Copyright 1995 NLCIFT
BH209.txt
THE GENERAL AGREEMENT ON TARIFFS AND TRADE (Oct. 30, 1947)
(as amended through 1966)
TABLE OF CONTENTS
Preamble
PART I
Article
I General Most-Favoured-Nation Treatment
II Schedules of Concessions
PART II
III National Treatment on Internal Taxation and Regulation
IV Special Provisions relating to Cinematograph Films
V Freedom of Transit
VI Anti-dumping and Countervailing Duties
VII Valuation for Customs Purposes
VIII Fees and Formalities connected with Importation and
Exportation
IX Marks of Origin
X Publication and Administration of Trade Regulations
XI General Elimination of Quantitative Restrictions
XII Restrictions to Safeguard the Balance of Payments
XIII Non-discriminatory Administration of Quantitative
Restrictions
XIV Exceptions to the Rule of Non-discrimination
XV Exchange Arrangements
XVI Subsidies
XVII State Trading Enterprises
XVIII Governmental Assistance to Economic Development
XIX Emergency Action on Imports of Particular Products
XX General Exceptions
XXI Security Exceptions
XXII Consultation
XXIII Nullification or Impairment
PART III
XXIV Territorial Application--Frontier Traffic--
Customs Unions and Free-trade Areas
XXV Joint Action by the Contracting Parties
XXVI Acceptance. Entry into Force and Registration
XXVII Withholding or Withdrawal of Concessions
XXVIII Modification of Schedules
XXVIII-bis Tariff Negotiations
XXIX The Relation of this Agreement to the Havana Charter
XXX Amendments
XXXI Withdrawal
XXXII Contracting Parties
XXXIII Accession
XXXIV Annexes
XXXV Non-application of the Agreement between particular
Contracting Parties
PART IV TRADE AND DEVELOPMENT
XXXVI Principles and Objectives
XXXVII Commitments
XXXVIII Joint Action
Annexes A to G -- Relating to Article I
Annex H -- Relating to Article XXVI
Annex I -- Notes and Supplementary Provisions
PROTOCOL OF PROVISIONAL APPLICATION
* * * * *
THE 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
endeavour 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 these objectives by entering into
reciprocal and mutually advantageous arrangements directed to the
substantial reduction of tariffs and other barriers to trade and to the
elimination of discriminatory treatment in international commerce,
Have through their Representatives agreed as follows:
PART I
Article I
General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or
in connection with importation or exportation or imposed on the
international transfer of payments for imports or exports, and with
respect to the method of levying such duties and charges, and with
respect to all rules and formalities in connection with importation and
exportation, and with respect to all matters referred to in paragraphs 2
and 4 of Article III, any advantage, favour, privilege or immunity
granted by any contracting party to any product originating in or
destined for any other country shall be accorded immediately and
unconditionally to the like product originating in or destined for the
territories of all other contracting parties.
2. The provisions of paragraph 1 of this Article shall not require the
elimination of any preferences in respect of import duties or charges
which do not exceed the levels provided for in paragraph 4 of this
Article and which fall within the following descriptions:
(a) Preferences in force exclusively between two or more of the
territories listed in Annex A, subject to the conditions set forth
therein;
(b) Preferences in force exclusively between two or more territories
which on July 1, 1939, were connected by common sovereignty or
relations of protection or suzerainty and which are listed in
Annexes B, C and D, subject to the conditions set forth therein;
(c) Preferences in force exclusively between the United States of
America and the Republic of Cuba;
(d) Preferences in force exclusively between neighbouring countries
listed in Annexes E and F.
3. The provisions of paragraph 1 shall not apply to preferences between
the countries formerly a part of the Ottoman Empire and detached from it
on July 24, 1923, provided such preferences are approved under paragraph
5 of Article XXV, which shall be applied in this respect in the light of
paragraph 1 of Article XXIX.
4. The margin of preference on any product in respect of which a
preference is permitted under paragraph 2 of this Article but is not
specifically set forth as a maximum margin of preference in the
appropriate Schedule annexed to this Agreement shall not exceed:
(a) in respect of duties or charges on any product described in such
Schedule, the difference between the most-favoured-nation and
preferential rates provided for therein; if no preferential rate is
provided for, the preferential rate shall for the purposes of this
paragraph be taken to be that in force on April 10, 1947, and, if
no most-favoured-nation rate is provided for, the margin shall not
exceed the difference between the most-favoured-nation and
preferential rates existing on April 10, 1947;
(b) in respect of duties or charges on any product not described in the
appropriate Schedule, the difference between the most-favoured
nation and preferential rates existing on April 10, 1947.
In the case of the contracting parties named in Annex G, the date of
April 10, 1947, referred to in sub-paragraphs (a) and (b) of this
paragraph shall be replaced by the respective dates set forth in that
Annex.
Article II
Schedules of Concessions
1. (a) Each contracting party shall accord to the commerce of the other
contracting parties treatment no less favourable than that provided for
in the appropriate Part of the appropriate Schedule annexed to this
Agreement.
(b) The products described in Part I of the Schedule relating to any
contracting party, which are the products of territories of other
contracting parties, shall, on their importation into the territory to
which the Schedule relates, and subject to the terms, conditions or
qualifications set forth in that Schedule, be exempt from ordinary
customs duties in excess of those set forth and provided for therein.
Such products shall also be exempt from all other duties or charges of
any kind imposed on or in connection with importation in excess of those
imposed on the date of this Agreement or those directly and mandatorily
required to be imposed thereafter by legislation in force in the
importing territory on that date.
(c) The products described in Part II of the Schedule relating to any
contracting party which are the products of territories entitled under
Article I to receive preferential treatment upon importation into the
territory to which the Schedule relates shall, on their importation into
such territory, and subject to the terms, conditions or qualifications
set forth in that Schedule, be exempt from ordinary customs duties in
excess of those set forth and provided for in Part II of that Schedule.
Such products shall also be exempt from all other duties or charges of
any kind imposed on or in connection with importation in excess of those
imposed on the date of this Agreement or those directly and mandatorily
required to be imposed thereafter by legislation in force in the
importing territory on that date. Nothing in this Article shall prevent
any contracting party from maintaining its requirements existing on the
date of this Agreement as to the eligibility of goods for entry at
preferential rates of duty.
2. Nothing in this Article shall prevent any contracting party from
imposing at any time on the importation of any product:
(a) a charge equivalent to an internal tax imposed consistently with
the provisions of paragraph 2 of Article III in respect of the like
domestic product or in respect of an article from which the
imported product has been manufactured or produced in whole or in
part;
(b) any anti-dumping or countervailing duty applied consistently with
the provisions of Article VI;
(c) fees or other charges commensurate with the cost of services
rendered.
3. No contracting party shall alter its method of determining dutiable
value or of converting currencies so as to impair the value of any of the
concessions provided for in the appropriate Schedule annexed to this
Agreement.
4. If any contracting party establishes, maintains or authorizes,
formally or in effect, a monopoly of the importation of any product
described in the appropriate Schedule annexed to this Agreement, such
monopoly shall not, except as provided for in that Schedule or as
otherwise agreed between the parties which initially negotiated the
concession, operate so as to afford protection on the average in excess
of the amount of protection provided for in that Schedule. The provisions
of this paragraph shall not limit the use by contracting parties of any
form of assistance to domestic producers permitted by other provisions of
this Agreement.
5. If any contracting party considers that a product is not receiving
from another contracting party the treatment which the first contracting
party believes to have been contemplated by a concession provided for in
the appropriate Schedule annexed to this Agreement, it shall bring the
matter directly to the attention of the other contracting party. If the
latter agrees that the treatment contemplated was that claimed by the
first contracting party, but declares that such treatment cannot be
accorded because a court or other proper authority has ruled to the
effect that the product involved cannot be classified under the tariff
laws of such contracting party so as to permit the treatment contemplated
in this Agreement, the two contracting parties, together with any other
contracting parties substantially interested, shall enter promptly into
further negotiations with a view to a compensatory adjustment of the
matter.
6. (a) The specific duties and charges included in the Schedules relating
to contracting parties members of the International Monetary Fund, and
margins of preference in specific duties and charges maintained by such
contracting parties, are expressed in the appropriate currency at the par
value accepted or provisionally recognized by the Fund at the date of
this Agreement. Accordingly, in case this par value is reduced
consistently with the Articles of Agreement of the International Monetary
Fund by more than twenty per centum, such specific duties and charges and
margins of preference may be adjusted to take account of such reduction;
Provided that the CONTRACTING PARTIES (i.e., the contracting parties
acting jointly as provided for in Article XXV) concur that such
adjustments will not impair the value of the concessions provided for in
the appropriate Schedule or elsewhere in this Agreement, due account
being taken of all factors which may influence the need for, or urgency
of, such adjustments.
(b) Similar provisions shall apply to any contracting party not a
member of the Fund, as from the date on which such contracting party
becomes a member of the Fund or enters into a special exchange agreement
in pursuance of Article XV.
7. The Schedules annexed to this Agreement are hereby made an integral
part of Part I of this Agreement.
PART II
Article III
National Treatment on Internal Taxation and Regulation
1. The contracting parties recognize that internal taxes and other
internal charges, and laws, regulations and requirements affecting the
internal sale, offering for sale, purchase, transportation, distribution
or use of products, and internal quantitative regulations requiring the
mixture, processing or use of products in specified amounts or
proportions, should not be applied to imported or domestic products so as
to afford protection to domestic production.
2. The products of the territory of any contracting party imported into
the territory of any other contracting party shall not be subject,
directly or indirectly, to internal taxes or other internal charges of
any kind in excess of those applied, directly or indirectly, to like
domestic products. Moreover, no contracting party shall otherwise apply
internal taxes or other internal charges to imported or domestic products
in a manner contrary to the principles set forth in paragraph 1.
3. With respect to any existing internal tax which is inconsistent with
the provisions of paragraph 2, but which is specifically authorized under
a trade agreement, in force on April 10, 1947, in which the import duty
on the taxed product is bound against increase, the contracting party
imposing the tax shall be free to postpone the application of the
provisions of paragraph 2 to such tax until such time as it can obtain
release from the obligations of such trade agreement in order to permit
the increase of such duty to the extent necessary to compensate for the
elimination of the protective element of the tax.
4. The products of the territory of any contracting party imported into
the territory of any other contracting party shall be accorded treatment
no less favourable than that accorded to like products of national origin
in respect of all laws, regulations and requirements affecting their
internal sale, offering for sale, purchase, transportation, distribution
or use. The provisions of this paragraph shall not prevent the
application of differential internal transportation charges which are
based exclusively on the economic operation of the means of transport and
not on the nationality of the product.
5. No contracting party shall establish or maintain any internal
quantitative regulation relating to the mixture, processing or use of
products in specified amounts or proportions which requires, directly or
indirectly, that any specified amount or proportion of any product which
is the subject of the regulation must be supplied from domestic sources.
Moreover, no contracting party shall otherwise apply internal
quantitative regulations in a manner contrary to the principles set forth
in paragraph 1.
6. The provisions of paragraph 5 shall not apply to any internal
quantitative regulation in force in the territory of any contracting
party on July 1, 1939, April 10, 1947, or March 24, 1948, at the option
of that contracting party; Provided that any such regulation which is
contrary to the provisions of paragraph 5 shall not be modified to the
detriment of imports and shall be treated as a customs duty for the
purpose of negotiation.
7. No internal quantitative regulation relating to the mixture,
processing or use of products in specified amounts or proportions shall
be applied in such a manner as to allocate any such amount or proportion
among external sources of supply.
