The seventh annual report of the Organization for European Economic Cooperation (OEEC), subtided “Economic Expansion and its Problems”, was made public February 1956. During 1955, the report stated, the economic expansion characteristic of 1953 and 1954 had continued; production had reached record heights, and it appeared that the gain in total output for 1955 had exceeded the rise of five percent recorded for 1953 and 1954. Higher production had allowed a fuller realization of the basic objectives of the policies of the member governments: high levels of employment had been reached, investment needed for economic growth had increased, and consumers had enjoyed a substantially larger amount of goods and services. However, according to the report a danger to the prosperity had arisen during 1955; the threat consisted in the possibility that an excessive growth of demand might turn the expansion into a boom, that a boom would entail price and production distortions as well as balance of payments difficulties, and that such inflationary excesses would disrupt the course of economic progress. In the view of the report, it was not yet clear that the threat to economic balance had been removed by dampening measures taken by governments. There were many signs indicating the strain that demand was putting on productive resources: production was pressing on capacity in most industries, with tight market situations developing, the demand for labor had taken up all the slack in unemployment, sensitive price indicators had moved up considerably, and in some countries, there had been significant increases in the general level of prices to consumers, while home demand had advanced somewhat more rapidly than production, leading to a reduction of the current balance of payments surplus or to a deficit.

Annual Report:The fifth annual report of the Managing Board of the European Payments Union (EPU) covered the period July I, 1954 to June 30, 1955. The financial year 1954—1955, the report noted, had been one of considerable economic expansion in member countries, although with some variation between them; the progress of the previous year, which had followed upon a period of relative stagnation, had continued and gathered momentum. The report noted that in some countries the rapid expansion had had repercussions both internally and externally which had required corrective measures. During 1954–1955 industrial production had increased greatly, the increase being most marked in base metal manufacturing, metal products and in chemical manufacturing. However, agricultural production of member countries, as a whole, had not changed from the previous year. The report stated that the greater industrial production had been the result of both increased employment and productivity; in a number of countries unemployment had been reduced to new low levels and in certain countries, the number of unfilled vacancies exceeded that of the registered unemployed. Concurrently, and in connection with the rapid economic expansion, salaries and wages had increased in practically all member countries to a much greater extent than in previous years.

The fifteen countries members of the North Atlantic Treaty Organization (NATO) were represented by their defense ministers at a conference held in Paris from October 10 to 12, under the chairmanship of Lord Ismay (Vice Chairman of the North Atlantic Council and Secretary General of NATO). The meeting, which was attended by the Standing Group and the Supreme Commanders, was a preliminary to the full ministerial session, to be held in December; it was the first occasion on which the NATO defense ministers met in Council without the foreign or finance ministers. A communique issued at the close of the meeting stated that the meeting had primarily been for the exchange of information, and that the ministers had heard statements on the strategic situation and on western defensive arrangements from General Sir John Whiteley (United Kingdom), Chairman of the Standing Group, and from his colleagues on the Standing Group, General Joseph Lawton Collins (United States), General Jean Valluy (France), General Alfred M. Gruenther (SACEUR), Admiral Jerauld Wright (SACLANT) and several other officers. Following these statements, a useful exchange of views between the defense ministers took place, the communique concluded. It was reported that many of the speakers had concurred in the view that the military potential of the Soviet Union was steadily increasing, especially in the areas of atomic weapons and submarines, that the recently announced decision to reduce the armed forces in the Soviet Union and some of the people's democracies did not modify the potential of communist forces, and that it was therefore indispensable to intensify the NATO military effort, which so far had not met expectations for it.

Consultative Assembly The first part of the eighth ordinary session of the Consultative Assembly of the Council of Europe was held in Strasbourg from April 16 to 21, 1956, under the presidency of Mr. Fėrnand Dehousee (Belgium, Socialist). The Council welcomed the representatives of Austria, which had become a full member.

