Foreign Relations of the United States, 1949, Western Europe, Volume IV

ECA Telegram Files, FRC Acc. No. 53A278, Paris Torep: Telegram

The Acting Administrator for Economic Cooperation (Bruce)¹ to the United States Special Representative in Europe (Harriman), at Paris

secret

Washington, April 29, 1949—10 p. m.

Torep 4928. 1. Pressures increasing from different industries for ECA to channel dollar purchases by participating countries into US market. We have already been urged by lumber interests to insist that UK make ECA and non-ECA dollar purchases in US if US prices equal to those in other dollar markets. Similar requests may be expected from other quarters. At the extreme these groups argue that US taxpayer makes possible all dollar purchases by participants and therefore US suppliers should get the business if they quote as good a price. They complain that instead Europeans discriminate against US suppliers even refusing to let them bid.

2. We consider that ECA should not pressure participating countries in their non-ECA dollar purchases to discriminate against outside Suppliers in favor of US suppliers. We also feel ECA cannot sanction uneconomic dollar purchasing practices especially when these discriminate against US suppliers as mentioned Ecato Rome 691 April 8 and Ecato Rome 732 April 22.² The following statement of trade policy subscribed to by all divisions and offices concerned here is submitted for your consideration and comment.

“In order to be consistent with the U.S. policy of non-discrimination and in line with the general policy of ECA which is to encourage participating countries to be economical in the use of their resources and particularly their dollar resources, ECA will request participating countries (when using non-ECA dollars) (a) to make dollar purchases in the cheapest source, (b) to canvass all possible dollar sources, including US sources, in order to ensure they are obtaining the lowest possible bids, and (c) certainly not to pay more from any dollar source than US suppliers quote. ECA recognizes that current market prices are not the sole consideration in the placing of purchase contracts. Where participating countries find that exceptional circumstances warrant paying higher prices with non-ECA dollars from certain dollar sources than prevail in others, they should be prepared to submit reasonable justification for such action to ECA.”

3. If you approve statement please circulate to all missions. Please advise your action or comment promptly as we wish inform foreign missions here.³

Bruce

1. Howard Bruce.
2. Neither printed.
3. In Repto 3959 and Repto 4074, April 30 and May 7, neither printed, OSR stated its view that the policy would restrict the participating countries’ use of free dollars, and it recommended that no such statement be issued. OSR suggested instead that each specific complaint from an American industry would serve as an additional instrument in ECA’s program to reduce trade barriers. (ECA Telegram Files, FRC Acc. No. 53A278, Paris Repto, and London Embassy Files, Lot 58F47, 500 Marshall Plan)