FOREIGN RELATIONS, 19 5 0, VOLUME I


pete for such global quotas. And, here again, the eligible countries
are not universal. For example, the global quotas set up by Denmark
and Norway are all limited to OEEC country sources, while Sweden's
global quotas are available to OEEC countries and non-OEEC sterling
area countries.
   While these measures of trade liberalization tend to further the
 objectives of the GATT in reducing trade barriers on a significant
 volume of international trade, at the same time they are tending to
 raise questions whether OEEC members are engaging in a line of
 action inconsistent with the general nondiscriminatory provisions of
 the GATT. The Finns have already informally raised this issue be-
 cause of the impact of certain Danish measures upon Finnish export
 trade,t and there are indications that the Czechs may raise the issue
 at the Fourth Session as a means of embarrassing the U.S.
   The relevant GATT provisions. The relevant provisions of Articles
 XI and XII bearing on this problem have been summarized in a
 preceding section.
   In general, they prohibit the use of quantitative restrictions on
 imports but grant a broad exemption for such restrictions when
 applied to safeguard the monetary reserves of a country in balance-of-
 payments difficulties. These provisions, it should be noted, do not of
 themselves justify the use of discriminatory import restrictions. Stand-
 ing by themselves, these provisions would authorize only a non-
 discriminatory application of quantitative restrictions in view of
 the provisions of the GATT which guarantee general most-favored-
 nation treatment.
   Article XIII, paragraph 1, of the GATT makes this point crystal
clear by providing that: "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 . . . unless the importation
of the like product of all third countries . . . is similarly prohibited
or restricted." The Article then goes on to require the use either of
global quotas or of country allocations based either on common con-
sent or a historical import pattern, as a means of implementing the
nondiscriminatory application of import restrictions.
  Authorization for the use of discriminatory balance-of-payments
import restrictions under certain circumstances is found in Article
XIV. That Article provides that a country which is applying restric-
tions under Article XII (that is to say, a country which is applying
import restrictions to safeguard its balance of payments) may ,apply
such import restrictions along certain discriminatory patterns. One

  t Legtel 455, Helsinki, Nov. 5, 1949, Secret. [Footnote in the source text.
Not
printed.]


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