the countries concerned in the negotiations maintained an entirely independent status. During the negotiations and in the later stages as Contracting Parties to the General Agreement on Tariffs and Trade, the countries concerned took part neither as an operating unit of the United Nations nor as an independent organization. As Contracting Parties they are a group of important trading countries bound by an Agreement negotiated among themselves meeting from time to time to settle matters arising out of the Agreement calling for common action.

The countries participating in these successful negotiations were, first, certain members of the Preparatory Committee itself, namely Australia, Belgium, Brazil, Canada, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Union of South Africa, United Kingdom and United States; and, second, certain states participating in the negotiations because of their close economic connection with certain members of the Preparatory Committee, namely, Burma, Ceylon, Pakistan, Southern Rhodesia and Syria (Benelux and Syria-Lebanon each participated as a Customs Union). A total of 123 bilateral sets of negotiations were completed among the abovementioned countries, and the results were incorporated into the Schedules of GATT. The negotiated tariff reductions and concessions cover some 45,000 items, affecting two thirds of the import trade of the participating countries, and about half of the over-all world imports, representing a total value in excess of $US10,000,000,000 (based on 1938 prices).

GATT is, in effect, a framework to protect the tariff concessions. However, it goes further in that it contains a very comprehensive set of general rules for regulating normal commercial relations between the parties to GATT. Out of the 35 articles of GATT, these rules take up 21 articles. They are similar in outline to the set of rules on commercial policy later incorporated in the Havana Charter. GATT is not a charter but a multilateral trade agreement. It is an arrangement which is intended to provide a binding structure for the Geneva tariff negotiations, and to provide a basis for extending further tariff reductions all over the world.

Although the negotiations were bilateral in form, GATT is multilateral in character, since a concession granted by country A to country B in connection with a given item becomes automatically available to all other countries that are parties to GATT, in accordance with the most-favored-nation principle.

At the end of the Geneva negotiations, on October 30, 1947, the 23 participating countries signed a Final Act which simply authenticated the text of GATT. In order to bring GATT into effect, each participating country was invited to sign a Protocol of Provisional Application. This Protocol states that each signatory country will bring into effect the Schedules of Tariff Concessions and Part III of GATT, and will apply Part II of GATT to the fullest extent not inconsistent with existing legislation. (Part II of GATT deals largely with commercial policy rules.) The countries which signed the Protocol of Provisional Agreement and are thus applying GATT provisionally are known as the Contracting Parties. Of the 23 countries participating in the tariff negotiations all except one, namely Chile, had signed the Protocol of Provisional Application by the closing date of June 30, 1948. An extension of time was granted to Chile at the second session of the Contracting Parties. GATT will enter into definite force when governments whose external trade totals 85 percent of the total trade of the 23 countries have accepted GATT.

The Contracting Parties held their first session in Havana from February 28, 1948, to March 24, 1948. The session was mainly concerned with the question of the replacement of certain parts of GATT by the relevant parts of the Havana Charter when the latter comes into force. At the end of the first session, four protocols were signed.

The second session of the Contracting Parties was held in Geneva from August 16 to September 14, 1948. Two protocols were signed bringing into effect certain changes in the articles of GATT. The most important change was the inclusion of the provisions worked out at Havana covering the use by under-developed or war-damaged countries of protective measures such as import quotas to help economic development and reconstruction of particular industries or branches of agriculture. A Protocol of Rectifications corrected detailed errors in GATT Tariff Schedules. An additional protocol allowed Chile up to February 17, 1949, to apply GATT.

The Contracting Parties agreed to hold a further series of tariff negotiations, with a view to enabling additional governments to accede to GATT. A detailed time schedule was adopted, with the final stage of multilateral negotiations set

to open at Geneva on April 11, 1949. In conjunction with the original 23 Governments, the following Governments were to participate: Denmark, Dominican Republic, El Salvador, Finland, Greece, Haiti, Italy, Liberia, Nicaragua, Sweden and Uruguay.

Requests were received from several Contracting Parties for release or waiver of obligations under GATT for reasons related to their particular economic problems. Decisions affecting items which had been negotiated in 1947 were made in respect of the Tariff Schedules relating to Ceylon and Pakistan in view of current economic difficulties. Permission was given to Brazil to increase certain import duties in view of the fact that Brazil was applying lower duties than those provided in GATT over a broad range of items and would in addition negotiate definite compensating concessions. Permission was also given to the United States to accord preferential treatment to the Trust Territory of the Pacific Islands.

