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There would be similar consequences for other GATT members. The cumulative effect could be damaging to a trading system which is already under strain. It is already a major source of danger to the open trading system, that the industrialised West has shouldered so many GATT obligations towards the developing countries, the NICS and Japan without securing effective rights
in return. The imbalance has grown so far that we have to admit privately, whatever we can continue to say publicly, that we can no longer fulfill even our existing obligations: VRAS are
a notorious symptom of this. A new Round will aim to resolve some problems. But for the present it would be highly dangerous to put the GATT system under further strain, by loading ourselves with further oblgiations to new Contracting Parties, without any assurance of our ability to fulfill them.
12. The commercial practices of a State Trading Country are
incompatible with the GATT System. In a country where prices are not determined in the market, and where administrative fiat can exclude imports far more effectively and far less openly than by tariff, GATT "obligations" in the form of MFN commitments,
bindings, etc, are meaningless. It was for this reason that
special Protocols of Accession were written for the Eastern European State Traders which joined the GATT. These include a requirement to increase overall imports at a fixed annual rate: but this requirment has remained a dead letter.
Keeping China Out?
13. All this indicates that Chinese membership of the GATT could afford the UK no worthwhile rights in the Chinese market. On the other hand it would entail obligations of potentially vast pro- portions, which could well prove burdensome in commercial and political terms. Of course the trading relationship could flourish on mutually advantageous lines: but only by accident: where there is no balance between rights and oblgiations, there is no guarantee. Thus, political attractions notwithstanding, it would be preferable if China remained outside GATT. Certainly the UK should not encourage her membership, and with due discretion should seek to discourage it by using the above
arguments, (which of course are far from applying to the UK alone).
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