Senator MILLIKIN. No. You are dead right. And yet you have incorporated a very important part of it in your Geneva agreements, which becomes a part of your reciprocal-trade system. And you are telling me that you do not see any connection between that and the extension of this system, or the terms of the extension.

Mr. THORP. It is not the incorporation in this agreement of the ITO as such. This is a part of ITO which stems from the same experience and background.

Senator MILLIKIN. Mr. Thorp, please go back and read our hearings, which were devoted to the relation of these two subjects, in which it was freely confessed that there would be importations out of ITO into the reciprocal-trade system. It is all in the record. That is why we had the hearing. You were treated courteously, and you were treated in good faith. And I suggest again that you have not been acting in good faith since then.

The CHAIRMAN. Are there any further questions, Senator?

Senator MILLIKIN. No; except that I want to get at Mr. Thorp again, pending my inquiries as to when ITO will be over here.

The CHAIRMAN. We will be obliged, Mr. Thorp, to ask you to come back, because some of the other Senators have some questions.

The committee will recess until 2:30, if that is agreeable with the committee.

Mr. THORP. Do you want me at 2:30?

Senator MILLIKIN. Yes, sir.

The CHAIRMAN. We will recess at this time until 2:30.

(Thereupon, at 12:40 p. m., the hearing was recessed to reconvene at 2:30 p. m. of the same day.)

AFTERNOON SESSION

(The hearing was resumed at 2:30 p. m.) The CHAIRMAN. We will come to order.

Mr. Thorp, are you prepared to make an explanation of the bill itself, just as it stands? Some of the other members of the committee have not come in yet, and perhaps we might do that now. It is not a very long bill.

STATEMENT OF HON. WILLARD L. THORP, ASSISTANT SECRETARY

FOR ECONOMIC AFFAIRS, DEPARTMENT OF STATE, ACCOMPANIED BY WINTHROP G. BROWN, DIRECTOR OF THE OFFICE OF INTERNATIONAL TRADE POLICY, DEPARTMENT OF STATE

Mr. THORP. In order to make sure that it is correct and in full detail, I think Mr. Brown could do it more accurately.

The CHAIRMAN. We will switch, then, to Mr. Brown, and if you will, we will make an explanation of this bill, just as it came from the House.

Mr. BROWN. Section 1 is the title. Section 2 repeals the Trade Agreement Extension Act of 1948. Section 3 extends the period under which the President would be authorized to negotiate trade agreements from June 12, 1948, until June 12, 1951.

Section 4 deletes from the preamble of Section 350 of the Tariff Act of 1930, a parenthetical phrase which is obsolete and no longer applies to conditions of today.

Section 5 changes the reference in section 350 to the War and Navy Departments, to the National Military Establishment, to reflect the unification which took place last year.

The CHAIRMAN. Is the Department of Labor mentioned?

Mr. BROWN. No, sir. As a matter of administrative practice and by Executive order, Labor is however included.

The CHAIRMAN. The Secretary of Labor has made the suggestion, in a letter which I put in the record here and asked that it go at the end of the day's proceedings, a suggestion that Labor ought to be named specifically in the act. Do you know whether he made that suggestion in the House?

Mr. BROWN. Yes, sir, that was also included in his letter to Mr. Doughton.

The CHAIRMAN. You may proceed.

Mr. BROWN. Section 6 is a technical paragraph which has the effect of permitting the President to proclaim some negotiated increases in rates of duty, under certain circumstances, where he would not be able to do it now. The reason for that is that the present statute says that no rate of duty may be increased or decreased more than 50 percent from the level applying on the 1st of January 1945. Also, we have agreements with other countries that none of us will increase the absolute margin of preferences above present levels.

Now, if you take those two limitations together, it has proved impossible in at least two cases already for the President to proclaim an increase in the United States rate of duty which was negotiated with another country, because you could not raise the Cuban rate more than 50 percent.

