EXHIBIT No. 17

[From United Nations Yearbook, 1947-1948]

XII. THE INTERNATIONAL TRADE ORGANIZATION (ITO)1

(Not yet established)

A. THE PREPARATORY COMMITTEE

On February 18, 1946, the Economic and Social Council of the United Nations, pursuant to a proposal submitted by the representative of the United States, resolved (13 (I)) to convene an International Conference on Trade and Employment. The aim of the Conference would be to devise ways and means for the expansion of the production, exchange and consumption of goods. The Council, at the same time, decided to establish a Preparatory Committee, composed of one representative each of Australia, Belgium, Brazil, Canada, Chile, China, Cuba, Czechos.ovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zeleand, Norway, Union of South Africa, U. S. S. R., United Kingdom and United States, to prepare for the consideration of the Conference an agenda and a draft convention for an international trade organization. The Government of the U. S. S. R. subsequently indicated that it was unable to participate in the work of the Preparatory Committee because it had not been possible to devote sufficient time to the preliminary study of the important questions with which the Committee would have to deal. The remaining eighteen nations accepted membership on the Committee and designated representatives.

The Preparatory Committee held a first series of meetings in London between October 15 and November 26, 1946. Before the Committee was a "Suggested Charter for an International Trade Organization", published by the United States Government in September 1946. This “Suggested Charter" represented a further elaboration of "Proposals for Expansion of World Trade and Employment", made public by the United States Department of State on December 6, 1945. The "Proposals" were the outcome of financial and trade discussions between the United Kingdom and United States. Also before the Committee were a detailed Indian commentary on the United States proposals, a Uinted Kingdom memorandum on employment policy, a draft charter for an international trade organization submitted by Brazil and various other document ssubmitted by other delegations. Out of the consideration of these proposals and suggestions, there emerged a first draft Charter for the International Trade Organization (ITO).

Further work on this first draft Charter was carried out by a Drafting Committee established by the Preparatory Committee at its London session. The work of the Drafting Committee was reviewed and revised by the Preparatory Committee during its second session in Geneva between April 10 and August 22, 1947.

The draft Charter finally adopted by the Preparatory Committee formed the basis for the work of the United Nations Conference on Trade and Employment (Havana Conference) which met at Havana from November 21, 1947, to March 24, 1948.

B. THE HAVANA CONFERENCE

The Havana Conference was attended by representatives of 56 Governments: Afghanistan

Argentina

Australia

Austria

Belgium

Bolivia

Brazil

Burma

Canada

Ceylon

Chile
China
Colombia

Costa Rica
Cuba

Czechoslovakia

Denmark

El Salvador
France

Greece

Guatemala

Haiti

India

Republic of Indonesia

Dominican Republic

Iran

1 For further details, see Yearbook of the United Nations, 1946-47, pp. 821-24. See also reports of the Preparatory Committee (E/PC/T/33 and E/PC/T/186) and the Drafting Committee (E/PC/T/34), and the report of the Secretary-General on the Havana Conference (E/807). In this Yearbook, see also pp. 522-23 and Bibliography, Appendix III. 2 See Yearbook of the United Nations, 1946-47, pp. 492-94.

Finland, Paraguay and the Allied Control Authorities for Japan sent observers to the Conference. Representatives from the following inter- and non-governmental organizations also attended the Conference:

International Labour Organisation

Food and Agriculture Organisation of the United Nations

International Bank for Reconstruction and Development
International Monetary Fund

International Federation of Agricultural Producers

World Federation of Trade Unions

International Co-operative Alliance

International Organization of Industrial Employers
International Chamber of Commerce

The Conference prepared a Charter for an International Trade Organization (to be officially known as the Havana Charter) to be submitted to the Governments represented, authenticated the text of the Charter in a Final Act, signed on March 24, 1948, by representatives of all but three (Argentina, Poland, Turkey) of the 56 participating Governments, and adopted six resolutions. The Government of Turkey signed the Final Act subsequently.

The resolutions adopted referred to:

(1) Establishment of an Interim Commission for the International Trade Organization (see below).

