Agreement of 1940 (55 Stat. (pt. 2) 1143), the International Wheat Agreements of 1949 (63 Stat. (pt. 2) 2173) and 1953 (4 UST (pt. 1) 944), and the International Sugar Agreement of 1953 (TIAS 3177) requires specific legislative approval. In all such cases there was approval by the Senate of those agreements as treaties. Although the headings of some of the articles in the General Agreement might suggest that they contain provisions relating to matters other than trade, an examination of such articles will disclose that this is not the case.

For instance, article XVIII is headed "Governmental Assistance to Economic Development". This article does not, however, contain provisions for positive action by parties to the Agreement in order to render assistance to the economic development of other parties, comparable to the provisions of articles 8 to 12 of the Havana Charter for the International Trade Organization, or to agreements for according technical assistance for economic development. Article XVIII relates solely to the use of trade barriers for economic development. All it contains is a set of procedures by which countries in the process of economic development may under specified circumstances be relieved from certain obligations they have undertaken under other articles of the General Agreement, principally articles III (tariff concessions) and XI (prohibition against quantitative restrictions). The principal purpose of article XVIII is to ensure adequate opportunity for consideration by interested contracting parties of proposals by a particular contracting party asking release under the article from such obligations, and in certain instances it provides for action by which an impairment of the balance of the Agreement resulting from such a release may be restored. Thus this article, like the escape clause proposed by the United States and embodied in article XIX, is merely an exception to obligations undertaken elsewhere in the Agreement.

Reference may also be made to article XV entitled "Exchange Arrangements". The article deals largely with procedures for consulting with the International Monetary Fund in respect of the financial justification for balance of payments restrictions and discriminations in their application, permitted by articles XII and XIV as exceptions to the basic undertakings contained in articles XI (prohibition against quantitative restrictions) and XIII (nondiscriminatory application of quantitative restrictions). It also contains additional exceptions from the obligations in articles XI and XIII (par. 9). The most important undertaking in the article from the standpoint of the United States is paragraph 4 which provides:

"4. Contracting parties shall not, by exchange action, frustrate the intent of the provisions of this Agreement, nor, by trade action, the intent of the provisions of the Articles of Agreement of the International Monetary Fund."

Both clauses of this paragraph have a very direct relationship to trade, and bearing in mind the various references to the effects of exchange controls on trade in Secretary Hull's statement before the Ways and Means Committee in 1934 (House hearings 1934, 13 and 19), this paragraph is clearly within the President's authority under the Trade Agreements Act, as were the much more detailed provisions relating to exchange controls included in a number of the bilateral trade agreements (see article IV of the 1941 trade agreement with Argentina (56 Stat. 1685)).

The other provisions of the General Agreement will similarly be found, on examination, to relate to govermental barriers to trade, and consequently to be within the authority of the President under the Trade Agreements Act.

3. QUESTION OF DELEGATION TO OTC

The activity of the Organization for Trade Cooperation in administering the General Agreement-its only administrative function-will be the same as have been the activities of the contracting parties to the General Agreement at their meetings. These consist of (i) consultative and recommendatory activities, (ii) interpretation of trade obligations and rights in the General Agreement, and (iii) the release of contracting parties from trade obligations under certain circumstances. The first type of activity includes the consultations with individual contracting parties applying balance-of-payments restrictions, the receiving and consideration of reports of action taken by individual contracting parties under waivers which have been granted to them, and investigations and recommendations in connection with the settlement of disputes between contracting parties. None of these activities involve any action by the Organization directly affecting rights and obligations of contracting parties. The latter two activities-interpretation of and release from obligations-will be examined more closely.

Before doing so, however, it should be pointed out that the Agreement on the Organization for Trade Cooperation specifically states that action by the Organization cannot impose any new obligation on a member which that member has not specifically agreed to undertake (art. 3 (d)). This categorical statement limits the activities of the Organization to interpretation of the obligations which have already been undertaken and to the release of contracting parties from such obligations. Even the provisions for amendment of the Agreement on the Organization and the General Agreement are carefully drawn to limit the application of amendments to the countries which have accepted them (Organization Agreement, art. 16, General Agreement, art. XXX). This is in contrast to the agreements establishing certain other international organizations which provide that amendments shall under certain circumstances become applicable to members which have not accepted them (see Agreement Establishing the World Health Organization, art. 73, 62 Stat. (pt. 3) 2678; and Universal Postal Convention of 1952, art. 27, 4 U. S. T. (pt. 1) 1300).

