Foreign Relations of the United States: Diplomatic Papers, 1945, The British Commonwealth, The Far East, Volume VI

Secretariat Files: Lot 122, Box 13148

Memorandum by the Secretary of State’s Staff Committee⁵²

[Extract]

[Washington,] March 5, 1945.

Methods and Procedures for the Expansion of International Trade

The Problem

A decision by the Department is required as to the methods and procedures which it will support in seeking to achieve basic United States objectives in the field of commercial policy. Until a Departmental position has been taken no further progress can be made, either internationally or within this Government with plans now under consideration.

Recommendations

It is recommended that the Department approve the following position:

Methods

1. The United States should seek the agreement of as many nations as possible that the following basic objectives of commercial policy should be jointly pursued:

(a) the maintenance of high levels of employment and income by domestic and international measures;

(b) substantial reduction of import duties, and the eventual elimination of quotas and exchange controls;

(c) the elimination of all forms of discriminatory trade treatment;

(d) the elimination of export subsidies and the regulation of other subsidies affecting commodities that move in international trade;

(e) the elimination of restrictive international private business arrangements;

(f) with respect to such intergovernmental commodity agreements as may be necessary to meet emergency situations with respect to primary products in surplus supply, the establishment of procedures designed to protect the interests of consuming nations, to stimulate demand and to bring about the shifting of production from less efficient to more efficient sources of supply.

2. In order to implement these objectives, the United States should propose and strongly support the negotiation, among as many countries as possible but including at least a nucleus of the major trading nations, of a multilateral commercial-policy agreement along the lines of the draft now under consideration in the Executive Committee on Economic Foreign Policy. This draft is summarized in Annex I attached to this document.⁵³ Briefly it would involve:

(a) recognition of the importance of maintaining high levels of employment and income by domestic and international measures and affirmation of the principle of international consultation on anti-depression policies;

(b) the substantial reduction of import duties by means of a formula applied horizontally to the tariffs of all countries, this formula to be accompanied, however, by an appropriate “escape” clause permitting temporary emergency measures limiting imports;

(c) the elimination of tariff preferences;

(d) the general abolition of quotas, subject to exceptions chiefly of an emergency or transitional nature;

(e) the general elimination of export subsidies and the regulation of other subsidies;

(f) the establishment of suitable principles concerning state trading;

(g) the regulation and eventual elimination of exchange controls by provisions consistent with and supplementary to the Monetary Fund; and

(h) the establishment of an appropriate international trade organization.

3. At the same time, the United States should propose and strongly support the negotiation among as many countries as possible, but including at least a nucleus of the major trading nations, of a multilateral understanding for the elimination of restrictive international private business arrangements, such understanding to be an integral part of the general commercial policy agreement.

4. At the same time, the United States should propose and strongly support the negotiation of a broad multilateral understanding with respect to commodity policy and commodity arrangements, such understanding also to be an integral part of the general commercial policy agreement. It should embody the agreed principles which would govern the institution and operations of particular commodity agreements, including, among others, (a) the principle that the interests of consuming nations must be protected, and (b) the principle that any commodity arrangement should, through measures stimulating demand and shifting production from the less efficient to the more efficient sources of supply, provide for the gradual correction of the abnormal supply-demand situation which necessitated the commodity arrangement.

5. If it becomes clear in the course of negotiations that the agreement of a sufficient number of other countries in respect of any one or more of the measures described above cannot be obtained in an agreement of this kind, an effort should then be made to provide in that agreement for such of the measures as may be practicable and equitable, and to reach agreement that action with regard to the other measures will be taken by some other appropriate means, such as the conclusion of individual, bilateral, trade agreements, on the unconditional most-favored-nation principle.

. . . . . . .

52. This document, SC–55b, was approved by the Secretary of State’s Staff Committee on February 27, 1945. The position herein set forth was to be quickly modified by the developments outlined in telegram 1685, March 5, to London, infra; see also memorandum by Assistant Secretary Clayton to Mr. Hawkins. April 28, p. 45.
53. Not printed.