840.50/4–245
The Deputy Director of the Office of European
Affairs (Hickerson) to the
Canadian Ambassador (Pearson)
Washington, April 7,
1945.
Dear Mike: You may recall that when Norman
Robertson74 and you had a discussion
with Harry Hawkins and me some weeks ago we promised to send Norman
the views of our experts on the British proposal [Page 32] with regard to agricultural policy
clauses in connection with the proposed multilateral approach for
the reduction of trade barriers.75
I now enclose two copies of this memorandum. Will you be good enough
to send a copy to Norman. I am sure that Norman and you will
appreciate the tentative and informal charager [character] of the views expressed in this memorandum.
Yours sincerely,
[Enclosure]
Some Views of United States Experts on the
British Proposal With Regard to Agricultural Policy Clauses
of a Multilateral Agreement for the Reduction of Trade
Barriers
- 1.
- It is understood that the British are giving serious
consideration to a proposal that, in an international
agreement for reducing trade barriers, contracting states be
permitted to deal with special problems of agricultural
price or income support, affecting a list of “primary
foodstuffs” to be set out in the agreement, by any methods
of intervention they wish to use, provided:
- (a)
- that their domestic production of these
commodities does not exceed Y percent of a pre-war
base; and
- (b)
- that their domestic (presumably wholesale) market
price of these commodities does not exceed the world
market price by more than X percent, the values of X
and Y to be negotiated and specified in the
agreement. If a state’s production of a commodity
were to rise beyond the Y level of the agreement,
the government would be obliged to modify its
intervention accordingly.
- 2.
- The following observations appear to apply to this
proposal:
- (a)
- It recognizes that provisions that will permit
agricultural support policies must be included in
the multilateral agreement.
- (b)
- It suggests that importing countries must be
permitted to maintain a certain level of
agricultural production even though, to the
disadvantage of exporting countries, this probably
would result in the trade barriers on certain
agricultural products being reduced by the agreement
to a smaller extent than trade barriers on other
products. Moreover, it would seem impracticable to
negotiate with regard to a separate list of products
for each country or a single list for all countries
and, therefore, a formula would undoubtedly have to
be developed [Page 33]
that would be generally applicable wherever certain
definable conditions are met; e.g. a provision,
applicable to any product, under which a country
could, provided it restricted its production to a
fixed agreed on percentage (say 75% or 100%) of
production in a specified period, use whatever trade
barrier it wished provided the domestic price of the
products did not exceed the world price by more than
an agreed-on percent. In this connection, a problem
arises because of the fact that some importing
countries had pushed their pre-war agricultural
production to uneconomic levels to a much greater
degree than had others.
- (c)
- It does not seem to envisage the possibility of
eventual adjustment of importing-country production
toward economic levels when generally improved
international conditions may permit.
- (d)
- It leaves open the possibility for world prices of
important agricultural products to be driven to
abnormally low levels by competition among exporting
countries for what remains of the market after the
supported production in the importing countries has
been absorbed.
- (e)
- If it were applied to exporting countries, the
British proposal would involve export subsidies
equivalent to the value of the X percentage.
