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OECD in pursuance of its objectives. The OECD will thus be able to fulfill the desire of the countries which have created it by becoming the forum in which twenty countries will consult, cooperate closely and where appropriate take coordinated action to meet the economic tasks which face them today.

ATTEMPTS TO RECONCILE THE PURPOSES OF THE EUROPEAN ECONOMIC COMMUNITY (EEC, THE "INNER SIX") AND THE EUROPEAN FREE TRADE ASSOCIATION (EFTA, THE "OUTER SEVEN”)

142. THE CONVENTION ESTABLISHING THE EUROPEAN FREE TRADE ASSOCIATION, Signed at Stockholm by Representatives of Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom, January 4, Entered Into Force, May 3, 1960 (Excerpt)1

The Republic of Austria, the Kingdom of Denmark, the Kingdom of Norway, the Portuguese Republic, the Kingdom of Sweden, the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland:

Having regard to the Convention for European Economic Co-operation of 16th April, 1948, which established the Organisation for European Economic Cooperation;

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Resolved to maintain and develop the co-operation instituted within that Organisation;

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Determined to facilitate the early establishment of a multilateral association for the removal of trade barriers and the promotion of closer economic cooperation between the Members of the Organisation for European Economic Cooperation, including the Members of the European Economic Community; 3 Having regard to the General Agreement on Tariffs and Trade;' Resolved to promote the objectives of that Agreement; Have agreed as follows:

ARTICLE 1
The Association

1. An international organisation to be known as the European Free Trade Association, hereinafter referred to as "the Association", is hereby established. 2. The Members of the Association, hereinafter referred to as "Member States", shall be the States which ratify this Convention and such other States as may accede to it.

3. The Area of the Association shall be the territories to which this Convention applies.

4. The Institutions of the Association shall be a Council and such other organs as the Council may set up.

1Convention Establishing the European Free Trade Association (Geneva, EFTA, April 1961).

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* Text in American Foreign Policy, 1950-1955: Basic Documents, pp. 992-1000. The text of the Treaty Establishing the EEC appears in American Foreign Policy: Current Documents, 1957, pp. 426-518.

*Text in American Foreign Policy, 1950-1955: Basic Documents, pp. 29533013.

ARTICLE 2

Objectives

The objectives of the Association shall be:

(a) to promote in the Area of the Association and in each Member State a substained expansion of economic activity, full employment, increased productivity and the rational use of resources, financial stability and continuous improvement in living standards,

(b) to secure that trade between Member States takes place in conditions of fair competition,

(c) to avoid significant disparity between Member States in the conditions of supply of raw materials produced within the Area of the Association, and

(d) to contribute to the harmonious development and expansion of world trade and to the progressive removal of barriers to it.

ARTICLE 3

Import duties

1. Member States shall reduce and ultimately eliminate, in accordance with this Article, customs duties and any other charges with equivalent effect, except duties notified in accordance with Article 6 and other charges which fall within that Article, imposed on or in connection with the importation of goods which are eligible for Area tariff treatment in accordance with Article 4. Any such duty or other charge is hereinafter referred to as an "import duty".

2. (a) On and after each of the following dates, Member States shall not apply an import duty on any product at a level exceeding the percentage of the basic duty specified against that date:

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(b) On and after 1st January, 1970, Member States shall not apply any import duties.

3. Subject to Annex A, the basic duty referred to in paragraph 2 of this Article is, in respect of each Member State and in respect of any product, the import duty applied by that Member State to the imports of that product from other Member States on 1st January, 1960.

4. Each Member State declares its willingness to apply import duties at a level below that indicated in paragraph 2 of this Article if it considers that its economic and financial position and the position of the sector concerned so permit.

5. The Council may at any time decide that any import duties shall be reduced more rapidly or eliminated earlier than is provided in paragraph 2 of this Article. Between 1st July, 1960, and 31st December, 1961, the Council shall examine whether it is possible so to decide in respect of import duties applied on some or all goods by some or all of the Member States.

ARTICLE 4

Area tariff treatment

1. For the purposes of Article 3 to 7, goods shall, subject to Annex B,' be accepted as eligible for Area tariff treatment if they have been consigned to

As amended by Council Decision No. 4 of 1961 (adopted by the Council on 16th February, 1961). [Footnote in source text.] The date had originally read "1st January, 1962."