Interpretation of an international agreement such as the general agreement is a necessary part of its administration. The function of interpretation may be exercised in various forms. It may involve the relatively routine application of specific provisions of the Agreement in given circumstances-for example the determination in a particular case of those contracting parties with which negotiations must be carried on because they have a substantial trade interest in proposed negotiations of tariff concessions under section A of article XVIII, or under article XXVIII, of the General Agreement. It may be set forth in a working party report adopted by the Organization, such as the interpretation, on the basis of negotiating history, of the words "increased quantities" in the escape clause in article XIX to include relative as well as absolute increases (2 GATT, basic instruments and selected documents 44 and 45). It may be embodied in a formal resolution, such as that by the contracting parties in 1949, indicating that the provisions of GATT were not intended to prevent the reduction of margins of preference (ibid. 11). In addition to various specific provisions in the General Agreement, such as those referred to above in connection with articles XVIII and XXVIII, for the making of determinations by the Organization in applying that Agreement, article 14 of the Organizational Agreement provides that in the settlement of disputes the Organization may make rulings, which would include interpretations of the General Agreement.

From the early days of the Republic, the United States has adopted the practice of submitting questions of treaty interpretation to an international body for decision (see art. 5 of the Jay Treaty of 1794, 8 Stat. 116; see also the statute of the International Court of Justice, and the acceptance by the United States of the compulsory jurisdiction of the Court, 59 Stat. (pt. 2) 1055, 61 Stat. (pt. 2) 1218). There has never been any question as to the authority of the United States under the Constitution to do so. The agreements establishing a number of existing international organizations expressly authorize the organization to interpret the agreement which it is to administer (see International Civil Aviation Convention (received the advice and consent of the Senate as a treaty), art. 84, 61 Stat. (pt. 2) 1180; the Articles of Agreement of the International Monetary Fund (membership in which was authorized by both Houses of Congress in enacting the Bretton Woods Agreements Act), art. XVIII, 60 Stat. 401; the International Wheat Agreement of 1953 (received the advice and consent of the Senate as a treaty), art. XIX, 4 U. S. T. 986; and the Universal Postal Union Convention of 1952 (participation by United States pursuant to prior legislation authorizing the conclusion of postal agreements), art. 27, 4 U. S. T. 1300).

In a multilateral agreement which necessarily deals with technical matters, as does the General Agreement, it has been found necessary to include exceptions to basic rules; some of these exceptions may be invoked unilaterally without any requirement of prior approval by the Organization (see the escape clause in art. XIX of the General Agreement). However, in some provisions it was considered preferable, often because of the difficulty of writing into the agreement exact criteria to cover all possible cases, to give to the Organization the authority to release governments, under specified circumstances, from the general trade obligations which they had entered into. It was believed, and the history of the past 8 years has demonstrated the correctness of this belief, that the majority of the members would be less interested in the concrete outcome of individual cases than in the fact that such cases are decided on the grounds of principles of the General Agreement, thus giving to it a workable balance between stability and flexibility. Consequently, most of the instances in which the Organization may release a member from obligations represent cases in which some exception has been found necessary for flexibility, but in which it has been found desirable, in

the interests of maximum stability, to avoid preserving to individual members complete unilateral freedom to apply the exception.

There are several provisions in the General Agreement under which the Organization may release individual contracting parties from obligations under specified circumstances. An example is that permitting a country to increase specific rates of duty (e. g., duties expressed in cents per pound) which have been bound in the Agreement against increase, in order to compensate for a substantial devaluation of its currency, if such increase will not materially impair the value of the concessions involved (art. III, par. 6 (a)). Another example is the provision under which the Organization may release a contracting party from obligations not to impose a particular import restriction, if it agrees that the particular restriction is justified for purposes of helping an infant industry (art. XVIII, pars. 16 and 22). The most important provisions which would authorize the Organization to release a country from its trade obligations are in the general waiver and the settlement of disputes paragraphs which are being transferred from the General Agreement (art. XXV, par. 5 (a) and art. XXIII, par. 2) to the Organizational Agreement itself. Under the general waiver provision (art. 13 of the Organizational Agreement) the Organization may, in exceptional circumstances, release a party from an obligation under the General Agreement by a two-thirds majority of the votes cast, such majority also representing more than half of all the members. Under the settlement-of-disputes provisions (art. 14 of the Organizational Agreement) the Organization may, in serious cases of nullification or impairment of benefits under the General Agreement, authorize the party whose benefits have been nullified or impaired to withdraw compensatory concessions or other obligations.

As has already been pointed out, the Organizational Agreement precludes action by the Organization imposing new obligations on members. Thus the actions by the Organization under consideration can, in respect to the United States, only diminish the obligations of other members when a release is granted to another member, or diminish the obligations of the United States, when a release is granted to the United States.

