purpose of redeploying industries, but it joined in the adoption by, consensus at the 15th session of the TDB of a resolution requesting the UNCTAD Secretary General to study ways to facilitate the industrial development of the developing countries through industrial collaboration arrangements. The Committee on Manufactures also agreed to continue work within an UNCTAD expert group in order to identify and exchange information on restrictive business practices, and to study the possibility of drafting a model law and mutually agreed principles on restrictive business practices. The group of experts held its first meeting in October 1975, with a second session scheduled for February 1976. A major development in the trade area arising out of UNCTAD activity concerned the generalized system of preferences (GSP) granted by developed to developing countries. Legislative and administrative action on the U.S. GSP was completed during 1975, enabling it to go into effect on January 1, 1976. This marked the final step in fulfillment of requests made by developing countries in 1964 at the first UN Conference on Trade and Development. (All other developed countries. have also put their GSP schemes into effect.) UNCTAD's Special Committee on Preferences each year reviews the functioning of the various systems. The UNCTAD secretariat also operates a technical assistance project, financed by the UNDP, to disseminate information about the GSP schemes to help beneficiary countries take advantage of the new trade opportunities provided. GENERAL AGREEMENT ON TARIFFS AND TRADE The GATT entered into force January 1, 1948, with the objective of promoting world economic growth and higher levels of living through a reduction of barriers to international trade and the adoption by member countries of contractual rights and obligations governing the conduct of their trade relations. In the ensuing 28 years, world trade expanded more than fourfold and the GATT, although now in need of reform in certain regards, remains the principal multilateral instrument through which the United States is working to improve the world trading system. The GATT consists of (1) a framework of general rules to promote trade relations among the contracting parties on a fair and equitable basis, (2) procedures for the application of these rules, and (3) concessions agreed upon in trade negotiations in the form of schedules of tariff rates extended by individual contracting parties to other contracting parties. The GATT contracting parties have established a variety of forums in which general and specific trade problems and disputes may be discussed. The membership of the GATT remained at 83 nations throughout 1975, although the applications of Colombia and Paraguay for provisional and full accession respectively were approved by the Contracting Parties at the 31st Session in November and the Philippines and Tunisia continued to maintain their provisional accessions. Eighteen other nations also adhered to the GATT on a de facto basis. While not formally a part of the UN system, the GATT Contracting Parties, functioning as an institutional entity, cooperates closely with UN organizations. For example, the GATT Contracting Parties and UNCTAD jointly direct an International Trade Center to assist developing countries in promoting their exports. The GATT has provided the framework for seven multilateral rounds of tariff negotiations. The seventh, most ambitious and far-reaching to date, was officially launched with the unanimous adoption of the Tokyo Declaration in September 1973. This round differs from previous negotiations in that major emphasis is being placed on reduction of nontariff barriers to trade, and that special efforts are being made to benefit the less developed countries and to achieve freer trade in agricultural products. Previous rounds of trade negotiations had concentrated to a much greater degree on reduction of tariffs and had only limited success in dealing with agricultural trade problems. This round also differs from previous rounds in that a number of non-GATT countries are participating while a few GATT members are not. In 1975 the negotiations moved from the preliminary procedural stage into the beginning of real bargaining on specific issues. A target completion date of December 1977 was agreed on by the Trade Negotiations Committee at its December 1975 meeting. (The Trade Negotiations Committee, on which all participating governments may be represented, was created by the Tokyo Declaration and is responsible for planning and directing the negotiations.) While the major rounds of trade negotiations have liberalized international trade over the last 25 years in several large steps, the role of the GATT in the functioning of the international trading system on a day to day basis has also been important. The regular Sessions of the Contracting Parties are the highest forum of the GATT and, as such, decide upon the direction of the GATT's work. In addition, the GATT Council (which meets about nine times a year between Sessions), standing committees, and special working parties and panels afford the contracting parties other forums for debate of trade issues and mechanisms for the resolution of disputes. Regular GATT activities in 1975 were dominated by measures taken by various contracting parties to deal with trade problems. Among the measures that the GATT reviewed were adjustments in Israel's tariffs necessitated by a major currency devaluation; import deposit schemes invoked by Brazil, Finland, and Portugal under balance of payments provisions of the General Agreement; a variety of import restrictive measures taken by Australia; the European Communities' embargo on bovine meat; U.S. anti-dumping and countervailing duty actions; intensification of Yugoslav import restrictions, including the imposition of a 10% import surcharge; and the extension by Turkey of its stamp duty until the end of 1977. The GATT also examined a series of free trade agreements between Finland and four Eastern European states and, at the request of the United States, Canadian import quotas on eggs and egg products. A major development within GATT during 1975 was the Council's establishment in July of a Consultative Group of 188/ to monitor developments in trade policy with the objective of heading off or resolving conflicts between contracting parties through consultation. Because the Group of 18 consists of high-level representatives of the member states, it