In accordance with its terms of reference, and on the basis of information supplied by Uruguay in support of its recourse to paragraph 2 of Article XXIII in respect of Czechoslovakia, the Panel discussed with the delegations of Uruguay and Czechoslovakia the facts concerning the maintenance of the restrictive measures included in the Uruguayan submission, the effects of these measures on trade, and the relationship between these measures and the provisions of the General Agreement.

The Panel confirmed that Czechoslovakia maintained State trading in respect of all the items included in the submission by Uruguay.

The representative of Uruguay maintained that the effects of State trading in Czechoslovakia were restrictive and resulted in restrictions of Czechoslovak imports from Uruguay. The representative of Czechoslovakia, however, claimed that State trading in Czechoslovakia had increased the volume of trade beyond that which would have prevailed without it, and that no benefits accruing to Uruguay under the Agreement were being impaired by Czechoslovakia. Czechoslovakia had granted Uruguay tariff concessions on hides, oils and wool and recognized the substantial interest of Uruguay in meat. Czechoslovakia imports of these commodities had increased considerably since the granting of the concessions. The representative of Czechoslovakia further contended that the Czechoslovak State-trading monopoly did not operate so as to afford protection on the average in excess of the amount of protection provided for by the concessions (as required in Article II:4 of the Agreement) and that Uruguay was granted equal and non-discriminatory opportunities to compete for participation in Czechoslovak purchases, in the sense of Article XVII. In his view the following statistics, which he supplied, justified this contention:
 

The representative of Czechoslovakia stated that Czechoslovak imports from Uruguay were continuing to increase in 1962 and that it was the declared policy of Czechoslovakia to continue to promote imports, including processed and semi-manufactured products, from the developing countries.

(b)Czechoslovakia's internal pricing policy

The Panel discussed with the representative of Czechoslovakia the internal price system in Czechoslovakia insofar as this might influence the volume of Uruguay's exports. The Czechoslovakian representative stated that under the Czechoslovak economic system, consumer prices were not directly related to import prices but rather conform to the general structure of consumer prices which took into account not only production and transport costs but also included an element to cover the costs of services rendered to the consumer free of charge (such as health, education and other social services). Pricing policy was employed to curb consumption of certain products (e.g. spirits) and to encourage that of others (e.g. books). As regards meat, the pricing policy adopted had not, in his opinion, been restrictive and per caput consumption of meat had in fact increased steadily over the last decade.

The Panel noted that in the opinion of the Government of Czechoslovakia the State-trading measures in force in Czechoslovakia were operated in conformity with the provisions of Articles XVII and II:4 of the General Agreement, and did not involve any quantitative restriction of imports in contravention of Article XI of the Agreement.

The Uruguayan representative, whilst noting that the State-trading measures maintained by Czechoslovakia were in conformity with the GATT, drew attention to the fact that the whole range of Uruguayan exports were subjected, in Czechoslovakia, to a form of treatment which could affect the opportunities for their full and free competition on the Czechoslovakian market. He noted that certain Uruguayan exports to Czechoslovakia had increased over the last thirteen years as stressed by the delegate of Czechoslovakia, but expressed the hope that Czechoslovakian imports of these and other items from Uruguay would increase in the future.

(a)In the light of the information obtained from the consultations with the two parties concerned, and for reasons set out in paragraph 16 of the Panel's general report, the Panel does not consider that it would be appropriate to make any specific recommendations based on nullification or impairment in terms of Article XXIII:2 in respect of the State-trading measures in force in Czechoslovakia.

(b)However the Panel considers that in respect of these measures, having regard to their nature and the interest which Uruguay has in the products in question, there are a priori grounds for assuming that they could have an adverse effect on Uruguay's exports. In this connection the Panel recalled the provisions of Article XXII pursuant to which the Government of Czechoslovakia would no doubt accord sympathetic consideration to any concrete representations which Uruguay might wish to make concerning these measures, or their administration, with a view to minimizing any such adverse effects.

In accordance with its terms of reference, and on the basis of information supplied by Uruguay in support of its recourse to paragraph 2 of Article XXIII in respect of Denmark, the Panel discussed with the delegations of Uruguay and Denmark the facts concerning the maintenance of the restrictive measures included in the Uruguayan submission, the effects of these measures on trade, and the relationship between these measures and the provisions of the General Agreement.

