Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

501.BD Europe/8–1048: Telegram

The Assistant Secretary of State for Economic Affairs (Thorp) to the Secretary of State ¹

secret   us urgent

Geneva, August 10, 1948—8 p. m.

970. Noce 289. ECOSOC 50 from Thorp. Public debates and private discussions have made it clear that both East and West recognize importance of developing trade. No one has spoken in contrary vein. Our policy regarding ECE ad hoc committee on trade and industrial development must not expose us to charge of cold water throwing or feet dragging.²

I see no advantage in leaving initiative to eastern countries with respect to trade. Even if we so desire, it would be extremely difficult to avoid establishment of ECE standing committee on trade and industrial development. This being so, I think West should assert its intrinsically and numerically stronger postion at Geneva to mold committee to our own interest. This, however, is not British view at this time. Makins³ remarked to me that he supposed we would be willing to join British delegation in keeping trade committee relatively innocuous. I told him that I did not think he should make any assumption re our position as yet, but that we would expect to discuss matter with them well ahead of meeting.

Believe it would be wise for us to take active part in proposing ECE standing committee to assist such trade relations and in defining committee’s responsibilities in manner that would give maximum assistance ERP. This opinion strengthened by ECOSOC debate on ECE, and by private talks with European delegations including Poles. Suggestion ECE should become center of actual trade negotiations has not been put forward by anyone and should be resisted. Since OEEC plans will be relatively public ECE standing trade committee should be used to obtain information plans of East and as forum for discussion interrelated problems with operational arrangements handled in limited technical committees as at present.

Visualize objectives which committee should foster as follows:

a. To obtain from eastern European countries most precise data possible on their probable imports and exports over next four years, which data would be of basic importance to OEEC in development of both its annual and long term programs;

b. To ascertain what equipment and supplies US or OEEC countries will need to send to East in order to raise exports of coal, timber, foodstuffs, potash, etc., to levels desired by West. Test for trade with East would be not fulfillment of eastern economic plans, as East would obviously prefer, but contribution to western Europe recovery as compared with cost and yield of similar expenditures in other areas;

c. To ascertain what items both capital goods and raw materials such as cotton, eastern countries presently give specially high priority; and thus to aid us in better calculating what exports we may wish to permit and what we may wish to restrict for security or other policy reasons;

d. To persuade eastern European countries with influential inducements which we as group can command to give higher priority in their national economic programs to output and export of products of agriculture and extractive industry needed by West; I am inclined to believe that Marshall Plan progress and economic difficulties in East will make it easier to obtain fundamental revision of eastern economic programs that would have been case few months ago.

e. To link more clearly fortunes of eastern European countries to success of Marshall Plan, as for example dependence of Polish coal industry on high level of industrial activity in West; if so doing to counteract autarchic tendencies, give encouragement to our friends in East, and make more difficult Soviet efforts to establish full control over satellites;

f. To further economic unification in West by development of concerted trade policy with East with emphasis on positive rather than primarily negative aspects of such policy.

g. To use the opportunity to continue pressure for limiting use of bilateral agreements and supporting GATT and ITO principles.

Foregoing objectives intended define US and OEEC interest in ECE trade committee. If they meet with US approval suggest early discussion of them at high OEEC level so that all western delegations will be adequately prepared for Geneva talks at end September. Meanwhile Department will doubtless wish prepare draft terms of reference for committee, define relationships with specialized agencies, etc.

If time and energy permit, shall take advantage of attendance of various European delegations at ECOSOC session to sound out their present views, specific functions trade committee. There is no clear indication whether or not Soviets will attend meeting of ad hoc committee although guess is that they will after going this far. Lychowski, head of economic department of Polish Foreign Office told Porter⁴ he thought Russians would not attend, but we of course should take account of possibility they may.

Re urtel Soceco 30,⁵ Hoffman is oversold on significance of ECE resolution. To be sure USSR did vote for resolution, but it represents no advance over position at ECE meeting except warmer support of proposed committees. Only possible support Hoffman’s position concerning change in Soviet position is that USSR being soundly defeated on ERP attack, was willing to accept final resolution, but this was clearly on basis of accepting highest common denominator and retaining belief in own position. Debate was clearly one involving general recognition of necessity and desirability of East-West trade on both sides, but nothing explicit as to replanning along lines Hoffman’s analysis. Our information is that Hoffman’s sources chiefly Polish and French.

Early Department comment on foregoing views would be appreciated. Comments of Harriman,⁶ Caffery,⁷ Douglas⁸ and Crocker⁹ would also be welcomed.

Sent Department 970 repeated Paris 165 for Harriman and Caffery, London 87 for Douglas, Warsaw 31 for Crocker.

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Thorp

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1. Assistant Secretary of State Thorp was serving as United States Representative to the United Nations Economic and Social Council. Through June 1948, Thorp was also United States Representative to the United Nations Economic Commission for Europe until he was succeeded in that post by W. Averell Harriman, the United States Special Representative in Europe. Thorp’s messages were transmitted via the facilities of the Consulate in Geneva.
2. Regarding the decision by the Economic Commission for Europe to establish an ad hoc committee on trade and the resolution by the Economic and Social Council endorsing the decision, see the editorial note, supra.
3. Roger M. Makins, Superintending Under-Secretary of State, General Department, British Foreign Office.
4. Paul Porter, Deputy United States Representative to the Economic Commission for Europe.
5. Telegram 1051, Soceco 30, August 6, to Geneva, not printed, transmitted excerpts from a front page article from The New York Times for August 4 by correspondent Michael Hoffman reporting on the August 4 resolution by the U.N. Economic and Social Council on the annual report by the Economic Commission for Europe. Hoffman interpreted the resolution as meaning that the ECE had the task of arranging large-scale trade deals between eastern and western Europe and becoming an instrument for bringing the economic policies of eastern and western Europe into much closer coordination (501.BD/8–648).
6. In his telegram Repto 60, August 20, from Paris, not printed, Ambassador Harriman generally concurred in the objectives set forth by Assistant Secretary Thorp, but he warned that the ECE trade committee might be used by the Soviet Union and the satellites to hamper the European Recovery Program (London Embassy Files, File—850 Marshall Plan).
7. Jefferson Caffery, Ambassador in France.
8. Lewis O. Douglas, Ambassador in the United Kingdom.
9. In his telegram 1083, August 13, from Warsaw, not printed, Chargé Edward Crocker emphatically concurred in Assistant Secretary Thorp’s recommendations. Crocker expressed the belief that East-West trade ought to be encouraged, within the limits of current U.S. strategic and politico-economic aims, in order 1) to benefit the economic recovery of all of Europe, 2) to relax satellite economic dependence upon the Soviet Union and thereby to foster tendencies towards independence and nationalism, 3) to stimulate the flow of critical commodities to the West (501.BD Europe/8–1348).