(2) Relation of the International Trade Organization and the International Court of Justice;

(3) Chairmanship of the Interim Co-ordinating Committee for International Commodity Arrangements;

(4) Study of international employment situation;

(5) Role of the United Nations in the fields of economic development and reconstruction; and

(6) Expression of gratitude to Cuban Government and people as well as others, for their co-operation with the Havana Conference.

C. PURPOSE AND OBJECTIVES

The Havana Charter consists of nine chapters, comprising 106 articles, and sixteen annexes. The chapters deal respectively with:

3

I. Purpose and Objectives

II. Employment and Economic Activity

III. Economic Development and Reconstruction

IV. Commercial Policy

V. Restrictive Business Practices

VI. Inter-Governmental Commodity Agreements

VII. The International Trade Organization

VIII. Settlement of Differences

IX. General Provisions

The purpose and objectives of the proposed ITO are stated in Chapter I of the Havana Charter. They may be summarized as follows:

A balanced and expanding world economy;

Promotion of industrial and general economic development of economically under-developed countries;

Access on equal terms by all countries to the markets, products and productive facilities needed for their development;

Reduction of tariffs and other trade barriers and elimination of discriminatory treatment in international commerce;

The text of the Charter will be reproduced in the Yearbook after the Organization has come into existence.

Elimination of measures disruptive of world commerce, productive employment or economic progress;

Promotion of mutual understanding, consultation and co-operation to facilitate the solution of problems relating to international trade in the fields of employment, economic development, commercial policy, business practices and commodity policy.

D. ORGANIZATION

Article 73 of the Havana Charter provides that the proposed ITO shall consist of a Conference composed of all ITO Members; an Executive Board, composed of eighteen members, eight of which are to represent nations or customs unions of chief economic importance, as determined by the Conference, having regard to their shares in world trade and to the representation of the different types of economies or degrees of economic development found among ITO Members, and ten of which are to be elected by the Conference; such commissions as may be established by the Conference; and a staff headed by a Director-General. In both the Conference and the Executive Board, voting will be on the principle of one vote per member, and, except where otherwise provided in the Charter, decisions will be made by simple majority.

The Havana Charter further provides (Article 77) that the powers and duties attributed to the International Trade Organization by the Charter and the final authority to determine the policies of ITO shall be vested in the Conference, which, however, may vote by a simple majority to assign to the Executive Board any power or duty of ITO except those specifically conferred or imposed upon the Conference by the Charter. The Conference may also, by a two-thirds majority, decide to waive, in exceptional circumstances, an obligation imposed upon a Member by the Charter. It may prepare or sponsor agreements concerning any matter within the scope of the Charter and, by a two-thirds majority, may recommend acceptance of such agreements. It may make recommendations to inter-governmental organizations on any subject within the scope of the Charter. The Conference is also to approve the budget of the Organization and apportion the expenditures of the Organization among Members according to a scale of contributions to be fixed from time to time. It is to determine the seat of the Organization and establish such branch offices as it may consider desirable. The Executive Board, according to Article 81 of the Charter, is to be responsible for the execution of the policies of the Organization and is to exercise the powers and perform the duties assigned to it by the Conference. It is also to supervise the activities of the commissions and to take such action upon their recommendations as it may deem appropriate. The Board may also make recommendations to the Conference, or to intergovernmental organizations, on any subject within the scope of the Charter.

The Conference is to meet in regular session once a year and in extraordinary session as may be necessary. The frequency of Executive Board meetings is to be agreed upon in the rules of procedure which the Board will adopt.

E. ENTRY INTO FORCE OF THE HAVANA CHARTER

The Havana Charter will enter into force 60 days after more than half the governments which signed the Final Act have deposited instruments of acceptance with the Secretary-General of the United Nations. This would require 28 ratifications. If the Charter has not come into force in this manner by March 24, 1949, it will become effective 60 days after twenty governments have deposited instruments of acceptance. Should this second alternative fail to bring the Charter into force by September 30, 1949, the Secretary-General of the United Nations will consult with those governments which have deposited instruments of acceptance to see whether and on what conditions they wish to bring ITO into being.

