4 and 6 years old, by 75 percent. A new tax was levied on cars of 16 horsepower or less, but at a much lower rate than that on cars of more than 16 horsepower.

In 1956 at the 11th Session of the Contracting Parties, the

United States noted that French production of automobiles rated at more than 16 horsepower is negligible and that therefore the French tax applies almost exclusively to imported cars, particularly United States makes. The United States felt that for these reasons the tax was discriminatory and contrary to the provisions of article III of the General Agreement, which prohibits the use of internal taxes to protect domestic producers. Moreover, according to the United States, the effect of the tax was to nullify benefits to which the United States was entitled under existing French tariff consessions on automobiles. France contended that the United States complaint was technically improper, since it was made under the wrong article of the General Agreement, and that the tax had not been levied as a protective measure, but to provide revenue.

The United States indicated that it would continue to consult with France on the question of the automobile tax. The Contracting Parties requested that, if these consultations did not result in a satisfactory solution, the United States refer the matter to the Intersessional

Committee for further examination.

French stamp tax on imports (art. II)

The French stamp tax on imports, which is levied in addition to the regular import duties, is designed to defray the costs of clearing imported commodities through the customs. The General Agreement authorizes such taxes by providing (art. II) that a contracting party shall not be

prevented from imposing fees or other charges on imports commensurate with the cost of services it renders in connection therewith. At the Ninth Session of the Contracting Parties in 1954-55, the United States asserted that France had increased its stamp tax beyond the allowable limits. The matter was temporarily resolved, however, when the French representative noted that France had not increased the tax--and did not intend to increase it--beyond the point necessary to meet the cost of ser1/ vices rendered, as authorized by the General Agreement. In August 1955. however, France increased the tax from 2 percent to 3 percent, with the specific provision that the increase in the proceeds from it be applied to the budget for agricultural family allowances.

The United States immediately complained to the Contracting Parties that France's action was inconsistent with its obligations under the General Agreement. When the matter came before the Contracting Parties at their 10th Session, the French representative agreed that the increase in the tax violated the agreement. But, he stated, France had decided on the increase in exceptional circumstances--when it had been necessary to finance his country's program of agricultural family allowances and when there seered to be no possibility of financing such allowances by normal methods. Also, he noted, the increase in the level of protection involved was small and did not seem to be of such a nature as to seriously damage the interests of the contracting parties or to alter the channels of trade. He assured the Contracting Parties, however, that

his Government would adjust the tax as soon as possible.

1/ See Operation of the Trade Agreements Program (eighth report), Pp. 34-36.

At the 11th Session, the French delegate informed the Contracting Parties that the draft of his country's Finance Act for 1957 provided for the reduction of the stamp tax from 3 to 2 percent. The Contracting Parties requested the French Government to inform them when the measure had been approved. As approved by the French National Assembly on December 29, 1956, however, the Finance Act continued the stamp tax at the rate of 3 percent. For this reason, the Contracting Parties placed the United States complaint on the agenda for their 12th Session. Federal Republic of Germany's turnover tax on imports of

printed matter (art. III)

age.

In the latter part of 1954 the customs authorities of the Federal Republic of Germany began to calculate the country's 4-percent compensatory turnover tax on imported printed matter on its "wholesale" price-that is, on the ultimate German retail price reduced by a fixed percentFormerly, the tax had been based on the invoice price, which is the contractual price paid by the publisher to the printer, and which is still used as the base for the tax on domestic printed matter. At the 11th Session the Netherlands complained that, under the new method of calculating the tax, the taxable value of imported printed matter includes copyright, royalty, and other cost elements, whereas the taxable value of domestic printed matter does not include them.

Moreover, according to

the Netherlands, the method of calculating the tax is not in accordance

with the principles of article III of the General Agreement, which

provide for "national"

treatment of
of imported products for purposes

United Kingdom subsidization of exports of eggs, cattle,

and potatoes (art. XVI)

At its meeting that began on April 24, 1957, the Intersessional Committee considered a complaint by Denmark that during the first few months of 1957 the United Kingdom had begun to export large quantities of eggs, cattle, and potatoes to Denmark's traditional European markets. The Danish representative expressed the opinion that the exports in question were the result of production in excess of the United Kingdom's domestic requirements, and that such excess production resulted from the operation of the United Kingdom's guaranteedprice program for these products. According to the Danish representative, his country was willing to await future developments with respect to the United Kingdom's action to reduce its exports of cattle and potatoes. He felt, however, that the United Kingdom had failed to take sufficient action with respect to exports of eggs, and that he must ask the United Kingdom to discuss with Denmark the possibility of limiting the exportation of subsidized eggs in accordance with the provisions of article XVI of the General Agreement. The Danish complaint was supported by the Netherlands, Belgium, Germany, and Sweden.

After discussion, the Intersessional Committee recommended that the United Kingdom and Denmark continue the consultations that they had undertaken and that, in determining its future policy with respect to subsidies on the products in question, the United Kingdom consider the views expressed by the various contracting parties. The Committee also appointed a panel to examine the Danish complaint. The panel.

is to examine the complaint if the contracting parties concerned report to the Executive Secretary of the Contracting Parties that their consultations have not led to a satisfactory settlement of the problem.

United States subsidization of poultry exported to Germany (art. XVI)

On September 27, 1956, the United States Department of Agriculture announced that the United States was granting an export subsidy of 5-1/2 cents per pound on about 3 million pounds of whole frozen readyto-cook poultry intended for sale in the Federal Republic of Germany. Western Germany has been a traditional market for Danish poultry products, and Denmark had obtained tariff concessions from Western Germany, under a bilateral trade agreement in 1951, as a principal supplier of those products.

At the 11th Session of the Contracting Parties, Denmark asked the Contracting Parties to review the United States subsidy on poultry exported to Western Germany. According to Denmark, the United States subsidy was not compatible with the spirit of the present article XVI of the General Agreement, and was clearly inconsistent with the revised article XVI, which the United States already has accepted. The revised article states that contracting parties should avoid subsidies on the exportation of primary products, including agricultural products.

The Contracting Parties noted the Danish complaint and the fact that Denmark and the Netherlands (which also is an interested contracting party) proposed to consult with the United States on the matter under the provisions of article XVI.