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See pp. 42-44 of the source text.

See pp. 45-53 of the source text.

the territory of the importing Member State from the territory of another Member State and if they are of Area origin under any one of the following conditions:

(a) that they have been wholly produced within the Area of the Association; (b) that they fall within a description of goods listed in the Process Lists which form Schedules I and II to Annex B and have been produced within the Area of the Association by the appropriate qualifying process described in those Lists;

(c) that, in the case of goods other than those listed in Schedule II to Annex B, they have been produced within the Area of the Association, and that the value of any materials imported from outside the Area or of undetermined origin which have been used at any stage of the production of the goods does not exceed 50 per cent of the export price of the goods.

2. For the purposes of sub-paragraphs (a), (b) and (c) of paragraph 1 of this Article, materials listed in the Basic Materials List which forms Schedule III to Annex B which have been used in the state described in that List in a process of production within the Area of the Association shall be deemed to contain no element imported from outside the Area.

3. Nothing in this Convention shall prevent a Member State from accepting as eligible for Area tariff treatment any goods imported from the territory of another Member State, provided that the like goods imported from the territory of any Member State are accorded the same treatment.

4. Provisions necessary for the administration and effective application of this Article are contained in Annex B.

5. The Council may decide to amend the provisions of this Article and of Annex B.

6. The Council shall from time to time examine in what respect this Convention can be amended in order to ensure the smooth operation of the origin rules and especially to make them simpler and more liberal.

ARTICLE 5

Deflection of trade

1. For the purposes of this Article, trade is said to be deflected when (a) imports of a particular product into the territory of a Member State from the territory of another Member State are increasing,

(i) as a result of the reduction or elimination in the importing Member State of duties and charges on that product in accordance with Article 3 or 6, and (ii) because the duties or charges levied by the exporting Member State on imports of raw materials or intermediate products, used in the production of the product in question, are significantly lower than the corresponding duties or charges levied by the importing Member State, and

(b) this increase in imports causes or would cause serious injury to production which is carried on in the territory of the importing Member State.

2. The Council shall keep under review the question of deflections of trade and their causes. It shall take such decisions as are necessary in order to deal with the causes of deflection of trade by amending the rules of origin in accordance with paragraph 5 of Article 4 or by such other means as it may consider appropriate.

3. If a deflection of trade of a particularly urgent nature occurs, any Member State may refer the matter to the Council. The Council shall take its decision as quickly as possible, and, in general, within one month. The Council may, by majority decision, authorise interim measures to safeguard the position of the Member State in question. Such measures shall not continue for longer than is necessary for the procedure under paragraph 2 above to take place, and for not more than two months, unless, in exceptional cases, the Council, by majority decision, authorises an extension of this period by not more than two months. 4. A Member State which is considering the reduction of the effective level of its duties or charges on any product not eligible for Area tariff treatment shall, as far as may be practicable, notify the Council not less than thirty days

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before such reduction comes into effect, and shall consider any representations by other Member States that the reduction is likely to lead to a deflection of trade. Information received under this paragraph shall not be disclosed to any person outside the service of the Association or the Government of any Member State.

5. When considering changes in their duties or charges on any product not eligible for Area tariff treatment, Member States shall have due regard to the desirability of avoiding consequential deflections of trade. In such cases, any Member State which considers that trade is being deflected may refer the matter to the Council in accordance with Article 31.

6. If, in the consideration of any complaint in accordance with Article 31, reference is made to a difference in the level of duties or charges on any product not eligible for Area tariff treatment, that difference shall be taken into account only if the Council finds by majority vote that there is a deflection of trade. 7. The Council shall review from time to time the provisions of this Article and may decide to amend those provisions.

ARTICLE 6

Revenue duties and internal taxation

1. Member States shall not

(a) apply directly or indirectly to imported goods any fiscal charges in excess of those applied directly or indirectly to like domestic goods, nor otherwise apply such charges so as to afford effective protection to like domestic goods, or

(b) apply fiscal charges to imported goods of a kind which they do not produce, or which they do not produce in substantial quantities, in such a way as to afford effective protection to the domestic production of goods of a different kind which are substitutable for the imported goods, which enter into direct competition with them and which do not bear directly or indirectly, in the country of importation, fiscal charges of equivalent incidence, and shall give effect to these obligations in the manner laid down in paragraphs 2 and 3 of this Article.

