RESTRICTED GENERAL AGREEMENT ON L/445 TARIFFS AND TRADE 2 November 1955 Limited Distribution CONTRACTINGPARTIES Original: French Tenth Session REQUEST BY HAITI FOR EXTENSION OFRELEASE UNDER ARTICLE XVIII1 Notes relating to application of import restrictions on leaf tobacco, cigars and cigarettes be the Republic of Haiti 29 September 1955 By decision of 27 November 1950 the CONTRACTING PARTIES to the General Agreement on Tariffs and Trade authorized the Republic of Haiti to maintain in effect for a period of five years compulsory import licences for Haitian importers of least tobacco, cigars and cigarettes. The obligation to produce import licences was considered a restrictive measure, and the CONTRACTING PARTIES granted the authorization under the provisions of Article XVIII, para- graph 12, of the Agreement. In view of the fact that the authorization expires on 27 November 1955 and is to be reviewed at the forthecoming session of the CONTRACTING PARTIES the consequences of the application of that measure on the foreign trade relations of Haiti should be ascertained. The obligation to secure import licences prior to importing leaf tobacco, cigar and cigarettes into Haiti is part of a general mechanism established by the Haitian Government authorities in. 1948 for the purpose of developing domestic production of tobacco and promoting local manufacture of the home-grownvariety. This mechanism ishinged around the Tobacco Régie., a state enterprise exercising a de jure monopoly over the tobacco trade. The objectives of Haiti in establishing a State tobacco monopoly are set forth in document GATT/CP/60 of 21 April 1950, and correspond to the specfications of Article XVIII of the Agreement. That Article recognizes that protective measures are justified whenever the establish- ment or development of particular industries or branches of agriculture requires to be promoted, Insofar as the proposed objectives have been achieved. the establishment of a new industry or of a new agricultural activity in a specific country is usually accompanied by a fall in the global quantum of imports into that country of the articles now produced by the new home industry. From the angle of international trade, this reduction cannot be considered of itself and singly as indicating that the measures adopted to achieve the proposed objectives were harmful or restrictive. The two criteria which should serve as a guide in any appraisal 1ef.L/379/Add. 2 for this request. L/445 Page 2 of these measures are the tact that development o! that branch of industrial or agricultural activity is indispensable and that the measures adopted are non-discrininatory. In the case of the Republic of Haiti, tobacco growing was faced with a serious crisis in 1948, the causes being of long standing (ref: document GATT/CP/60 of 21 April 1950) and it proved necessary, for economic and social reasons alike, to promote a resumption of that cultivation, and to increase production and the number of factories engaged in processing tobaçco for the manufacture of cigars and cigarettes. The development of tobacco production and the manufacture or cigarettes since 1948 is reflected by the development of import of leaf tobacco, cigar and cigarettes for the .first four years when the restrictive measure authorized by the CONTRACTINGPARTIES was applied (of. Statistics: Annexes A and B)- The statistics in Axnex B show that while imports of leaf tobacco were not normally affected - account should be taken of the customary Introduction of a percentage of imported tobacco into the domestic manufacture of cigarettes- imports of cigars and cigarettes declined substantially., more particularly beginning with the financial year 1952/531 at a time when the efforts under- taken in 1949-1950 were beginning to yield results. (Data relating to domestic production appear in Annex A). It should be noted that this overall reduction in tobacco imports is more than offset by the increase in the general import trade of Haiti for these same years (of.Statistics, Annex C). The need for prior licensing In the case of imports of leaf tobacco, cigar and cigarettes inherent in the Tobacco Régie system. In Haiti the Régie i a State body which has a de jure exclusive monopoly over the tobacco trade. II practice, however, that organ has been superimpsed over the private home manufacturers of cigarettes and importers of foreign cigarettes, rather than substituted for them. Thus the Régie allows manufacturers to pursue their' activities as in the past, but requires them to use it as an intermediary for the marketing of their production. Likewise the Régie allows private import- ers to carry out imported of tobacco, but undertakes to purchase from them the entire imported stock for resale on the home market. Unless previous licensing were required, importers would be tempted