GENERAL AGREEMENT ON TARIFES AND TRADE RESTRICTED

11 Hay 1959

Working Party en Re la t i ons wi th Yugoslavia

NOTE SUBMITTED BY TIIS DELEGATION OF YUGOSLAVIA

I . Appreciating, the import ance of the General Agreement on Tariffs and Trade as an instrument of in terna t ional trade co-operation, and des i r ing to strengthen through t h i s Organization i t s t i e s with the CONTRACTING PARTIES to the General Agreement, the Federal People 's Republic of Yugoslavia formally submitted to the th i r t een th session held in October 1959 the request to associate i t s e l f closer to the GATT.

In submitting t h i s request the Federal l eop l e ' s Republic of Yugoslavia set forth at the same time, through i t s delegation at the th i r t een th session, the reasons explaining such an approach to GATT, the main point being tha t the present s i tua t ion does not make i t technically and materially feasible for the Federal People's Republic of Yugoslavia to assume a l l provisions of the GATT, but that the evolution i s moving in the direct ion of a further rapprochement with GATT which could and should eventually lead t o f u l l membership.

The afore-mentioned reasons have also conditioned the a t t i tude of the Yugoslav delegation at the session of the Working Party on Relations with the Federal People's Republic of Yugoslavia, which was held from 16 - 20 March 1959, with a view to recommend an instrument of closer association between the Federal People's Republic of Yugoslavia and GATT.

I I . The finding of a sa t i s fac tory solution in t h i s concrete case i s important not only for the Federal People's Republic of Yugoslavia but also for GATT as a whole,, as i t broadens the l a t t e r ' s framework in the d i rec t ion of un iversa l i ty . Therefore, th3 unanimity which found expression at the th i r t een th session of GATT with regard to the need of finding a solution for the question of closer associat ion between the Federal People's Republic of Yugoslavia and GATT - and wlich was confirmed by the work of the Working Party - points to the necessity of taking once more in to consideration Yugoslavia's requests and stands before the f i na l decision is taken.

The purpose of t h i s note i s t o provide an addi t ional explanation of Yugoslavia's posi t ion and to contribute to the finding of the most sat isfactory solut ion.

I I I . The draft prepared by the sec re ta r i a t of GATT, annexed t o the report of the Working Party of 29 March 1959 (document ~L/9b5/Aâd.l) i s , on the whole, acceptable as a basis for the regulat ion of r e l a t i ons between GATT and the Federal People's Republic of Yugoslavia, but with the following exceptions:

1. I t i s considered tha t paragraph 1 (b) of Part I , referr ing to "effecting rec iproci ty of t rading conditions and opportuni t ies" , should be deleted from the draft in i t s en t i r e ty .

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Explanation: The wording of th i s paragraph i s such that i t would be easy t o asser t and d i f f i cu l t to contest that the meaning could be construed as to imply an in te rpre ta t ion of reciproci ty which goes beyond and outside the reciproci ty which i s both: formulated in the Preamble ("on a reciprocal and mutually advantageous basis") and implemented in practice by the COMPACTING PARTIES. There i s , for example, no mention at a l l of "effective reciprocity of t rading conditions and opportunit ies" ei ther in the Preamble of the General Agreement or anywhere else in i t s t e x t . This wording might further confuse instead of c lar i fying and to deter iorate instead of improving the t rade re la t ions between the Federal People's Republic of Yugoslavia and the CONTRACTING PARTIES. Final ly , i t may impair the position of the Federal People's Republic of Yugoslavia and would probably preclude the effor ts to achieve settlement in case the Federal People's Republic of Yugoslavia i s in a posi t ion to avai l i t s e l f of the provisions of the General Agreement.

Therefore, i t i s f e l t - if the reciprocity must be mentioned in the instruments defining clouer associat ion between GATT and the Federal People's Republic of Yugoslavia - tha t i t should be suff ic ient to r e t a in i t in the Preamble, in the form in which i t i s worded in the l a s t paragraph of the Preamble of.document L/965/Add.1. Furthermore, the idea of rec iproci ty i s also stressed in paragraph 1 (b) of Part I I , where small a l t e r a t i o n s , which are suggested, would increase the c lar i ty of i t s meaning and include i t be t te r into the philosophy of GATT. I t meets in tha t way the statement contained in the report of the Working Party which says: "there was common agreement that the association should be based on rec iproci ty and mutual advantage".

