to accept the Organization's recommendations or to participate in such agreements.

Article 12 recognizes the importance of the contribution which international investment, both public and private, can have in promoting economic development, and also the extent to which the international flow of capital can be stimulated if Members afford nationals of other countries opportunities for investment and security for existing and future investments. It therefore provides that Members will provide reasonable opportunities for investments acceptable to them and adequate security for existing and future investments. On the other hand, it recognizes the right of each Member to take appropriate safeguards necessary to insure that foreign investments are not used as a basis for interference in its internal affairs; to determine whether, and to what extent, and on what terms, it will allow future investments; and to prescribe and give effect on just terms to requirements as to the ownership of existing and future investments.

It is recognized that treaties or other agreements relating to the opportunities and security for investment will promote the movement of capital, and Members undertake, upon the request of other Members, to enter into consultation and participate in negotiations directed to the conclusion of mutually-acceptable treaties or agreements for this purpose.

Articles 13, 14 and 15 define certain limited cases in which tariffs, quotas, or preferences, which would not be permitted under the rules and obligations of the Commercial Policy Chapter of the Charter, may be allowed for the purpose of promoting the establishment or development of particular industries or branches of agriculture.

Article 13 provides that if a Member wishes to increase a tariff rate which it has bound in a trade agreement with another Member or Members, or to impose a quota on a product included in such an agreement, for the purpose of establishing a new industry or branch of agriculture or materially developing one which exists, it must seek the consent of the other Member or Members with which it has made the trade agreement. If it secures the consent of the Members substantially affected it may impose the proposed measure. If it does not secure such consent, it may not do so. The Organization may assist in the negotiations and, where a multila teral

trade agreement is involved such as the General Agreement on Tariffs and Trade, has a responsibility for determining which Members are substantially interested in the proposed

This is to assure that some Member with a le gal right under the General Agreement on Tariffs and Trade, for example, to a given tariff rate, but which has only a small interest in the trade in the product concerned, cannot block an agreement reached by all of the other Members who are substantially interested. If the measure proposed affects a product which is not included in a trade agreement, the Member would, of course, be free to change its tariff in any way it wished.

If, however, a Member desires to impose a quota which would be prohibited by the commercial policy provisions of the Charter, it must obtain the consent of the Organization. If the Member can show that the proposed quota meets certain specified and limited conditions (Article 13 (7)(a)), the Organization must grant permission to use the quota for a specified period. If the proposed quota does not meet these specified conditions, the Organization must arrange for consultation with other Members which would be materially affected by the proposed measure and, after obtaining their views, may approve or disapprove it. A time schedule is specified for the consideration of such applications so that applications cannot be blocked simply by inertia or delay.

Whereas Article 13 sets up procedures under which proposed measures for economic development (which would otherwise conflict with obligations under the Charter) may obtain the approval of the Organization, Article 14 establishes spe cial transitional precedures for dealing with existing measures for economic development which Members have in effect when they join the ITO. Generally speaking, such measures which are already in effect may be continued if they are non-discriminatory and if advance notice is given, but they are subject to a kind of postaudit by the Organization, i.e. they are subject to review and possible disapproval by the Organization as if they had been submitted for approval under Article 13. It is specifically provided that Article 14 is not to apply to measures relating to products on which tariff concessions were made in a trade agreement.

Article 15 would permit new preferential arrangements between two or more countries in the interests of their programs of economic development if the Organization approves the proposal by a two-thirds vote, or if the Organization

met and that the proposed arrangement will not cause substantial injury to the external trade of other members.

6. SECURITY EXCEPTIONS

( Article 99)

All of the provisions of the Charter which have been described are subject to the express proviso that they shall not be construed:

a. to require a Member to furnish any information the disclosure of which it considers contrary to its essential security interests; or

b. to prevent a Member from taking, either singly or with other States, any action which it considers necessary for the protection of its essential security interests, where such action

1. relates to fissionable materials or to the materials from which they are derived, or

11. relates to the traffic in arms, ammunition or implements of war, or to traffic in other goods and materials carried on directly or indirectly for the purpose of supplying a military establishment of the Member or of any other country, or

111. is taken in time of war or other emergency in international relations; or

C. to prevent a Member from entering into or carrying out any intergovernmental agreement made by or for a military establishment for the purpose of meeting essential requirements of the national security of one or more of the participating countries.

7. CHAPTER VII

THE INTERNATIONAL TRADE ORGANIZATION

( Articles 71-91)

These provisions of the Charter consist, in effect,of a series of agreements among the member governments upon substantive questions relating to international trade in the

fields of commercial policy, restrictive business practices, commodity problems, employment, and economic development. The Organization which the Charter would create will derive its powers from those agreements. It is designed to be a specialized agency of the United Nations, along with the Food and Agriculture Organization, the International Bank and the International Monetary Fund.

The functions assigned to the Organization are to collect, analyze and publish information, to make studies and issue reports, to recommend changes in laws and procedures, to promote international agreement in the area of its interest, to encourage and facilitate consultation, and to call conferences and sponsor negotiations between its

Members. It will administer the provisions of the Charter, receive complaints, settle disputes between Members, and permit withdrawal of concessions in cases of viol tion so that a balance of interests may be maintained.

Countries invited to attend the Havana Conference may become original members of the Organization. Other countries may join with the approval of a majority of the Members. (Article 71)

The final authority for determining the Organization's policies is a Conference composed of all Members (Articles 74, 77) Responsibility for execution of policies is placed in an Executive Board of eighteen Members. Eight of the Board's eighteen seats will always be assigned to the eight Members of chief economic importance. (Article 78)

Each Member has one vote in the Conference and in the Executive Board. (Articles 75, 79)

The formula provided for the determination of economic importance makes it clear that the eight seats on the Executive Board will go to the United States, United Kingdom, Canada, France, the Benelux Customs Union, India, China, and, if it should join, to the Soviet Union. Four of the remaining seats will go at the first election to countries in Latin America, and one each to countries in Scandinavia, the Near and Middle East, and the Arab States. (Annex L)

The detailed work of the Organization will be carried on under the supervision of the Executive Board, by a Director-General and a staff. (Articles 84, 85)

specialized commissions to be staffed by technical experts sele cted by the Executive Board. These experts will serve in their professional capacity and not as representatives of governments. (Articles 83, 88)

The relationship of the Organization to the United Nations will be defined in an agreement similar to those entered into by other specialized agencies (Article 86). Certain relationships with the Fund and the FAO are described in detail (e.g. Article 24, 67). It is contemplated that such relationships in general are to be subject to agreement that will ensure effective cooperation and the avoidance of unnecessary duplication. The Organization may also absorb or bring under its supervision certain existing organizations, such as the International Customs Tariff Bureau, whose operations fall within its competence. (Article 87)

Contributions for the support of the Organization are to be apportioned among its Members in accordance with such principles as may be followed in financing the United Nations. If a maximum limit is placed upon the share that any Member may be asked to contribute to the budget of the United Nations, this limit must also be applied to its contribution to the Organization. (Article 77, (6))

8. CHAPTER VIII

SETTLEMENT OF DIFFERENCES

( Articles 92-97)

The Members undertake that they will follow the procedures envisaged in the Charter for settling differences arising out of its operation. (Article 92)

If any Member considers that any benefit accruing to it under the Charter is being nullified or impaired by the action of another Member or the existence of any other situation, it may consult with the other Members concerned. Arbitration may be employed if desired. (Article 93)

If this procedure does not effect a settlement, the case may be taken to the Executive Board of the Organization which, after investigation, may dismiss the complaint, suggest further consultation, refer the case for arbitration if this is agreed by the Members concerned, or make