841.24/720: Telegram
The Ambassador in the United Kingdom ( Winant ) to the Secretary of State
[Received 8:35 p.m.]
4059. For the Secretary and Under Secretary. The day following receipt of your 3466, August 28, 7 p.m., I discussed the question of the modifications you asked for which required amendments to the Chancellor’s statement forwarded in my 3310 and asked for their acceptance. At the Chancellor’s request, I sent him a letter containing the amendments and the substance of the Department’s interpretative comment. He asked for time for consideration and consultation. On September 2, I received a letter from him which read in part as follows:
“My colleagues and I have considered these amendments and subject to the drafting points which I mention below we are glad to accept them.
On the amendment to paragraph 4, I have no comments to make. We agree with it entirely.
The amendment to paragraph 2 is entirely satisfactory when read together with your comments on it; but, owing to the fact that in the case of some commodities, such as cotton, I regret that segregation is completely impossible, we feel that, unless the qualifications which you propose is incorporated in the text itself we run too near the risk of undertaking the impossible. I therefore suggest that paragraph 2 of the memorandum should run as follows:
‘Lend-lease materials sent to this country have not been used for export and every effort will be made in the future to ensure that they are not used for export, subject to the principle that where complete physical segregation of lend-lease materials is impracticable domestic consumption of the material in question in the United Kingdom shall be at least equal to the amounts received under Lend-Lease.’
We accept the essence of the second amendment but it would not be easy for the Board of Trade to administer it unless it were made a little more precise; and the principle which it embodies is so important that I should like to give it rather more emphasis. I suggest, therefore, that we should leave the end of paragraph 3 as it is, but insert between the revised paragraph 2 and paragraph 3 a new paragraph as follows:
‘His Majesty’s Government have not applied and will not apply any lend-lease materials in such a way as to enable their exporters to enter new markets or to extend their export trade at the expense of the United States exporters. Owing to the need to devote all available capacity and man power to war production, the United Kingdom export trade is restricted to the irreducible minimum necessary to supply or obtain materials essential to the war effort.’”
The Chancellor, and particularly Sir Andrew Duncan, President of the Board of Trade, in agreement with other Ministers, felt that it would be far easier from the British point of view and ultimately create less friction as between the United States and Great Britain if the interpretation in paragraph 2 of your 3466 was made a part of paragraph 1 section 2 as amended.
I believe the second suggested change is simply an effort at precision and to facilitate administration. [Apparent omission] no objection to it. The amendment to paragraph 4 is accepted without comment.
In order to set up a possible alternative to the British position and because I realize that the Department had reason for excluding from the agreement the interpretation of paragraph 1 section 2, I suggested an exchange of notes to cover interpretation of this section. The question of publication of the interpretation was raised. The British would accept the Department’s decision on the matter.
I feel that Duncan is tough but honest and would like to get the negotiations in exact terms and in the open on a practical working agreement so as to minimize friction and misunderstanding on both sides and that he genuinely accepts the moral and military need of restricting “exports to their irreducible minimum necessary to supply or obtain materials essential to the war effort”.
For your convenience I am setting out below the paragraphs under discussion, giving first, the version in the Chancellor’s statement forwarded in 3310, secondly, the suggested amendments contained in 3466 from the Department, and thirdly, the amendments contained in the letter of September 2 from the Chancellor, which is quoted above.
- 1.
- Paragraph 2.
- (a)
- Chancellor’s original statement reads: “No lend-lease materials sent to this country have been used for export”.
- (b)
- Amendment suggested by Department: “Lend-lease materials sent to this country have not been used for export and every effort will be made in the future to ensure that they are not used for export”.
- (c)
- Chancellor’s amended statement: “Lend-lease materials sent to this country have not been used for export and every effort will be made in the future to ensure that they are not used for export, subject to the principle that where complete physical segregation of lend-lease materials is impracticable, domestic consumption of the material in question in the United Kingdom shall be at least equal to the amounts received under Lend-Lease”.
- 2.
- End of paragraph 3.
- (a)
- Chancellor’s original statement: “Materials which are not in short supply in the United States but which we obtain on lend-lease terms will not be used for export in quantities greater than those which we ourselves produce or buy from any source.”
- (b)
- Amendment suggested by Department: “Where materials being provided through lend-lease funds are not in short supply in the United States, the export of similar materials or articles made [Page 30] of similar materials will not be restricted except in cases where such exports compete with American exports. In such cases of competition, every effort will be made to restrict such exports to their irreducible minimum necessary to supply or obtain materials essential to the war effort”.
- (c)
- Chancellor’s amended statement: The Chancellor proposes that a new paragraph shall be inserted between the revised paragraph 2 and paragraph 3 as follows: “His Majesty’s Government have not applied and will not apply any lend-lease materials in such a way as to enable their exporters to enter new markets or to extend their export trade at the expense of United States exporters. Owing to the need to devote all available capacity and man power to war production, the United Kingdom export trade is restricted to the irreducible minimum necessary to supply or obtain materials essential to the war effort”.
- The Chancellor proposes that the end of paragraph 3 shall remain as in the original draft: “Materials which are not in short supply in the United States but which we obtain on lend-lease terms will not be used for export in quantities greater than those which we ourselves produce or buy from any source.”
- 3.
- Addition to paragraph 4.
- (b)
- Suggested statement by Department: “In the distribution of lend-lease goods there will be no discrimination against United States firms”.
- (c)
- The Chancellor’s amended statement: “In the distribution of lend-lease goods there will be no discrimination against United States firms”.
An early decision on this matter would help here.