G.A.T.T. WARNING ON FREE TRADE PLANS

Press, Volume XCV, Issue 28314, 27 June 1957, Page 13

G.A.T.T. WARNING ON FREE TRADE PLANS

(Rec. 10 p.m.) GENEVA, June 25.

The General Agreement on Tariffs and Trade said in its 1956 report today that the challenge of the European common market may mean far-reaching adjustments in trading relations between G.A.T.T. members and other countries.

A satisfactory solution within the G.A.T.T. framework was essential if the search for regional integration was not to bring the risk of disintegrating the worldwide trading system so painfully built up since the war. The value of international trade in 1956 was 11 per cent, higher than in 1955, according to the report. The rate of increase in industrial production was slow. Future development of trade hinged on the further growth of economic activity in Western Europe. The report said 1956 was the first year in which the trade of

the world’s non-industrial areas yielded a large deficit, amounting to about 1,200 m dollars. The share of the non-industrial areas in total supplies of primary products to industrial countries had declined. Two important reasons for this were:

A big fall in raw material and fuel needs per unit of manufacturing output in industrial countries. Increased production of domestic raw materials within the industrial areas themselves.

There was also the intensified use of manufactured raw materials like synthetic rubber and synthetic fibres, and the relative decline of the textile industries. Long-term prospects for net imports of primary products in Western Europe and North America were distinctly favourable for fuels and metals. The indications were that by 1973-75, the volume of these imports would at least be doubled. For textile fibres and natural rubber, a decline in combined net import volume was likely. For timber,, hides and natural fertilisers, it was estimated that the import volume would rise by a half in Western Europe, while remaining nil in North America. The long-term marketing prospects in Western Europe and North America of coffee, tea, cocoa, and tropical fruits were quite promising. For other foodstuffs, future market developments were uncertain, depending entirely on the rate of growth of agricultural production in industrial countries.

It was obvious, the report said, that a further rapid growth of agricultural production in the industrial areas would lead to a radical fall in world trade volume relative to world production volume, and to fundamental changes in the geographical distribution of output. as between industrial and non-industrial areas.