2. For the afore-nentioned reasons i t is also fe l t that the word "effect ively" , between the words "above" and "accords", should be deleted from paragraph 1 (b) of Part I I as superfluous and that the word "equivalent"-• should be replaced by the word "corresponding". With these adjustments, t h i s paragraph would be c l a r i f i e d . Notwithstanding a l l t h i s , there is some concern whether the meaning which determines the posi t ion of the Federal People's Republic of Yugoslavia in Part I , paragraph 1 (a) i s adequately embodied in Part I I , paragraph 1 ( b ) which concerns the CONTRACTING PARTIES.

3 . I t i s f e l t tha t the meaning of paragraph 3 of Part I wi l l not be al tered but only c la r i f ied if the words "ful l obligat ions" are replaced by the word "provisions". The purpose of th i s amendment i s to underline tha t Yugoslavia's intended adherence to GATT does not simply amount to the assuming of fu l l obligations only, but also to the avail ing i t s e l f of r igh t s deriving from GATT.

4 . I t i s further suggested tha t the l a s t two l i nes of paragraph 3 of Fart I (beginning with the words: "and wi l l be prepared . . . " to the end of the sentence), as well as paragraph 3 (d) of l . r t I I , should be deleted and replaced by a new Part I I I which would read to the effect t ha t :

"The CONTRACTING EARTI.iS s ignator ies of th i s Declaration and the 'Federal People's Republic of Yugoslavia agree to review each year the development of mutual r e l a t ions on the basis of t h i s Declaration as well as the p o s s i b i l i t i e s of further movement towards the fu l l applicat ion of the provisions of the General Agreement".

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As a resul t of t h i s , the prosont Pert I I I would become Fart IV, Part IV would become Part V, e t c . Corresponding changes should also be inserted in tho l a s t sontence of new JTart IV, i . e . into the present Part I I I .

Explanation: Proceeding from tho fact that the instrument of c loser association botweon tho Federal People's Republic of Yugoslavia and GATT cons t i tu tes a b i l a t e r a l ac t , i . e . between the COixffRACTIM} PARTIES and the Federal People's Republic of Yugoslavia, i t i s believed that the annual review should re f lec t t h i s character . That means that i t should not amount merely to the examination of the process of Yugoslavia's progressive movement towards a posit ion in which i t could assume the fu l l obligations of the General Agreement, i t should also mean tho mutual examination of the process of the implementation of t h i s Declaration. Tho idea of gradualness is c lear ly emphasized in paragraph 3 of Part I , as woll as in paragraph 1 ( b ) of Part I I - i . e . b i l a to ra l ly - and therefore i t i s f e l t tha t tho b i l a t e r a l annual review const i tu tes the most appropriate form and procedure for defining not only Yugoslavia's new obligations but also the new r igh t s accruing t o the Federal People's Republic of Yugoslavia in exchange for them. Actually, i t i s only by means of a b i l a t e r a l review tha t i t i s possible to es tab l i sh whether an equitable balance of r i gh t s and obligations has boen or should be achieved. For these reasons i t is f e l t tha t the idea of annual review should be embodied in a separate Par t , in order to point more clo r ly i t s b i l a t e r a l character .

IV. T/Jhon elaborating the amendments to the draft contained in document L/965/Add.l, the r e a l i s t i c character of the Decisions made so far by GATT was taken into account. I t i s hoped tha t th i s realism wi l l prevai l in t h i s case a l so . For Yugoslavia's gradual approach t o GAIT i s a process which w i l l take some t ime. This process did not begin with tho submission of tho request for associate :.:omb:rship at tho th i r t een th session, but much e a r l i e r . In endeavouring to incorporate t h i s process into the legal construction of GATT, fu l l a t ten t ion was paid both to tho requirements ox GATO and to Yugoslavia's present conditions.

la i t s desire to make the greatest possible contribution to the reaching of mutually acceptable solut ions , tho Federal People's Republic of Yugoslavia has exerted groat effor ts in order to harmonize i t s stand with those set forth in document L/965/Add.l. This has boon done in order t o c lar i fy Yugoslavia's in tent ions and aims and to rule out any impressions tha t the Federal People 's Republic of Yugoslavia i s endeavouring to avai l i t s e l f of the advantages extended by GATT without making corresponding concessions on i t s pa r t . On the contrary, i t i s stressed that tho amendments proposed by the Federal People's Republic of Yugoslavia to the afore-mentioned document L/965/Md.l - while adhering to the idea of equitable balance of r i gh t s and obligat ions -are aimod at the elimination of everything that could create the impression that the balance wi l l be al tered to the detriment of e i ther s ide .