FOREIGN ECONOMIC AND COMMERCIAL POLICY


free competition with other participating countries. ... The liber-
alization of trade in Europe is hampered by the desire of member
countries to retain some measure of protection. In certain cases it is
even possible that the desire for protection may be the true motive
for the maintenance of quantitative restrictions while payment dif-
ficulties are only the pretext. In most cases this attitude arises from
the fact that most countries fear the changes in the structure of their
economy which may result from       the liberalization of trade,....
Countries subject to de facto discrimination, particularly because of
their creditor position in Europe, are 'avoiding the adoption of meas-
ures of liberalization on too large a scale in order to retain a bargain-
ing counter. They are stressing the reciprocity which they expect
from other countries in such a way as to safeguard both the volume
and the nature of their exports."**
  It is reasonably evident that the practice of employing ostensible
balance-of-payments quantitative restrictions for protective purposes
is not ,confined to OEEC Countries alone. Most non-OEEC countries
under circumstances similar to thosewhich led to the admissions by
OEEC countries summarized above, would have been obliged to make
similar admissions.t t
  Notwithstanding the admissions in the OEEO         and the ialmosit
universal judgment of experts that ostensible balance-of-payments
restrictions now in effect throughout the world contain protectionist
elements not necessary for the achievement of balance-of-payments
objectives, only a few specific cases have been found in which this
fact is evident on its face beyond any serious possibility of rebuttal.
  Those cases are provided by several, of the new type of bilateral
agreement-the type which eliminates quantitative restrictions be-
tween the trading partners on all products except those listed in the
agreement. Ingeneral these agreements represent a substantial advance
over the traditional form of bilateral trade agreement which tends
to limit trade to those products listed in the .agreement. At the same
time, the new form of agreement discloses the protectionist objectives
of the parties muchmore starkly than does the old form. This is the
case because if the provisions of the agreement were in fact con-
fined to balance-of-payments objectives land if they contained no pro-
tectionist motivation, only one party, but not both, would be imposing

  ** OEEC Council, Liberalization of Intra-European Trade, First Report by
the Central Group, Paris, Oct. 28, 1949, C (49)167, Restricted. [Footnote
in the
source text.]
  tt This assumption is fortified by the fact that Chile, for example, maintains
quantitative restrictions on a range of products which initially she attempted
to justify on the basis of economic development, In accordance with the,
pro-
cedure laid down In Article XVIII of the GATT. When it became apparent that
she might have difficulty in justifying some of these measures pursuant to
the
standards of Article XVIII, she shifted the basis for her justification to
balance-
of-payments considerations. [Footnote in the source text.]


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