841.51/10–1447: Circular Instruction
The Secretary of State to Certain Diplomatic and Consular Officers 1
Discrimination in Favor of Imports From One Another and From the United Kingdom by Dependencies Sharing Common Membership and Quota in International Monetary Fund
The Secretary of State refers to the circular instruction dated August 7, 1947 sent to certain American Consular Officers under the above title.
For the information of the Officers in Charge a copy of each of the following documents is attached:
- 1)
- Directive sent to British Dependencies by the British Colonial Office, handed to Officers of the Department by Mr. Anthony Percival, Commercial Counselor, British Embassy, Washington, on September 5, 1947;2
- 2)
- Memorandum of Conversation between Mr. Percival and Officers of the Division of Commercial Policy on September 5, 1947.
The Officers in Charge will note that the directive which has been sent to the British Colonial Dependencies differs in a number of respects from the draft directive submitted to the Department April 28, 1947, a copy of which was enclosed with the instruction under reference.
Of particular interest is the fact that the directive does not include the “token import” control schemes which had previously been contemplated. It has been transmitted moreover, to the trust territories, former Italian colonies, Palestine, and those dependencies located in the Congo Basin area, notwithstanding the fact that the Department in its aide-mémoire of July 24 assumed that there would be no discrimination against the United States in those areas in favor of any third country including the United Kingdom. As stated in the instruction under reference this Government recognizes the right of mutual discrimination in the administration of import controls among the metropole and its dependent areas which share a common quota and membership in the International Monetary Fund. The Department is however studying the British action in including among this group those territories covered by international acts guaranteeing [Page 84] equality of treatment, and the Officers in Chargé will be informed of any further developments concerning this matter.
With the exception of this latter point this Government feels that the British directive is both reasonable and necessary as a temporary measure in view of the current dollar shortage on the part of the British Empire as a whole. Problems, however, will doubtlessly arise in the various areas through the interpretation and implementation of the Colonial Office directive. Any discriminatory action on the part of the colonial governments will have to be examined not only on the basis of the facts of any specific case but also in light of the general British situation.
The Consular Officers are therefore requested to study carefully the methods used by the local colonial authorities in implementing the new directive. Cases of undue discrimination should be examined for the facts, which then should be reported to the Department. No action, other than that arising from investigation of a complaint or the settling of minor problems, should be taken by the Consular Officers concerning the general policy until the Department’s approval has been obtained, so that a uniform policy may be followed throughout all of the British dependent areas.
The majority of American exporters, understanding the seriousness of the present shortage in the British dollar availabilities, appreciates the inevitability of import restrictions during this emergency period. It must be remembered, however, that for some time American exporters have been expecting a nondiscriminatory import control regime to be effected in the colonial areas. Consequently, they may be inclined to be critical of this new and more severe import control program, especially if it is felt that the United Kingdom is using the present financial crisis to secure long-term advantages for goods from the United Kingdom as opposed to those from the United States.
The British are being informed unofficially of certain practical steps that could be taken in the administration of the directive to assure American exporters that they are not being placed in a permanently disadvantageous position in the colonial markets. The Consular Officers, bearing in mind that the British have not committed themselves with respect to these steps, are requested to observe and report, without disclosure to either importers or exporters, whether the following suggestions made by the United States are being carried out by the local authorities:
- (1)
- Import samples of goods and advertising literature having no commercial value should generally be admitted;
- (2)
- Imports needed for the maintenance and repair of goods already in the colonies, such as auto and radio parts, should in any event be considered as in the category of essential goods and imports of these permitted from the original sources.
- (3)
- A reasonable interpretation of the section of the directive relating to the honoring of orders already placed and for which licenses have been granted so long as a confirmed letter of credit in the seller’s country has been opened should be given. In certain instances where payment has been arranged other than by letter of credit, inequities may result from cancellation of orders. Each case will have to be considered on its individual merits.
- (4)
- Orders for goods connected with long-term development projects should not unduly discriminate against United States goods, recognizing, of course, the limitations of the dollar supply.
- (5)
- So far as it is possible, American exporters should be given an advance estimate of the dollar allocations anticipated by individual colonial importers, in order to facilitate reasonable future planning by producers and exporters.
It is realized that considerable leeway is granted to local colonial authorities in so far as implementation of the new import control regime is concerned. Reliance will be placed on the Consular Officers in the various dependent areas to evaluate the implementation of the directive in light of local conditions. As already noted it is expected that lesser cases may be settled by discussions between the Consular Officers and the local colonial authorities. Cases involving general policy and repeated infringements of the directive should be reported to the Department so that appropriate action may be taken through the British Embassy in Washington or the Colonial Office in London. Special treatment accorded imports from the war disrupted countries under Section 9 (b) of the Financial Agreement should also be reported to the Department for consideration.
The Consular Officers should take positive action to encourage colonial exports to the United States in order to increase the supply of dollars by:
- 1)
- Watching for and reporting export opportunities to the Department of Commerce, which will notify interested individuals and groups in this country;
- 2)
- Continued reporting on export controls which are restricting colonial exports to the United States. This Government is endeavoring to secure the elimination of such restrictions in cases where it would appear to be to the mutual advantage of the United States and those areas sharing the common quota to do so.