<<

Fifth Annual Report 1964/1965 of the

European Free Trade Association Fifth Annual Report 1964-1965 of the European Free Trade Association

Geneva - September 1965 FIFTH ANNUAL REPORT 1964-1965

Table of Contents

Page I. SURVEY OF THE YEAR

Introduction: The Year in E F T A ...... 5 The British Import Surcharge...... 6 The Vienna Initiatives...... 8 Economic Developments...... 11 EFTA Trade in 19 6 4 ...... 15 Intra-EFTA T ra d e ...... 15 EFTA Trade with E E C ...... 17 EFTA Trade with U S A ...... 18 E F T A Trade with Developing C o u n trie s ...... 18

II. INTERNAL DEVELOPMENTS IN EFTA

Tariffs and Quotas: Further EFTA Tariff Reduction ...... 19 Quantitative Im port R e s tr ic t io n s ...... 19 The Origin R ules ...... 20 Annexes D and E ...... 20

Operation of the Free Trade Area: Measures introduced by the British Government . . 20 D r a w b a c k ...... 20 Price Differences for Agricultural Raw Materials . . 21 Revenue Duties ...... 21 Non-tariff Barriers to Trade ...... 21 Practices of Public Undertakings...... 22 Restrictive Business Practices ...... 22 Establishment...... 22

3 Page Double Taxation ...... 22 Patents...... 23 Industrial Standardization ...... 23 Study of Effect on Prices of Tariff Dismantling . . 24

Agriculture: Annual Review ...... 24 Bilateral Agreements...... 25 Export Subsidies ...... 25 Economic Com m ittee ...... 25 Economic Development Com m ittee ...... 26

The Association with Finland: Participation of Finland in EFTA Activities .... 26 T a riffs ...... 27 Annex I to the Association A g r e e m e n t...... 27 Quantitative Import Restrictions ...... 27 The Consultative Com m ittee ...... 27 EFTA Parliamentarians...... 28 Information Activities ...... 29 The EFTA Council and the Joint C o u n cil ...... 31 Administration and Finance...... 31

III. EXTERNAL RELATIONS

The GATT and the Kennedy Round ...... 33 The Conference on Trade and Develop­ ment ...... 33 Organisation for Economic Co-operation and Develop­ ment ...... 34 Nordic Council...... 34 Council of Europe ...... 34 Exchange of Technical Information with EEC . . . . 35 Technical Assistance to E C A F E ...... 35

Appendix I: Communiques of Ministerial meetings. . 36

Appendix II: Amendments to the EFTA Convention and the Finland-EFTA A greem ent...... 43

4 I. SURVEY OF THE YEAR

INTRODUCTION

The Year in EFTA

The year July, 1964— June, 1965, was very eventful for EFTA. Trade between the eight EFTA countries grew more rapidly than in any previous year in the life of the Association. In addition, as described in a later section of this Annual Report, most EFTA countries experienced in 1964 an unusually rapid rate of economic growth. The year also included a serious internal crisis for EFTA—that of the British import surcharge — and ended with a meeting in Vienna at Prime Ministerial level, at which Ministers of all countries voiced their concern at the continuing trade division of Europe and their desire both to restore momentum towards European integration and to intensify EFTA co-operation.

There was also a great deal of other activity both in the internal affairs of EFTA and in its external relations. The “ timetable reductions ” of tariffs, which brought them down to 30 per cent of the i960 level, were duly made by EFTA Members on 31st De­ cember 1964, and by the Associated country, Finland, on 1st March 1965; the few remaining quantitative restrictions in EFTA were further reduced during the period. Work continued in committees and working parties on a wide range of questions affecting the EFTA market, including the rules of competition— restrictive busi­ ness practices, establishment, and the purchasing practices of public undertakings. Some preliminary work was done on other matters of vital importance to trade, such as patents, and co-operation in the field of standardization was intensified. A thorough study was made of the problem of drawback in the EFTA context and the ground was prepared for the necessary decisions. In the field of agriculture, the year saw the publication of the first Annual Review of Agricultural Trade in EFTA. This Review pointed to several

5 difficult internal and external problems affecting the EFTA agri­ cultural markets and work has continued on all these questions in the context of the second Annual Review, which was nearing completion at the end of June 1965. In external affairs, the Kennedy Round of tariff negotiations in the GATT continued to occupy the centre of the stage. All the EFTA countries required to do so met the GATT deadline for the presentation of their “ exceptions lists ” in the industrial sector of these negotiations. It was noteworthy that five EFTA countries, Austria, , , and , submitted nil exceptions lists— in other words, they signified their willingness to offer a 50 per cent cut across-the-board in their tariffs on industrial products if they obtained suitable reciprocal concessions from the other parties to the Kennedy Round. The exceptions lists submitted by two EFTA countries— Britain and Finland— were both very limited; is in a special category in this negotiation and was not required to submit a list. The exceptions lists put in by the other main parties to the Kennedy Round, however, were much larger and foreshadowed considerable diffi­ culties for some EFTA countries. The first six months of 1965 saw the beginning of detailed Kennedy Round negotiations on industrial products, in which the EFTA countries were involved in a complex of bilateral and multilateral discussions. Talks on agricultural products were also begun during the period. EFTA co-ordination in the Kennedy Round was intensified, so that all delegations could be kept fully informed of the intentions and problems of their EFTA partners. This co-operation was found to be very valuable. The year also saw the formation of the new United Nations Trade and Development Board, which grew out of the world conference which took place in in the spring of 1964. The EFTA countries played their part in the formation of the Board and in its early deliberations.

The British Import Surcharge

The year’s work in EFTA began with Ministerial meetings of the EFTA Council and the Joint Council of the EFTA countries and Finland in Edinburgh on 9th and 10th July, 1964. Mr. Edward Heath, then Secretary of State for Industry, Trade and Regional Development of the , was in the chair. As the communique * said, “ Ministers reviewed the whole range of the Association’s internal activities and recent developments in their

* The communiques of all Ministerial meetings in 1964/1965 are reproduced in full in Appendix 1.

6 relations with other countries. They expressed their satisfaction with the progress made towards complete free trade in industrial products by the end of 1966 Three months later the new British Government found itself faced, immediately on taking office, with a severe balance of pay­ ments situation, the likely deficit for the year 1964 being about £800 million. On 26th October, the Government announced a series of measures to deal with the situation, the principal emergency measure being a 15 per cent charge on imports from any source, including EFTA, of most manufactured and semi-manufactured goods. The effect, so far as EFTA was concerned, was broadly to nullify the tariff reductions Britain had made towards her EFTA partners. The British Government made it clear that the charge was a temporary measure and would be removed as soon as was justified by the needed improvement in the British balance of payments; they recognized that the surcharge instrument was not strictly within the letter of the Stockholm Convention; however, the legal alternative, quota restrictions on imports, was not practicable because the apparatus of quota control had been dismantled and could not be brought into existence quickly enough to have any impact on the immediate crisis. Moreover, the British Government believed that the effect of quotas on EFTA trade would probably be more damaging than that of the surcharge. British spokesmen also pointed out that the situation in any case required a reduction in imports; there was therefore no way of avoiding some adverse effects on the trade of the other EFTA countries with Britain. The attitude of the other EFTA countries, however, was to see the surcharge as a fundamental infringement of the Stockholm Convention. Such action by a Member country, without prior consultation with its partners, struck at the foundations of EFTA co-operation. The first action in the matter was taken by the Joint Council at a meeting on 29th October 1964 when the official representatives of the other EFTA countries emphasized that a crisis of confidence had been created. They also pointed out that many of their manufacturers and traders had made large invest­ ments in production and distribution facilities aimed at establishing a market in Britain for their goods. They believed that the sur­ charge would result in serious losses for those concerned. The Joint Council agreed that a report be prepared on the British economic situation in time for the Ministerial meeting which had already been arranged for 19th and 20th November in Geneva. Two working parties were set up to carry out this study, one of them to concentrate on the surcharge in relation to the British balance of payments and the other to examine the compatibility with the Stockholm Convention of another measure announced by the British Government, a system of export rebates.

7 This criticism was also voiced in meetings of the EFTA Consul­ tative Committee, which asked that the surcharge be “ reduced within a matter of weeks and abolished within a matter of months A similar attitude was shown at a meeting of Members of Parliament of the EFTA countries in Strasbourg on ist November 1964.

The EFTA Council and the Joint Council met in Geneva at Ministerial level on 19th and 20th November, 1964, with Mr. Douglas Jay, President of the Board of Trade of the United Kingdom, in the chair. The Ministers concentrated their discus­ sions, which were very critical, on the measures taken by the British Government to improve its balance of payments. The communique is given in full in Appendix I. The Ministers agreed to keep the situation under close and continuous review. They instructed the working party on the British balance of payments to prepare a new report in time for the next Ministerial meeting in February, 1965. In addition, in accordance with Article 30 of the Stockholm Convention, the Ministers decided to set up an Economic Committee of senior officials from EFTA capitals.

By 22nd February 1965 when the Councils met again in Geneva at Ministerial level, under the chairmanship of Dr. Fritz Bock, Austrian Minister for Trade and Reconstruction, there were signs of an improvement in the British trade balance. The hope that this would allow the British Government to reduce the surcharge was realized when the British Ministers announced, as recorded in the communique, that they had decided to reduce the temporary import charge to 10 per cent from midnight on 26th April 1965. This action was welcomed by the other EFTA Ministers as a basis of increasingly close co-operation in EFTA and marked the end of the acute phase of the crisis situation. While Ministers were still concerned about the effects on EFTA trade of the remaining 10 per cent charge on imports, and anxious that it should be eliminated as soon as possible, the general view was that the British Government would take the necessary action as early as possible.