This is intended to permit that to be done. It gives no authority to reduce the duty any more than below the 50 percent, but it does enable increases in certain cases, which could not take place now. The CHAIRMAN. It works up but not down?

Mr. BROWN. That is right.

The CHAIRMAN. All right, sir.

Senator MILLIKIN. May I ask a question, Mr. Chairman?

Under the proposed law, what is your range of negotiation?

Mr. BROWN. The same as it was under last year's law, sir; 50 percent. Senator MILLIKIN. There is no new base?

Mr. BROWN. That is right.

Senator MILLIKIN. It is exactly the same base?

Mr. BROWN. Yes, sir.

Senator MILLIKIN. Up and down from the same base as we had in last year's act?

Mr. BROWN. Yes, sir.

Senator MILLIKIN. May I make a request, Mr. Chairman. In connection with the examination which may come on the ITO provisions in the reciprocal trade agreements, I would like to ask that we have a comparative chart gotten up that will show the provisions in ITO and the related provisions in your Geneva agreement. It is just a scissors and pasting job.

The CHAIRMAN. You can do that, can you?
Mr. THORP. Yes, sir; we can.

THE GENERAL AGREEMENT ON TARIFFS AND TRADE AND PARALLEL PROVISIONS OF THE HABANA CHARTER FOR AN INTERNATIONAL TRADE ORGANIZATION There follows a comparison between the complete text of the General Agreement on Tariffs and Trade (GATT) (showing amendments in force for the United States as from January 1, 1949) and the identical or similar portions of the text of the Habana Charter for an International Trade Organization (ITO). GATT is being applied provisionally by the 23 countries which negotiated it, in accordance with the protocol of provisional application of the agreement which provides that part II of the agreement (arts. III to XXIII, inclusive) shall be applied to the fullest extent not inconsistent with existing legislation. Under the protocol any government is free to withdraw its provisional application on the expiration of 60 days from the day on which written notice of such withdrawal is received by the Secretary-General of the United Nations. The Charter for the International Trade Organization is not in effect.

In the comparison which follows the complete text of the GATT is shown, but only parallel provisions of the ITO Charter are reproduced opposite the GATT provisions. The ITO Charter contains also the following chapters and articles not corresponding to any provisions of GATT and not shown in the comparison below:

Chapter I. Purpose and objectives, one article.

Chapter II. Employment and economic activity, six articles.

Chapter III. Economic development and reconstruction, six articles in addition to articles 13 and 14, reproduced herein.

Chapter V. Restrictive business practices, nine articles.

Chapter VII. The International Trade Organization, 20 articles in addition to article 21, reproduced herein.

Chapter IX. General provisions, two articles in addition to those shown. Annex E. List of Portuguese territories referred to in paragraph 2 (b) of article 16.

Annex H. List of territories covered by preferential arrangements among Colombia, Ecuador, and Venezuela referred to in paragraph 2 (e) of article 16. Annex I. List of territories covered by preferential arrangements among the republics of Central America referred to in paragraph 2 (e) of article 16.

Annex J. List of territories covered by preferential arrangements between Argentina and neighboring countries referred to in paragraph 2 (e) of article 16. Annex L. Relating to article 78.

NOTE. In the following comparison, the provisions of annex I of GATT and relevant portions of annex P of the ITO Charter are shown following the articles to which the provisions relate.

GENERAL AGREEMENT ON TARIFFS AND

TRADE

The Governments of the Commonwealth of Australia, the Kingdom of Belgium, the United States of Brazil, Burma, Canada, Ceylon, the Republic of Chile, the Republic of China, the Republic of Cuba, the Czechoslovak Republic, the French Republic, India, Lebanon, the Grand Duchy of Luxemburg, the Kingdom of the Netherlands, New Zealand, the Kingdom of Norway, Pakistan, Southern Rhodesia, Syria, the Union of South Africa, the United Kingdom of Great Britain and Northern Ireland, and the United States of America:

Recognizing that their relations in the field of trade and economic endeavor should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods;

Being desirous of contributing to

ITO CHARTER