641.006/9–547
Memorandum of Conversation, by the Acting Assistant Chief of the Division of Commercial Policy (Lewis)
| Participants: | Mr. Anthony E. Percival, Commercial Counselor, British Embassy |
| Mr. Corse, Acting Chief, Division of Commercial Policy | |
| Mr. Lewis, Acting Assistant Chief, Division of Commercial Policy |
Mr. Percival said he had instructions to give the Department copies of the attached directive1 which was being sent out on September 5 from London to the Colonial dependencies explaining how colonial import licensing policy should be implemented, particularly with regard to the nondiscrimination provisions of the Anglo-American [Page 71] Financial Agreement. He said a copy was also being handed to our Embassy in London.
Mr. Percival explained that the directive differed in a number of respects from the draft directive which had been submitted to the Department on April 28, 19472 and which was the subject of the Department’s aide-mémoire of July 24. In the first place, the present crisis in the United Kingdom had made it necessary to stiffen the part of the directive which called on the colonies to curtail purchases from the United Kingdom.3 In the second place the new directive did not include the “token import” control regimes which had been previously contemplated (whereby imports up to 150 percent of prewar were to be permitted in the West Indian colonies and 50 percent in the other colonies). Instead the colonies were merely being instructed to keep imports from outside the United Kingdom plus Colonies group lower than imports from countries within the group, so far as practicable having regard to supply availabilities. The reason for this was that it was not certain that the token-import plan in the United Kingdom could be continued, and it would not be desirable to have such a system operating in the colonies and not in the United Kingdom.
With regard to the mandates, trust territories and Congo Basin area, Mr. Percival said his Government had not been able to accept the United States position as set forth in the aide-mémoire of April 28 [July 24] (in which we requested that there be no discrimination against us in these areas in favor of any other country including the United Kingdom). He said he had thought it unfortunate that in the Department’s press release of July 23, 1947 reference had been made to this problem, although he realized the release had merely stated that the Department was studying the pertinent international commitments. Mr. Lewis asked whether the new directive was being sent out to the mandates and trust territories. Mr. Percival said it was. Mr. Lewis expressed surprise that this action had been taken without at least discussing the problem with us further, and asked whether Mr. Percival could say upon what reasoning the British Government had rejected our request for non-discrimination in these areas. Mr. Percival said he had not been given any detailed explanation to present to us. He said he presumed the argument was that these territories were a part of the common quota area and hence did not differ from the other colonies. He said the Colonial Office must have considered it important to include them in the scope of the directive. Mr. Lewis said he thought the importance to the United Kingdom of discrimination in these [Page 72] areas was not very great. He pointed out that the United States had been willing to concede discrimination in the United Kingdom in favor of the mandates, (so that the United Kingdom could buy Palestine oranges, for example), but he had felt that the principle of equality of treatment ought to be maintained in the mandates themselves. Mr. Corse emphasized the special nature of these territories, referring to the fact that they had been given to the United Kingdom to administer in trust, and to the probability that there would be criticism in this country that the United Kingdom was now attempting to build up its long-term position at the expense of other countries. Mr. Percival suggested it was unlikely that occasion for any public reaction would arise. Mr. Lewis expressed the opinion that on the contrary there would probably be considerable criticism, particularly in the case of Palestine. He referred to the special importance of Palestine because of its large net dollar receipts and possibility that such receipts might not all be used by Palestine directly.
Mr. Lewis also referred to the former Italian colonies and said it seemed to the Department it would be very difficult to explain why there should be discrimination in favor of the United Kingdom in these areas. Here again the adverse reaction might be out of all proportion to any slight benefit which the United Kingdom might obtain.
Mr. Percival mentioned the temporary nature of the arrangement and repeated that he had not been instructed to present any detailed explanation. He said, however, that he had already asked London to provide him with a fuller explanation, and suggested that the Department make a formal request for such an explanation if it desired one. Mr. Corse said it would be helpful if Mr. Percival could let us have informally anything further he received from London on the subject.
Mr. Percival then referred to the proposal in the Department’s aide-mémoire for discussions at the technical level. He said his Government preferred that these take place in Washington. Mr. Lewis said this was acceptable to us. Mr. Percival said he presumed we would want to wait until specific problems arose in particular colonies and then to discuss them. Mr. Lewis replied that on the contrary we desired some discussion in advance, since the Department of Commerce in particular wanted to point out certain aspects of the import control system which might cause trouble and to make certain suggestions which might be advantageous to both countries. Mr. Percival suggested that Mr. Heatherington of Commerce might talk with him immediately and let him know some of the problems Commerce had in mind so that he could inform London. Mr. Lewis said he would suggest this to Mr. Heatherington.
[Page 73]Mr. Percival was informed that the Department would study the new directive and would consult the other interested agencies, before deciding what further action we might wish to take.