Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

70. Letter From the Minister for Economic Affairs in the United Kingdom (Brown) to John M. Leddy¹

London, August 22, 1956.

Dear John: Eric has sent me a copy of a memorandum which he has done appraising the present status of the GATT which he tells me he has also sent to you. I must say that I think the appraisal is pretty realistic. We have a piece of machinery which we created at enormous effort which we are not prepared really to use after we’ve got it.

The Brazilian problem lies directly within the competence of the GATT. But unfortunately we have, in writing the rules of the GATT, so boxed ourselves in that it is almost impossible to deal with it. As you know, I have for a long time felt that many of the Latin American countries were in a position which could not be sustained indefinitely since they had bound a wide range of very low tariff rates which they would have to raise for revenue purposes if for no other reason.

Eric is quite right in feeling that we would probably be better off if these countries had slightly higher tariffs and could be induced to rely on the tariff and decrease their reliance on quotas and exchange manipulations. I confess I don’t know the answer to this problem, but I would hate to see us continue to be in a position where our own rules keep us from achieving a result which we might consider to be substantively desirable.

Eric is also quite right about our lack of use of the GATT on quotas. It has now become apparent that a lot of countries, in Europe at least, are using quotas for protective reasons which are not justified on balance of payments grounds. But the Contracting Parties haven’t done anything about it and in fact haven’t even complained. I am glad to see from a Position Paper of the TAC, No. D–170/56 of August 13,² that we are beginning to see if we can’t do something about this because I should think that if we could get some effective results it would greatly strengthen the GATT at home and help keep it from withering on the vine as Eric feels it will.

Eric said that he had some very useful talks with Frank Southard on this subject and came away hopeful that we might be able to work out something with the Fund that would permit attack on these protective quotas without necessarily raising the issue of Article XIV.

In all these issues and most of the others mentioned by Eric, our position is decisive.

I understand there is a possibility that you might go along with the Boggs sub-committee³ on their trip. I certainly hope you do. It would be extremely helpful to them and very valuable for the Department. Also it would give us a chance to see you.

Sincerely yours,

Win

1. Source: Department of State, Central Files, 394.41/8–2256. Personal and Confidential.
2. Not found in Department of State files.
3. The House Subcommittee on Customs, Tariffs, and Reciprocal Trade Agreements, established in July 1956 under the chairmanship of Congressman Hale Boggs (D–La.), was preparing an extensive study trip to Europe and Japan in late November and early December 1956.