15 November 1962

1.The Panel was appointed by the Council in February 1962 on the instructions of the CONTRACTING PARTIES given at the nineteenth session. Its terms of reference were:

3.At the nineteenth session of the CONTRACTING PARTIES in November 1961, the representative of Uruguay stated that Uruguay would have recourse to Article XXIII in respect of fifteen countries (L/1647). The CONTRACTING PARTIES were informed that Uruguay had, during 1960, held a consultation with the Federal Republic of Germany under Article XXIII:1 and, in 1961, with France and Italy under Article XXII. In a further statement during the nineteenth session in December 1961 (L/1679), the representative of Uruguay informed the CONTRACTING PARTIES that consultations under Article XXIII:1 had been held with twelve other countries. At the request of Uruguay the CONTRACTING PARTIES authorized the Council of Representatives to take up the matter of the Uruguayan recourse under paragraph 2 of Article XXIII should Uruguay so request.

4.On 11 and 13 December 1961 the delegation of Uruguay addressed a communication to each of the fifteen Governments concerned, reiterating the representations already made, to the effect that consideration should be given to the abolition of their restrictive measures, which had been the subject of the consultations referred to above (cf. paragraph 9 of C/W/33). In February 1962, the delegation of Uruguay formally submitted to the Council of Representatives a request that it take action in accordance with the provisions of Article XXIII:2. The Council, in February 1962 (L/1739), accordingly

appointed the present Panel.

5.The original membership of the Panel, as recorded in C/M/9 and L/1739, comprised seven members in addition to the Chairman. Some of these members, owing to practical difficulties (such as transfer of duty station away from Europe, urgent duties elsewhere, etc.) found themselves unable to participate in the work and requested that their names be withdrawn from the Panel. In two cases, the Chairman of the CONTRACTING PARTIES, in accordance with established practice, has appointed a substitute. The actual membership of the Panel, resulting from these changes, is as follows:

Chairman:Mr. R. Campbell Smith (Canada)

Mr. E. J. Biermann (The Netherlands)

Mr. M. Itan (Israel)

Mr. S. L. Portella de Aguiar (Brazil)

Mr. A. Schnebli (Switzerland)

6.When the Panel was appointed, it was agreed that the Chairman should select among it four members to examine each case. This arrangement having been rendered impracticable by the reduced membership, it was agreed that the Panel should sit in plenary sessions, except that, in deference to their wishes, Mr. Campbell Smith, Mr. Schnebli and Mr. Biermann would not be required to participate, respectively, in the consideration of the cases of Canada, Switzerland and the EEC countries; they are therefore in no way responsible for the conclusions which the Panel has drawn with regard to the respective countries.

7.Immediately after its appointment, the Panel sought to determine the scope of its work by requesting the Uruguayan delegation definitively to identify the contracting parties, the products and the restrictive measures with respect to which action under Article XXIII:2 was taken. Uruguay was also requested to supply information on the circumstances which it considered had justified the invocation of Article XXIII:2, its view of the consistency or otherwise of the restrictive measures in question with the provisions of the General Agreement, the effects of the measures on Uruguay's exports and the extent to which it considered benefits accruing to it under the General Agreement had been nullified or impaired.

8.In response to this request, the Uruguayan delegation submitted in June a general note in which it confirmed that the Uruguayan submissions related to all the fifteen contracting parties named by it at the Council meeting¹; stated that it would wish the Panel to review all the measures enumerated in document L/1662 (which were of twelve different types and applied to over thirty different products or groups of products); and generally reiterated the position it had taken as noted in the various previous statements. Subsequently, the Uruguayan delegation also supplied fifteen separate papers concerning the representations and consultations under Article XXII or XXIII:1 which had led to the cases being brought under Article XXIII:2. The receipt of these papers enabled the Panel to commence its consultations with the fifteen contracting parties concerned and Uruguay. These took place from 17 to 28 July. During these consultations the Panel examined each restrictive measure, the manner in which it was applied and its relationship with the provisions of the General Agreement and the relevant protocol. The Panel also discussed with the delegations of Uruguay and the contracting parties concerned the question of nullification or impairment of benefits accruing to Uruguay under the Agreement as it was alleged to have arisen from the application of each measure. The records of these consultations were immediately transmitted to the delegations of Uruguay and of the contracting parties concerned in order that the Panel's recommendations might be drawn up after the records had been examined and accepted by both sides.

