Summary Memorandum for the Government by the Department of External Affairs
'Instructions for the Delegation to the United Nations Conference on Trade and Employment' with paragraph seven of the full memorandum

1. The United Nations Conference on Trade and Employment which opened in Havana on the 21st November, 1947, has before it a draft charter of a World Trade Organisation drawn up by the Preparatory Committee of the United Nations at two sessions held in London in October–November, 1946, and in Geneva from April to October, 1947, respectively. The Charter lays down certain objectives for the Organisation and certain principles to be observed in the realm of international trade with a view to expanding world trade. Members of the Organisation will be under an obligation to negotiate about the reduction of tariffs and the elimination of preferences.
2. Thirteen States, including Ireland, not members of the United Nations, have been invited to attend the Conference without voting rights. In view of the important role which the International Trade Organisation, if established, will play in international trade, it is desirable that Ireland, which took part in two Commonwealth meetings held in London prior to the two sessions of the Preparatory Committee, should be represented at the Conference and a delegation has accordingly been appointed. ¹
3. It is now desired that the Government determine the instructions which the delegation should follow at the Conference. It is suggested that, taking its stand on the fact that the Charter provides for national and international action designed to foster and assist industrial and general economic development in countries in an early stage of industrial development and that Ireland is still in a state of industrial under-development, the delegation should oppose and endeavour to have amended any clauses in the draft Charter which are contrary to the economic policy of the Government. Draft instructions on this point and on a number of provisions of the Charter of particular interest to this country are set out in paragraph 7.

[The following is paragraph seven of the main memorandum]

7. It is desired that the Government determine the instructions which the delegation should follow at the Conference and it is suggested that these instructions might be as follows:-

1. By paragraph 2 of Article 1 of the Draft Charter the States parties to the Charter pledge themselves to promote national and international action designed 'to foster and assist industrial and general economic development, particularly in those countries which are still in the early stages of industrial development ...'. The delegation should take its stand on this objective of the Charter and point out that Ireland is a country which is still in a state of industrial underdevelopment, that it already imports to the limit permitted by balance of payments considerations and that the best contribution which Ireland can make towards an expansion of world trade is by an expansion of our national income by means of the fullest possible development of our productive capacities – the attainment of this objective – and the elimination of unemployment – necessitating, inter alia, greatly increased industrial development. The delegation should, using this argument, oppose and endeavour to have amended any clauses in the draft Charter which are contrary to the economic policy of the Government.
2. The following points in the Draft Charter should receive special attention from the delegation.
• Our right to continue to impose purely revenue duties must be safeguarded and the question should be clarified as to whether and to what extent we might be required under the Charter to negotiate on the reduction of such duties.
• Article 12 (International investment for economic development) does not seem to interfere with the Control of Manufactures Act. The delegation should confirm that this interpretation is correct and ensure that the relevant provision, as finally drafted, is in accordance with Government policy. It would be well to bear in mind in this context that a differential stamp duty is levied on the transfer of property to non-residents.
• Articles 13 and 14 and Article 20: These Articles which limit severely the use of quantitative restrictions on imports are important from our point of view. While it is unlikely that the Conference will agree to the complete disappearance of provisions of this kind, the delegation should use every effort, and support every initiative, to establish the right to resort to quantitative restrictions in the case of a country with an under-developed economy or where a country is committed to an agricultural policy which involves the maintenance of producers’ incomes at a reasonable and stable level.
• Articles 16 and 17: these articles provide for the grant of most-favoured nation treatment by each member of the Organisation to all the others and for negotiations designed to reduce tariffs and eliminate preferences. If we join the Organisation we will be liable to be called upon in due course to enter into negotiations for these purposes. While it is conceivable that we would be unable to agree to such reduction of tariffs as would be satisfactory to the organisation and may thereby forfeit the tariff benefits granted by other States, it is unlikely that it will be possible to modify these provisions. The delegation should, however obtain full information on the precise implications of Article 17 and endeavour to limit, so far as possible, any difficulties it may present from our point of view.
• Article 18 (National treatment of internal taxation and regulation) contains two provisions which are in conflict with our present or normal practice in certain respects. Paragraph 1 provides that the ‘products of any member country imported into any other member country shall be exempt from internal tax and other internal charges of any kind in excess of those applied directly or indirectly to like products of national origin’. This would cut across our present practice of e.g. applying a differential rate of road tax to motor-cars assembled in this country and motor-cars imported in a complete form from abroad.

