Lot 65A987, Box 99
Minutes of a Meeting of the United States Delegation, Geneva, Switzerland, July 2, 19471
1. Return of Mr. Clayton to Geneva. Mr. Wilcox opened the meeting by asking Mr. Clayton to give the Delegation a summary of his activities in Washington. Mr. Clayton said he returned to the United States to make a determined effort to try to forestall passage of the legislation with respect to wool as it was finally amended by the Committee handling the legislation of the House of Representatives. The terms of the legislation as passed by the Senate would not have affected adversely the negotiations on trade and the ITO Charter now in progress at the Geneva Conference on trade and employment. The Senate version of the Bill continued in effect the price support measures of the war period which amounted to a subsidy paid to domestic producers. However, the House Committee handling the legislation amended the Bill to provide authority for the Secretary of Agriculture to place an import fee of 50 percent ad valorem on imports of wool. However, there was such an outburst of opposition against delegating so much power to a cabinet officer that it was decided to drop the amendment in favor of another placing wool under Section 22(a) of the Agricultural Adjustment Act. During this period Mr. Clayton said he had many conferences with the Senate and House leaders, describing to them the irreparable damage this bill, if passed in that form, would have on the Geneva Conference. However, despite all of his pleadings the Bill passed both houses of Congress with very large majorities. Because of the wide difference between the Senate and House variations of the Bill it was sent to a House and Senate Conferees’ Conference. While before the Conferees, Mr. Clayton, contrary to all previous proceedings, was permitted to appear before that body to state once again the tragic consequences that passage of the Bill in that form would have on the Geneva Conference, particularly at a time when the United States was taking the leadership in freeing the channels of international trade from restrictive barriers. Notwithstanding his pleading the bill was passed by both the Senate and House with small majorities.
[Page 960]Mr. Clayton indicated that he was confident at all times that the President would veto the bill, because, Mr. Clayton said, the President is firmly convinced of the importance of creating the conditions for full restoration of foreign trade upon sound basis as a means of increasing employment and standards of living. Terrific pressure was brought to bear upon the President to sign the bill. Proponents of the measure pointed out that the western farming states, due to political mistakes made by the Republicans vis à vis farm interests were once again back in the Democratic columns. However, the President was told, if he failed to sign the bill those states would revert to the Republicans. Mr. Clayton remarked the passage of the Wool Bill does not reflect a reversion by the American people to the splendid isolationism which followed the last World War, nor did it reflect a reversion to isolationism by Congress. The Bill was sponsored primarily by four groups: (1) Those who are economy minded and wish to safeguard the Treasury against large outlays of money by way of subsidies involved in the price support program in effect during the war. These people wished to transfer the costs of price support to the consumer; (2) Some supported the bill because of their firm conviction in protectionism; (3) Those that saw in the Wool Bill an excellent opportunity to undermine the Geneva Conference; and (4) Those groups of farmers who have become convinced that the subsidy system of aid is not satisfactory because they are never sure when an economy minded Congress might withdraw price support. Moreover, they felt that the payment of subsidies is at its best only a temporary postponement of the problem, and the time has come to seek permanent aids for the wool industry.
2. Marshall Plan. Mr. Clayton remarked that he was sure that many of the members of the United States Delegation had been trying to determine what the relationship might be between the Marshall Plan and the ITO. The two programs complement each other. Under the Marshall Plan the ITO becomes all the more important. Behind the Marshall Plan is a recognition that Europe has a number of extremely difficult reconstruction problems that must be solved in order to open up channels of trade. One of the most pressing of those problems is that of balance of payments. To create the conditions for normal commerce a temporary aid program for Europe had to be developed. Unbelievable damage was done to the economic structure of Europe by the war. Mr. Clayton remarked that the damage is greater than can be imagined. The Marshall Plan, Mr. Clayton said, is based upon two fundamental conceptions. The first one is that European nations must show what they can do individually to help themselves in rebuilding their economic structure; and second what they can do to help each other. In other words, they must draw up a blue print of their needs [Page 961] and indicate to what extent those needs can be met by self help. The United States will aid in the balance.
