By Michael Rom (auth.)
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19 To Promote New Trade While the philosophy of free trade is based on the idea of competition between equals, the reality is that countries are unequal, being at different stages of economic development and competitive ability. Most countries have accepted that it is desirable to help to stimulate the Introduction to Tariff Quotas 7 economic progress of developing countries by providing them with an advantage in comparison with developed countries, facilitating the promotion of their exports and the development of new export industries.
The League, however, pointed out one drawback prevalent during the 1920s. This arose when proportional country quotas were fixed after negotiations in bilateral trade agreements with the least interested country in that particular quota, so that a relatively small quota could be established with it. Then, on the basis of the non-discrimination principle, proportional tariff quotas were extended to all countries enjoying MFN treatment. 30 But even if proportional country quotas are determined by negotiations with the principal supplier, they still are a far cry from MFN treatment.
Unfortunately, past experience with the unallocated tariff quota in 22 The Role of Tariff Quotas in Commercial Policy commodities which interested a number of exporting countries has not been favourable, and a number of difficulties and problems have arisen. For instance, the 'Geneva Reservation' of the woollens and worsted fabrics tariff quota caused serious difficulties in application, as can be seen from a statement made by the United States Department of State on 9 November 1960. 19 'The operation of the tariff quota system has disrupted normal marketing practices in the woollen goods trade.