RESTRICTED GENERAL AGREEMENT ON L/1411/Add.1 TARIFFS AND TRADE 9 June 1961 Limited Distribution WORKING PARTY ON ACCESSION OF PORTUGAL Information on Portugal's Commercial Policy and Regulations Addendum 1. There are attached hereto the replies which the Portuguese delegation gave to supplementary questions put to it at meetings of the Working Party on the Accession of Portugal last February. The questions bear the numbers of the original questions in L/1411 to which they are related. 2. As promised to the Working Party the Portuguese delegation has submitted a number of amendments to replies contained in L/1411. These amendments are listed in Annex B hereto. L/1411/Add.1 Page 2 ANNEX A I. TARIFFS Question 2 The old Portuguese Customs Tariff had two columns: "maximum" and "minimum"duties. Does this two-column system still apply? Reply Yes. The "minimum" rates are applied to imports from countries with which Portugal has bilateral agreements: the "maximum" tariff to all others. In fact, the "minimum" tariff is applied to practically all imports. Question 3 The Portuguese representative announced that two new decree-laws, embodying some modifications in the tariffs, would be forwarded to the secretariat. Question 4 What is the "National Salvation Tax"? Reply This is a tax which was imposed at a time of financial difficulty and is still collected. II. PREFERETIAL ARRANGEMENTS Question 19 The Working Party heard statements by the Portuguese representative and the Deputy Executive Secretary on the arrangements which Portugal proposed to make with regard to its overseas provinces upon its accession to GATT. This information is summarized below: The special arrangements existing between the metropolitan territory and the overseas provinces could not easily be covered by the provisions of GATT as they stood at present. The most obvious difficulty was that it would not be possible for Portugal to accept commitments which would prevent it from giving effect to its constitutional provisions which required the prompt economic unifi- cation of all its territories and free circulation of goods among the various provinces. As indicated in their written reply to Question 19, the 1These have now been received by the secretariat and may be consulted et the secretariat offices (Rue de Lausanne). L/1411/Add.1 Page 3 Portuguese Government was compelled, by the constitutional provisions mentioned above, to take all the measures required to establish free trade between all Portuguese territories. This would bring about a system of commercial relations which would in fact correspond to the idea of a free-trade area within the terms of Article XXIV of GATT. The Portuguese Government intended to present before its accession a piar and schedule for the complete abolition of internal barriers. It was pointed out that the GATT provisions relating to the constitution of free-trade areas applied to territories under different sovereignty but there had been cases in which the principles of Article XXIV had been applied to territories under the same sovereignty. The Portuguese plan would have to be examined in detail but it would appear possible to reconcile it with the provisions of GATT. Question 19 Will the Portuguese Goverment negotiate rate bindings on behalf of its overseas provinces? Yes, but only when the Portuguese Govcrnrnent will be in a position to negotiate. At present the overseas provinces have their own customs tariffs, but they will not be able to come into the forthcoming tariff negotiations because they are engaged in the process of reforming those tariffs, including the adoption of the Brussels Nomenclature. It is expected that this reform will be completed in 1962, and thou negotiations could be held. Portugal would not however be in a position to accept commitments which would prevent the establishment of a national free-trade area between the various provinces. Question 16 Are there duty preferences for goods of foreign origin entering Portugal in Portuguese ships? Reply Ho. Question 16 According to Section B of the reply to Question 16, goods exported to the overseas provinces benefit from a reduction of 20 per cent of the export duties normally applicable. Does this reduction apply only to goods of Portuguese origin or is it extended also to foreign goods which have been nationalized by importation into Portugal? Reply The reduction applies to both domestic and nationalized products exported to the overseas provinces. L/1411/Add.1 Page 4 Question 16 Do goods not originating in Portugal, and which have not been imported into Portugal benefit from the 20 per cent reduction of export duty? Reply The situation is the following: 1. A foreign product nationalized upon importation into Portugal by the payment of Portuguese customs duty will, if exported to an overseas province in a Portuguese ship, enjoy a 20 per cent reduction of Portuguese export duty and a 60 per cent reduction of the "minimum" import tariff in the overseas provinces. 