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

611.0031 Executive Committee/7–1645

Memorandum by the Executive Committee on Economic Foreign Policy

[Washington,] July 21, 1945.

Views of the Executive Committee Regarding Draft Tariff Proposals for Proposed Multilateral Agreement on Commercial Policy

The necessity of rebuilding the industries and trade of a wartorn world, and the unprecedented closeness of the present political ties among the leading trading nations, offer an unparalleled opportunity to obtain a large and world-wide reduction of trade barriers. Such a reduction has been a stated objective of United States policy for many years. The present opportunity may exist, however, for only a brief and critical interval.

1. It is understood that the British take the view that if the reestablishment of post-war international economic relations is to be based on a substantial expansion of world trade on a free-enterprise basis, the reduction of trade barriers must be very substantial. They are also understood to take the view that since the world’s economic reconstruction cannot wait, the reduction must be prompt; and that definite assurances are needed at once with respect to the extent of the reduction and the time within which it will be effected.

The British appear to be convinced that these requirements can be met only through a multilateral convention, under which all participating countries agree simultaneously to reduce all of their import duties by a certain percentage. This would also make possible the general termination of non-tariff trade barriers, with appropriate exceptions, as part of the convention.

2. The Committee recognizes that either this multilateral-horizontal procedure, or any other procedure which does not allow selectivity in the reduction of United States tariff rates, would be difficult to negotiate and probably impossible to implement under the Reciprocal Trade Agreements Act as extended.

For the immediate purposes of the impending discussions with the British, therefore, the Committee recommends that the United States urge as an alternative to the multilateral-horizontal procedure, Proposal D, the selective nuclear-multilateral approach.³⁴ It is believed that this proposal comes nearer to meeting the British viewpoint than any other alternatives which are practicable under the present grant of authority by the Congress.

3. If it should appear that there is no practical possibility of acceptance of the selective, nuclear-multilateral proposal by the British, or of some variant which would likewise permit selectivity in the reduction in the United States tariff, the negotiations should still not be terminated. Every possible measure should be explored to take advantage of the present unique opportunity to preserve and strengthen the free-enterprise basis of world trade.

4. The majority of the Committee believes that the multilateral-horizontal procedure, if considered apart from the limitations presently imposed by the Reciprocal Trade Agreements Act, is superior on its merits to all alternatives which have been presented. Should the British refuse to accept the nuclear-multilateral procedure, this would provide an immediate and obvious occasion for reexamining the multilateral-horizontal approach with the Congress.

34. Proposal D was the last of four alternative approaches listed in Executive Committee on Executive Foreign Policy Document 104/45, approved on July 21, 1945, not printed, to which this accompanying memorandum was attached. The nuclear-multilateral approach meant, briefly, that a nuclear group of approximately a dozen countries would agree to negotiate, first, bilateral agreements for selective tariff reductions, and second, an informal, multilateral program dealing with tariff preferences and non-tariff barriers, which program would then be presented at a general international conference to be concluded and made operative among the nuclear group and other nations wishing to participate.