The Panel confirmed that Denmark maintained in force the following measures on items included in the submission by Uruguay:
 

(a)Variable charges and maximum and minimum price system: The Uruguayan representative stated that these charges had a restrictive effect on Uruguay's exports to Denmark. The Danish representative advised the Panel that in the case of barley, one of the two items on which variable charges were leviable, total Danish imports in 1961 amounted to 320,984 metric tons. Uruguay, however, had not participated in this trade. The Danish representative stated that the system of variable charges and maximum and minimum price system in respect of barley had been introduced for balance-of-payments reasons and had been fully explained in L/1617.

(b)Import permit requirements and quotas: The representative of Denmark explained that for balance-of-payments reasons Denmark restricted imports of a number of commodities. In most cases quotas had been established. In this connection, the Danish representative pointed out that barley, an important Uruguayan export product, although formally subject to import control, in conjunction with a maximum and minimum price system, had, in fact, been permitted entry to Denmark without restriction since November 1961. The representative of Uruguay, however, stated that liberalization in Denmark had not as yet been extended to cover products of major importance to Uruguay. The representative of Denmark considered nonetheless that the remaining restrictions in force in Denmark did not harm Uruguay's export opportunities. It was, he considered, unlikely for example that Uruguay would be able to sell significant quantities of meat to Denmark, even if the restrictions were withdrawn, since Denmark was herself a major exporter of this item. The representative of Uruguay queried the need for controls if this were in fact the case.

The representative of Denmark informed the Panel that as from 1 January 1963, edible oils, crude and refined (item 15.07) would be liberalized.

(c)Wholesale taxes: The Danish representative informed the Panel that a general wholesale tax of 9 per cent had been introduced covering most goods except food. However, as a transitional feature, the existing turnover tax for woollen yarns and wool textiles at 15 per cent would remain in force until 1 April 1963. Local production of textiles in Denmark was high in relation to imports. In 1961 local production of all textiles amount to Kr.1,052 million, whilst imports were in the neighbourhood of Kr.800 million (exports amounted to the value of Kr.200 million).

(d)Mixing regulation: The representative of Denmark informed the Panel that Danish flour mills were required to use certain percentages of Danish bread grains (see also COM.II/61).

The Panel noted that in the opinion of the Danish Government the import permit and quota measures were compatible with the General Agreement in view of the fact that Denmark was at present permitted to maintain such measures under Article XII; the variable charges and maximum and minimum price system were not inconsistent with the provisions of the General Agreement; the mixing regulation fell within the terms of the protocol under which Denmark applied the GATT; and the turnover taxes were permitted under Article III of the General Agreement.

Apart from the variable charges, the status of which are discussed in paragraph 17 of the Panel's general report, the representative of Uruguay did not wish to question the conformity with the provisions of the General Agreement of the measures maintained by Denmark. He, nevertheless, wished to

emphasize the fact that the measures in force in Denmark had the effect of restricting the access to the Danish market for a number of Uruguayan products which together constituted a considerable proportion of Uruguay's total exports.

(a)In the light of the information obtained from the consultations with the two parties concerned, and for reasons set out in paragraphs 16 and 17 of the Panel's general report, the Panel does not consider that it would be appropriate to make any specific recommendations based on nullification or impairment in terms of Article XXIII:2 in respect of the measures maintained by Denmark, namely:

(i)import permit requirements and quotas;

(ii)maximum and minimum price system;

(iii)import charges;

(iv)wholesale taxes; and

(v)mixing regulations.

(b)However the Panel considers that in respect of the maximum and minimum price system, import charges and mixing regulation mentioned above, having regard to the nature of the measures and the interest which Uruguay has in the products in question, there are a priori grounds for assuming that they could have an adverse effect on Uruguay's exports. In this connection the Panel recalled the provisions of Article XXII pursuant to which the Government of Denmark would no doubt accord sympathetic consideration to any concrete representations which Uruguay might wish to make concerning these measures, or their administration, with a view to minimizing any such adverse effects.

Further, as regards the import permit requirements and quotas, the Panel would recall the view of contracting parties as expressed in the consultations under Article XII:4 that the Government of Denmark should endeavour to ensure that the quantitative restrictions maintained under Article XII do not have incidental protective effects which would render their removal difficult when Denmark no longer had need to have recourse to Article XII.

In accordance with its terms of reference, and on the basis of information supplied by Uruguay in support of its recourse to paragraph 2 of Article XXIII in respect of Finland, the Panel discussed with the delegations of Uruguay and Finland the facts concerning the maintenance of the restrictive measures included in the Uruguayan submission, the effects of these measures on trade, and the relationship between these measures and the provisions of the General Agreement.

