Foreign Relations of the United States, 1947, General; The United Nations, Volume I

560.AL/8–2247: Telegram

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

top secret
us urgent
niact

Geneva, August 22, 1947—2 p.m.

895. From Clayton for personal attention Lovett. Tariff negotiations with British Commonwealth have been lagging on question preferences. In order bring matter to head TAC has prepared revised list requests on Commonwealth showing (a) items on which we must insist on immediate elimination preferences; (b) items on which we could accept progressive elimination preferences over period five years; (c) items on which we require reduction margin preference beyond that now offered; (d) items on which we could accept margin preference offered. The portion of this list affecting preferences enjoyed by the UK in the Commonwealth represents judgment TAC as to extent action on preferences necessary constitute implementation UK promise re preferences made in connection loan and adequate quid pro quo our tariff offers. It nevertheless represents substantial modification our original requests.

Wednesday I asked Cripps directly if UK was prepared negotiate real action on elimination preferences enjoyed by UK. He replied flatly politically impossible UK take any substantial action elimination preferences. He would look at “a short” list requests eliminations and give answer Monday. (See my telegram from London August 20.)¹

Probabilities are answer will be negative. In this case, alternatives open are as follows:

1. Conclude agreement without substantial preference elimination on basis substantially our present offers.

2. Conclude agreement without substantial preference eliminations but curtail our offers materially both in number and extent of concessions. Cripps has twice suggested such curtailment.

3. (a) Advise UK we cannot conclude trade agreement with them unless they take substantial action elimination preferences and therefore on basis their rejection our list we must not continue negotiations and (b) advise other delegates here we are discontinuing negotiations UK and reasons therefor and seek best agreements possible with them preferably still on multilateral basis.

4. Adjourn tariff negotiations either (a) until after Havana or (b) indefinitely.

Believe course 3 should be followed. Convinced we could not sustain domestically any material concessions UK unless they give substantial action elimination preferences. To do so might prevent renewal TA Act. We would be in sound position if we return having given no concessions to UK because we could not get adequate concessions from them in return. This agreement (course 2) would cheapen price admission to ITO and earn us criticism from friends and foes of program alike. Adjournment negotiations until after Havana would not only endanger progress made here with other countries but would put negotiations in setting TA renewal fight Congress. Indefinite adjournment complete confession failure.

Discontinuance US–UK tariff negotiations could not necessarily prevent UK signing multilateral agreement without US–UK items in schedules. This would have advantage of having UK as well as other members Preparatory Committee bound by main commercial policy provisions of charter including obligation not to increase margins preference. TAC unanimously concurs.

Have not overlooked fact course (3) involves serious risk, jeopardizing success Havana Conference and support Marshall proposals in US with consequent broad political implications. Nevertheless believe making clear issue of UK non-action preference elimination and facing it squarely is on balance best course. Should convince British we are prepared forego any agreement rather than accept poor one.

Therefore propose if British reject our list without making any acceptable counter-proposal, to hand Cripps letter making following points:

1. In connection loan they promised negotiate substantial action elimination preferences in return substantial tariff concessions. We have offered latter. They have refused former.

2. We are offering substantial help their admittedly serious short-term problem:

a. By agreeing non-convertibility sterling;

b. By relaxation short-term non-discrimination provisions charter and trade agreement;

c. By considering similar action loan agreement;

d. By Marshall proposals.

3. Preference eliminations requested would not in any way handicap British in dealing with their short-term problem. Given non-convertibility sterling and freedom to discriminate in short-term they would have full ability direct their trade to meet their needs. Eliminations requested would affect only long-term. They would be fulfillment British promise (1) above, necessary basis any trade agreement with US, and step toward non-discriminatory multilateral trading world in longer term necessary to gain support in US for charter and Marshall proposals and make them worthwhile.

4. British failure perform on preference eliminations casts doubt validity their charter promises and will make more difficult our implementation Marshall proposal.

Please advise if you approve. You may wish to advise Secretary and possibly President as approach this subject might be made by British highest level.

Frankly, I was disappointed in Cripps’ attitude, which bordered on a callous disregard of their commitment on preferences. At any rate, he used political arguments and present British circumstances admittedly extremely serious as excuse for disavowing any intention of substantially living up to their obligations, although I clearly pointed out that action requested by us on preferences would not add to the British burdens in the short term.

Suggest you consult Hawkins. [Clayton.]

Troutmam

1. Not printed.