Free Entry for Commonwealth Goods into United Kingdom.

Mr. Helmore [1] referred to discussions at Spencer House and at
Commonwealth Meeting held 8th July in Geneva (see
T.N.(P)(B.C.)(G.S.C.)(47) 20th meeting paragraphs 13 and 14) and
said that the United Kingdom were anxious before Commonwealth
Delegations left Geneva to get a clear understanding as to
position in regard to free entry for Commonwealth goods. Problem
for United Kingdom as everyone was aware arose from fact that on
one hand the United Kingdom would be prevented under terms of GATT
from increasing any margins of preference, while on the other hand
the United Kingdom was committed under Ottawa Agreement and
subsequent Trade Agreements with Commonwealth countries exempt
Commonwealth goods from duty (apart from revenue duties and a few
exceptional protective duties). Combined effect of these
obligations was that the United Kingdom could not increase present
duties on foreign goods entering United Kingdom whether or not
these duties were bound under GATT for any such increase would
increase margin of preference unless the United Kingdom imposed
simultaneously corresponding duty on like goods from Commonwealth
countries and this could not be done without infringing rights of
Commonwealth countries to duty-free entry. The Canadian Government
had proposed to replace their Trade Agreement with the United
Kingdom by exchange of notes which, amongst other things, would
release the United Kingdom from any obligations to admit Canadian
goods free of duty if they were goods of the kind not scheduled to
the GATT. This would go a considerable way to solving problem for
the United Kingdom as Canada was Commonwealth country most likely
to be affected by any increase of unbound United Kingdom duties.

But Mr. Helmore went on to emphasise that a satisfactory solution
of the problem must be found in relation to other Commonwealth
countries, it would clearly be an untenable position politically
for the United Kingdom that they unlike other countries should be
precluded from imposing protective duties on unbound items in
their tariff and it was a matter of immediate concern to the
United Kingdom Government that they should be in a position to
reassure Parliament and industry before there was any public
discussion of the problem.

Mr. Helmore went on to explain that United Kingdom Ministers had
considered the whole question very carefully. They were reluctant
to suggest that the United Kingdom should take any initiative by
way of amending Ottawa Agreements and they had accordingly
approved proposal tentatively made at meeting on 8th July that
Commonwealth countries concerned should conclude gentlemen's
agreement to cover point. Ministers had contemplated also that
complex obligations of GATT might easily lead to other
Commonwealth Governments finding themselves embarrassed in one way
or another by reason of strict application of Ottawa Agreements
and they recognised that other Commonwealth Governments too might
wish to have reciprocal cover of gentlemen's agreement. What Mr.

Helmore wished accordingly put to meeting was that Governments of
the United Kingdom, Australia, South Africa, India, Pakistan and
Southern RhodeSia2 should go on record as having discussed this
question and reached agreement as follows-

'In any case where any Government of the British Commonwealth of
Nations considers that owing to obligations assumed under General
Agreement on Tariffs and Trade obligations assumed by it in
relation to another Government or Governments within the British
Commonwealth have become impossible of fulfillment without serious
prejudice to its interests in relation to a particular product,
that Government may raise with other Commonwealth Governments
enjoying rights under terms of Ottawa Agreements in relation to
product concerned question of modifying those rights to extent
necessary to avoid adverse consequences referred to above. It is
understood-
(a) That in any such case Commonwealth Governments enjoying rights
under Ottawa Agreements will give sympathetic consideration to any
such representations,
(b) That in any case where Government enjoying rights is not at
material time substantially interested in the export of product
concerned to the territory of the Government making these
representations consent to the modification of the rights enjoyed
under Ottawa Agreement shall in general be granted and
(c) That in all other cases Governments concerned shall consult
together with view to agreeing upon an equitable solution.'