611.00/2–2053
No. 376
Memorandum by the Secretary of State to the President1
Subject:
- British Proposals on “Trade, Not Aid”
The British Ambassador has given me a memorandum2 setting out in detail the Commonwealth proposals for international action to strengthen the economic underpinning of the non-Communist world through “trade, not aid”.
These proposals amount to a fresh and comprehensive attack on free world economic problems and are clearly of first importance for our foreign economic policy and our mutual defense program. At some stage they would require negotiations between the United States, the Commonwealth and Western Europe. They would also require a fundamental reexamination of our reciprocal trade and related foreign economic legislation.
Stated briefly, the main elements in this program are:
- 1.
- A determined effort by the British and continental Europeans to put their own internal economies on a sound basis.
- 2.
- A determined effort by these countries, over a period of time, to achieve convertibility of currencies and eliminate barriers to trade, including existing barriers to American exports.
- 3.
- Action by foreign countries and by the U.S. to increase the flow of American investment abroad.
- 4.
- Action by the U.S. to liberalize its import policy. This would mean reexamination of our reciprocal trade legislation, “Buy-American” policies, agricultural import restrictions and related trade questions. It would also involve planning large-scale tariff negotiations with a number of countries, including Japan.
- 5.
- Greater financial resources for the International Monetary Fund. This would require us to consider whether the U.S. contribution to the Fund should be increased.
- 6.
- Strengthening existing international machinery on trade and financial matters, principally the Monetary Fund and the General Agreement on Tariffs and Trade (GATT).
As you know, Secretary Humphrey and I plan to discuss these proposals with Foreign Secretary Eden and Chancellor of the Exchequer Butler in March. These talks, of course, will be entirely exploratory and without commitment. As the subject matter is also of interest to a number of other agencies, my staff is now discussing [Page 890] with the Treasury Department and MSA how best to obtain the views of other agencies consistent with maximum security.
The British have emphasized their desire to treat these proposals as Top Secret, particularly in view of certain of the financial aspects.