During the period from September 16, 1954 through December 15, 1954, the Council of the Organization of American States (OAS) took a number of administrative and budgetary decisions among which were the following: 1) At a meeting on September 16, 1954, the Council decided to postpone until 1955 the Second Meeting of the Inter-American Cultural Council and the Inter-American Meeting of Ministers of Education, the exact date of the meetings to be determined by the Council in consultation with the government of Brazil since the meetings would be held in that country. 2) On October 20, 1954, the Council decided to include the representative of Chile on the Committee on Juridical-Political Matters, thereby increasing the membership of the committee to fourteen. 3) On November 17, 1954, the Council elected Dr. José A. Mora (Uruguay) Chairman, and Dr. José Ramón Rodríguez (Dominican Republic) Vice-Chairman for 1954–1955. 4) Under a resolution adopted by the Council on December 15, 1954, the chairmen or vice-chairmen of special committees were to be included in the membership of the General Committee, and ex-chairmen of the Council who were still members might participate and vote in the discussions of the General Committee. 5) On December 15, 1954, the Council also approved the organization plan of the Inter-American Travel Congresses submitted by the Fifth Inter-American Travel Congress.

Council It was reported in the press on July 20, 1956 that the west German government was preparing to bring its anxieties about United Kingdom and United States suggestions for a reduction in armed forces before the meeting of the North Atlantic Treaty Organization (NATO) Council, but contrary to expectation, at the July 25 meeting of the Council no reference was made to the reduction of forces. The press did note on July 25 that the United States Secretary of State Dulles gave reassurances to the German ambassador that the United States contemplated no change from the existing number of troops at that time and was still in favor of a German contribution of twelve divisions to NATO. Press reports also noted that the west German government transmitted notes to the members of the Western European Union calling for a review of allied strategy and military planning in view of moves by the United States and United Kingdom to cut their armed forces.

The first part of the first session of the Assembly of Western European Union(WEU) was held in Strasbourg from July 5 to 8, 1955. Mr. John Maclay (United Kingdom, National Liberal and Conservative) was elected President of the Assembly by acclamation. Six Vice-Presidents, Mr. Robert Bichet (France, M.R.P.), Mr. Antonio Boggiano Pico (Italy, Christian Democrat), Mr. Georges Bohy (Belgium, Socialist), Mr. J. J. Fens (Netherlands, Popular Catholic), Mr. Gerhard Luetkens (German Federal Republic, Social Democrat), and Mr. Eugene Schaus (Luxembourg, Liberal) were elected, and the Bureau of the WEU Assembly was thus constituted.

The South Pacific Commission held its fourteenth session at Anse Vata, Noumea from October 24 to November 9,1955 under the chairmanship of Mr. R. Lassalle-Sere, Senior Commissioner for France. The Secretary-General (Bedell), in his report to the Commission, emphasized the value of the friendly spirit and cooperative effort that existed among the six participating governments and their territories in the South Pacific. The Commission approved the arrangements for the Third South Pacific Conference to be held at Suva, Fiji beginning on April 23, 1956 and voted a budget up to £14,000 for the purposes of the Conference. The Conference was to be attended by delegates from the territories of the participating governments in the South Pacific. The Commission decided to give regional health education strong emphasis in its program for 1956–1957, and suggested that the establishment of a short training course in health education in 1957 be considered. The Commission announced that during 1955 the dietitian on the Commission's team of specialists working with the territories on the major problem of improving infant and adult nutrition in the South Pacific had completed five years of special field studies on infant nutrition and maternal welfare in the region, and that Dr. M. O. T. Iyengar, research specialist in mosquito-borne diseases, would continue his work in that field during 1956.

The second part of the first session of the Assembly of Western European Union (WEU) was held in Strasbourg on October 24 and 28, 1955 under the chairmanship of Mr. John Maclay, President of the Assembly (United Kingdom, National Liberal and Conservative). A draft charter and draft rules of procedure, the chief items on the agenda, were presented to the Assembly on behalf of the Committee on Organization by the rapporteur, Mr. van der Goes van Naters (Netherlands, Socialist), who stated that the method of creating new organizations in Europe had empirical merits, but that there was a danger of inefficient use of Europe's resources as a whole; he felt that the best possible use should be made of parliamentary time; that parliamentarians should not sit on committees that duplicated each other's work; and that no new assemblies should be created without a careful examination of the burdens involved. Mr. van der Goes van Naters declared that collaboration between the ministerial and parliamentary organs of WEU was the keynote of the charter; in order to avoid a clash between the ministers and the Assembly, the charter had been drafted so as to avoid making general rules to govern future and unknown situations and to allow for each case to be treated on its merits as it arose. He stated that with the exception of two provisions where the assent of the Council of Europe must first be sought, the charter contained no provisions on which the Assembly could not decide for itself.