9.The Panel reconvened early in October immediately after comments on the records were received from the contracting parties concerned and Uruguay. In the course of the meeting the Uruguayan delegation made it known that it wished to raise further questions with the fifteen contracting parties, and a second round of consultations was accordingly held from 30 October to 5 November 1962 with the fifteen delegations.

10.Paragraph 2 of Article XXIII provides that the CONTRACTING PARTIES shall promptly investigate any matter referred to them under that paragraph. From the context it is obvious, however, that before a "matter" can be so referred to the CONTRACTING PARTIES it must have been the subject of representations or proposals made pursuant to paragraph 1 of the Article which have not resulted in

a "satisfactory adjustment" (unless the difficulty is of the type described in paragraph 1(c) of the Article).² Under paragraph 1 representations or proposals can be made by a contracting party if it considers:

11.Paragraph 2 of Article XXIII provides, apart from promptly investigating any matter so referred to them, for two kinds of action by the CONTRACTING PARTIES, namely:

12.The paragraph states that the CONTRACTING PARTIES "shall make appropriate recommendations to the contracting parties which they consider to be concerned or give a ruling on the matter, as appropriate". Whilst a "ruling" is called for only when there is a point of contention on fact or law, recommendations should always be appropriate whenever, in the view of the CONTRACTING PARTIES, these would lead to a satisfactory adjustment of the matter.

13.The latter part of paragraph 2 of Article XXIII states that "if the CONTRACTING PARTIES consider the circumstances are serious enough to justify such action, they may authorize a contracting party or parties to suspend the application to any other contracting party or parties of such concessions or other obligations under this Agreement as they determine to be appropriate in the circumstances". In the view of the Panel the requirement that the situation must be serious enough limits the applicability of the provision to cases where there is nullification or impairment; it would at any rate be difficult to conceive a situation in which the suspension of concessions or obligations could be appropriate where nullification or impairment was not involved.

14.In most cases Uruguay claimed that the maintenance of the trade measures by the other contracting parties had nullified or impaired benefits accruing to Uruguay under the General Agreement. The Panel thought it essential to have a clear idea as to what would constitute a nullification or impairment. In its view impairment and nullification in the sense of Article XXIII does not arise merely because of the existence of any measures; the nullification or impairment must relate to benefits accruing to the contracting party "under the General Agreement".

15.In implementing the compensation provision of Article XXIII:2 the CONTRACTING PARTIES would therefore need to know what benefits accruing under the Agreement, in the view of the country invoking the provisions, had been nullified or impaired, and the reasons for this view. In cases where there is a clear infringement of the provisions of the General Agreement, or in other words, where measures are applied in conflict with the provisions of GATT and are not permitted under the terms of the relevant protocol under which the GATT is applied by the contracting party, the action would, prima facie, constitute a case of nullification or impairment and would ipso facto require consideration of whether the circumstances are serious enough to justify the authorization of suspension of concessions or obligations.⁴ While it is not precluded that a prima facie case of nullification or impairment could arise even if there is no infringement of GATT provisions, it would be in such cases incumbent on the country invoking Article XXIII to demonstrate the grounds and reasons of its invocation. Detailed submissions on the part of that contracting party on these points were therefore essential for a judgment to be made under this Article.

16.In a number or cases, the contracting party concerned maintained (a) that certain measures applied by it were consistent with the provisions of GATT, or (b) that the measures, while not consistent with the provisions of the General Agreement, were permitted under the terms of the Protocol of Provisional Application, the Annecy Protocol or the Torquay Protocol on account of their being applied pursuant to "existing legislation". In most of these cases, the contention was not questioned by the Uruguayan delegation. For practical purposes, the Panel has taken the position that in cases where the contention has not been challenged and is not contradicted by the available records of the CONTRACTING PARTIES, it would be beyond its competence to examine whether the contention was or was not justified.

17.The Panel was faced with a particular difficulty in considering the status of variable import levies or charges. It noted the discussion which took place at the nineteenth session of the CONTRACTING PARTIES on this subject during which it was pointed out that such measures raised serious questions which had not been resolved. In these circumstances the Panel has not considered it appropriate to examine the consistency or otherwise of these measures under the General Agreement.