3. Tariff Negotiations. Mr. Brown gave a brief resume of the progress of the tariff negotiations. He indicated that there are only two items holding up the progress of negotiations with Norway. As soon as those two items namely, apples and sardines were resolved, an agreement with Norway would be concluded. The same thing is likewise true in the case of Brazil and Lebanon. Mr. Brown reported that yesterday China had finally offered the United States concessions on two important items which up to this time they had been unwilling to do. The United States was very much interested in those two items since they constituted a very large part of our total trade with China. Those two items are leaf tobacco and raw cotton. Mr. Brown further reported that negotiations with the Southern Dominions was at an absolute standstill because of wool. As soon as the wool question has been finally settled, he said, negotiations will recommence and will be brought to a successful conclusion. India, he said, is very well pleased with our offers and the major obstacle in the way of concluding an agreement within a short time is due to two facts: (1) that the United States is not satisfied with the offers made by India; and (2) the political situation arising in connection with Indian independence has been a handicap to the Indian Delegation in improving their offers. Mr. Moline, however, is pressing the Indians hard both with respect to improve the offers made to the United States and to speed negotiations. Negotiations with France have been more or less in deadlock because of the new French tariff increasing all rates of duty compared to the prewar tariff. The French wish to negotiate on the basis of the new tariff, whereas the United States insists that negotiations should be conducted on the basis of the old tariff. It is hoped that real progress will be made this week. In the case of Cuba the preliminary work has been done and the team is evaluating the results. Cuba wishes to raise tariff rates on some important items in the United States trade relations with that country. The United States is resisting this endeavor. Conclusion of an agreement with the United Kingdom has been held up because of the wool question, but as soon as that question has been resolved negotiations will proceed rapidly. Negotiations with Belgo-Luxembourg are somewhat slow in getting started because of the new tariff structure which required United States to recast its requests. That was a difficult arduous undertaking. Recasting of the United States request list has been completed and negotiations are now proceeding rapidly with much satisfaction on both sides. The Czechoslovaks are not very forthcoming in their offers to the United States or to others.
4. Charter Negotiations. Mr. Wilcox remarked that we have undertaken the most complicated set of international negotiations in the [Page 962] history of mankind. There are no less than 100 sets of negotiations among the 18 countries participating in the Geneva Conference proceeding at the same time. One should not be disturbed, therefore, Mr. Wilcox remarked, that three months have passed without the signing of a single agreement. It should not be forgotten that the trade agreement concluded in 1938 with the United Kingdom required 11 to 12 months to negotiate. Here we are negotiating with 17 other countries all at the same time; and those same 17 countries are negotiating among themselves also at the same time.
Mr. Wilcox said that the work on the employment, commercial policy, investment and cartel sections of the Charter are virtually complete. The work on all other Chapters is well under way. Mr. Wilcox informed the Delegation that the United States negotiators have succeeded in having amendments to the Charter adopted to meet practically all of the suggestions made by the Senate Finance Committee, by the Foreign Trade Council, by the National Association of Manufacturers, by the International Commerce Commission and by the various interested parties who appeared at the public hearings on the Charter held in various cities throughout the United States. No changes, Mr. Wilcox said, have been made in the substance or patterns of the Charter. The changes that have been made relate to matters of detail. Mr. Wilcox further informed the Delegation that there are a number of serious problems still ahead of us; the most serious of which is the one dealing with the continuous assaults that are being made from all sides upon the controls developed at the London Meeting dealing with the use and imposition of quantitative restrictions. Mr. Wilcox remarked that the United States reluctantly accepted at the London meeting two compromises with respect to the use of quantitative restrictions because it was necessary to recognize certain realities. But the instances under which quantitative restrictions may be imposed must be kept at an absolute minimum. It was agreed at London to permit countries to introduce quantitative restrictions on imports in cases of balance of payments difficulties. But the amendments which have been offered at the Geneva Conference are designed to whittle away all controls relating to the use of quantitative restrictions which