560.AL/12–647: Telegram

The Acting Secretary of State to the Embassy in France

confidential
us urgent

4419. For the Ambassador. Geneva draft ITO Charter Article 24 (2) contains provision making determination of IM Fund final on issue of whether country is in balance of payments difficulties justifying use of quantitative restrictions. We consider this provision of critical importance. Quantitative restrictions are worst type of barrier to trade and their use can completely nullify tariff concessions granted to us in return for reductions our tariff. It is essential that there be protection against unjustified use of quantitative restrictions and IMF seems to us proper agency to decide whether conditions justifying their use exist. For your own information Congress will of course attach great importance to our weight of voting in IMF.

When we agreed at Geneva to relax provisions against discrimination in Charter and Trade Agreement French Cabinet agreed support United States on finality fund determination as quid pro quo and did not reserve position on part 2 Article 24. Without warning on December 3 French Delegation attacked this provision in open meeting.

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Please see Lacoste1 personally and if necessary Schuman2 advising them that Clayton regards French attitude this issue serious threat success Conference and prospect ratification charter United States.

Please point out France bound by finality fund determination in corresponding article general agreement tariffs and trade. If charter defeated they can escape from this provision only by repudiating general agreement. In this case they lose all concessions made to them by twenty other countries.

Lovett
  1. Robert Lacoste, French Minister of Commerce and Industry.
  2. Robert Schuman, French Premier.