8. (a) The provisions of this Article shall not apply to laws,
regulations or requirements governing the procurement by governmental
agencies of products purchased for governmental purposes and not with a
view to commercial resale or with a view to use in the production of
goods for commercial sale.
(b) The provisions of this Article shall not prevent the payment of
subsidies exclusively to domestic producers, including payments to
domestic producers derived from the proceeds of internal taxes or charges
applied consistently with the provisions of this Article and subsidies
effected through governmental purchases of domestic products.
9. The contracting parties recognize that internal maximum price control
measures, even though conforming to the other provisions of this Article,
can have effects prejudicial to the interests of contracting parties
supplying imported products. Accordingly, contracting parties applying
such measures shall take account of the interests of exporting
contracting parties with a view to avoiding to the fullest practicable
extent such prejudicial effects.
10. The provisions of this Article shall not prevent any contracting
party from establishing or maintaining internal quantitative regulations
relating to exposed cinematograph films and meeting the requirements of
Article IV.
Article IV
Special Provisions relating to Cinematograph Films
If any contracting party establishes or maintains internal quantitative
regulations relating to exposed cinematograph films, such regulations
shall take the form of screen quotas which shall conform to the following
requirements:
(a) Screen quotas may require the exhibition of cinematograph films of
national origin during a specified minimum proportion of the total
screen time actually utilized, over a specified period of not less
than one year, in the commercial exhibition of all films of
whatever origin, and shall be computed on the basis of screen time
per theatre per year or the equivalent thereof;
(b) With the exception of screen time reserved for films of national
origin under a screen quota, screen time including that released by
administrative action from screen time reserved for films of
national origin, shall not be allocated formally or in effect among
sources of supply;
(c) Notwithstanding the provisions of sub-paragraph (b) of this
Article, any contracting party may maintain screen quotas
conforming to the requirements of sub-paragraph (a) of this Article
which reserve a minimum proportion of screen time for films of a
specified origin other than that of the contracting party imposing
such screen quotas; Provided that no such minimum proportion of
screen time shall be increased above the level in effect on April
10, 1947;
(d) Screen quotas shall be subject to negotiation for their limitation,
liberalization or elimination.
Article V
Freedom of Transit
1. Goods (including baggage), and also vessels and other means of
transport, shall be deemed to be in transit across the territory of a
contracting party when the passage across such territory, with or without
trans-shipment, warehousing, breaking bulk, or change in the mode of
transport, is only a portion of a complete journey beginning and
terminating beyond the frontier of the contracting party across whose
territory the traffic passes. Traffic of this nature is termed in this
Article " traffic in transit ".
2. There shall be freedom of transit through the territory of each
contracting party, via the routes most convenient for international
transit, for traffic in transit to or from the territory of other
contracting parties. No distinction shall be made which is based on the
flag of vessels, the place of origin, departure, entry, exit or
destination, or on any circumstances relating to the ownership of goods,
of vessels or of other means of transport.
3. Any contracting party may require that traffic in transit through its
territory be entered at the proper custom house, but, except in cases of
failure to comply with applicable customs laws and regulations, such
traffic coming from or going to the territory of other contracting
parties shall not be subject to any unnecessary delays or restrictions
and shall be exempt from customs duties and from all transit duties or
other charges imposed in respect of transit, except charges for
transportation or those commensurate with administrative expenses
entailed by transit or with the cost of services rendered.
4. All charges and regulations imposed by contracting parties on traffic
in transit to or from the territories of other contracting parties shall
be reasonable, having regard to the conditions of the traffic.
5. With respect to all charges, regulations and formalities in connection
with transit, each contracting party shall accord to traffic in transit
to or from the territory of any other contracting party treatment no less
favourable than the treatment accorded to traffic in transit to or from
any third country.
6. Each contracting party shall accord to products which have been in
transit through the territory of any other contracting party treatment no
less favourable than that which would have been accorded to such products
had they been transported from their place of origin to their destination
without going through the territory of such other contracting party. Any
contracting party shall, however, be free to maintain its requirements of
direct consignment existing on the date of this Agreement, in respect of
any goods in regard to which such direct consignment is a requisite
condition of eligibility for entry of the goods at preferential rates of
duty or has relation to the contracting party's prescribed method of
valuation for duty purposes.
7. The provisions of this Article shall not apply to the operation of
aircraft in transit, but shall apply to air transit of goods (including
baggage).
Article VI
Anti-dumping and Countervailing Duties
1. The contracting parties recognize that dumping, by which products of
one country are introduced into the commerce of another country at less
than the normal value of the products, is to be condemned if it causes or
threatens material injury to an established industry in the territory of
a contracting party or materially retards the establishment of a domestic
industry. For the purposes of this Article, a product is to be considered
as being introduced into the commerce of an importing country at less
than its normal value, if the price of the product exported from one
country to another
(a) is less than the comparable price, in the ordinary course of trade,
for the like product when destined for consumption in the exporting
country, or,
(b) in the absence of such domestic price, is less than either
(i) the highest comparable price for the like product for export
to any third country in the ordinary course of trade, or
(ii) the cost of production of the product in the country of
origin plus a reasonable addition for selling cost and
profit.
Due allowance shall be made in each case for differences in conditions
and terms of sale, for differences in taxation, and for other differences
affecting price comparability.
2. In order to offset or prevent dumping, a contracting party may levy on
any dumped product an anti-dumping duty not greater in amount than the
margin of dumping in respect of such product. For the purposes of this
Article, the margin of dumping is the price difference determined in
accordance with the provisions of paragraph 1.
3. No countervailing duty shall be levied on any product of the territory
of any contracting party imported into the territory of another
contracting party in excess of an amount equal to the estimated bounty or
subsidy determined to have been granted, directly or indirectly, on the
manufacture, production or export of such product in the country of
origin or exportation, including any special subsidy to the
transportation of a particular product. The term "countervailing duty"
shall be understood to mean a special duty levied for the purpose of
offsetting any bounty or subsidy bestowed, directly or indirectly, upon
the manufacture, production or export of any merchandise.
4. No product of the territory of any contracting party imported into the
territory of any other contracting party shall be subject to anti-dumping
or countervailing duty by reason of the exemption of such product from
duties or taxes borne by the like product when destined for consumption
in the country of origin or exportation, or by reason of the refund of
such duties or taxes.
5. No product of the territory of any contracting party imported into the
territory of any other contracting party shall be subject to both anti-
dumping and countervailing duties to compensate for the same situation of
dumping or export subsidization.
6. (a) No contracting party shall levy any anti-dumping or countervailing
duty on the importation of any product of the territory of another
contracting party unless it determines that the effect of the dumping or
subsidization, as the case may be, is such as to cause or threaten
material injury to an established domestic industry, or is such as to
retard materially the establishment of a domestic industry.
(b) The CONTRACTING PARTIES may waive the requirement of subparagraph
(a) of this paragraph so as to permit a contracting party to levy an
anti-dumping or countervailing duty on the importation of any product for
the purpose of offsetting dumping or subsidization which causes or
threatens material injury to an industry in the territory of another
contracting party exporting the product concerned to the territory of the
importing contracting party. The CONTRACTING PARTIES shall waive the
requirements of sub-paragraph (a) of this paragraph, so as to permit the
levying of a countervailing duty, in cases in which they find that a
subsidy is causing or threatening material injury to an industry in the
territory of another contracting party exporting the product concerned to
the territory of the importing contracting party.
(c) In exceptional circumstances, however, where delay might cause
damage which would be difficult to repair, a contracting party may levy a
countervailing duty for the purpose referred to in sub-paragraph (b) of
this paragraph without the prior approval of the CONTRACTING PARTIES;
Provided that such action shall be reported immediately to the
CONTRACTING PARTIES and that the countervailing duty shall be withdrawn
promptly if the CONTRACTING PARTIES disapprove.
7. A system for the stabilization of the domestic price or of the return
to domestic producers of a primary commodity, independently of the
movements of export prices, which results at times in the sale of the
commodity for export at a price lower than the comparable price charged
for the like commodity to buyers in the domestic market, shall be
presumed not to result in material injury within the meaning of paragraph
6 if it is determined by consultation among the contracting parties
substantially interested in the commodity concerned that:
(a) the system has also resulted in the sale of the commodity for
export at a price higher than the comparable price charged for the
like commodity to buyers in the domestic market, and
(b) the system is so operated, either because of the effective
regulation of production, or otherwise, as not to stimulate exports
unduly or otherwise seriously prejudice the interests of other
contracting parties.
Article VII
Valuation for Customs Purposes
1. The contracting parties recognize the validity of the general
principles of valuation set forth in the following paragraphs of this
Article, and they undertake to give effect to such principles, in respect
of all products subject to duties or other charges or restrictions on
importation and exportation based upon or regulated in any manner by
value. Moreover, they shall, upon a request by another contracting party
review the operation of any of their laws or regulations relating to
value for customs purposes in the light of these principles. The
CONTRACTING PARTIES may request from contracting parties reports on steps
taken by them in pursuance of the provisions of this Article.
2. (a) The value for customs purposes of imported merchandise should be
based on the actual value of the imported merchandise on which duty is
assessed, or of like merchandise, and should not be based on the value of
merchandise of national origin or on arbitrary or fictitious values.
(b) "Actual value" should be the price at which, at a time and place
determined by the legislation of the country of importation, such or like
merchandise is sold or offered for sale in the ordinary course of trade
under fully competitive conditions. To the extent to which the price of
such or like merchandise is governed by the quantity in a particular
transaction, the price to be considered should uniformly be related to
either (i) comparable quantities, or (ii) quantities not less favourable
to importers than those in which the greater volume of the merchandise is
sold in the trade between the countries of exportation and importation.
(c) When the actual value is not ascertainable in accordance with
sub-paragraph (b) of this paragraph, the value for customs purposes
should be based on the nearest ascertainable equivalent of such value.
3. The value for customs purposes of any imported product should not
include the amount of any internal tax, applicable within the country of
origin or export, from which the imported product has been exempted or
has been or will be relieved by means of refund.
4. (a) Except as otherwise provided for in this paragraph, where it is
necessary for the purposes of paragraph 2 of this Article for a
contracting party to convert into its own currency a price expressed in
the currency of another country, the conversion rate of exchange to be
used shall be based, for each currency involved, on the par value as
established pursuant to the Articles of Agreement of the International
Monetary Fund or on the rate of exchange recognized by the Fund, or on
the par value established in accordance with a special exchange agreement
entered into pursuant to Article XV of this Agreement.
(b) Where no such established par value and no such recognized rate of
exchange exist, the conversion rate shall reflect effectively the current
value of such currency in commercial transactions.
(c) The CONTRACTING PARTIES, in agreement with the International
Monetary Fund, shall formulate rules governing the conversion by
contracting parties of any foreign currency in respect of which multiple
rates of exchange are maintained consistently with the Articles of
Agreement of the International Monetary Fund. Any contracting party may
apply such rules in respect of such foreign currencies for the purposes
of paragraph 2 of this Article as an alternative to the use of par
values. Until such rules are adopted by the CONTRACTING PARTIES, any
contracting party may employ, in respect of any such foreign currency,
rules of conversion for the purposes of paragraph 2 of this Article which
are designed to reflect effectively the value of such foreign currency in
commercial transactions.
(d) Nothing in this paragraph shall be construed to require any
contracting party to alter the method of converting currencies for
customs purposes which is applicable in its territory on the date of this
Agreement, if such alteration would have the effect of increasing
generally the amounts of duty payable.
