measure was not expected to bring an immediate reduction in the consumption of scrap within the Community.

The working party that the

Contracting Parties established to review the Community's report expressed the hope that the Community would take the necessary steps to maintain, as far as practicable, the traditional channels of trade in scrap iron-that is, the export of scrap to Sweden and Austria.

At the 11th Session, Austria complained that other countries were obtaining an increasing proportion of the Community's exports of coal, whereas Austria was finding it difficult to obtain coal. However, working-party discussions indicated that exports of coal to the other countries were not of coking coal, such as Austria required, but of a lower grade coal. The working party noted that Austria and the Community were to hold bilateral discussions with a view to preventing a further decline in exports of coking coal to Austria. According to the High Authority of the Community, the Community's capacity to produce coking coal was barely adequate to meet current requirements. It was, therefore, encouraging investment in coking plants, and had also assigned a substantial part of the Community's recently obtained loan funds for this purpose. The working party noted that the Community was sponsoring technical research to develop means of using coal previously considered unfit for the production of coke and to determine the feasibility of employing low-shaft blast furnaces that consume less coke. Success of these efforts, however, would not result in increased production of coke for several years.

A large part of the discussion of the Community's report to the Contracting Parties concerned prices charged for exports from the Community. Denmark and Sweden were concerned about the differential between the prices charged for exports from the Community and the Community's domestic prices for iron and steel products. The High Authority pointed out that it had endeavored to maintain exports to traditional customers, despite increased consumption within the Community. With respect to coke, the Community has been obliged to satisfy a substantial part of its requirements with the more costly coke made in the Community from imported coal--as do third countries-instead of using entirely the coke produced in the Community from Community coal. The High Authority assured the Contracting Parties that it would make every effort to keep export prices for coke within equitable limits, and that exporters would not be allowed to take advantage of current market conditions by charging traditional customers abnormally high prices.

The working party noted with satisfaction that the previous system of differential prices for steel exported to various destinations had been abolished. The price-differential system was eliminated when the major steel exporters in the Community formed an association in March 1953. The association established minimum prices for steel exported from the Community whenever the sale is made directly by a Community producer to

foreign user.

However, when

a sale is made by a Community exporter to an importer in a third

country, there is no guaranty that minimum prices will be applied.

The working party felt that, in the main, minimum prices were being charged. As it had in previous years, the working party expressed concern as to possible nullification of the competitive advantage that accrued to third countries in manufacturing certain products by virtue of the lower priced fuel and steel they obtained from some of the countries within the Community. Such nullification might result from the agreement by the Community's coal and steel producers to apply uniform export prices for Community products at a level determined by the highest prices prevailing in any member country.

In summary, the working party felt that the Community's fourth annual report reflected a substantial improvement in trade conditions between it and third countries--an improvement that resulted from the 1956 tariff negotiations. In addition, during the year Italy had placed in effect unilateral tariff reductions on Community products; this action was part of the program for the reduction and harmonization of duties provided for in the Community's treaty and in the waiver that the Contracting Parties granted to the Community. The working party expressed the hope that the Community's next annual report would show continued progress.

Italian preferential customs treatment of Libyan products (fourth annual report) (art. I)

At their Sixth Session in 1951, the Contracting Parties granted Italy a waiver of its most-favored-nation obligations under article I

of the General Agreement.

The waiver, which permitted Italy to accord-

for a period of 1 year--duty-free entry to a specified list of products

of which Libya is its principal foreign supplier, was intended to

facilitate the development of Libya's economy during that country's transition to an independent status. At their Seventh Session in 1952, the Contracting Parties--at Italy's request--extended the waiver until December 31, 1955, and requested annual reports by Italy on the development of Italian-Libyan trade and by Libya on that country's economic

At the 10th Session, the Contracting Parties considered the requests of Italy and Libya that the operation of the waiver be allowed to continue. After a working party reported that there had been a considerable expansion of Libyan exports to Italy and to other countries, the Contracting Parties extended the waiver until December 31, 1958. The reports that these two countries submitted at the 11th Session, which were similar to those they submitted at the 10th Session, indicated that Libya will require assistance for some time in solving its trade problems.

Luxembourg's quantitative restrictions on imports (first annual report) (art. XI)

On May 17, 1955, Luxembourg requested the Contracting Parties to waive its obligations under article XI of the General Agreement (requiring the general elimination of quantitative restrictions on imports) to permit it to maintain certain restrictions on imports of agricultural products. Luxembourg's economic structure, the request pointed out,

is based essentially on the steel industry and agriculture. Agriculture is, therefore, a vital branch of the national economy and is indispensable

1/ See Operation of the Trade Agreements Program: pp. 31-32; eighth report, pp. 33-34.

Seventh report,

to its structural and political balance. However, because of excessive fragmentation of agricultural holdings, unfavorable productive conditions, and a very narrow market, Luxembourg's agriculture is in a precarious position, and can be maintained in a satisfactory position only with the support of the state. For more than a century this precarious position has made it necessary to protect agriculture, the request stated, and Luxembourg is not now able to relinquish such protection. Consequently, Luxembourg desired permission to maintain quantitative restrictions on imports of certain agricultural products, of which Belgium and the Netherlands are the principal suppliers.

.Luxembourg's request for a waiver was considered by an intersessional working party. At the meeting of this group, the representative of Luxembourg made it clear that his country's need for agricultural protection was structural in nature, and could not be regarded as transitional or temporary. Consquently, he pointed out, Luxembourg had requested the waiver pursuant to article XXV, rather than under the hard-core decision of March 5, 1955. The representative also explained the relationship between Belgium's request for a waiver and the request that Luxembourg had submitted. Restrictions that were specified in

the requests of both countries, he noted, would be maintained by Luxembourg after they had been eliminated by Belgium. Restrictions that were specified only in the Belgian list would control importation into the whole territory of the Belgo-Luxembourg Economic Union, but when they were eliminated by Belgium no restrictions would remain on imports into Luxembourg. In administering restrictions appearing only