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that appropriate to the materials and components used. The United States, Canada and New Zealand intend to rely primarily on a value added criterion. The United States criterion will be that no more than 50 per cent of the Customs value as appraised in the United States should be from sources other than the exporting pre- ference receiving country and the goods will also have to have undergone a substantial transformation in the exporting country. The satisfactory functioning of rules of origin will depend on close collaboration between the authorities of all the countries concerned, in particular on documentation and control. Recommendations have been made by UNCTAD on matters such as a standard form of origin certificate, verification, sanctions and administrative arrangements.
Beneficiary countries
The main issue still outstanding is to decide which countries should benefit from the preferences under schemes of individual donors. All the independent countries of the continents of America (except the United States and Canada) and Africa (except South Africa and Rhodesia), Mongolia and the non-Communist countries of Asia other than Japan, as well as Bulgaria, Cyprus, Greece, Malta, Israel, Portugal, Romania, Spain, Turkey and Yugoslavia, have already claimed that as developing countries they consider that they should be beneficiaries. The United Kingdom and other coun. tries have made a similar claim on behalf of all their dependent territories and those states for whose international relations they are responsible.
The OECD Special Group which reported in 1967 recommended that preferences should be granted to the exports of any country, territory or area claiming developing status. The Group came to
this conclusion in order to avoid the difficulty of reaching inter- national agreement on determining relative stages of development. The United Kingdom and a number of other developed countries continue to support the Special Group's recommendation, but only on the understanding that all preference-giving countries act similarly. The OECD countries are still discussing this question.
Another problem results from the United States condition that developing countries which themselves grant tariff preferences to particular developed countries must undertake to phase these out within two or three years if they are to benefit from preferences in the United States. Many - but by no means all - Commonwealth developing countries accord preferences to the United Kingdom and some of them accord preferences to the exports of other de- veloped Commonwealth countries. Most of the African countries associated with the EEC grant preferences to Community exports. No solution was found to this problem in the Special Committee on Preferences. It was agreed however, that consultations should con- tinue between the countries directly concerned with a view to trying to solve the problem before the schemes are put into effect.
Implementing the scheme
Legislation will be required in most of the preference-giving countries before their schemes can be implemented. Enabling legis- lation will be necessary before the United Kingdom scheme can be put into effect and the Government has announced that it hopes to introduce a Bill during the current session of Parliament. The exact date of implementation will be decided in the light of action by the other developed countries.
A summary of the proposals of the various preference-giving countries is given below. The detailed proposals are available for reference in the Statistics and Market Intelligence Library at Export House, 35 Old Bailey, London, E.C.4.
UNITED KINGDOM
The statement made by our delegate in UNCTAD introducing the proposed United Kingdom arrangements was published in the Board of Trade Journal on September 30, 1970.
The United Kingdom proposes to grant duty free entry for in- dustrial products in Chapters 25 to 99 of the Tariff (including raw materials, with some possible exceptions still to be decided upon) other than most textiles and apparel and goods subject to revenue duties. Duty free entry is offered on a number of textiles including carpets and floor coverings of all materials, twine, cordage and ropes and goods made therefrom, yarn and fabrics of jute, of paper and of miscellaneous vegetable fibres, and felts and felt articles. In addition to textiles the main category of goods excluded are those subject to revenue duties: hydrocarbon oils, perfumed spirits, matches and portable lighters.
Duty free entry or tariff reductions are also proposed for a range of processed agricultural products covering over 140 tariff positions. Among the products for which duty free entry is proposed are bone meal, currants and certain other dried and preserved or otherwise prepared fruits and vegetables, tomato juice and certain other fruit and vegetable juices, glycerol and glycerol lyes, chocolate and sugar confectionery, sweetened cocoa powder and biscuits and cakes. A 50 per cent duty reduction is proposed for beef extracts and juices and canned tuna. It is proposed to reduce the duty on extracts,
and essences
concentrates of coffee to the Commonwealth Preference rate.
The inclusion in our scheme of a number of goods is conditional upon the consent of countries in the Commonwealth preference area which have trade agreement rights to margins of preference in the United Kingdom market.
The Commonwealth preference arrangements will continue in parallel to the generalized scheme. Developing Commonwealth countries will also be able to benefit from the inclusion in the United Kingdom offer of a number of products (for example, clocks and watches and musical instruments) on which they at present have to pay a Commonwealth rate of duty.
Since the purpose of the scheme is to increase the export earnings and to promote the industrialization of the developing countries, imports from these countries may be expected to become more competitive and to increase to the extent that this purpose is ful- filled. Nearly all imports from the developing Commonwealth
countries already enjoy duty free entry in the United Kingdom market and the scheme will therefore have little effect on imports from those countries. The main advantages will accrue to non- Commonwealth developing countries. The United Kingdom has reserved the right to withdraw or modify the concessions on any products within the scheme. The grounds for such action would normally be the import of a product in increased quantities and under conditions which, in the Government's view, cause ΟΙ threaten serious injury to domestic producers of similar or directly competitive products. Arrangements will be made to obtain suf- ficiently detailed import statistics to enable the scheme's effects on trade to be kept under review.
The United Kingdom offer is also subject to a number of other qualifications. First, the scheme may have to be modified if it becomes necessary to keep it broadly in line with those of other preference-giving countries. Second, account will have to be taken of the extent to which Commonwealth developing countries benefit as a result of all the schemes. Third, in the event of successful negotiations for entry into the EEC, our scheme would have to be assimilated to that of the Community.
EUROPEAN ECONOMIC COMMUNITY
The EEC propose to grant duty free entry to all manufactures and semi-manufactures in Chapters 25 to 99 of the Common External Tariff, without exception. There will be no safeguard arrangement linked to injury to domestic industries, but the amount of imports from developing countries that will benefit from duty free entry will be subject to limitation within quota ceilings. These will be calculated under a standard formula applicable to all pro- ducts under which each ceiling will have two elements. The first, the basic amount, will be the total value of imports of the product from the beneficiary countries in a base year, 1968. To this will be added a supplementary amount calculated by taking 5 per cent of total imports into the Community from all sources other than the beneficiary countries. Trade between the member states is excluded from the total from which the 5 per cent will be calculated, but imports from the Community's associated states in Africa and else- where (which already receive duty free entry) will be included. The additional amount of the quota will be calculated from the total imports into the Community from non-beneficiary countries in the most recent year and will be recalculated annually on the
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