840.50/2–545: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received February 5—4:11 p.m.]
1260. After further personal discussions foreshadowed in the last sentence on [in] the fifth paragraph of section 238 of Embassy’s 725, [Page 19] January 20 it has become clear that in the United Kingdom agricultural proposals subsidies are not treated in a precisely parallel manner with quotas and tariffs. The concept of protection in the definition of the symbol X given in the second paragraph of section 2 of the above message should be defined as follows:
Let X equal the permitted protection, which is the degree of protection by tariffs or quotas or both required to maintain the permitted excess of domestic price over the average world price in the base period.
“Domestic price” is conceived of as the price at the consumer and not the producer end.
It follows that in this context subsidies are not to be regarded as “protection” and this should be kept in mind in interpreting the third paragraph of section 239 of the message cited above. The term “protectionist measures” there used means tariffs and quotas but does not include subsidies. Thus, if in given conditions P equalled X but Q were less than Y there would be no ban on raising Q to Y by means of subsidies though there would be a ban on raising it by tariffs or quotas.
This renders invalid the second sentence in paragraph 5 of section 2 of the message cited.40
Please bring this message to the attention of Hawkins and Steere when they arrive.
- Evidently telegram 725 was paragraphed differently on receipt in the Department than when sent from London. As herein printed, the reference is to the last sentence in the fourth paragraph of section 2, p. 14.↩
- As herein printed, the reference is to the second paragraph of section 2, p. 13.↩
- As herein printed, the reference is to the second sentence in paragraph 4 of section 2, p. 14.↩