of the country's total imports from third countries during the latest year for which statistical data are available. Under article XXIV of the General Agreement on Tariffs and Trade, member states of the European Economic Community, in establishing their common external tariff, must apply substantially the same duties and other commercial regulations to the trade of territories not included in the Common Market. The formula that the Common Market countries adopted to meet this requirement calls for establishing duties under the common tariff at the level of the arithmetic average of the duties applied in the four 1/ customs territories embraced by the Common Market. The duties to

be employed in calculating the arithmetic average are those that the member states applied on January 1, 1957. Use of the Brussels Nomenclature by all the member states facilitates the calculation of the arithmetic average.

In negotiating the Common Market Treaty, literal adherence to the principle of a simple arithmetic average in calculating the common external tariff proved to be impossible. Exceptions were made to permit some rates of duty to be higher or lower than the average. The Common Market Treaty establishes arbitrary maximum rates of duty, or ceilings, for specified lists of commodities that embrace most raw materials and semimanufactures. These ceilings are 3 percent ad valorem for raw materials, 10 percent ad valorem for semimanufactured products, 15 percent ad valorem for inorganic chemicals and organic and inorganic compounds of certain metals, and 25 percent ad valorem for organic chemicals. For a list of commodities consisting mainly of foodstuffs,

1/ This average is the maximum level authorized for new customs unions by art. XXIV of the General Agreement on Tariffs and Trade.

unmanufactured tobacco, a few chemical products, crude petroleum,

animal hides and skins, raw cotton and certain other fibers, and some nonferrous metals, the duties in the common tariff have been established by mutual agreement. For another relatively short list of com

modities, consisting of certain foodstuffs, chemicals, metals, ores,

wood, fibers, and certain machinery and tools, the duties in the common tariff are to be negotiated by the member states. The rates of duty decided upon for these few commodities probably will not greatly affect the general level of the common tariff.

In calculating the arithmetic average, France has been permitted-for a number of commodities--to substitute specified duties for the duties actually in effect on January 1, 1957. The list of such commodities includes a number of chemicals, a few medicinal products, artificial fertilizers, some films and plastics, paper, certain yarns, and several types of machines. For purposes of calculating the arithmetic average, Italy also will be permitted to make certain adjustments in using its tariff rates. With respect to the products that will have a fixed maximum rate of 25 percent ad valorem in the common tariff, the Benelux countries have been permitted--for the purpose of calculating the arithmetic average--to increase to 12 percent ad valorem any duties that do not exceed 3 percent ad valorem.

In formulating that part of the Common Market Treaty that deals with alining the tariffs of the member states with the common tariff, it was anticipated that a member state might find the supplies of a particular commodity within the Community insufficient to meet its own

requirements. The Commission of the European Economic Community, therefore, is authorized to permit imports to enter such a country from third countries if it finds that supplies in the Community are not adequate to meet the requirements of the particular country and if it finds that such supplies traditionally have been imported to a considerable extent from third countries. This arrangement was provided for the importation of raw materials, semimanufactured products, and the group of commodities that includes inorganic chemicals. particular member state may be permitted to import these commodities under quotas at reduced rates of duty or duty-free. For organic chemicals and the other products for which the common tariff rates have yet to be negotiated, provision is also made for the importation of the commodities under quotas at reduced rates of duty or duty-free. However, the arrangement for the importation of such commodities from third countries depends on whether a change in sources of supply or a shortage of supplies within the Community would harm the processing industries of the member state concerned. In both cases mentioned above, the quotas may not exceed the limits beyond which the shift to third-country supplies would be detrimental to other member states of the Community. Agricultural products listed in a special category may also be exempted from duty in whole or in part, or may be allowed to enter under quotas at reduced rates of duty or duty-free, provided

such action will not seriously disturb the market for the particular

products.

Initial Reaction to the Establishment
of the Common Market

During 1956, after the general principles that were to govern the establishment of the proposed Common Market had become fairly clear,

the Research and Planning Division of the Economic Commission for Europe prepared an analysis of the Common Market, with special reference to its long-run implications. This study, which was published by the United Nations Department of Economic and Social Affairs, 1/ surveys (1) the possible advantages and disadvantages that participating and non-participating countries might expect to experience from the establishment of the Common Market, (2) the relationship of the Common Market to the proposed free-trade area, and (3) the possible long-run effects of the Common Market on the organization of world trade. During the period when the Common Market Treaty was being drafted the United States and other contracting parties to the General Agreement, including the Common Market countries, officially raised questions regarding, and undertook to supply answers bearing on, the possible effect of the new customs union on their own interests. Private organizations and the

press in most countries likewise gave lengthy consideration to the implications of the Common Market. Before their negotiations on the drafting of the Common Market Treaty, the foreign ministers of the

1/ United Nations, Economic Survey of Europe in 1956, Sales No.: 1957. II.E. 1, Geneva, 1957, ch. IV.

countries of the European Coal and Steel Community had at their meeting at Messina in June 1955 provided for the preparation of an expert report dealing with procedural and other matters. 1/ OEEC established a special working party to report on possible forms of association between the Common Market and other members of OEEC, particularly through the establishment of a free-trade area. 2/

Publication of the Common Market Treaty after it was signed in March 1957 gave rise to still another round of appraisals by interested parties; essentially, these appraisals differed little from those made when the treaty was in its preparatory stages. These appraisals emphasized the broad and long-run aspects of the new proposals rather than such details as the level of the new common tariff, the incidence of new rates of duty, and the effect of revised duties on individual industries within the Common Market. This emphasis resulted from the fact that the broad, long-run aspects of the Common Market are of primary concern to countries outside the European Economic Community and also to the Contracting Parties to the General Agreement, whose duty it is to make certain that the aims of the General Agreement are not distorted or perverted. In other words, countries outside the Common Market are not particularly concerned with how the member states abolish import duties or other restrictions on their own mutual trade.

1/ Comité intergouvernemental créé par la Conference de Messine, Rapport des chefs de délégation aux Ministres des affaires étrangères, Brussels, Apr. 21, 1956.

2/ See Organization for European Economic Cooperation, Report on the Possibility of Creating a Free Trade Area in Europe, C(57)5, Paris, January 1957.