Foreign Relations of the United States, 1949, National Security Affairs, Foreign Economic Policy, Volume I

560.AL/3–2249: Circular telegram

The Secretary of State to Certain Diplomatic Missions ¹

secret

Washington, March 22, 1949—2 a. m.

Czech has put on agenda forthcoming GATT session Annecy alleged failure US carry out obligations under GATT involving discriminatory policy in issuing export licenses. Czech Amb presented here Dec 2, 1948, note listing denials export license applications for Czech and noting that US “system export licenses stands in way normal development trade relations between our two countries.”²

USDel response to Czech charges will be initially in general terms noting charges are repetition those pressed in previous internatl mtgs. Such charges adequately answered Comite 2 UNGA Nov 4, 1948 and ECE Feb 1949.³ In latter mtg Feb 19 Czech-Pol res calling for full report on question discrimination including “attention to economic effects US discrimination policy and extent of differential application US export licensing system in light theory and practice internatl commercial policies” was rejected by vote 11 to 6. Voting against res were fol GATT countries: Belg, Luxem, Neth, Nor, Fr and UK. USDel will emphasize largely polit nature charges likely hamper amicable attainment coop objectives GATT mtg, and will maintain US justified in export controls on grounds short supply and natl security both of which recognized by GATT.

If further discussion necessary, case can be elaborated more specifically as fol:

1. In large part, export controls imposed by US represent measures “essential to the acquisition or distribution of products in general or local short supply.” Furthermore, countries participating ERP are cooperating to increase own production thus remove necessity such controls. US also cooperates this effort by controlling its exports to Eur to assure equitable distribution and most effective utilization possible of limited supplies available. These export controls help implement the multilateral arrangements under OEEC for equitable distribution products in short supply and are thus in accord GATT provision requiring that such controls “shall be consistent with any multilateral arrangement directed to an equitable distribution such products.” Czech unwilling accept responsibilities and obligations participation ERP and has aligned self in opposition to major efforts of European countries to achieve recovery. This decision Czech’s, hence seems reasonable consideration shld be given in allocation exports to responsibility assumed. Such consideration not “arbitrary or unjustifiable” within meaning introductory language GATT Art XX.

2. In addition export controls imposed for reasons short supply. US clearly entitled under Art XXI to restrict shipments for security reasons, as fol:

a. Under sub-para (b) (i) US restricts export fissionable materials.

b. Under sub-para (b) (ii) US restricts shipments arms, ammunition, implements war, and other materials “directly or indirectly for purpose supplying mil estab.”

c. Under para (a) US prevents export commodities incorporating technological info whose disclosure by export of prototype considered by US as “contrary to essential security interests.”

For info of Mission, certain export license denials involve goods of recognized strategic importance which are nevertheless only remotely related to supplying mil estab. Room for debate as to indirect mil importance such commodities, but it appears undesirable in light political implications to introduce all-inclusive exception in GATT sub-para (b) (iii) which wld permit “action necessary for protection essential security interests in time of war or other emergency in intematl relations.” This aspect shld not be discussed with Fon Govt. Matter will of course be discussed with Fon Dels at Annecy prior to GATT mtg. Since largely political issue, appears useful also take it up with Govts of contracting parties preferably prior to departure their delegations for Annecy. Basis US position is that GATT instrument for promoting expanding economic intercourse among countries accepting premise of beneficial nature of freeing trade from barriers and discriminations. Since Czechs dominated by political policy antagonistic to this premise, purely technical approach to their complaint wld ignore basic problem involved. You therefore instructed discuss Czech attack and proposed US response confidentially with appropriate officers of Govt to which you accredited in order obtain support for US position in possible vote at Annecy. Report reaction.⁴

Principal difficulty GATT discussion will be consideration in highly specialized technical forum of question which has important political aspects and is, as far as European contracting parties concerned, closely related to common US–OEEC security aims represented by Atlantic Pact and ECA negots on parallel strategic controls. For these reasons, it appears likely to Dept that European contracting parties and Canada will probably support US position. To assure majority in possible vote, it will be particularly important ascertain views of Austral, NZ, Southern Rhodesia, Union of SoAfr. If these countries plus Can and European GATT countries support US position, a majority would be assured.⁵

Acheson

1. Sent to London, Wellington, Canberra, Oslo, Capetown (repeat to Johannesburg for Southern Rhodesia), Brussels, Luxembourg, The Hague, and Paris.
2. Not printed.
3. For documentation on U.S. export controls imposed on East–West trade, see vol. v, pp. 61 ff.
4. Replies were substantially favorable, although in almost all instances some concern was expressed about some aspect of the U.S. position. The most blunt opinion was that from The Hague, the Embassy reporting that “Economic Affairs official believe US answers Czechoslovakian charges weak; Netherlands unable take strong position but will fully support US stand.…” (Telegram 307, April 1, from The Hague, 560.AL/4–149).
5. There is a small collection of documents dealing with the question of the Czech charges in the file series 560.AL. The item was not considered by the Contracting Parties until June 8, at which time they voted 17 to 1 that the United States had not failed to carry out its obligations under the General Agreement through its administration of the issue of export licenses. India and Syria-Lebanon abstained and Luxembourg and Burma were absent. (Telegrams 196 and 197, June 8, from Annecy, 560.AL/6–849)