And the Trade Organization releases India under those circum stances. Now, your question is, What do we get out of that? The CHAIRMAN. That is right. Mr. WILCOX. We do not get any direct quid pro quo in that case. The CHAIRMAN. Could not this Organization require, as a part of the negotiations, that we should get a direct quid pro quo? Mr. WILCOX. Well, we might require it. I mean, we might say, "We do not give you this release unless this concession that we have given you is removed." Is that not true? The CHAIRMAN. Yes. Mr. WILCOX. But we do not have to do that. It is up to us. The CHAIRMAN. Now, then, let us take that last sentence again [reading]: Upon such agreement being reached, the Organization may release the applicant Member from the obligation in question or from any other relevant obligation under this Charter, subject ot such limitations as may have been agreed upon in the negotiations between the Members concerned or such further limitations as the Organization may impose. In other words, if the parties agree, the Organization itself may impose further limitations upon the agreement of the parties? Mr. WILCOX. Further limitations, yes. The CHAIRMAN. Yes. Mr. WILCOX. That is designed, I think, to make (b) and (c) parallel. The CHAIRMAN. Yes. But it makes them parallel in a great grant of power to the Organization. Mr. WILCOX. Well, the great grant of power is to limit the extent of the escape from these obligations. The CHAIRMAN. But if the two people agree on an escape, and you put it in the hands of a third person to burden the escape; you are giving that third person a great grant of power. Mr. WILCOX. Would it be your judgment, Senator, that that sentence was inappropriate? That that should not be done? The CHAIRMAN. Well, I can hardly answer that until I have some kind of an example of what is in mind, and we have not had it yet. Perhaps on further reflection, maybe by reference to the minutes that led to this sentence, we might be able to get a little illumination as to what was in mind, and if we knew what was in mind, we might be able to circumscribe it and state it in a way so that it will cover the cases that are in mind. On the assumption, and I do not think we are ready yet to abandon the assumption, that this language is intended to include countries like the United States, or developed industrial nations, let us test the practicality of it. Suppose that we want to breach some trade agreement that we have with Great Britain. We have put a most-favored-nation clause in that agreement so that a wide variety of countries, every country we also have a trade agreement with, has an interest in that agreement with Great Britain, has it not? Will this Organization start consulting every one of the countries with whom we have a trade agreement? Mr. WILCOX. No. The CHAIRMAN. It says so. Mr. WILCOX. Every country substantially interested in the trade, in the particular commodity. The CHAIRMAN. That is right. Mr. WILCOX. That would not be every country with which we had an agreement. The CHAIRMAN. I quite agree. I am happy for the correction. We would consult with every country that would be affected. Mr. WILCOXx. Yes. The CHAIRMAN. That might be a considerable number of countries? Mr. WILCOX. Every country substantially affected. The CHAIRMAN. Every country substantially affected, and that might be a considerable number of countries. Now, let us consider the time element involved. Would that not be a terrifically cumbersome thing by reason of the time element involved, the difficulty of getting people together and negotiating and trying to get their consent? Would not the original relief that this holds out disappear because it would bog down in delay and probably would not be worth anything after it had been obtained? Mr. WILCOX. Well, I think there might be some delay involved in the process, yes, sir. It is a little difficult for me to envision the case of the United States of America in the guise of an undeveloped country asking for relief from obligations so that it can have some manufacturing. The CHAIRMAN. I was very careful to state the assumptions which we are not entitled to abandon that this does not apply exclusively to nondeveloped countries. So far as we are concerned, if we tried to get a breach through this mechanism, or if Great Britain tried to get a breach through this mechanism, or if any of the other great powers tried to get a breach through this mechanism, it would involve a very, very long time lag, would it not? Mr. WILCOX. It would involve some time lag; yes. The CHAIRMAN. And perhaps a direct negotiation between the two countries concerned, even though it had glaring repercussions on other countries, might be the best approach, so far as that type of country is concerned. Mr. WILCOX. Yes. I think perhaps the country that was seeking this release might feel that its case would be improved if it presented it through the Trade Organization instead of going direct to the other country to which it had made a commitment. The CHAIRMAN. Well, let us take the underdeveloped country. Would you say Brazil is an underdeveloped country, industrially? Mr. WILCOX. Yes. The CHAIRMAN. Brazil sends coffee all over the world. I assume that it has many, many trade agreements on the subject of coffee. Am I correct in that? Mr. WILCOX. Well, I do not know what you mean by trade agree ment there. It certainly does sell coffee all over the world. The CHAIRMAN. And does it not have agreements with respect to its import and export business with other countries? Mr. WILCOX. Coffee is on the free list here, I believe. I am told they have a good many agreements on coffee. The CHAIRMAN. Yes. Of course they would have. So Brazil, then, an underdeveloped country, would have the same time difficulty and I suggest that just as a matter of principle we should be as solicitous in getting up this kind of organization to protect Brazil against harmful time lags, as we should be in protecting ourselves. If you were to ask for my counsel on this thing, I would say that it needs a lot of clarification, and perhaps a lot of restriction and perhaps elimination. Mr. WILCOX. You puzzle me there, Senator. I understand what you mean by "clarification," but I do not understand what you mean by "elimination." The CHAIRMAN. I think when you prescribe a procedure for breaching an agreement between two countries by a body which is not a judicial body in the first instance, at least, which is not operating on judicial standards, I think you are getting off into a lot of troubled waters. Mr. WILCOX. I see. The CHAIRMAN. And I am not so sure that you are not off on something which even if it worked and worked well, if it were adequately prescribed, would be a good thing. But my notion on that is entirely tentative. Why do you not think on it some more and you may have some further thoughts on it? Mr. WILCOX. Well, I should appreciate an opportunity to pursue this further with you outside the committee some time. The CHAIRMAN. All right. We will do that. We will meet tomorrow morning at 10:30 in the Foreign Relations room, in the Capitol. (Thereupon, at 5 p. m., an adjournment was taken until 10:30 a. m., Tuesday, March 25, 1947, in the Foreign Relations Committee room, the Capitol.) 60316-47-pt. 1—11 INTERNATIONAL TRADE ORGANIZATIONS TUESDAY, MARCH 25, 1947 UNITED STATES SENATE, The committee met at 10:30 a. m., pursuant to adjournment in the Foreign Relations Committee room, the Capitol, Hon. Eugene D. Millikin (chairman) presiding. Present: Senators Millikin (chairman), Martin, and Johnson of Colorado. Present also: Representative Gearhart. The CHAIRMAN. The meeting will come to order. Is Mr. Fahy here? STATEMENT OF CHARLES FAHY, LEGAL ADVISER, The CHAIRMAN. State your full name and position with the Government. Mr. FAHY. Charles Fahy, legal adviser, State Department. Mr. FAHY. Senator, I have been advised that one of the problems which has concerned the committee is whether or not the proposed International Trade Organization, the charter, went beyond the powers of the Economic and Social Council under the United Nations Charter, and if so, whether that brought into question the legality of the proposed ITO charter. I would like to state the legal position there as I am convinced that it is. First, referring to the provisions of the United Nations Charter regarding the Economic and Social Council, so far as here relevant, contained in chapters IX and X. Article 56 provides [reading]: All Members that is, the nations who constitute the United Nations pledge themselves to take joint and separate action in cooperation with the Organization for the achievement of the purposes set forth in Article 55. Now, article 55 states the purposes to be as follows [reading]: The United Nations shall promote higher standards of living, full employment, and conditions of economic and social progress and development. Also, it shall promote solutions of international economic, social, health, and related problems; and international cultural and educational cooperation. 157 |