Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

21. Minutes of a Meeting, Washington, February 15, 1955, Morning Session¹

Washington, February 15, 1955, Morning Session

PARTICIPANTS

• Mr. Randall, White House, Presiding
• Dr. Hauge, White House
• Mr. Morgan, White House
• Mr. Waugh, State
• Mr. Brown, State
• Mr. Flemming,
• Mr. Stambaugh, White House
• Dr. Galbreath, White House
• Mr. Thibodeaux, State
• Mr. Frank, State
• Mr. Metzger, State
• Miss Kirlin, State
• Mr. Nichols, State
• Mr. Pickering, State²
• Mr. Blake, State, Secretary³

1. Full Powers

Mr. Randall stated that the problem was to determine what authority should be given to the Delegation in Geneva for signing the documents that would result from the work of the Ninth Session. He asked Mr. Brown to indicate the status of the main problems of the Session.

Mr. Brown stated that the Session was still faced with several outstanding issues on which decisions would have to be reached. After the decisions had been made on these issues the Session would be speedily terminated. These issues were:

(a) The continued stability of the tariff concessions (Article XXVIII).

(b) Certain aspects of the balance of payments provisions of the GATT, and particularly that related to the “scarce currency” provisions.

(c) The relationship of the proposed GATT Organization to the Commodity Agreement that was being drafted at the Session.

(d) The United States request for a waiver in connection with Section 22.

(e) Proposals by certain countries that they be permitted to maintain import restrictions for protective purposes after the balance of payments justification for such restrictions had disappeared.

It was the Delegation’s impression that the GATT that would emerge from the negotiations would be a substantially better one. The emphasis of certain Articles, particularly those dealing with the conditions under which import restrictions could be imposed, had been shifted in the direction of the United States point of view, and an improvement in the enforcement machinery of the GATT Articles was practically certain. The United States position on subsidies would be pretty largely reflected in the new Article XVI, except for one point to which he would refer later. The United States objective of keeping the new Organization⁴ and the Commodity Agreement far apart⁵ had been largely attained. The Delegation had been successful in preventing the inclusion of articles in the new GATT on restrictive business practices and full employment. The provisions dealing with underdeveloped countries (Article XVIII) had been simplified and the procedures in that Article and those in the balance of payments provisions had been made less complex. In sum, Mr. Brown stated, the United States will have in the new General Agreement a proposed Organization capable of improving the present enforcement and application of GATT Articles, a simpler Agreement in certain major fields, and a certainty that its desire to place the General Agreement on a permanent basis is shared by all of the Contracting Parties. He wished to point out that the new GATT would differ very markedly from the ITO Charter⁶ in that proposals for the inclusion of substantial sections of the Charter in the General Agreement had been rejected during the Ninth Session.

Mr. Randall stated at this point that a brief should be prepared which would spell out the benefits to the United States of the General Agreement. He felt that Mr. Brown’s point regarding the dissimilarity between the General Agreement and the ITO Charter would be one of the most important points in the brief. He asked Mr. Brown to distinguish for the members of the group the difference between the GATT Organization Agreement and the General Agreement on Tariffs and Trade itself.

Mr. Brown replied that the Organization Agreement would be the basic charter of the new Organization that would be responsible for the administration of the General Agreement. It would contain provisions on membership, functions, subsidiary bodies, procedures and the standard provisions usually found in international instruments of this type. It was the Organization Agreement which the Administration was committed to submit to the Congress for its approval.

On the other hand, Mr. Brown went on, the General Agreement on Tariffs and Trade was a multilateral trade agreement containing many of the rules of trade which the United States had formerly incorporated in all of its bilateral trade agreements. He estimated that approximately 85 percent of the General Agreement, as amended at the Ninth Session, reflected United States experience in bilateral trade agreements. The important point was that this experience was embodied in the GATT in general provisions applicable to all of the trade of the Contracting Parties, whether covered by concessions or not.

Mr. Morgan asked what the powers of the new Organization would be—he wondered, specifically, whether the Organization would have supranational powers. Mr. Brown stated that the proposed Organization would have no sanctions but that it would have two very important functions: (a) it would be able to mobilize international opinion against countries violating the GATT and (b) it would be able to release a country adhering to the Agreement from its obligations to another country adhering to the Agreement if the latter was in violation of its commitments. However the Organization could not make any country accept an amendment to the General Agreement against its will.

