560.AL/5–647: Telegram

The Consul at Geneva ( Troutman ) to the Secretary of State

us urgent

251. For Acheson and Anderson from Clayton. Following present situation negotiations British Commonwealth:

Original Commonwealth offers generally inadequate particularly [Page 924] with respect preferences. Reductions of significant margins small; eliminations few.
Australian offers showed more serious effort comply trade program than those of other Commonwealth countries.
Following our failure offer reduction wool: (a) Australia has withdrawn her offers; (b) South Africa offered thin list apparently amended and later submitted stiff letter indicating no basis agreement; (c) Australia has withdrawn her waivers of preferential treatment under agreements other Commonwealth countries; (d) South Africans indicate they will take similar action. Other Commonwealth countries therefore cannot reduce such preferences our favor unless they denounce agreements, which probably politically impossible.
Negotiations this basis offer slight prospect real attack on preferences to southern Dominions mainly on agricultural products. Would therefore be necessary curtail our offers. The sort of trade barrier reduction contemplated in our original program could not then occur. Tariff negotiations would at best produce disappointing results.
In view key position Australia leading bloc of undeveloped countries opposing US views on charter her dissatisfaction would probably make impossible get modifications required satisfy American business and Congressional opinion and might result in loss of ground gained in London.
I am meeting heads Commonwealth delegation urging improvement their offers. Anticipate they will use our failure offer reduction wool as justification their obdurance. This issue jeopardizes all aspects negotiations. Indefinite continuation stalemate would imperil conference.
If we could offer maximum concession wool would turn situation our advantage placing US in strategic position to demand maximum, tariff cuts by Commonwealth and elimination preferences of material importance to US. Change in atmosphere would also revive prospect of successful charter negotiations.
Believe commodity agreement along lines suggested paragraph two, urtel 271, May 2 would not be acceptable Australia as substitute duty cut but might make cut more acceptable in US.1 [Clayton.]

  1. Marginal notation: “5/9/47 Action taken by Mr. Acheson. C[larence] W. N[ichols]”. Nichols was Assistant Chief, International Resources Division.