unreasonably to increase their lmports, in view of the fact that any danger o! unsold quantities would thus be shifted to their advantage and to the detriment of the Régie. ln addition, this obligation affords a means of controlling the activities of lmporters and o! counteracting any tenancy to create a tobacco trade circuit outaide of the Régie. It is mainly from that viewpoint that the real character of the import licence required to be secured by Haitian imported of tobacco should be considered. The interested of the CONTRACTINGPARTIES could be deemed to be injured only if, in effect, the granting of import licences involved The financail year extends from 1 October to 30 September. L/445 Page 3 discrimination with regard to any country. The Tobacco Régie cannot be accused of discriminating since it has always been careful to ensure that no discriminatory measure was taken either against private importers or against the various supplier countries. Licences are issued on the basis of current sales which reflect consumers preferences. In analyzing the statis- tics in Annex A, it may be seen that downward trends during the financial years 1952 - 1953 and 1953 - 1954 affect all the main supplier countries. Increase in Imports from certain countries is the result of economic factors only, or of consumers preference, and not of a preferential or more liberal distribution of licences. The CONTRACTING PARTIES are therefore requested to re-examine the Heitian licensing system for imported of leaf tobacco, cigar and cigarettes in the light of the above considerations. They are asked to recognize that the objectives pursued by the Republic of Haiti through the intermediary of the Tobacco Régie are fully consistent with the principles of Article XVII, para- graph 12, of the Agreement; to recognize likewise that implementation of the measure requiring import licensesto be obtained by importers hag. given rise to no discrimination against any of the contracting partiee which are interest- ed in the tobacco trade, and to authorize the maintenance of the measure, as a means of pursuing the proposed objectives of the Government of the Republic of Haiti. L/445Page ANNEXA REPUBLICOF HAITI TOBACCO REGIE PRODUCTION No.1. ~ ~ ~ ~ 1 - YEAR CIGARS LEAF TOBACCO l I i QUANTITY VALUE QUANTITY, VALUE QUANTITY 8520,000 5,623,200,00 113,025 13,015,4 1950-51 1,072,785 7,030,381,00 217,200 29,495,50 7,000 252,50 1951-52 1,412e190 9,320,454,00 448,325 41,242,50 2,264 8,494,40 1952-53 1,274,480 8,411,568,00 730,925 101, 679, 101 1,043,000 3,911,250,00 1953-54 1,564,000 10,322,450,00 826,309 757,419,00 328,000 1,230,000,00 x 1One kilo represented a carton of ten packets containing twenty cigarettes each. L/445 Page 5 ANNEXB STATISTICS OF TOBACCO IMPORTS FROM 1949-50 TO 1953-54 1949 - 50 Quantity Value Tobacco and its manufactured products Kilos Gourds Leaf Tobacco: Canada 1 23 Puerto-Rico 2,383 12,029 United States of America 45,144 347,789 47,528 359,841 Number Cigars: Austria 200 63 Belgium 100 24 Canada 650 335 Cube 51,550 29,511 Curaçao 45 14 Dominican Republic 5,975 2,854 france 5 1 Jamaica 500 154 Netherlands 1,085 343 Puerto-Rico 50 17 United States or America 8,448 4,353 68,608 37,669 Number Cigarettes: Belgium 540 12 Canada 822 76 Cuba 340 6 France 80 2 Jamaica 40 2 Puerto-Rico 1,200 28 United e tes of Aumerica 71,979,458 1,302,509 71,982,480 1,302,635 Quantity Value Kilos Gourds Other: Belgium 3 29 Canada 7 France 5 United States of America 124,775 1,142,072 124,779 1,142,113 L/445 Page 6 1950 - 1951 Quantity Value Kilos Gourds Least Tobacco: Canada 2,313 10,394 United States of America 77,579 534,597 Puereo-Rico 2,390 12,779 82,282 557,770 Number Cigars: Canada 112 28 Cuba 97,431 30,558 United States of America 42, 291 6,808 France 25 20 Jamaica 1,010 341 Netherlands 1,000 286 Puerto-Rico 40 17 Dominican Republic 10 350 3,407 Switzerland 1 9000 251 153,259 41,716 Number Cigarettes: Germany 20 1 Canada 1,340 53 Cuba 41,836 647 United States of America 63,088,822 1,209,520 France 120 10 Netherlands 100 9 United Kingdom 5,020 181 63,137,258 1,210,421 Kilos Other: Belgium 4 51 Canada 25 265 Cuba 14 United States of America 159,410 1,417,902 France - 10 159,439 31,418,p243 L/445 Page 7 1951 - 1952 Quantity Value Tobacco and its manufactured products Kilos Kilos Gourds Leaf Tobacco: United States or America 80,519 774,037 Puerto-Rico 323- 3,944 Dominican Republic 11 115 80,853 778,096 Cigars Belgium 802 Canada 57,4 236 Cuba 67,110 35,875 United States of America 18,989 6,606 France 30 60 Netherlands 1,888 941 Puerto-Rico 8,385 4,372 Dominican Republi c 4, 500 1,371 Switzerland 900 265 104,476 50,528 Number Cigarettes Belgium 40 1 Canada 226 25 Cuba 523 126 United States of America 66t297; 251 1,302,666 France 12,000 416 United Kingdom 60 2 Switzerland 1,200 44 66,311,300 1,303,280 Kilos Others Belgium 2 19 Canada .