5. The bases and methods for determining the value of products subject to
duties or other charges or restrictions based upon or regulated in any
manner by value should be stable and should be given sufficient publicity
to enable traders to estimate, with a reasonable degree of certainty, the
value for customs purposes.
Article VIII
Fees and Formalities connected with Importation and Exportation
1. (a) All fees and charges of whatever character (other than import and
export duties and other than taxes within the purview of Article III)
imposed by contracting parties on or in connexion with importation or
exportation shall be limited in amount to the approximate cost of
services rendered and shall not represent an indirect protection to
domestic products or a taxation of imports or exports for fiscal
purposes.
(b) The contracting parties recognize the need for reducing the number
and diversity of fees and charges referred to in sub-paragraph (a).
(c) The contracting parties also recognize the need for minimizing the
incidence and complexity of import and export formalities and for
decreasing and simplifying import and export documentation requirements.
2. A contracting party shall, upon request by another contracting party
or by the CONTRACTING PARTIES, review the operation of its laws and
regulations in the light of the provisions of this Article.
3. No contracting party shall impose substantial penalties for minor
breaches of customs regulations or procedural requirements. In
particular, no penalty in respect of any omission or mistake in customs
documentation which is easily rectifiable and obviously made without
fraudulent intent or gross negligence shall be greater than necessary to
serve merely as a warning.
4. The provisions of this Article shall extend to fees, charges,
formalities and requirements imposed by governmental authorities in
connexion with importation and exportation, including those relating to:
(a) consular transactions, such as consular invoices and certificates;
(b) quantitative restrictions;
(c) licensing;
(d) exchange control;
(e) statistical services;
(f) documents, documentation and certification;
(g) analysis and inspection; and
(h) quarantine, sanitation and fumigation.
Article IX
Marks of Origin
1. Each contracting party shall accord to the products of the territories
of other contracting parties treatment with regard to marking
requirements no less favourable than the treatment accorded to like
products of any third country.
2. The contracting parties recognize that, in adopting and enforcing laws
and regulations relating to marks of origin, the difficulties and
inconveniences which such measures may cause to the commerce and industry
of exporting countries should be reduced to a minimum, due regard being
had to the necessity of protecting consumers against fraudulent or
misleading indications.
3. Whenever it is administratively practicable to do so, contracting
parties should permit required marks of origin to be affixed at the time
of importation.
4. The laws and regulations of contracting parties relating to the
marking of imported products shall be such as to permit compliance
without seriously damaging the products, or materially reducing their
value, or unreasonably increasing their cost.
5. As a general rule, no special duty or penalty should be imposed by any
contracting party for failure to comply with marking requirements prior
to importation unless corrective marking is unreasonably delayed or
deceptive marks have been affixed or the required marking has been
intentionally omitted.
6. The contracting parties shall co-operate with each other with a view
to preventing the use of trade names in such manner as to misrepresent
the true origin of a product, to the detriment of such distinctive
regional or geographical names of products of the territory of a
contracting party as are protected by its legislation. Each contracting
party shall accord full and sympathetic consideration to such requests or
representations as may be made by any other contracting party regarding
the application of the undertaking set forth in the preceding sentence to
names of products which have been communicated to it by the other
contracting party.
Article X
Publication and Administration of Trade Regulations
1. Laws, regulations, judicial decisions and administrative rulings of
general application, made effective by any contracting party, pertaining
to the classification or the valuation of products for customs purposes,
or to rates of duty, taxes or other charges, or to requirements,
restrictions or prohibitions on imports or exports or on the transfer of
payments therefor, or affecting their sale, distribution, transportation,
insurance, warehousing, inspection, exhibition, processing, mixing or
other use, shall be published promptly in such a manner as to enable
governments and traders to become acquainted with them. Agreements
affecting international trade policy which are in force between the
government or a governmental agency of any contracting party and the
government or governmental agency of any other contracting party shall
also be published. The provisions of this paragraph shall not require any
contracting party to disclose confidential information which would impede
law enforcement or otherwise be contrary to the public interest or would
prejudice the legitimate commercial interests of particular enterprises,
public or private.
2. No measure of general application taken by any contracting party
effecting an advance in a rate of duty or other charge on imports under
an established and uniform practice, or imposing a new or more burdensome
requirement, restriction or prohibition on imports, or on the transfer of
payments therefor, shall be enforced before such measure has been
officially published.
3. (a) Each contracting party shall administer in a uniform, impartial
and reasonable manner all its laws, regulations, decisions and rulings of
the kind described in paragraph 1 of this Article.
(b) Each contracting party shall maintain, or institute as soon as
practicable, judicial, arbitral or administrative tribunals or procedures
for the purpose, inter alia, of the prompt review and correction of
administrative action relating to customs matters. Such tribunals or
procedures shall be independent of the agencies entrusted with
administrative enforcement and their decisions shall be implemented by,
and shall govern the practice of, such agencies unless an appeal is
lodged with a court or tribunal of superior jurisdiction within the time
prescribed for appeals to be lodged by importers; Provided that the
central administration of such agency may take steps to obtain a review
of the matter in another proceeding if there is good cause to believe
that the decision is inconsistent with established principles of law or
the actual facts.
(c) The provisions of sub-paragraph (b) of this paragraph shall not
require the elimination or substitution of procedures in force in the
territory of a contracting party on the date of this Agreement which in
fact provide for an objective and impartial review of administrative
action even though such procedures are not fully or formally independent
of the agencies entrusted with administrative enforcement. Any
contracting party employing such procedures shall, upon request, furnish
the CONTRACTING PARTIES with full information thereon in order that they
may determine whether such procedures conform to the requirements of this
sub-paragraph.
Article XI
General Elimination of Quantitative Restrictions
1. No prohibitions or restrictions other than duties, taxes or other
charges, whether made effective through quotas, import or export licences
or other measures, shall be instituted or maintained by any contracting
party on the importation of any product of the territory of any other
contracting party or on the exportation or sale for export of any product
destined for the territory of any other contracting party.
2. The provisions of paragraph I of this Article shall not extend to the
following:
(a) Export prohibitions or restrictions temporarily applied to prevent
or relieve critical shortages of foodstuffs or other products
essential to the exporting contracting party;
(b) Import and export prohibitions or restrictions necessary to the
application of standards or regulations for the classification,
grading or marketing of commodities in international trade;
(c) Import restrictions on any agricultural or fisheries product,
imported in any form, necessary to the enforcement of governmental
measures which operate:
(i) to restrict the quantities of the like domestic product
permitted to be marketed or produced, or, if there is no
substantial domestic production of the like product, of a
domestic product for which the imported product can be
directly substituted; or
(ii) to remove a temporary surplus of the like domestic product,
or, if there is no substantial domestic production of the
like product, of a domestic product for which the imported
product can be directly substituted, by making the surplus
available to certain groups of domestic consumers free of
charge or at prices below the current market level; or
(iii) to restrict the quantities permitted to be produced of any
animal product the production of which is directly dependent,
wholly or mainly, on the imported commodity, if the domestic
production of that commodity is relatively negligible.
Any contracting party applying restrictions on the importation of any
product pursuant to sub-paragraph (c) of this paragraph shall give public
notice of the total quantity or value of the product permitted to be
imported during a specified future period and of any change in such
quantity or value. Moreover, any restrictions applied under (i) above
shall not be such as will reduce the total of imports relative to the
total of domestic production, as compared with the proportion which might
reasonably be expected to rule between the two in the absence of
restrictions. In determining this proportion, the contracting party shall
pay due regard to the proportion prevailing during a previous
representative period and to any special factors which may have affected
or may be affecting the trade in the product concerned.
Article XII
Restrictions to Safeguard the Balance of Payments
1. Notwithstanding the provisions of paragraph 1 of Article XI, any
contracting party, in order to safeguard its external financial position
and its balance of payments, may restrict the quantity or value of
merchandise permitted to be imported, subject to the provisions of the
following paragraphs of this Article.
2. (a) Import restrictions instituted, maintained or intensified by a
contracting party under this Article shall not exceed those necessary:
(i) to forestall the imminent threat of, or to stop, a serious
decline in its monetary reserves, or
(ii) in the case of a contracting party with very low monetary
reserves, to achieve a reasonable rate of increase in its
reserves.
Due regard shall be paid in either case to any special factors which may
be affecting the reserves of such contracting party or its need for
reserves, including, where special external credits or other resources
are available to it, the need to provide for the appropriate use of such
credits or resources.
(b) Contracting parties applying restrictions under sub-paragraph (a)
of this paragraph shall progressively relax them as such conditions
improve, maintaining them only to the extent that the conditions
specified in that sub-paragraph still justify their application. They
shall eliminate the restrictions when conditions would no longer justify
their institution or maintenance under that sub-paragraph.
3. (a) Contracting parties undertake, in carrying out their domestic
policies, to pay due regard to the need for maintaining or restoring
equilibrium in their balance of payments on a sound and lasting basis and
to the desirability of avoiding an uneconomic employment of productive
resources. They recognize that, in order to achieve these ends, it is
desirable so far as possible to adopt measures which expand rather than
contract international trade.
(b) Contracting parties applying restrictions under this Article may
determine the incidence of the restrictions on imports of different
products or classes of products in such a way as to give priority to the
importation of those products which are more essential.
(c) Contracting parties applying restrictions under this Article
undertake:
(i) to avoid unnecessary damage to the commercial or economic
interests of any other contracting party;
(ii) not to apply restrictions so as to prevent unreasonably the
importation of any description of goods in minimum commercial
quantities the exclusion of which would impair regular
channels of trade; and
(iii) not to apply restrictions which would prevent the importation
of commercial samples or prevent compliance with patent,
trade mark, copyright, or similar procedures.
(d) The contracting parties recognize that, as a result of domestic
policies directed towards the achievement and maintenance of full and
productive employment or towards the development of economic resources, a
contracting party may experience a high level of demand for imports
involving a threat to its monetary reserves of the sort referred to in
paragraph 2(a) of this Article. Accordingly, a contracting party
otherwise complying with the provisions of this Article shall not be
required to withdraw or modify restrictions on the ground that a change
in those policies would render unnecessary restrictions which it is
applying under this Article.
4. (a) Any contracting party applying new restrictions or raising the
general level of its existing restrictions by a substantial
intensification of the measures applied under this Article shall
immediately after instituting or intensifying such restrictions (or, in
circumstances in which prior consultation is practicable, before doing
so) consult with the CONTRACTING PARTIES as to the nature of its balance
of payments difficulties, alternative corrective measures which may be
available, and the possible effect of the restrictions on the economies
of other contracting parties.
(b) On a date to be determined by them, the CONTRACTING PARTIES shall
review all restrictions still applied under this Article on that date.
Beginning one year after that date, contracting parties applying import
restrictions under this Article shall enter into consultations of the
type provided for in sub-paragraph (a) of this paragraph with the
CONTRACTING PARTIES annually.
(c) (i) If, in the course of consultations with a contracting party
under sub-paragraph (a) or (b) above, the CONTRACTING PARTIES find that
the restrictions are not consistent with the provisions of this Article
or with those of Article XIII (subject to the provisions of Article XIV),
they shall indicate the nature of the inconsistency and may advise that
the restrictions be suitably modified.