  Paragraph 3 forbids regulations requiring ‘that any specified amount or proportion of the product in respect of which such regulations are applied must be supplied from domestic sources’ (sub-paragraph (a)) and forbids restrictions on ‘the mixing, processing and the use of a product of which there is no substantial domestic production with a view to affording protection to the domestic production of a directly competitive or substitutable product’ (sub-paragraph (b)). These provisions would appear to run counter to our pre-war wheat and maize meal mixture schemes and might interfere with the distribution scheme for industrial alcohol. Paragraph 4 of the same article, however, exempts from the provisions of paragraph 3 ‘measures of internal quantitative control in force in any member country on 1st July 1939 or 10th April 1947 at the option of that member’, except that such measures shall not be modified to the detriment of imports and shall be subject to negotiations for their limitation, liberalisation or elimination. The delegation should get clarification of the precise scope of Article 18 and should endeavour to have it amended so as to avoid its restricting the policy of the Government in certain matters.

• Article 20 (General elimination of quantitative restrictions). This Article tends to restrict the use of quantitative restrictions not only for imports (vide (c)) but also for exports. It would thus interfere with our present practice of e.g. making the export of cattle to countries other than Great Britain and the Six Counties dependent on the issue of a licence. It would hardly, however, be a source of special embarrassment to this country, as the termination of the present practice would affect primarily Great Britain, and to have to put an end to that practice under the Charter would be a valid argument vis-à-vis the British authorities for doing so.
• Articles 21-24 (Restrictions to Safeguard the Balance of Payments): It is desirable that the receipt of aid from the USA under the European Recovery Programme should not of itself preclude a member from imposing import restrictions designed to safeguard its balance of payments either generally or with the USA or other individual countries. The delegation should support any initiative in this direction taken by the States represented at the Paris Conference on European Economic Co-Operation and also any proposals made by such States to ensure that the Charter is in keeping with the principles enunciated in the report of that Conference.
• Section C (Articles 25-29) relates to subsidies. Article 25 makes it obligatory for any member granting or maintaining ‘any subsidy, including any form of income or price support, which operates directly or indirectly to increase exports of any product from or reduce imports of any product into its territory’ to notify the Organisation of the nature and extent of the subsidization and the circumstances making it necessary and, where it is shown that serious prejudice to the interest of another member is caused or threatened by such subsidization, to discuss with the other member or members concerned or with the Organisation the possibility of limiting the subsidization. This Article and Article 27 would affect our stated policy of guaranteed prices to farmers for certain products (e.g. wheat, barley, milk, pigs, sugar beet). It would, however, also apply to the agricultural price policies of Britain and the USA, and other States. In both Britain and the USA there is an elaborate system of price guarantees to farmers which are implemented by subsidies and other devices. It seems, therefore, that on these provisions the British and American attitude may not be fundamentally different from ours. The delegation should bear this point in mind.

  Both Article 25 and the subsequent Articles in the Section would seem to be capable of restricting our use of the system of subsidy applied before the war in respect of the export of certain agricultural products. The Delegation should endeavour to have such exceptions to the present provisions written into the Charter as will permit the continuance of that system in the interests of full employment in the country and full utilization of the country’s agricultural productive capacity.