The Vienna Initiatives

Following the February Ministerial meeting, there was a desire in most EFTA countries that advantage should be taken of the return to confidence in EFTA co-operation. The crisis had brought home to most EFTA countries both the value of the partnership to their commerce and the need to extend EFTA co-operation to avoid the recurrence of such a situation. Moreover, it was relaized that the remaining tariffs and quantitative restrictions on trade in industrial goods between the EFTA countries were due for abolition

8 at the end of December 1966, less than two years away. If the fullest advantage was to be taken of this situation, it was necessary that the EFTA countries should move rapidly in the realm of non­ tariff barriers to trade, so that these too might be eliminated, so far as was possible, by the end of the transitional period. There were also some, including many EFTA industrialists and parliamentarians, who believed that more should be made of the EFTA partnership than had hitherto been attempted.

In addition, there was disquiet within EFTA about the possi­ bilities of an indefinite prolongation of the division of into two separate trading groups. As explained in a later section of this Report, it became clear in 1964 and in the first months of 1965, that EFTA exports to the Six had ceased to rise at the same rate as had prevailed in the years 1959-1963. Moreover, there was no doubt that investment decisions taken on the basis of two separate markets would in many cases be less satisfactory and less economic than if a single market existed covering the whole area. EFTA Governments were also conscious that the two trading groups were rapidly nearing zero in their internal tariffs, and it was feared that this would worsen the situation and lead to greater rigidities.

This led to the feeling— expressed in particular by the British Prime Minister and communicated by him to his EFTA colleagues — that the time had come to try to restore momentum to a wider European economic integration by evolving initiatives which could be made by EFTA to the EEC. The situation was admittedly difficult. Various previous attempts had been made at forming a single market comprising the whole of Western Europe; these had failed and the factors which brought about their failure were still operating. Nonetheless, it was believed that the imminent comple­ tion of tariff elimination inside each of the two groups created a new situation and that past failures should not be reasons for inaction in present circumstances. Further attempts should be made, in a climate of realism, to build bridges between the two groups and so mitigate the damage which would result from continued division. These two main currents of thought, the development of EFTA co­ operation and new initiatives towards co-operation between EFTA and the EEC, provided the Agenda for EFTA Ministerial meetings in Vienna on 24th and 25th May, 1965. The importance attached by EFTA Governments to these meetings was evidenced by the fact that they were attended by the Prime Ministers of Austria, Denmark, Finland, Norway, Sweden and the United Kingdom. Sixteen other Ministers attended, including the Minister of , and the Foreign

9 Minister and the Minister of Public Economy of Switzerland. The chair at the Vienna meetings was again taken by Dr. Bock, who was also the leader of the Austrian Delegation.

After debates ranging over all the matters discussed above, the Ministers decided on two mandates calling for an intensive study programme, to yield its first results in time for a Ministerial meeting to be held in Copenhagen in the last week of October, 1965. The first mandate was confined to the seven Member States of EFTA and covered the “ bridge-building ” studies, involving two related questions; (a) the exploration of possible ways and forms of closer contact between EFTA and the EEC, and (b) the study of subjects which might usefully be discussed in such contacts.

The second mandate, based on a joint memorandum submitted by the four Scandinavian Governments and placed under the auspices of the Joint Council, was concerned with the development of EFTA co-operation. In their turn, these studies could also be divided into two parts: (a) examination of the internal activities of the Association to ensure that it would function effectively and to the fullest advantage of all EFTA countries by the end of the transitional period; these subjects included possible new fields of internal EFTA co-operation; (b) the study of the external aspects of EFTA activities, with a view to the further development of consultation and co-operation on economic and commercial policies in other international organizations.

The Ministers stressed that a successful outcome of the Kennedy Round o f tariff-cutting negotiations in the GATT remained of paramount impor­ tance as “ the principal means for the lowering of barriers to trade, both worldwide and in Europe No action should be taken in EFTA which would in any way reduce the possibilities of success in this endeavour.

By the end of June 1965, the necessary work on both these Ministerial mandates was in train. It had been so arranged as to bring the results of expert examination as quickly as possible to the EFTA Joint Councils for their consideration. Although only a first report would be possible on some parts of the mandates, others had already received a great deal of consideration and could be presented to Ministers for decision in Copenhagen. This Report would not be complete if it did not record an important change in EFTA’s organization. On 24th May, Mr. Frank E. Figgures, C.M.G., Secretary-General of EFTA since i960, submitted his resignation to the EFTA Ministerial meeting in Vienna, to take effect at the end of October 1965. The Ministers took note with great regret of this resignation and expressed their deep appreciation of the outstanding services which Mr. Figgures has rendered to the Association and to the EFTA Governments.

10 ECONOMIC DEVELOPMENTS Economic growth in the EFTA countries continued at a high level during the past year. In real terms, i.e. after allowing for price increases, seven EFTA countries increased their national product by between 5 per cent and 7 per cent over the previous year. The only case in which expansion was slower in the past year was that of Portugal, where a decline in agricultural output, due to adverse climatic conditions, resulted in a decline in the growth rate to 4 per cent in 1964, compared with 4.7 per cent the previous year. This remarkable record of economic growth in EFTA was inevitably associated with the familiar problems which accompany rapid increases in production and wealth. In all countries there was pressure on resources, and the availability of labour became particularly tight. A specific case was that of the United Kingdom, where the high level of internal demand in 1964 led to a sharp increase in imports. These, in conjunction with heavy net exports of long-term capital, contributed to a serious balance of payments deficit and consequently a period of extreme difficulty for sterling. These events once more illustrated the special difficulties of the United Kingdom as a reserve currency country, with consequent problems of international confidence. Although several EFTA countries experienced serious deficits in their balance of payments, their situation never assumed the crisis dimensions suffered by the United Kingdom. Dealing with these matters in more detail, economic activity in the United Kingdom expanded considerably in 1964. Investment in manufacturing industry rose throughout the year; this was in addition to a continuing expansion of investment in the public sector, in the distributive and services industries, and in house building. Industrial production grew at the rate of 8 per cent between 1963 and 1964, whilst unemployment fell to low levels and there was heavy pressure of demand for imported goods. The size of the trade gap in the last six months of 1964 pressed directly on the United Kingdom’s gold and dollar reserves and led in turn to pressure on sterling due to confidence factors abroad. By the spring of 1965, however, a combination of factors had brought about a slight improvement in the situation. The United Kingdom position had been heavily reinforced by credits from other countries and from the International Monetary Fund, and a series of Govern­ ment measures had come into effect to restrict demand, including measures taken both inside and outside the two budgets presented in November and April. Although the trade balance did not continue to respond quite as satisfactorily in the second quarter of 1965 as had earlier been hoped, nevertheless, over the first six months of 1965 taken together, exports were 4 per cent higher in value than the average for 1964, while imports were 1 per cent lower.

11 Although the most acute phase of the difficulties had passed, British Ministers did not disguise the fact that much more remained to be done to bring external payments into balance. The necessary measures were being applied with the aim of achieving balance on the external account in 1966. Probably the most difficult problem lay in the control of incomes and prices, both of which tended to rise very rapidly as a result of the general boom conditions in the United Kingdom’s internal economy. These matters were receiving concentrated attention from the British Government, which had embarked upon a new prices and incomes policy designed to limit wage increases to the growth of productivity. T he Austrian economy in 1964-1965 achieved its most rapid rate of expansion for several years. The gross national product rose by 6 per cent over the year, fixed investment by 9 per cent and exports also by 9 per cent. On the other hand, public consumption also increased sharply and rising prices, which increased by about 5 per cent over the period, reduced the effective value of the 8 per cent increase in per capita incomes over the period.

Denmark increased its gross national product by 7 per cent in real terms. This was in sharp contrast with 1963, when the intro­ duction of stabilization policies resulted in there being only a very small increase in gross national product compared with 1962. The main forces behind last year’s increase were a sharp rise in fixed investment and a consequent increase in private consumption based on higher employment and wages and a continued increase in earnings from exports. Consumer prices rose by about 4 per cent over the year. In spite of fiscal and monetary measures aimed at moderating the rate of growth of the Danish economy, economic expansion continued in the first part of 1965, causing a heavy deficit on the balance of payments. The trade deficit of 1964 was financed by capital imports, which led to a net increase in monetary reserves over the year. In Finland, the grew by over 5 per cent in real terms and industrial production was up by 8 per cent. There were two indications of over-heating. First, the deficit on external trade was considerable; secondly, the consumer price index rose by no less than 10 per cent. To some extent, this rise was triggered by alterations in the sales tax system in the early months of 1964, which led to an increase in the cost of living index on which are based many collective wage agreements. Consequently, wages rose and affected industrial costs. There are indications that the sharpest rise in prices has now been passed and that they will be limited to a more supportable rate of increase this year. Both production and exports have continued to grow, but the size of the trade deficit envisaged remains a disturbing feature, especially considering the decreased opportunities for capital imports.

