The Chairman of the United States Delegation to the Eighth Session of the General Agreement on Tariffs and Trade (Waugh) to the Secretary of State


My Dear Mr. Secretary: I submit the enclosed unclassified report and supplementary confidential report on the Eighth Session of the Contracting Parties to the General Agreement on Tariffs and Trade, held in Geneva, Switzerland, from September 27 to October 24, 1953.1 I should like, however, to touch briefly on certain aspects of the session which may be of special interest to you.

The session was one of a series of meetings which started in 1948 and which now take place about once a year. The thirty-odd contracting parties met to deal with trade matters arising out of the operation of the multilateral trade agreement. General tariff negotiations were not a part of the business of this session. The principal agenda subjects were: (a) the application of Japan for provisional [Page 172] accession to the agreement, (b) the extension of the period during which the existing tariff bindings would remain valid, that is, during which they would not be subject to possible renegotiation under special procedures which were scheduled to become operative at the beginning of this year, (c) a request by the United Kingdom for a waiver from the agreement rule binding margins of tariff preference in order to increase certain unbound tariff rates against other parties without also raising the rates against Commonwealth suppliers, and (d) the arrangements for a review of the agreement in 1954 for the purpose of seeing whether, and if so how, it might be revised, including consideration of possible future tariff negotiations.

The main tasks of the United States Delegation were to prevent an unwinding of trade commitments or impairment of the gains already achieved under the GATT, to maintain a sense of momentum and progress in the international work in the trade field, and at the same time to avoid any action which would prejudice the examination of foreign economic policy by the Randall Commission.

I believe that the Delegation was successful in these efforts. Other countries were aware that the United States was re-examining its foreign economic policy and were prepared to maintain the status quo until that examination was completed. As I wrote you from Geneva, I and all the members of the Delegation were impressed by the anxiety with which the other countries around the conference table were awaiting the results of the Randall Commission study and the action which the United States may take as a result, and the extent to which they were withholding decisions as to what their own individual policies would be until they knew these results.

The matter of Japanese accession, first requested by Japan in July, 1952, was settled very satisfactorily from the United States point of view. As you know, we have consistently and strongly supported this application. Most of the other countries had been reluctant to have Japan come in except through the normal process of a general tariff negotiation, which of course was out of the question for the time being. It became apparent that although a majority of the Contracting Parties now favored temporary Japanese accession, even without tariff negotiations, we could not get the two-thirds vote in favor of such accession which we believed was politically and psychologically desirable. Therefore, with Japanese concurrence, we developed and supported a two-stage proposal under which Japan would be invited to participate without formal voting in the work of the Contracting Parties until June 30, 1955, and Japan and individual Contracting Parties could agree to apply the rules of the General Agreement to their trade during this period of [Page 173] temporary participation. This two-stage arrangement was carried by a vote of 27 to none, with the United Kingdom, Australia, South Africa, Southern Rhodesia, New Zealand, and Czechoslovakia abstaining. By the end of the year, 18 countries, including the United States, had signed the agreement to apply the terms of the General Agreement to their trade with Japan.

The attitude of the United States Delegation caused great satisfaction to the Japanese. In contrast, the British position vis-à-vis Japan was significantly damaged, not only because of the substance of the position they took, but because of the rather tactless way in which they handled it. I believe that the British position resulted largely from pressure put on the Government by the Lancashire textile industry which is fearful of Japanese competition in third countries and from a general public apprehension in the United Kingdom of cut-throat Japanese competition, of which there has been some experience in the past.

Australia’s objections were principally political. There is great public feeling against Japan in Australia. The Government felt that it had made a number of moves recently toward improving its relations with Japan and did not believe that public opinion would sustain it in taking this additional step so soon.

It was a matter of satisfaction to the United States Delegation that the meeting agreed to extension of the firm validity of the tariff concessions under the agreement for a further period of 18 months, that is, until June 30, 1955, and that this was accomplished without any reservations. We were anxious to have this period extended in order to prevent a possible substantial unwinding of tariff concessions negotiated under the agreement.

One of the most important decisions of the meeting was that in which the Contracting Parties granted a limited waiver to the United Kingdom from the rule which prevents the increase of margins of tariff preference from the level existing in 1947. This was perhaps the most controversial issue in the meeting and was not settled until the very last moment. The outcome was satisfactory to the United States. A solution was found to a very real and extremely difficult problem without doing violence to the principle that tariff preferences should not be increased. Furthermore, a solution was found despite the opposition by the Continental countries as a bloc to the British request. This opposition was significant in demonstrating that opposition to tariff preferences was not an aberration peculiar to the United States, a view heretofore held by the British. The effective resistance of the Continental countries, led by Denmark, also demonstrated the value of the agreement to relatively small countries which have occasion to defend their trade interests from the action of stronger powers.

[Page 174]

During the course of the meeting a series of specific trade disputes brought before the Contracting Parties were either settled or moved forward on the road to settlement. The meeting thus again demonstrated the value of the agreement as a means of orderly settlement of international trade disputes and as a forum for discussing problems which might otherwise create difficulties between the Contracting Parties.

Finally, the meeting set the stage for potentially important action in the field of international trade in the near future. This arises from the fact that arrangements were made for reviewing the General Agreement in October 1954.

It became evident at the beginning of the session that there was practically unanimous sentiment that, although the agreement had been generally useful and effective, it had been in effect for six years in a changing world and the time had come to take a hard look at operations under the agreement and also at the terms of the agreement itself to see what revisions and improvements were desirable and necessary.

Since the General Agreement is the only international agreement in the trade field, this means that next October or a few months thereafter there will be a large scale international review of international trade policy rules and practices. The task in that review will be to preserve and strengthen the progress already made and to see what improvements can be introduced. United States policies resulting from the Randall Commission report will be a major factor determining the results of this review.

To confine this review to what will be feasible and profitable will not be easy. There will be many efforts, particularly on the part of underdeveloped countries, for the loosening of some of the basic rules to which the United States attaches importance and for the expansion of the coverage of the agreement, not only into fairly closely related fields such as commodity agreements and restrictive business practices, but into more unrelated areas of full employment and economic development. The main task of the United States in preparing for this review is going to be to see that we have positive and constructive proposals to make, around which support can be mobilized, not only because of their essential desirability but in order to counteract more extreme ideas.

Sincerely yours,

Samuel C. Waugh
  1. Neither printed. (394.31/3–854)