International Trade Files, Lot 57D284, Box 111

Extract From Confidential Report by Mr. Henry F. Grady, Chairman of the United States Delegation to the Fourth Session of the Contracting Parties to GATT, to the Secretary of State


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13. Consideration of Quantitative Restrictions on Imports and Exports

This subject had originally been proposed by the US as two separate items which were subsequently combined into one.

(a) Quantitative Restrictions on Exports

The United States delegation’s position papers pointed out that export restrictions were being widely used for protection and promotional purposes under circumstances not permitted by the agreement and instructed the delegation (a) to obtain agreement among the contracting parties that certain types of export restrictions were in violation of the GATT, and (b) to obtain agreement among the contracting parties that the Secretariat should collect data from the contracting parties on existing export restrictions.

It was evident at once, in the early plenary sessions that most of the CP’s were reluctant to include the item on the agenda. The most vocal resistance came from the UK and NZ. Both countries based their resistance on the contention that the GATT spoke for itself on the question of export restrictions and that the appropriate means for determining the meaning of, and enforcing the provisions of the Agreement was through the consultation procedures.

The US promptly initiated informal private conversations with the UK and NZ delegation, in the course of which they amplified their objections to the inclusion of the item. The UK pointed out that the GATT was a delicately balanced instrument, with many intentional ambiguities which represented compromises in basically conflicting viewpoints, and that the proposed exercise might have no other result [Page 715] than to create new and acrimonious discussions on the meaning of the compromise; that the provisional nature of the GATT foreclosed the possibility of any real progress through it; that the proposed discussion might create animosities from the underdeveloped countries, many of which were using such restrictions; and that the Czechs might seize the occasion to raise the issue of our security controls. The New Zealand delegation expressed many of the same objections and added that anything done which might be construed by the New Zealand Government as creating annoying or onerous obligations might provoke New Zealand’s withdrawal from the GATT or refusal to ratify the ITO.

The US countered by pointing out that the importance of the problem was generally being underestimated; that there was a substantial likelihood that the GATT could achieve important progress in this field, thereby contributing to its prestige; and that the interests of the UK and New Zealand, considering that they had few export restrictions, lay in lending their assistance to the exercise. It was also pointed out that the issue then under consideration was whether the item should go on the agenda, rather than what the CP’s should decide with respect to export restrictions.

As a result of these informal discussions and of similar discussions with the French, Dutch, Italian, Belgian and Canadian delegations, agreement was reached to list the item on the agenda and to set up a working party. As an integral part of the agreement, a set of instructions was developed for the working party, directing it to review types of export restrictions used for “protective, promotional or other commercial purposes”,

The negotiations in the working party were prolonged but fruitful. Two points should be mentioned. First, the UK delegation was cooperative on all points, but was concerned that the report should not condemn without qualification the use of export restrictions in connection with the procurement of scarce materials. Second, the Secretariat’s first draft report, submitted informally to the UK, US and Australian delegations before distribution, was so ambiguous, equivocal and unhelpful to the US position as to require complete rewriting. The rewriting was done by the US delegation and, after prolonged discussion with the UK delegation, was concurred in by the latter after some modifications. Thereafter the Secretariat submitted and the Contracting Parties adopted the revised US draft report.

(b) Quantitative Restrictions on Imports

The instructions to the Delegation regarding import restrictions were less explicit than those relating to export restrictions. They were specific, however, in that they directed the delegation to obtain agreement [Page 716] by the CP’s condemning certain types of bilateral trade agreements, in which both parties retained import restrictions against the other. Before introducing these proposals formally in the Working Party the US delegation discussed them informally with the British and Canadian delegations. On the basis of these discussions, the US Delegation concluded that the introduction of these proposals would precipitate discussion among the CP’s regarding the meaning of Article XIV, involving issues regarding that Article which the delegation had been instructed to avoid, e.g., whether a CP could discriminate in different degree between countries with which it was in payments difficulties in equal degree. The Delegation also was convinced that the US proposals, if introduced, would not be adopted. Accordingly, the proposals were not introduced. The same objections that had been made to including export restrictions on the agenda were also made with respect to import restrictions and were overcome in the same manner.

The discussions in the Working Party regarding quantitative import restrictions developed in a somewhat unexpected manner. A number of countries, including the UK, Canada, Pakistan and India, undertook to describe the techniques which they were currently employing to minimize the inevitable protective incidence of balance-of-payments import restrictions. After some discussion of these techniques, the US delegation proposed that they be codified in the Working Party report and recommended to the individual CP’s as desirable measure. Although this phase of the discussion had clearly been outside the terms of reference of the Working Party, the proposal was adopted.

Another aspect of the discussion of quantitative import restrictions dealt with practices which could be regarded as illegal under the agreement. Belgium led this discussion with a series of recommendations and extensive discussions. The UK delegate was designated as rapporteur to attempt to restate the Belgium proposals in a manner which might be acceptable to the Working Party. The UK delegate, in turn, set up an informal drafting group consisting of himself, the Canadian delegate and the US delegate. These three, consulting continuously with the Belgian, French, Dutch and New Zealand delegation, finally developed a series of propositions which the Working Party adopted.

One other feature of the import restrictions discussion which should be noted had reference to a New Zealand proposal that the Contracting Parties agree that import restrictions imposed for the purpose of reducing the cost of a domestic price support program were inconsistent with the GATT. This was first proposed informally to the US delegate by the New Zealand delegate, since it was aimed primarily [Page 717] at US import restrictions on butter. After receiving instructions from Washington, in Tagg1 72 the New Zealand delegate was informed that the United States would not object to the proposal. It was introduced and adopted, without discussion either in the Working Party or in plenary sessions.2

  1. Series indicator for telegrams from the Department of State to the United States GATT Delegation, at Geneva. Tagg 72 is not printed.
  2. A valuable reference source for the documentation of the Fourth Session of the Contracting Parties of GATT is found in Doc. GATT/CP.4/INF/6, dated 26 April 1950, “List of Documents Issued from 20 December 1949 to 20 April 1950” (Lot 57D284, Box 111, Binder “GATT/CP.4/1–45”).