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

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

The Acting Chief of the ECA Mission in France (Reed) to the Administrator for Economic Cooperation (Hoffman)

secret
priority

Paris, June 4, 1949—3 p. m.

Toeca 994. Re Toeca 975 and Toeca 993.¹ Statement by Petsche² at meeting of OEEC ministers was mainly in defense of French proposal concerning liberalization of intra-European trade and payments as compared with British proposals on this subject. Four main points summarized as follows:

1. British thesis appears to be that the freeing of trade will by itself make it possible for European countries to achieve “viability” by 1952. In French view, to achieve “viability” requires certain fundamental adjustments in economic, financial and monetary (exchange rate) structures of European countries, and no one can now foresee at what moment the conditions making these adjustments possible will be fulfilled. A certain liberalization of trade is measured which can be taken without waiting for these adjustments to be completed and which will aid in achieving them.

2. French proposal is (a) that participating countries should undertake gradual elimination of all quantitative trade barriers, which elimination should be completed no later than July 1, 1951; (b) that liberalization effort should be carried out mainly upon multilateral rather than unilateral or bilateral basis; and, (c) that for time being efforts at liberalization should be confined to trade among the participating countries rather than being extended to other soft currency areas. (Petsche made it clear that since liberalization was possible only because of ERP aid, in his view, British should have raised exception for Article 9³ only insofar as Europe is concerned.)

3. French Government does not favor linking, in way British proposal does, problem of liberalizing trade and that of system of intra-European payments and its relationship to gold and dollar payments and distribution of US aid. Participating countries should examine separately question of trade barriers in order to determine how far they can go in breaking down these barriers and reestablishing conditions of completion [competition?] among nations.

4. System of intra-European payments which will best promote their aims in commercial field should they [then?] be drawn up. To achieve this purpose it is opinion of French Government that compromise can and must be found between two opposing views which have arisen in OEEC payments committee concerning the role of dollar in intra-European payments.

Pass to State and Treasury.

Reed

1. Neither printed. The former transmitted the tentative proposals of the French Government for the eventual removal of all obstacles to the exchange of goods and services and all restrictions on current payments between participating countries. The latter reported that the principal features of the French proposal on liberalization of intra-European trade and payments, as submitted on June 3 to the OEEC ministers’ meeting, were (a) progressive elimination of quantitative trade restrictions, (b) periodic agreement on list of products to be freed by common action, (c) supplementary lists to be adopted by participating countries that could accept them, and (d) invitation to participating countries to take unilateral action on quantitative restrictions to the extent permitted by their economies. (ECA Telegram Files, FRC Acc. No. 53A278, Paris Toeca)
2. Maurice Petsche, French Minister of Finance and Economic Affairs.
3. The reference is to section 9 of the Financial Agreement between the Governments of the United States and the United Kingdom, signed at Washington, December 6, 1945, effective July 15, 1946, which provided, among other things, that any quantitative import restrictions imposed by either country should be administered “on a basis which does not discriminate against imports from the other country.…” For the text of the agreement, see Department of State Treaties and Other International Acts Series No. 1545, or 60 Stat. (pt. 2) 1841. The bearing of this provision upon British plans for a system of open general licensing was discussed in telegram Torep 5654 to Paris, June 3, not printed. (ECA Telegram Files, FRC Acc. No. 53A278, Paris Torep)