706 ' “FOREIGN RELATIONS, 1950, VOLUME 1

on the basis of the degree to which alternative domestic sources could
be created.|| — |

“Nevertheless, 1 many of the devices which have been developed and
justified by GATT members as part of the mechanism for dealing with
their current balance-of-payments difficulties contain features whose
prime or sole motivation is clearly the protection of domestic industry,
rather than the protection of monetary reserves. While the importance
of the protectionist objective as a motivation in the development of
seeming balance-of-payment import restrictions had always been rec-
ognized in the abstract, events arising out of the current OEEC trade
liberalization program have suggested that the relative importance of
the protectionist obj ective may be far greater than is generally
appreciated. —

- During the course of discussions before the OEEC Trade Committee,
representatives of a number of major. Kuropean countries readily
agreed that the quantitative restrictions on imports imposed by their
respective countries on certain major commodities were primarily for
protectionist, rather than balance-of-payments, purposes. Thus, the
French asserted that some of their quantitative restrictions were in-
tended to protect their fresh fruit and vegetable industry and to pre-
vent German competition; the Belgians asserted that their reason for
excluding some 30 percent of their imports from the lists to which
the liberalizing measures were applicable was to protect home indus-
tries; the Irish stated that a small range of commodities was subject to
quota for protective purposes; the Dutch stated that their failure to
include some 21 percent of imports in lists of liberalized products was
for the purpose of protecting young industries; and the Portuguese,
Swedes, Swiss, Italians, Germans and Danes: made similar
observations. - i :

-As a result of these ready admissions, and of its qualitative judg-
ment of the significance of the measures of liberalization offered by
the various OEEC countries, the Central Group of the (OEEC
summarized the situation as follows:

TE appears that most countries have limited their proposals: to
those commodities 3 in which. domestic producers will suffer least, from

fl One might conceivably 1 insist that a country in halance-of-payments ‘diffi-
eulties should refuse to permit the creation or expansion of domestic industries
whose foreign competitors have been excluded, particularly where such creation
or expansion would require the diversion of domestic resources from other uses
in which they would otherwise be fully. employed. Although: such a. position
might be justifiable on the grounds that it would help avoid the development
of new vested interests anxious to retain quantitative restrictions, it is probably
not a negotiable position at this time. [Footnote in the source text.]

q For a more detailed presentation of these statements, see Annex A attached.
[Footnote in the source text. Annex A not printed. ]