18.Whilst the Panel was conducting its consultations, the EEC introduced its Regulation on Cereals under the common agricultural policy, replacing the measures included in the original submission by Uruguay. The Panel noted the statement by the delegation of Uruguay that those new measures (which are described in COM.II/134) would have a significant impact on Uruguay's cereals trade. However, since these measures did not form part of Uruguay's original submission and since they were under consideration by the CONTRACTING PARTIES with the active participation of Uruguay, the Panel considered that it would not be appropriate for it to examine the compatibility or otherwise of the

measures applied under that Regulation with the General Agreement.⁵ The Panel also noted that the measures applying to certain other products might be replaced shortly with the extension of the application of the common agricultural policy, but in the absence of any definite indication in this regard, the Panel deemed it advisable to treat such measures as they now existed.

19.For the reasons given in paragraph 16 to 18 above, the Panel has not found itself in a position to sustain Uruguay's claim regarding nullification or impairment in respect of a number of cases.

20.Where the Panel finds that there is prima facie nullification or impairment of benefits accruing to Uruguay under the Agreement, it has proposed recommendations based on that finding. Where a measure affecting imports is maintained clearly in contradiction with the provisions of the General Agreement (and is not covered by the "existing legislation" clause of a Protocol), the Panel has in all cases recommended that the measure in question be removed. Reference is made in these recommendations based on nullification or impairment to the possibility of further action, in the event of non-fulfilment, by the CONTRACTING PARTIES under paragraph 2 of Article XXIII. In respect of these particular cases the Panel proposes the following procedure for adoption by the CONTRACTING PARTIES:

22.In invoking the provisions of Article XXIII the Uruguayan delegation repeatedly referred to the general difficulties created for Uruguay by the prevalence of restrictive measures affecting its exports and to the resulting inequality in the terms on which temperate zone primary producers participate in world trade. The Panel noted that it was not charged with the examination of broader issues falling outside the purview of Article XXIII. It also noted that those broader issues are being actively discussed by the CONTRACTING PARTIES. The Panel is of the view that if the proposed recommendations, especially those relating to health regulations and those figuring in paragraph (c) of Section 4 of the individual reports, were fulfilled an important contribution would have been made to the solution of the difficulties mentioned by Uruguay in bringing the cases before the CONTRACTING PARTIES under Article XXIII.

23.With these general considerations and observations, the Panel submits, for consideration and adoption by the CONTRACTING PARTIES, the attached fifteen reports on the Uruguayan recourse under Article XXIII with respect to the fifteen contracting parties.

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 Austria, the Panel discussed with the delegations of Uruguay and Austria 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 Austria maintained in force the following measures on items included in the submission by Uruguay:
 

(For a fuller account of the measures maintained on the meat and cereal items listed above, see COM.II/2(a) and L/1144.)

(a)Import permits: The Panel noted the contention of the Uruguayan Government that the existence of the import permit régime in Austria had a restrictive effect on Uruguayan exports to that country. It also took account of the statement of the representative of Austria that Austria had made significant progress in the last few years towards liberalizing its trade with GATT countries. In 1962, over 70 per cent of its trade with contracting parties had, in fact, been liberalized. It was hoped to complete the liberalization by the end of 1964, except for a small number of "hardship" items which could not yet be enumerated. In the view of the Austrian representative the remaining Austrian import permit requirements, although of a restrictive nature, exerted little effect on Uruguay's exports; Uruguay should be able to increase her exports to Austria by an intensification of export efforts.

(b)Discrimination: The Austrian representative informed the Panel that Austria had in recent years made strenuous efforts to remove those import permit requirements which did not extend to OECD countries and thus discriminated in their favour. The existence of such discrimination did not, in his view, represent a material restriction of Uruguayan exports of combed wool yarns and wool textiles, and in any event liberalization towards GATT countries would be continued, except for certain "hardship" cases, in the very near future with a view to eliminating differential treatment between OECD and other GATT countries. The Uruguayan representative did not agree that the existence of this discrimination was not prejudicial to Uruguayan exports.

(c)Mixing regulation: The Panel noted the Austrian representative's statement that mixing regulations in respect of wheat were applied in accordance with legislation (State trading) which required the Austrian Government to ascertain the quantity and quality of the Austrian crop and accordingly determine the volume and type of imports.