12 Norway achieved a high level of economic expansion in 1964, raising its gross national product by 6 per cent in real terms. The driving forces in this increase were rising overseas demand and a strong expansion of domestic investment. Whereas consumer prices rose by nearly 7 per cent from December 1963 to December 1964, savings also increased and helped to finance the high level of investment. There was a favourable movement in export prices and the volume of exports of goods and services rose by 11 per cent. The trade deficit was further reduced by lower imports of ships. The rate of expansion of the Norwegian economy has lately fallen slightly as available capacity and labour has become fully utilized. These factors will restrain expansion in the coming months, but there may be increased pressure on the balance of payments. As already stated, Portugal suffered a decline in output from the agricultural sector in 1964. Thus, although industrial output grew by about 7.4 per cent, the overall production increase in 1964 was estimated at about 4 per cent, compared with 4.7 per cent in the previous year. Since domestic demand grew slightly more than output, there was a consequent small increase in Portugal’s trade deficit. The most striking aspect of Sweden's economic progress in the past year was the sharp increase in exports. After allowing for changes in prices, commodity exports increased by about 13 per cent in one year. The gross national product rose by 7 per cent, but industrial fixed investment fell by about 8 per cent, though it appears that the increase in public investment more than offset this reduction. Private consumption rose by about 5 per cent. The rise in consumer prices was relatively moderate in 1964, amounting to about 4 per cent, but the pressure on resources and labour in Sweden is now considerable and may well cause some serious price increases. As a result, the Swedish authorities have embarked on a more stringent economic policy which is intended to keep the situation under control in the period ahead. In spite of some stringent measures taken by Switzerland, to reduce the over-heating of its economy, the amount of work already in progress early in 1964 maintained economic expansion at the same rate as in previous years, i.e. about 6 per cent per annum. This was mainly due to a further sharp rise in fixed investment of 11 per cent; although new building starts were controlled by the Federal Government in the spring of 1964, the construction work already begun was sufficient to keep the con­ struction industry almost at full stretch. Other indications of the very high level of demand were a further increase in imports, raising the trade deficit to new levels, and a further rise in consumer prices of about 4 per cent. The Swiss Government has maintained in action the economic measures taken in 1964 and has intensified its control over the employment of foreign workers.

13 INTRA-EFTA TRADE IN 1964 AND TOTAL IMPORTS (c.i.f.) AND EXPORTS (f.o.b.) BY COUNTRIES IN MILLION US $ AND PERCENTAGE CHANGES ON 1963 AND 1959

IMPORTS EXPORTS

From E F T A From W orld T o E F T A T o W orld

1964 1964 1964/63 '964/63 ■964/59 ' 964/59 1964 1964/63 ' 964/59 ■964 1964/63 1964/59

U S $ mill. % ch. % ch. U S S mill. % ch. % ch. U S S mill. % ch. % ch. U S S mill. % ch. % ch.

271.4 Austria. . . . + 1 6 .2 + IOO.7 1,863.4 + 1 1 .2 + 62.8 276.6 + 25-7 + ■36-7 1.444.4 + 9 -o + 49-8 Denmark . . . 930-2 + 22.8 + 75-i 2,596-1 + 22.4 + 62.7 976.0 + ■4-5 + 7 1 -7 2,075-3 + 10.7 + 50.4 Finland . . . 479-7 + 22.1 + 102.4 ■>495-9 + 24.6 + 8 0 .2 439-2 + 23.1 + 76.8 1.283.4 + 12.3 + 59-6 Norway . . . 814.3 + 1-2 + 68.3 ■>983-1 + 8.9 + 50.8 578-1 + 27.0 + 76-1 1,290.8 + 20.2 + 54-8 Portugal . . . 164.4 + I4.O + 66.7 761.0 + 16.9 + 60.7 132.4 + 40.4 + 159-6 515-3 + 23.6 + 77-7 Sweden . . . 1.229.6 + 19.6 + 102.1 3,850.1 + ■3-7 + 60.2 1,518.2 + 18.2 + 86.1 3.669.0 + ■4-7 + 66.5 Switzerland. . 538-2 + 21-5 + 11.1 + ■■7-5 3>598.4 + 8 8 .1 5 ' 7-9 + 20.6 + 86.9 2.654.0 + 9-8 + 57-7 United K in g d o m . . 2.066.6 + 22.0 + 14.4 + 56.8 ■5,437-8 + 38.2 1,781.0 + u -3 + 59-7 ■2,341.2 + 4 -i + 27-5

Total EFTA . 6,494.4 + I8.I + 77-5 3',585-8 + ■4-5 + 5 '-5 6,219.4 + ■7-5 + 76.7 25,273-4 + 8.5 + 4 '-7

Source: O E C D and National Statistics. EFTA Trade in 1964 World commodity trade (excluding most state-trading coun­ tries) increased more rapidly in 1964 than in the previous year. Trade between the industrial countries of Western Europe also expanded faster, although it was affected by the stabilization policies introduced in some EEC countries in the latter part of 1963. trade with the rest of the world increased con­ siderably and trade between the industrialized countries and the developing countries showed a further marked increase over the level achieved in 1963. Foriegn trade by the EFTA countries expanded sharply during 1964. EFTA commodity imports from the world (including intra- EFTA trade) were valued at US $31,600 million (c.i.f.) in 1964, or 14.5 per cent higher than in the previous year. This was a larger increase than in any year since EFTA was established. The figures in the table show that half of this increase in value came from the unusually large increase in imports into the United Kingdom. Even larger percentage increases were, however, recorded for Denmark, Finland and Portugal. EFTA commodity exports to the world in 1964 were valued at $25,300 million (f.o.b.), an increase of 8.5 per cent over the previous year. This was a slightly bigger ycar-on-year percentage increase than was achieved in 1963 and is considerably above the average annual rate of increase since EFTA was set up. All Member countries, except the United Kingdom, increased their exports in 1964 at rates higher than their average annual rates of increase over the period 1959-1964, and Norway and Portugal increased their exports by more than 20 per cent. Exports from the United Kingdom, which account for just under half of total EFTA exports, rose less rapidly than the EFTA average, causing the level of total EFTA exports in 1964 to be only 8.5 per cent higher than in the previous year. Intra-EFTA Trade Trade between the EFTA countries continued to expand much more quickly in T964 than their trade with the rest of the world. Intra-EFTA trade, measured f.o.b. at current prices, was 17.5 per cent higher in 1964 than in 1963; EFTA exports to the rest of the world were 6 per cent higher than in the previous year and imports were 13 per cent higher. The share of EFTA total exports going to other EFTA markets is now approaching one quarter, compared with just under 20 per cent in 1959. All Member countries showed large increases in exports to their EFTA partners in 1964. The largest was recorded by Portugal, whose exports to EFTA were 40 per cent higher in 1964 than in 1963. United Kingdom exports to EFTA increased by 11.3 per cent from the level of the previous year, just above the average annual rate of increase for the United Kingdom since 1959. Although

*5 EFTA TRADE 1964 (measured by exports f.o.b.)

US $ million

From U nited Austria Denmark Finland N orw ay Portugal Sweden Switzerland K ingdom To

A u s t r i a ...... 17.4 4-7 8.6 5-2 31.2 103.8 9°-7 Denm ark .... 22.6 47.1 88.1 10.9 316-9 52.3 341-3 F in la n d ...... 10.1 42.6 — 21.6 2-9 172.3 34-7 184.0 N o r w a y ...... 13-1 H 5-3 11.6 — 4.6 393-1 31.0 247.4 Portugal .... 7-3 6.6 i-7 4.8 — 15-5 27.7 102.8 S w e d e n ...... 44-5 245.8 76-5 182.9 18.2 — 87.6 5 7 I-I Switzerland . . . 113.8 60.5 9-9 13.0 9-5 78.2 — 243-7 United Kingdom . 65.2 487.8 287.7 259-1 81.1 511.0 180.8

Total EFTA . . . 276.6 976.0 439-2 578.1 132.4 1,518.2 517.9 1,781.0

Source: O E C D Series A and National Statistics. United Kingdom imports from other EFTA countries increased by a larger proportion (22 per cent) than exports to other EFTA countries in 1964, British exports to EFTA have still grown faster than imports from the Area over the whole period 1959-1964. Intra-Scandinavian trade continued to expand rapidly during 1964, growing by 19 per cent over the level of the previous year. The four Scandinavian countries now account for more than half of intra-EFTA exports and trade between these countries accounts for 28 per cent of intra-Area trade. The main growth in trade between the Scandinavian countries continued to come from sales of technically advanced manufactured goods and consumer goods, although exports of staple commodities still played an important part in their total trade. The other three Scandinavian countries found Sweden a particularly favourable market for their exports in 1964. Denmark and Finland in particular are finding that the Scandinavian market forms a sound basis for expansion of their industrial exports; Finnish exports to the other Scandinavian countries rose by 28 per cent last year, Norway followed with a 21 per cent increase, Sweden with a 19 per cent increase and Denmark 15 per cent. The foreign trade of Austria and Switzerland is closely linked to their neighbours in the Six, but the trade of both these countries with their EFTA partners since 1959 has been growing more rapidly than their trade with the EEC. Both Austria and Switzerland have more than doubled the value of their imports from the other EFTA countries in the five-year period. Austrian exports to EFTA in 1964 were well over twice their value in 1959 and Swiss exports to EFTA were 87 per cent higher. For both these countries 1964 was a good year for trade with the other EFTA countries. Swiss exports were 21 per cent higher than in 1963 and imports were 21.5 per cent higher. Austrian exports to EFTA were 26 per cent higher in value in 1964 than in 1963 and imports rose by 16 per cent.