It has been argued that the provisions authorizing the Organization to release members from obligations would constitute an unconstitutional delegation to the Organization of the authority of the United States. Neither when the Organization is releasing another member nor when it is releasing the United States is there any delegation to the Organization involved, since in neither case is it exercising any function which could have been exercised by an agency or official of the United States. In the case of the release of another member, that other country is obtaining a right to take certain action which it could have taken if there had been no agreement, but which it had given up, or limited, its right to take in becoming a party to the General Agreement. The question of whether or not such action should nevertheless be taken by such other country is not a matter within the competence of the Congress of the United States (American Banana Co. v. United Fruit Co., 213 U. S. 347) but is within the sovereign jurisdiction of that country. Likewise it is not within the President's control except to the extent that he is able, by negotiation, to persuade that country to undertake an obligation, with or without qualification, not to take the action.

There can thus be no question as to the validity, from the standpoint of delegation, of an agreement in which the President obtains an undertaking that certain action will not be taken by another country except under specified circumstances. The other country is then free to act unilaterally when it considers the circumstances have arisen. It is equally valid for the President to obtain a greater undertaking for the United States to the effect that the other country would not take the specified action except under such circumstances as a body, in which the United States wields a considerable influence, considers would justify the action. Any limitations as to the conduct of foreign governments in exercising their own sovereign power over their own regulation of commerce are thus purely a matter of what the President can obtain by negotiation, since the regulation of another country's commerce is a matter beyond the legislative power of Congress, or the administrative power of the President, or indeed the sovereignty of the United States.

In cases in which the actica of the Organization releases the United States from an obligation, such action takes place merely in the field of international law, and the effect which it might have in the United States depends upon United States domestic legislation, not upon action by the Organization. For example, partial implementation of the 1948 waiver by the contracting parties enabling the United States, without violation of the General Agreement, to extend certain

preferences to the Trust Territory of the Pacific Islands was carried out by act of Congress more than 31⁄2 years after the waiver was accorded by the contracting parties. (2 GATT, Basic instruments and selected documents 9; 66 Stat. 136). And the 1950 waiver permitting the United States to increase the duty temporarily on certain potatoes was made effective by a proclamation in which the President exercised his authority under section 350 to terminate in part a prior trade agreement proclamation (GATT/CP/61; proclamation 2901, recitals 3, 4, and 7, and pt. I (a), 64 Stat. (pt. 2) A427). The action of the contracting parties permitting the United States to suspend obligations toward Czechoslovakia under the General Agreement had no automatic effect on the actual suspension of such obligations; it had to be implemented by a letter of October 2, 1951, from the President to the Secretary of Treasury (3 CFR, 1951 supp., p. 54) pursuant to Proclamation 2935 of August 1, 1951 (65 Stat. 625), which itself was issued pursuant to section 5 of the Trade Agreements Extension Act of 1951 (65 Stat. 72). It should be noted that several other international bodies, with the express approval of the Congress, have been given authority, under varying circumstances, to relieve parties to an international agreement from particular obligations, or from obligations generally under specified circumstances. Some of these provisions are quite similar to particular provisions in the General Agreement and the Organizational Agreement. They have not been considered as constituting a delegation to an international organization of powers previously inherent in the Government of the United States.

The Articles of Agreement of the International Monetary Fund contain a number of such provisions, probably the most important of which is article VIII, section 2, which provides that, with certain specific exceptions, "no member shall, without the approval of the fund, impose restrictions on the making of payments and transfers for international transactions" (emphasis added; 60 Stat. 401). Other provisions in the Articles of Agreement permitting the Fund to relieve members from specific obligations are those under which the fund may arree to accept securities rather than currency as part of a member's financial contribution, i. e., its "quota" (art. III, sec. 5), and the Fund's right to waive conditions regarding the use of its financial resources (art. V, sec. 4). The 1953 International Wheat Agreement authorizes the International Wheat Council to relieve importing countries which are parties to the wheat agreement from certain of their obligations because of balance-of-payments difficulties, or, in the case of exporting countries like the United States, because of a short crop (art. X, par. 5, 4 Ù. S. T. 974).

Some agreements also provide that the particular international body may relieve parties from obligations under exceptional circumstances, comparable to article 13 of the Organizational Agreement. An example is the Articles of Agreement of the International Monetary Fund (art. XVI, under which such broad rights may be exercised by a four-fifths vote, 60 Stat. 401). The 1953 Narcotics Protocol provides that, in "exceptional" circumstances, the Central Opium Board may temporarily exempt a party from its obligations under the protocol as to the level of its stocks of opium (art. 5, par. 5 (a), S. Exec. C, 83d Conz., 2d sess., p. 10; this protocol has received the advice and consent of the Senate, but has not yet entered into force).

