lJNITED STATES TARIFF COMMISSION OPERATION OF THE TRADE AGREEMENTS PROGRAM 2oth Report 1968 TC Publication 336 UN1TED STATES TARIFF <~O-rv1MISS10~ Glenn W. Sutton Bruce E. Clubb Will E. Leonard, Jr. George M. Moore Kenneth R. Mason, Secreta:r"IJ Address all communications to Gnited States Tariff Commission Washington, D. C. 20436 UNITED STATES TARIFF COMMISSION OPERATION OF THE TRADE AGREEMENTS PROGRAM 2oth Report 1968 Prepared in Conformity With Section 4o2(b) of the Trade Expansion Act of 1962 Washington 1970 Preface This, the 2oth report issued by the United States Tariff Commis- sion on the operation of the trade agreements program, relates to the calendar year 1968. The report is made pursuant to section 4o2(b) of the Trade Expansion Act of 1962 (76 Stat. 902), which re~uires the Commission to submit to the Congress, at least once a year, a factual report on the operation of the trade agreements program. ij The principal developments during 1968 that are discussed in this report relate to actions by the United States affecting its obli- gations under the trade agreements program, actions initiated by the Contracting Parties to the General Agreement on Tariffs and Trade to implement that agreement, and conunercial policy developments in the major countries with which the United States has trade agreements. The report was prepared principally by John F. Hennessey, Jr., Magdolna Kornis, and Jozef Dolina. 1/ The immediat.ely. preceding report in this series was U.S. Tariff coillmission, Operati.on of the Trade Agr.e.ements Program, With a Special Chapter on the Kennedy Round 1 h Report January-December 1967, TC Publication .2 7., 19. 9 .. Hereaft.er that report will be cited as Opera­ tion of the Trade Agreements Program, 19th report. Other reports of the Tariff Commission on the operation of the trade agreements program will be cited in a similar short form. iii CONTENTS Chapter 1. U.S. Actions in Connection With the Trade Agreements Program Introduction----------------------------------------------------- 1 Status of U.S. trade-agreement obligations----------------------- 2 Implementation of the United States-Canadian automotive agree- ment------------------------------------------------------- 5 United States and Canadian production and trade in auto- motive products-------------------------------------------- 7 Action on petitions filed------------------------------------ 10 Participation in the long-term cotton textiles arrangement------- 12 Government actions affecting trade-agreement items--------------- 16 The escape clause-------------------------------------------- 17 Action under section 22 of the Agricultural Adjustment Act--- 18 National security investigations----------------------------- 20 Chapter 2. Operation of the General Agreement on Tariffs and Trade Introduction----------------------------------------------------- 23 Activities in the interest of developing countries--------------- 25 The Committee on Trade and Development----------------------- 26 Implementation of part IV of the General Agreement------- 26 Residual import restrictions affecting exports of developing countries----------------------------------- 27 Application of the principle of nonreciprocity----------- 27 Tariff reclassification for liberalization of imports---- 28 Special tariff problem----------------------------------- 29 Joint advisory group on International Trade Center-------.---- 29 Trade Negotiations Committee of Developing Countries--------- 30 Special group on trade in tropical products------------------ 31 Actions relating to obligations under GATT----------------------- 31 Import restrictions for balance-of-payments or economic development purposes--------------------------------------- 32 Import restrictions applied contrary to obligations under GATT and not authorized by waivers------------------------- 34 Reports on actions taken under waiver------------------------ 35 U.S. import restrictions on agricultural products-------- 36 United States-Canadian agreement on automotive products-- 37 Turkish stamp duty (tax)--------------------------------- 37 Franco-German treaty on the Saar------------------------- 38 Australian tariff preferences for developing countries-- -----·------------- ------- --------- --- ---- --- 38 Australi_an tariff preferences for products of Papua and New Guinea-----~----------------------------------- 39 Italian tariff preferences for products of Libya--------- ~39 Waivers granted under article XXV:5---------------------- 40 v Capter 2. Operation of the General Agreement on Tariffs and Trade--8ontinued Various actions taken--------------------------------------------- 40 Establishment of the Committee on Antidumping Practices------- 41 Border tax adjustments---------------------------------------- 