2. In order that the negotiations may proceed in an orderly fashion, it is desirable that a Steering Committee be established as soon as the various delegations have assembled at the Second Session. SECTION G. RESULT OF THE NEGOTIATIONS If the tariff negotiations proceed successfully along the lines set forth above, there should emerge from the negotiations a tariff schedule for each member, each schedule containing concessions granted to all of the other members in their own right. These schedules might be identified as follows: Names of Country 1 Australia. Belgo-Luxembourg-Netherlands Customs Union, Belgian Congo and Netherlands Overseas Territories_. Brazil.. Canada_. Chile.. China Cuba Czechoslovakia.... France and French Union__ India_ New Zealand. Schedule Schedule I Schedule II Schedule III Schedule IV Schedule V Schedule VI Schedule VII Schedule VIII Schedule IX Schedule X United Kingdom and the overseas territories for which it has international responsibility. United States____. Schedule XI Schedule XII Schedule XIII Schedule XIV Schedule XV Schedule XVI 1 Separate, or possibly sub-divided, schedules may be necessary in the case of certain countries in order to provide adequately for certain overseas territories. If the principles indicated in Article 33 of the Charter should prove acceptable to the Soviet Union, this schedule would relate, not to tariff concessions, but to an undertaking to purchase annually products valued at not less than an aggregate amount to be agreed upon. SECTION H. GENERAL AGREEMENT ON TARIFFS AND TRADE 1. Once agreed upon the tariff schedules resulting from the negotiations among the members of the Preparatory Committee cannot easily be held in abeyance pending action by the International Conference on Trade and Employment and the adoption of the Charter by national legislatures. 2. It is, therefore, proposed that the tariff schedules be incorporated in an agreement among the members of the Preparatory Committee which would also contain, either by reference or by reproduction, those general provisions of Chapter V of the Charter considered essential to safeguard the value of the tariff concessions and such other provisions as may be appropriated. The Agreement should contain a provision under which the signatory governments could make any adjustments in the Agreement which may be desirable or necessary in the light of the action taken by the International Conference on Trade and Employment on the Charter. A draft outline of a General Agreement on Tariffs and Trade appears in Section I. The Drafting Committee should consider this outline and prepare a more complete draft for the consideration of the Preparatory Committee at its Second Session. 3. The General Agreement on Tariffs and Trade should be signed and made public at the close of the tariff negotiations. The Agreement should be legally independent of the Charter and should be brought into force as soon as possible after its signature and publication. Countries should be free to withdraw from the agreement at the end of three years or thereafter on giving six months' prior notice. This will provide an opportunity for a review of the Agreement and any adjustment of the tariff schedules which may be considered desirable. 4. The Agreement should conform in every way to the principles laid down in the Charter and should not contain any provision which would prevent the operation of any provision of the Charter. 5. The tariff concessions granted under the Agreement should be provisionally generalized to the trade of other countries pending the consideration by the International Conference on Trade and Employment of the question whether benefits granted under the Charter should be extended to countries which do not join the International Trade Organization and which, therefore, do not accept the obligations of Article 24. SECTION 1. CREATION OF A PROVISIONAL AGENCY PENDING THE ESTABLISHMENT OF THE INTERNATIONAL TRADE ORGANIZATION Certain of the provisions of the General Agreement on Tariffs and Trade, for example, those incorporating Article 34 of the Charter (Emergency Action on Imports of Particular Products) and Article 35 of the Charter (Nullification or Impairment), will require for their successful operation the existence of an international body. It is proposed, therefore, that the members of the Preparatory Committee, which make effective the General Agreement on Tariffs and Trade, should create a provisional international agency for this purpose. This provisional agency would go out of existence upon the establishment of the International Trade Organization. SECTION J. RELATION OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE TO THE INTERNATIONAL TRADE ORGANIZATION AFTER ITS ESTABLISHMENT Interim Tariff Committee 1. The Charter as now formulated provides in Article 67 that the countries which make effective the General Agreement on Tariffs and Trade shall constitute the original members of the Interim Tariff Committee to be set up within the International Trade Organization after the International Conference on Trade and Employment has met and the Organization has been established. 2. The Interim Tariff Committee will have the function of determining whether (with respect to any negotiations subsequent to those culminating in the General Agreement on Tariffs and Trade) any member of the Organization has failed to live up to its obligation regarding tariff negotiations and, under paragraph (3) of Article 24 of the Charter, of authorizing complaining members to withhold tariff benefits from offending members. The following points should be noted with regard to this function: (a) A member of the Organization may be admitted to membership in the Committee when the member has completed tariff negotiations "comparable in scope or effect" to the negotiations already completed by the original members of the Committee. Thus, what is achieved by way of tariff action in the General Agreement on Tariffs and Trade will become the standard to which members of the Organization will be expected to conform in order to obtain membership of the Interim Tariff Committee. In applying this standard the Committee should have regard to the provisions of the Charter as a whole. (b) Since it is agreed that the original members of the Interim Tariff Committee will have taken adequate steps toward fulfillment of the tariff obligations of