2. A foreign product which has not been imported into Portugal pays no Portuguese export duty on being shipped from Portugal. But if it is shipped under the Portuguese flag the product will enjoy a reduction of 2C per cent of the applicable import duty in the overseas territory. III. QUANTITATIVE RESTRICTIONS Question 36 It is noted that Portugal does not intend in the present circumstances to invoke balance-of-payments difficulties to maintain import restrictions and that it will endeavour progressively to eliminate restrictions which would normally be authorized on such grounds. Can the Portuguese Government provide a time-schedule for this progressive elimination? When? Reply The Portuguese Government intends to present to the CONTRACTING PARTIES at their autumn session - and earlier, if possible - a list of the items which it is not in a position to liberalize upon its accession to GATT. Their notification would cover the overseas provinces as well as the metropolitan territories. Question 26 It is understood from the written reply to Question 36 that, in respect of measures not covered by the balance-of-payments provisions of GATT, the Government of Portugal envisages recourse to the facilities relating to hard- core restrictions. Would the examination of any such request by the Government of Portugal take place before or after accession? Reply The Deputy Executive Secretary explained that the Agreement originally provided in Article XVIII:11 that a contracting party could maintain any non- discriminatory protective measures affecting imports in force before that L/1411/Add.1 Page 5 country's accession which had been imposed for the establishment, development, or reconstruction of a particular industry or branch of agriculture and not otherwise permitted by the Agreement, subject to notification before accession; the measure was subject to examination thereafter. When Article XVIII was revised at the ninth session this provision disappeared. The CONTRACTING PARTIES had now two alternatives. They could require: 1. notification before accession with subsequent examination by them; or 2. the insertion of transitional provisions in the Protocol of Accession. The choice between these alternatives woul in any case have to be made before Portugal's accession. Question 38 With respect to the replies given to Question 36, does the Portuguese Government have the same intentions with respect to imports into the overseas provinces? Reply The r6gime applied to imports into the overseas provinces is the same as that of the metropolitan territories although the products involved may be different. Question 21 What is the criterion for the inclusion of countries among those enjoying liberalization? Reply Liberalization has boon extended to OEEC countries; to countries associated to OEEC (Canada and the United States); to countries which were once dependent on OEEC members and have since become independent; to other countries with which liberalization was agreed to in bilateral negotiation. Question 21 In the Portuguese reply to Question 21 it is stated that there are no quantitative restrictions on goods included in the liberalization lists in force. However, in answer to Question 59, it is stated (Section (c)) that for meat and butter the competent bodies determine the quantities to be imported. How are these two statements to be reconciled? L/1411/Add. 1 Page 6 Reply The importation of these products from OEEC and other countries is liberalized. In general however they are not imported because the price of the domestic product is lower. Imports consequently take place only when they are subsidized and the competent bodies arc limited in their action to fixing the quantities to be subsidized and to determining in public auctions, according to the lowest price bid by private importers, the amount of subsidy to be paid. Question 27 What is the length of time during which licences can be applied for from the moment of the announcement of a six-month quota? RepIy Licences can be applied for as long as a balance is available in the quota; after that no more licences are granted until the next period. There are cases when a quota may be exhausted quite rapidly. This occurs when quotas are very small. In such cases, after an announcement in official publications and newspapers the quota is allocated according to a representative period. In other cases licences are granted as and when applied for. Question 48 apart from outright export prohibitions is there any other form of regulation of exports? Reply As stated in the reply to Question 58, Portugal grants no export subsidies. Quota restrictions on the exports of certain products can be imposed with the aim of protecting national resources. It is considered that such restrictions as applied by Portugal (for example: timber) are covered by GATT. Question 42 Since the situation with respect to imports into overseas provinces appears to be much more restrictive than in the metropolitan territory, is it to be understood that it will be only temporary? Reply The reply to Question 42 does not reflect the actual situation.