FOREIGN ECONOMIC AND COMMERCIAL POLICY 705

ucts from some of the countries with which they have bilateral trade
agreements. This trend has culminated in a new pattern which has
emerged in recent months, particularly in agreements to which Ger-
many and Belgium have been parties, namely, a pattern which provides
that all products should be imported freely from the other country
party to the bilateral agreement, except for an enumerated list of
restricted or prohibited imports.{ : ,

These liberalizing trends have, of course, been given great impetus
by the OEEC trade liberalization program.? OEEC countries have
been required under this program to eliminate quantitative restrictions
on imports from other OEEC countries on products which in the
ageregate cover at least 50 percent of the privately-traded imports
from those countries in a previous base period ; the 50 percent standard
has had to be met separately for foodstuffs, raw materials, and manu-
factured products. Moreover, the OEEC countries are committed in
principle to the progressive elimination of such restrictions among
themselves.§ :

The protective element in import restrictions. Itis, of course, axio-
matic that any system of import control of the kind associated with
bilateral agreements tends to determine not only the volume but also
the composition of the imports of the controlling country. It follows,
therefore, that any system of quantitative restrictions on imports,
whether or not developed for the bona fide purpose of dealing with
a current balance-of-payments difficulty, almost invariably has a sig-
nificant protective incidence. For such a restriction, unless accom-
panied by the most severe limitations upon domestic capital invest-
ment, is bound to stimulate the production of commodities which are
directly or partially competitive with those excluded. Indeed, one
could hardly take issue with a country if, in the development of a
scheme of quantitative restrictions genuinely intended to meet a bal-
ance-of-payments difficulty, it developed its list of restricted products

~ There is no reliable evidence available to indicate whether these liberalizing
tendencies have developed in bilateral agreements between Western European
and non-European countries. The likelihood is that they have not. [Footnote in
the source text.]

For documentation on the OEEC, see vol. 111, pp. 611 ff.

§ See OEEC Council Decision, Paris, July 4, 1949, C(49)88 (Final), Restricted,
which provides in part:

“That participating countries shall forthwith take the necessary steps for the
progressive elimination of quantitative import restrictions between one another,
in order to achieve as complete a liberalization of intra-Huropean trade as
possible by 1950.” [Footnote in the source text. ]