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The sequence of actions by each of the two groups was thoroughly considered and was incorporated in the memorandum.

The Canadian group promptly took the specific action to which it had committed itself at Toronto. It informed the Canadian Government of the Toronto Agreement and specifically urged (1) that, when exemption of Canada from the manufacturing clause became law, Canada accept the Florence Agreement, thus removing the present Canadian ad valorem duty of 10 percent on a large volume of U.S. book exports to Canada, and (2) that the Canadian Government oppose adherence to the Stockholm Protocol or similar actions weakening international copyright. Since that time, the Canadian group has continued to keep its Government informed and has continued to support these positions. It was always clearly understood by all concerned that Canada's acceptance of the Florence Agreement, which can be accomplished very simply and quickly, would follow the granting of Canadian exemption from the manufacturing clause. As far as the Stockholm Protocol is concerned, the Canadian Government cooperated closely with the United States and both countries achieved their joint objective.

On the U.S. side, the U.S. group promptly conveyed notice of the Agreement of Toronto to the Executive Branch of the Government and also the appropriate subcommittees of the Senate and House Judiciary Committees. During the entire period that the Copyright Revision Bill was pending in the Senate, following passage of the House bill in 1967, the U.S. group urged that an exemption for Canada be included in Section 601. This position was accepted, successively, by the Senate Subcommittee on Patents, Trademarks and Copyrights; the Senate Judiciary Committee; and the Senate itself. The report of the Senate Judiciary Committee states as follows on page 198:

“The committee has adopted the proposal put forward by various segments of both the U.S. and the Canadian printing industries, recommending an exemption for copies manufactured in Canada. Since wage standards in Canada are substantially comparable to those in the United States, the arguments for equal treatment under the manufacturing clause are persuasive."

We were pleased that H.R. 2223, as introduced, contained the Canadian exemption in the same manner as it had passed the Senate last year and in the same manner as is provided in Senator McClellan's companion bill, S. 22. We have every reason to believe that, if this provision is retained in the bill as it is finally approved, Canadian acceptance of the Florence Agreement will follow shortly thereafter. In the unexpected event that it would not, we would surely then urge the Congress to withdraw the exemption.

In urging this exception for Canada, we do not mean to gloss over the existing irritants between Canada and the United States in the field of publishing and printing. However, we earnestly believe that the best chance of removing some or all of these irritants lies in improving the relationship between the two countries in the areas of printing and publishing. This can best be done, in our view, by carrying out the remaining objectives of the Toronto Agreement in the sequence there intended, i.e., by Canadian exemption from the manufacturing clause. fol. lowed promptly by Canadian acceptance of the Florence Agreement. The atmosphere would then be propitious to carry out the final objective of the Toronto Agreement—the removal of any remaining barriers to trade between the two countries affecting the printing and publishing industries.

To our knowledge, the only objection that has been made before this Subcommittee to Canadian exemption has been by the Departments of State and Commerce on the ground that such exemption would be a violation of an executive agreement known as the GATT (General Agreement on Tariffs and Trade) and of certain unspecified bilateral treaties.

We believe that it is significant that the Senate Subcommittee, the Senate Judiciary Committee and the Senate as a body disregarded even broader and more basic objections by the Department of State registered in 1967. At that time, the State Department took the position that an exception for Canada "would create a conflict with the spirit of the most favored-nation requirement in Article I (of the GATT), and in all likelihood with the words of Article I calling for most-favored-nation treatment with respect to all rules and formalities in connection with importation and exportation' (the Protocol does not except legislation inconsistent with Article I); and would also create a new conflict with the nondiscrimination requirement in Article XIII, paragraph 1..."

The State Department also stated that the Canadian exemption "would be contrary to the requirements for most-favored-nation treatment contained in

bilateral commercial treaties with many of our trading partners [citing treaties with Germany and Japan, 'both of which contain most-fa vored-nation provisions similar to Articles I and XIII of the GATT)."

We are pleased to note that, in its statement to this Subcommittee on May 8, 1975, the State Department representative abandoned any reference to violation either of the letter or the spirit of most-favored-nation principles in Article I of the GATT. In this important respect at least, the State Department accedes to the technical position which we took before the Senate Subcommittee in 1967. We do not regard the reference to "various bilateral treaties” as of any independent significance. As we pointed out in our technical memorandum in 1967, the various bilateral commercial treaties are not a separate reason for opposing a Canadian exemption, because they each contain provisions authorizing any action which is regarded or permitted by the GATT. Thus, we are still left only with the question whether an exception would be precluded by the GATT.

