INSTRUCTIONS FOR THE CANADIAN DELEGATION TO THE SEVENTEENTH SESSION OF GATT

The Contracting Parties to the General Agreement on Tariffs and Trade meet twice yearly in regular session to administer the Agreement and to deal with various problems of international trade. The 17th Session opens in Geneva on October 31st and is expected to last three weeks.

(This meeting of the GATT countries is separate from the Tariff Conference which is currently going on in Geneva and in which a Canadian delegation under the chairmanship of Mr. H.B. McKinnon is participating. A number of major issues of international trade are being pursued primarily through the Tariff Conference: (1) Problems relating to the level of the common tariff of the European Economic Community of the Six (the Common Market); (2) the question of Canadian access to European markets for agricultural products; (3) the tariff barriers to Canada’s trade in the United States and other markets and (4) the short term difficulties relating to the trade split in Europe between the Common Market Six and the Seven countries of the European Free Trade Association which includes the United Kingdom.)

A number of problems of particular interest to Canada in the field of international trade are up for consideration at this Session. The principal matters are: (a) Problems relating to the continued maintenance of quantitative restrictions which affect Canadian exports; (b) the examination of the European Free Trade Association; (c) proposals for a Latin American Free Trade Association; (d) special problems relating to trade in agricultural products; (e) market disruption arising from low-cost imports; (f) limitation on export subsidies; and (g) arrangements for the accession of new members to the General Agreement.

It is recommended that a Canadian Delegation participate in the work of the 17th Session with a view to protecting Canadian trade interests and expanding Canada’s export opportunities. It is further recommended that Mr. J.H. Warren, Assistant Deputy Minister (Trade Policy), Department of Trade and Commerce, should be Chairman of the Canadian Delegation; that Mr. J.F. Grandy, Director, International Economic Relations, Department of Finance, should be Deputy Head of the Delegation, and that the following officials should be included in the Delegation:

Mr. M.A. Crowe - Department of External Affairs

Mr. V.L. Chapin - Department of Trade and Commerce

Mr. B. Shapiro - Department of Trade and Commerce

Dr. G.J. Dobson - Department of Agriculture

Mr. W.F. Stone - Canadian Permanent Mission, Geneva

that Mr. L.C. Howey of the Department of National Revenue and currently with the Canadian Tariff Delegation in Geneva participate in the work of the Delegation as required; and that Mr. R.M. Tait of the Canadian Permanent Mission, Geneva, act as Secretary to the Delegation.

The Canadian Delegation should be guided by the following general considerations relating to the main items on the agenda of the Session.

1. Quantitative Restrictions

While substantial progress has been made in freeing Canadian exports from quantitative barriers to trade in world markets, more remains to be done. The continued maintenance of import controls disturbs the balance of advantage in the Agreement. The Canadian Delegation should stress the importance of proceeding rapidly with the removal of the remaining quantitative restrictions which are no longer justifiable on balance of payments grounds. The Canadian Delegation should seek to ensure that effective arrangements are made to accelerate the elimination of these controls and should insist on the elimination of any discrimination against Canadian exports which may remain.

2. European Free Trade Association

At the Session the Contracting Parties are expected to complete the detailed examination of the Convention for a European Free Trade Association (the United Kingdom together with Norway, Sweden, Denmark, Austria, Switzerland and Portugal) in terms of its compatibility with the GATT provisions. The EFTA envisages the possible use of quantitative restrictions in certain circumstances which could involve some discrimination. Further, there are special arrangements relating to trade in agricultural products which may be inconsistent with the Agreement. The Canadian Delegation should seek satisfactory assurances and procedures for dealing with this Convention under GATT which would safeguard against such developments affecting Canadian trade.

3. Latin American Free Trade Association

The Montevideo Treaty providing for a free trade arrangement in Latin America among Argentina, Brazil, Chile, Mexico, Peru, and Uruguay is not yet in effect. The Treaty itself is in only general terms and the detailed arrangements are yet to be worked out. Accordingly, it is not possible at this stage to draw any precise conclusions as to the possible implications for Canadian trade. The Canadian Delegation should seek to obtain effective arrangements which would permit Canada and other contracting parties to maintain a close liaison with the Latin American countries so as to provide an opportunity to safeguard Canadian trade interests as the Latin American Free Trade Association evolves.

4. Trade in Agricultural Products

The contracting parties have completed their detailed examination of the policies and restrictions of member countries affecting trade in agricultural products. The next phase of the work will be to explore ways of expanding agricultural trade. Canada has major agricultural export interests and will wish to play an active role in this programme. The Canadian Delegation should seek to ensure that the work in this field is carried forward on a constructive and realistic basis with the objective of providing expanded opportunities for Canada’s agricultural exports. (While Canada has an agricultural support programme of its own, these measures and their effects on trade are relatively modest compared to those maintained by many other countries.)

5. Avoidance of Market Disruption

The contracting parties are currently engaged in a study of how to avoid market disruption resulting from rapid increases of low-cost imports and how to facilitate further progress in the removal of the restrictions maintained principally by the European countries against imports from Japan (and in some cases from Hong Kong and India). Canada now takes a disproportionately large share of imports from Japan and progress in the relaxation of restrictions by other countries would ease the burden on us. Further, generally agreed ways of dealing with the problem of low-cost competition should facilitate agreement between Canada and Japan on our own particular problems. The Canadian Delegation should therefore seek agreement on an international solution of this problem and continue to press other countries to take a fair share of the low-cost goods.

6. Export Subsidies

It has so far not been possible in the GATT to obtain international agreement on an effective means of limiting the use of export subsidies. Even in the field of non-primary products the most that has been possible has been agreement on a so-called standstill, i.e., agreement that new export subsidies on non-primary products would not be introduced.

Consideration will be given at this Session to the possibility of making some further progress on the limitation of export subsidies. It may be proposed that instead of the present standstill there should be agreement to prohibit export subsidies except on agricultural products and other primary products. The only subsidies paid by the Canadian Government apply to primary products - certain agricultural products and coal. The subsidization of exports by other countries is clearly not in Canada's interests and the Canadian Delegation should support the proposal to prohibit the introduction of new export subsidies on products other than primary products. Before doing so they should ensure that the subsidies now being paid or which may be paid under our agricultural price support programme will not be subject to the prohibition.

It is possible that there may also be some attempt to begin to introduce limitations on the subsidization of primary products. If it were feasible to obtain effective international restraints on agricultural export subsidies Canada would stand to benefit. In present circumstances, however, it is not conceivable that the United States (and some other countries) could accept any effective limitations. Should proposals be made in this field, therefore, the Canadian Delegation should not make any commitment but should support any realistic proposals to explore reasonable suggestions for later consideration.

7. Accession of New Members

Arrangements for the accession of Argentina, Ireland, Portugal and Spain are expected to be worked out at this Session. In addition, there will be discussions relating to the full accession of Switzerland to the General Agreement. The Canadian Delegation should welcome the participation of new members. At the same time, the Delegation should seek to ensure that the acceding countries are prepared to comply with the GATT obligations and in particular should not acquiesce in any arrangements which would permit the perpetuation of discriminatory restrictions by any of these countries against Canadian trade.¹¹⁷

[H.C. GREEN]

¹¹⁷Approuvé par le Cabinet le 2 novembre 1960./Approved by Cabinet on November 2, 1960.