• Section D (Articles 30-31) deals with State trading. It was originally introduced into the Draft Charter to meet the position of countries like the Soviet Union all, or the greater proportion, of whose trade is conducted on a State basis. The British, however, are using a system of State trading in the purchase of a very large number of commodities and, in so far as the Section would tend to curb the misuse of such a system and eliminate the risk of the prices of our exports to Great Britain being fixed officially at artificially low levels, it is to be welcomed. Article 31, on the other hand, seems capable of cutting across our policy in the matter of marketing of sugar and possible future arrangements for central purchase of grain and other commodities from abroad as it lays down, inter alia, that ‘the price charged by the import monopoly for the imported product in the home market shall not exceed the lending cost plus the maximum import duty negotiated, under paragraph 2 of this Article, or notified to the Organisation, under paragraph 3 of this Article, after due allowance for internal taxes, transportation, distribution and other expenses incidental to the purchase, sale or further processing, and for a reasonable margin of profit.’ Paragraph 2 provides for negotiation for the establishment of a maximum rate of duty so as to limit or reduce any protection that might be afforded, through the operation of a monopoly, to the domestic producers of a monopolised product or to prevent any limitation of imports to an extent inconsistent with the provisions of the Charter. Paragraph 3 provides that, ‘where a maximum import duty is not negotiated under paragraph 2, the member concerned must make public or notify the Organisation of the maximum import duty which it will apply in respect of the product concerned’. Bearing in mind that this Article, as it stands, might interfere with measures necessary to give effect to a policy of guaranteed and stable prices for home produce the delegation should support any initiative to render its provisions more innocuous from our viewpoint. The argument based on the maintenance of full employment and the full utilization of our agricultural capacity and the increased industrial development of the country would, of course, be relevant here. Should suitable amendments not be adopted the delegation should endeavour to ascertain from the British and Americans, who will, it is believed, be presented with a somewhat similar problem to that facing us, how they propose to solve it.
• Article 34, (Valuation for Customs Purposes) as it stands is acceptable to the Revenue Commissioners. The delegation should consult them if it is proposed to change it.
• Article 37 (Publication and Administration of Trade Regulations). It is felt that, while the very great number of administrative regulations relating to tariffs, etc., is not normally available to the public in a convenient form, our practice is unlikely to give rise to objection. We conform technically with the provision in paragraph 2 requiring official publication beforehand of an increase in a rate of duty or other import charge, etc.
• Chapter VI (Inter-Governmental Commodity Agreements) would appear not to cover such bilateral arrangements as we have with Great Britain. It would, however, be well for the delegation to be alive to any attempt to subject arrangements of this kind to the sanction of the Organisation.>
• Articles 71-74 deal with the composition, system of voting, sessions, etc., and powers and duties of the Conference which will be the main organ of the Organisation. There are, at present, three alternatives in the draft Charter in regard to voting. The delegation should support the first alternative which provides for one vote for each member. If, however, a system of weighted voting seems likely to be adopted the delegation should favour that principle of weighting which seems likely to give a proportionate voice to countries whose interests are similar to our own. Among the considerations which should be borne in mind is that, in view of the traditional pattern of our foreign trade, any disputes in which we are directly concerned are likely to be with Britain and that in the adjudication of such disputes by the Organisation any preponderance in voting power possessed by Britain would count against us.
• Articles 75-78 are concerned with the Executive Board, which will be responsible for the execution of the policies of the Organisation, will exercise the powers and perform the duties assigned to it by the Conference, will supervise the activities of any Commissions set up by the Conference and will prepare the provisional agenda of such Conference. The most important matter to be decided at Havana is the composition of the Board. The Conference will have before it three alternative drafts. The delegation should support the draft which seems best to provide for the possibility of Ireland becoming occasionally a member of the Board. Of the three drafts immediately before the Conference, alternative B, which provides for fifteen members and does not automatically confer member-
  ship on the eight most important trading countries, seems best to fulfil this condition.
• Staff of International Trade Organisation: The delegation should be opposed to any proposal to give inordinately high salaries to the staff of the Organisation. It should support steps to make the salaries of employees of international organisations uniform so as to prevent competition among them for personnel.
• Contribution to Organisation: The delegation should see to it that the contribution to be paid by Ireland, if a member of the Organisation, is not set unduly high.
• The delegation should ensure that we appear as ‘Ireland’ in the records of, and all documents emanating from, the Conference and that the heading to Annex A (list of territories between which a particular system of preferences is in force) remains unchanged.
• The delegation will have no authority to accept the new Charter. It will endeavour to secure that the final date for acceptance (Article 68) is so fixed that the Government will have due opportunity of considering the final text.

[matter omitted]