The Panel confirmed that Finland maintained in force the following measures on items included in the submission by Uruguay:
 

(a)Import permit requirements and quotas: The Panel noted the statement by the representative of Finland that his country's quantitative restrictions were maintained for balance-of-payments reasons. On some items listed a global quota was in force but in the case of others discretionary licensing was employed. The representative of Finland advised the Panel that in the recent past no licence had been refused by the Finnish authorities for imports from Uruguay. He was not, however, in a position to affirm that no licence application would be refused in future since this would depend upon circumstances. The representative of Finland also advised that global quotas, including those listed in Section 1, had generally been increased by 50 per cent between 1960 and 1961.

(b)Production or turnover taxes: The representative of Finland explained that Finland had experienced considerable difficulty in disposing of domestic butter fat production and that the Finnish Government had felt obliged to curb consumption of other fats. With this aim in view it had, in 1958, imposed a production tax on vegetable oils. Before 1 October 1962 imported oil had borne a charge of 149 FM per kilo consisting of duty and excise tax, and locally produced oil one of only 51 FM (excise tax). Since 1 October the customs duties had been removed and there was now a charge of 149 FM per kilo on edible oils, whether imported or domestically produced. This change had naturally improved the position of imported edible oils vis-à-vis those locally produced. As regards technical oils, such as linseed oil, in which Uruguay was interested, there was a customs duty of 10 FM (3 US$ cents) per kilo for unbleached oil and 12 FM for bleached oil, but no other charges. The representative of Finland informed the Panel that production in Finland of vegetable oils amounted in 1961 to 9,000 tons, whilst imports of animal and vegetable oils (15.01-15.08) amounted to 11,408 tons.

(c)Health regulations: The representative of Finland informed the Panel that his country's health regulations were administered in a manner which excluded imports of uncooked meat from countries where foot-and-mouth disease existed according to official announcement by the World Health Organization. All domestically produced meat was subject to health controls established by the Finnish law.

(d)State trading: The representative of Finland informed the Panel that the State Granary was the sole agency for the import of inter alia wheat and wheat flour intended for human consumption. The aim of the State Granary was to maintain stability in the domestic market.

(e)Tariff preferences: The Panel noted the statement of the representative of Uruguay that these preferences were a potential threat to Uruguayan exports. The Finnish representative stated that the preferences listed above had been of no practical importance since no imports had taken place under them.

The Panel noted the Finnish statement that the import permit requirements and quotas were permissible under Article XII to which Finland had recourse; State trading as practised by Finland was operated in accordance with Article XVII of the General Agreement and did not involve restriction beyond that permissible under Article XII; the health regulations conformed with Article XX; and the turnover and production taxes were of the type provided for in Article III.

The representative of Uruguay did not wish to question the conformity with the provisions of the General Agreement of the measures maintained by Finland where such conformity was claimed by the Government of Finland. He nevertheless wished to emphasize the fact that the measures in force in Finland had the effect of restricting the access to the Finnish market for a number of Uruguayan products which together constituted a considerable proportion of Uruguay's total exports.

(a)In the light of the information obtained from the consultations with the two parties concerned, and for reasons set out in paragraph 16 of the Panel's general report, the Panel does not consider that it would be appropriate to make any specific recommendations based on nullification or impairment in terms of Article XXIII(2) in respect of the following measures maintained by Finland:

(i)Production or turnover taxes;

(ii)Health regulations;

(iii)State trading; and

(iv)Import permit requirements and quotas.

(b)However the Panel considers that in respect of the State-trading measures mentioned above, having regard to the nature of the measures and the interest which Uruguay has in the products in question, there are a priori grounds for assuming that they could have an adverse effect on Uruguay's exports. In this connection the Panel recalled the provisions of Article XXII pursuant to which the Government of Finland would no doubt accord sympathetic consideration to any concrete representations which Uruguay might wish to make concerning these measures, or their administration, with a view to minimizing any such adverse effects.

Further, as regards the import permit requirements and quotas, the Panel would recall the view of contracting parties as expressed in the consultations under Article XII:4 that the Government of Finland should endeavour to ensure that the quantitative restrictions maintained under Article XII do not have incidental protective effects which would render their removal difficult when Finland no longer had need to have recourse to Article XII.