(ii) If, however, as a result of the consultations, the CONTRACTING
PARTIES determine that the restrictions are being applied in a manner
involving an inconsistency of a serious nature with the provisions of
this Article or with those of Article XIII (subject to the provisions of
Article XIV) and that damage to the trade of any contracting party is
caused or threatened thereby, they shall so inform the contracting party
applying the restrictions and shall make appropriate recommendations for
securing conformity with such provisions within a specified period of
time. If such contracting party does not comply with these
recommendations within the specified period, the CONTRACTING PARTIES may
release any contracting party the trade of which is adversely affected by
the restrictions from such obligations under this Agreement towards the
contracting party applying the restrictions as they determine to be
appropriate in the circumstances.
(d) The CONTRACTING PARTIES shall invite any contracting party which
is applying restrictions under this Article to enter into consultations
with them at the request of any contracting party which can establish a
prima facie case that the restrictions are inconsistent with the
provisions of this Article or with those of Article XIII (subject to the
provisions of Article XIV) and that its trade is adversely affected
thereby. However, no such invitation shall be issued unless the
CONTRACTING PARTIES have ascertained that direct discussions between the
contracting parties concerned have not been successful. If, as a result
of the consultations with the CONTRACTING PARTIES, no agreement is
reached and they determine that the restrictions are being applied
inconsistently with such provisions, and that damage to the trade of the
contracting party initiating the procedure is caused or threatened
thereby, they shall recommend the withdrawal or modification of the
restrictions. If the restrictions are not withdrawn or modified within
such time as the CONTRACTING PARTIES may prescribe, they may release the
contracting party initiating the procedure from such obligations under
this Agreement towards the contracting party applying the restrictions as
they determine to be appropriate in the circumstances.
(e) In proceeding under this paragraph, the CONTRACTING PARTIES shall
have due regard to any special external factors adversely affecting the
export trade of the contracting party applying restrictions.
(f) Determinations under this paragraph shall be rendered
expeditiously and, if possible, within sixty days of the initiation of
the consultations.
5. If there is a persistent and widespread application of import
restrictions under this Article, indicating the existence of a general
disequilibrium which is restricting international trade, the CONTRACTING
PARTIES shall initiate discussions to consider whether other measures
might be taken, either by those contracting parties the balances of
payments of which are under pressure or by those the balances of payments
of which are tending to be exceptionally favourable, or by any
appropriate intergovernmental organization, to remove the underlying
causes of the disequilibrium. On the invitation of the CONTRACTING
PARTIES, contracting parties shall participate in such discussions.
Article XIII
Non-discriminatory Administration of Quantitative Restrictions
1. No prohibition or restriction shall be applied by any contracting
party on the importation of any product of the territory of any other
contracting party or on the exportation of any product destined for the
territory of any other contracting party, unless the importation of the
like product of all third countries or the exportation of the like
product to all third countries is similarly prohibited or restricted.
2. In applying import restrictions to any product, contracting parties
shall aim at a distribution of trade in such product approaching as
closely as possible the shares which the various contracting parties
might be expected to obtain in the absence of such restrictions, and to
this end shall observe the following provisions:
(a) Wherever practicable, quotas representing the total amount of
permitted imports (whether allocated among supplying countries or
not) shall be fixed, and notice given of their amount in accordance
with paragraph 3 (b) of this Article;
(b) In cases in which quotas are not practicable, the restrictions may
be applied by means of import licences or permits without a quota;
(c) Contracting parties shall not, except for purposes of operating
quotas allocated in accordance with sub-paragraph (d) of this
paragraph, require that import licences or permits be utilized for
the importation of the product concerned from a particular country
or source;
(d) In cases in which a quota is allocated among supplying countries,
the contracting party applying the restrictions may seek agreement
with respect to the allocation of shares in the quota with all
other contracting parties having a substantial interest in
supplying the product concerned. In cases in which this method is
not reasonably practicable, the contracting party concerned shall
allot to contracting parties having a substantial interest in
supplying the product shares based upon the proportions, supplied
by such contracting parties during a previous representative
period, of the total quantity or value of imports of the product,
due account being taken of any special factors which may have
affected or may be affecting the trade in the product. No
conditions or formalities shall be imposed which would prevent any
contracting party from utilizing fully the share of any such total
quantity or value which has been allotted to it, subject to
importation being made within any prescribed period to which the
quota may relate.
3. (a) In cases in which import licences are issued in connection with
import restrictions, the contracting party applying the restrictions
shall provide, upon the request of any contracting party having an
interest in the trade in the product concerned, all relevant information
concerning the administration of the restrictions, the import licences
granted over a recent period and the distribution of such licences among
supplying countries; Provided that there shall be no obligation to supply
information as to the names of importing or supplying enterprises.
(b) In the case of import restrictions involving the fixing of quotas,
the contracting party applying the restrictions shall give public notice
of the total quantity or value of the product or products which will be
permitted to be imported during a specified future period and of any
change in such quantity or value. Any supplies of the product in question
which were en route at the time at which public notice was given shall
not be excluded from entry; Provided that they may be counted so far as
practicable, against the quantity permitted to be imported in the period
in question, and also, where necessary, against the quantities permitted
to be imported in the next following period or periods; and Provided
further that if any contracting party customarily exempts from such
restrictions products entered for consumption or withdrawn from warehouse
for consumption during a period of thirty days after the day of such
public notice, such practice shall be considered full compliance with
this sub-paragraph.
(c) In the case of quotas allocated among supplying countries, the
contracting party applying the restrictions shall promptly inform all
other contracting parties having an interest in supplying the product
concerned of the shares in the quota currently allocated, by quantity or
value, to the various supplying countries and shall give public notice
thereof.
4. With regard to restrictions applied in accordance with paragraph 2 (d)
of this Article or under paragraph 2 (c) of Article XI, the selection of
a representative period for any product and the appraisal of any special
factors affecting the trade in the product shall be made initially by the
contracting party applying the restriction; Provided that such
contracting party shall, upon the request of any other contracting party
having a substantial interest in supplying that product or upon the
request of the CONTRACTING PARTIES, consult promptly with the other
contracting party or the CONTRACTING PARTIES regarding the need for an
adjustment of the proportion determined or of the base period selected,
or for the reappraisal of the special factors involved, or for the
elimination of conditions, formalities or any other provisions
established unilaterally relating to the allocation of an adequate quota
or its unrestricted utilization.
5. The provisions of this Article shall apply to any tariff quota
instituted or maintained by any contracting party, and, in so far as
applicable, the principles of this Article shall also extend to export
restrictions.
Article XIV
Exceptions to the Rule of Non-discrimination
1. A contracting party which applies restrictions under Article XII or
under Section B of Article XVIII may, in the application of such
restrictions, deviate from the provisions of Article XIII in a manner
having equivalent effect to restrictions on payments and transfers for
current international transactions which that contracting party may at
that time apply under Article VIII or XIV of the Articles of Agreement of
the International Monetary Fund, or under analogous provisions of a
special exchange agreement entered into pursuant to paragraph 6 of
Article XV.
2. A contracting party which is applying import restrictions under
Article XII or under Section B of Article XVIII may, with the consent of
the CONTRACTING PARTIES, temporarily deviate from the provisions of
Article XIII in respect of a small part of its external trade where the
benefits to the contracting party or contracting parties concerned
substantially outweigh any injury which may result to the trade of other
contracting parties.
3. The provisions of Article XIII shall not preclude a group of
territories having a common quota in the International Monetary Fund from
applying against imports from other countries, but not among themselves,
restrictions in accordance with the provisions of Article XII or of
Section B of Article XVIII on condition that such restrictions are in all
other respects consistent with the provisions of Article XIII.
4. A contracting party applying import restrictions under Article XII or
under Section B of Article XVIII shall not be precluded by Articles XI to
XV or Section B of Article XVIII of this Agreement from applying measures
to direct its exports in such a manner as to increase its earnings of
currencies which it can use without deviation from the provisions of
Article XIII.
5. A contracting party shall not be precluded by Articles XI to XV,
inclusive, or by Section B of Article XVIII, of this Agreement from
applying quantitative restrictions:
(a) having equivalent effect to exchange restrictions authorized under
Section 3 (b) of Article VII of the Articles of Agreement of the
International Monetary Fund, or
(b) under the preferential arrangements provided for in Annex A of this
Agreement, pending the outcome of the negotiations referred to
therein.
Article XV
Exchange Arrangements
1. The CONTRACTING PARTIES shall seek co-operation with the International
Monetary Fund to the end that the CONTRACTING PARTIES and the Fund may
pursue a co-ordinated policy with regard to exchange questions within the
jurisdiction of the Fund and questions of quantitative restrictions and
other trade measures within the jurisdiction of the CONTRACTING PARTIES.
2. In all cases in which the CONTRACTING PARTIES are called upon to
consider or deal with problems concerning monetary reserves, balances of
payments or foreign exchange arrangements, they shall consult fully with
the International Monetary Fund. In such consultations, the CONTRACTING
PARTIES shall accept all findings of statistical and other facts
presented by the Fund relating to foreign exchange, monetary reserves and
balances of payments, and shall accept the determination of the Fund as
to whether action by a contracting party in exchange matters is in
accordance with the Articles of Agreement of the International Monetary
Fund, or with the terms of a special exchange agreement between that
contracting party and the CONTRACTING PARTIES. The CONTRACTING PARTIES,
in reaching their final decision in cases involving the criteria set
forth in paragraph 2 (a) of Article XII or in paragraph 9 of Article
XVIII, shall accept the determination of the Fund as to what constitutes
a serious decline in the contracting party's monetary reserves, a very
low level of its monetary reserves or a reasonable rate of increase in
its monetary reserves, and as to the financial aspects of other matters
covered in consultation in such cases.
3. The CONTRACTING PARTIES shall seek agreement with the Fund regarding
procedures for consultation under paragraph 2 of this Article.
4. Contracting parties shall not, by exchange action, frustrate the
intent of the provisions of this Agreement, nor, by trade action, the
intent of the provisions of the Articles of Agreement of the
International Monetary Fund.
5. If the CONTRACTING PARTIES consider, at any time, that exchange
restrictions on payments and transfers in connexion with imports are
being applied by a contracting party in a manner inconsistent with the
exceptions provided for in this Agreement for quantitative restrictions,
they shall report thereon to the Fund.
6. Any contracting party which is not a member of the Fund shall, within
a time to be determined by the CONTRACTING PARTIES after consultation
with the Fund, become a member of the Fund, or, failing that, enter into
a special exchange agreement with the CONTRACTING PARTIES. A contracting
party which ceases to be a member of the Fund shall forthwith enter into
a special exchange agreement with the CONTRACTING PARTIES. Any special
exchange agreement entered into by a contracting party under this
paragraph shall thereupon become part of its obligations under this
Agreement.
7. (a) A special exchange agreement between a contracting party and the
CONTRACTING PARTIES under paragraph 6 of this Article shall provide to
the satisfaction of the CONTRACTING PARTIES that the objectives of this
Agreement will not be frustrated as a result of action in exchange
matters by the contracting party in question.
(b) The terms of any such agreement shall not impose obligations on
the contracting party in exchange matters generally more restrictive than
those imposed by the Articles of Agreement of the International Monetary
Fund on members of the Fund.
8. A contracting party which is not a member of the Fund shall furnish
such information within the general scope of section 5 of Article VIII of
the Articles of Agreement of the International Monetary Fund as the
CONTRACTING PARTIES may require in order to carry out their functions
under this Agreement.