The only basis upon which the Department of State now claims that obligations under the GATT would be violated by a Canadian exception is Article XIII of the GATT. This section of the executory agreement requires nondiscriminatory administration of quantitative restrictions. We believe that the State Department is taking an invalid and simplistic position in attempting to apply Article XIII to an exemption for Canada from the U.S. manufacturing requirements. The history and context of paragraph 1 of Article XIII make it clear that this provision refers only to nondiscriminatory administration of quotas or other restrictions which come within one of the three exceptions authorized by the GATT—Article XI, paragraph 2; Article XII; and Article XIII, section b. It is not a blanket prohibition against all types of restrictions which do not apply equally to all countries. It applies only to the restrictions which come within any of the three above enumerated exceptions.

As we pointed out in our technical memorandum in 1967, the State Department itself, in various publications interpreting Article XIII, has related the nondiscriminatory requirement to quantitative restrictions on imports under one of the three enumerated exceptions. Since the manufacturing clause is not a restriction authorized by any of the three exceptions, Article XIII does not apply to it. Indeed, the whole context of Article XIII, which refers to allocation of quotas among supplying countries, makes it clear that the situation dealt with has no relationship at all to administration of the manufacturing clause of the copyright laws. Rather, the manufacturing clause is sui generis. It is an extension of the benefits and protection conferred by the copyright monopoly.

We are used to the idea and practice that U.S. copyright is enforceable by an author's publisher to protect the copies manufactured by the one selected producer against the independent manufacturer of copies by any other book manufacturer, including all American book manufacturers. Normally, only a single manufacturer is chosen to produce all of the copies for the national market. The Canadian exception in Section 601 merely extends to a Canadian book manufacturer the eligi. bility to be selected as the single manufacturer, or perhaps as one auxiliary manufacturer. Hence, to discuss the manufacturing clause or copyright law as a restriction on international free trade is anomalous and inappropriate.

At this point, Mr. Chairman, I ask permission to submit for the record copies of the following:

1. Excerpts from the BMI testimony before the Senate Subcommittee on Pat. ents, Trademarks and Copyrights, April 6, 1967, pages 676–677.

2. Letter dated September 19, 1967, from the Department of State to the Chairman of the Senate Subcommittee on Patents, Trademarks and Copyrights.

3. Letter dated October 11, 1967, to the Senate Subcommittee on Patents, Trademarks and Copyrights from counsel of BMI, including "Technical Memorandum on Effect of Existing U.S. International Agreements on Proposed Exception of Canada from the Manufacturing Clause of the Copyright Law."

One further point. The State Department representative referred in his testimony on May 8, 1975, to a protest by the United Kingdom against the exception for Canada. We understand that, when the t'nited Kingdom made this protest, it was unaware of the long-standing, and recently reaffirmed, position of the British Publishers Association expressing its lack of objection to an exemption for Canada from the U.S. manufacturing clause. With your permission. Mr. Chairman, I offer for the record copies of letters dated January 3, 1968, and Mar 6, 1975, to Robert W. Frase from Mr. Ron Barker, Secretary of the British Publishers Association.

AMERICAN BOOK PUBLISHERS COUNCIL, INC.-
AMERICAN TEXTBOOK PUBLISHIERS INSTITUTE

April 1, 1968.
Hon. ROBERT W. KASTENMEIER,
Acting Chairman for Copyright Law Revision, Subcommittee No. 3, Committee on

the Judiciary, House of Representatives, Washington, D.O. DEAR MR. CHAIRMAN : The U.S. business and labor organizations concerned with printing and publishing met with a similar representative group of Canadian organizations in Toronto on February 16, 1968, to discuss three interrelated issues of mutual interest, namely, an exemption for Canada from the U.S. manufacturing clause, Canadian adherence to the Florence Agreement, and effective resistance to weakening of international copyright protection.

As you will see from the attached copy of a memorandum signed on behalf of the U.S. and Canadian groups, we arrived unanimously at an agreement to recommend certain legislative and executive actions to our respective governments.