Also, as regards health regulation, the Panel noted the statement of Uruguay that these regulations, as administered at present, constituted a considerable, if not insuperable, barrier to the uncooked meat exports of Uruguay. The Panel suggests to the CONTRACTING PARTIES that it would be useful if Finland were to enter into consultation with Uruguay to examine the possibility of administering the regulations in such a way as to permit the entry of Uruguayan meat into Finland, whilst affording adequate sanitary protection to domestic livestock.

(c)The Panel has noted that certain tariff preferences which have been accorded by the Government of Finland are not provided for in Article I:2 of the General Agreement. However, the Panel can only leave it to the judgment of the Government of Uruguay as to whether or not it would wish to pursue further this matter under the provisions of paragraph 2 of Article XXIII.

In accordance with its terms of reference, and on the basis of information supplied by Uruguay in support of its recourse to paragraph 2 of Article XXIII in respect of France, the Panel discussed with the delegations of Uruguay and France the facts concerning the maintenance of the restrictive measures included in the Uruguayan submission, the effects of these measures on trade, and the relationship between these measures and the provisions of the General Agreement.

The Panel confirmed that France maintained in force the following measures on items included in the submission by Uruguay:
 

(a)State trading: The representative of France stated that State trading in edible oils was carried out by the "Société Interprofessionnelle des Oléagineux et les Huiles Alimentaires" (SIOFA) which enjoyed a monopoly of the trade in oils not only in France but in certain of the oilseed producer countries in the franc zone. Imports of edible oils were made within the framework of global quotas (cf. COM.II/112). As regards linseed oil, imports were made by the "Société Interprofessionnelle du Lin" (SILIN). As regards rice, there were practically no imports from third countries.

(b)Tariff preferences: The Panel noted the statement by the representative of France that France accorded duty-free entry to many products originating in the countries of the france zone¹⁴ while duties were charged against other countries. The tariff preference in force for items Nos. 41.02 to 41.08 (leathers) had little practical effect since, as yet, the countries of Africa had not developed tannin industries to any significant extent and, in the case of Morocco and Tunisia, exports, mainly of small hides, constituted an insignificant share of France's total imports of leather. There was, in fact, a duty on Moroccan leather once a tariff quota had been exceeded and the situation in respect of Tunisia was at present under review. The Panel also noted the statement by the representative of Uruguay

that Uruguay was interested in future leather exports which might be adversely affected by the development of tanning industries in those countries which enjoy preferences. Moreover, the Uruguayan Government considered that the other preferences listed were by their nature already having a deleterious effect on its exports to France. In this latter connection, the representative of France pointed out that the preferences presently accorded were currently the subject of renegotiation between the European Economic Community and the African and Malagasy Associated States since they were scheduled to expire on 31 December 1962. It was thus difficult for the French delegation to elucidate further on this particular matter since the information provided would be out of date within the near future.

(c)Discrimination: The Panel noted the contention of the representative of France that it would be difficult for France to remove the discriminatory import permit requirements in respect of item 53.05 (combed wool tops), item 53.07 (yarn of combed wool) and item 53.11 (wool textiles) until such time as the problem of combed wool tops had been settled. The Uruguayan practice of allowing the domestic combing industry to obtain its raw wool net of the levy imposed on exports of such wool amounted to a form of subsidization. The Panel noted that France appeared to be the only country which considered it necessary to discriminate against Uruguay on these grounds. The Panel also noted that the restriction had been extended to all non-OECD members of the GATT. It further noted that French combed wool tops were themselves able to compete successfully against Uruguayan exports of this commodity on world markets and that France was the world's second largest exporter of wool tops. The French representative took note of the above observations concerning the quantitative restrictions applied in France as regards certain contracting parties. He recognized that it would be permissible for the Government of France to resort to solutions other that quantitative restrictions.

Recognizing that the wool trade could benefit from closer contact between the two countries at a technical level, and noting the willingness on the part of Uruguay to discuss the matter further with the French authorities, the French representative invited Uruguay to send a mission to discuss the technical aspects of this matter with the French Government and wool industry. In this connection, he recalled the earlier offer made by a Uruguayan delegation to send a mission of technicians to France. The representative of Uruguay undertook to transmit this invitation to Montevideo, but expressed the view that such technical discussions should not be confined to the problem of wool tops but should cover other products which Uruguay seeks to export to the French market as well as all French exports to Uruguay.

