Foreign Relations of the United States: Diplomatic Papers, 1943, The British Commonwealth, Eastern Europe, the Far East, Volume III

611.4131/2647: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

London, August 20, 1943—midnight.
[Received August 21—4:30 a.m.]

5479. For the Secretary and the Under Secretary. Your 5027, August 19, 6 p.m. We agree entirely with you on the importance of resuming and pressing to a conclusion as quickly as possible the negotiations on the proposed trade agreements with Britain and the Dominions.

The Dominions in their talks here in June argued for early negotiations on the trade pacts but Britain wished, before entering on such negotiations, to take up informally its general proposals for implementation of article 7 in the field of commercial policy outlined in Embassy’s 4355 of July 2.⁷⁴ The compromise reached was that the trade agreement talks should follow quickly on the opening of talks on the implementation of article 7 with respect to commercial policy. At that time however we were not clear what date would be proposed for opening the talks and there seemed to be some prospect that it would be earlier than September.

We believe on the basis of personal conversations here in the last 2 years that the reasons for the apparent lack of interest on the part of the United Kingdom in the trade agreements negotiations have been as follows:

(1) In the critical state of the war in 1941 and most of 1942 Foreign Office circles felt that detailed discussions of tariffs on particular commodities in an uncertain and perhaps distant post-war period were somewhat unrealistic.

(2) Since the signing of the Lend-Lease Agreement there has been an increasing interest in post-war international economic reconstruction, but the Foreign Office and Civil Service generally have been in favor of working out agreements on comprehensive lines on the means of implementing article 7 before going into detailed negotiations on tariffs on particular commodities. This started with the working out of proposals on monetary questions, went on to raw material questions and from late last year extended to commercial policy.

(3) The Department of Overseas Trade and the Board of Trade in the last 8 months have concentrated on the construction of a plan for a commercial policy union on lines indicated in Embassy’s [Department’s] 3683, June 14,⁷⁵ based on proposals originally drawn up by James Meade, an economist in the War Cabinet Secretariat. Their interest and that of the Foreign Office are strongly attached to this plan.

(4) Some of the civil servants in the Department of Overseas Trade and the Board of Trade, while recognizing that substantial gains to the postwar export trade of the Dominions would result from the proposed trade pacts, feel that Britain has less direct interest in the U.S. market from the point of view of exports. They are anxious for a reduction of tariffs on a wider basis which would include other countries in which they believe their export prospects to be greater.

(5) There seems to be a feeling, the basis of which cannot be evaluated here, within some Government and export circles that United States business groups are pursuing a more aggressive policy of advertising and selling than is permitted by the British Government to British businessmen with a view to capturing postwar markets in Latin America. This has directed considerable attention to Latin American markets in Government, parliamentary and export trade circles and tends to increase the tendency noted under (4).

(6) Some of the leading civil servants in the Foreign Office, the Department of Overseas Trade, the Board of Trade and the Treasury appear to underestimate greatly the extent to which trade barriers can be reduced by reciprocal trade agreements with us and between us and the Dominions.

Of these reasons the first has ceased to be important; it is difficult to judge the importance of the fifth; but the second, third, fourth and sixth, undoubtedly remain important.

In view of the Department’s reply⁷⁶ (Department’s 5020, August 19⁷⁷) to the aide-mémoire left by Lord Halifax on August 4⁷⁸ there should be some prospect of reconciling the views outlined under (2) and (3) above with an immediate resumption of trade pact negotiations. As regards the views outlined under (6) it seems possible to demonstrate in appropriate quarters in Whitehall the quantitative importance of the proposed trade pacts as a contribution to the reduction of trade barriers.

To obtain an immediate resumption of the trade agreement negotiations, together with a ministerial directive to the British negotiations [negotiators] to reach agreement within 6 months, it will be necessary to convince certain ministerial circles and their chief Civil Service advisors that we regard the early conclusion of the proposed agreements as a vital part of postwar reconstruction measures, that failure to conclude these agreements promptly would nullify in practice all the efforts that were put into the drive to renew the act in Congress, and that there are substantial advantages to be gained from the agreements by Great Britain and the Dominions. It would also be an effective argument here if it could be said that, so far as British views on the implementation of article 7 in respect of commercial policy might involve wider measures than reciprocal trade agreements, it would be difficult for us to ask Congress subsequently for additional powers on commercial policy if we had not used the powers already given. Would you approve the use of this argument?

In regard to the most effective approach there seems to be some advantage in a preliminary informal sounding out here. The prospects could then be reported and if it did not appear that an informal approach would bring adequate results quickly we would suggest that you send an instruction. We believe that considerable support can be gained here among the Government economists and other civil servants who supported our position within the Government during the article 7 negotiations. Much of the hesitation on the trade agreements arises not from a reactionary attitude on trade barriers but from preoccupation with a somewhat different method of approach to commercial policy, an inadequate grasp of the quantitative significance of the proposed trade agreements, and insufficient appreciation of the fact that governmental implementation of trade agreements will be assured in advance while the wider commercial policy plans, however desirable, will be exposed to the hazards of legislative debate and voting.

Winant

[Specific trade agreement discussions with the British Government continued in abeyance. For informal and exploratory discussions regarding postwar economic policy, see volume I, pages 1099 ff.]

74. Vol. i, p. 1102.
75. Vol. i, p. 1100.
76. ibid., p. 1107.
77. Not printed.
78. Vol. i, p. 1106.