An important case involving restriction of imports of textiles by the Cuban Government was referred to the Contracting Parties by the United States. This was resolved through an undertaking by the Government of Cuba to relieve the immediate difficulties affecting imports of textiles and to negotiate for a solution in accordance with normal commercial principles and through measures which will not restrict trade. In response to a request made to the Contracting Parties by Cuba, the United States Government undertook to renegotiate with Cuba certain tariff concessions, which had been granted by Cuba under GATT, in return for adequate compensation.

ANNEX I. MEMBERS, OFFICERS AND HEADQUARTERS as of SEPTEMBER 21, 1948

Chairman: Max Suetens (Belgium)

Executive Secretary: Eric Wyndham White (United Kingdom)

OFFICERS OF THE EXECUTIVE COMMITTEE

Chairman: L. D. Wilgress (Canada)

Vice-Chairmen:

Ramon Beteta (Mexico)

Sir Raghavan Pillai (India)

André Philip (France)

HEADQUARTERS

Address: Interim Commission for the International Trade Organization, Palais des Nations, Geneva, Switzerland

ANNEX II. RESOLUTION ESTABLISHING AN INTERIM COMMISSION FOR THE
INTERNATIONAL TRADE ORGANIZATION

The United Nations Conference on Trade and Employment,

Having prepared the Havana Charter for an International Trade Organization (hereinafter referred to as "the Charter" and "the Organization" respectively),

Considering that pending the establishment of the Organization certain interim functions should be performed,

Hereby resolves to establish an Interim Commission for the International Trade Organization (hereinafter called "the Commission") consisting of the governments the representatives of which have approved this resolution and which are entitled to original membership of the Organization under Article 71 of the Charter. The terms of reference and structure of the Commission are set out in the Annex to this resolution which forms an integral part thereof. The following delegations approved the resolution establishing the Interim Commission:

111

Norway

Pakistan

Panama

Peru

Philippines

Poland

Southern Rhodesia

Republic of Indonesia

Sweden

Syria

Transjordan

Turkey

South Africa

United Kingdom

United States

Uruguay

Venezuela

ANNEX

1. The Commission shall elect an Executive Committee of eighteen members to exercise any or all of its functions as the Commission may determine on electing the Committee.

2. The Commission shall have the following functions:

(a) to convoke the first regular session of the Conference of the Organization (hereinafter referred to as "the Conference") not less than four months and, as far as practicable, not more than six months after the receipt of the last acceptance needed to bring the Charter into force;

(b) to submit the provisional agenda for the first regular session of the Conference, together with documents and recommendations relating to all matters upon this agenda, including:

(i) proposals as to the programme and budget for the first year of the Organization;

(ii) studies regarding selection of headquarters of the Organization; (iii) draft financial and staff regulations.

(c) to prepare, in consultation with the United Nations, a draft agreement of relationship as contemplated in paragraph 1 of Article 86 of the Charter for consideration by the first regular session of the Conference;

(d) to prepare, in consultation with inter-governmental organizations other than the United Nations, for presentation to the first regular session of the Conference, documents and recommendations regarding the imple

mentation of the provisions of paragraphs 1 and 3 of Article 87 of the Charter;

(c) to prepare, in consultation with non-governmental organizations, for presentation to the first regular session of the Conference recommendations regarding the implementation of the provisions of paragraph 2 of Article 87 of the Charter;

(f) to prepare, with a view to recommendation by the Economic and Social Council to the first regular session of the Conference, the Annex referred to in paragraph 3 of Article 90 of the Charter [regarding the General Agreement on Privileges and Immunities of the Specialized Agencies];

(g) to carry out the functions and responsibilities referred to in the following documents of the United Nations Conference on Trade and Employment:

1. Paragraph 2 of the Final Act of the United Nations Conference on Trade and Employment (to which the present resolution is annexed). 2. The Resolution of the Conference regarding the relation of the International Trade Organization and the International Court of Justice (annexed to the Final Act).

3. The Resolution of the Conference relating to Economic Develop ment and Reconstruction (annexed to the Final Act).

4. The Report of Sub-Committee G of the Third Committee on the Proposal made by the Delegation of Switzerland (E/CONF.2/C.3/78) together with the sections relating to that matter in the Report of the Third Committee (E/CONF.2/70).

(h) to enter into consultations with the Secretary-General of the United Nations regarding the expenses incurred by the Preparatory Committee of the United Nations Conference on Trade and Employment and by that Conference and, in the light of such consultations, to present a report to the first regular session of the Conference;

(i) generally to perform such other functions as may be ancillary and necessary to the effective carrying out of the provisions of this annex. 3. The Commission shall elect an Executive Secretary who shall be its chief administrative officer. The Executive Secretary shall appoint the staff of the Commission observing, as far as possible, the principles of paragraph 2 of Article 85 of the Charter and using, as he considers desirable, such assistance as may be extended to him by the Secretary-General of the United Nations. The Executive Secretary shall also perform such other functions and duties as the Commission may determine.

