840.50/1–2445: Telegram

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

834. Hawkins and Penrose had a further conversation yesterday with Liesching, Eady, Robbins, Fergusson and Shackle. The discussion was concentrated on questions of the best procedure for obtaining international action on commercial policy.

1. The UK officials compared the multilateral approach with the bilateral and multilateral-bilateral approaches. While appreciating the complexities of the first approach, they believe that the last two approaches have such serious disadvantages that they should only be [Page 16] considered as a last resort in the event of a breakdown of attempts at the multilateral approach.

They point out that in the bilateral approach concessions are narrowed down because of the obligation to generalize them under the MFN37 principle. Second, the principle of “equivalence of concessions” raises difficulties. Efforts had been made after 1860 and to some extent in the 1920’s to get around these difficulties by trying to negotiate a string of bilateral agreements. But the results were largely destroyed by subsequent depressions. In any case, this approach failed to meet satisfactorily the objections to the pure bilateral approach. In addition, since an early US–UK agreement would be necessary under the bilateral or multilateral-bilateral approach, and preferences would be a major issue in such an agreement, the UK at an early stage would have to make concessions on preferences which would at once be made general. Consequently, when UK negotiated later with other countries it would not be able to get concessions in return for this.

2. Therefore, UK officials have come to the conclusion that the best procedure is to start with a statement of principles and attempt to get international agreement first on the principles and second on the establishment of an international organization charged to translate them into a detailed convention.

The UK will press strongly for a statement of general principles as the first step. On political grounds they are opposed to the presentation of a detailed convention at the start. Liesching emphasized that “not enough air has yet been let in internationally or domestically” on commercial policy. It is essential, he added, to get the subject canvassed here and among the European Allies, both among the public and among industrialists.

The UK officials conceive of the proposed statement of principles, not in the form of vague resolutions in general terms, but as concrete and specific, involving an outline of definite government commitments, and carrying with it the obligation to set up an international trade organization to work out the multilateral framework needed for the application of the principles in detail. To avoid delay they suggest that immediately following international agreement on a statement of principles an interim trade organization should be set up to start this work at once.

3. The following alternatives on the best procedure for initiating such a statement of principles were discussed as possibilities:

An agreed joint statement by US–UK followed by a general conference of the United and Associated Nations.
As in (a), except that the agreement of USSR and France and possibly others would be sought before a general conference was called.
A statement by US alone after informal agreement had been reached with UK and after US had talked it over with USSR and France; followed by a general conference.

It was recognized, of course, that the immediate task is to resolve differences developed in the course of the present talks.

  1. Most-favored-nation.