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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 I, 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 Tarifi 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. 2 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 grant: ing 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.

(0) 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
in respect of themselves and that they stand ready, in conformity with the spirit
of these Articles, to undertake similar negotiations with such other governments
as may desire to become members of the International Trade Organization,

Article III

Each signatory government shall accord to the commerce of the customs ter-
ritories of the other signatory governments the treatment provided for in the
appropriate Schedule annexed to this Agreement and made an integral part
thereof.

Article IV
(This Article would set forth the general exceptions provided for in Article
37 of the Charter.)

Article V

(This Article would reproduce the provisions of Article 38 of the Charter re-
lating to territorial application.)

Article VI

(This article would permit revision of the Agreement, by agreement among
the signatories, if necessary or desirable in order to take account of changes in
the Charter effected by the International Conference on Trade and Employment.)

Article VII

(This Article would provide for the entry into force of this Agreement, its
duration, and its termination. The Agreement would remain initially in force
for three years. If not terminated at the end of the three-year period (which
would require six months' prior notice), it would remain in force thereafter,
subject to termination on six months' notice.

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

FIRST MEETING OF THE PREPARATORY COMMITTEE FOR THE IN-
TERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT, LONDON,
ENGLAND, OCTOBER 15, 1946

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INDEX

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Page

Page
I. Background.

885 XI. Work of the Committees-Continued
II, Agenda..

886 B. Committee II: General Commercial
III. Participation.

886
Policy.

894
IV. United States delegation.

886

1. General Most Favored - Nation
V. Travel

887
Treatment.

895
VI. Conference Arrangements..

887

2. General Commercial Provisions
VII. Opening Plenary Sessions.

887

(Except Most-Favored-Nation
VIII. Organization of the Preparatory Com-

Treatment and General Excep-
mittee

889
tions)

895
A. General.

889

3. Reduction of Tariffs and Eliming-
B. Committees.

889
tion of Preferences.

895
0. The Secretariat...

890

4. Quantitative Restrictions and Ex-
IX. Language

891
change Control..

896
A, Official and Working Languages.

891

(i) General Elimination of Quan-
B. Conference Publications.

891
titative Restrictions...

896
C. General Comment on Interpretation

(ii) Restrictions to Safeguard the
and Language Difficulties

891

Balance of Payments.. 896
X. Policy With Regard to the Press.-

891

(iii) Administration of Quantita-
XI. Work of the Committees..

891
tive Restrictions...

897
A. Committee I: Employment and Econ-

(iv) Exchange Control...

897
omic Activity..

891
6. Subsidies.

898
1. Undertakings With Respect to

6. State Trading-

898
Levels of Employment and Effec-

7. Emergency Provisions Consulta-
tive Demand...

892

tion-Nullification and Impair-
2. Other Issues and Undertakings... 893

ment..

898

INDEX-Continued
XI. Work of the Committees Continued

XI. Work of the Committees-Continued
B. Committee II-Continued
Page

Page
8. Territorial Application of the Com-

E. Committee V: Administration and Or-
mercial Policy Provisions-Cus-

ganization..

906
toms Unions-Frontier Traffic... 899

1. Membership and Functions... 906
9. Memorandum on Multilateral

2. The Conference..

906
Trade Agreement Negotiations.. 899

3. Voting and Executive Board Mem-
0. Committee III: Restrictive Business

bership..

907
Practices...

900
4. The Executive Board.

907
1. Introduction.

900
5. The Commissions..

907
2. General Outline of Chapter VI of

6. The Secretariat.

903
the Redrafted Charter.

901
7. Miscellaneous Provisions.

908
3. Modifications of the Original U. S.

F. Joint Committee of Committees I and
Draft Charter...

901

II: Industrial Development...- 909
D. Committee IV: Intergovernmental

1. Recognition of the Importance of
Commodity Arrangements..

903
Economic Development.

909
1. Need for Commodity Arrangements

2. Positive Aids to Economic Develop-
Appreciated.

903
ment.

909
2. Committee IV Procedure

904

3. Protective Measures to Assist De-
3. Principles of Commodity Arrange-

velopment...

910
ments.

904
4. Allocation of Functions.

911
4. Different Types of Arrangements..

905

XII. Entertainment and Official Functions. 912
5. Steps in Arriving at Intergovern XIII. Closing Plenary sessions.

912
mental Arrangements..
905 XIV. Summary and Appraisal..

912

I. BACKGROUND
In December, 1945, the Government of the United States published and trans-
mitted to other governments for their consideration its Proposals for Erpansion
of World Trade and Employment. These Proposals contain suggestions for rules
to govern trade barriers, restrictive business practices, intergovernmental com-
modity arrangements, the international aspects of domestic employment policies,
and outlined a suggested structure for an International Trade Organization of
the United Nations whose members would agree to conduct their commercial
relations in accordance with these rules. This publication coincided with the
conclusion of negotiations with the Government of the United Kingdom with
respect to the British loan. The Government of the United Kingdom at that
time stated that it was in full agreement on all important points with these
Proposals, and that it accepted them as a basis for international discussion.

