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

501.BD Europe/8–1048: Telegram

The Secretary of State to the Consulate in Geneva

secret

Washington, August 13, 1948—7 p. m.

1090. Soceco 37 for Thorp, Econ 195 for Porter.

1. Dept concurs in general points contained urtel Ecosoc 50, Noce 289.¹ Position paper prepared in Dept prior receipt urtel, contains recommendation that US support establishment committee on trade but discourage establishment committee on economic development on grounds that type of functions ECE could assume in this area could more adequately be performed by existing committees plus trade committee if established.² In Dept’s view separate development committee would probably be little more than propaganda sounding board. Although same danger exists with respect trade committee, Dept feels there are a number of ways in which it could be of use provided OEEC countries are agreed on how to use it and Eastern countries provide adequate information. Committee in which East not prepared provide info would obviously be simply less efficient means of discussing same questions already under consideration in Paris.

2. Dept agrees that initiative at ad hoc committee should not be left to East and that it is essential to have prior conversations with other OEEC countries so that at Geneva we can make positive case for committee which is potentially useful rather than reaching reluctant compromise on innocuous language.

3. Following discussion position paper and procedure with ECA and Commerce, Dept intends to send paper to Harriman with suggestion that on basis this paper and points made urtel he insure question receives adequate consideration by OEEC representatives prior to Geneva meeting. Dept and other interested US agencies should have opportunity to reconsider present recommendations in light OEEC discussion if this appears necessary before Geneva instructions finalized.

4. Although agree that desirable US and Western European countries avoid giving initiative to East at Geneva, Dept would assume that in prior conversations with OEEC countries, US representative would draw attention to advantages of establishment of trade committee and indicate type of tasks it might handle, but that OEEC countries would be expected play major share in defining scope and terms of reference. Probably undesirable for OEEC countries to go to Geneva with a completely “pre-cooked” draft of terms of reference but should be unanimity of views on major points.

5. In addition to containing many of points you have made, Dept paper also indicates that it may be possible by analysis existing trade between East and West and of impediments to expansion under bilateral agreements for trade committee to draw attention to specific trilateral or multilateral East-West exchanges and clearing arrangements which might serve to

(a) increase total Eastern European exports of goods required by West above level attainable under bilaterals;

(b) improve terms of trade and payments for Western Europe as a whole vs. Eastern Europe as a whole, minimizing credits and total dollar payments from Western Europe to Eastern Europe and maximizing exports of less essential goods from West to East; or

(c) increase Eastern European exports of goods to weaker bargainers in Western Europe without imposition of onerous payments terms that frequently have been required of weaker OEEC members.

Recognized that number of such deals probably limited but that may be possibility of making a few specific arrangements of positive advantage West. Foregoing not intended to imply that ECE committee would be center of actual trade negotiations and we agree with you that any such suggestion should be resisted.

6. Paper also contains preliminary US views on desirable lines expansion of East-West trade and relationship security objectives. Copies Dept’s paper will be airmailed Geneva for Thorp and Porter, and Paris for Harriman. As indicated above, paper will require and does not yet have ECA and Commerce clearance and should therefore be considered preliminary views only.

Marshall

1. Supra.
2. The revised text, of the position paper under reference here was transmitted in telegram 3740, September 20, to Paris, not printed (840.50 Recovery/9–2048). Additional clarification of the position paper was contained in telegram 3820, September 24, to Paris, repeated as 1379 to Geneva, not printed (840.50 Recovery/9–2448).