740.00119 Council/2–2048
The Secretary of State to the Embassy in the United Kingdom
608. Gerdel for Martin.1 Refer your telephone conversations with Hickerson, Lewis and Weiss, and urtel 664, Feb 20.
2. Protocol for m-f-n treatment for occupied areas was suggested not for ITO Charter but for contracting parties of General Agreement on Tariffs and Trade as indicated Deptel 543, Feb. 18. Exact text of such protocol has not been prepared but substance of it has been outlined in attachment to memo from Clayton to Douglas of Feb 11. Both Douglas and Saltzman2 were given copies of memo and attachment prior to their departure for London.
3. The proposed protocol would be of following character:
- (a)
- Contracting parties of GATT having responsibility for direction in Ger, Jap and Korea of matters provided for in GATT, would accept obligations of latter in respect of such areas for which they may have such responsibility, to extent of and for period of their responsibility. Exceptions to this undertaking would be provided to permit (i) measures relating to security occupation forces, (ii) measures pursuant to peace treaties and related instruments in regard to such areas for conclusion World War II, and (iii) measures made necessary, pending conclusion special exchange agreement in accordance with para 6 of Art XV of GATT, by reason of absence of an exchange rate.
- (b)
- In return for above undertaking, those contracting parties of GATT and other countries which might wish to adhere, would obligate themselves to extend benefits of GATT, including m-f-n treatment, to occupied areas.
- (c)
- Protocol or commitment providing such reciprocal treatment would be voluntary and open-end in character in sense that (i) only those contracting parties of GATT which wish to engage in such reciprocal undertaking need adhere, and (ii) such countries as are not parties to GATT but wish to enter into such reciprocal arrangement would be free to adhere.
4. Dept would be agreeable to modifying above proposed protocol so as to confine it to undertaking merely for reciprocal m-f-n treatment as regards trade with occupied areas. For your information such undertaking would not prevent imposition in occupied areas of quantitative restrictions for economic development, though it would require that any such restrictions be imposed on non-discriminatory basis. Hence, if British and French are worried about use of QR’s in occupied areas for economic development purposes, they would [Page 867] seem to be better served by protocol as suggested in para 2 which would apply all of GATT to occupied areas and thus restrict in first instance use of QR’s for economic development.
5. Note that Korea should be included in proposed protocol although inadvertently omitted in attachment to Clayton memo.
6. If protocol is to be obtained at GATT meeting Habana, essential that British and French be brought around by early part next week since GATT meeting scheduled to close Feb 29. If British and French agree in principle, they should instruct their dels Habana who can work out exact text with our del there.
Sent London as 608, repeated Habana as 250.