require the chief representative to make an annual report to the President on OTC activities, for transmittal to the Congress; the report was to give particular attention to the effect of such activities on United States labor, industry, and agriculture. Another provision of House bill 6630 that had no counterpart in House bill 5550 would require the President to appoint an advisory committee of not more than six members representative of the interests of United States labor, industry, agriculture, and the public, to advise and consult with the chief representative on matters coming before the OTC that affect the United States.

The remaining provisions of House bill 6630 followed closely those of House bill 5550 as amended by the House Committee on Ways and Means during the second session of the 84th Congress. Specifically, these provisions made it clear that nothing in the bill should be construed to enlarge or otherwise alter the President's authority to negotiate trade agreements; to repeal or modify by implication or otherwise any existing legislation; to constitute approval or disapproval by the Congress of the tariff and trade obligations provided for in the General Agreement on Tariffs and Trade; or to commit the United States to enact any specific legislation regarding any matter referred to either in the Agreement on the OTC or in the General Agreement. These provisions of the bill also stated that it was the understanding of the Congress that the functions. of the OTC should be limited to the administration of the General Agreement and the facilitating of intergovernmental cooperation solely in the field of trade; that the OTC should not be brought into a specialized agency relationship with the United Nations; and that neither the President nor any other person or agency should accept on behalf of the United States any amendment to the Agreement on the OTC unless the Congress by law authorized such action.

By June 30, 1957, the end of the period covered by this report, the House Committee on Ways and Means had not reported on the proposed legislation authorizing United States membership in the Organization for Trade Cooperation.

Chapter 2

Developments Relating to the Operation of the General Agreement on Tariffs and Trade

INTRODUCTION

The General Agreement on Tariffs and Trade (GATT), the most important and most comprehensive agreement that the United States has entered into under the provisions of the Trade Agreements Act, is a multilateral agreement in which the United States and 34 other countries now participate. The General Agreement consists of two parts: (1) The so-called general provisions, which consist of numbered articles that set forth rules for the conduct of trade between contracting parties 2 and (2) the schedules of tariff concessions that have resulted from the various multilateral negotiations sponsored by the Contracting Parties. On June 30, 1957, the following 35 countries were contracting parties to the General Agreement: Australia, Austria, Belgium, Brazil, Burma, Canada, Ceylon, Chile, Cuba, Czechoslovakia, Denmark, the Dominican Republic, Finland, France, the Federal Republic of Germany, Greece, Haiti, India, Indonesia, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Nicaragua, Norway, Pakistan, Peru, the Federation of Rhodesia and Nyasaland, Sweden, Turkey, the Union of South Africa, the United Kingdom, the United States, and Uruguay.

At the end of the period covered by this report, the General Agreement embraced the original agreement concluded by the 23 countries that negotiated at Geneva in 1947; the Annecy Protocol of 1949, under which 10 additional countries acceded to the agreement; the Torquay Protocol

1 For the earlier history of the General Agreement, see Operation of the Trade Agreements Program: First report, pt. II, ch. 3; second report, pp. 19-21; third report, pp. 31-32; and fifth report, pp. 23-26.

"The term "contracting parties,” when used without initial capitals (contracting parties), refers to member countries acting individually; when used with initial capitals (Contracting Parties), it refers to the member countries acting as a group.

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of 1951, under which 4 other countries acceded; and the Protocol of Terms of Accession of Japan, under which that country acceded in 1955. Indonesia, on behalf of which the Netherlands negotiated concessions at Geneva in 1947, became an independent contracting party in 1950. At one time or another during the period commencing with the Geneva Conference in 1947 and ending June 30, 1957, a total of 39 countries became contracting parties to the General Agreement. Four of these countries, the Republic of China, Lebanon, Liberia, and Syria, all of which acceded to the agreement as a result of negotiations at Geneva in 1947 or at Annecy in 1949, have since withdrawn from it.

Article XXV of the General Agreement provides that the Contracting Parties shall meet from time to time to further the objectives of the agreement and to resolve operational problems that may arise. Between the Geneva Conference in 1947 and June 30, 1957, the Contracting Parties met in 11 regular sessions. From the time that the ad hoc Committee for Agenda and Intersessional Business-now called the Intersessional Committee was established in 1951, it has held one or more meetings each year.

The 11th Session of the Contracting Parties, which was held at Geneva from October 11 to November 17, 1956, was attended by representatives of 33 of the 35 contracting parties to the General Agreement. Two contracting parties-Haiti and Uruguay-did not send delegates to the 11th Session; Haiti was represented by an observer, instead of a delegate, and Uruguay did not send either a delegate or an observer. Represented by observers were the following 15 countries that were not contracting parties to the agreement: Argentina, Afghanistan, Colombia, Ecuador, Egypt, Iran, Israel, Laos, Libya, Panama, Portugal, Switzerland, Tunisia, Venezuela, and Yugoslavia. Also represented by observers were the United Nations, the International Labor Organization, the Food and Agriculture Organization, the International Monetary Fund, the Organization for European Economic Cooperation, the Council of Europe, the European Coal and Steel Community, and the Customs Cooperation Council.

