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Post-War International Trade Arrangements*
Published online by Cambridge University Press: 07 November 2014
Extract
International discussions with a view to establishing improved conditions in international trade began early in the war. There was a general feeling that world trading relations during the inter-war period, particularly after 1929, had been most unsatisfactory. It was realized also that at the conclusion of hostilities large quantities of capital equipment would have been destroyed or worn out, that the relative financial position of the major trading countries would be drastically altered, and that the productive structures and capacities of all but a few of the belligerents would be badly disrupted. Since wide reconversion and reconstruction were going to be necessary in any event, national economies could perhaps be moulded with a view to fitting in with more liberal trading policies and, if the type of framework for expanding multilateral trade could be established, there was less possibility of countries developing what they might feel later were vested rights in restrictive business practices.
Consequently, as early as 1942, a series of international discussions was begun with the object of establishing those monetary and trade relations which would provide the desired framework for international trade. The outcome has been the establishment of, or provision for, a number of interrelated international institutions. While the whole programme has included many provisions, such as UNRRA., E.R.P. and the like, to meet temporary problems, and while some of these are of great importance in helping to place disrupted economies in a position where they can play their part in a restored world economy, from the long-run point of view the major achievements are four in number: the establishment of an International Bank for Reconstruction and Development; the establishment of an International Monetary Fund; the preparation of a final draft of a charter to establish an International Trade Organization; and the conclusion of the Geneva Trade Agreement, lowering barriers to trade among the most important trading nations of the world.
- Type
- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 14 , Issue 3 , August 1948 , pp. 373 - 385
- Copyright
- Copyright © Canadian Political Science Association 1948
Footnotes
*
This paper was presented at the annual meeting of the Canadian Political Science Association in Vancouver, June 19, 1948.
References
1 These negotiations were truly remarkable. The discussions involved the majority of the nations of the world, each with diverse and sometimes opposed interests and the matters to be considered were extremely detailed and complex. The Geneva Trade Agreements alone (in which only twenty countries were concerned) involved consideration of thousands of individual tariff rates with some attempts being made to balance the advantages of the tariff changes among the negotiating countries. It is a major achievement, particularly in the light of the failure of many of the world economic conferences of the ihter-war years, that anything regarded as worthwhile was accomplished.
2 The reconstruction measures, such as the Canadian and American loans and E.R.P., will have a permanent effect on world trading relations by providing a more sound world economy but they are temporary in nature in being undertaken to meet a specific situation which it is hoped will not be repeated.
3 Including nearly all the big countries with the exception of Russia, Germany, and Japan.
4 The Charter goes into effect either sixty days after a majority of the fifty-three countries signing the Havana Charter have deposited instruments of acceptance with the secretary-general of the United Nations, or if it has not entered into force under the foregoing provision, by March 24, 1949, then sixty days after twenty of the governments signing at Havana have deposited instruments of acceptance. If neither of the above conditions has been satisfied by September 30, 1949, those countries which have deposited instruments of acceptance are to confer as to further action, if any. Eligibility for original membership extends to those countries whose representatives signed the Havana Charter. Provision is made for new countries to become members upon application to the Organization.
5 It is important to note this distinction of the two features of the Charter. The rules establishing the obligations of members cannot be changed by the Organization itself. Any amendment affecting obligations of members goes into effect only after two-thirds of the competent authorities (usually legislative bodies) in the member countries have indicated their acceptance. The Organization itself, in a sense, merely applies and interprets these rules.
6 The Conference is to meet annually, or, upon the call of the Executive Board or application of one-third of the members for a special session, at more frequent intervals. Undoubtedly wide powers will be delegated to the Executive Board. It is to be composed of eighteen members of which eight are to be members of chief economic importance as determined by the Conference, the volume of international trade being a major criterion of such status and the other ten to be representative of broad geographical divisions. The commissions and director-general are to be responsible to the Executive Board. Each commission is to be composed of persons, not usually more than seven in number, appointed by the Executive Board.
7 This authority was originally granted for a three-year period. It was renewed in 1937, 1940, and 1943, in each instance permitting reductions to as low as 50 per cent of the rates prevailing in 1934. A new Act in 1945 gave authority for a three-year period for reduction of 50 per cent on rates existing in 1945. Thus a rate which had been cut by half under the 1934 Act could again be cut by half.
8 Arrangements with respect to international investments will be carried on, of course, in collaboration with the International Bank.
9 As, for instance, in the case of an agreement between two contiguous countries to assist economic development.
10 Tariff quotas which allow a limited quantity of imports at one rate of duty and which provide for higher rates on quantities in excess of this amount are not prohibited.
11 A suggested criterion of the basis of allocation is the division of trade in some recent representation period. However, if one country would have obtained a larger share, say by an improvement in productive techniques, allowance is to be made for this in the sharing of trade.
12 The General Agreements were negotiated among about twenty nations concurrently with, but independently of, the drafting of the I.T.O. Charter by a preparatory commission at Geneva in 1947. In addition to providing tariff reductions on a wide range of items they also incorporate most of the rules of the I.T.O. governing trading relations. This latter provision is for the purpose of governing trade until the I.T.O. comes into effect or, in case it is not established, more permanently.
13 This was particularly true of many of the foreign issues sold in the United States in the nineteen-twenties.
14 See below for a discussion of the disciplinary powers of the Organization.
15 The proceeds of international investment are not always used to buy capital equipment for the specific project which the foreign funds financed. For instance, a large part of the outlay in railway construction involves use of local labour and materials. Thus the flow of capital provides exchange for general use in buying a wide range of commodities. In this connexion see Buchanan, Norman S., International Investment and Domestic Welfare (New York, 1945).Google Scholar
16 As an example, Viner, Jacob in his Canada's Balance of International Indebtedness 1900-1913 (Cambridge, 1924)Google Scholar shows that the price level in Canada in the period 1900-13, when there was a large inflow of capital, rose more than in the lending countries.
17 In the pre-World War I period new foreign issues in the London market substantially exceeded domestic issues. In this respect see the Royal Institute of International Affairs, The Problem of International Investment (Oxford, 1937), p. 134.Google Scholar Of course there was a great deal of domestic investment not financed by new security sales. Nevertheless the same source shows that foreign investment was largely relative to total British investment and relative to national income.
18 The nature of American investment abroad is discussed in The Problem of International Investment, chap. XI.