EFTA Trade with EEC Total EFTA imports from the six countries of the EEC in 1964 were valued at $9,500 million (c.i.f.), an increase of 13.2 per cent over 1963. EFTA exports to EEC, however, increased by only 6.4 per cent to $6,900 million. This showed a sharp fall from the rate of increase in previous years; the average annual increase for the five years 1959-1964 was 11.5 per cent a year. The smaller growth in exports to EEC, particularly by Austria, Switzerland and the United Kingdom, caused the EFTA visible trade deficit with the EEC in 1964 to rise to $2,600 million from $1,900 million in the previous year. The stabilization policies introduced in and make it difficult to draw any definite conclusions from these figures.

17 For example, Italy’s imports from all countries fell during the year; even her imports from the rest of EEC fell by 8.6 per cent. It is not certain, however, that economic developments in Italy and France were the only cause of the failure of EFTA exports to keep up their previous rate of growth. The much slower rate of growth, which was also shown by the trade results of the first quarter of 1965, may indicate for the first time that the increasing tariff discrimination between the two groups is beginning to affect trade between them.

EFTA Trade with USA In 1964 EFTA imports from the United States totalled $3,100 million, an increase of 23 per cent over the previous year. These imports represented 10 per cent of total EFTA imports. EFTA exports to the United States also rose by 8 per cent during the year. At $1,950 million, they were equivalent to 8 per cent of total EFTA exports. The United Kingdom was responsible for more than half of both EFTA exports to, and imports from, the United States. The export performance of the United Kingdom was, however, lower than the EFTA average, with a 5 per cent gain in 1964 as compared with 1963. The result of the year’s trading was that EFTA had a deficit on visible trade with the United States for 1964 of $1,200 million.

Trade with Developing Countries In 1964, EFTA’s trade with the developing countries of Africa, Asia and Latin America, measured at current prices, continued the expansion that had begun in the previous year. EFTA imports from those countries rose by 6 per cent to $6,103 million (c.i.f.), and exports were 3 per cent higher at $4,711 million (f.o.b.). The annual commodity trade deficit of EFTA with the developing countries rose to $1,392 million. The United Kingdom, which accounts for three-quarters of EFTA trade with the developing countries, recorded only a 2 per cent increase in the value of its imports from those areas. All other EFTA countries, however, showed substantial increases in their imports from the developing countries last year. On the other hand, EFTA exports to developing countries in 1964, although still growing, expanded much more slowly. Imports from the developing countries accounted for just under 20 per cent of total EFTA imports in 1964. The largest increase in imports was 12 per cent from African countries, although the developing countries of Asia remained the largest suppliers, mainly because of their large share in the British market. Asia is also the most important market for EFTA exports to the developing coun­ tries, representing 19 per cent of total EFTA exports in 1964. II. INTERNAL DEVELOPMENTS IN EFTA

TARIFFS AND QUOTAS

Further EFTA Tariff Reduction

In accordance with the agreed timetable, a further reduction of 10 per cent was made on 31st December 1964 in the tariffs on most industrial goods traded between Member States. These duties have now been reduced to 30 per cent of the basic level (the level which applied on 1st January i960). The remaining 30 per cent will be eliminated in two stages— a reduction of 10 per cent on 31st December 1965 and the removal of the final 20 per cent at the end of December 1966.

Quantitative Import Restrictions

During the year covered by this Report, those Member States which had retained quantitative restrictions on a considerable number of products liberalized their imports to a high degree. In all Member States, the few remaining quotas were considerably enlarged. A working party has again this year examined the remaining restrictions in the light of the obligations in Article 10, paragraph 3, of the Convention, i.e. to see whether the remaining quotas are sufficiently enlarged so that no burdensome problems will exist when the time for their abolition arrives at the end of 1966. The working party reported to the Council that the final abolition of quantitative restrictions would not be expected to create burdensome problems in any Member country. Certain controls on imports— and also on exports— may be maintained under Article 12 of the Convention if they are not used as a “ means of arbitrary or unjustifiable discrimination ” or as a “ disguised restriction on trade between Member States ”. Member States can thus retain measures to protect public morals, to prevent disorder and crime, to protect human, animal or plant life and health, etc. A working party has been established in order to examine all the measures notified under Article 12; it has already met twice and is expected to complete its work in the autumn of 1965.

19 The Origin Rules The EFTA rules of origin have in general continued to operate satisfactorily. Two small changes were made to provide a qualifying process for certain embroidered goods and for hat shapes of certain materials which were not previously covered by any listed quali­ fying process; in addition, various textual changes were made to keep the Schedules in line with the Brussels Nomenclature, for which a number of changes came into force on ist January 1965.* Consideration is being given to the Consignment Rule, under which goods qualify for EFTA tariff treatment only if consigned from one Member State to another to see whether it can be relaxed somewhat to allow EFTA treatment to EFTA goods which have been stored in Customs warehouses in a non-EFTA country. Certain changes in the origin rules for some mixed textiles are also under consideration.

Annexes D and E Following amendments to the Brussels Nomenclature, certain consequential changes were made in Annexes D and E to the Convention; these were mainly textual and in general did not affect the coverage of the Annexes.*

OPERATION OF THE FREE TRADE AREA

Measures Introduced by the British Government Reference has already been made in the Introduction to this Report to the working party on the British import surcharge. It should also be recorded that the second EFTA working party established by the Joint Council on 29th October to study the export rebate scheme, held two meetings but has not presented any report. The Council decided that, before proceeding further, the Secretary-General should prepare a thorough study of the whole question of rebates of internal taxes on exports within EFTA, especially concerning the situation after the end of 1966 when the Free Trade Area would be in full operation. This study was completed in June.

Drawback The main task of the Committee of Trade Experts and the Customs Committee during the second half of 1964 was again consideration of the drawback question. Towards the end of the

* See also Appendix II to this Report.

20 year both Committees completed their reports to the Council. The report of the Committee of Trade Experts deals with the eco­ nomic aspects of drawback and the effects of either continuing to allow drawback on EFTA goods after 31st December 1966 when most goods traded between Member States will be free of duty, or not allowing it. The Customs Committee’s report contains a detailed study of the administrative and procedural implications involved in a decision to withhold EFTA tariff treatment from goods which have benefited from drawback. The Council has not yet taken a decision as to whether drawback should be retained or abolished. A study is taking place of the domestic administrative procedures that Member States would need to adopt to ensure that goods would not benefit from both drawback and Area tariff treatment.

Price Differences for Agricultural Raw Materials The Council has continued its study of the problems arising for some Member States from the reduction of duties on imports of certain manufactured products, e.g. chocolate, sugar confec­ tionery, biscuits, etc., which contain a high proportion of agri­ cultural raw materials which are not, as such, eligible for EFTA tariff treatment and may be highly protected, with the result that their own domestic producers must pay prices significantly higher than world market prices. As an interim measure the Council, by Decisions Nos. 15 of 1964, and 9 of 1965, allowed Switzerland and Austria to postpone until 30th December 1965 the tariff reductions which should have been made on 31st December 1964 on these manufactured products.

Revenue Duties At the request of the Council, the Customs Committee is carry­ ing out an examination of the revenue duty lists of the Member countries and of the manner in which the obligations under Article 6 of the Convention are being interpreted and fulfilled.

Non-Tariff Barriers to Trade As the date on which EFTA tariffs and quantitative import restrictions on industrial goods will be eliminated is rapidly approaching, EFTA has again turned its attention to other barriers to intra-EFTA trade as these become of increasing importance in a full free trade area. The Committee of Trade Experts has been instructed to examine any such cases which may be brought to its attention and several specific cases were considered by the Commit­ tee during the year.

21 Practices of Public Undertakings Article 14 of the Stockholm Convention calls for the progressive elimination before the end of 1966 of practices of public under­ takings which result in protecting national industries or in trade discrimination on grounds of nationality. A sub-committee of the Committee of Trade Experts was set up in March 1964 with the mandate to study the implementation of the provisions of Article 14. During the year covered by this Report, the sub-committee held three meetings (in November 1964, and in March and June 1965) at which the procurement practices of central government pur­ chasing authorities were reviewed, and a report on this subject was almost completed.

Restrictive Business Practices The Restrictive Business Practices working party which was set up as a result of the Ministerial meeting in Lisbon in 1963 has completed its review of the situation in the restrictive business practices field and submitted a report to the Council. The task of the working party was to examine, on the basis of facts, whether any provisions other than those of Article 15 were necessary to deal with the effects of restrictive business practices, or actions by dominant enterprises, on trade between Member States. The working party undertook a general survey of national legislation and practice in the restrictive business practices field.

Establishment Article 16, paragraph 1 of the Stockholm Convention is designed to prevent Member States from hampering the development of the Free Trade Area by discriminating against the nationals of other EFTA countries by applying restrictions on the setting-up or operation of economic enterprises. The Establishment working party which was set up following the Lisbon Ministerial meeting with the task of examining on the basis of facts, whether further or different provisions are necessary to give effect to the principle in paragraph 1 of Article 16 had completed its study by the end of June. Its survey of national legislation and practice in the esta­ blishment field enabled it to assess the means available to Member States to implement the obligation in Article 16.