(d)State trading: The representative of Austria informed the Panel that the Grain Compensation Board, the semi-official organization concerned, prepared an annual import programme for cereals and milling products on which volumes, timing and qualities of imports were based. When imports were to take place, tenders were invited of which the most attractive in terms of commercial criteria are accepted. This acceptance constituted the prerequisite for the delivery of an import licence.

(e)Turnover taxes: The Panel noted the statement of the representative of Austria that vegetable oils falling under tariff item 15.07 when imported in drums or, without other packing, in vehicles, were exempt from the turnover equalization tax and that, for the rest, turnover taxes on vegetable oils were of very low incidence and in no case did they exceed 5.25 per cent. The rate of the turnover tax on edible oils, insofar as they were not exempt from such tax, was 1.7 per cent. Thus edible oils were not placed at any disadvantage vis-à-vis butter which itself bore a 1.7 per cent tax. The Austrian representative also stated that domestic consumption of edible oils amounted to 27,000 tons in 1961/62 crop-year, whilst domestic production accounted for 5,500 tons. In the opinion of the Austrian representative these taxes did not constitute a barrier to Uruguay's trade, and that therefore reference to them in Section 1 should be deleted.

(f)Import charges: The representative of Austria explained that the import charges were levied in order to raise, where necessary, the price of imports to the level of prices prevailing on the Austrian market for domestic produce. The prices for domestic products were stabilized at a level predetermined by the Austrian Government. The import charges varied according to divergencies between Austrian domestic prices and import prices, but they never exceeded the level of duty as set out in the Austrian tariff.

The Panel noted that in the opinion of the Austrian Government the import charges and the turnover taxes were not in contravention with any provision of GATT and that the State-trading measures were applied in conformity with Article XVII and did not involve discrimination.

Apart from the import charges, 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 Austria where such conformity was claimed by the Government of Austria. He nevertheless wished to emphasize the fact that the measures in force in Austria had the effect of restricting the access to the Austrian 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 Austria:

(i)import charges;

(ii)State trading; and

(iii)turnover taxes.

(c)As regards the import permit requirements, two of which are discriminatory, and the mixing regulation, 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 Austria 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 Austria 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 Austria's failing to carry out this recommendation.

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 Belgium, the Panel discussed with the delegations of Uruguay and Belgium 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 Belgium maintained in force the following measures on items included in the submission by Uruguay.
 

Brussels tariff item No	Description of products	Measures in force
02.01	Meat of animals of the bovine species, frozen	Import permit and quota8
	Meat of animals of the bovine species, chilled	Import permit, quota and variable surtax8
	Meat of animals of the ovine species, frozen	Import permit8
16.02	Preserved meat	Import permit8
16.03	Meat extracts	Import permit and compensation tax8
10.01	Wheat	Import certificate, variable levy and mixing regulation9
11.01	Wheat flour	Import certificate and variable levy7
10.03	Barley	Import certificate and variable levy
15.07	Linseed oil, crude	Import permit and compensation tax
	Edible oils, crude	Import permit and compensation tax
15.07	Edible oils, refined or purified	Import permit and compensation tax
23.04	Oil cake and meal resulting from the extraction of vegetable oils	Import permit
41.02	Cow-hide, tanned	Compensation tax
41.06	Chamois-dressed leather	Compensation tax
41.08	Patent leather and metallized leather	Compensation tax
ex 53.01	Washed wool	Compensation tax (suspended)
53.05	Combed wool (tops)	Import permit
53.07	Yarn of combed wool	Compensation tax
53.11	Wool textiles	Compensation tax

Note: A fiscal "transmission" tax is charged on all items appearing in Uruguay's submission. It is applied without discrimination to all products, whether Belgian or imported, and varies from 5 per cent to 12 per cent ad valorem.

(A fuller account of the measures maintained on the meat items is contained in COM.II/2(i) and L/1173.)

(a)Import permits: The Panel noted the statement of the Belgian Government that, in no case, were the import permit requirements, listed above, restrictive. These permits, which were called in Belgium "licences d'importation" were granted automatically, free of charge and with no distinction between sources of supply. In the case of meat of animals of the bovine species, frozen and chilled, the permit could be used to administer a quota if one were in force. The import permit requirement in respect of frozen ovine meat, preserved meat, meat extracts, crude linseed oil and edible oils, oil cake, meal of vegetable oils and combed wool (tops) were maintained for administrative reasons only.

(b)Quotas: At the present time Belgium does not apply any quota restrictions on the importation of frozen and chilled bovine meat. The quotas must, therefore, be regarded as potential only.