The following discussion of the principal developments relating to the General Agreement during the period covered by this report is divided into four sections: (1) Items arising out of the operation of the agreement; (2) tariffs and tariff negotiations; (3) other developments relating to the agreement; and (4) the status and administration of the agreement. The first section-items arising out of the operation of the agreementconsiders deviations from the General Agreement by contracting parties either under specific provisions for such deviations or as breaches of the rules of the agreement. These deviations may be divided into the following four categories: (a) Deviations with respect to which interested contracting parties have complained to the Contracting Parties under the

the provisions of article XXIII;3 (b) waivers of obligations that the Contracting Parties have granted under article XXV; (c) releases from obligations that the Contracting Parties have authorized under article XVIII; and (d) import restrictions that contracting parties impose for balance-of-payments reasons under the provisions of articles XII and

XIV.4

ITEMS ARISING FROM THE OPERATION OF THE

GENERAL AGREEMENT

Article XXIII of the General Agreement provides that if any contracting party considers that any benefit accruing to it under the agreement is being nullified or impaired by the action of another contracting party, it may bring the alleged impairment to the attention of the contracting party concerned. If this action does not result in an adjustment that is satisfactory to both contracting parties, the matter may be referred to the Contracting Parties for examination and appropriate recommendation. Matters brought before the Contracting Parties in this manner are known as complaints. At their 11th Session in 1956, the Contracting Parties considered a total of 9 complaints; at its meeting in April 1957, the Intersessional Committee considered 1 additional complaint. By June 30, 1957, the end of the period covered by this report, 1 of these complaints had been settled. One additional complaint that was made at the 10th Session in 1955-that on United States (Territory of Hawaii) regulations on imported eggs was not discussed at the 11th Session and remains unsettled.

5

Complaint Settled by June 30, 1957

In August 1956 Chile placed in effect a new tax law, one provision of which establishes a progressive tax on automobiles. The tax is levied on five categories of motor cars; the third, fourth, and fifth categories apply to cars valued at more than $1,500 c.i.f. As all automobiles imported into Chile from the United States are valued at more than $1,500, the United States complained to the Contracting Parties at their 11th Session that the new tax impaired the value of the concession that Chile had granted to it on automobiles.

* Unless otherwise specified, the numbers of the articles of the agreement, as used in this chapter, are those of the unamended agreement. The amended agreement was not yet in force as of the end of the period covered by this report.

For the texts of discussions, resolutions, and reports of the 11th Session, see Contracting Parties to the General Agreement on Tariffs and Trade, Basic Instruments and Selected Documents: Fifth Supplement, Decisions, Reports, etc. of the Eleventh Session, Procedures and Index; Sales No.: GATT/1957-1, Geneva, 1957.

* See Operation of the Trade Agreements Program (ninth report), pp. 15–16. 'Cost, insurance, and freight.

Since the United States and Chile had been consulting on this matter during the 11th Session, the United States requested only that the Contracting Parties note that the consultation was taking place. Because of Chile's assurances that legislation to correct the impairment of the concession would be proposed to the Chilean Congress, the United States requested no formal action at that time. However, the United States did request that the Contracting Parties place the matter on the agenda for the 12th Session, and they agreed to do so.

At the meeting of the Intersessional Committee in April 1957, the United States representative announced that Chile had rectified the matter of the licensing tax to the satisfaction of the United States and that, accordingly, the United States considered the complaint settled.

Complaints Not Settled by June 30, 1957

Brazilian internal taxes (art. III)

The complaint regarding Brazil's internal "consumption" taxes (impostos do consumo), which that country applies to certain domestic and imported commodities, has been on the agenda of the Contracting Parties since 1949. These consumption taxes, which are substantially higher on certain imported products than they are on like products of domestic origin, violate the provisions of article III of the General Agreement, which require that a contracting party refrain from imposing upon imports of another contracting party internal taxes or other charges in excess of similar charges levied on like products of domestic origin. Over the years, the Brazilian Government has made continued efforts to obtain approval by the Brazilian Congress of legislation that would eliminate the discriminatory aspects of its consumption taxes.

The status of Brazil's consumption taxes was discussed again at the 11th Session of the Contracting Parties. According to the Brazilian representative, the Brazilian legislature had not acted on the matter of the consumption taxes because it had been considering the adoption of an entirely new fiscal code. Pending legislation for revision of the Brazilian excise-tax law provides that the same rates and methods of computation will be applied to both imported and domestic products. Adoption of such legislation would remove the discriminatory aspects of the law and thus remove the basis of the complaint regarding Brazil's consumption taxes. The Contracting Parties, therefore, took no further action on the matter at their 11th Session, but expressed the hope that the question would soon be settled.

French compensatory tax on imports (art. II)

At their Ninth Session in 1954-55, the Contracting Parties considered "See Operation of the Trade Agreements Program: Seventh report, pp. 37-39; eighth report, p. 39.