The tenth session of the 35 contracting parties to the General Agreement on Tariffs and Trade (GATT) was held at Geneva from October 27 to December 3, 1955, under the chairmanship of Mr. L. Dana Wilgress (Canada). An agenda was considered of questions relating to 1) items arising out of the operation of GATT, including items falling under the complaints procedures, 2) tariffs and tariff negotiations, 3) administrative barriers to trade, 4) commodity problems, 5) surplus disposal, 6) the accession of Japan, and 7) the administration of GATT.

Council The Council of the Organization for European Economic Cooperation (OEEC), meeting in Paris on June 29, 1956, decided to maintain the European Payments Union (EPU) for another year beginning on July 1, 1956, without any modifications in its rules. The Council also approved bilateral agreements on repayment and liquidation concluded by some EPU members. The Council met again in Paris from July 17 to 19, under the chairmanship of Mr. Harold Macmillan (United Kingdom); among the major questions discussed were nuclear energy and trade liberalization. Prior to the meeting, press reports indicated that the United Kingdom had refused an invitation from the west German government to discuss a flexible exchange rate for sterling, stating that the United Kingdom government saw no useful purpose to be served in an international discussion of the exchange value of sterling. During the Council session the ministers had before them a report and proposal dealing with 1) the need for the OEEC countries to achieve a degree of free trade abolishing quantitative restrictions to the extent of 90 percent or more; 2) the possibility of consolidating that degree of liberalization; and 3) the desire of the low tariff countries in Europe to see this quantitative liberalization accompanied by tariff reductions.

The second meeting of the Council of the Southeast Asian Defense Treaty Organization (SEATO) was held in Karachi, Pakistan from March 6 through 8, 1956, under the chairmanship of Hamidul Haq Chowdhury, Foreign Minister of Pakistan. The meeting was attended by the foreign ministers of the eight member states: Australia, France, New Zealand, Pakistan, the Philippines, Thailand, the United Kingdom and United States. In the communique issued at the close of the session, the Council maintained that SEATO had made a notable contribution to the maintenance of peace in southeast Asia and the southwest Pacific. Council members affirmed that their countries would never commit aggression and that their cooperation under SEATO was directed toward mutual defense and the maintenanceof peace. In regard to political developments in southeast Asia, the Council noted with satisfaction reports of the steps being taken toward establishing full self-government and independence for Malaya within the United Kingdom, and the further progress in the development of free political institutions in the region, particularly in regard to Cambodia, Laos and the Republic of Vietnam which, although not members of SEATO, were under its protection.

The Political Consultative Committee established under the Warsaw collective security treaty held its first meeting in Prague on January 27 and 28, 1956. In addition to representatives of the eight signatory powers (Albania, Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, Rumania and the Soviet Union), an observer from the People's Republic of China attended the meeting. According to press reports, a declaration was issued at the close of the two-day meeting in which an immediate big-power agreement to exclude nuclear weapons from the equipment of any armies stationed in Germany was proposed. The declaration said that the Warsaw powers noted a basic change in the international situation and the existence of possibilities for its further improvement; while in Europe the continued armament of the western powers and the remilitarization of Germany made it essential for the signatories to ensure their own safety, at the same time they intended to work constantly for a system of collective security and general disarmament. Specifically, the declaration renewed an earlier Soviet proposal for a European collective security system and the establishment of a zone to include all Germany, where arms and troops would be limited and controlled. In the meantime, it recommended that nonaggression pacts should be made between states, and in general a start should be made to improve relations between states, irrespective of their existing or eventual membership in one or another military bloc. A communique issued with the declaration announced that the newly created army of the German Democratic Republic had been formally accepted into the command of Marshal Ivan S. Konev, supreme commander of the Warsaw treaty military structure.

