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A Guide to the Study of the ITO Charter

INTRODUCTION \HE Charter of the International Trade Organization is a code under which countries that become members of the organization

will conduct their mutual, commercial relations. It is the result of years of work by economic and legal experts and discussions among the representatives of many countries. These discussions culminated in the United Nations Conference on Trade and Employment in which 57 nations participated at Havana, Cuba, from November 1947 to March 1948.

Although the Charter is lengthy and complex, it can be studied with ease if its main features are made clear. Accordingly, the purpose of this Guide is to acquaint tbe reader with the plan of the Charter. As a further aid to the reader, the more difficult articles are briefly summarized. Other articles, which can be readily understood, are not individually discussed. It should be understood throughout that this Guide is not an official interpretation of the Charter.

The Charter contains three "key” provisions which express its basic economics in terms of the actual problems of world trade. Most articles that deal with the international exchange of goods are closely related to these three provisions. Certain articles support and extend them, while others qualify them to take account of ex·ceptional circumstances. The Guide divides these articles into two main classes and explains their relation to the “key” provisions.

Half of the 106 articles of the Charter can be covered in this way. The remainder are concerned with special problems and are treated separately. This arrangement has been chosen because it is convenient for purposes of study; it does not imply that any part of the Charter is more or less important than others.

The outline of the Guide presented below may be sufficient for the purposes of many readers; others may find the following brief explanation of further assistance.

1 Prepared by Robert P. Terrill, Adviser on Commercial Policy, Division of Commercial Policy, Department of State.

OUTLINE

I. KEY PROVISIONS

1. Article 16—Equal treatment (non-discrimination)
2. Article 17-Reduction of tariffs and elimination of preferences
3. Article 20—General elimination of quantitative restrictions (quotas)

II. SUPPORTING PROVISIONS
1. Provisions related to Article 16

8. Article 19 (moving pictures)
b. Article 22 (administration of quantitative restrictions)

c. Articles 29-30 (state trading enterprises)
2. Provisions related to Article 17

8. Article 18 (internal taxes and regulations)

b. Article 31 (state trading enterprises)
3. Provisions related to Article 20

8. Article 18 (mixing regulations)
4. Provisions related to Articles 16, 17, and 20

a. Articles 33-39 (invisible tariffs)
b. Articles 46-54 (restrictive business practices)

C. Articles 25–28 and 34 (subsidies and counter measures)
III. QUALIFYING PROVISIONS
1. Qualifications related to Article 16

a. Article 44 (customs unions and free-trade areas)
b. Article 15 (preferences for economic development)

c. Article 23 (scarce currency provisions)
2. Qualifications related to Article 17

8. Article 40 (modification of tariff concessions)
3. Qualifications related to Article 20

8. Articles 13 and 14 (quotas for economic development)
b. Articles 21 and 24 (quota systems for monetary purposes)

c. Articles 55-70 (intergovernmental commodity agreements) 4. Qualifications related to Articles 16, 17, and 20

&. Article 45 (general commercial policy exceptions)

b. Article 99 (national security exceptions) IV. SPECIAL PROVISIONS

1. Chapter II: Employment and Economic Activity
2. Chapter III: Economic Development
3. Chapters VII, VIII, and IX: The Organization

SUMMARY OF CHARTER PROVISIONS

I. KEY PROVISIONS

The Charter of the International Trade Organization (Ito) has one over-all purpose which should be borne in mind in any study of the provisions of this document: to establish and maintain by mutual agreement, an "open" or multilateral system of trade relations between members of the organization, and to expand on businesslike principles the trade of each member with all other members. The opposite state of affairs calls for numerous “closed” economies, each of which conducts foreign trade under strict governmental control in accordance with short-term agreements based on planned “barter" with politically selected countries. The United States has traditionally favored the open or multilateral system as opposed to this bilateral approach. Most other countries share our objective as indicated, for example, by their pledges in article VII of the lend-lease agreements out of which the present Charter grew through a series of international conferences.

This purpose of the Charter is reflected in three "key" provisions of chapter IV in which members agree to grant equal treatment to each other with respect to tariffs and other foreign trade matters (article 16); to reduce tariffs on a selective basis (article 17); and to refrain from using quantitative restrictions, i.e. quotas, on imports or exports to protect particular industries from competition or for other purposes detrimental to international trade (article 20). A study of the Charter may, accordingly, begin with a summary of these provisions. 1. ARTICLE 16. EQUAL TREATMENT (Non-discrimination)

In this article each member agrees to apply, in its import and export trade with every other member, the same customs duties and the same laws and regulations concerning customhouse procedures generally. No special privileges can be given in the future and existing discriminations must be abolished, except as to tariff rates on certain products based on historic agreements. Most important are those agreements between countries of the British Empire and between the United States on the one hand and Cuba and the Philippines on the other. However these tariff rate differentials cannot be increased,

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