(c)Variable surtax: The variable surtax applied to chilled bovine meat has been described in document CG.2, page 11. The surtax is charged over and above the normal duties and is varied from time to time to take account of differences between domestic and imported prices.

(d)Compensation tax: These are taxes fixed by the Minister of Finance and levied on importation in order to bring foreign producers into line with Belgian national producers who pay an equivalent tax on the products in question.

(e)Mixing regulation: The Panel noted that this mixing regulation would be removed on 31 December 1962. According to a Belgian Royal Decree dating from 20 September 1956, industrial mills in Belgium have to purchase a certain proportion of their wheat requirements from the domestic production. Since 5 February 1962 this proportion of locally produced wheat has been fixed at 65 per cent. The Panel noted, however, that to the extent that a Belgian miller exported flour made from Belgian wheat, he could replace this quantity of wheat by an equivalent amount of imported wheat. However, this right of substitution was restricted to 25 per cent of his total turnover. Flours destined for the manufacture of farinaceous foods and semolinas were exempted from the mixing regulation, subject to certain conditions. Flours used for the manufacture of biscuits for export were also exempted from the mixing regulation.

The Panel noted that, in the opinion of the Government of Belgium, the variable surtax and the "transmission" tax did not conflict with any provision of the GATT; the compensation taxes were maintained in conformity with Article III. The mixing regulation in respect of wheat was permissible in terms of the Protocol of Provisional Application under which Belgium applied the GATT.

Apart from the variable levy and variable surtax, 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 Belgium, where such conformity was claimed by the Government of Belgium. He nevertheless wished to emphasize that the measures maintained by Belgium had the effect of restricting the access to the Belgian 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 Belgium:

(i)variable surtax;

(ii)transmission taxes;

(iii)compensation taxes; and

(iv)mixing regulation.

(c)As regards the import permit requirements and such quotas as may exist, 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 Belgium 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 Belgium 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 Belgium's failing to carry out this recommendation.

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 Canada, the Panel discussed with the delegations of Uruguay and Canada 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 Canada maintained in force the following measures on items included in the submission by Uruguay:
 

Brussels tariff item No.	Description of products	Measures in force
02.01	Meat of animals of the bovine species, frozen and chilled	Health regulations
	Meat of animals of the ovine species, frozen	Health regulations
	Offals, chilled	Health regulations
10.01	Wheat	State trading, import permit and tariff preference
11.01	Wheat flour	State trading, import permit and tariff preference
10.03	Barley	State trading, import permit and tariff preference
10.06	Rice, peeled	Tariff preference
15.07	Linseed oil, crude	Tariff preference
15.08	Linseed oil, boiled	Tariff preference
15.07	Edible oils, crude	Sales tax and tariff preference
15.07	Edible oils, refined	Sales tax and tariff preference
41.02	Cow-hide	Tariff preference
41.03	Sheepskin leather, tanned	Tariff preference
41.06	Chamois-dressed leather	Tariff preference
41.07	Parchment-dressed leather	Tariff preference
41.08	Patent leather	Tariff preference
53.05	Combed wool (tops)	Tariff preference
53.07	Yarn of combed of wool	Tariff preference
53.11	Wool textiles	Tariff preference

 

(a)Sales tax: The representative of Canada explained that the sales tax (applied to all products except certain staples) on crude and refined edible oils was applied virtually only to those oils used in the manufacture of margarine. It was not possible to give a precise breakdown of the applicability of the tax to imported and locally produced oils used for this purpose. However, in 1961, the tax had been applied to oils, 30 per cent of which were not produced in Canada. As regards the remaining 70 per cent, statistics do not indicate the proportion of taxed oils locally produced or imported. In this connection, it had to be borne in mind that Canada was herself a significant exporter of oils and oilseeds. The sales tax was 11 per cent and applied equally to oils produced domestically or imported when used in the manufacture of margarine.

