641.6231/190
The British Board of Trade to the American Embassy in the United Kingdom 82
Memorandum
Mr. Oliver Stanley has considered Mr. Kennedy’s memorandum of 23rd March83 and is glad to have the opportunity of explaining the origin and purpose of the recent negotiations between the British and German industrial groups.
His Majesty’s Government were receiving frequent and growing complaints from British trade interests of competition from their German competitors, particularly in export markets. These interests represented that it was impossible for them to maintain their trade against competition which was subsidised and backed by the whole resources of the State; they urged that competition of this character constituted an entirely new problem and that they were entitled to look to the protection and support of His Majesty’s Government both in the home and export trades in meeting it.
His Majesty’s Government could not but accept these arguments. They were reluctant, however, to contemplate extending assistance of a similar character to British export interests, with all that this course might entail. They were also of opinion that efforts for the reduction of barriers to trade generally were nugatory so long [Page 111] as the uncertainties created by subsidised exports persisted. Accordingly, they pointed out that it was equally in the interests of German and British exporters that unhealthy competition should be eradicated. There emerged the programme of discussions between the industrial groups which culminated in the Joint Declaration signed at Dusseldorf. As Mr. Kennedy is aware, Mr. Stanley has expressed the opinion that action on this Declaration should be suspended in present circumstances.
Mr. Kennedy refers to paragraph 8 of that Declaration. In the understanding of His Majesty’s Government the last sentence of that paragraph is intended to meet the obvious criticism (as set out in the first sentence of that paragraph) to which the Declaration is open, and tacitly admits that the industrial groups are not themselves in a position to deal with this contingency. His Majesty’s Government would naturally give sympathetic consideration, within the general spirit of the Declaration, to cases where the legitimate efforts of industries in two or more countries to develop trade in accordance with the general principles of the Declaration were frustrated by the position taken up by the corresponding industry of some other country, particularly as the result would be to impede that reduction of undue barriers to trade which they have constantly at heart. Such cases would, of course, be considered on their merits and any action would be in harmony with those common principles of commercial policy which were so happily reaffirmed in the recent Trade Agreement between the two Governments. Indeed the general purpose was to restore trade to a healthy basis and so facilitate the reduction of trade barriers instead of allowing a general deterioration in the conditions of international trade.
It is known that what was particularly in the mind of the Federation of British Industries when paragraph 8 was drafted was the position in the United Kingdom market. The German Government had asked for reductions or stabilisations of United Kingdom Customs duties on various classes of goods which Germany exports to the United Kingdom. It had been pointed out to the German Government that some of these duties had been imposed following complaints of excessive imports of low-priced and possibly subsidised goods from Germany, and that if the cause of those complaints could be removed the difficulty of stabilising or reducing duties would be lessened. Some United Kingdom and German industries thought it might well be possible to make arrangements between themselves which would give assurance against undue competition in this market from German goods but they feared that if the United Kingdom Customs duties were in consequence reduced or fixed at a low level there might, as a consequence, be an increase of low-priced or subsidised imports from [Page 112] other countries. Such imports would, of course, be imported at the low or reduced rate of duty and it was to meet such circumstances that the industries proposed to seek the help of their Governments.
Mr. Stanley will bear in mind Mr. Kennedy’s suggestion that His Majesty’s Government should reiterate their policy of working for the lowering of tariff barriers on most-favoured-nation lines. At the same time, it is, of course, desirable to take into account the danger of making any statement which might have the effect of extending the present political tension to the commercial sphere. He would be happy to discuss the matter further with Mr. Kennedy at any time.