and export, to provide for the disposal of surplus commodities, and to establish quality and grading standards. The principal objective of such programs has been to stabilize prices at levels that would provide a fair return to producers, consistent with the interests of consumers. To the extent that these programs have had the effect of maintaining domestic price levels for agricultural products above the duty-paid, laid-down prices of comparable imports, they have tended to stimulate a greater quantity of imports than would have prevailed had there been no domestic program. Such artificially stimulated imports tend to increase the cost of relevant programs and to interfere with the realization of their objectives. To provide for such contingencies, section 22 of the United States Agricultural Adjustment Act, as amended, authorizes the President to restrict the importation of commodities by imposing either fees or quotas (within specified limits) if such importation tends to render ineffective or materially interfere with the agricultural commodity programs of the United States Department of Agriculture. Section 22, as amended by the Trade Agreements Extension Act of 1951, specifically provides that no trade agreement or other international agreement heretofore or hereafter entered into by the United States shall be applied in a manner inconsistent with the requirements of section 22. To resolve the differences between its domestic legislation and the provisions of the General Agreement, the United States--at the Ninth Session of the Contracting Parties in 1954-55--requested a waiver of its commitments under the General Agreement, insofar as such commitments might be regarded as inconsistent with action it is required to take under section 22. 1/ Besides establishing certain rules of procedure and certain conditions as to consultation, the waiver that the Contracting Parties granted to the United States at the Ninth Session required the United States to report annually on its actions under the waiver. At the 11th Session of the Contracting Parties, held during October and November 1956, the United States submitted its second annual report under the waiver. The report, which covered the period between the 10th and 11th Sessions, presented an explanation of United States action with respect to each of the commodities that were under control during the reporting period. Besides presenting, for each commodity, data on domestic production, consumption, purchases by the Commodity Credit Corporation, exports, and imports, the report described the quotas in effect and the steps that the United States had taken toward resolving the problem of commodity surpluses. The report noted that import controls were in effect on only 6 of the 9 groups of products originally covered by the waiver, the same number as in the previous year, except for two modifications--the increased coverage of the quota on long-staple cotton, and the temporary increase in the quota on peanuts. The report also described the positive steps that the United States had taken toward reducing surpluses of certain agricultural commodities. These actions were intended to reduce existing crop surpluses, discourage the creation of future surpluses, and encourage consumption. Acreageallotment programs and marketing quotas had been instituted during previous years. Early in the fall of 1956 the United States soil-bank 1/ See Operation of the Trade Agreements Program (eighth report), pp. 43-47. program became effective; the program is designed primarily to reduce surpluses that prevented the flexible features of the United States price-support program from effectively coordinating production with prospective markets at fair prices. As the soil-bank program became effective shortly before the opening of the 11th Session, it was not possible for the United States to report the extent to which the program will be effective in reducing surpluses and in balancing domestic production with consumption in the United States and in export markets. The Danish delegate, as well as the delegates of the Netherlands, Australia, New Zealand, and Canada, expressed concern about several aspects of United States agricultural quotas. One of their concerns was that, although United States stocks of dairy products had declined, the United States had not increased the small import quotas on those products. The Danish delegate pointed out that the United States partly eliminated its stocks of butter by increasing exports, which action seriously affected Denmark's normal exports of that product. It was the view of the Danish delegate that the United States should not have introduced measures to increase prices to producers before relaxing quantitative restrictions on imports; increased prices that were not accompanied by increased imports, he felt, would provide further incentive for increased production in the United States. Other contracting parties also expressed concern about the lack of any significant elimination by the United States of its import restrictions on the commodities covered by the waiver. After a plenary discussion of the working party's report, the Contracting Parties accepted the second annual report of the United States. Releases From Obligations Considered at the 11th Session Article XVIII of the General Agreement permits contracting parties to employ nontariff protective measures for purposes of economic development or reconstruction, provided the proposed measures meet the criteria 1/ established for them under the agreement. The article specifies, among other things, that the measures must be nondiscriminatory, and must (1) be intended to promote an industry that processes an indigenous primary commodity, external sales of which have been reduced by increased foreign production, or (2) be necessary to develop resources that would otherwise be wasted and that, if conserved, would in the long run be beneficial to the applicant country. The measures must not be more restrictive than other practicable measures that would be permitted under the General Agreement. Permission to apply such measures may involve a release from a negotiated commitment, a release from other obligations under the General Agreement, or both. A contracting party that desires. to take action under article XVIII is obligated to notify the Contracting Parties of its proposed action, so that other contracting parties may indicate whether their interests would be adversely affected by it. Approval of the proposed measure by the Contracting Parties is mandatory if the measure meets the standards outlined above. At their 11th Session, the Contracting Parties considered an application by Ceylon for releases under article XVIII of the General Agreement. Ceylon requested permission to limit imports of bicycles, dry batteries, vol. 1, 1/ See Contracting Parties to GATT, Basic Instruments. Text of the Agreement and Other Instruments and Procedures, Sales No.: GATT/1952-3, Geneva, 1952, pp. 41-46. accumulators (storage batteries), safety-razor blades, and cotton sarongs and saris by applying to such imports--for a period of 5 years--the provisions of its Industrial Products Act No. 18 of 1949. 2/ Under this act Ceylon may require an importer to purchase a specified quantity of a domestic product in order to obtain a license to import a specified quantity of a "regulated" product. Such quantitative limitations, Ceylon stated, were necessary to afford special protection for the development of the industries concerned. Ceylon's requests for releases were examined by a working party, which found them to be consistent with the provisions of article XVIII. Accordingly, the Contracting Parties granted the releases, subject to certain technical provisions. Under these provisions, annual quotas of a predetermined amount were not established for the products concerned. Instead, the Contracting Parties devised "standard" ratios for determining the quantity of the local product that an importer must purchase in order to obtain a license--an action that was consistent with the purposes of Ceylon's Industrial Products Act. Examination of Quantitative Import Restrictions Imposed Articles XI through XV of the General Agreement deal with the problem of the use of quantitative restrictions on imports in trade between contracting parties. Article XI prohibits a contracting party from imposing 1/Cotton sarongs were included in the application because the release previously granted on them at the Ninth Session in 1954-55 was due to expire on October 13, 1957. 2/ Cotton towels and toweling were also included in the application, but were subsequently withdrawn by Ceylon during the discussion with the working party. |