4. The Commission shall approve the budget estimates for the operation of the Commission. The Executive Secretary shall prepare the draft of such estimates The expenses of the Commission shall be met from funds provided by the United Nations and for this purpose the Commission shall make the necessary arrangements with the Secretary-General of the United Nations for the advance of such funds and for their reimbursement. Should these funds be insufficient, the Commission may accept advances from Governments. Such advances from Governments may be set off against the contributions of the Governments concerned to the Organization.

5. Arrangements may be made with the Secretary-General of the United Nations regarding the provision of such personnel as may be required to carry on the work of the Interim Co-ordinating Committee for international Commodity Arrangements.

6. The Executive Committee shall hold its first meeting in Havana immediately after its establishment. Its subsequent meetings shall be held in Geneva unless it decides otherwise.

7. The Executive Committee shall submit a report of the activities of the Commission to the first regular session of the Conference.

8. The benefit of the privileges and immunities provided in the Convention on Privileges and Immunities of the Specialized Agencies adopted by the General Assembly of the United Nations shall, as far as possible, be extended to and in connection with the Commission.

9. The Commission shall cease to exist upon the appointment of the DirectorGeneral of the Organization, at which time the property and records of the Commission shall be transferred to the Organization.

For the press

EXHIBIT No. 18
DEPARTMENT OF STATE

APRIL 19, 1950.
No. 380

For release on delivery, expected at 10:30 a. m., Wednesday, M.S.T. April 19, 1950. Not to be previously published, quoted from, or used in any way ADDRESS BY THE HONORABLE DEAN ACHESON, SECRETARY OF STATE, BEFORE THE HOUSE COMMITTEE ON FOREIGN AFFAIRS, IN SUPPORT OF UNITED STATES ACCEPTANCE OF MEMBERSHIP IN THE INTERNATIONAL TRADE ORGANIZATION

You have before you the question of United States membership in the proposed International Trade Organization. The purpose of the proposed Organization is to promote international trade. The Charter of the Organization establishes for the first time a comprehensive code of international fair trade practices. The Organization, to be established within the United Nations structure, will provide a forum where nations can bring their trade grievances and settle their trade problems.

The code of fair trade practices set forth in the Charter is a code designed to help achieve an international trading system in which traders may buy and sell where they please the system economists call "multilateral trade"-the system under which private enterprise and free competition has the best chance to prosper.

The

This alignment with basic United States principles did not just happen. United States took the lead in urging the United Nations to bring together representatives of 54 nations to work out an agreed charter. We provided the original document which they used as the basis of their deliberations. We did this because we believed that the world would not achieve economic recovery and world peace unless the unhealthy and chaotic conditions of international trade, resulting from two world wars and a serious depression, could be improved. It was clear that the growth of all sorts of new devices to restrict and channel trade would continue unabated if each country tried to solve its economic problems at the expense of others. Only by joint effort by many countries could we hope to alter the trend toward diminishing trade and bilateralism.

The United States is the leading exponent of free enterprise and free competition. The United States is a leading advocate of the advantages of multilateral trade. The United States believes in the cooperative approach to the settlement of international problems.

It is not enough to believe and to advocate. American leadership in world affairs has always depended on our willingness to translate belief into action, to practice what we preach. In a real and practical way, American action with respect to the International Trade Organization is a test of our leadership. It is a demonstration not only to ourselves, but to all other free peoples, that we really believe in free enterprise, competition and multilateral trade. Such a practical demonstration is sorely needed at this time, when freedom is hanging in the balance in many parts of the world, and millions of people are looking in our direction for assurance that we really mean what we say.

We have learned the bitter lesson that freedom is often a fragile thing-that it may wither, especially when its roots are shallow, under the stress of privation and economic crisis. It is where the people of a free nation can see the prospect of achieving a fuller and more satisfying material existence that the institutions of freedom are most likely to be secure and the advocates of peace are most likely to hold firmly the reins of government.

The European nations have made great strides toward restoration of their production and economic health, by their own efforts and with our help through the European Recovery Program. They need to do much more.

In the Point IV program we hope to help in the long process of building production and bringing about higher standards of living in underdeveloped areas. But increase in production is not enough. Countries must be able to exchange the goods they produce for the goods of others which they need. In other words, production and trade are two sides of the same coin, both necessary to its value.