550.S1 Documents/54
The Chairman of the American Delegation
(Hull) to the Chairman of the Economic Commission
(Colijn)
Dear M. Colijn: Although the chief portion of
its work is uncompleted, the Conference is about to enter upon a recess.
During and following this recess it is to be hoped that the interested
governments will bring forward, through diplomatic or other channels,
substantial proposals aimed to carry out ultimately the fundamental
purpose for which the Conference was called. I herewith forward a
document which I hope will, along with others of a similar character
that may come from other sources, receive the attention of those who
have the duty of planning the continuation of the work of the
Conference.
This document contains the outline of a possible agreement for a
protracted truce against measures restrictive of international trade. I
contemplate that this truce agreement might be carried into effect when
and as the Conference truce80—which I understand remains in effect among the
adhering states during the recess—may end. This further truce may carry
through the longer period required for the carrying out of the general
aim of reducing existing barriers. The terms suggested are more precise
than those of the Conference truce. Other governments may quite possibly
feel that their national necessities would require them to add various
points even to the substantial list of reservations and exceptions
proposed. A continuing truce should serve to restrict new barriers to
such instances of evident and unusual necessity as may arise, even while
general governmental policy was aimed in the other direction.
It will be seen that in this document the American Government indicates
the precise test of necessity which it expects to observe before
introducing any new restrictions that may seem imperative for the
success of the domestic program of recovery upon which it is engaged.
American policy will in general seek to further international commerce
to the fullest possible extent compatible with the essential aims of
this program.
The document advocates, furthermore, the immediate undertaking of
reductions of the existing barriers by the encouragement of bilateral
[Page 728]
and of practical
multilateral agreements. It does not attempt to put into legal form of
agreement the terms of possible action; the difficulties of this require
further discussion among governments. But it does attempt to limit with
some degree of precision the exceptions and reservations which may be
necessary.
It also sets forth the present American attitude towards other matters
involved in commercial treaty negotiations, such as the
most-favoured-nation principle and the possible special exceptions from
that principle that might be allowed by governments to facilitate
agreements for the lowering of trade barriers.
I trust that these proposals will turn out to be a useful contribution to
the long term plan of attack upon existing trade obstacles. Despite
their limitations and imperfections, I am confident that their
acceptance in substance would mark an important advance toward the
restoration of international commerce.
The American Government reserves the liberty in the course of any future
discussion that may take place of modifying its attitude on details.
Other governments will no doubt find that their approach to this
question, as dictated by their own national situations, is somewhat
different and may have modifications and additions to present. However,
it is my hope that the governments will be able to adjust their national
interests and necessities and devise the means for achieving the general
purpose upon which we have all agreed.
Sincerely yours,
[Enclosure]
American Suggestion for the Further Development,
During the Recess and Later Stages of the Conference, of a
Program on Commercial Policy
The Governments represented at the World Economic Conference, being
desirous of abandoning economic conflict and collaborating in
seeking general economic improvement through the mutually profitable
exchange of goods, undertake to reach agreement, first in the
negative way of ceasing to erect new barriers, and then in the
positive way of progressive reduction of existing barriers;
Section I
Are resolved, as a first step in carrying out this program, to
endeavour to reach agreement, at the earliest moment favourable to
such action, along the following lines:
The participating governments agree not to introduce any new
obstacles, direct or indirect, to the movements of international
commerce, whether such obstacles are embodied in new legislation or
[Page 729]
brought into existence
by the exercise of administrative or executive power under existing
legislation. This truce against new barriers is to become effective
as between the countries participating in it but will not, subject
to treaty obligations, bind participating governments towards those
governments which do not participate.
The preceding agreement shall be subject to the following
reservations and exceptions:
- (a)
- The exceptions generally admitted in existing treaties,
for purposes of safety, sanitation, plant and animal
protection, morals, et cetera (such as are enumerated in
Article 4 of the Geneva Convention of 192781
and reproduced as annex to document Conf. M.E./C.E.24, and
that for the purpose of exclusion of products of convict or
forced labour).
- (b)
- Duties or taxes imposed on imported products merely to
offset internal excise taxes on competing domestic
products.
- (c)
- Arrangements, whether of duties, quotas, or other forms,
applied in connection with multilateral agreements for the
regulation of production and/or marketing of natural
products, provided such agreements conform to principles
which have received general approval.
