Executive Secretariat Files

Briefing Book Paper

Discussions Concerning Post-War Trade Policy

(Article VII of the Mutual-Aid Agreements)

Summary

In Article VII1 we and the British and the Russians pledged ourselves to early agreed action to reduce trade barriers as part of a broad program to maintain high levels of employment and expand the production, consumption and exchange of goods.

The pledge on trade barriers was put in Article VII because it is essential to all the rest: to carry out our own and Britain’s full employment programs, to assure the success of the Monetary Fund and International Bank, to make possible eventual repayment of the large loans we will need to extend, directly and indirectly, to the rest of the world.

Unless we and the British get together urgently, while the political and trade situation is favorable, on adequate measures in the field of commercial policy (including cartels and commodity arrangements), there is grave danger that our whole foreign economic program may be undermined. While satisfactory exploratory talks on a commercial-policy plan were held with the British (on the technical level) in late 1943, the British have not appeared eager to resume discussions.

We are convinced that unless you bring your strong personal influence to bear on the Prime Minister and urge him to get these discussions started promptly, on the ministerial level and on a more definitive basis than those held earlier, the British cabinet will continue to postpone these matters indefinitely. This would be fatal to all our hopes.

To date, the Russians have not accepted any of our invitations to conduct exploratory Article VII conversations. We are prepared to hold such exploratory talks immediately and when we are ready to have formal discussions with the British we will be in a position to schedule formal discussions with the Russians and others.

Recommendations

It is strongly recommended (1) that you point out to Mr. Churchill and Mr. Stalin your personal interest in, and the critical importance and urgency of, commercial-policy measures to implement Article VII; and (2) that you urge them to facilitate the necessary inter-governmental [Page 326] discussions preparatory to a United Nations international trade conference.

Discussions Concerning Post-War Trade Policy

(Article VII of the Mutual-Aid Agreements)

The status of post-war trade discussions with the British and Russians is as follows:

With the British

Informal and exploratory Article VII conversations, covering trade barriers, commodity arrangements and cartels, were held with British experts over a year ago. Although these talks have not been resumed, our Economic Counselor at London is currently sounding out the direction of recent British thinking on the various topics.

When discussions are resumed, they should be on a more definitive and formal basis than the exploratory talks in 1943. What is needed now is a meeting between full delegations, headed by persons of ministerial rank (Mr. Clayton for the U. S. delegation), which will be in a position to speak authoritatively with regard to the policies which their respective governments will support in wider United Nations discussions and before their legislatures.

With regard to the position of the United States in these discussions, the President has already approved the policy recommended by the Executive Committee on Economic Foreign Policy with respect to intergovernmental commodity agreements. The President has also received from the Executive Committee a tentative statement of policy with regard to international cartel practices. The Committee now has under consideration detailed proposals dealing with trade barriers and it is expected that recommendations can be submitted to the President shortly.

Renewal of discussions of these matters with the British as soon as possible is of the greatest importance. However, there is reason to believe that the British cabinet will be reluctant to give the necessary clearance, primarily because of the opposition of a few members to the trade-barrier objectives of Article VII and because of the failure to perceive that these objectives are an essential and integral part of the broader plan, set out in Article VII, for measures “directed to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods.” It is believed that even though the majority of the cabinet may be favorable to these discussions, they are unlikely to make a strong stand unless they are convinced that the United States objectives in the trade barrier field are not limited to the State Department but are also shared by the President and have [Page 327] an important place in his general economic program, and unless the Prime Minister, who has been preoccupied with war and political problems, gives the matter his personal attention.

With the Russians

Although we have issued repeated invitations, we have made no headway in getting together with the Russians, even on an exploratory basis. We are ready to have exploratory talks with the Russians now, at the technical level. When we are ready to have formal discussions with the British we will also be in a position to schedule formal discussions with the Russians and others.

Recommendations

1. It is recommended that the President express to Mr. Churchill his strong personal interest in Article VII and that he stress with him the critical importance of early discussions between ourselves and the British, on the more definitive basis indicated above, in preparation for a United Nations trade conference. It is recommended that the President urge upon Mr. Churchill the view that action in the trade-barrier field is essential to the attainment of all our other mutual economic goals: of maintaining high levels of employment here and in other countries, which we, for our part, are determined to do; of assuring, through the International Bank and otherwise, the capital assistance necessary to the adequate development of the world’s resources; of helping the devastated areas to get back on their feet and go forward to increased levels of production and consumption and better living standards. These programs mean that the United States will be called upon for substantial credits to the rest of the world. The only way these credits can be justified is by making their eventual repayment possible through increased opportunities for trade. It is obvious that the United States cannot reduce its trade barriers unilaterally—action must be on the joint basis contemplated in Article VII. If that action is to be taken, on the necessary broad scale, it must be taken soon while the political and trade situation is favorable to it. If we delay too long the favorable opportunity which now exists may be lost, and the experience after the last war may be repeated.

2. It is recommended that the President endeavor to obtain the agreement of Mr. Stalin to go forward promptly with exploratory Article VII conversations at the technical level, pointing out to him that we have already had such talks with the British and Canadians and are preparing for more definitive discussions with the British.

  1. i. e., Article VII of the Lend-Lease Agreements. For the text of the Master Lend-Lease Agreement between the United States and the United Kingdom, signed at Washington February 23, 1942, see Department of State Executive Agreement Series No. 241, or 56 Stat. 1433.