(b)Health regulations: The Panel noted the statement by the Uruguayan representative that the effects of the health regulations on uncooked ovine and bovine meat were a matter of prime concern to Uruguay. The regulations, as administered, excluded from the Canadian market uncooked meat from the many countries, including Uruguay, where foot-and-mouth disease existed. The Uruguayan representative stated that certain importing countries had, both by sending permanent or visiting inspectors to Uruguay and by suggesting modifications to Uruguayan meat production and marketing methods, been able to continue to purchase Uruguayan meat despite the existence of the disease. The Panel also took cognizance of the statement by the representative of Canada that the reasons for veterinary regulations were two-fold, first to protect Canadian livestock and, secondly, to satisfy United States requirements since the latter was Canada's principal meat export market. Imports could be admitted into Canada if Uruguay could certify that no cases of the foot-and-mouth disease had been reported in the country over a period of twelve months. Canned cooked meats were admitted without restriction.

(c)Preferences: The Panel noted that it was the hope of the Uruguayan Government that it would be possible for Canada to remove or reduce preferences which were a considerable barrier to the trade of countries such as Uruguay; although the maintenance of the preference admittedly was not something which Uruguay could not have anticipated at the time of accession. The Panel also noted the statement by the Canadian representative that margins of preference had, since the advent of the GATT, been reduced considerably in Canada as a result of reduction in most-favoured-nation rates of duty, and that there was little evidence to support the view that Canada's preferences adversely affected Uruguayan exports to Canada. For instance, in the case of peeled rice, despite the existence of Commonwealth preference, the product was imported entirely from countries not enjoying this preference.

(d)Import permit requirements and State trading: The Canadian representative informed the Panel that authority to issue import permits was vested in the Canadian Wheat Board in order that it might discharge its responsibility for orderly marketing, inter-provincially, of wheat, oats and barley under the provisions of the Canadian Wheat Board Act of 1935. The Board did not own or operate facilities for the handling or storage of grain. On behalf of producers the Board was responsible for the movement of grain into export channels through established private traders. The Panel also noted the fact that Canada was a major exporter of cereals.

The Panel noted that in the opinion of the Government of Canada the health regulations were applied under the provisions of Article XX; import licensing on the grain items was permitted by the terms of the Protocol of Provisional Application under which Canada applied the GATT; the sales taxes were consistent with Article III since they were applied equally to imports and domestic products; the tariff preferences were permitted under Article I:2; and the State trading under Article XVII.

The representative of Uruguay did not wish to question the conformity with the provisions of the General Agreement of the measures maintained by Canada. He nevertheless wished to emphasize the fact that the measures in force in Canada had the effect of restricting the access to the Canadian 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 measures maintained by Canada, namely:

(i)State trading;

(ii)health regulations;

(iii)tariff preferences; and

(iv)turnover taxes.

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 to Government of Canada 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.

Also, as regards health regulations, 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 Canada 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 Canada, whilst affording adequate sanitary protection to domestic livestock. It is noted that the health regulations maintained by Canada are similar to those of the United States and for this reason it is felt that a joint consultation embracing both Canada and the United States might be appropriate.

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 Canada 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.

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

¹Namely, Austria, Belgium, Canada, Czechoslovakia, Denmark, Finland, France, Federal Republic of Germany, Italy, Japan, The Netherlands, Norway, Sweden, Switzerland and the United States of America.

²However, at least in respect of quantitative import restrictions applied inconsistently with the General Agreement, it has been agreed by the CONTRACTING PARTIES that the holding of a consultation under paragraph 1 of Article XXII would fulfil the conditions of paragraph 1 of Article XXIII (cf. BISD, Ninth Supplement, pages 19-20).

³The paragraph goes on to enumerate the circumstances under which either of these two contingencies could arise, under the three sub-headings (a), (b) and (c).

⁴It may be noted in this connection that the status of a measure (that is, whether or not it is consistent with GATT) is not to be affected by a waiver decision taken subsequently. In fact, Decisions taken under Article XXV:5 granting waivers from GATT obligations have normally expressly provided for the continued validity of the procedures of Article XXIII in respect of the otherwise "waived" obligations (cf. inter alia, BISD, Third Supplement, pages 35 and 41; Eighth Supplement, page 22).

⁵These measures have been included in Section 1 of the relevant individual country reports merely in order to provide a complete list of measures which were considered by Uruguay to be confronting its export trade.

⁶Import permit required if oil fit for direct human consumption except in the case of olive oil.

⁷Measures applied under the common agricultural policy of the European Economic Community on cereals (see paragraph 18 of the Panel's general report).

⁸Measures which may be replaced shortly with the extension of the common agricultural policy to these items.

⁹The mixing regulation in respect of wheat will remain in force until 31 December 1962.