is exporting unemployment, or conversely, that when a nation buys more than it sells it is importing unemployment-provided, that is to say, the goods are competitive. Thus, for example, if Great Britain buys from us goods that she can make for herself and buys them from us only because they are better or cheaper she is importing unemployment.

This paragraph, therefore, means that if, notwithstanding universal fullemployment policies, unemployment does reappear in the world, each nation shall undertake to absorb its own instead of trying in the old-fashioned way to create employment for its own people by increasing its exports. And if it fails to do so, it shall make "its full contribution to action designed to correct the maladjustment.” What that action might be is not explained. The conference of the International Trade Organization would decide and the offender, which might be the United States, would be pretty helpless with only one vote against the world.


The American experts had been rather free with escape clauses, but the experts assembled in London were freer still. So many more escape clauses were written in that now it seems a member nation may do almost anything it likes, under

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