- (d)
- Additional duties imposed upon goods found to be “dumped”,
in the strict sense of having been sold for exportation for
less than for consumption at home, or benefiting directly or
indirectly from governmental or other bounties (such
additional duties being limited to the difference in the
prices or to the amount of the bounties as nearly as may be
ascertainable).
- (e)
- Additional duties imposed on products of particular
countries which refuse to accord equality of
treatment.
- (f)
- New or additional duties or restrictions necessitated by
governmental measures of an emergency character which—by
raising wages, shortening hours and improving conditions of
labour—have resulted in increased costs and prices.
Any new or additional duties or restrictions authorised under the
above circumstances shall be imposed only for the purpose of
preventing an excessive influx of imports of particular
commodities.* They
[Page 730]
should not be
more than sufficient to meet the emergency and should continue in
force only for the period of the emergency. They should not reduce
foreign trade in the commodities affected below the level of a
pre-determined period, and should be used only to prevent drastic
increases of imports above the level of such period. They should not
be imposed or applied in such manner as to discriminate against the
trade in the products concerned of any country participating in the
truce.
Before exercising the right conferred in this reservation,
governments are to give preliminary notice to the principal foreign
countries supplying their imports of the particular commodity, and
to allow reasonable opportunity for representation of the viewpoints
of such governments with regard to such duties or restrictions each
government having the right, in the case of an unsatisfactory result
of such consultations, to denounce the agreement with reference to
the products of the country availing itself of this safeguarding
provision.
This agreement would be open to adhesion by all governments, and
would come into force when accepted by governments representing
(say) 50 per cent of the world’s international commerce. It is to be
of indefinite duration, but one year after coming into force it may
be subject to denunciation upon one month’s notice.
Section II
Are further resolved forthwith to initiate bilateral (or
plurilateral) negotiations for the removal of prohibitions and
restrictions and for the reduction of tariff rates; and they declare
that their aim in these treaties is substantial reduction of basic
trade barriers, and not merely the removal of temporary and abnormal
restrictions and increments imposed for bargaining purposes.
In shaping its policy and in executing its obligations under any
agreements, each government should direct its first and greatest
efforts towards eliminating restrictions and reducing duties which
most clearly lack economic justification, particularly:
- (a)
- Duties or restrictions which now completely or almost
completely exclude foreign competition, such as those which
restrict importation of particular commodities to less than
5 per cent of the domestic consumption thereof,
- (b)
- Duties or restrictions on articles the imports of which
have been substantially curtailed since 1929 as compared
with domestic consumption,
- (c)
- Protective duties or restrictions which have been in
effect a considerable period of time without bringing about
a substantial domestic production of the protected
commodities (say equal to 15 per cent of the total domestic
consumption thereof).
[Page 731]
Such agreements should have incorporated in them the
most-favoured-nation principle in its unconditional and unrestricted
form—to be applied to all forms and methods of control of imports,
and not only to import duties—subject only to such limited or
temporary exceptions as have been recognised in the past or may gain
general assent.
Such agreements shall not introduce discriminatory features which,
while providing an immediate advantage to the contracting parties,
will react disadvantageously upon world trade as a whole.
The governments declare that the most-favoured-nation principle
enjoins upon every power making use of the quota system or other
systems for limiting imports, to apply these systems so as to
derange as little as possible the natural relative competitive
positions of the various countries supplying the imports of articles
affected.
The participating governments urge the general acceptance of the
principle that the rule of equality shall not require the
generalisation to non-participants of the reduction of tariff rates
or import restrictions made in conformity with plurilateral
agreements that give reasonable promise of bringing about such
general economic strengthening of the trade area involved as to
prove of benefit to the nations generally; provided such agreements
- (a)
- Include a trade area of substantial size;
- (b)
- Call for reductions that are made by uniform percentages
of all tariff rates or by some other formula of equally
broad applicability;
- (c)
- Are open to the accession of all countries;
- (d)
- Give the benefit of the reductions to all countries which
in fact make the concessions stipulated; and
- (e)
- When the countries party to the plurilateral agreement do
not, during the term of the plurilateral treaty, materially
increase trade barriers against imports from countries
outside of such agreement.