9. Nothing in this Agreement shall preclude:
(a) the use by a contracting party of exchange controls or exchange
restrictions in accordance with the Articles of Agreement of the
International Monetary Fund or with that contracting party's
special exchange agreement with the CONTRACTING PARTIES, or
(b) the use by a contracting party of restrictions or controls on
imports or exports, the sole effect of which, additional to the
effects permitted under Articles XI, XII, XIII and XIV, is to make
effective such exchange controls or exchange restrictions.
Article XVI
Subsidies
Section A--Subsidies in General
1. If any contracting party grants or maintains any subsidy, including
any form of income or price support, which operates directly or
indirectly to increase exports of any product from, or to reduce imports
of any product into, its territory, it shall notify the CONTRACTING
PARTIES in writing of the extent and nature of the subsidization, of the
estimated effect of the subsidization on the quantity of the affected
product or products imported into or exported from its territory and of
the circumstances making the subsidization necessary. In any case in
which it is determined that serious prejudice to the interests of any
other contracting party is caused or threatened by any such
subsidization, the contracting party granting the subsidy shall, upon
request, discuss with the other contracting party or parties concerned,
or with the CONTRACTING PARTIES, the possibility of limiting the
subsidization.
Section B--Additional Provisions on Export Subsidies
2. The contracting parties recognize that the granting by a contracting
party of a subsidy on the export of any product may have harmful effects
for other contracting parties, both importing and exporting, may cause
undue disturbance to their normal commercial interests, and may hinder
the achievement of the objectives of this Agreement.
3. Accordingly, contracting parties should seek to avoid the use of
subsidies on the export of primary products. If, however, a contracting
party grants directly or indirectly any form of subsidy which operates to
increase the export of any primary product from its territory, such
subsidy shall not be applied in a manner which results in that
contracting party having more than an equitable share of world export
trade in that product, account being taken of the shares of the
contracting parties in such trade in the product during a previous
representative period, and any special factors which may have affected or
may be affecting such trade in the product.
4. Further, as from 1 January 1958 or the earliest practicable date
thereafter, contracting parties shall cease to grant either directly or
indirectly any form of subsidy on the export of any product other than a
primary product which subsidy results in the sale of such product for
export at a price lower than the comparable price charged for the like
product to buyers in the domestic market. Until 31 December 1957 no
contracting party shall extend the scope of any such subsidization beyond
that existing on 1 January 1955 by the introduction of new, or the
extension of existing, subsidies.
5. The CONTRACTING PARTIES shall review the operation of the provisions
of this Article from time to time with a view to examining its
effectiveness, in the light of actual experience, in promoting the
objectives of this Agreement and avoiding subsidization seriously
prejudicial to the trade or interests of contracting parties.
Article XVII
State Trading Enterprises
1. (a) Each contracting party undertakes that if it establishes or
maintains a State enterprise, wherever located, or grants to any
enterprise, formally or in effect, exclusive or special privileges, such
enterprise shall, in its purchases or sales involving either imports or
exports, act in a manner consistent with the general principles of
non-discriminatory treatment prescribed in this Agreement for
governmental measures affecting imports or exports by private traders.
(b) The provisions of sub-paragraph (a) of this paragraph shall be
understood to require that such enterprises shall, having due regard to
the other provisions of this Agreement, make any such purchases or sales
solely in accordance with commercial considerations, including price,
quality, availability, marketability, transportation and other conditions
of purchase or sale, and shall afford the enterprises of the other
contracting parties adequate opportunity, in accordance with customary
business practice, to compete for participation in such purchases or
sales.
(c) No contracting party shall prevent any enterprise (whether or not
an enterprise described in sub-paragraph (a) of this paragraph) under its
jurisdiction from acting in accordance with the principles of
subparagraphs (a) and (b) of this paragraph.
2. The provisions of paragraph 1 of this Article shall not apply to
imports of products for immediate or ultimate consumption in governmental
use and not otherwise for resale or use in the production of goods for
sale. With respect to such imports, each contracting party shall accord
to the trade of the other contracting parties fair and equitable
treatment.
3. The contracting parties recognize that enterprises of the kind
described in paragraph 1 (a) of this Article might be operated so as to
create serious obstacles to trade; thus negotiations on a reciprocal and
mutually advantageous basis designed to limit or reduce such obstacles
are of importance to the expansion of international trade.
4. (a) Contracting parties shall notify the CONTRACTING PARTIES of the
products which arc imported into or exported from their territories by
enterprises of the kind described in paragraph 1 (a) of this Article.
(b) A contracting party establishing, maintaining or authorizing an
import monopoly of a product, which is not the subject of a concession
under Article II, shall, on the request of another contracting party
having a substantial trade in the product concerned, inform the
CONTRACTING PARTIES of the import mark-up on the product during a recent
representative period, or, when it is not possible to do so, of the price
charged on the resale of the product.
(c) The CONTRACTING PARTIES may, at the request of a contracting party
which has reason to believe that its interests under this Agreement are
being adversely affected by the operations of an enterprise of the kind
described in paragraph 1 (a), request the contracting party establishing,
maintaining or authorizing such enterprise to supply information about
its operations related to the carrying out of the provisions of this
Agreement.
(d) The provisions of this paragraph shall not require any contracting
party to disclose confidential information which would impede law
enforcement or otherwise be contrary to the public interest or would
prejudice the legitimate commercial interests of particular enterprises.
Article XVIII
Governmental Assistance to Economic Development
1. The contracting parties recognize that the attainment of the
objectives of this Agreement will be facilitated by the progressive
development of their economies, particularly of those contracting parties
the economies of which can only support low standards of living and are
in the early stages of development.
2. The contracting parties recognize further that it may be necessary for
those contracting parties, in order to implement programmes and policies
of economic development designed to raise the general standard of living
of their people, to take protective or other measures affecting imports,
and that such measures are justified in so far as they facilitate the
attainment of the objectives of this Agreement. They agree, therefore,
that those contracting parties should enjoy additional facilities to
enable them (a) to maintain sufficient flexibility in their tariff
structure to be able to grant the tariff protection required for the
establishment of a particular industry and (b) to apply quantitative
restrictions for balance of payments purposes in a manner which takes
full account of the continued high level of demand for imports likely to
be generated by their programmes of economic development.
3. The contracting parties recognize finally that, with those additional
facilities which are provided for in Sections A and B of this Article,
the provisions of this Agreement would normally be sufficient to enable
contracting parties to meet the requirements of their economic
development. They agree, however, that there may be circumstances where
no measure consistent with those provisions is practicable to permit a
contracting party in the process of economic development to grant the
governmental assistance required to promote the establishment of
particular industries with a view to raising the general standard of
living of its people. Special procedures are laid down in Sections C and
D of this Article to deal with those cases.
4. (a) Consequently, a contracting party the economy of which can only
support low standards of living and is in the early stages of development
shall be free to deviate temporarily from the provisions of the other
Articles of this Agreement, as provided in Sections A, B and C of this
Article.
(b) A contracting party the economy of which is in the process of
development, but which does not come within the scope of sub-paragraph
(a) above, may submit applications to the CONTRACTING PARTIES under
Section D of this Article.
5. The contracting parties recognize that the export earnings of
contracting parties, the economies of which are of the type described in
paragraph 4 (a) and (b) above and which depend on exports of a small
number of primary commodities, may be seriously reduced by a decline in
the sale of such commodities. Accordingly, when the exports of primary
commodities by such a contracting party are seriously affected by
measures taken by another contracting party, it may have resort to the
consultation provisions of Article XXII of this Agreement.
6. The CONTRACTING PARTIES shall review annually all measures applied
pursuant to the provisions of Sections C and D of this Article.
Section A
7. (a) If a contracting party coming within the scope of paragraph 4 (a)
of this Article considers it desirable, in order to promote the
establishment of a particular industry with a view to raising the general
standard of living of its people, to modify or withdraw a concession
included in the appropriate Schedule annexed to this Agreement, it shall
notify the CONTRACTING PARTIES to this effect and enter into negotiations
with any contracting party with which such concession was initially
negotiated, and with any other contracting party determined by the
CONTRACTING PARTIES to have a substantial interest therein. If agreement
is reached between such contracting parties concerned, they shall be free
to modify or withdraw concessions under the appropriate Schedules to this
Agreement in order to give effect to such agreement, including any
compensatory adjustments involved.
(b) If agreement is not reached within sixty days after the
notification provided for in sub-paragraph (a) above, the contracting
party which proposes to modify or withdraw the concession may refer the
matter to the CONTRACTING PARTIES, which shall promptly examine it. If
they find that the contracting party which proposes to modify or withdraw
the concession has made every effort to reach an agreement and that the
compensatory adjustment offered by it is adequate, that contracting party
shall be free to modify or withdraw the concession if, at the same time,
it gives effect to the compensatory adjustment. If the CONTRACTING
PARTIES do not find that the compensation offered by a contracting party
proposing to modify or withdraw the concession is adequate, but find that
it has made every reasonable effort to offer adequate compensation, that
contracting party shall be free to proceed with such modification or
withdrawal. If such action is taken, any other contracting party referred
to in sub-paragraph (a) above shall be free to modify or withdraw
substantially equivalent concessions initially negotiated with the
contracting party which has taken the action.
Section B
8. The contracting parties recognize that contracting parties coming
within the scope of paragraph 4 (a) of this Article tend, when they are
in rapid process of development, to experience balance of payments
difficulties arising mainly from efforts to expand their internal markets
as well as from the instability in their terms of trade.
9. In order to safeguard its external financial position and to ensure a
level of reserves adequate for the implementation of its programme of
economic development, a contracting party coming within the scope of
paragraph 4 (a) of this Article may, subject to the provisions of
paragraphs 10 to 12, control the general level of its imports by
restricting the quantity or value of merchandise permitted to be
imported; Provided that the import restrictions instituted, maintained or
intensified shall not exceed those necessary:
(a) to forestall the threat of, or to stop, a serious decline in its
monetary reserves, or
(b) in the case of a contracting party with inadequate monetary
reserves, to achieve a reasonable rate of increase in its reserves.
Due regard shall be paid in either case to any special factors which may
be affecting the reserves of the contracting party or its need for
reserves, including, where special external credits or other resources
are available to it, the need to provide for the appropriate use of such
credits or resources.
10. In applying these restrictions, the contracting party may determine
their incidence on imports of different products or classes of products
in such a way as to give priority to the importation of those products
which are more essential in the light of its policy of economic
development; Provided that the restrictions are so applied as to avoid
unnecessary damage to the commercial or economic interests of any other
contracting party and not to prevent unreasonably the importation of any
description of goods in minimum commercial quantities the exclusion of
which would impair regular channels of trade; and Provided further that
the restrictions are not so applied as to prevent the importation of
commercial samples or to prevent compliance with patent, trade mark,
copyright or similar procedures.
11. In carrying out its domestic policies, the contracting party
concerned shall pay due regard to the need for restoring equilibrium in
its balance of payments on a sound and lasting basis and to the
desirability of assuring an economic employment of productive resources.
It shall progressively relax any restrictions applied under this Section
as conditions improve, maintaining them only to the extent necessary
under the terms of paragraph 9 of this Article and shall eliminate them
when conditions no longer justify such maintenance; Provided that no
contracting party shall be required to withdraw or modify restrictions on
the ground that a change in its development policy would render
unnecessary the restrictions which it is applying under this Section.
12. (a) Any contracting party applying new restrictions or raising the
general level of its existing restrictions by a substantial
intensification of the measures applied under this Section, shall
immediately after instituting or intensifying such restrictions (or, in
circumstances in which prior consultation is practicable, before doing
so) consult with the CONTRACTING PARTIES as to the nature of its balance
of payments difficulties, alternative corrective measures which may be
available, and the possible effect of the restrictions on the economies
of other contracting parties.
