842.5151/10–1447: Telegram

The Acting Secretary of State to the Consulate at Geneva

secret

1321. Personal for Brown.1 Deptel 1102, August 28.2 Further recent discussions Canadian dollar position with Clark, Acting Minister Finance and Canadian Ambassador indicate likelihood imposition soon restrictions imports from US including some items specified Schedule I, 1938 agreement.3 Probable items already decided but Can feel they cannot discuss with us.

Canadians emphatically deny possibility devaluating Can dollar, which may or may not be true since this is line any Can official bound to take until and unless the moment for devaluation comes.

Believe impossible solve problem through 1) increased US procurement Can, 2) increased Can exports US, 3) loan or borrowing New York though all three would help. We are obviously unable at present give Can any assurance re Marshall Plan and effects on Can position. All foregoing under study by interdepartmental committee.

Believe here Can should not take unilateral action in announcing restrictions. Hope to persuade them advisability releasing simultaneously with list of restricted goods an exchange of memoranda similar to exchange between US and Sweden regarding restrictions imposed by latter.

Can memo, if they agree, would refer to present dollar difficulties, their causes and the need of measures now to prevent more drastic controls later, as well as to permit continued Can participation in European reconstruction, would emphasize intention administer controls in manner consistent Gen Agreement Trade and Tariffs,4 remove controls as soon as possible, allow imports in transit and, with appropriate cut-off dates, goods for which bona fide contracts made. Would agree discuss any individual cases with us. Would express hope US not invoke pertinent provisions 1938 trade agreement and would suggest [Page 127]early consultation re future under 1938 agreement if Gen Agreement did not come into effect early 1948.

US memo would note appreciation of Can difficulties and extent of Can contribution to European reconstruction. Would acknowledge Can intention to follow Gen Agreement, and their statement re temporary nature and transitional measures. Would comment particularly on desirability opportunity discuss individual cases as no opportunity given before announcement restrictions. Would agree not to invoke provisions 1938 agreement for duration of arrangement and to consult early in 1948 if 1938 agreement not superseded.

US press release issued same time would note foregoing stressing traditional cooperation, friendship US and Can. Action contemplated is predicated on need and desirability assisting Can whose action would be consistent Gen Agreement though not with 1938 TA. Since 1938 TA would presumably be in effect until Jan, TAC decision to waive rights under that agreement necessary. Does TAC agree course of action outlined above?

Proposed exchange of memoranda not yet submitted to Canadians but expect to submit possibly within one week.

Reply soonest.5

Lovett
  1. Winthrop G. Brown, Chief of the Division of Commercial Policy and U.S. delegate to the Second Meeting of the United Nations Preparatory Committee, International Conference on Trade and Employment, at Geneva, 1947.
  2. Not printed.
  3. For text of Reciprocal Trade Agreement between the United States and Canada, signed at Washington, November 17, 1938, see Department of State Executive Agreement Series No. 149, or 53 Stat. 2348. For documentation on the negotiation of the Agreement, see Foreign Relations, 1938, vol. ii, pp. 164 177.
  4. For documentation on the negotiation of this Agreement, see volume i .
  5. In telegram No. 1147, October 16, 4 p. m., Brown answered as follows: “TAC members feel they have no basis decision as to necessity proposed Canadian action reported Deptel 1321, October 14. If Department convinced Canadian action necessary, TAC members agree we must concur. Procedure outlined telegram 1321 satisfactory.” (842.5151/10–1647)