such allowances by normal methods. Also, he noted, the increase in the level of protection involved was small and did not seem to be of such a nature as to seriously damage the interests of the contracting parties or to alter the channels of trade. He assured the Contracting Parties, however, that his Government would adjust the tax as soon as possible.

At the 11th Session the French delegate informed the Contracting Parties that the draft of his country's Finance Act for 1957 provided for the reduction of the stamp tax from 3 percent to 2 percent. The Contracting Parties requested the French Government to inform them when the measure had been approved. As approved by the French National Assembly on December 29, 1956, however, the Finance Act continued the stamp tax at the rate of 3 percent.

At the 12th Session, when the United States complaint was again considered by the Contracting Parties, the French representative stated that, in the appropriation bill for 1958, his Government would again seek to have the tax rate reduced from 3 percent to 2 percent. The Contracting Parties noted this development and asked that they be informed when the proposed legislation became law.

French subsidization of exports of wheat and flour (art. XVI).--At its meeting in April 1958 the Intersessional Committee considered a complaint by Australia that France had been subsidizing exports of wheat and flour since 1953 and was thus obtaining more than an equitable share of the world trade in those products. Australia complained that the subsidy, which it maintained was contrary to the provisions of article XVI, had distorted the pattern of trade in wheat and flour, and that if France continued the subsidy Australia might be forced out of its traditional export markets for those commodities.

Since France had indicated during bilateral consultations with Australia that it did not intend to modify the subsidy, the Intersessional Committee referred the complaint to a panel. After hearing statements by both France and Australia, the panel adjourned so that the two contracting parties could consider the possibility of resuming their bilateral discussions.

Italian discrimination against imported agricultural machinery (art. III).--Early in their 12th Session the Contracting Parties examined a complaint by the United Kingdom concerning Italian discrimination against imported agricultural machinery. The United Kingdom was joined in the complaint. by Denmark and Sweden. Under a law of July 25, 1952, Italy had established a revolving fund to enable Italian farmers to purchase domestic tractors and other agricultural machinery. Since July 1, 1957, Italy has granted new loans for that purpose only at the rate permitted by the repayment of earlier loans. No funds are made available for the purchase of imported agricultural machinery. The representative of the United Kingdom stated that, besides the discrimination involved, the restriction impaired the value of the concession on wheeled tractors that Italy had granted to the United Kingdom in 1956, but which had not yet become effective. The Contracting Parties agreed that discussion between the interested contracting parties should continue and that, if necessary, the matter would be examined again by the Contracting Parties later in the session.

By the end of the 12th Session the problem had not been resolved. The Contracting Parties therefore agreed that if it were not settled before the next meeting of the Intersessional Committee, it would be

examined by that Committee. At the meeting of the Intersessional Commit

tee in April 1958 the United Kingdom representative reported that his

country and Italy had not reached agreement on the matter, and he requested that it be examined by a panel. This procedure was agreeable to the Italian representative. The Committee therefore referred the

complaint to a panel for examination.

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United States restrictions on imports of dairy products (art. XI).In 1951, at the Sixth Session of the Contracting Parties, Denmark and the Netherlands, supported by Australia, Canada, France, Italy, New Zealand, and Norway, complained that United States restrictions on imports of certain dairy products violated the provisions of article XI, which require the general elimination of quantitative restrictions on imports. These countries maintained that the restrictions in question impaired concessions that the United States had made under the General Agreement. They therefore contended that the complaining parties were entitled--in retaliation--to request suspension of certain of their obligations to the United States, as provided for in article XXIII. At their Seventh Session in 1952 the Contracting Parties authorized the Netherlands--in retaliation--to limit imports of wheat flour from the United States to 60,000 metric tons a year. At the Eighth Session in 1953 the Contracting Parties requested the United States to report 1/ annually on the import restrictions in question.

During 1957 the United States continued to restrict the importation of certain dairy products. At their 12th Session in 1957, therefore,

1/ See Operation of the Trade Agreements Program: 5th report, pp. 32-33; 6th report, pp. 43-45; 7th report, pp. 59-61; 8th report, pp. 59-62; 9th report, pp. 16-17; and 10th report, pp. 32-33.

the Contracting Parties authorized the Netherlands--as they have each year since 1952--to limit imports of wheat flour from the United States to 60,000 metric tons during the next calendar year. 1/

United States increase in rate of duty on spring clothespins

(art. XIX).--At the 12th Session of the Contracting Parties, Denmark and Sweden complained that on November 9, 1957, the United States withdrew the concession that it had granted on spring clothespins in the General Agreement, and increased the duty on them from 10 cents to 20 cents per gross. This action by the United States was taken, after an escapeclause investigation by the United States Tariff Commission, under article XIX of the General Agreement, which provides that a tariff concession on a product may be suspended, withdrawn, or modified when, as a result of the concession, the product is being imported in such increased quantities and under such conditions as to cause or threaten serious injury to the domestic producers of like or directly competitive products. Article XIX also provides for consultations with those contracting parties that have a substantial interest in exporting the product concerned. The Danish and Swedish representatives stated that their Governments had consulted with the United States on spring clothespins but had been unable to arrive at a satisfactory solution to the problem. These representatives, together with those of the United Kingdom and Belgium, contended that United States recourse to the provisions of article XIX was

1/ The United States report on its restrictions on imports of dairy products at the 12th Session was incorporated in the more comprehensive report that the United States submitted to the Contracting Parties under the terms of the sec. 22 waiver that the latter granted to the United States in 1955. That report is discussed in the section of this chapter that relates to waivers.

not justified. They stated that increased United States imports of spring clothespins, whether or not such imports were causing or threatening in jury to the domestic industry, could not be considered a result of the concession that the United States had granted in 1950 under the General Agreement, because the duty had been bound at the same rate

since January 1943. 1/ They further contended that the United States

action was not justified under article XIX, since the increase in imports could not be considered as unforeseen. 2/

The representatives of Sweden, Denmark, and Belgium proposed that the question be referred to the Intersessional Committee, which could appoint a panel to examine the issues involved. The United States representative stated that his Government was prepared to continue the bilateral discussions on spring clothespins and that his delegation had no objection to the appointment of a panel to examine the issue. The Contracting Parties therefore agreed to follow the proposed procedure.

At the meeting of the Intersessional Committee in April 1958, the Danish and Swedish representatives reported that their discussions with the United States had produced no positive results. Since the consultations were to continue, however, they did not wish the Committee to consider their complaint at that time. Both Denmark and Sweden reserved their right, subject to the outcome of the consultations, to refer the matter to the Contracting Parties at the 13th Session. The Intersessional Committee noted the Danish and Swedish reservation and therefore agreed to postpone consideration of the complaint.

The United States reduced the rate of duty on spring clothespins to 10 cents per gross and bound it at that rate pursuant to the 1943 bilateral trade agreement with Mexico.

2/ Art. XIX of the General Agreement requires the increase in imports to be unforeseen. Sec. 7 of the United States Trade Agreements Extension Act of 1951, as amended, however, includes no such requirement.