The fourth annual report prepared for the Contracting Parties to the General Agreement on Tariffs and Trade (GATT) was divided into three sections, dealing respectively with 1) recent developments in the structure and pattern of international trade, 2) developments in commercial policy, and 3) the principal activities of the Contracting Parties during the period under review. International trade during 1955, the report stated, had established new records both in value and in volume; in the first half of the year, the value of world exports had exceeded $80,000 million (at an annual rate), and in the second half it rose by a further $5,700 million, thus reaching a value about 13 percent above that of 1951. Taking the year as a whole, the value of world exports had been about $83,300 million. In terms of volume, the increase had been even greater, since export prices had been appreciably below the level of 1951, and in the second half of 1955 the volume of world exports had reached a level exceeding that of 1951 by 21 percent. The increase in volume had also represented a further acceleration in the speed of its growth. There had been three major developments in international trade in 1955, the report stated: 1) the rise in value of world exports in 1955 again had been mainly accounted for by trade among industrial countries, while the relative importance of the non-industrial areas had continued to decline; 2) the increase in the export trade of the industrial countries in 1955 had been shared by North America and by the other industrial areas, the revival of North America's exports being due largely to a growing dependence of western Europe on supplies of raw material and fuels from that source; and 3) in 1955, many industrial countries had relied more heavily on imports from the most economic sources of supply, and had therefore adopted more liberal import policies.

Settlements in EPU for the period May through July 1956 showed the German Federal Republic retaining the strongest creditor position. Austria, which showed a small surplus in June, had a larger one in July, while Italy moved from a substantial deficit in June to a surplus in July. France continued to have the largest monthly deficit; second was the United Kingdom, which showed a surplus in May, a deficit in June and a significantly larger deficit in July. Since December 1955, France had covered its deficits fully in gold payments, but in July 1956 it resorted to the 25 percent EPU credit to which it was entitled. Belgium and Luxembourg retained strong creditor positions.

The fifth annual meeting of the International Commission for Northwest Adantic Fisheries was held in Ottawa, Canada from June 6 to 11, 1955 under the chairmanship of Dr. Stewart Bates (Canada). The Commission had before it research reports from Canada, Denmark, France, Iceland, Norway, Portugal, Spain, the United Kingdom and the United States, and a report on German fisheries in West Greenland waters.

CouncilCosta Rica–Nicaragua Situation: At a special meeting of the Council on January 10, 1955, the representative of Costa Rica requested the Council to take action to protect Costa Rica's territorial integrity and sovereignty from intervention by the government of Nicaragua, by convoking a Meeting of Consultation of Ministers of Foreign Affairs, pursuant to Article 6 of the Inter-American Treaty of Reciprocal Assistance, to act as Organ of Consultation in the matter. The Council had referred a similar request for action on April 21, 1954 back to the two countries for direct negotiations. The representative of Costa Rica charged that his country had tried to settle the dispute by direct negotiation and mediation, but that groups had meanwhile been trained and mobilized for invasion. The representative of Nicaragua stated in reply that the Costa Rican accusations were baseless and that President Figueros of Costa Rica was using them to rouse his people's patriotism and gain support for his regime. After prolonged discussion the Council decided to hold a meeting on January 12 to study the matter further and take suitable action; in the meantime the governments of Costa Rica and of Nicaragua were asked to refrain from acts likely to aggravate the controversy.

The twenty-fifth annual report of the Bank for International Settlements was made public in June 1955. In reviewing the period April 1, 1954—March 31, 1955, the report noted that 1954 had been a fundamentally prosperous year; in most countries of Europe the volume of production had continued to increase during 1954, and in the United States and Canada output had begun to rise again in the second half of the year and had continued to increase in the early months of 1955. The progress had been all the more notable since it had been achieved concurrently with an unusual degree of over-all price stability and without any resurgence of major balance-of-payments difficulties; in these respects the conditions prevailing in 1954 had been a continuation of those of the two preceding years. In discussing the 1953–1954 recession in the United States and the recovery which had taken place in the United States since the autumn of 1954, the report outlined the forces and policies which it felt had enabled the recession to be halted effectively and fairly rapidly: 1) the great wealth and liquidity of the United States economy; 2) the operation of various “automatic stabilizers”, such as income tax and unemployment insurance, which had not been dependent upon new policy decisions, but had come into operation of their own accord; 3) other factors conducive to stability, such as long-term borrowing, the insurance of individual bank deposits against loss to the depositor up to $10,000, and the system of margin requirements which had been introduced in 1934; 4) special steps taken by the authorities in the field of fiscal and credit policy; and 5) the continued economic expansion in western Europe.