611.0031/9–1145
Memorandum by the Acting Secretary of State to President Truman 23
Subject: Proposal to Establish an International Trade Organization
I am attaching a document entitled Proposal to Establish an International Trade Organization24 which has been approved by the Executive Committee on Economic Foreign Policy.
This document sets forth a program in the field of foreign trade and commercial policy analogous to that provided in the financial field by the Bretton Woods agreements. If you approve, it will serve as a basis for definitive discussions with British officials during the conversations to be held here next week. At a later stage the program would form the agenda for a world conference on trade and employment, to be held early next year if possible.
[Page 118]The proposed trade program contemplates the negotiation among the United Nations of a multilateral agreement containing understandings with regard to:
- a)
- the maintenance of employment,
- b)
- the relaxation of trade barriers of all kinds,
- c)
- the elimination of restrictive private business practices,
- d)
- the principles to be observed in the negotiation and operation of intergovernmental commodity agreements, and
- e)
- the establishment of an intergovernmental agency to discuss trade problems.
The following are the points of main significance from the viewpoint of the obligations which would need to be assumed by the United States:
1. With regard to employment, each nation would agree to take such domestic measures to maintain employment as may be “appropriate to its political and economic institutions.” This pledge is important to insure the cooperation of other countries in achieving our trade objectives. It is in accordance with the Charter of the United Nations which provides that “the United Nations shall promote … full employment.”
2. With regard to trade barriers (Chapter III of the Proposal), it is proposed that certain barriers which are severely restrictive of trade, such as quotas and exchange controls, be eventually eliminated, subject to agreed exceptions, and that certain other barriers, such as subsidies, restrictive state trading, and protective customs regulations of all kinds, be moderated. Discriminatory trade treatment in general would be prohibited.
As a necessary counterpart of these commitments, which primarily affect foreign countries, provision is also made for the substantial and expeditious reduction of tariffs, and the elimination, in so far as practicable, of tariff preferences. The tariff provisions would involve, at an early stage, the broad and substantial use of the authority under the Trade Agreements Act. The specific tariff concessions which we would offer to other countries would, of course, be submitted to you for prior consideration and would be subject to appropriate safeguarding provisions.
The sound growth of our export trade requires that we do away as much as possible with systems of tariff preference, such as that maintained among the British countries. This involves on our part a willingness to modify our own preferential relations with Cuba and possibly the Philippines. The proposals contemplate such a modification, to the same extent that the British and others prove willing to modify the preferences they now maintain.
[Page 119]Certain of the proposals dealing with trade barriers will probably require some additional legislation, and may involve the modification of existing laws or adoption of laws relating to agriculture. The Department of Agriculture, of course, has fully participated, and will continue to participate, in the formulation of any understandings which may affect our agricultural legislation or policy.
3. With regard to commodity agreements (Chapter IV), governments would undertake to observe certain principles in negotiating agreements which restrict production or trade in respect of particular commodities. These principles, designed to limit the agreements to necessary cases and assure fair treatment for producers and consumers, are in accord with our long-term objectives of promoting sound international trade on a nondiscriminatory basis.
The proposals dealing with commodity agreements were approved by President Roosevelt.
4. The provisions dealing with restrictive business practices (Chapter V), conform to the basic policies laid down by Congress. Only minor changes, if any, would be required in our existing anti-trust legislation.
The provisions regarding cartels were concurred in by you in a conversation with Mr. Clayton and Mr. Mason on May 17, 1945.25
5. The provisions for an international trade organization (Chapters I, II, and VI) would set up an intergovernmental trade body which would be coordinated with other international agencies by the Economic and Social Council of the United Nations. The organization would have no compulsive powers but would serve largely in an advisory capacity as a forum for the discussion of trade problems, including those arising under the commitments outlined above. Enabling legislation would of course be required in connection with this organization.
The provisions dealing with organizational machinery are based on earlier recommendations of the Executive Committee contained in Outline of Proposed International Trade Organization (ECEFP D–72/45).26 The earlier document, together with the dissenting views of the Department of Agriculture, were submitted to you under memorandum dated May 14, 1945, on which no action has yet been indicated. A copy of that memorandum, together with the recommendations and dissenting views of the Department of Agriculture, is attached for convenient reference.27