Mr. Randall asked Mr. Frank to state what documents in addition to the Organization Agreement were expected to emerge from the work of the Session. Mr. Frank described them as follows:

(1) A protocol or protocols of rectifications and modifications which would incorporate any changes in the tariff schedules of the Contracting Parties resulting from renegotiations of concessions and corrections in their schedules.

(2) A declaration by the Contracting Parties extending the present status of Japan in the GATT to the end of December 1955.⁷

(3) A declaration by the Contracting Parties by which they would commit themselves not to use before a specified date, except in special circumstances, the right now found in Article XXVIII to withdraw or modify tariff concessions negotiated with each other.

Mr. Randall asked whether the declaration on Article XXVIII would involve an infringement on the prerogative of the Congress. Mr. Brown replied in the negative. He explained that the United States was always free to withdraw a tariff concession that it had granted. In such an event, however, the country from which the concession had been withdrawn would have the right to retaliate by withdrawing a compensatory concession.

Dr. Hauge stated that the Chairman of the Tariff Commission had spoken to him frequently on this matter during the past week, recommending against US adherence to the proposed declaration on the ground that it would encounter Congressional opposition. The Chairman of the Commission had also maintained that other countries would be able to withdraw concessions from the United States, notwithstanding their adherence to the declaration, whereas the United States could not.

Mr. Brown stated that other countries regarded their adherence to the declaration on the continued stability of the tariff concessions as a very serious matter. Many of them were initially opposed to such a declaration, and had only changed their views with the greatest reluctance. He felt certain that they would adhere to the declaration fully. He wished to point out that the US would still have access to the escape clause article of the GATT (Article XIX) even if it adhered to the declaration on Article XXVIII.

Mr. Randall asked specifically what the benefits would be to the US in agreeing not to withdraw or modify any of the concessions it had granted for a stipulated period of time except in special circumstances. Mr. Brown stated that adherence to such a declaration would assure US exporters against increases in duties which are now bound. In his view, retaliation by the US or other countries against such increases, through the withdrawal of compensatory concessions, was not an advantage to any contracting party since such actions only reduce international trade rather than expand it.

Mr. Frank pointed out that the inter-agency Trade Agreements Committee had reviewed the problem of a continued binding of the tariff concessions. The issue, essentially, was whether the United States could go along with the general principle of extending the existing tariff concessions for a fixed period of time.

Mr. Randall asked what the effect on the GATT would be if Congress were to approve the Organization Agreement with a rider providing that the United States should not sign any declaration continuing the firm life of the tariff concessions. Mr. Brown stated that the effect of such action would be to weaken the effectiveness of both the GATT Organization and of the General Agreement itself.

[Here follows discussion of whether full powers should be accorded the United States Delegation to sign the amended GATT agreement in Geneva.]

1. Source: Department of State, GATT Files: Lot 66 D 209, GATT, Ninth Session Review. Limited Official Use. No drafting information is given on the source text.
2. Laurence G. Pickering of the Trade Agreements and Treaties Division.
3. James J. Blake of the Trade Agreements and Treaties Division.
4. The Organization for Trade Cooperation (OTC), proposed to oversee and administer the GATT agreement between sessions, was approved by the contracting parties on March 10, 1955; for text, see Department of State Bulletin, April 4, 1955, p. 579.
5. The U.S. position was that the OTC should only be impowered to perform functions directly related to the GATT agreement, and should not become involved in commodity arrangements or other international issues. (See Document 25.)
6. The charter for the International Trade Organization (ITO), 2 years in preparation, was signed by over 50 nations on March 24, 1948, at the close of the U.N. Conference on Trade Employment, meeting in Havana, Cuba. The ITO, which was not ratified by the U.S. Senate, was never formally established.
7. During the Eighth Session of GATT, Japan was admitted as a temporary member pending its successful conclusion of tariff negotiations with individual contracting parties. For documentation, see Foreign Relations, 1952–1954, vol. I, Part 1, pp. 158 ff.