Double Taxation A n ad hoc working party on double taxation was set up In March 1964 to examine the technical feasibility of establishing a multi­ lateral EFTA convention on double taxation based on the OECD draft model Convention of July 1963. In May 1964 the working party tentatively concluded that it would be technically possible

22 to work out such an EFTA convention; a final answer could, however, only be given after a thorough examination of the articles of the OECD draft Convention. During the year covered by this Report, the working party held three meetings— in January, March and May of 1965— for detailed discussion of a number of articles in the OECD draft Convention. The working party will prepare a report to the Council on the progress of its work by the end of

1965- Patents Since the publication in November 1962 of the draft EEC Patent Convention, the EFTA countries have shown their interest in establishing closer co-operation among European countries in this field. During the second half of 1963, six of the Member countries of EFTA addressed notes to the EEC Commission, pointing out their interest, and asking that they be given the opportunity to participate in the final drafting of the Convention. No formal reply has been given to these notes. On the initiative of the Swedish Government, the question of European co-operation in patent matters was discussed by the EFTA Ministerial Council in November 1964. Following this discussion, an ad hoc group of Patent experts was convened to examine whether a common EFTA attitude to the draft EEC Patent Convention could be defined. The group held two meetings, in February and April 1965, and made a report to the Council. On the basis of this report, the Ministerial Council held a further discussion of the question at its Vienna meeting in May 1965. Ministers declared that they would welcome the opening of negotiations with the purpose of concluding a general European convention centralizing procedures for the granting of patents. They considered that the general framework of the draft Convention prepared by the EEC constituted a suitable basis for discussion of a broad international scheme. Ministers therefore decided to establish an EFTA working group on patents to examine the whole of the problem and to present proposals taking into account current developments.

Industrial Standardization In June 1964, the EFTA Council accepted the report of an ad hoc working party on industrial standardization. The report concluded that there could be no question of EFTA setting up its own standards. EFTA should rather support the activities of the international standards organizations. Member States could best do this by strengthening their national standards bodies and en­ suring that, as far as possible, national standards are aligned with agreed international standards. Within EFTA, the working party suggested that new statutory regulations enforcing standards of

23 importance to EFTA trade should be notified to Member countries for comments before entering into force. The working party has not met during the period under review. Over the past year, the Association has been engaged in pursuing the report’s recommendations. The procedure for consultation between Member States before the introduction of new compulsory standards has been put into effect and an exchange of information about steps taken by national authorities on the implementation of recommendations of the working party has been initiated.

Study of Effect on Prices of Tariff Dismantling The group of experts from Member countries which had met in June 1964 to discuss ways and means of measuring the effect on prices of the dismantling of tariffs between EFTA countries con­ tinued its work during the year. Pilot studies were undertaken following the first meeting, and their results were discussed at a second meeting on 2nd and 3rd March 1965, when the merits of the various statistical methods which had been used were considered. The group of experts is expected to meet again in the autumn of 1965, when it will prepare a progress report for the Council.

AGRICULTURE

Annual Review The EFTA Council is required once a year to examine the development of trade in agricultural goods, and to consider what further action should be taken in pursuit of the Association’s objec­ tive of facilitating an expansion of agricultural trade that will provide reasonable reciprocity to those Member States whose economies are largely dependent upon agricultural exports. During the period covered by this Report the Agricultural Review Committee completed its 1964 Review. In its Report to the Council, the Committee concluded that the expansion of trade in agricultural products since 1960 had, by and large, matched the average expansion rate of EFTA trade in general. However, atten­ tion was drawn to several specific problems as regards trade in agricultural products in EFTA which might cause increasing diffi­ culties unless adequate measures were taken to deal with them. The most important of these problems were surplus production in various sectors in certain Member countries and the effects of dumped and subsidized exports by non-Member countries on EFTA markets. Particular consideration has been given to these specific pro­ blems during the 1965 Annual Review of Trade in Agricultural Goods. To carry out the 1965 Review, the Agricultural Review

24 Committee held four meetings and had almost concluded its examination at the end of the year covered by this Report.

Bilateral Agreements A new bilateral agreement on agricultural trade was reached between Denmark and Portugal and entered into force on ist July 1965; this agreement forms an integral part of the Free Trade Area arrangements.

Export Subsidies The Stockholm Convention lays it down (in Article 24, para­ graph 2) as an objective of the Council that it should “establish rules for the gradual abolition of subsidized exports (of products listed in Annex D) detrimental to other Member States”. These rules have now been established. The working party which was set up by the Council in February 1964 to examine subsidized agricultural exports which cause dam­ age to Member States presented its report to the Council in No­ vember 1964. The Council completed its discussions on the matter in December, and adopted Council Decision No. 14; a similar decision (No. 8 of 1964) was adopted by the Joint Council. The Decisions establish rules for dealing with subsidized exports of agri­ cultural goods detrimental to other EFTA countries. In order to ascertain whether the new rules have achieved satisfactorily the purpose of Article 24:2, their operation is to be reviewed by the Council in the light of practical experience before the end of 1966.

ECONOMIC COMMITTEE By a Decision (No. 16) adopted on 22nd December 1964, the EFTA Council established an Economic Committee with the purpose of: (a) examining the economic and financial situation of Member States; and (b) reviewing the economic and financial policies of Member States, including their implementation in practice, and their impact in any of their aspects on the economies of Member States and on the satisfactory operation of the Free Trade Area. Each Member State is to be represented on the Committee; Finland has also accepted an invitation to take part in its work. The Committee is to meet at least twice a year and whenever the Council deems it necessary. The Committee is to be furnished by Member States with all necessary information. It is required, as far as possi­

25 ble, to avoid duplication of the work of other bodies, especially that of the Organisation for Economic Co-operation and Development. The Committee will report to the EFTA Council. The first meeting of the Economic Committee took place on gth-ioth July, 1965.

ECONOMIC DEVELOPMENT COMMITTEE Following upon the Colloquy on Regional Development held in Geneva under the auspices of the Economic Development Committee at the end of June 1964, a booklet on regional develop­ ment policies in EFTA countries was published in April 1965. This contained a general chapter based on the discussion at the colloquy and chapters on regional development problems and policies in each of the eight countries. The working party on the Portuguese Tool Industry held its second and final meeting on 2nd February in Geneva. The report of the working party has now been issued and it remains to be considered by the Council. (The major part of this report was published in the July/August 1965 issue of the E F T A Bulletin.) The main recommendation of the report, which has been well received by the Portuguese Government, is that a further survey of the industry should be undertaken by professional consultants, who should be asked to prepare a detailed analysis of costs, prices and domestic and foreign conditions, together with a full-scale investment study of the existing industry and the export opportuni­ ties open to it. In March 1965, the Secretariat presented a paper to the Council reviewing the progress of the Economic Development Committee from 1963 to early 1965. Consideration of this paper by the Council is now complete, and its main recommendations have been adopted. At the end of the period under review proposals were in hand for the third meeting of the Economic Development Committee. Officials concerned with the work of the Committee paid visits to Portugal, Oslo and London during the year. Several suggestions have been made as to ways in which the scope of the Economic Development Committee should be extended or modified.

THE ASSOCIATION WITH FINLAND

Participation of Finland in EFTA Activities Finland has been fully associated with the work of the Associa­ tion during the past year. Because the great majority of the issues concern Finland equally, substantive discussion of most matters has, to avoid repetition, been concentrated in the Joint Council (which includes Finland) rather than in the EFTA Council. This

26 is reflected in the fact that in 1964-1965, for the first time, the Joint Council met as frequently as the EFTA Council. Finland has also been a full member of all the EFTA working parties.

Tariffs On 1 st March 1965 Finland made a further reduction of 10 per cent in her tariffs on most industrial goods imported from her EFTA partners. These duties are now at 30 per cent of their basic level. Further reductions of 10 per cent will take place at the end of 1965 and 1966, and the final 10 per cent will be removed at the end of 1967.

Annex I to the Association Agreement Finland also made a further cut of 10 per cent on 1st March 1965 in duties on imports from EFTA countries for the items listed in Annex I to the Finland-EFTA Agreement. These duties are now at 50 per cent of their basic level and will be reduced in 10 per cent stages at the end of 1965 and each subsequent year until 1969, when they will have been completely removed. Some minor changes have been made in the list of goods to which the Annex I timetable applies.

Quantitative Import Restrictions The import restrictions in Finland have been reviewed by the working party on quantitative import restrictions. As is the case for other EFTA countries, the Finnish quotas have to be examined under paragraph 3 of Article 10 of the Convention with a view to ensuring that the complete abolition of import restrictions will not give rise to any burdensome problems in Finland. The Finnish authorities have submitted a preliminary schedule for the liberaliza­ tion of remaining import restrictions. This liberalization will take place in four steps during the next two and a half years; as the yearly quota programmes in Finland cover the calendar year, the Finnish position will be considered again towards the end of 1965.

THE CONSULTATIVE COMMITTEE

The Consultative Committee, which consists of representatives of Chambers of Commerce, Federations of Industry, Employers’ Associations and Trade Unions of the EFTA countries, held three meetings during the year, and continued to play an active role as a forum discussion on EFTA affairs among the various sectors of the national economic communities. The Committee’s meetings are now timed to precede by a few weeks the Ministerial meetings

27 of the EFTA Council; as a report on each Committee meeting is transmitted by its Chairman to the Ministerial meeting, Ministers are provided with an up-to-date account of the views on EFTA matters of businessmen and trade unionists in their countries. The eighth meeting of the Consultative Committee was held in Geneva on gth November 1964, just two weeks before the Mini­ sterial meeting which considered the emergency measures announ­ ced by the United Kingdom Government to deal with the country’s balance of payments problem. Added weight was given to the Committee’s discussion of these measures by the presence as Chair­ man of the Committee of Mr. Douglas Jay, President of the Board of Trade in the United Kingdom and then Chairman in office of the EFTA Ministerial Council. At the conclusion of the meeting the Committee expressed its wish to keep under close review develop­ ments in EFTA in the light of the United Kingdom balance of payments problem, and to have the opportunity to present its views to the EFTA Ministerial Council in good time. The ninth meeting of the Committee took place on 29th January 1965 in Geneva with Dr. Fritz Bock, Austrian Minister of Trade and Reconstruction, in the chair. Once again, the United Kingdom balance of payments problem provided the main focus of discussion. Representatives of industry in other Member countries presented evidence of the effect on their exports of the United Kingdom import surcharge, and also of its psychological impact on EFTA co-operation. Other internal and external problems facing EFTA were also discussed. The Committee’s tenth meeting was held in Helsinki on 6th May 1965, with Dr. J. O. Soderhjelm, Minister of Justice for Fin­ land, in the chair. On this occasion the Committee’s discussion centred on the policies of EFTA in the current situation of European economic integration. There was general agreement that the Com­ mittee would welcome any successful steps towards closing the gap between the two trading groups of Western Europe. The majority of the Committee’s members also agreed that in the meantime EFTA co-operation could and should in any case be intensified in order to achieve the objective of a single EFTA market as soon as possible. The British balance of payments situation was again discussed, and the representatives of other EFTA countries expressed the view that the import surcharge was not well adapted to secure the ends in view and that the remaining 10 per cent should be abolished as early as possible.