the Charter in respect of negotiations among themselves (see Article III of the draft General Agreement on Tariffs and Trade), the Committee may not authorize one original member of the Committee to withhold tariff concessions from another original member of the Committee. This would be without prejudice, of course, to any decisions reached, under the auspices of the Organization, regarding a second series of tariff negotiations among the members of the Committee. (c) Members of the Interim Tariff Committee must, in negotiations with members of the Organization which are not members of the Committee, be prepared to consider concessions on products of interest to the latter which were not dealt with in the original negotiations. Refusal to negotiate on such products might warrant a legitimate complaint. Accordingly the Committee could in such cases authorize a member of the Organization, which is not a member of the Committee, to withhold tariff benefits from a member of the Committee. However, the extent to which a member of the Organization, which is not a member of the Committee, might withhold tariff benefits from a member of the Committee would be limited only to tariff concessions which the former had already made pursuant to Article 24 and general tariff penalties could not be applied. * It should be noted that the Organization, as distinct from the Committee, could authorize an original member of the Committee to withhold benefits from another original member of the Committee under certain other provisions of the Charter, (d) The authority of the Committee would in all cases be limited to granting permission to a member of the Organization to withhold tariff benefits from another member. In no event could the Committee compel a member to withhold benefits. Procedure for Broadening Membership in the Interim Tariff Committee through Additional Tariff Negotiations 1. Procedures must be developed for assuring, by negotiation, action for the reduction of tariffs and the elimination of preferences by members of the Organization, which are not parties to the General Agreement on Tariffs and Trade and hence would not be original members of the Interim Tariff Committee. The following alternative procedures are suggested for consideration: (a) The original members of the Interim Tariff Committee would negotiate separate bilateral agreements with members of the Organization, which are not members of the Committee, and the latter would negotiate such agreements between themselves. The Committee would judge as to when a particular country had completed enough such agreements to entitle it to membership in the Committee. (b) A member of the Organization, which is not an original member of the Committee, might offer to negotiate with the Committee a multilateral schedule of concessions similar in scope and legal application to the schedules appended to the General Agreement on Tariffs and Trade concluded among the original members of the Interim Tariff Committee and the original members of the Committee would agree to amend the multilateral schedules appended to the General Agreement on Tariffs and Trade to the extent necessary to assure appropriate concessions on products of which the country, not a member of the Committee, was a principal supplier. 2. Whatever procedure is adopted, due weight should be given in the negotiating process to concessions already made as a result of prior negotiations. SECTION K. TENTATIVE AND PARTIAL DRAFT OUTLINE OF GENERAL AGREEMENT ON TARIFFS AND TRADE The governments in respect of which this Agreement is signed: Having been named by the Economic and Social Council of the United Nations to prepare, for the consideration of the International Conference on Trade and Employment, a Charter for an International Trade Organization of the United Nations; Having, as the Preparatory Committee for the Conference, recommended to the Conference the provisions of such a Charter, the text of which is set forth in the Report of the Preparatory Committee; and Being desirous of furthering the objectives of the Conference by providing an example of concrete achievement capable of generalization to all countries on equitable terms; Have, through their respective Plenipotentiaries, agreed as follows: Article I 1. During the life of the Agreement each signatory government shall make effective in respect of each other signatory government the provisions described below of the Charter for an International Trade Organization of the United Nations recommended in the report of the Preparatory Committee. [There would follow a list of the articles to be included in the Agreement.] * 2. Functions entrusted to the proposed International Trade Organization under any of the provisions of the Charter incorporated in this Agreement by virtue of paragraph 1 of this Article shall, pending the establishment of the Organization, be carried out by a provisional international agency consisting of delegates appointed by the signatory governments. Article II With regard to Articles 24, 32 and 33 of the Charter, which relate to negotiations for 1. The reduction of tariffs and the elimination of tariff preferences, and 2. Parallel action by state-trading enterprises, the signatory governments declare that they have, by virtue of Article III of this Agreement, taken this step towards fulfilment of the obligations of these Articles Article III Each signatory government shall accord to the commerce of the customs ter- Article IV (This Article would set forth the general exceptions provided for in Article Article V (This Article would reproduce the provisions of Article 38 of the Charter re- Article VI (This article would permit revision of the Agreement, by agreement among Article VII (This Article would provide for the entry into force of this Agreement, its There would be a number of purely technical and of purely legal provisions.) EXHIBIT IV-D OFFICIAL REPORT OF THE UNITED STATES DELEGATION TO THE In December, 1945, the Government of the United States published and trans- Shortly thereafter, the United States Government issued invitations to the At the same time, the Council suggested to the Preparatory Committee that "(a) International agreement relating to the achievement and main- "(c) International agreement relating to restrictive business practices, "(e) Establishment of an international trade organization, as a specialized |