560.AL/2–2349: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

666. Bliss discussed MFN for Japan yesterday with Stephen Holmes and Shackle1 of BOT (Depcirtel Feb 11 and 588, February 19, reiterated US position as developed November meeting2 and insisted on community of US–UK economic and political interests in this problem. Pointed out US prepared meet Commonwealth suggestions to greatest extent possible, solicited suggestions for adopting German protocol to Japan, and indicated US working seriously to establish exchange rate.

Holmes felt that few salient new points emerged from discussion but noted and would consider implications of exchange rate suggesting might be necessary postpone application MFN until rate fixed definitely. Shackle will study the protocol further but doubtful will wish suggest changes. General opinion was that visit textile mission to Japan might help reassure Manchester, if SCAP able convince Street, but BOT not taking initiative. Holmes stated that BOT not convinced [Page 660]that MFN for Japan has any practicable economic significance for US or SCAP and that trade agreements represent best current approach to trade development. He feels that US interest is psychological which Embassy representative amended to political.

Further argument on economic basis seems to offer little hope for breaking impasse, although possible removal exchange rate difficulty represents great progress. Further discussions must emphasize political arguments, and Embassy will meet Makins3 and others in FonOff along lines of Deptel 588. Results these two discussions cannot be expected immediately.

Douglas
  1. R. J. Shackle, Adviser on Commercial Policy, British Board of Trade.
  2. Informal conversations were held in London from November 1 to November 4, 1948, between representatives of the United States and the United Kingdom-Commonwealth countries regarding the U.S. desire to have most-favored-nation treatment extended to Occupied Japan.
  3. Roger Makins, Assistant Under Secretary of State, British Foreign Office.