EFTA PARLIAMENTARIANS Last year’s Annual Report noted the beginning of a new ex­ pression of EFTA co-operation, the meetings of Parliamentary delegations from EFTA countries, held in conjunction with meetings

28 of the Consultative Assembly of the Council of Europe. These meetings have now become an established feature of EFTA co­ operation, attracting the attendance of a very high proportion of the EFTA Parliamentarians representing their Parliaments in Strasbourg. The meetings continue to be organized on an informal basis, with no fixed or formal procedures, and are open to the press, which takes an increasing interest in the discussions. Three meetings were held during the year. The first was in November 1964, and concentrated on the problems raised by the imposition of the British surcharge on imports. The Parliamen­ tarians wished to keep in close contact with the development of this matter and held a second meeting in January 1965, at which there was a more general discussion of the problems created for the United Kingdom by difficulties in its balance of payments. The third meeting took place in May 1965, when Mr. Per Federspiel of Denmark relinquished the chair and was replaced by Mr. Gunnar Heckscher of Sweden. There was a lively discussion of the present stage and possible future development of EFTA co-opera­ tion, in which the Parliamentarians displayed a willingness to promote the further development of the Association. These periodic meetings are doing a great deal to assist the spread of comprehension of EFTA and its activities in the Parliaments of Member countries.

INFORMATION ACTIVITIES Events in EFTA during the past year— especially the impact of the British import surcharge and the meeting of the EFTA Prime Ministers in Vienna— stimulated a greatly increased press interest in all the activities of the Association. Close relations with the press in Geneva and elsewhere have been further developed, and there was a marked improvement over the year in the understanding shown in press reports of the problems of EFTA and of its place in the general scheme of economic integration. The range of EFTA publications was widened during the period covered by this Report. The circulation and content of the regular E F T A Bulletin, issued monthly, and of the bi-weekly E F T A Reporter (issued only in the United States) have been further developed. A standard leaflet on EFTA, and a short booklet describing the working of the Free Trade Area, are now available; editions in most of the EFTA languages have been prepared for bulk distri­ bution through Member Governments. The publication towards the end of 1964 of a volume of statistics and commentary, EFTA Trade, provided the first comprehensive study (in English, French and German) of the trading patterns of the EFTA countries; this is intended as an annual publication. The Report of the first Annual Review of Agricultural Trade in EFTA was published (also in three languages) in November 1964; this too is likely to be an annual

29 publication. Other EFTA publications put on sale during the year were a study of The Structure and Growth of the Potruguese Economy, by Dr. V. Xavier Pintado, and a report on Regional Develompent Policies in E FT A . The appearance of these new publications, together with the continued availability of such formal documents as the Stockholm Convention, the Finland-EFTA Agreement, and the Annual Reports of the Association, mean that there now exists a body of EFTA literature that meets part of the need for serious study material on the Association for use in universities. Towards the end of the year under review, steps were taken to make this material available in university libraries throughout Europe. The countries of Western Europe continued to be the main focus of EFTA information activities: the bulk of EFTA publications are distributed in these countries; and the EFTA press mailing list has been extended to all important Western European newspapers. At the request of EFTA Ministers, special steps were taken during the latter part of the year covered by this Report to enlarge the scope of EFTA information activities in the EEC countries; mem­ bers of the EFTA Secretariat visited , France and the to examine the scope for improving the distribution of EFTA information in these countries, and similar visits to Belgium, and Italy are planned for the near future. In the United States, where EFTA maintains an Information Office in Washington D.C., the circulation of the E F T A Reporter has been considerably expanded on a selective basis. As in Europe, events in EFTA over the year resulted in increased reporting and understanding of the affairs of the Association in the United States press. In the course of visits to the United States during the year both the Deputy Secretary-General and the Assistant Secretary- General addressed audiences in various parts of the country. The preparation of Spanish and Portuguese editions of basic EFTA information leaflets made it possible to carry out an initial distribution of this material to interested circles in the Latin American countries. An important stimulus to information activities in the EFTA countries was provided by the organization of effective EFTA Action Committees in Sweden and Denmark. The Swedish Com­ mittee now publishes E F T A Horisont, its own regular report on EFTA affairs. Many individuals and groups visited Secretariat Headquarters during the year and the Secretary-General and other members of the Secretariat fulfilled numerous speaking engagements at universi­ ties, conferences, etc. Although every effort is made to meet re­ quests for such visits, it is unavoidable that many are refused, given the very limited number of persons available in the Secretariat to fulfil such engagements.

30 THE EFTA COUNCIL AND THE JOINT COUNCIL The EFTA Council and the Joint Council each met 40 times during the year. The two Councils met at Ministerial level in Edinburgh on 9th and 10th July, in Geneva on 19th and 20th November and on 22nd February, and in Vienna on 24th and 25th May. All other meetings of the Councils were held in Geneva, with Member Governments represented by officials.

ADMINISTRATION AND FINANCE During the year the staff of the Secretariat in Geneva was in­ creased from 69 to 79; the number in the professional category rose from 30 to 34, and in the general service category from 39 to 45. The staff of the Washington Information Office totalled 8 persons: one in the professional category and 7 locally engaged. Following discussions with representatives of the Swiss Federal and Cantonal authorities, agreement has been reached in principle on the erection of a building for EFTA. The building, which would be rented to EFTA, would accommodate the Secretariat and some permanent delegations and provide some conference facilities for the use of the Association. The Association’s net budget for 1964/1965 (including a supple­ mentary budget for the year) was Sw. Frs. 4,885,400. The budget for the financial year 1965/1966 has been established at a gross sum of Sw. Frs. 5,508,800 or Sw. Frs. 5,478,800 net. The Budget Com­ mittee held two meetings during the year. The scale of contributions to the EFTA budget is determined by reference to the Member States’ gross national product at factor cost, no Member being required to contribute more than 30 per cent of the expenses of the Association. The individual national contributions to the E F T A budget for 1964./1965 were on the following basis (the figures for 1965/1966 are shown in brackets); United Kingdom 30 per cent (30 per cent); Sweden 22.11 per cent (22.01 per cent); Switzerland 16.09 Per cent (16-67 Per cent); Denmark 10.08 per cent (10.56 per cent); Austria 9.51 per cent (10.12 per cent); Norway 8.24 per cent (7.94 per cent); and Portugal 3.97 per cent (2.70 per cent). By annual agreement, Finland also makes a contribution which, in practice, has been between 6 and 6 1/, per cent of the net budget.

3 i III. EXTERNAL RELATIONS

THF GATT AND THE KENNEDY ROUND

The enthusiastic support for the Kennedy Round which has been made clear from the beginning by all EFTA countries was maintained all through last year. At the Ministerial meeting in Vienna in May 1965 Ministers again stressed the paramount importance they attach to a successful outcome to the Kennedy Round as the principal means for the lowering of barriers to trade, both world-wide and in Europe, and they confirmed the intention of all the Member countries of EFTA to continue to work towards its success. During the period of this Report the Kennedy Round entered a stage of more concrete negotiations. As a consequence of the principal decision by the Ministers in May 1964 to accept a 50 per cent cut on the tariffs on industrial products as a “working hypo­ thesis”, the Contracting Parties to the GATT submitted their lists of exceptions by 16th November 1964. Only two of the EFTA countries, namely the United Kingdom and Finland, submitted such lists and these were very limited; Austria, Denmark, Norway, Sweden and Switzerland declared their willingness to cut all their industrial tariffs by the full 50 per cent, provided a reciprocity of concessions could be reached. As already stated, Portugal is in a special category in this negotiation and was not required to submit a list. The EFTA countries have intensified their consultations to ensure the closest co-operation among themselves in the negotiations, especially during the confrontation of exceptions lists, the ensuing bilateral negotiations on these lists, and lately as regards the negotia­ tions on agriculture. The periodic EFTA Report on progress made in implementing the Stockholm Convention was presented at the 22nd Session of the Contracting Parties.

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

The EFTA countries have continued to take an active part in the United Nations Conference on Trade and Development, and in the establishment of the new institutions under the Con­

33 ference. Six EFTA countries— Austria, Denmark, Norway, Sweden, Switzerland and the United Kingdom— are at present members of the Trade and Development Board. Close collaboration in the UNCTAD work between the EFTA countries will continue with a view to helping to carry out the numerous important tasks as effectively as possible and to the greatest benefit of all trading nations. The Secretariat was represented by the Assistant Secretary- General at the first session of the UN Trade and Development Board in New York in April 1965.