Shortly thereafter, the United States Government issued invitations to the
Governments of Australia, Belgium, Brazil, Canada, China, Cuba, Czechoslorakia,
France, India, The Netherlands, New Zealand, South Africa, the U. S. S. R.,
and the United Kingdom envisaging the convening of an International Conference
on Trade and Employment for the purpose of establishing an International Trade
Organization of the United Nations which would carry the ideas of the Proposals
into effect. These fourteen governments were invited to join the United States in:
(a) a preparatory meeting to lay the groundwork for the International Conference
by preparing a draft Charter for the Organization; and (b) a meeting to negotiate
concrete arrangements for the relaxation of tariffs and trade barriers of all
kinds. With the exception of the U. S. S. R., all the fourteen governments
accepted the invitation of the United States Government from both points of view.

On March 5, 1946, the Economic and Social Council passed a resolution under
which the Council decided that it would itself sponsor the International Confer-
ence on Trade and Employment and under which it set up under its own auspices
a Preparatory Committee consisting of the fifteen governments above named, with
the addition of the Governments of Chile, Lebanon and Norway, to lay the ground-
work for the Conference by the elaboration of an annotated draft agenda, including
a draft Charter, for its consideration. Thus the Council took over from the United
States Government the initiative on the first matter ("a", above) covered in the
United States invitation.

At the same time, the Council suggested to the Preparatory Committee that
its agenda include the following topics:

"(a) International agreement relating to the achievement and main-
tenance of high and stable levels of employment and economic activity,

"(b) International agreement relating to regulations, restrictions and
discrimination affecting international trade,

"(c) International agreement relating to restrictive business practices,

"(d) International agreement relating to intergovernmental commodity
arrangements,

"(e) Establishment of an international trade organization, as a specialized
agency of the United Nations, having responsibilities in the fields of (b), (c)
and (d) above;"

The Council also requested the Preparatory Committee to take into account the special conditions which prevail in countries whose manufacturing industry is still in its initial stages of development, and the questions that arise in connection with commodities which are subject to special problems of adjustment in international markets. The U. S. S. R., which was a member of the Council, voted in favor of this resolution.

In preparation for the first session of the Preparatory Committee, which was scheduled by the Secretary-General of the United Nations to be held in London beginning on October 15, 1946, the various agencies within the United States Government interested in this field collaborated in the preparation of a Suggested Charter for an International Trade Organization, based upon the Proposals. This Suggested Charter was made public in September 1946, after months of intensive preparation. (More discussion of the background of the Conference is contained in Section 14 on pages 55 to 62.)

II. AGENDA Other than formal matters, such as election of officers, adoption of rules of procedure, etc., the agenda of the first session of the Preparatory Committee was based upon the resolution of the Economic and Social Council quoted above (page 2). However, in setting up the working committees, the Preparatory Committee made the following changes :

Topic (a), which was assigned to Committee I, was changed to read "International agreement relating to the achievement and maintenance of high and steadily rising levels of effective demand, employment and economic activity";

A new topic, which was assigned to a Joint Committee of Committees I and II, was inserted as follows: "International agreement relating to industrial development”;

Topic (e) was amended to read "Establishment of an international trade organization as a specialized agency of the United Nations having appropriate responsibilities in the above field" ;

Topic (b) was assigned to Committee II;
Topic (c) was assigned to Committee III;
Topic (d) was assigned to Committee IV;

Topic (e), as amended, was assigned to Committee V. The agenda for the session, in its original form as submitted by the Secretariat, is contained in Appendix A, attached hereto. The last few items on this document were left for the second session of the Preparatory Committee scheduled to meet in Geneva on April 8, 1947.

III. PARTICIPATION

Delegations representing seventeen of the eighteen governments, mentioned in Section I were present when the Conference convened on October 15, 1946. A joint delegation represented the Governments of Belgium and Luxembourg.

Also present at the Conference were representatives of certain of the specialized agencies of the United Nations. These included the Food and Agriculture Organization, the International Labor Organization, the International Bank for Reconstruction and Development, and the International Monetary Fund. Nongovernmental organizations included the International Chamber of Commerce, International Cooperative Alliance, World Federation of Trade Unions, and the American Federation of Labor. The following members of the United Nations sent observers to the Conference: Colombia, Denmark, Poland, Peru and Mexico.

IV. UNITED STATES DELEGATION

President Truman designated Mr. Clair Wilcox, Director of the Office of International Trade Policy, Department of State, as chairman of the United States Delegation, and Mr. Harry C. Hawkins, Counselor for Economic Affairs, American Embassy, London, England, as vice-chairman. The delegates to the Conference were:

Lynn R. Edminster, Vice Chairman, United States Tariff Commission; John W. Gunter, U. S. Treasury Representative, American Embassy, London, England; John H. G. Pierson, Consultant on Employment Policy, Bureau of Labor Statistics, Department of Labor; Robert Schwenger, Special Assistant

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