can also provide the GATT with policy guidance on relatively short notice. The Group held its first meeting in November 1975 and considered recent trade policy developments as well as a possible reform of GATT procedures for reviewing trade measures taken by contracting parties for balance of payments reasons. The United States is hopeful that the Group of 18, because of its relatively small size and the high level of representation, will develop into a useful addition to the GATT, in which policy makers from the major trading countries will be able to discuss common problems candidly and in depth. COMMODITY TRADE Most intergovernmental consideration of problems concerning trade in primary commodities takes place within the UN framework. The FAO Committee on Commodity Problems reviews developments in world agricultural production and trade and focuses on particular products either through the meetings of formally established intergovernmental study groups (bananas; citrus fruits; grains; rice; jute, kenaf, and allied fibers; hard fibers; meat; oilseeds, oils, and fats; and tea) or through ad hoc meetings on other products. 8/ Established provisionally for a period of 1 year the initial composition of the group was Argentina, Australia, Brazil, Canada, Egypt, European Communities and their member states, India, Japan, Malaysia, Nigeria, Nordic country, Pakistan, Peru, Poland, Spain, Switzerland, United States, and Zaire. UNCTAD's Committee on Commodities is directly responsible for UN activity on tungsten and exercises general surveillance over all intergovernmental commodity activities, receiving for its consideration reports from FAO, from the autonomous commodity study groups (cotton, lead-zinc, rubber, and wool), and from the independent commodity councils (coffee, cocoa, olive oil, sugar, tin, and wheat). In addition, the UNCTAD Secretary General may convene, upon request of the interested parties and by recommendation of the Trade and Development Board, negotiating conferences leading to formal international commodity agreements. The United States takes part in most of these intergovernmental commodity activities. Of particular importance during 1975 was its participation in negotiations for new commodity agreements on tin, cocoa, and coffee. In a departure from previous policy, the United States announced in September 1975 its intention to become a party to the new International Tin Agreement. Production and trade in many important commodities was off sharply in 1975 as a result of the general recession in industrial countries. Prices of many commodities important to developing countries declined sharply from record levels set in late 1973 and early 1974. Copper prices, for example, fell from a high of $1.29 per pound in April 1974 to a low of 51¢ per pound in December 1975. Prices of other major commodities declined to a lesser degree; lead and zinc prices remained relatively firm; and coffee prices rose 50% in the latter half of 1975 as the result of severe frost damage to Brazil's coffee trees. Large inventories of copper, aluminum, and other commodities, which accumulated during 1975, may help to moderate the upward pressure on prices expected as a result of the continued recovery of industrial activity expected in 1976. As in 1974, commodity trade problems in 1975 were an important issue in the relations between developed and developing countries. The developing countries continued to be adversely affected by recession-caused declines in the volume and price of their commodity exports, and by inflation-caused increases in the costs of essential imports from the industrial countries. Both UNCTAD and the General Assembly, at its seventh special session, were key forums for the presentation by developing countries of such proposals to remedy these problems as indexation of commodity prices, implementation of a "new international economic order" (as called for by the General Assembly at its sixth special session, but opposed by the United States), and UNCTAD's proposed integrated program for commodities. Following are highlights of the year's activities in commodities of particular importance in world trade. Wheat In February 1975, the International Wheat Council extended the International Wheat Agreement of 1971 for 1 year, until June 30, 1976. (The U.S. Senate subsequently gave its advice and consent to ratification of the extension on December 1.) The Council also established a preparatory group to examine the possible bases for negotiation of a new arrangement replacing the 1971 agreement. This action came, in part, as a response to the growing international concern over world food security that culminated in the World Food Conference of 1974. At The preparatory group met three times in 1975. its third meeting, in late September, the United States presented a proposal for the establishment of a system of nationally-held reserves designed to assure that adequate food supplies would be available worldwide. The proposal was discussed further at the December meeting of the Council. The preparatory group is expected to present to the Council in June 1976 its conclusions and recommendations on both the U.S. proposal and the bases for the negotiation of a new agreement. Coffee The world coffee market in 1975 was dominated by the effects of a July frost in Brazil, which will cut Brazilian coffee production well into 1978. Prices, which remained at depressed levels during the first half of 1975, rose by more than 50% after the reports of widespread damage to the Brazilian crop and are expected to remain high for at least 2 years. The United States participated actively in the negotiations that the International Coffee Organization completed in December 1975 for a new agreement with operative economic provisions to replace the 1968 agreement, which has, since 1973, been without such provisions. The new International Coffee Agreement will enter into force on October 1, 1976, for a period of 6 years. However, its operative provisions will not be activated until world coffee production is restored and coffee supplies are again abundant. The new agreement follows the outline of previous agreements, but a number of additional innovative provisions will provide greater protection for consuming members. Cocoa The International Cocoa Agreement of 1972--the first for this commodity--has not had to operate in the cocoa market since its entry into force in June 1973, because cocoa prices have remained well above the |