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The Secretary-General of EFTA attended the Ministerial meet­ ing of the OECD in December 1964. Members of the Secretariat have continued to attend meetings of interest to EFTA— in parti­ cular the meetings of the Trade Committee, the Agricultural Committee, the Economic Policy Committee and the Economic and Development Review Committee.

NORDIC COUNCIL

Following the establishment of relations between EFTA and the Nordic Council at the beginning of 1964, the EFTA Secretariat is now represented at the sessions o f the Nordic Council. The Deputy Secretary-General attended the 13th session of the Council in Reykjavik in February 1965. At the beginning of June 1965 the Assistant Secretary-General represented EFTA at an information conference organized by the Nordic Council in Stockholm for officials from international economic organizations.

COUNCIL OF EUROPE

The Fourth EFTA Annual Report was discussed by the Con­ sultative Assembly of the Council of Europe on 3rd and 4th No­ vember 1964, as usual in the context of the Assembly’s debate on economic questions. The Report was presented on behalf of the EFTA Council by Mr. Per Haekkerup, Minister for Foreign Affairs of Denmark, who also answered questions by members of the Assembly. At the conclusion of the debate the Assembly adopted, in reply to the Report, Resolution 283 (1964), which noted with satisfaction “that intra-EFTA trade, as well as EFTA’s trade with the EEC and with the rest of the world, have continued to expand”, and “that a good start has been made in implementing the decisions

34 reached at Lisbon in May last year with a view first to ensuring that the integration of the EFTA countries is not frustrated or distorted by non-tariff barriers to trade, and second to securing a fair balance of advantage to all EFTA countries”. The Assembly invited EFTA “to consider what initiatives the Association could take on its side to establish consultations with the EEC with a view to both groupings seeking, wherever possible, solutions on the desired lines to the problems that arise in the process of integrating their respective markets”. The Resolution concluded by expressing its “lively concern” at the emergency economic measures taken by the British Government, and invited EFTA “to arrange within the Association regular consultations on economic and financial policy among Member Governments”. Officials of the Secretariat have attended the debates of the Consultative Assembly as observers.

EXCHANGE OF TECHNICAL INFORMATION WITH EEC

Agreement has been reached between representatives of the EEC Commission and of the EFTA Secretariat on an exchange of experience and techniques in matters of common interest. Meetings between experts from the Commission and Secretariat will take place in Brussels or Geneva whenever the necessity for a meeting arises. At a meeting in Geneva on ioth May 1965, a tentative list of subjects for discussion over the coming months was agreed between officials of the EEC Commission, and of the Secretariat of EFTA. The subjects include problems of comparability of statistical material, and methods being used by the two organisations in studying the effect on consumer prices of tariff dismantling.

TECHNICAL ASSISTANCE TO ECAFE

At the request of the United Nations Economic Commission for Asia and the Far East (ECAFE), the Assistant Secretary-General took part in a working group which met in Bangkok during Novem­ ber 1964 to discuss regional trade liberalization in the ECAFE area.

35 Appendix I COMMUNIQUES OF MINISTERIAL COUNCIL MEETINGS Edinburgh Meetings, 9th and 10th July, 1964 Communique Meetings of the Council of the European Free Trade Association and of the Joint Council of Association with Finland were held in Edinburgh on gth-ioth July under the chairmanship of Mr. Edward Heath, Secretary of State for Industry, Trade and Regional Development of the United Kingdom. Ministers reviewed the whole range of the Association’s internal activities and recent developments in their relations with other countries. They expressed their satisfaction with the progress made towards complete free trade in industrial products by the end of 1966. EFTA Ministers discussed recent contacts with members of the European Economic Community and with the Commission. They stressed the importance of minimizing adverse consequences of the progressive establishment of two trading groups in Europe and avoiding serious divergencies on questions of commercial policy or such technical matters as standardization and patents. On the basis of a complete report by Austrian Ministers, there was a full discussion of the exploratory talks which had taken place between Austria and the Community. EFTA Ministers also reviewed the information policy of the Association and approved measures designed to promote a fuller understanding of the Association’s objectives and achievements. EFTA Ministers, together with their Finnish colleague, reviewed the extensive programme of internal work under way in EFTA, dealing both with industrial products and with agriculture. Mem­ ber States are now entering the final stages of eliminating tariffs and quantitative restrictions; it is therefore important to ensure that the advantages of the large single market are not frustrated by other barriers to trade. Special attention was devoted to the work of the Economic Development Committee; Ministers approved its report, and gave instructions for its work to be carried forward. The effective role played by the EFTA Consultative Committee was also welcomed.

36 In reviewing the outcome of the United Nations Conference on Trade and Development, Ministers stressed the importance of continuing to work for constructive solutions to the outstanding problems of developing countries. EFTA countries import more per capita from developing countries than any other major trading group, and six EFTA countries are to be represented on the Trade and Development Board. The Ministers examined the current prospects for the Kennedy Round. They reaffirmed their resolve to work for a fifty per cent linear cut in tariffs with a bare minimum of exceptions justified only for reasons of overriding national interest; but they stressed the importance of finding an acceptable basis for negotiations on agricultural products. The Kennedy Round offers an unpreceden­ ted opportunity to open markets for the benefit of the developing as well as of the industrialized countries and to reduce the barriers between the two European trading groups. It was agreed that the next meeting of the two Councils at Ministerial level will be held in Geneva on igth-20th November, 1964.

Geneva Meetings, 19th and 20th November, 1964

Communique

The EFTA Council and the Joint Finland-EFTA Council held meetings at Ministerial level in Geneva on 19th and 20th November, 1964. The Right Honourable Douglas Jay, M.P., President of the Board of Trade (United Kingdom), was in the chair. Ministers considered the report of the working party which had been studying the recent British economic measures and their implications for EFTA. The other Ministers pointed out to the British Ministers that the application of the 15 per cent charge on imports into the United Kingdom was inconsistent with the United Kingdom’s obligations under the Convention and the Association Agreement. It was generally urged on British Ministers that a firm date in a few months’ time should be fixed for removing or reducing the charge. It was also urged that the charge should be reduced to 10 per cent in a matter of weeks; that imports should be exempted from the charge in all cases where there was bona fide evidence that contracts were concluded before 27th October 1964 and that the charge should not be applied to goods subject to quantitative restrictions (import quotas or others) in the United Kingdom.

37 British Ministers, while not claiming that the charge came within the terms of the Convention and the Association Agreement, pointed out that Article 19 provided for the use of quantitative restrictions on imports to correct a serious balance of payments deficit. Although such measures would have brought the United Kingdom within the terms of the Stockholm Convention, they would, in the British view, have been more damaging to EFTA and to the development of EFTA trade in tye United Kingdom market. British Ministers affirmed that the charge was a temporary measure and that the British Government was firmly resolved in the interests of the United Kingdom, as well as of their EFTA partners, to reduce and to abolish it at the earliest possible moment. They explained that it was not possible to fix precise dates for reducing and eliminating the charge but it was intended that this process would begin in a matter of months. As regards contracts, British Ministers drew attention to the fact that in response to the representations made by a number of EFTA Governments, provision had been included in the Finance Bill to relieve exporters who, under the terms of pre-existing contracts, would have to bear the charge. Other Ministers requested the United Kingdom Government to undertake bilateral negotiations with EFTA countries about any losses forced upon individual firms which have concluded contracts relying on the EFTA Convention. The Council of Ministers agreed to keep the situation under close and continuous review. They instructed the working party, which had examined the British economic situation, to re-convene in December with a view to preparing a new report on the recent developments and the steps planned by the British Government to restore the equilibrium of the balance of payments. It was under­ stood that the legal rights of all Parties to the Agreement remained unprejudiced. The Ministerial Council decided to review the situation at its next meeting in February 1965. Furthermore, in order to provide better means for giving effect in future to the consultations provided for in Article 30 of the Convention, Ministers decided to set up an Economic Committee of senior officials from capitals to meet as frequently as necessary. The development of EFTA trade in agriculture was fully dis­ cussed by the Ministers. The First Annual Review of this trade had been most useful. The Ministers underlined the need for intra- EFTA co-operation in this sector; the Annual Review procedure will itself assist intensified efforts to expand intra-EFTA trade in agricultural goods. In the meantime, two problems called for special attention; that of the surplus of certain products in some Member countries; and that created in EFTA markets by dumped or subsidized supplies of agricultural products from third countries.

38 On the Kennedy Round of tariff negotiations, the Ministers welcomed the fact that all the main parties to the negotiations had met the GATT deadline for the tabling of “exceptions lists” to the general linear cut in industrial tariffs. In accordance with their stated policies from the inception of the idea of the Kennedy Round, the EFTA countries had either abstained from making any excep­ tions or had kept their lists to a bare minimum and thus confirmed their intention to make the Kennedy Round a success. They noted, however, that the exceptions lists tabled by some other parties to the negotiations created great problems for some EFTA countries. The EFTA Council reviewed the present situation regarding European integration. The British Ministers reported on recent contacts which they had had with member countries of the EEC at which there had been general recognition of the need to prevent any deepening of the gap between EEC and EFTA. The EFTA Ministers noted with interest recent suggestions for closer contact between EFTA and the EEC and agreed that all such possibilities and proposals should be given full and careful attention. Other Ministers also reported on meetings with Members of the European Economic Community and the Commission. Ministers approved the proposals for accommodation for EFTA and expressed their gratitude to the Swiss authorities for the sympathetic consideration they had shown for EFTA’s needs. The next meeting of the two Councils at Ministerial level will be held in February 1965.