41 Foreign trade measures introduced by France------------------- 42 Poland's implementation of accession protocol----------------- 43 United Kingdom import deposits------------------------------~- 43 Trade agreement between India, the United Arab Republic, and Yugoslavia---------------------------------------------- 44 Report of the Cotton Textiles Committee--------------·--------- 44 The simplification of consular formalities-------------------- 45 Provisional accession of Tunisia and the United Arab Republic-------------- ------- --- --- ------ -------------·------ 46 Regional economic arrangements------------------------------------ 46 Chapter 3. Major Economic Developments in Regional Trading Blocs Introduction------------------------------------------------------ 49 European Community------------------------------------------------ 51 The customs union--------------------------------------------- 54 Provisions to make the customs union fully operative---------- 55 The agricultural connnon market-------------------------------- 57 Structural reform of agriculture------------------------------ 61 Financing of the CAP------------------------------------------ 63 Commercial policy affecting third countries: Reduction of the common external tariff------------------- 64 France---------------------------------------------------- 65 The Federal Republic of Germany-------------------------~- 66 Enlargement of the European Connnunity------------------------- 67 Other external relations-------------------------------------- 69 Association with three east African countries------------- 70 Renewal of the African association agreements------------- 71 Foreign trade-- ------- ---- ----------------- ----- --- ----- --- -·-- 72 Commercial relations with the United states------------------- 73 The European Free Trade Association------------------------------- 75 The future of the organization-------------------------------- 76 Internal activities------------------------------------------- 78 Foreign trade------------------------------------------------- 81 Commercial policy affecting third countries------------------- 81 Commercial relations with the United States------------------- 82 Canada------------------------------------------------------------ 84 Japan------------------------------------------------------------- 85 vii Chapter 3. Major Economic Developments in Regional Trading Blocs--Continued Latin .American Free Trade Association----------------------------- 86 Trade concessions added to national lists--------------------- 89 The problem of the Common List-------------------------------- 92 Complementation agreements------------------------------------ 93 Industrial sector meetings------------------------------------ 94 The Andean Group---------------------------------------------- 95 River Plate Basin (Cuenca del Plata) Group-------------------- 98 Growth of intraregional trade--------------------------------- 99 Extraregional trade trends------------------------------------ 100 Miscellaneous developments------------------------------------ 100 The LAFI'A-CACM Coordinating Connnission-------------------- 101 Latin .American industrial congress------------------------ 101 Uniform trade statistics---------------------------------- 102 Central .American Common Market------------------------------------ 102 Growth of intraregional trade--------------------------------- 105 Common external tariff---------------------------------------- 106 Extraregional trade------------------------------------------- 107 Integrated industries----------------------------------------- 108 Balance-of-payments and fiscal problems--------------------~-- 110 The Central .American Bank for Economic Integration-------- 112 The Central Anerican Investment Bank---------------------- 113 Meeting of the Presidents------------------------------------- 113 Cooperation with other countries------------------------------ 115 Trade and economic integration treaties of Central .America---- 115 Caribbean Free Trade Association---------------------------------- 117 Removal of intraregional trade restrictions------------------- 119 The Reserve Lists----------------------------------------- 119 Basic Materials List-------------------------------------- 120 Qualifying Process List----------------------------------- 121 The Agricultural Marketing Protocol----------------------- 121 Miscellaneous provisions---------------------------------- 122 Trade with the United States---------------------------------- 123 The Caribbean Regional Development Bank----------------------- 123 Chapter l U.S. Actions. in Conne.ction. With the Trade Agreements Program INTRODUCTION At the close of 1968 the United States maintained trade-agreement obligations in force