Lot 65 A 987, Box 104
Memorandum by the Acting Director, Office of International
Trade Policy (Brown) to the Ambassador in the
United Kingdom (Douglas)
[Washington,] February 17, 1948.
This1 will supplement Mr. Clayton’s
memorandum2
to you asking to take up with the British and the French what their
objections are to according most-favored-nation treatment to the trade of
German zones.
We are most anxious to find out what the real British reasons are for
refusing to give this assurance at Habana. The only reason we have been able
to think of is that they wish to be free to direct the exports
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from their part of Bizonia without
being limited by any obligation to give other countries most-favored-nation
treatment.
We feel strongly that we are entitled to know what the British reasons are
for taking the position they have.
[Annex]
Memorandum for Lord Inverchapel3
A situation has arisen at Habana which causes my Government great
concern. The United States Delegation has proposed an amendment to the
draft Charter for an International Trade Organization which would
provide that members, in their administration of the Western zones of
Germany and of Japan, should be subject to the obligations and entitled
to the benefits of the Charter. One of the most important of these
benefits is that of most-favored-nation treatment in tariffs and other
trade regulations. The United Kingdom Delegation has opposed this
amendment on the ground that this is not the appropriate time to discuss
this question.
My Government believes (a) that it is of the
utmost importance that Germany be integrated into the economy of Western
Europe as rapidly and effectively as possible; (b) that it would be contrary to the interests of all of the
occupying powers if any member of the International Trade Organization
should be free to discriminate against the trade of these occupied
zones; and (c) that it will be most difficult for
the Congress and people of the United States to understand why the
Government of the United Kingdom would be unwilling at this time to
undertake a commitment to extend most-favored-nation treatment and the
other benefits of the Charter to these occupied areas, particularly in
view of the fact that the United States is contemplating an extensive
program of aid to Western Europe designed to assist it in a program of
self-help.
On January 23, officers of the Department spoke with a representative of
the British Embassy asking him to impress upon his Government the
importance which my Government attached to its amendment. We have
received a reply that the United Kingdom Government is unable to concur
in the amendment, but no reasons for this position were given except
that it was considered to be premature.4
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I would like to reiterate again the fact that my Government considers it
absolutely essential that there be agreement at Habana on some form of
undertaking that the members of the International Trade Organization
will give most-favored-nation treatment to the products of the Western
zones of Germany and Japan in return for most-favored-nation treatment
of their products by the authorities occupying those zones. My
Government would prefer to see this recognition take the form of
acceptance of the amendment to Article 99 of the draft Charter which it
has proposed, but would, of course, be willing to consider alternative
suggestions along this line.
This question is being debated today at Habana, and a prompt decision is
imperative. I hope you will emphasize this to your Government. I hardly
need mention how unfortunate it would be if the public should gain the
impression that our two Governments were at odds on so important a
question of economic policy with respect to the zones in Germany which
we respectively administer.