The Canadian group has already taken the specific action which it undertook at Toronto. I enclose a copy of a letter dated March 19, 1968, from W. E. Curry, Chairman, Joint Committee of the Printing and Publishing Industries of Canada, to The Honorable Paul J. J. Martin, Secretary of State for External Affairs. In this letter, copies of which were also sent to other appropriate high-ranking Canadian Government officials, Mr. Curry urged (1) that Canada adhere to the Florence Agreement when exemption for Canada from the U.S. manufacturing clause becomes law, which would result in removing the present Canadian ad valorem duty of 10% on a large volume of U.S. book exports to Canada, and (2) that the Canadian Government oppose adherence to the Stockholm Protocol or similar actions weakening international copyright.

All of us from the United States who attended the Toronto meeting, and all of the various organizations and interests we represent, feel strongly that it would be greatly to the advantage of the United States to achieve at the earliest possible date the objectives agreed upon at Toronto. I am therefore writing to you, on behalf of the U.S. group, to urge that Canada be exempted from the U.S. manufacturing clause. The sooner this can be accomplished in any appropriate bill dealing with copyrights, the sooner we will be able to obtain for the United States the completion of Canadian action called for by the Toronto Agreement.

I am also authorized to state that the Authors' League of America shares the views expressed in this letter.

An identical letter has been sent to The Honorable John L. McClellan, Chairman of the Subcommittee on Patents, Trademarks and Copyrights of the Senate Committee on the Judiciary. Sincerely yours,

ROBERT W. FRASE. AGREEMENT OF TORONTO Representatives of the U.S. and Canadian business and labour organizations concerned with printing and publishing met in Toronto on February 16, 1968 to discuss three interrelated issues of mutual interest, namely, an exemption for Canada from the U.S. manufacturing clause, Canadian acceptance of the Florence Agreement, and effective resistance to weakening of international copyright protection.

After a thorough discussion of all aspects of these interrelated issues, the following courses of action were unanimously agreed upon :

(1) The Canadian group will promptly inform the Canadian Government of the Toronto meeting and of the agreement to take parallel action on both sides of the border to bring about exemption for Canada from the U.S. manufacturing clause and the acceptance by Canada of the Florence Agreement. The Canadian group will urge the Canadian Government to accept the Florence Agreement as soon as exemption for Canada has been adopted by the U.S. Congress. It is noted that the acceptance of the Florence Agreement can be accomplished in Canada without the necessity of an Act of Parliament.

(2) The U.S. and the Canadian groups will co-operate closely in urging their respective governments to consult and work together to oppose the Stockholm Protocol or similar actions weakening international copyright protection which may be proposed under the Universal Copyright Convention.

(3) The U.S. group will do its utmost to obtain incorporation of an exemption for Canada in the manufacturing section of the bill to revise the U.S. copyright law (S. 597) now being considered by a U.S. Senate Subcommittee. Specifically, the U.S. group will inform the Department of State of the Toronto meeting and will urge the Department (a) not to oppose an exemption for Canada from the U.S. manufacturing clause, and (b) to work closely with the Government of Canada in opposing weakening of international copyright protection under the Berne Convention or the Universal Copyright Convention. The l'.S. group will also bring to the attention of the appropriate subcommittee of the Senate and House Judiciary Committees the recommendations of the Toronto meeting with respect to the manufacturing clause amendment.

(4) It is anticipated that co-operative efforts on, and resolution of, the foregoing issues in a mutually satisfactory manner will lead promptly to definite future co-operation between the United States and Canadian groups on the removal of any remaining barriers to trade between the two countries affecting the printing and publishing industries. On behalf of the U.S. group:

ROBERT W. FRASE,
Director, Joint Washington Office,

American Book Publishers Council,
American Educational Publishers Institute,

(And seven others). On behalf of the Canadian group:

W. E, CURRY,
Chairman, Joint Committee of the
Printing and Publishing Industries of Canada,

(And seven others).

COPYRIGHT LAW REVISION

HEARINGS BEFORE THE SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS

OF THE COMMITTEE ON THE JUDICIARY, UNITED STATES SENATE, NINETIETH CONGRESS, FIRST SESSION

Pursuant to S. Res. 37 on S. 597

Part 3—April 6, 11, and 12, 1967 (Excerpts from Statement of James H. French, Counsel, Book Manufacturers'

Institute, Inc., pages 676-677] The cultural and educational interrelationship of the U.S. and Canada indeed reflects a unique situation which requires a special solution. And there is no need to retain the protection of the manufacturing clause as to Canada.

In recommending that Canada be exempted from the provisions of the manufacturing clause, we quite naturally have examined this subject from the point of view of our own self-interest. We have concluded that book manufacturers in the United States will not suffer injurious consequences if this is done. Production techniques, quality, and distances to major market areas are all so similar that we foresee no disruption in the American book manufacturing industry as a result of Canadian exemption. Canadian wage rates and costs of equipment and production are comparable to our own and will provide the kind of competition that we can contend with.

