Relationship of GATT to Existing or Projected Organizations INTRODUCTION Although the postwar program of the United States and other countries to restore international trade to a multilateral basis has been grounded primarily in the multilateral General Agreement on Tariffs and Trade, a number of other international organizations and arrangements have similar or related objectives. These organizations and arrangements include the International Monetary Fund (IMF); the Organization for European Economic Cooperation (OEEC) and its subsidiary, the European Payments Union (EPU); the Economic Commission for Europe (ECE); such regional groupings of countries as the Belgo-Luxembourg Economic Union, the Benelux Customs Union, and the European Coal and Steel Community (ECSC); and such multilateral trade arrangements as the "Paris Club" and the "Hague Club." The sterling area also comprises a bloc of countries, mainly British, which cooperate in matters relating to their foreign-exchange reserves, the use of sterling, and restrictions on trade with countries both within and outside the sterling area. Other proposed regional arrangements that have been actively considered for some time include the Nordic Council (Denmark, Finland, Norway, and Sweden), and the Central American free-trade area (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). The World Bank 1/ See Operation of the Trade Agreements Program (ninth report), p. 134. Export-Import Bank of Washington (an agency of the United States Government) are concerned with long-range problems of economic development, and their activities are therefore of great importance in the field of international trade. The various forms of United States financial aid to foreign countries during the postwar period have likewise served to further the objectives of the General Agreement and of organizations that are concerned with restoring international trade to a multilateral basis and creating conditions favorable to the general convertibility of currencies. The latest development in the field of international economic cooperation is the establishment of the European Economic Community (EEC) (usually known as the Common Market), the treaty for which was signed in March 1957 by Belgium, the Federal Republic of Germany, France, Italy, Luxembourg, and the Netherlands. Under consideration, although still in the formative stage, is the proposed European freetrade area, which involves a much larger group of countries than does the Common Market, and which is intended to operate under a somewhat different set of principles. The European Economic Community, or Common Market, is a direct outgrowth of the European Coal and Steel Community and comprises the same six countries. But, whereas the Coal and Steel Community removed the barriers to trade among the participating countries from coal, iron ore, scrap iron, and steel products only, the Common Market provides for the removal of barriers from the entire trade of the member countries. Thus, since World War II a complex array of international organizations and arrangements has been created to cope with the problems of international trade. Some of these organizations and arrangements have a broad membership; others operate on a narrower regional basis. All of them, however, are concerned in one way or another with the restoration of international trade to a multilateral basis. Although the se organizations and arrangements involve some overlapping of functions, they have resulted in remarkably few conflicts of aim and method. The high degree of coordination that has been achieved by these postwar organizations and arrangements is due in large measure to the fact that one of the earliest of them--the General Agreement on Tariffs and Trade-has served as the framework within which, or alongside which, subsequent steps toward international economic cooperation have been undertaken. The General Agreement anticipated, and in some cases made specific provisions for, the establishment of other international trade organizations such as customs unions and free-trade areas. The customs unions and free-trade areas that have been formed or projected in the postwar period have usually involved contracting parties to the General Agreement; they have been established in such a way as not to conflict with the aims of the agreement, and, indeed, to contribute to the realization of its objectives. The provisions of the General Agreement on Tariffs and Trade relate primarily to the reduction of import duties through negotiation by the contracting parties. Although the General Agreement is also concerned with eliminating both quantitive import restrictions and exchange controls, this concern is somewhat incidental since the agreement recognizes such restrictions and controls as temporary expedients, applicable only during a transitional period of adjustment when its contracting parties are faced with balance-of-payment problems. The agreement assumes that the external financial difficulties of its contracting parties will be overcome in time, whereas the task of reducing import duties will be one of its continuing functions. The General Agreement also permits the use of quantitative restrictions for other than balance-of-payments reasons, but only on a temporary basis; the only continuing form of import restriction that the General Agreement recognizes is that provided by customs duties. It is significant that the General Agreement contains no provisions, much less any machinery, for solving the balance-of-payments problems that lead contracting parties to adopt exchange controls and quantitative restrictions on imports. The lack of dollar exchange during and after World War II was the principal reason why most countries adopted restrictions on imports and on exchange transactions. After the war, the United States undertook, by grants of financial aid, to assist a number of Western European countries in improving their external payments positions. It soon became apparent, however, that the recipients of such aid were of dollars and other scarce currencies by recourse to quantita1/ tive restrictions on imports payable in these currencies. inclined to build up their reserves The next problem, therefore, was to provide incentives and a mechanism that would make it possible for recipients of dollar aid to cooperate in building up their exchange reserves instead of competing for dollars and other scarce currencies. It was anticipated that with such incentives the countries concerned would make more efficient use of the aid they received, and that the elimination of quantitative 1/ See Operation of the Trade Agreements Program: pp. 117-125; seventh report, pp. 128-129. Sixth report, trade restrictions and exchange controls would thereby be hastened. Emphasis was to be placed on the use of positive instead of negative measures by the various countries and on the building up of their productive capacity so as to improve the competitive position of thefr goods in export markets. Moreover, it was hoped that with the employment of more positive measures the countries of Western Europe would be able to place their trade on a multilateral basis instead of relying, as they formerly had, on bilateral trade arrangements. Part of the problem in achieving this objective was to find a means of making the various currencies transferable within a given area. This agency For Western Europe, the agency established to accomplish the objectives outlined above was the European Payments Union. was created by the countries that comprise the Organization for European Economic Cooperation, which was established in 1948 to administer dollar-aid receipts on a cooperative basis. For a time 1/ OEEC undertook to obtain cooperation among its members in the use of dollar aid, but did not provide adequate incentives for the countries to accept each other's currencies and to relax the quantitative restrictions they maintained on their trade with one another. Not until the European Payments Union was established in mid-1950 did such incentives-together with penalties for failure to meet certain specified obligations-become operative. 1/ The OEEC countries are Austria, the Benelux countries (Belgium, Luxembourg, and the Netherlands), Denmark, France, the Federal Republic of Germany, Greece, Iceland, Ireland, Italy, Norway, Portugal, Sweden, Switzerland, Turkey, and the United Kingdom. |