2. Member States shall not introduce new fiscal charges which are inconsistent with paragraph 1 of this Article, and shall not vary an existing fiscal charge in such a way as to increase, above the level in force on the date by reference to which the basic duty is determined in accordance with paragraph 3 of Article 3, any effective protective element in the fiscal charge, that is to say, the extent to which that charge is inconsistent with paragraph 1 of this Article.

3. (a) In the case of any internal tax or other internal charge, Member States shall eliminate any effective protective element on or before 1st January, 1962.

(b) In the case of any revenue duty, Member States shall either

(i) progressively eliminate any effective protective element in the duty by successive reductions corresponding to those prescribed for import duties in Article 3, or

(ii) eliminate any effective protective element in the duty on or before 1st January, 1965.

(c) Each Member State shall, on or before 1st July, 1960, notify to the Council any duty to which it will apply the provisions of subparagraph (b)(ii) of this paragraph.

4. Each Member State shall notify to the Council all fiscal charges applied by it where the rates of charge, or the conditions governing the imposition or collection of the charge, are not identical in relation to the imported goods and to the like domestic goods, as soon as the Member State applying the charge considers that the charge is, or has been made, consistent with subparagraph (a) of paragraph 1 of this Article. Each Member State shall, at the request of any other Member State, supply information about the application of paragraphs 1, 2 and 3 of this Article.

5. Each Member State shall notify to the Council the revenue duties to which it intends to apply the provisions of this Article.

6. For the purposes of this Article:

(a) "fiscal charges" means revenue duties, internal taxes and other internal charges on goods;

(b) "revenue duties" means customs duties and other similar charges applied primarily for the purpose of raising revenue;

(c) "imported goods" means goods which are accepted as being eligible for Area tariff treatment in accordance with the provisions of Article 4.

ARTICLE 7
Drawback

1. Each Member State may, on and after 1st January, 1970, refuse to accept as eligible for Area tariff treatment goods which benefit from drawback allowed by Member States in the territory of which the goods have undergone the processes of production which form the basis of the claim that the goods in question are of Area origin. In applying this paragraph, each Member State shall accord the same treatment to imports from the territories of all Member States.

2. Similar provisions shall apply to drawback in respect of imported materials of the kinds listed in Annex D* and in Annex E.

3. Before 31st December, 1960, the Council shall decide what provisions are to be applied to deal with drawback in the period after 31st December, 1961, and before 1st January, 1970.

4. The Council may at any time after its decision under paragraph 3 consider whether further or different provisions are necessary to deal with drawback after 31st December, 1961, and may decide that such provisions are to be applied. 5. For the purposes of this Article:

(a) “drawback" means any arrangement for the refund or remission, wholly or in part of duties applicable to imported materials, provided that the arrangement, expressly or in effect, allows refund or remission if certain goods or materials are exported, but not if they are retained for home use; (b) "remission" includes exemption for materials brought into free ports and other places which have similar customs privileges;

(c) "duties" means (i) all charges on or in connection with importation, except the fiscal charges to which Article 6 applies and (ii) any protective element in such fiscal charges;

(d) "materials" and "process of production" have the meanings assigned to them in Rule 1 of Annex B.

ARTICLE 8

Prohibition of export duties

1. Member States shall not introduce or increase export duties and, on and after 1st January, 1962, shall not apply any such duties.

2. The provisions of this Article shall not prevent any Member State from taking such measures as are necessary to prevent evasion, by means of re-export, of duties which it applies to exports to territories outside the Area of the Association.

3. For the purposes of the Article, "export duties" means any duties or charges with equivalent effect, imposed on or in connection with the exportation of goods from the territory of any Member State to the territory of any other Member State.

ARTICLE 9

Co-operation in customs administration

Member States shall take appropriate measures, including arrangements regarding administrative co-operation, to ensure that the provisions of Articles 3 to 7 and of Annexes A and B are effectively and harmoniously applied, taking account of the need to reduce as far as is possible the formalities imposed on "Not printed here. · Not printed here.

See pp. 55-59 of the source text.
See p. 60 of the source text.

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