The Press THURSDAY, FEBRUARY 22, 1251. TRADE CHARTER DISCARDED

Press, Volume LXXXVII, Issue 26353, 22 February 1951, Page 6

The Press THURSDAY, FEBRUARY 22, 1251. TRADE CHARTER DISCARDED

The announcement that Britain does not propose to ratify the Havana Charter for an International Trade Organisation is not unexpected, since American delegates tc the trade conference at Torquay had intimated that the charter would not again be submitted to Congress for ratification. Without the United States, both the prime mover in liberalising world trade and its most generous contributor, the charter and the 1.T.0. could have no real meaning. Thus ends four years of effort towards the goal of expanding employment and prosperity, an effort that has become increasingly difficult as the hopes of peace have faded into the cold war. But the effort has not been altogether wasted; and the end may and no doubt will be pursued by other means. The United Nations conferences on trade and employment not only drafted „ the charter but also produced the General Agreement on Tariffs and Trade, which in its limited field can serve some of the purposes of the charter. The nations that have co-operated in revising tariffs under the agreement have at least had before them a set of rules for an expanding world economy that would benefit them all, and a programme for its achievement. As they continue careful steps forward under the agreement, they are at least shortening the leap to full co-operation, which seemed so easy in 1946 and so difficult in 1950. History of the Charter

This attempt to liberalise world trade was founded on the philosophy of Mr Cordell Hull, Secretary of State in Mr Roosevelt’s Cabinet, of freer and non-discrimina-tory international trade. This was embodied in the Atlantic Charter, and later in the charter of the United Nations. Soon after the war ended, the United Nations began to work positively for a trade and employment agreement giving effect to this philosophy. A preparatory committee met in London in 1946 and continued its work in Geneva the following year. The Geneva meeting drew up the General Agreement on Tariffs and Trade to serve as an interim measure until the draft of a trade organisation charter could be prepared and adopted by the participating nations. The Geneva meeting also began the process of tariff .bargaining under the general agreement, which has since been continued at Annecy and Torquay. The charter drafted at Geneva was adopted with amendments at the Havana conference and referred to the participating nations for their adherence. Just as the United States had given a generous and necessary lead at the London end Geneva meetings, so it was expected to give a lead in ratifying the charter. Because of domestic considerations and, later, America’s adoption of rather different measures, such as Marshall Aid, ratification was deferred, and now has been dropped. Without full American participation other countries can do little by ratifying the charter, particularly since Eastern Europe has not supported the proposal. Objectives of Charter

To realise the aims of Article 54 of the United Nations Charter for the attainment of higher standards of living, full employment, and conditions of economic and social progress and development, the draft charter provided that the signatories should pledge themselves individually and collectively to promote national and international action tc attain the following objectives:

(1) To assure a large and steadily growing volume of real income and effective demand, to increase the production. consumption, and exchange of goods, and thus to contribute to a balanced and expanding world economy.

(2) To foster and assist industrial and general economic development, and to encourage the flow of international capital for productive investment.

(3) To further the enjoyment by all countries on equal terms of access to the markets, products, and productive facilities which are needed for their economic prosperity and development. (4) To promote on a reciprocal and mutually advantageous basis the reduction of tariffs and other barriers to trade and the elimination of discriminatory treatment in international commerce. (5) To enable countries by increasing ttie opportunities for their trade and economic development to abstain from measures which would disrupt world commerce, reduce productive employment, or retard economic progress. (6) To facilitate through the promotion of mutual understanding, consultation. and co-operation the solution of problems relating to international trade in the fields of employment, economic development, commerci il policy, business practices, and commodity policy. Individual articles of the draft dealt with machinery for informs tion and consultation, fair labour standards, economic development and reconstruction, tariffs, preferences and taxation, quantitative restrictions, subsidies, State trading, and restrictive business practices. There were many escape elapses in the charter, but at least it was emphasised that these should be exceptions to the general rule. The charter also provided for the establishment of the International Trade Organisation to function in the field of trade and employment as the International Labour Organisation does in the field of labour relations. There was to be a secretariat, regular annual conferences, and special conferences if necessary. Limited Aim of GATT

< The General Agreement on Tariffs and Trade has the much more limited aim of contributing to the purposes of Article 55 by

Reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and

° f . h " to trade, and to the discriminatory treatment m international commerce.

This agreement deals with such matters as the general application of tariff concessions granted by one country to another country, dumping duties, customs procedures, and quantitative restrictions (again with suitable escape clauses), subsidies, State trading, the protection of national security interests, and customs unions.

Under the general agreement, substantial reductions have been made in the tariffs of the 39 participating countries, which do 80 per cent, of the world’s trade. The procedure has been for two countries to negotiate tariff concessions on items of particular interest to them. By the terms of the agreement these concessions are extended to all signatories to the agreement. Like the charter, the agreement is full of loopholes. Through them many members have wriggled to escape their obligation not to resort to such practices as exchange control and import quotas except in cases of necessity. Such barriers to trade have nullified much of the value of the many tariff concessions that have been arranged; but it is still true that the breaches made in the tariff walls have been of real importance in Britain’s trading recovery. As import restrictions disappear, these tariff adjustments will be of increasing value. The immediate need is to ensure that the gains made so far under the agreement are consolidated and extended as opportunity offers. One of the first things that must be done is to strengthen the interim commission which has been acting for the proposed 1.T.0. The secretary of the commission (Mr E. Wyndham White) has pointed to the urgent need for an international organisation capable of grappling with such problems as bilateral deals and blocked payments, quota restrictions and licences, tariff bargaining, and discrimination. Equivalent problems in the field of currency and exchange have been dealt with successfully by the International Monetary Fund. In the field of commerce there remains a gap which the International Trade Organisation was intended to fill. To make good this deficiency now that the charter has been dropped will be a task of prime importance for the next conference under the general agreement at Geneva in September.