Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 1

841.00/4–2154

No. 438
The Government of the United Kingdom to the Government of the United States

secret

[London, April 1954?]¹

The Collective Approach to Freer Trade and Currencies

1. In 1953, the United Kingdom Government presented to the United States Administration a Memorandum dated February 10, on Freer Trade and Currencies.² The proposals in that Memorandum emerged from the Commonwealth Economic Conference in December, 1952³ and were again endorsed by Commonwealth countries at the Sydney Conference in January, 1954.⁴

2. The proposals in the United Kingdom Memorandum referred to above constituted a coordinated and comprehensive whole: they were, however, not put forward as cut-and-dried propositions but rather as a basis for exploratory discussions with other countries in order to see how far international agreement could be secured on the main purposes and features of the proposals.

3. The United States/United Kingdom discussions in Washington in March, 1953 did not go beyond a general survey of the Commonwealth proposals.⁵ In the Communiqué issued at the end of these discussions, however, it was stated:—

“The Government of the United States will undertake, and continue over the next several months, an intensive examination and review of the general subjects discussed at the present meetings, including the suggestions resulting from the Commonwealth Economic Conference, and possible alternative suggestions, in order to arrive at a sound judgment with respect to the specific courses of action which might be taken.”⁶

Since then there have been occasional discussions at various levels between the United States and the United Kingdom on certain general and particular aspects of the Collective Approach. The United Kingdom Government would welcome now a systematic and detailed exchange of views at the official level with the U.S. Administration in order to ascertain how far the Commonwealth proposals on particular aspects of the Collective Approach commend themselves to the United States and whether the United States have any alternative suggestions to make, as envisaged in the Communiqué quoted above.

4. The main particular topics which the United Kingdom hope can now be fruitfully discussed are: —

(i) Support Funds for Convertibility.

(ii) Trade Policy and Rules under Convertibility.

(iii) International Organizations.

(iv) Exchange Rate Policy.

Notes on each of these topics are attached in order to facilitate the proposed discussions.⁷

5. There are other major aspects of the Collective Approach on which further discussions would be desirable at an appropriate time, in particular the European problems arising out of the Collective Approach, and the question of “good creditor” policies.

6. The United Kingdom have always recognized the importance of arranging the advance to convertibility and freer trade in such a way as to minimize damage to the fabric of European cooperation in all its aspects. This was one of the reasons for the “collective” element in the Commonwealth proposals, although this did not imply that an advance must be delayed until every country in Europe is ready to participate. The Commonwealth proposals, as explained to European countries, contained suggestions for the replacement of E.P.U. credits by I.M.F. credit, for the maintenance of liberalization of trade, and for continuing economic cooperation in Europe. United Kingdom discussions with European countries have not, however, yet reached a stage where the United Kingdom Government think it would be useful to discuss this aspect with the U.S. Administration. The United Kingdom believe, however, discussions with the Europeans would be greatly facilitated if progress could be made in United States/United Kingdom discussions of the topics in paragraph 4.

7. The United Kingdom Memorandum of February, 1953 attached great importance to changes in United States policies which would increase the opportunities of the rest of the world to acquire U.S. dollars through trade and investment. As recommendations in this field by the President of the United States are now before Congress, further discussion at this stage would perhaps be inopportune. The United Kingdom will wish at a later stage, in the light of any Congressional action and of the general development in the pattern of United States external policies, to discuss with the U.S. Administration the prospects for a dependable balance in United States payments with the rest of the world.

1. The source text bears the handwritten notation “UK paper—handed in about 1 May 1954.” The only date on the paper is Apr. 21, 1954, which appears on the fourth annex, not printed.
2. Regarding this memorandum, see Document 375.
3. Regarding this Commonwealth Conference, see Documents 371 and 372.
4. Regarding the Sydney Conference, see Document 427.
5. For documentation on the U.S.–U.K. talks, held at Washington, Mar. 4–7, 1953, see Documents 375 ff.
6. See Document 391.
7. None of the four annexes is printed.