(b) On a date to be determined by them, the CONTRACTING PARTIES shall
review all restrictions still applied under this Section on that date.
Beginning two years after that date, contracting parties applying
restrictions under this Section shall enter into consultations of the
type provided for in sub-paragraph (a) above with the CONTRACTING PARTIES
at intervals of approximately, but not less than, two years according to
a programme to be drawn up each year by the CONTRACTING PARTIES; Provided
that no consultation under this sub-paragraph shall take place within two
years after the conclusion of a consultation of a general nature under
any other provision of this paragraph.
(c) (i) If, in the course of consultations with a contracting party under
sub-paragraph (a) or (b) of this paragraph, the CONTRACTING PARTIES find
that the restrictions are not consistent with the provisions of this
Section or with those of Article XIII (subject to the provisions of
Article XIV), they shall indicate the nature of the inconsistency and may
advise that the restrictions be suitably modified.
(ii) If, however, as a result of the consultations, the CONTRACTING
PARTIES determine that the restrictions are being applied in a manner
involving an inconsistency of a serious nature with the provisions of
this Section or with those of Article XIII (subject to the provisions of
Article XIV) and that damage to the trade of any contracting party is
caused or threatened thereby, they shall so inform the contracting party
applying the restrictions and shall make appropriate recommendations for
securing conformity with such provisions within a specified period. If
such contracting party does not comply with these recommendations within
the specified period, the CONTRACTING PARTIES may release any contracting
party the trade of which is adversely affected by the restrictions from
such obligations under this Agreement towards the contracting party
applying the restrictions as they determine to be appropriate in the
circumstances.
(d) The CONTRACTING PARTIES shall invite any contracting party which
is applying restrictions under this Section to enter into consultations
with them at the request of any contracting party which can establish a
prima facie case that the restrictions are inconsistent with the
provisions of this Section or with those of Article XIII (subject to the
provisions of Article XIV) and that its trade is adversely affected
thereby. However, no such invitation shall be issued unless the
CONTRACTING PARTIES have ascertained that direct discussions between the
contracting parties concerned have not been successful. If, as a result
of the consultations with the CONTRACTING PARTIES no agreement is reached
and they determine that the restrictions are being applied inconsistently
with such provisions, and that damage to the trade of the contracting
party initiating the procedure is caused or threatened thereby, they
shall recommend the withdrawal or modification of the restrictions. If
the restrictions are not withdrawn or modified within such time as the
CONTRACTING PARTIES may prescribe, they may release the contracting party
initiating the procedure from such obligations under this Agreement
towards the contracting party applying the restrictions as they determine
to be appropriate in the circumstances.
(e) If a contracting party against which action has been taken in
accordance with the last sentence of sub-paragraph (c) (ii) or (d) of
this paragraph, finds that the release of obligations authorized by the
CONTRACTING PARTIES adversely affects the operation of its programme and
policy of economic development, it shall be free, not later than sixty
days after such action is taken, to give written notice to the Executive
Secretary 1 to the CONTRACTING PARTIES of its intention to withdraw from
this Agreement and such withdrawal shall take effect on the sixtieth day
following the day on which the notice is received by him.
(f) In proceeding under this paragraph, the CONTRACTING PARTIES shall
have due regard to the factors referred to in paragraph 2 of this
Article. Determinations under this paragraph shall be rendered
expeditiously and, if possible, within sixty days of the initiation of
the consultations.
Section C
13. If a contracting party coming within the scope of paragraph 4 (a) of
this Article finds that governmental assistance is required to promote
the establishment of a particular industry with a view to raising the
general standard of living of its people, but that no measure consistent
with the other provisions of this Agreement is practicable to achieve
that objective, it may have recourse to the provisions and procedures set
out in this Section.
14. The contracting party concerned shall notify the CONTRACTING PARTIES
of the special difficulties which it meets in the achievement of the
objective outlined in paragraph 13 of this Article and shall indicate the
specific measure affecting imports which it proposes to introduce in
order to remedy these difficulties. It shall not introduce that measure
before the expiration of the time-limit laid down in paragraph 15 or 17,
as the case may be, or if the measure affects imports of a product which
is the subject of a concession included in the appropriate Schedule
annexed to this Agreement, unless it has secured the concurrence of the
CONTRACTING PARTIES in accordance with the provisions of paragraph 18;
Provided that, if the industry receiving assistance has already started
production, the contracting party may, after informing the CONTRACTING
PARTIES, take such measures as may be necessary to prevent, during that
period, imports of the product or products concerned from increasing
substantially above a normal level.
15. If, within thirty days of the notification of the measure, the
CONTRACTING PARTIES do not request the contracting party concerned to
consult with them, that contracting party shall be free to deviate from
the relevant provisions of the other Articles of this Agreement to the
extent necessary to apply the proposed measure.
16. If it is requested by the CONTRACTING PARTIES to do so, the
contracting party concerned shall consult with them as to the purpose of
the proposed measure, as to alternative measures which may be available
under this Agreement, and as to the possible effect of the measure
proposed on the commercial and economic interests of other contracting
parties. If, as a result of such consultation, the CONTRACTING PARTIES
agree that there is no measure consistent with the other provisions of
this Agreement which is practicable in order to achieve the objective
outlined in paragraph 13 of this Article, and concur in the proposed
measure, the contracting party concerned shall be released from its
obligations under the relevant provisions of the other Articles of this
Agreement to the extent necessary to apply that measure.
17. If, within ninety days after the date of the notification of the
proposed measure under paragraph 14 of this Article, the CONTRACTING
PARTIES have not concurred in such measure, the contracting party
concerned may introduce the measure proposed after informing the
CONTRACTING PARTIES.
18. If the proposed measure affects a product which is the subject of a
concession included in the appropriate Schedule annexed to this
Agreement, the contracting party concerned shall enter into consultations
with any other contracting party with which the concession was initially
negotiated, and with any other contracting party determined by the
CONTRACTING PARTIES to have a substantial interest therein. The
CONTRACTING PARTIES shall concur in the measure if they agree that there
is no measure consistent with the other provisions of this Agreement
which is practicable in order to achieve the objective set forth in
paragraph 13 of this Article, and if they are satisfied:
(a) that agreement has been reached with such other contracting parties
as a result of the consultations referred to above, or
(b) if no such agreement has been reached within sixty days after the
notification provided for in paragraph 14 has been received by the
CONTRACTING PARTIES, that the contracting party having recourse to
this Section has made all reasonable efforts to reach an agreement
and that the interests of other contracting parties are adequately
safeguarded.
The contracting party having recourse to this Section shall thereupon be
released from its obligations under the relevant provisions of the other
Articles of this Agreement to the extent necessary to permit it to apply
the measure.
19. If a proposed measure of the type described in paragraph 13 of this
Article concerns an industry the establishment of which has in the
initial period been facilitated by incidental protection afforded by
restrictions imposed by the contracting party concerned for balance of
payments purposes under the relevant provisions of this Agreement, that
contracting party may resort to the provisions and procedures of this
Section; Provided that it shall not apply the proposed measure without
the concurrence of the CONTRACTING PARTIES.
20. Nothing in the preceding paragraphs of this Section shall authorize
any deviation from the provisions of Articles I, II and XIII of this
Agreement. The provisos to paragraph 10 of this Article shall also be
applicable to any restriction under this Section.
21. At any time while a measure is being applied under paragraph 17 of
this Article any contracting party substantially affected by it may
suspend the application to the trade of the contracting party having
recourse to this Section of such substantially equivalent concessions or
other obligations under this Agreement the suspension of which the
CONTRACTING PARTIES do not disapprove; Provided that sixty days' notice
of such suspension is given to the CONTRACTING PARTIES not later than six
months after the measure has been introduced or changed substantially to
the detriment of the contracting party affected. Any such contracting
party shall afford adequate opportunity for consultation in accordance
with the provisions of Article XXII of this Agreement.
Section D
22. A contracting party coming within the scope of sub-paragraph 4 (b) of
this Article desiring, in the interest of the development of its economy,
to introduce a measure of the type described in paragraph 13 of this
Article in respect of the establishment of a particular industry may
apply to the CONTRACTING PARTIES for approval of such measure. The
CONTRACTING PARTIES shall promptly consult with such contracting party
and shall, in making their decision, be guided by the considerations set
out in paragraph 16. If the CONTRACTING PARTIES concur in the proposed
measure the contracting party concerned shall be released from its
obligations under the relevant provisions of the other Articles of this
Agreement to the extent necessary to permit it to apply the measure. If
the proposed measure affects a product which is the subject of a
concession included in the appropriate Schedule annexed to this
Agreement, the provisions of paragraph 18 shall apply.
23. Any measure applied under this Section shall comply with the
provisions of paragraph 20 of this Article.
Article XIX
Emergency Action on Imports of Particular Products
1. (a) If, as a result of unforeseen developments and of the effect of
the obligations incurred by a contracting party under this Agreement,
including tariff concessions, any product is being imported into the
territory of that contracting party in such increased quantities and
under such conditions as to cause or threaten serious injury to domestic
producers in that territory of like or directly competitive products, the
contracting party shall be free, in respect of such product, and to the
extent and for such time as may be necessary to prevent or remedy such
injury, to suspend the obligation in whole or in part or to withdraw or
modify the concession.
(b) If any product, which is the subject of a concession with respect
to a preference, is being imported into the territory of a contracting
party in the circumstances set forth in sub-paragraph (a) of this
paragraph, so as to cause or threaten serious injury to domestic
producers of like or directly competitive products in the territory of a
contracting party which receives or received such preference, the
importing contracting party shall be free, if that other contracting
party so requests, to suspend the relevant obligation in whole or in part
or to withdraw or modify the concession in respect of the product, to the
extent and for such time as may be necessary to prevent or remedy such
injury.
2. Before any contracting party shall take action pursuant to the
provisions of paragraph 1 of this Article, it shall give notice in
writing to the CONTRACTING PARTIES as far in advance as may be
practicable and shall afford the CONTRACTING PARTIES and those
contracting parties having a substantial interest as exporters of the
product concerned an opportunity to consult with it in respect of the
proposed action. When such notice is given in relation to a concession
with respect to a preference, the notice shall name the contracting party
which has requested the action. In critical circumstances, where delay
would cause damage which it would be difficult to repair, action under
paragraph 1 of this Article may be taken provisionally without prior
consultation, on the condition that consultation shall be effected
immediately after taking such action.
3. (a) If agreement among the interested contracting parties with respect
to the action is not reached, the contracting party which proposes to
take or continue the action shall, nevertheless, be free to do so, and if
such action is taken or continued, the affected contracting parties shall
then be free, not later than ninety days after such action is taken, to
suspend, upon the expiration of thirty days from the day on which written
notice of such suspension is received by the CONTRACTING PARTIES, the
application to the trade of the contracting party taking such action, or,
in the case envisaged in paragraph 1 (b) of this Article, to the trade of
the contracting party requesting such action, of such substantially
equivalent concessions or other obligations under this Agreement the
suspension of which the CONTRACTING PARTIES do not disapprove.
(b) Notwithstanding the provisions of sub-paragraph (a) of this
paragraph, where action is taken under paragraph 2 of this Article
without prior consultation and causes or threatens serious injury in the
territory of a contracting party to the domestic producers of products
affected by the action, that contracting party shall, where delay would
cause damage difficult to repair, be free to suspend, upon the taking of
the action and throughout the period of consultation, such concessions or
other obligations as may be necessary to prevent or remedy the injury.
