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in the domestic market. GATT provisions both on subsidies and on countervailing duties specifically state that the exemption or rebate on exports of consumption taxes shall not be considered to be a subsidy.

The greatest problem with this obligation is to determine what practices are covered by the term "subsidy." While the Contracting Parties have been unable to arrive at a precise definition, there seems to be general agreement that "subsidy," for purposes of this obligation, includes:

(a) Currency retention schemes or any similar practices which involve a bonus on exports or re-exports;

(b) The provision by governments of direct subsidies to exporters;

(c) The remission, calculated in relation to exports, of direct taxes or social welfare charges on industrial or commercial enterprises;

(d) The exemption, in respect of exported goods, of charges or taxes, other than charges in connection with importation or indirect taxes levied at one or several stages on the same goods if sold for internal consumption; or the payment, in respect of exported goods, of amounts exceeding those effectively levied at one or several stages on these goods in the form of indirect taxes or of charges in connection with importation or in both forms;

(e) In respect of deliveries by governments or governmental agencies of imported raw materials for export business on different terms than for domestic business, the charging of prices below world prices;

(f) In respect of government export credit guarantees, the charging of premiums at rates which are manifestly inadequate to cover the long-term operating costs and losses of the credit insurance institutions;

(g) The grant by governments (or special institutions controlled by governments) of export credits at rates below those which they have to pay in order to obtain the funds so employed; (h) The government bearing all or part of the costs incurred by exporters in obtaining credit.

At the initiative of the United States, in the fall of 1972 a GATT Working Group began consideration of: (a) domestic subsidies that stimulate exports; and (b) a revised definition of subsidies and the possible application of GATT provisions to subsidization in third country markets. GATT Article VI:6(b) permits a contracting party to levy antidumping or countervailing duties on dumped or subsidized imports which injure an industry in another country exporting the product to the importing country. Such action, which requires the

approval of the Contracting Parties acting jointly, has not in practice been taken. When no domestic industry is being injured by subsidized imports, an importing country can be expected to be reluctant to impose countervailing duties at the request of another country. The subsidy enables the importing country to buy that product at a lower price than it would in the absence of a subsidy. A request from the injured exporting country for the levying of a countervailing duty would also oblige the importing country to "choose sides" in a trade dispute between the exporting countries. The United States also has difficulty with the clause qualifying subsidization as that "which results in the sale of a product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market." Believing that price is only one of many means by which export competitiveness can be enhanced through subsidization, the United States has recommended elimination of this clause. Protection of Patents, Trademarks, and Copyrights

Two provisions of the GATT relate to protection of patents, trademarks, and copyrights. Article XX (d) states that as long as they are not applied in an arbitrary or unjustifiably discriminatory fashion and are not disguised restrictions on international trade, nothing shall prevent a contracting party from adopting measures “... necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of [the GATT] including those relating to .......the protection of patents, trademarks and copyrights...." Article XX (d) also permits measures designed to prevent deceptive practices, such as actions under the Trademark Act, Federal Trade Commission Act, and the Tariff Act of 1930 which affect deceptive practices in connection with imported goods.

Article IX provides that "The contracting parties shall cooperate with each other with a view to preventing the use of trade names in such manner as to misrepresent the true origin of a product. . . . There have been no cases arising with respect to either provision, and no relevant Interpretative Notes. International regulation in the area of patents, trademarks, and copyrights would appear to lie outside of the GATT.

Study No. 3.-The Adequacy of GATT Provisions Dealing with Agriculture

Trade in agriculture, as other trade, is subject to the three elements of the GATT system: general rules, procedures for interpreting and enforcing them, and specific tariff commitments.

General Rules

The general provisions of the GATT apply to agricultural as well as to industrial trade. They should afford stability of trading expectations and give meaning to negotiated tariff and other concessions. To the extent that these purposes are frustrated through such devices as nontariff trade controls, internal support mechanisms, and export subsidies, the GATT becomes less effective.

Nontariff controls on agricultural products abound. Many of them are applied pursuant to the general exceptions provisions of the GATT. Among these provisions are those which permit restrictions necessary to protect human, animal or plant life or health and temporary quantitative restrictions to safeguard the balance of payments. Some restrictions are justified under the Protocol of Provisional Application which contains a "grandfather clause" permitting the application of measures required by domestic legislation which antedates the GATT, even though these measures are inconsistent with GATT provisions. A few restrictions have been authorized by waivers, subject to certain conditions. (In 1955, the United States obtained a waiver entitling it to apply restrictions required by Section 22 of the Agricultural Adjustment Act (of 1933), as amended, when such restrictions are inconsistent with the GATT.) Finally, there are a number of restrictions which are inconsistent with the GATT and are not covered by waivers.

The GATT also speaks to the problem of subsidies, including price or income support policies, which have the effect of increasing exports or reducing imports. It brings them under a regime of notification, exchange of information, and consultation. It particularly notes the possibly harmful effects of export subsidies and the undue disturbance to normal commercial interests which they may occasion. The GATT does not prohibit export subsidies on primary products. It states that governments should seek to avoid their use; but that if a government does apply an export subsidy on a primary product, it should not do so in a manner which would give that country more than an equitable share of world export trade in that product. The GATT provisions on export subsidies on primary products reflects the position taken by the United States on this matter when the GATT was reviewed in 1955.