560.AL/6–2549: Telegram

The Consul General at Shanghai (Cabot) to the Secretary of State

2492. Following translation local Chinese press June 22:

“A certain responsible official of Chinese Maritime Customs informed this reporter that ‘GATT’ tariffs (international tariff reduction concessions), which have all along been a stranglehold on this country by the British and American imperialists, have been abolished since liberation. These tariffs, the official explained, constitute most unfair and unreasonable practice. On basis of these tariffs, imports from Britain, US and other countries enjoy ‘tariff concession and reduction’ privileges. Although in theory Chinese exports may also enjoy similar privileges abroad, in actual practice with imports of British and American goods predominating in our foreign markets, the system is at best only outwardly reasonable. After investigation and consideration by People’s Government, the system had been declared most unreasonable one and been finally abrogated.”

In view evident deliberate Communist decision withdraw GATT benefits from North China Shanghai imports as better policy “because foreign imports always exceed exports making operation GATT unfavorable to China”, ConGen feels US Government should take immediate steps deny GATT benefits to Chinese exports to USA, from Communist ports, despite administrative difficulties involved controlling transshipments Hong Kong or elsewhere, and should proceed at once with consultation contracting powers in effort obtain exclusion Communist China from GATT concessions by all signatories.

ConGen believes rather role all cp’s88 should take joint action against Communists, in preference to unilateral US action.

Although ConGen feels GATT benefits should be removed from exports Communist ports, as matter of fact few South China exports to USA entitled GATT benefits and normal volume as exports subject GATT rates to Nationalist-held ports South China unimportant to them as ports handle less than 10 percent China’s total imports. Hence, withdrawal GATT benefits from Nationalist China would have slight effect on trade under present conditions.

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We must assume Communist intentions revise tariffs upward across board possibly directed against major American and British imports as such. In that case might prove advantageous require Communist renew adherence to GATT rather than leave problem dangling indefinitely in hope of persuading eventual reconsideration.

ConGen feels as Communists initiated this issue they should be made to feel immediate consequences by all signatories.

Sent Department, repeated Nanking 1352, Canton 803, Peiping 182; Department pass Tientsin 80.

  1. Contracting parties.