On balance, we feel that the exemption of Canada from the manufacturing clause will simply remove an irritant between Canada and the United States, will promote a healthy degree of cooperation between publishers and book manufacturers in both countries, and will help to promote an atmosphere in which friction occasioned by actions and recriminations by citizens of both countries can be significantly reduced.

We wish to make it clear that we are not reintroducing the wage parity formula that the House Committee last year found raised "complex problems of foreign policy and administration." We are recommending enactment of a direct, forthright exemption from the manufacturing clause for Canada. We do not believe that such an exemption will be found objectionable from any reasonable international trade viewpoint, or that it will in any way contravene the General Agreement on Tariffs and Trade (GATT).

Under the Protocol of Provisional Application of the GATT, the United States agreed to apply Part II of the GATT to U.S. laws in existence on January 1, 1948, only to the extent that it is not inconsistent with such laws. The manufacturing clause of the United States Copyright Law has been in existence since 1891 and represents an integral part of United States Copyright policy. Thus, to the extent that anything in Part II of the GATT is inconsistent with the dynamic implementation of United States Copyright policy through the manufacturing clause, it must give way. This is the very raison d'etre of the Protocol of Provisional Application.

Our conclusion that nothing in the GATT prevents the granting to Canada of an exemption from requirements of the United States Copyright Law derives additional support from the existence, in Article XX of the GATT, of a general exception for national measures relating to copyright. This exception clearly, demonstrates the intentions of the member nations not to interfere with expressions of national policy manifested through Copyright Laws.

The exception in Article XX is made subject to "the requirement that such measures are not applied in a manner which would constitute a means of arbi. trary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade." No country other than Canada has the same conditions prevailing in its printing industry as does the United States. Therefore, exemption of Canada from the manufacturing clause of our Copyright Law would not constitute "a means of arbitrary or unjustifiable discrimination" under Article XX. Far from being "a disguised restriction on international trade," such exemption would tend to expand international trade between the United States and Canada without decreasing it between the United States and other countries.

But most persuasive of all is the GATT's clear recognition, in Article XXIV, of (a) the need for special and preferential measures between adjacent countries in order to facilitate frontier traffic and (b) the desirabliity of increasing freedom of trade between such countries through closer integration of their economies.

Under these circumstances, it is difficult indeed to see how any country could justify the lodging of a complaint under the GATT if the United States exempts Canada from long-standing requirements of the U.S. Copyright Law. If the fear should prevail that such a complaint may be effectively put forth, then we believe that the Administration should move promptly to obtain a waiver under Article XXV of the GATT. Such a waiver should be quite easy to obtain.

Only a strained interpretation of this country's GATT obligations could support an argument against the exemption here requested. And in view of the clear unanimity on both sides of the border that such a result is desirable, it is difficult to see how an argument for such a strained interpretation can be defended.

Nevertheless, we recognize that it is possible to argue that the Most FavoredNation requirements of Article I of the GATT and the non-discrimination requirements of Article XIII militate against the making of any special arrangements with any single country, even one having such a special interrelationship with the United States as does Canada. In our view, however, neither of these Articles applies.

Article XIII, as its title states, requires the “Non-discriminatory Administration of Quantitative Restrictions." The entire context of this provision makes it quite clear that the provision's requirements are designed to apply to certain quantitative restrictions specifically authorized by another of the Agreement's provisions, Article XI, paragraph 2. The manufacturing clause of the Copyright Law is not a restriction authorized by Article XI, and, therefore, Article XIII does not apply to it. In any case, since Articles XI and XIII are in Part II of the GATT and are covered by the Protocol of Provisional Application, neither applies to the extent that it is inconsistent with the action proposed.

Turning to Article I, the Most-Favored Nation clause of the GATT, we do not believe that this provision, properly interpreted, prevents the proposed exemption for Canadian printing. Article I provides in effect that with respect to four enumerated categories of matters, any advantage granted to the products of one country must simultaneously be extended to the like products of all countries.

The first three enumerated categories, relating to (1) customs duties and charges, (2) the method of levying such duties and charges, and (3) rules and formalities in connection with importation and exportation, clearly are not applicable. (Now that the United States has implemented the Florence Agreement, there are not to our knowledge any duties or other charges on printed matter

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