Memorandum by George Bronz, United States Treasury, to the Head of the United States Delegation to the First Session of the Contracting Parties
I have examined Attachment A–VIII to Document TAC B–4/48 dealing with supercession of the provisions of GATT by the Havana Charter provisions. One of the reasons given for not favoring supercession until the effective date of the Charter is that the Havana Charter non-discriminatory provisions seem likely to be weaker than the corresponding GATT provisions. I suggest that the opposite is closer to the truth.
GATT contains Article XIV which corresponds with Article 23 of the Charter dealing with discrimination. Insofar as it corresponds with the Geneva text of Article 23, the GATT provision is stronger for the transitional period than the corresponding provisions of the Havana Article 23. However, Article XIV of the GATT contains paragraph 6 which is not included in the Geneva Charter. This provision allows Members an absolutely free hand in the field of discrimination until January 1, 1949, with a proviso that this period may be extended by majority vote of the contracting parties “for such further periods as they may specify in respect of any contracting party whose supply of convertible currencies is inadequate to enable it to apply” the Geneva rules of non-discrimination for the transitional period.
In view of the violent position taken by so many European countries against the Geneva transitional rules, I feel we must anticipate that if the GATT Article XIV extends beyond January 1, 1949, we will get an irresistible pressure to extend the absolutely free period until the Charter comes into force.
Thus, the net result of leaving the GATT provision in effect is to have completely unrestricted discrimination up to the time that the Charter enters into force. If we substitute the new Havana text of Article 23 at this time, we will have various powers in the contracting parties and in the Monetary Fund to limit discrimination at least to some extent. Furthermore, we would have a pretty good rule to prevent any expansion of discrimination beyond what existed on February 15, 1948.
In view of the foregoing I would recommend immediate supercession of Article XIV by Article 23 of the Havana Charter.
By this memo I am not intending to express any view on the more general question of supercession but simply want to point out how [Page 905] things stand on this one Article in which I am particularly interested. The changes in Article 21 and 24 of the Charter (Articles XIII and XV of the GATT) made at Havana are immaterial in this connection and it would not appear to make any difference to us whether or not those Articles are superceded.
- Folder “H—General Agreement on Tariffs and Trade—Miscellaneous”.↩