ject may properly find a place in a Charter whose primary purpose is the expansion of international trade. In article 3 each member agrees to take measures, appropriate to its own political and economic institutions, designed to maintain full and productive employment within its territory. This objective is consistent with the policy and purpose of the Employment Act of 1946, a postwar program laid down by the United States Congress for this country. Such measures must, of course, be compatible with the Charter, and the member must try to avoid spreading its depression to other countries. If a depression occurs in one country while others remain relatively prosperous, its imports are likely to drop while its exports temporarily remain high. Since this creates difficulties for the other countries, chapter II provides that the member in question shall make its full contribution toward correcting the situation and that other members shall also take appropriate action to avoid a general shrinkage of world trade. Finally, the chapter provides that each member shall seek to eliminate unfair labor standards, particularly in its export industries, and that appropriate consultation and cooperation with the International Labor Organization will be established. 2. CHAPTER III. ECONOMIC DEVELOPMENT AND INTERNATIONAL INVESTMENT It is a significant fact that more than two thirds of the world's two billion people live in countries which consider that they are underdeveloped relative to the industrialized nations of western Europe and North America. The Charter recognizes that the development through sound measures of economic and industrial resources in underdeveloped countries will raise standards of living and expand international trade. Accordingly, provision is made for Iro, in cooperation with other international agencies, to advise members as to their plans for economic development and help them procure further advice and assistance. Also, members within whose boundaries there exist disposable capital funds, equipment, and technology agree not to impose unreasonable or unjustifiable impediments that would prevent other members from obtaining on equitable terms such facilities for their economic development. The general economic progress and industrialization of underdeveloped countries, the Charter recognizes, would be stimulated if private foreign investment were encouraged in these areas through proper protection and security. Accordingly, members agree under article 11 to take no unreasonable or unjustifiable action injurious to the rights or interests of nationals of other members in the enter prise, skills, capital, arts, or technology which they have supplied. Members also agree, in article 12, to provide adequate security for existing and future investments, but they may take measures to ensure that such investments are not used as a basis for interference in internal political affairs. Likewise, members retain full right to determine the conditions under which new investments, if any, may be made by foreign nationals. They have the further right to impose, on just terms, requirements as to the ownership of existing as well as future investments. None of the above provisions, however, can override any obligations toward foreign investors that a member may assume under any other international agreement. If, for example, a treaty between the United States and another member imposes greater limitations than does the charter upon freedom of governmental action toward investments owned in either country by citizens of the other, these treaty obligations will prevail. In this regard, article 12 also provides that a member will, if requested by another member, participate in negotiations for an agreement relating to investment opportunities and security for investments. In summary, articles 11 and 12 require that no unreasonable or unjustifiable action can be taken toward foreign investments, that ownership requirements must be imposed on just terms, and that in general the treatment of foreign investors must be reasonable. If disputes occur between members concerning the application of these requirements, such as the determination of just compensation to foreign owners whose property has been nationalized, the Iro has power to make decisions, and the issue may be further carried to the International Court of Justice under appropriate circumstances. (These procedures are described in the following section of this Guide). In this manner, principles of equity and of international law may be applied to the highly complex and varied circumstances of individual cases. Finally, Iro may formulate and promote agreement among members on a foreign investment code which would be more detailed than the provisions of the Charter concerning this subject. 3. CHAPTERS VII, VIII, AND IX. THE ORGANIZATION An organization to administer the provisions of the Charter is provided in chapter VII. It is governed by a general conference consisting of all members, each of whom has one vote and none the right of veto. Many functions of the conference are, or may be, delegated to an executive board consisting of 18 members, including as permanent members the eight states of chief economic importance. Under this arrangement the United States would have a permanent seat on the Board; among the remaining seven entitled to permanent seats would initially be Canada, the United Kingdom, France, Benelux (the customs union of Belgium, Netherlands, and Luxembourg), China, and India. Commissions, composed of highly trained experts, will be established to advise the Board and the conference on the complex technical problems which will arise in Iro's various fields of activity. One of the major functions of the organization is set forth in chapter VIII. It relates to the settlement of differences between members, without resort to "economic warfare" which frequently results from retaliatory measures taken by one country against the actions of another. Article 92 provides that members will not have recourse to such unilateral measures and will settle their differences in accordance with the procedures provided for in the Charter. They will consult with each other when necessary and may use the good offices of ITO to help settle their differences. If a dispute cannot be settled by agreement between the parties, any member concerned may refer it to the Executive Board. The Board must then investigate and decide whether a complaining member has in fact been injured through a loss of benefits under the Charter because of action or nonaction of another member. The Board must next determine whether the action or nonaction was in violation of obligations assumed by members under the Charter. If an obligation has been breached, the Board may request the offending member to take the steps necessary to conform to its obligation. If no obligation has been breached, the Board may make recommendations to the members to help them adjust their differences. In either case the Board may also release the injured member from obligations or concessions granted to the offending member, to the extent that benefits under the Charter have been nullified or impaired by the action of the offending member. Members aggrieved by the action of the Board may appeal to the conference which can confirm, modify, or reverse the Board's action. Finally, any decision by ITO may be brought, at the request of any member whose interests are prejudiced, to the attention of the International Court of Justice by a request for an advisory opinion under the Statute of the Court. The second main function of Iro concerns the administration of provisions which set forth qualifications or exceptions to the basic rules of the Charter. As noted under section III of this Guide, there are numerous instances calling for the exercise of discretion by Iro, in accordance with prescribed standards, in order that it may be determined whether a member may or may not take certain proposed measures. This introduces a necessary and desirable element of flexibility into the Charter and enables it to be adapted to the numerous and changing conditions of the modern world. |