F. INTERIM COMMISSION FOR ITO

Pending the entry into force of the Havana Charter and of ITO, 52 of the 56 governments (i. e., all but Bolivia, Ireland, Portgual and Switzerland) represented at the Havana Conference approved a resolution establishing an Interim Commission for the International Trade Organization composed of the 52 members which approved the resolution.

The Interim Commission was given functions which may be summarized as follows:

To convoke the first session of ITO after the Charter has entered into force;

To prepare the agenda of the first ITO session, including therein proposals concerning: a plan of work for the first year of the Organization, the budget, the site of ITO headquarters, relations with the United Nations, the specialized agencies and other inter- and non-governmental organizations;

To publish the reports of the main committees of the Havana Conference; To consult with the International Court of Justice concerning procedural matters arising out of the fact that, under the Havana Charter, ITO may request advisory opinions from the Court;

To prepare for the first session of ITO a report on the entire field of industrial and general economic development and postwar reconstruction, with particular reference to the role of the United Nations, the specialized agencies and other organizations;

To consult with the Government of Switzerland concerning certain problems facing the Swiss economy in connection with the provisions of the Havana Charter.*

The Interim Commission held its first meeting in Havana on March 20, 1948, and Max Suetens (Belgium) was chosen as Chairman. The Commission then elected an Executive Committee consisting of eighteen members, namely, Australia, Benelux (Belgium, Netherlands, Luxembourg, as a Customs Union, represented as one member), Brazil, Canada, China, Colombia, Czechoslovakia, Egypt, El Salvador, France, Greece, India, Italy, Mexico, Norway, Philippines, United Kingdom and United States. L. Dana Wilgress (Canada) was elected Chairman by the Executive Committee at the Committee's first meeting in Havana on March 24, 1948. Geneva was chosen as the seat of the Executive Committee. The Executive Committee was entrusted with carrying out the tasks assigned to the Interim Commission.

The Executive Committee held its second meeting at Geneva from August 25 to September 15, 1948, and considered a number of procedural and organizational matters relating to such items as the relationship of ITO, when established, with other specialized agencies and the expenses incurred during the meetings of the Preparatory Committee. The Executive Committee decided that it would not meet again until the time when twenty countries had accepted the Havana Charter, or on September 30, 1949, whichever was earlier.

A working group, established during the second session of the Executive Committee to consider how best to proceed with examining the case of Switzerland, was unable to effect arrangements which were acceptable to the Swiss Government. The Executive Committee decided that, while the way should remain open for future consultations, the plan for nominating expert advisers to study the problem of the Swiss economy should be abandoned until the third session of the Executive Committee.

GENERAL AGREEMENTS ON TARIFFS AND TRADE (GATT)

The second session of the Preparatory Committee in Geneva in fact undertook two entirely separate functions. In addition to completing the draft Charter for an International Trade Organization, it also sponsored the negotiations for the reduction of tariffs and the discussions which led to the formulation of the General Agreement on Tariffs and Trade (GATT). It was considered that this would promote the objectives of the proposed International Trade Organization. This part of its work began on April 10, 1947, in Geneva, and concluded on October 30, 1947, when the Final Act of GATT was signed.

Although the tariff negotiations were sponsored by the Preparatory Committee, and although the results of the negotiations, incorporated in the General Agreement on Tariffs and Trade, were closely related to one of the main objectives of the Havana Charter and the International Trade Organization,

The consultations with Switzerland concern the possible effect of the Charter on the trading position of that country. Switzerland does not suffer today from balance of payments difficulties, but exports a great deal to countries that do experience such difficulties. The Charter would allow these latter countries to restrict their imports temporarily to safeguard their precarious balances of payments. This in turn might lead to a decline in Swiss exports, with the result that Switzerland might be threatened with unemployment. The problem was briefly examined at the Havana Conference but it was not possible to study all aspects of the matter in sufficient detail and to find a solution. It was therefore decided to authorize the Interim Commission to take up the Swiss case and to submit recommendations thereon to the first ITO Conference.

See p. 973.