Repeat London, T&C London, Washington, NATO Paris, Rome, Brussels, Hague, Bonn, Geneva, Finance, Bank of Canada, PCO, T&C Ottawa (Priority) from Ottawa (Information).

By Bag Oslo, Copenhagen, Madrid, Stockholm, Berne, Vienna, Dublin, Lisbon, Athens, Ankara from London.

GATT 16TH SESSION

Following from Canadian Delegation to Paris Trade Committee. On initiative of Wyndham White discussions were arranged yesterday with Executive Secretary Royer, Americans and ourselves concerning various GATT matters. Americans present included Mann, Leddy and Hadraba.

2. Following major issues which will be coming up at 16th Session were discussed:

(i) Rome Treaty. Present provisional agenda for 16th Session envisages a voluntary statement by the Six regarding general developments in Common Market. There is no repeat no separate item requiring the Six to report on specific aspects of Rome Treaty in accordance with procedures of paragraph 7 of Article XXIV of GATT. As far as agriculture is concerned, in view of restrictive aspects of proposals of Common Market Commission and the real possibilities that what might emerge from further consultations among the Six regarding EEC agricultural policy will be even more restrictive of trade, the feeling was that it would be most important for Contracting Parties to conduct a substantive discussion of this aspect of EEC arrangements at 16th Session. Failure to do so would leave the impression that Contracting Parties were not repeat not dissatisfied with the kind of arrangements presently envisaged in proposals of the Commission and an implicit acceptance that GATT rules are not repeat not relevant to trade in agricultural products. Presumably these discussions could take place on basis of present agenda item. (While on subject of agriculture Wyndham White reported that he had received info that consideration was being given by EEC Commission in Brussels to possible need for withdrawing all GATT tariff bindings on agriculture in order to permit application of variable import levies as envisaged in Commission’s proposal. No repeat no action would be taken on this until after 1960/61 Tariff Conference because of difficulties this could create for the Six in the negotiations.)

Other specific aspect of Rome Treaty which was discussed related to level of Common Market Tariff. We referred to desirability of including a specific item in agenda of 16th Session on this point. This would be based on reference in report of Committee I (which was approved by Contracting Parties at Tokyo Session) to need for Contracting Parties at 16th Session to consider general level of common tariff in light of paragraphs 4 and 5A of GATT Article XXIV. Wyndham White had envisaged that this could be dealt with in context of forthcoming Tariff Conference. However we indicated that it might be desirable to provide machinery for considering general level of Common Tariff in advance of Tariff Conference and Wyndham White undertook to add this item to agenda, on his own initiative, if on basis of a review of GATT documentation including report of Committee I, he would be justified in doing so.

Regarding acceleration of implementation of Common Market tariff GATT Secretariat are inclined to view that any increases in bound rates prior to their renegotiation would involve a contravention of contractual obligations under GATT. Accordingly, if we were to accept such increases in advance of renegotiations it would be desirable to grant a waiver from these contractual obligations in order to safeguard GATT principle. Royer has mentioned these legal implications to French authorities who had apparently not repeat not taken them into account in putting forward their initial proposals for acceleration. Feeling was that this was an aspect which would need to be put more clearly before European Six in relation to Hallstein proposals. (We of course have already referred in Paris Trade Committee discussions to appropriateness of delaying any increase in bound rates until these were renegotiated but more on basis of procedure than in legal terms).

(ii) European Free Trade Association. Wyndham White referred to procedures for dealing with EFTA Convention in GATT and indicated that he had tried to persuade UK and other EFTA countries not repeat not to seek GATT approval of their convention under paragraph 10 of Article XXIV. He maintains that paragraph 10 is intended to meet minor deviations from principles of a FTA rather than major exception which exclusion on agriculture would involve. Further he feels that to accept exclusion of agriculture from EFTA in terms of paragraph 10 would be a further indication that Contracting Parties are prepared to accept that GATT Agreement is not repeat not relevant to agricultural trading arrangements. On basis of this Executive Secretary’s suggestion is that a waiver under Article XXV would be best way of dealing with this lacuna. Such a waiver would not repeat not involve an endorsement of agricultural arrangements of the Seven and in his view these should remain subject to normal GATT provisions.

Regarding bilateral agreements for agriculture as envisaged in EFTA Convention, EFTA countries are apparently not repeat not intending to put these before Contracting Parties at 16th Session. Since however these are a major part of EFTA arrangements Wyndham White takes view that Contracting Parties should insist on having texts of these agreements made available to them as part of their examination of convention.

(iii) Montevideo Treaty. Wyndham White indicated importance he attached to having at least a preliminary examination of Latin American FTA Treaty at 16th Session. He indicated however that he was appreciative of timing problem and in view of our earlier comments had now arranged that procedure for submitting questions should be same as was followed in dealing with EEC and European Free Trade Association. He did not repeat not feel however that Latin American countries would have sufficient time to prepare adequate replies to questionnaire.