A number of agreements also contain provisions for action by an international body comparable to that provided for in article 14 of the Organizational Agreement, permitting the international body to relieve parties from obliations toward other parties as a penalty, which usually becomes applicable only if a party has not been living up to its obligations under the agreement or to a particular obligation imposed by the body itself. Examples are article XIX, paragraph 7, of the 1953 International Wheat Agreement (4 U. S. T. 987 and 988), articles 87 and 88 of the International Civil Aviation Convention (61 Stat. (pt. 2) 1180), and article V, section 5, VI, section 1, XIV, section 4, and XV, section 2 of the Articles of Agreement of the International Monetary Fund (60 Stat. 401). In releasing any contracting party to the General Agreement from an obligation under that Agreement, the Organization will not be dealing with the private rights of United States citizens, but only with the international rights or obligations of the United States. The provisions it will be applying are not legislative in nature, but are part of an international contract. The United States, in the exercise of its sovereign right to give or withhold agreement, has agreed to these provisions subject to a particular type of limitation which permits the Organization to diminish (but not increase) the obligations of parties to the contract. Thus there is no question of delegation of constitutional authority to the Organization.

ADDITIONAL QUESTIONS ASKED of the DEPARTMENT OF STATE BY COmmittee MEMBERS

Question. Would the United States have to modify any of its laws covering trade matters as a result of passage of H. R. 5550 or of U. S. participation in OTC? Answer. No. It is true that we do have on the books certain legislation inconsistent with part II of GATT, but with the exception of the amended section 22 which is covered by the waiver, this legislation was in force on October 30, 1947, the date of the general agreement, and, under the protocol by which we agree to apply the GATT, does not have to be brought in line.

Background. It has been implied (see pp. 283-284 of March 5 transcript) that the United States would accept GATT pursuant to article XXVI once OTC was approved, and hence that all legislation inconsistent with GATT would have to be brought in line. This is not true.

At the ninth session a resolution was drawn up providing that an acceptance under article XXVI would be valid even if accompanied by a reservation covering inconsistent legislation in existence on the date of the instrument by which a country became a contracting party (October 30, 1947 for the United States). This resolution must be accepted in writing by all contracting parties to be accepts this resolution or some other method is adopted for preventing such inconsistent legislation from conflicting with the General Agreement, we will not accept the general agreement under article XXVI. After Burma accepts the resolution, we will accept the agreement under article XXVI with a reservation for inconsistent legislation in existence on October 30, 1947.

In the meantime other countries cannot put the agreement into effect pursuant to article XXVI since countries representing 85 percent of the aggregate trade conducted by contracting parties must agree to that; the United States conducts over 20 percent of such trade.

BROADEN OTC BY AMENDING GATT?

Question. If Congress approves OTC, on the understanding it is only to administer GATT, what is to prevent the President from amending GATT in the future so as to bring in features of the old ITO such as commodity agreements and cartels?

Answer. No amendment to GATT can have application to the United States unless the United States accepts it. GATT is a trade agreement. The President has entered into the General Agreement pursuant to the authority contained in the Trade Agreements Act, which limits the scope of what the President may do under it. The scope of the Trade Agreements Act is determined by Congress. The President's actions under the Trade Agreements Act have been limited to exchanging international undertakings with respect to governmental trade barriers tariffs, quotas, internal taxes, exchange restrictions, discriminations, customs requirements not involving changes in specific United States laws, export subsidies and other governmental impositions which are or might become unduly burdening to the foreign trade of the United States. Provisions of this kind have been included in trade agreements since the passage of the Trade Agreements Act of 1934. In 22 years the President under the Trade Agreements Act has never assumed obligations for the United States in respect of cartels or commodity agreements. The International Wheat Agreements of 1949 and 1953 and the International Sugar Agreement of 1953, the only commodity agreements to which the United States is a party, were submitted to the Senate for approval as treaties. Cartel provisions and general provisions governing the conclusion of commodity agreements were included in the ITO, which, however, was submitted for approval as a joint resolution.

SANITARY REGULATIONS

Question. Does the GATT or the OTC change the sanitary regulations of the United States such as foot and mouth disease laws?

Answer. No. The only reference to sanitary regulations in GATT is an exception to the general rule against quotas and embargoes. Article XX provides that "Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: "(b) necessary to protect human, animal or plant life or health***"'

Background. The quoted language is almost identical with that appearing in the Convention for the Abolition of Prohibitions and Restrictions approved by