Geneva Meeting, 22nd February, 1965

Communique

The Joint Council of EFTA and Finland met in Geneva at Ministerial level on 22nd February 1965. The Ministerial Council reviewed the economic position of the United Kingdom and the comprehensive programme of measures taken and under consideration by the British Government to improve the state of the economy and the balance of payments; noted the improvement in the economic position of the United Kingdom and in the strength of sterling since the last Ministerial meeting, and the determination of the Government to stabilize the gains made and to foster further improvement. On behalf of the Government of the United Kingdom, Mr. George Brown, the First Secretary of State, announced that they had decided to reduce the temporary import charge to 10 per cent from midnight on 26th April 1965. The Council expressed warm satisfaction with this action which they welcomed as a basis

39 of increasingly close co-operation in EFTA and as a sign of confi­ dence in the fundamental strength of the British economy. The Council also reviewed the activities of the Association since the previous Ministerial meeting. Particular attention was given to the progress of the Kennedy Round of tariff negotiations in the GATT. At the invitation of the Austrian Government, the next meeting at Ministerial level will take place in Vienna on 24th-25th May, I9®5-

Vienna Meetings, 24th and 25th May, 1965

EFTA Council Communique

The EFTA Council met at Ministerial level in Vienna on 24th May 1965. Dr. Fritz Bock, Federal Minister for Trade and Recon­ struction, was in the chair. Delegations of five Member countries were led by their Prime Ministers. Dr. Klaus, the Federal Chan­ cellor, welcomed the delegates. Ministers examined the situation as it exists today in Europe, after five years of successful development of EFTA. They discussed the likely consequences for Europe of the deepening division result­ ing from the continued separate evolution of EFTA and the EEC. A heavy responsibility rested on Governments to seek to ensure closer co-operation between EFTA and EEC and to pursue such policies as would promote to the greatest extent possible the growth of trade, the expansion of their economies and the welfare of all the peoples of Western Europe. Ministers considered that a hardening of the division could only be arrested by new initiatives. They firmly believed that steps could and should be taken to bring about closer and more con­ tinuous contact between the two groups, in order to facilitate the removal of trade barriers and the promotion of closer economic co-operation in Europe, which are the fundamental objectives of EFTA. They agreed that it would be desirable to seek to arrange meetings at Ministerial level between the two groups at the earliest opportunity which offered prospects of a fruitful result. Ministers therefore decided that the Council should be charged with the task of recommending what procedural arrangements might best facilitate contacts between EFTA and the EEC, and what substantive issues of policy might be the subjects of discussion between them; and that this report should be submitted to the Ministerial Council of EFTA at its meeting in Copenhagen in October with a view to a meeting between EFTA and the EEC as soon as possible thereafter.

40 Ministers then considered a number of substantive ideas for increasing and strengthening co-operation between EFTA and the EEC, and for co-ordinating where practicable their policies in relation to developments of special economic concern to the two groups. These ideas include possible ways of reducing obstructions to freer trade between the two groups, functional collaboration in fields of research and development and the harmonization through­ out Europe of regulations and standards important for the manu­ facture and movement of goods. Ministers again stressed the paramount importance they attach to a successful outcome to the Kennedy Round as the principal means for the lowering of barriers to trade, both world-wide and in Europe; they confirmed the intention of all the Member countries of EFTA to continue to work towards its success. Furthermore, Ministers stressed their determination to co-operate with the United Nations Conference on Trade and Development. Ministers reaffirmed their determination to intensify co-opera­ tion within EFTA, in order to ensure the prosperity of its own Members and to offer the best prospect of achieving a satisfactory basis for closer collaboration between the Association and the European Economic Community. The transitional period of the Association would end in a year and a half. They agreed that Member countries should ensure that all necessary action was in train to secure that the Association would function to the fullest advantage of all of them, when the stage of full freedom of trade provided for in the Convention was reached. They accordingly instructed the Council at official level to examine the further progress to be made in EFTA with this in view and to report to them in time for their next meeting. The report would deal in the first place with the internal arrangements of EFTA, including the Economic Development Committee, with due regard to the objectives of the Association as set out in Article 2, and Articles 22 and 27. Secondly, the report would cover the external aspect of EFTA activities, taking into account the arrange­ ments proposed for joint discussions with the EEC. Thirdly, the Council were instructed to review the institutional arrangements o f E FT A . Ministers made it clear that a vital step in the consolidation of EFTA was the elimination of the United Kingdom import charge. They noted the continued strengthening of the balance of payments of the United Kingdom, and welcomed the statement of the British Prime Minister that the surcharge would be removed as soon as possible. Ministers took note with great regret of the wish expressed by the Secretary-General, Mr. Frank Figgures, to leave the Association and return to the British Treasury on 1st November of this year. They congratulated him on his appointment to an important post

41 and expressed their deep appreciation of the outstanding services which Mr. Figgures has rendered to the Association and the Member Governments since he became Secretary-General in September, i960. At the invitation of the Danish Government, the next meeting at Ministerial level will take place in Copenhagen on 28th and 29th October, 1965.

Communique of Joint Finland-EFTA Council

The Joint Council of EFTA and Finland met in Vienna at Ministerial level on 25th May 1965, under the chairmanship of Dr. Fritz Bock, Federal Minister for Trade and Reconstruction. Finland was represented by Mr. Johannes Virolainen, Prime Minister, and Mr. Ahti Karjalainen, Foreign Minister. The Joint Council considered and accepted a report by the Secretary-General on the activities of the Finland-EFTA Associa­ tion. Mr. Virolainen stated that Finland agreed to associate herself with the decisions on studies of possible fields of intensified co­ operation within EFTA taken by the EFTA Council on 24th May (and recorded in the EFTA Communique of that date). Finland would play a full part, as an associate, in these studies. The Joint Council discussed European co-operation in patent matters. The Joint Council considers that, both for economic and technical reasons, it is necessary to establish closer co-operation among European countries in the field of patents. It would welcome the opening of negotiations with the purpose of concluding a general convention centralizing procedures for the granting of patents. It notes the work done by the EEC countries in preparing a draft European patent convention, and considers that the general frame­ work of the draft constitutes a suitable basis for discussion of a broad international scheme. It decided therefore to establish a working group with instructions to examine the whole of the problem and to present proposals taking into account current developments. The Joint Council received a report from the Chairman on the tenth meeting of the EFTA Consultative Committee which took place in Finland on 6th May 1965. At the invitation of the Danish Government, the next meeting at Ministerial level will take place in Copenhagen on 28th and 29th October, 1965.

42 Appendix II

AMENDMENTS TO THE EFTA CONVENTION AND FINLAND-EFTA AGREEMENT

Under Decision of the Council No. 12 of 1964, various changes in Schedules I, II and III of Annex B and Annexes D and E to the Convention were made, consequential on the amendments made in the Brussels Nomenclature on which the lists of goods in the Schedules and Annexes are based. Joint Council Decision No. 7 of 1964 made changes in Annexes I and II to the Finland- EFTA Agreement which were also necessitated by the Brussels Nomenclature amendments. These changes are explained further in an article in Volume VI, No. 1 of the E F T A Bulletin (January- February 1965); detailed lists of the amendments involved have been published by various national authorities, e.g. in the British Board of Trade Journal No. 3530 of 13th November 1964. Under Council Decision No. 13 of 1964, Schedule II of Annex B to the Convention was amended by the addition of a qualifying process for embroideries in the length which are assembled with other fabrics in the length (BN 62.05) which were not covered by the existing item for embroideries. Joint Council Decisions No. 5 of 1964 and No. 1 of 1965 deleted iron and steel wool (BN ex 73-39)) discontinuous man-made fibres and continuous filament tow for their manufacture (BN headings 56.01, 56.02 and 56.04) and iron or steel chains (ex 73.29) from the list of goods for which a slower timetable of tariff reductions is applied for imports into Finland (Annex I to the Agreement). These goods have consequently become subject to the same tariff reductions as other goods covered by the Agreement. Under Council Decision No. 8 of 1965, Schedule I of Annex B to the Convention was amended to allow certain hat shapes (BN ex 65.02) manufactured from non-EFTA vegetable fibres such as manila hemp and sisal hemp, which are classified in BN Chapter 57, to qualify for EFTA tariff treatment.

43 EUROPEAN FREE TRADE ASSOCIATION

Secretary-General F. E. Figgures, CMG Deputy Secretary-General Assistant Secretary-General K. Hammarskjold Ch. M uller Head of General and Legal Department Council Secretary Mrs. B. Beer Miss S. Baverstock Head o f Trade Policy Department T . Jantzen Head o f Administration R . Girod Head of Economic Department P. Kleppe Head of Press and Information Department Finance Officer G. R. Young J. N. Macfarlane, OBE

MEMBER COUNTRIES: Austria Denmark Norway Portugal Sweden Switzerland United Kingdom

ASSOCIATE: Finland

EFTA SECRETARIAT HEADQUARTERS: 32, Chemin des Colombettes, Geneva, Switzerland. Telephone: (022) 34.90.00. Telex 22660 Published by the Secretariat o f the European Free Trade Association, 32 Chemin des Colombettes, Geneva, Switzerland (U.S.A.: 711 Fourteenth Street, IV. W., Washington 5, D .C.)

Printed by Imprimerie H. Studer S.A., Geneva, for the European Free Trade Association.

Swiss Francs 3.00 equivalent, excluding local taxes.