Article XX
General Exceptions
Subject to the requirement that such measures are not applied in a manner
which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail, or a
disguised restriction on international trade, nothing in this Agreement
shall be construed to prevent the adoption or enforcement by any
contracting party of measures:
(a) necessary to protect public morals;
(b) necessary to protect human, animal or plant life or health;
(c) relating to the importation or exportation of gold or silver;
(d) necessary to secure compliance with laws or regulations which are
not inconsistent with the provisions of this Agreement, including
those relating to customs enforcement, the enforcement of
monopolies operated under paragraph 4 of Article II and Article
XVII, the protection of patents, trade marks and copyrights, and
the prevention of deceptive practices;
(e) relating to the products of prison labour;
(f) imposed for the protection of national treasures of artistic,
historic or archaeological value;
(g) relating to the conservation of exhaustible natural resources if
such measures are made effective in conjunction with restrictions
on domestic production or consumption;
(h) undertaken in pursuance of obligations under any intergovernmental
commodity agreement which conforms to criteria submitted to the
CONTRACTING PARTIES and not disapproved by them or which is itself
so submitted and not so disapproved;
(i) involving restrictions on exports of domestic materials necessary
to ensure essential quantities of such materials to a domestic
processing industry during periods when the domestic price of such
materials is held below the world price as part of a governmental
stabilization plan; Provided that such restrictions shall not
operate to increase the exports of or the protection afforded to
such domestic industry, and shall not depart from the provisions of
this Agreement relating to non-discrimination;
(j) essential to the acquisition or distribution of products in general
or local short supply; Provided that any such measures shall be
consistent with the principle that all contracting parties are
entitled to an equitable share of the international supply of such
products, and that any such measures, which are inconsistent with
the other provisions of this Agreement shall be discontinued as
soon as the . conditions giving rise to them have ceased to exist.
The CONTRACTING PARTIES shall review the need for this
sub-paragraph not later than 30 June 1960.
Article XXI
Security Exceptions
Nothing in this Agreement shall be construed
(a) to require any contracting party to furnish any information the
disclosure of which it considers contrary to its essential security
interests; or
(b) to prevent any contracting party from taking any action which it
considers necessary for the protection of its essential security
interests
(i) relating to fissionable materials or the materials from which
they are derived;
(ii) relating to the traffic in arms, ammunition and implements of
war and to such traffic in other goods and materials as is
carried on directly or indirectly for the purpose of
supplying a military establishment;
(iii) taken in time of war or other emergency in international
relations; or
(c) to prevent any contracting party from taking any action in
pursuance of its obligations under the United Nations Charter for
the maintenance of international peace and security.
Article XXII
Consultation
1. Each contracting party shall accord sympathetic consideration to, and
shall afford adequate opportunity for consultation regarding, such
representations as may be made by another contracting party with respect
to any matter affecting the operation of this Agreement.
2. The CONTRACTING PARTIES may, at the request of a contracting party,
consult with any contracting party or parties in respect of any matter
for which it has not been possible to find a satisfactory solution
through consultation under paragraph 1.
Article XXIII
Nullification or Impairment
1. If any contracting party should consider that any benefit accruing to
it directly or indirectly under this Agreement is being nullified or
impaired or that the attainment of any objective of the Agreement is
being impeded as the result of
(a) the failure of another contracting party to carry out its
obligations under this Agreement, or
(b) the application by another contracting party of any measure,
whether or not it conflicts with the provisions of this Agreement,
or
(c) the existence of any other situation,
the contracting party may, with a view to the satisfactory adjustment of
the matter, make written representations or proposals to the other
contracting party or parties which it considers to be concerned. Any
contracting party thus approached shall give sympathetic consideration to
the representations or proposals made to it.
2. If no satisfactory adjustment is effected between the contracting
parties concerned within a reasonable time, or if the difficulty is of
the type described in paragraph 1(c) of this Article, the matter may be
referred to the CONTRACTING PARTIES. The CONTRACTING PARTIES shall
promptly investigate any matter so referred to them and shalt make
appropriate recommendations to the contracting parties which they
consider to be concerned, or give a ruling on the matter, as appropriate.
The CONTRACTING PARTIES may consult with contracting parties, with the
Economic and Social Council of the United Nations and with any
appropriate inter-governmental organization in cases where they consider
such consultation necessary. If the CONTRACTING PARTIES consider that the
circumstances are serious enough to justify such action, they may
authorize a contracting party or parties to suspend the application to
any other contracting party or parties of such concessions or other
obligations under this Agreement as they determine to be appropriate in
the circumstances. If the application to any contracting party of any
concession or other obligation is in fact suspended, that contracting
party shall then be free, not later than sixty days after such action is
taken, to give written notice to the Executive Secretary to the
CONTRACTING PARTIES of its intention to withdraw from this Agreement and
such withdrawal shall take effect upon the sixtieth day following the day
on which such notice is received by him.
PART III
Article XXIV
Territorial Application--Frontier Traffic--Customs Unions
and Free-trade Areas
1. The provisions of this Agreement shalt apply to the metropolitan
customs territories of the contracting parties and to any other customs
territories in respect of which this Agreement has been accepted under
Article XXVI or is being applied under Article XXXIII or pursuant to the
Protocol of Provisional Application. Each such customs territory shall,
exclusively for the purposes of the territorial application of this
Agreement, be treated as though it were a contracting party; Provided
that the provisions of this paragraph shall not be construed to create
any rights or obligations as between two or more customs territories in
respect of which this Agreement has been accepted under Article XXVI or
is being applied under Article XXXIII or pursuant to the Protocol of
Provisional Application by a single contracting party.
2. For the purposes of this Agreement a customs territory shall be
understood to mean any territory with respect to which separate tariffs
or other regulations of commerce are maintained for a substantial part of
the trade of such territory with other territories.
3. The provisions of this Agreement shalt not be construed to prevent:
(a) Advantages accorded by any contracting party to adjacent countries
in order to facilitate frontier traffic;
(b) Advantages accorded to the trade with the Free Territory of Trieste
by countries contiguous to that territory, provided that such
advantages are not in conflict with the Treaties of Peace arising
out of the Second World War.
4. The contracting parties recognize the desirability of increasing
freedom of trade by the development, through voluntary agreements, of
closer integration between the economies of the countries parties to such
agreements. They also recognize that the purpose of a customs union or of
a free-trade area should be to facilitate trade between the constituent
territories and not to raise barriers to the trade of other contracting
parties with such territories.
5. Accordingly, the provisions of this Agreement shall not prevent, as
between the territories of contracting parties, the formation of a
customs union or of a free-trade area or the adoption of an interim
agreement necessary for the formation of a customs union or of a
free-trade area; Provided that:
(a) with respect to a customs union, or an interim agreement leading to
the formation of a customs union, the duties and other regulations
of commerce imposed at the institution of any such union or interim
agreement in respect of trade with contracting parties not parties
to such union or agreement shall not on the whole be higher or more
restrictive than the general incidence of the duties and
regulations of commerce applicable in the constituent territories
prior to the formation of such union or the adoption of such
interim agreement, as the case may be;
(b) with respect to a free-trade area, or an interim agreement leading
to the formation of a free-trade area, the duties and other
regulations of commerce maintained in each of the constituent
territories and applicable at the formation of such free-trade area
or the adoption of such interim agreement to the trade of
contracting parties not included in such area or not parties to
such agreement shall not be higher or more restrictive than the
corresponding duties and other regulations of commerce existing in
the same constituent territories prior to the formation of the
free-trade area, or interim agreement, as the case may be; and
(c) any interim agreement referred to in sub-paragraphs (a) and (b)
shall include a plan and schedule for the formation of such a
customs union or of such a free-trade area within a reasonable
length of time.
6. If, in fulfilling the requirements of sub-paragraph 5 (a), a
contracting party proposes to increase any rate of duty inconsistently
with the provisions of Article II, the procedure set forth in Article
XXVIII shall apply. In providing for compensatory adjustment, due account
shall be taken of the compensation already afforded by the reductions
brought about in the corresponding duty of the other constituents of the
union.
7. (a) Any contracting party deciding to enter into a customs union or
free-trade area, or an interim agreement leading to the formation of such
a union or area, shall promptly notify the CONTRACTING PARTIES and shall
make available to them such information regarding the proposed union or
area as will enable them to make such reports and recommendations to
contracting parties as they may deem appropriate.
(b) If, after having studied the plan and schedule included in an
interim agreement referred to in paragraph 5 in consultation with the
parties to that agreement and taking due account of the information made
available in accordance with the provisions of sub-paragraph (a), the
CONTRACTING PARTIES find that such agreement is not likely to result in
the formation of a customs union or of a free-trade area within the
period contemplated by the parties to the agreement or that such period
is not a reasonable one, the CONTRACTING PARTIES shall make
recommendations to the parties to the agreement. The parties shall not
maintain or put into force, as the case may be, such agreement if they
are not prepared to modify it in accordance with these recommendations.
(c) Any substantial change in the plan or schedule referred to in
paragraph 5 (c) shall be communicated to the CONTRACTING PARTIES, which
may request the contracting parties concerned to consult with them if the
change seems likely to jeopardize or delay unduly the formation of the
customs union or of the free-trade area.
8. For the purposes of this Agreement:
(a) A customs union shall be understood to mean the substitution of a
single customs territory for two or more customs territories, so
that
(i) duties and other restrictive regulations of commerce (except,
where necessary, those permitted under Articles XI, XII,
XIII, XIV, XV and XX) are eliminated with respect to
substantially all the trade between the constituent
territories of the union or at least with respect to
substantially all the trade in products originating in such
territories, and,
(ii) subject to the provisions of paragraph 9, substantially the
same duties and other regulations of commerce are applied by
each of the members of the union to the trade of territories
not included in the union;
(b) A free-trade area shall be understood to mean a group of two or
more customs territories in which the duties and other restrictive
regulations of commerce (except, where necessary, those permitted
under Articles XI, XII, XIII, XIV, XV and XX) are eliminated on
substantially all the trade between the constituent territories in
products originating in such territories.
9. The preferences referred to in paragraph 2 of Article I shall not be
affected by the formation of a customs union or of a free-trade area but
may be eliminated or adjusted by means of negotiations with contracting
parties affected. This procedure of negotiations with affected
contracting parties shall, in particular, apply to the elimination of
preferences required to conform with the provisions of paragraph 8 (a)
(i) and paragraph 8 (b).
10. The CONTRACTING PARTIES may by a two-thirds majority approve
proposals which do not fully comply with the requirements of paragraphs 5
to 9 inclusive, provided that such proposals lead to the formation of a
customs union or a free-trade area in the sense of this Article.
11. Taking into account the exceptional circumstances arising out of the
establishment of India and Pakistan as independent States and recognizing
the fact that they have long constituted an economic unit, the
contracting parties agree that the provisions of this Agreement shall not
prevent the two countries from entering into special arrangements with
respect to the trade between them, pending the establishment of their
mutual trade relations on a definitive basis.
12. Each contracting party shall take such reasonable measures as may be
available to it to ensure observance of the provisions of this Agreement
by the regional and local governments and authorities within its
territory.
