Foreign Relations of the United States: Diplomatic Papers, 1945, The British Commonwealth, The Far East, Volume VI

611.0031 Executive Committee/8–1645: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

London, August 16, 1945—5 p.m.
[Received 9:08 p.m.]

8289. Clayton, Hawkins, Stinebower, Penrose, Fowler, Earley and Fergusson had a meeting on commercial policy yesterday with Liesching, Hall-Patch, Eady, Robbins, Shackle, Keynes, Brand, Stirling and Helmore.⁷⁹

1. Liesching first asked for clarification of the view that commercial policy should be dealt with simultaneously with financial policy. First, was it desired by this to press UK into accepting US ideas on commercial policy? Second, since it would take at least a year to deal with tariffs under bilateral agreements how could negotiations on the other subjects be kept in line with the commercial policy negotiations?

2. Clayton replied that reason for coupling the subjects was not to force UK into acceptance of US ideas. The point was that the collectibility of international credits depended upon the expansion of international trade through liberal and multilateral measures. On Liesching’s second point he said that what he had in mind was that in dealing with the financial and other matters there should be a pretty clear understanding of the commercial policy objectives and the procedures for reaching them.

3. Liesching replied that this explanation was helpful. He then asked whether the paper⁸⁰ given them was intended as a basis for discussion or as something they were asked to agree to in advance. Clayton replied that the aim was to reach an understanding on what US–UK would try to do and how they were to do it. He wanted to get US–UK ideas together on broad outlines and objectives not necessarily all the details.

4. The UK officials again emphasized the length of time required to arrive at a series of bilateral agreements and pointed out that agreement on non-tariff matters would not come into force until the last of the tariff agreements had been concluded. They think however (a) that the infant industry question may be somewhat easier to handle under selective tariff reductions than under uniform percentage cuts (b) that the UK may be able to meet its agricultural position under selective treatment. Liesching said that the exact agricultural policy of the new govt is not yet known but he hoped that something acceptable to US and UK may be found. The principal UK problem on agricultural imports was how to deal with glut offerings of exporting countries. There were administrative difficulties in dealing with these by subsidies.

5. Clayton and Hawkins explained the possibilities of shortening the tariff discussion by bringing all the nuclear countries together for the negotiations and using short cuts wherever practicable. Liesching said he was not suggesting the procedures were such that the UK could not cooperate in them but both he and Keynes stressed the interdependence of tariff and non-tariff restrictions and Stirling was less optimistic on the possibilities of speedy negotiations on tariffs.

6. On two points UK officials took very strong positions (a) the relation of negotiations on preferences to those on tariffs (b) the US proposals regarding export subsidies on commodities in world surplus. On the first Liesching restated in strong terms the objections outlined in Embassy’s 8132 August 11, paragraphs 9 and 10. He said there would be extreme difficulties if preferences were not handled temperately and if they did not appear as part of the tariff negotiations. With concurrence of the other UK officials he said that if they were taken out of that context the results would be very serious on the whole of article VII matters. They should be dealt with by the selective method. The wider tariff cuts went the more could be done on preferences. But within the nuclear group he added they could not agree to all they could have agreed to under a general cut. It was agreed to explore this matter further.

7. On export subsidies Liesching said the proposal to permit them on commodities in world surplus pending a commodity agreement was almost immoral and inconsistent with the rest of the US proposals. UK did not want the sort of commodity agreement that might come that way.

8. Liesching said US position on commodity policy generally raised no difficulties but that on restrictive practices it differed from position of UK officials who preferred more tentative and empirical approach. He could not predict attitude of the new ministers but UK officials still held the views expressed in paragraph dealing with subject in UK suggested statement of principles.⁸¹ Clayton and Stinebower pointed out inadequacy of this position from US viewpoint and importance given to subject in US.

9. Keynes in a statement of personal views said in his judgment great part of US document would find acceptance in UK which had not departed from its traditional position of desiring free trade. There were however some smaller points involving deep feelings on which care was needed, (a) Preferences had an emotional content and should not be picked out a priori and treated by themselves. (b) Because of certain countries state grading [trading?] was important and some points on it might have to be expressed a little differently but he saw no major difficulty there, (c) The introduction of matter similar to that covered at Bretton Woods was dangerous. It was wiser that this document do not go beyond Bretton Woods, (d) It should not be suggested import programming was only for early special post-war stages. He did not think it could be abandoned in any foreseeable period. Their most favorable figures showed equilibrium for UK 20% less imports than prewar. Necessities must be first charge on limited resources, (e) He regretted absence of reference to shipping subsidies and thought it would help UK to include them. (f) There should be provision to restrain manufacturers from dumping in export markets by selling abroad at less than domestic prices. The receiving country might not use its right to impose countervailing duties and other potential exporters would have no redress.

10. Liesching asked whether document given to UK was to be treated as a diplomatic document requiring formal answer or whether it was open to modification. There would be danger of long delay if such a detailed document were taken up with ministers.

11. Clayton said the document represents a negotiating as distinct from an exploratory stage of discussion and that presumably the UK Govt would want to consider the US Govt proposals and formulate a UK Govt position for the talks in September. In the Washington talks the US paper might be taken as a basis for discussion with a view to reaching agreement on main objectives and how to reach them. The UK could put forward whatever different ideas they might have for example on preferences. He emphasized necessity for speedy procedure.

12. Clayton proposed that in view of the need for rapid progress the US and UK should be free prior to reaching agreement between themselves to explore the subject informally with other countries. Liesching agreed.

Winant

79. J. R. C. Helmore, of the British Board of Trade.
80. Presumably reference is to Proposal D of ECEFP D–104/45, not printed; for text of accompanying memorandum as well as an explanation of Proposal D, see p. 74.
81. Reference is to the British statement, text of which was transmitted to the Department in telegram 6548, June 28, midnight, from London (not printed). For discussion of this British statement, see telegram 6547, June 28, midnight, p. 56.