(d)Import permit requirements and quotas in respect of certain meat items: As regards meat and preserved meat, imports are made by the private sector and applications for licences are considered in the light both of stocks held by the "Société Interprofessionnelle de Bétail et des Viandes" (SIBEV) and of the level of domestic prices.

(e)Variable charge (chilled offals): Only ovine and bovine tails are subject to this charge which is applied equally to domestic and imported tails.

The Panel noted that in the opinion of the Government of France the tariff preferences were provided for in Article I:2; the variable charge did not contravene any provisions of the GATT; and the State-trading measures were maintained consistently with Article XVII.

Apart from the variable charge and variable levies, the status of which is discussed in paragraph 17 of the Panel's general report, the representative of Uruguay did not wish to question the conformity with the provisions of the General Agreement of the measures maintained by France where such conformity was claimed by the Government of France. He nevertheless wished to emphasize the fact

that the measures in force in France had the effect of restricting the access to the French market for a number of Uruguayan products which together constituted a considerable proportion of Uruguay's total exports.

(a)In the light of the information obtained from the consultations with the two parties concerned, and for reasons set out in paragraphs 16 and 17 of the Panel's general report, the Panel does not consider that it would be appropriate to make any specific recommendations based on nullification or impairment in terms of Article XXIII:2 in respect of the following measures maintained by France:

(i)tariff preferences;

(ii)variable charge; and

(iii)State trading.

(b)However the Panel considers that in respect of the State-trading measures mentioned above, having regard to the nature of the measures and the interest which Uruguay has in the products in question, there are a priori grounds for assuming that they could have an adverse effect on Uruguay's exports. In this connection the Panel recalled the provisions of Article XXII pursuant to which the Government of France would no doubt accord sympathetic consideration to any concrete representations which Uruguay might wish to make concerning these measures, or their administration, with a view to minimizing any such adverse effects.

In respect of tariff preferences, the Panel is of the view that, bearing in mind the basic objectives of the General Agreement, the Government of France would no doubt accord due consideration to any proposals that might be made by Uruguay in the context of the CONTRACTING PARTIES tariff reduction activities or discussions relevant to the reduction of customs tariffs.

(c)As regards the import permit requirements, two of which involve quotas and three discrimination, the Panel considers that insofar as it has not been established that these measures are being applied consistently with the provisions of the General Agreement or are permitted by the terms of the Protocol under which France applies the GATT, it has to proceed on the assumption that their maintenance can nullify or impair the benefits accruing to Uruguay under the Agreement. It concludes, therefore, that the CONTRACTING PARTIES should recommend to the Government of France that it give immediate consideration to the removal of these measures. The procedure set out in paragraph 20 of the Panel's general report would become applicable in the event of the Government of France's failing to carry out this recommendation.

The franc area is defined on the basis of the following criteria:

-existence of a common foreign exchange fund between the member countries of the area;

-existence of a common set of exchange regulations for each of the member countries of the area;

-freedom of transfers within the area;

-existence of a fixed parity between the currencies of the member countries of the area.

At the present time, the members of the area are as follows:

1.

The French Republic its overseas departments: Guadeloupe, Martinique, French Guiana, Reunion;

its overseas territories: Comoro Archipelago, St. Pierre and Miquelon, New Caledonia, Wallis and Futuna Islands, French Polynesia, condominium of the New Hebrides.

Central Africa Republic

Republic of the Congo (Brazzaville)

Republic of the Ivory Coast

Republic of Dahomey

Republic of the Upper Volta

Gabon Republic

Republic of Senegal

Republic of Mali

Islamic Republic of Mauritania

Malagasy Republic

Republic of the Niger

Republic of Chad

Federal Republic of Cameroon

Republic of Guinea

Republic of Morocco

Republic of Algeria

Republic of Tunisia

Togolese Republic

Principality of Monaco

TO CONTINUE WITH REPORT OF THE PANEL ON URUGUAYAN RECOURSE TO ARTICLE XXIII

¹⁰The same measures as applied to barley are applied to wheat and wheat flour destined for animal feeding.

¹¹Measures which may be replaced shortly with the extension of the common agricultural policy to those items.

¹²Measures applied under the common agricultural policy of the EEC on cereals. (See paragraph 18 of the Panel's general report.)

¹³These preferences, forming part of the original submission by Uruguay in respect of France (L/1662) have been withdrawn except for Algerian cereals concerning whose preferential position, no final decision has yet been reached.

¹⁴See Annex for countries of the franc zone.

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