Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

80. Memorandum From the Assistant Secretary of State for Economic Affairs (Mann) to the Deputy Under Secretary of State for Economic Affairs (Dillon)⁰

September 18, 1958.

SUBJECT

• Strengthening of the GATT

Problem:

Pending a decision by the Administration on whether to press for Congressional approval of U.S. acceptance of the OTC Agreement, it is highly desirable for the United States to seek and support practical measures for achieving essential OTC objectives.

Discussion:

Although the session of Congress beginning January 1959 is probably the most favorable time in the foreseeable future to press for Congressional approval of the OTC Agreement, there are several persuasive arguments against such a course of action:

1. It would take a major Administration effort, probably out of any reasonable proportion to the substantive importance of having the OTC.

2. Failure after such an effort would be a major setback for the Administration’s trade program both domestically and abroad.

3. It may be difficult to continue to argue convincingly that the OTC is essential for administering the GATT.

4. Other countries recognize the limited scope (in a practical sense) of the OTC, as negotiated, and its symbolic value as an indication of U.S. leadership has greatly diminished.

It will be necessary to reassess the Administration’s position of support for the OTC in the light of these and other factors, including the composition of the new Congress. Meanwhile, however, it is highly desirable for the United States to be able to seek and give active support to other means of achieving the essential objectives of the OTC, i.e., strengthening of the operation of the GATT and placing U.S. acceptance of the GATT on a firm and permanent basis.

The major weakness in the present operation of the GATT is its unwieldiness through lack of a continuing organization and the current practice of conducting its main business through a single annual session of the Contracting Parties. But this weakness could be very substantially overcome by increasing the frequency of meetings: say, quarterly working-level meetings to dispatch current business and a brief (two weeks) annual session with high-level (Ministerial) representation to deal with major problems and policy issues. This plan would undoubtedly involve some strengthening of the permanent representation of Contracting Parties in Geneva, but the additional cost would be small. For example, smaller or poorer countries could use members of their missions at nearby posts for most of this expanded program. The United States should propose or support such a plan and be prepared to strengthen its own GATT representation as may be required.

A second major step would be U.S. definitive acceptance and application of the GATT, which in itself would have a significant strengthening effect in placing U.S. support of the GATT on a firm and permanent basis. Indeed, such an act of positive U.S. leadership would probably go far to offset any adverse repercussions abroad of a possible change of Administration policy regarding the OTC. Maximum impact would be obtained by announcing U.S. definitive acceptance of the GATT at the 13th Session, preferably in a speech at the meeting of Ministers.

The principal effects of definitive application of the GATT would be the change in formal status of application and the requirement of six months’ written notice of withdrawal, as compared with the sixty days’ written notice in the present situation of provisional application. In addition, definitive acceptance would have to be accompanied by a reservation to the effect that Part II of the GATT would be applied to the fullest extent not inconsistent with legislation in existence on the date of provisional accession (October 30, 1947). There would also be an annual review by the Contracting Parties of the extent to which such inconsistencies might have been eliminated, although there would be neither obligation nor commitment to eliminate inconsistencies.

Recommendation:

That you approve and authorize the following course of action:

1. Propose or support an expanded program of working-level meetings of the CPs to dispose of current business, with one brief high-level session each year on major problems and policy issues.

2. Call on other CPs to strengthen their representation at Geneva sufficiently to join meaningfully in such a program and be prepared to strengthen U.S. representation as may be required.

3. Announce at the Ministerial meeting that the United States is prepared to accept the GATT definitively.¹

0. Source: Department of State, Central Files, 394.41/9–1858. Confidential. Drafted by Alfred E. Pappano, Chief of the Commercial Policy and Treaties Division, Office of International Trade; cleared with L/E, TA, H, OT, and W; and initialed by Mann. The following typewritten notation appears beneath the clearance for H: “The Senatorial advisors to GATT Conf should be carefully briefed on this.”
1. Dillon initialed his approval on September 19. A typed notation beside his initials on the source text reads: “but should be checked out with Commerce. CDD”.