FOREIGN RELATIONS, 19 5 0, VOLUME I


materials*;-$ and Denmark closely restricts the export of Landrace

   (4) Countries desirous of assisting their individual 'exporters to
avoid price-cutting among themselves in their foreign sales have re-
quired that such sales be made at stated minimum prices, as a condi-
tion for the ;acquisition of export licenses. Such situations are under-
stood to exist with respect to Swedish pulp and Indian mica,J111 and
are probably quite widespread in other cases. At times, this practice
may be motivated by balance-of-payments considerations, that is, by
an effort to maximize the return on foreign sales in scarce currencies.
But the probability is that the practice is much more commonly
motivated by the simpler commercial objective of assisting a local
industry in the attainment of an oligopolistic or monopolistic position
in its sales.
  In some degree, the situations described above will tend to correct
themselves, as shortages disappear land competition is intensified in
international trade. But, at best, competition in many major products
will remain less than perfect and oligopolistic situations will not be
uncommon. Accordingly, the probability is that the kinds of restric-
tion described above will commonly persist in significant volume in
the absence of corrective action. The purpose of this paper is to ex-
plore the measures which might be taken at the forthcoming GATT
session which would contribute to the elimination of such situations.
  The relevant GATT provisions-The general rule of the GATT on
the subject of export restrictions is contained in Article XI, para-
graph 1, which provides:,.
  "No prohibitions or restrictions other than duties, taxes or other
charges, whether made effective through quotas, import licenses, or
other measures, shall be instituted or maintained by any contracting
party on the . . . exportation or sale for export of any product des-
tined for the territory of any other contracting party."
Paragraph 3 of the same Article defines "export restrictions" as
in-
cluding restrictions made effective through state trading operations.¶¶
  There are a number of major exceptions to this general prohibition,
which considerably limit the applicability of the general rule. To begin
with, under the Protocol of Provisional Application, the part of the
Agreement relevant to this problem is applied only provisionally, thatý

  fl Export Ordinance Nos. 560, Nov. 23, 1935, and 623,.Nov. 19, 1936, cited
in
memo in preceding fn. [Footnote In the source text.]
  §§ Memo from B. T. Simms, Chief,:Bur. of Animal Ind., to B. T.
Shaw, Acting
Administrator, Agrie. Research Adm., July 7,91949. [Footnote in the source
text.]
  1111 A-1112, New Delhi, Oct. 27, 1949, Unclassified. [Footnote in the source
text.]
  ¶¶ Presumably this provision would not go so far as to prohibit
minimum sale
prices by a state export monopoly where such sale prices could be analogized
to the maintenance of an export tariff. But it might well prohibit such price
maintenance where the analogy could not be so drawn. [Footnote in the source
text.]


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