I attach two short memoranda in response to the following questions which you
asked:
[Annex 1]
The ITO
Charter
The draft Charter for an International Trade
Organization calls for the creation of an international agency,
concerned with trade, within the framework of the United Nations, The
Charter also embodies a code of rules
governing the principal aspects of trade policy. The maintenance of
employment and a high level of effective demand by all countries is
recognized as a condition for the fullest promotion of trade. Equal
treatment of the trade of all countries belonging to the ITO is a fundamental principle of the code.
Quotas, exchange controls, and export subsidies are to be used only in
specified exceptional circumstances. Countries engaged in state trading
are to adhere to
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commercial
principles and treat the trade of all countries equally. Restrictive
practices in international trade by private business are to be curbed by
international action. Intergovernmental commodity agreements that
regulate prices, production or trade are to be entered into only when a
burdensome surplus or widespread unemployment have developed or are
expected to develop in the commodity in question. Such agreements should
be governed by a set of rules including the equal representation of
consuming and producing countries. In a chapter added at London, the
economic development of all countries is recognized as of major
importance to world trade and procedures are established whereby the
ITO may grant a limited release from
Charter obligations to countries wishing to
take measures to protect infant industries.
The United States would give up no sovereignty in joining the ITO. Our status under the Charter would be exactly the same as it under any other
international agreement.
Under the proposed ITO Charter, the
United States, along with other members of the ITO, would assume certain definite obligations specified in
the Charter. The Charter
does, however, contemplate situations arising under which members would
be justified in taking action contrary to those obligations, and
provision is made for release from these obligations if the contemplated
circumstances arise. In the event, however, that the United States
should at any time decide to take action contrary to the obligations
which it has assumed under the Charter and not
provided for by the escape clauses, the only sanction which would apply
would be a release of other members from certain of their obligations to
us under the Charter.
[Annex 2]
Results of the London Conference
In six weeks of work, representatives of 18 countries meeting in London
as the Preparatory Committee for an International Conference on Trade
and Employment, reached agreement on the greater part of a draft charter
for an International Trade Organization. This agreement among the
delegations is not finally binding on their governments. A drafting
committee will meet in New York in January to smooth out the document
prepared in London and to prepare alternative drafts for some of the
articles left unsettled at London. Next April the Preparatory Committee
will hold its second meeting in
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Geneva. At the same time, the countries
represented on it will negotiate an agreement reducing tariffs and other
trade barriers and moving toward the elimination of preferences, in
accordance with the Charter. The group in London agreed on procedures
covering these negotiations.
The agreement reached at London covered the following points:
A chapter on the need for each country to take domestic action
appropriate to its own system to maintain high levels of
employment and effective demand as essential to the maintenance
of a large volume of international trade;
A chapter on commercial policy limiting the use of quantitative
restrictions, exchange controls and export subsidies, except in
specified circumstances, and prescribing rules for the conduct
of state trading, and the principles according to which tariff
reductions are to be negotiated by member countries;
A chapter recognizing the importance of fostering economic
development throughout the world and providing means by which
‘countries desiring to use protective measures to encourage the
development of industries may secure from the ITO a limited release from their
obligations under the Charter for that purpose;
A chapter providing means by which international action can be
taken to curb restrictive trade practices of private business
harmful to the purposes of the Charter;
A chapter prescribing rules to govern all intergovernmental
commodity agreements undertaken to overcome difficulties of
production and trade in primary products;
A chapter dealing with the structure of the organization of the
ITO.
The following questions were left unsettled at London:
The relation between member and non-member countries;
Rules governing the conduct of complete state monopolies of
foreign trade;
Articles dealing with certain technical trade matters, for
instance tariff valuation, freedom of transit, etc.
The drafting committee will prepare alternative drafts embodying minority
viewpoints for some matters, such as weighted voting and permanent seats
on the Executive Board.
The Suggested Charter for an International Trade
Organization prepared by experts in the United States
Government was a basic working document of the Conference. The new draft
charter that has emerged is a truly international document to which all
delegates at the conference have contributed. It embodies the essential
principles of the American position as well as the contributions of
other countries and is a better balanced and more complete document than
the original American draft.
