Office of the Historian

International Trade Files, Lot 57D284, Box 105

Extract From Official Report of the Chairman of the United States Delegation to the Habana Conference to the Secretary of State

undated

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3. Accomplishments of Special Interest to the United States

A. The fundamentals of the draft Charter established at the London and Geneva meetings of the Preparatory Committee were retained:

For example:

(1)
The general principle of most-favored-nation treatment concerning imports and exports was established. This required successful opposition to 23 amendments providing sweeping exceptions for new regional preferences. It further required the defeat of repeated attempts to permit, without prior approval by ITO, the imposition of new tariff preferences to favor the development of new industries.
(2)
Certain provisions protecting the rights and interests of foreign investors were retained despite numbers attacks and proposals for crippling amendments.
(3)
The commitment to negotiate for the reduction of tariffs and the elimination of preferences, and the right to withhold tariff concessions from those countries which fail to live up to their commitment, were maintained. Amendments qualifying these principles were rejected.
(4)
The principle of national treatment in internal taxation and regulation was established. Amendments permitting existing or new discriminatory taxes and new mixing requirements were defeated.
(5)
Provision for equal treatment by foreign countries of American motion pictures in relation to other imported motion pictures was retained.
(6)
The general rule against quantitative restrictions on imports or exports, subject to strictly necessary exceptions, was maintained. Numerous amendments to permit the use of such restrictions, without prior approval of ITO, for purposes of economic development were rejected. (See also Section D (2) below)
(7)
Freedom to use quantitative restrictions where incidental to agricultural price support programs involving domestic controls, and not used to increase the share of domestic producers in the home market, was retained.
(8)
The designation of the International Monetary Fund as the arbiter of all important questions affecting the availability of quantitative restrictions to safeguard the balance-of-payments was preserved.
(9)
The general rule of non-discrimination in the administration of quantitative restrictions, where permitted and subject to strictly necessary exceptions, was maintained.
(10)
Attempts to undermine essential safeguards and limitations on the discriminatory application of quantitative restrictions during the transition period were defeated.
(11)
The subjection of state-trading enterprises to rules paralleling those applicable to the control of private trade was maintained.
(12)
A detailed code designed to control “invisible tariffs” was accepted, governing such specific matters as:
(a)
Freedom of transit
(b)
Anti-dumping and countervailing duties
(c)
Valuation for customs purposes
(d)
Customs formalities
(e)
Marks of origin
(f)
Publication and administration of trade regulations
(g)
Information, statistics and trade terminology.
(13)
A strengthened chapter was obtained to provide for international investigations, hearings, recommendations and national action with respect to restrictive business practices of public and private enterprises, possessing monopoly power in international trade or participating in international cartels. Amendments to exclude state-trading enterprises from the scope of this chapter and to cripple its provisions were rejected.
(14)
A code defining the conditions under which inter-governmental commodity arrangements may be concluded and the principles to which they must conform was maintained. Amendments to permit agreements among producing countries alone, without equal voice for consumers, were rejected.
(15)
A simple organizational structure for ITO was preserved.
(16)
A provision was included whereby the contribution of the United States to the budget of ITO can be limited in accordance with whatever limitations may in the future be provided for in the United Nations budget.
(17)
The capacity of ITO to settle economic disputes was sustained by the rejection of amendments designed to permit Members to go directly to the International Court of Justice and to appeal economic as well as legal questions to the Court.
(18)
Amendments that would have made it much more difficult to bring the Charter into force were rejected.

