840.50/7–1544: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received 6:23 p.m.]
5604. For those concerned with Article VII discussions. No. 11 of the series. Embassy’s 4782 of June 15 should have been numbered 10. After further conversations with civil servants concerned with [Page 56] Article VII questions, we have the following comments to make on the matters raised in Department’s 4984, of June 24, 6 p.m.
- 1.
- The deadlock on commercial policy is a deadlock within ministerial circles which, because of the Prime Minister’s desire to maintain Cabinet unity, causes complete ministerial inaction. This in turn creates a deadlock between the civil servants and the Ministers because the former are willing and anxious to resume Article VII discussions promptly.
- 2.
- The split in ministerial circles appears to be most acute in relation to postwar agricultural policy and imperial preference. Cartels are a third but less important area of controversy.
- 3.
- The extreme agricultural group wishes to apply practically all forms of protectionism to United Kingdom agriculture with a view to maintaining most wartime increases in cultivation and expanding beef cattle. In the opinion of opponents of agricultural protectionism, extreme views are unlikely to prevail but can only be countered successfully by concessions in the matter of subsidies and by emphasis on nutrition policy. If the Department feels that in future talks, it can relax pressure for a fixed ceiling on subsidies and trust to the taxpayer as a safeguard against extreme subsidization, it would be easier to reach agreement on this point. United Kingdom servants are not themselves opposed to a ceiling on subsidies but they believe it is impracticable to get political circles to accept it.
- 4.
- Obstacles to the elimination of preferences come mainly from two sources. First, there is political sentiment for Commonwealth unity. Second, there is an economic argument as follows: The elimination of preferences must not be achieved by raising the rate to countries formerly receiving the preferential rate. Therefore, Britain would stand to lose on its exports to Empire countries, which amounts to a substantial proportion of its total exports. The United States would experience no such losses. Similarly as regards imports, United Kingdom would drop protection in respect of (1) the reduction of the non-preferential to the preferential rate; (2) the reduction provided by say the 50% general cut in tariffs.
- United States would drop protection only or mainly in respect of (2).
- 5.
- We have previously pointed out in this series of messages that the British have only recently begun to give serious consideration to cartel questions and that their views are still in an early stage of development. Lately, however, there have been two new tendencies. British press and public opinion is taking an increasingly unfavorable and in some cases hostile view of cartels. Second, Beaverbrook75 and his newspapers have been making particularly vigorous attacks [Page 57] on cartels. The precise motives behind Beaverbrook’s attacks are not quite clear but some civil servants who are generally opposed to his views think that on cartel questions his position may be helpful.
The confidential views of British civil servants who in general personally support our position on cartels is that it will not be possible to obtain acceptance here for the whole series of provisions set by the United States members in the document on the Article VII talks in Washington. They think, however, that a start could be made by adopting (a) stringent provisions on publicity, (b) provisions for international machinery under which each country could bring complaints relative to specific practices before an international body.
They consider that prohibitions and regulations of specific practices would then grow out of this international machinery.
- William Maxwell Aitken, Lord Beaverbrook, British Lord Privy Seal and publisher of the Daily Express and Evening Standard.↩