Article XXV
Joint Action by the Contracting Parties
1. Representatives of the contracting parties shall meet from time to
time for the purpose of giving effect to those provisions of this
Agreement which involve joint action and, generally, with a view to
facilitating the operation and furthering the objectives of this
Agreement. Wherever reference is made in this Agreement to the
contracting parties acting jointly they are designated as the CONTRACTING
PARTIES.
2. The Secretary-General of the United Nations is requested to convene
the first meeting of the CONTRACTING PARTIES, which shall take place not
later than March 1, 1948.
3. Each contracting party shall be entitled to have one vote at all
meetings of the CONTRACTING PARTIES.
4. Except as otherwise provided for in this Agreement, decisions of the
CONTRACTING PARTIES shall be taken by a majority of the votes cast.
5. In exceptional circumstances not elsewhere provided for in this
Agreement, the CONTRACTING PARTIES may waive an obligation imposed upon a
contracting party by this Agreement; Provided that any such decision
shall be approved by a two-thirds majority of the votes cast and that
such majority shall comprise more than half of the contracting parties.
The CONTRACTING PARTIES may also by such a vote
(i) define certain categories of exceptional circumstances to which
other voting requirements shall apply for the waiver of
obligations, and
(ii) prescribe such criteria as may be necessary for the application of
this paragraph.
Article XXVI
Acceptance, Entry into Force and Registration
1. The date of this Agreement shall be 30 October 1947.
2. This Agreement shall be open for acceptance by any contracting party
which, on 1 March 1955, was a contracting party or was negotiating with a
view to accession to this Agreement.
3. This Agreement, done in a single English original and in a single
French original, both texts authentic, shall be deposited with the
Secretary-General of the United Nations, who shall furnish certified
copies thereof to all interested governments.
4. Each government accepting this Agreement shall deposit an instrument
of acceptance with the Executive Secretary to the CONTRACTING PARTIES,
who will inform all interested governments of the date of deposit of each
instrument of acceptance and of the day on which this Agreement enters
into force under paragraph 6 of this Article.
5. (a) Each government accepting this Agreement does so in respect of its
metropolitan territory and of the other territories for which it has
international responsibility, except such separate customs territories as
it shall notify to the Executive Secretary to the CONTRACTING PARTIES at
the time of its own acceptance.
(b) Any government, which has so notified the Executive Secretary
under the exceptions in sub-paragraph (a) of this paragraph, may at any
time give notice to the Executive Secretary that its acceptance shall be
effective in respect of any separate customs territory or territories so
excepted and such notice shall take effect on the thirtieth day following
the day on which it is received by the Executive Secretary.
(c) If any of the customs territories, in respect of which a
contracting party has accepted this Agreement, possesses or acquires full
autonomy in the conduct of its external commercial relations and of the
other matters provided for in this Agreement, such territory shall, upon
sponsorship through a declaration by the responsible contracting party
establishing the above-mentioned fact, be deemed to be a contracting
party.
6. This Agreement shall enter into force, as among the governments which
have accepted it, on the thirtieth day following the day on which
instruments of acceptance have been deposited with the Executive
Secretary to the CONTRACTING PARTIES on behalf of governments named in
Annex H, the territories of which account for 85 per centum of the total
external trade of the territories of such governments, computed in
accordance with the applicable column of percentages set forth therein.
The instrument of acceptance of each other government shall take effect
on the thirtieth day following the day on which such instrument has been
deposited.
7. The United Nations is authorized to effect registration of this
Agreement as soon as it enters into force.
Article XXVII
Withholding or Withdrawal of Concessions
Any contracting party shall at any time be free to withhold or to
withdraw in whole or in part any concession, provided for in the
appropriate Schedule annexed to this Agreement, in respect of which such
contracting party determines that it was initially negotiated with a
government which has not become, or has ceased to be, a contracting
party. A contracting party taking such action shall notify the
CONTRACTING PARTIES and, upon request, consult with contracting parties
which have a substantial interest in the product concerned.
Article XXVIII
Modification of Schedules
1. On the first day of each three-year period, the first period beginning
on 1 January 1958 (or on the first day of any other period that may be
specified by the CONTRACTING PARTIES by two-thirds of the votes cast) a
contracting party (hereafter in this Article referred to as the
"applicant contracting party") may, by negotiation and agreement with any
contracting party with which such concession was initially negotiated and
with any other contracting party determined by the CONTRACTING PARTIES to
have a principal supplying interest (which two preceding categories of
contracting parties, together with the applicant contracting party, are
in this Article hereinafter referred to as the "contracting parties
primarily concerned"), and subject to consultation with any other
contracting party determined by the CONTRACTING PARTIES to have a
substantial interest in such concession, modify or withdraw a concession
included in the appropriate Schedule annexed to this Agreement.
2. In such negotiations and agreement, which may include provision for
compensatory adjustment with respect to other products, the contracting
parties concerned shall endeavour to maintain a general level of
reciprocal and mutually advantageous concessions not less favourable to
trade than that provided for in this Agreement prior to such
negotiations.
3. (a) If agreement between the contracting parties primarily concerned
cannot be reached before 1 January 1958 or before the expiration of a
period envisaged in paragraph 1 of this Article, the contracting party
which proposes to modify or withdraw the concession shall, nevertheless,
be free to do so and if such action is taken any contracting party with
which such concession was initially negotiated, any contracting party
determined under paragraph 1 to have a principal supplying interest and
any contracting party determined under paragraph I to have a substantial
interest shall then be free not later than six months after such action
is taken, to withdraw, upon the expiration of thirty days from the day on
which written notice of such withdrawal is received by the CONTRACTING
PARTIES, substantially equivalent concessions initially negotiated with
the applicant contracting party.
(b) If agreement between the contracting parties primarily concerned
is reached but any other contracting party determined under paragraph 1
of this Article to have a substantial interest is not satisfied, such
other contracting party shall be free, not later than six months after
action under such agreement is taken, to withdraw, upon the expiration of
thirty days from the day on which written notice of such withdrawal is
received by the CONTRACTING PARTIES, substantially equivalent concessions
initially negotiated with the applicant contracting party.
4. The CONTRACTING PARTIES may, at any time, in special circumstances,
authorize a contracting party to enter into negotiations for modification
or withdrawal of a concession included in the appropriate Schedule
annexed to this Agreement subject to the following procedures and
conditions:
(a) Such negotiations* and any related consultations shall be conducted
in accordance with the provisions of paragraphs 1 and 2 of this
Article.
(b) If agreement between the contracting parties primarily concerned is
reached in the negotiations, the provisions of paragraph 3 (b) of
this Article shall apply.
(c) If agreement between the contracting parties primarily concerned is
not reached within a period of sixty days after negotiations have
been authorized, or within such longer period as the CONTRACTING
PARTIES may have prescribed, the applicant contracting party may
refer the matter to the CONTRACTING PARTIES.
(d) Upon such reference, the CONTRACTING PARTIES shall promptly examine
the matter and submit their views to the contracting parties
primarily concerned with the aim of achieving a settlement. If a
settlement is reached, the provisions of paragraph 3 (b) shall
apply as if agreement between the contracting parties primarily
concerned had been reached. If no settlement is reached between the
contracting parties primarily concerned, the applicant contracting
party shall be free to modify or withdraw the concession, unless
the CONTRACTING PARTIES determine that the applicant contracting
party has unreasonably failed to offer adequate compensation. If
such action is taken, any contracting party with which the
concession was initially negotiated, any contracting party
determined under paragraph 4 (a) to have a principal supplying
interest and any contracting party determined under paragraph 4 (a)
to have a substantial interest, shall be free, not later than six
months after such action is taken, to modify or withdraw, upon the
expiration of thirty days from the day on which written notice of
such withdrawal is received by the CONTRACTING PARTIES,
substantially equivalent concessions initially negotiated with the
applicant contracting party.
5. Before 1 January 1958 and before the end of any period envisaged in
paragraph 1 a contracting party may elect by notifying the CONTRACTING
PARTIES to reserve the right, for the duration of the next period, to
modify the appropriate Schedule in accordance with the procedures of
paragraphs 1 to 3. If a contracting party so elects, other contracting
parties shall have the right, during the same period, to modify or
withdraw, in accordance with the same procedures, concessions initially
negotiated with that contracting party.
Article XXVIII bis
Tariff Negotiations
1. The contracting parties recognize that customs duties often constitute
serious obstacles to trade; thus negotiations on a reciprocal and
mutually advantageous basis, directed to the substantial reduction of the
general level of tariffs and other charges on imports and exports and in
particular to the reduction of such high tariffs as discourage the
importation even of minimum quantities, and conducted with due regard to
the objectives of this Agreement and the varying needs of individual
contracting parties, are of great importance to the expansion of
international trade. The CONTRACTING PARTES may therefore sponsor such
negotiations from time to time.
2. (a) Negotiations under this Article may be carried out on a selective
product-by-product basis or by the application of such multilateral
procedures as may be accepted by the contracting parties concerned. Such
negotiations may be directed towards the reduction of duties, the binding
of duties at then existing levels or undertakings that individual duties
or the average duties on specified categories of products shall not
exceed specified levels. The binding against increase of low duties or of
duty-free treatment shall, in principle, be recognized as a concession
equivalent in value to the reduction of high duties.
(b) The contracting parties recognize that in general the success of
multilateral negotiations would depend on the participation of all
contracting parties which conduct a substantial proportion of their
external trade with one another.
3. Negotiations shall be conducted on a basis which affords adequate
opportunity to take into account:
(a) the needs of individual contracting parties and individual
industries;
(b) the needs of less-developed countries for a more flexible use of
tariff protection to assist their economic development and the
special needs of these countries to maintain tariffs for revenue
purposes; and
(c) all other relevant circumstances, including the fiscal,
developmental, strategic and other needs of the contracting parties
concerned.
Article XXIX
The Relation of this Agreement to the Havana Charter
1. The contracting parties undertake to observe to the fullest extent of
their executive authority the general principles of Chapters I to VI
inclusive and of Chapter IX of the Havana Charter pending their
acceptance of it in accordance with their constitutional procedures.
2. Part II of this Agreement shall be suspended on the day on which the
Havana Charter enters into force.
3. If by September 30, 1949, the Havana Charter has not entered into
force, the contracting parties shall meet before December 31, 1949, to
agree whether this Agreement shall be amended, supplemented or
maintained.
4. If at any time the Havana Charter should cease to be in force, the
CONTRACTING PARTIES shall meet as soon as practicable thereafter to agree
whether this Agreement shall be supplemented, amended or maintained.
Pending such agreement, Part II of this Agreement shall again enter into
force; Provided that the provisions of Part II other than Article XXIII
shall be replaced, mutatis mutandis, in the form in which they then
appeared in the Havana Charter; and Provided further that no contracting
party shall be bound by any provisions which did not bind it at the time
when the Havana Charter ceased to be in force.
5. If any contracting party has not accepted the Havana Charter by the
date upon which it enters into force, the CONTRACTING PARTIES shall
confer to agree whether, and if so in what way, this Agreement in so far
as it affects relations between such contracting party and other
contracting parties, shall be supplemented or amended. Pending such
agreement the provisions of Part Il of this Agreement shall,
notwithstanding the provisions of paragraph 2 of this Article, continue
to apply as between such contracting party and other contracting parties.
6. Contracting parties which are Members of the International Trade
Organization shall not invoke the provisions of this Agreement so as to
prevent the operation of any provision of the Havana Charter. The
application of the principle underlying this paragraph to any contracting
party which is not a Member of the International Trade Organization shall
be the subject of an agreement pursuant to paragraph 5 of this Article.
Articl