(iv) Committee I –Possible Negotiations with Poland. Procedure envisaged by Executive Secretary is that Poles would conduct bilateral consultations in course of 16th Session and if it became clear that a number of countries would be prepared to enter into negotiations with Poland during Tariff Conference, Poland should take initiative in arranging for joint consultations with these interested countries. If a basis is found for Polish participation in Tariff Conference it will be necessary to consider what changes may be required in tariff negotiating rules drawn up by Committee I.

(v) Committee II. Discussions related primarily to nature of interim report that Committee II should make to Session. It was generally felt that this should be confined to a factual report of scope and nature of restrictions maintained on trade in agricultural products which have emerged from consultations which have already taken place and which would indicate serious nature of these restrictions as they affect trade in agricultural products. Longer term conclusions should be left till later in order to have more time to consider them.

One particular problem referred to by Executive Secretary was need for reaching some understandings regarding barriers to trade on agricultural products which would make it possible for agricultural exporting countries to participate in 1960-61 tariff negotiations. It was left that this aspect of problem should not repeat not be referred to in interim report of Committee II but could be brought up in general discussions at time report is referred to the Contracting Parties.

(vi) Committee III. Wyndham White reported that last Committee III consultations were reasonably successful and that less developed countries were reasonably satisfied with progress being made. He referred to Tokyo discussions in which more industrialized countries were asked to voluntarily come forward with offers of any action they may be prepared to take to facilitate imports from less developed countries.

(vii) Market Disruption - Low Cost Imports. Factual study which is being prepared by GATT Secretariat is expected to be circulated to Contracting Parties about three weeks in advance of session. Wyndham White indicated that while this report would add little to what we already know on this subject, it would be useful in carrying forward discussions. He considered that suggestion which had been put forward by USA for a panel of experts would not repeat not contribute to finding effective solutions. He thought that in end it might be necessary to authorize discriminatory measures and this was not repeat not precluded under Article XXIII. What he envisages is a procedure under XXIII whereby countries would consult exporting country concerned with a view to reaching a mutually satisfactory settlement. If agreement could not repeat not be reached the matter could then be referred to Contracting Parties and considered by a consultation panel. In his view a procedure along these lines would at least have advantage of requiring countries to make a case before special measures are authorized; and this would rule out unjustified measures. He suggested that it would be useful to consider this line of approach at 16th Session and to establish a working party for this purpose.

(viii) Quantitative Restrictions. It will be necessary at this session to explore best way of dealing with the remaining QRS maintained by countries as they move out of balance of payments difficulties. Italians have not repeat not yet made up their minds on how to deal with their remaining restrictions through GATT although indications are that they may be coming forward with their programme for dismantling them. Dutch also indicated at Tokyo Session that they would be reporting on their programme for dealing with their remaining restrictions. UK however have indicated to Wyndham White that they do not repeat not intend to submit their negative list to Contracting Parties and if countries are to address themselves to remaining restrictions in UK it would be up to interested countries to make a formal complaint. French are intending to take a similar line. In this situation if a repetition of very difficult conflict which arose in relation to German restrictions is to be avoided, agreed procedures need to be worked for dealing with other countries. Executive Secretary is of view that if Italian restrictions were pursued in same way as was done in the case of Germany there would be serious danger of the Six as a group being even less forthcoming in their GATT relations. Two possibilities have been suggested, one is that use should be made of procedures of Article XXIII. In this case however it would be up to individual countries to formally raise matter in GATT forum. Alternative would be to seek a procedure under which the country concerned would voluntarily submit a list of their remaining restrictions to Contracting Parties and this could provide a basis for discussion. This procedure would probably need to be generalized and would require all Contracting Parties including Canada to submit a list of items which are subject to quantitative restrictions.

3. Apart from specific trade issues likely to come up at 16th Session question of GATT organization is becoming increasingly important and urgent. Wyndham White is seriously concerned that unless action is taken without delay to strengthen the GATT organization at a time when proposals are being discussed for a revised OEEC, prestige of GATT in Europe which is already at a low ebb would be further weakened. He has particularly in mind that if USA is prepared to submit to Congress an Organization for Economic Cooperation they should be prepared to similarly to take steps to strengthen their participation in the Organization for Trade Cooperation. At present time he is not repeat not pressing USA to submit to Congress OTC agreement (and Mann has made it clear this could not repeat not be done) but he did raise question of possibility of early definitive acceptance of General Agreement as envisaged under Article XXVI of GATT.

4. As regards 16th Session Wyndham White indicated that he proposed to put forward need for immediate establishment of a permanent executive body for GATT which was discussed at Tokyo Session. He intends to urge strongly that action on this should be taken immediately. Americans seemed to be rather receptive and have undertaken to give serious consideration to possibility of strengthening their representation in Geneva in order to provide a senior USA representative.

5. In view of above discussions Wyndham White is not repeat not planning to visit Washington or Ottawa in advance of 16th Session.