are now provided for in the Charter. One of the most difficult compromises developed by the drafting committee at the London Meeting was the concession in favor of backward and underdeveloped countries. Under the terms of the compromise worked out in London a country could petition the ITO for permission to increase tariffs to institute tariffs, or to impose quantitative restrictions for a period of time for good cause shown. There is now developing a mounting drive, Mr. Wilcox said, against the requirement in the Charter that before a country may impose quantitative restrictions prior permission must be obtained [Page 963] from the ITO upon a showing of a bona fide need for such action within the provisions of the Charter. What these countries want is an absolute free hand to impose quantitative restrictions without prior consultation with the ITO. Mr. Wilcox said that the obligation imposed by the Charter that prior international approval must be obtained to impose quantitative restrictions is something new in international affairs. This issue is a fundamental issue on which the United States can give no further ground. It was pressed vigorously in London. The same countries that pressed the matter at the London Meeting are pressing it in Geneva using the same arguments. The attack is made on all provisions of the Charter susceptible of amendment weakening existing controls. Among such provisions are: state trading, economic development, and balance of payments. The countries that are leading the fight are New Zealand, Cuba, China, Chile, India and Czechoslovakia.
The Geneva Conference, however, has an important feature distinguishing it from the London Meeting. In London the United States presented a draft Charter developed and worked out by experts of the various United States Government departments having responsibility of one kind or another in matters dealing with foreign trade. Consequently, the United States was constantly on the defensive in London. Here, however, the Conference is dealing with a draft that is the result of two international meetings, namely, the London meeting and the meeting in New York of the Drafting Committee created by a resolution adopted at the London meeting. Consequently, the United States can take the aggressive in the Geneva Conference. The United States is receiving excellent support from many countries, but notably from Belgium, the Netherlands and Canada. Mr. Wilcox indicated that if he might be permitted to venture his own opinion the United States will ultimately win its fight against any impairment of the controls presently provided for in the Charter to cover imposition of quantitative restrictions. In fact, if the issue is forced to a vote showdown the vote will be 11 to 6 in favor of the position taken by the United States.
There are a few other difficult problems facing the conference. One is the voting procedures of the ITO. That issue was postponed primarily at the request of the United States until the substantive provisions of the Charter are clearly defined. Mr. Wilcox indicated that if no agreement can be reached on that issue the World Trade Conference will have to decide the problem. Another difficult problem deals with the admission of non-members. Some of the delegates asked that the problem be deferred and be presented for solution at the World Trade Conference. Others have suggested that the ITO be instructed to draw up rules and regulations for the admission of the new members because at this stage it is not known who may become members. Some of the [Page 964] delegates fear the situation that may develop if Russia does not join the ITO; others fear what may happen if Argentina does not join. However, at a subcommittee it was decided to tackle that problem in Geneva on its merits and to present to the World Trade Conference three alternative drafts.
5. Termination of the Conference. Mr. Wilcox informed the delegation that according to the present schedule the work on the Charter should be completed by the 31st of July, and all of the editorial work by August 15. He remarked that the work on the Charter could be completed by those dates. Termination of tariff negotiations are scheduled for August 15, and all editorial work scheduled to be completed by September 1. However, Mr. Wilcox remarked this might be a bit optimistic. Some of the Delegation may have to remain in Geneva until September 15 to finish the work of the Conference.
6. Place and Date of World Trade Conference. Mr. Wilcox announced that at a meeting of the Executive Committee held yesterday afternoon the date of the World Trade Conference was definitely scheduled for November 21. The place of the Conference is to be somewhere in the western hemisphere, probably Havana. A suggestion was made by the Chairman of the Netherlands Delegation to hold the Conference in Havana. That suggestion was quickly seconded by Chile, and more than half a dozen delegations from the other countries. Finally the Chairman of the Cuban Delegation read a prepared statement to the effect that he had been instructed by his Government to extend an invitation to hold the World Trade Conference in Havana.
- The entire Advisory Staff was also present.↩