B. Certain modifications, of particular or exclusive interest to the United States, were obtained:

For example:

(1)
An unsatisfactory article in the Geneva draft Charter regarding [Page 898] the treatment of foreign investment was eliminated. In its place an article was adopted which gives to the United States a basis for obtaining new commercial treaties and to safeguard investors against unfair treatment by complaining to ITO that benefits of the Charter are being nullified or impaired.
(2)
Under a reformulation of the exceptions to the rule of nondiscrimination, the International Monetary Fund was given basic control over the exception permitting limited resort to discriminatory application of quantitative restrictions for balance-of-payments reasons.
(3)
Greater latitude was provided for customs unions, free-trade areas, and transitional arrangements such as those required for the economic unification of Western Europe under the Marshall Plan.
(4)
The requirement in the Geneva draft Charter of prior approval by ITO for export subsidies on primary products was removed. The articles on subsidies were revised to permit new export subsidies on primary commodities provided that they are not used to acquire more than an “equitable share of world trade” in the particular product. Under certain circumstances, the ITO may decide what is an “equitable share of world trade”.
(5)
Provision was introduced exempting commodity agreements for national security purposes from the requirements of the Charter.
(6)
Provision was introduced to permit ITO to bring within the terms of the Charter, by majority vote, areas under Allied Military Occupation.
(7)
The right to bring nullification or impairment complaints was limited by a new provision specifying that such complaints cannot be based on the grounds that the general purposes and objectives of the Charter have not been realized.
(8)
An article was adopted to ensure a permanent seat on the Executive Board to the United States.

C. Proposals which would have materially changed the purposes of the Charter were defeated:

For example:

(1)
Amendments to give ITO control over international migration and the treatment of migratory labor; to require social security legislation; to write a labor code into the statement of purposes.
(2)
Amendments to oblige industrial creditor countries to supply capital funds, equipment and technical assistance to underdeveloped countries; to require ITO to recommend loans to the International Bank.
(3)
Amendment to deprive foreign investors of diplomatic protection.
(4)
Amendments to prevent countries in which investors live from taxing revenues from their foreign investments.
(5)
Amendments designed to confine the Organization to purely advisory functions.

D. Certain compromises were agreed to:

For example:

(1)
Permission for Members to appeal to ITO from a decision by the Contracting Parties denying admission to the General Agreement on Tariffs and Trade.
(2)
Allowance for “automatic” prior approval by ITO of the use of import quotas for the development of new domestic industries in two limited cases; namely, industries newly established during the war and industries using local raw materials for which foreign markets have been reduced or eliminated by actions of other governments. This right is limited to a minority of products not governed by Trade Agreements and, moreover, a protection can only be given for a period subject to limitation by ITO.
(3)
Permission to grant new tariff preferences on particular products for the development of new industries in neighboring countries, with prior approval by a majority of the Members of ITO but only if detailed criteria are satisfied. In cases where all criteria are not satisfied, a two-thirds majority vote is required.

4. Conclusion

The Havana Conference laid the foundations for an International Trade Organization based upon principles which the United States has long advocated. They were expressed at London in 1945 by the Chairman of the United States Delegation at the meeting of the Preparatory Committee in the following terms:

  • “(1) that existing barriers to international trade should be substantially reduced so that the volume of such trade may be large—larger, certainly, than it was between the two world wars;
  • “(2) that international trade should be multilateral rather than bilateral;
  • “(3) that international trade should be nondiscriminatory;
  • “(4) that prosperity and stability, both in industry and agriculture, are so intimately related to international trade that stabilization policies and trade policies must be consistent, each with the other;
  • “(5) that the rules that govern international commerce should be so drafted that they will apply with equal fairness and with equal force to the external trade of all nations, regardless of whether their internal economies are organized on the basis of individualism, collectivism, or some combination of the two.”

The Charter for an International Trade Organization is essential to complete the structure of economic cooperation under the United Nations. [Page 900] The problems of employment, trade barriers, cartels, commodity agreements, and international trade policy generally must be dealt with concretely and on a firm foundation. If this is not done, material progress in other fields of economic cooperation under the United Nations will become increasingly difficult. Five years of careful preparation and international negotiation demonstrate that the Charter concluded at Havana is the best and most practicable agreement for the purpose that can be devised at this stage of our international relations. Viewed against the record of the inter-war years, the accomplishment of the Havana Conference is truly remarkable.