394.31/11–850: Telegram

The Chairman of the United States Delegation to the Fifth Session of the Contracting Parties to GATT ( Brown ) to the Secretary of State

confidential
priority

146. For State and Treasury from Brown and Bronz.1 Your 133, November 6. British last night made substantially same points Brown as to Thorp and Treasury. They confirmed prepared consult de novo and anxious avoid fight on merits sterling area. Plenary discussion scheduled for November 9, hoped it will be brief.

British main concern was avoid formal acceptance by CP’s of IMF report conclusions or any formal action CP’s. They hinted they could [Page 763] agree full presentation IMF conclusions if made orally. Saad2appears like this idea. They also raise no objection any CP or several CP’s stating opinion time for relaxation restrictions has come and having this view formally recorded provided issue not pressed to vote. This was procedure used Annecy in South African consultation.

British insist consultation under paragraph 4 (b) is advance discussion to get views on table and formal action CP’s desired, this should be done under 4 (d), with normal courtesy advance notice challenge.

British also willing have status consulting countries examined one at a time provided CP’s “take note” fact they are members sterling area and this fact has important bearing any assessment their situation. Fund report, of course, discusses this fully in relation each country.

British did not raise the question of publicity with respect to document finally developed at Torquay on this subject. We propose to handle matter in the following fashion:

1.
Accept full consultation on present position as matter of course.
2.
Insist Fund conclusions be presented CP’s but accept oral presentation with appropriate record in WP report if necessary.
3.
Insist status each country be discussed individually.
4.
Raise no objection to presentation of British paper re sterling area but take position that matters there discussed should more properly have been presented to the Fund. Point out that Fund reports indicate that Fund was fully apprised of relationship of each country to sterling area. Avoid arguing substance of British paper here but make clear that silence does not imply consent. We feel it would be undesirable to argue merits of paper here since matter so clearly involves purely financial arrangements which should be dealt with entirely in the Fund.
5.
Make the point as matter of principle that consultation between CP’s as collective group and individual country may very well require vote by CP’s to establish views of collective group for discussion with individual country. However, CP’s could conduct consultation by simply sponsoring round-table exchange of views among participating countries without developing collective CP position. For purposes of present consultation, we see little to be gained by pressing for a CP vote. On one hand, this would arouse violent opposition from UK and others, and on other hand would add little to the pressure already engendered by Fund conclusions and to be engendered by expression of individual country views here which should reveal pretty clearly what the result of a vote would be if taken. Establishing point that voting would be a proper procedure would make it possible to press for vote at sixth session in connection with review under last sentence of Article XII, paragraph 4 (b) if there is no sign of relaxation on part of British and others in the meantime.
6.
Insist that report record fact that Monetary Fund advises time for beginning progressive relaxation has come.
7.
WP report would follow lines Annecy report on South African restrictions, recording diverse country views, without necessarily identifying countries.
8.
We should maintain position that this report be declassified after usual waiting period following end of fifth session.
9.
We would not commit ourselves to the British to follow the above course but simply indicate to them that after consideration of their representations, we believe we are not too far apart and that we do not anticipate any great difficulties in WP or plenary sessions on this problem.

Believe this course will:

(a)
Get Fund conclusions before CP’s.
(b)
Support Fund conception proper scope consultation.
(c)
Put our views on propriety relaxation on record.
(d)
Maintain gain Fund decision and keep on pressure in CP’s.
(e)
Avoid open break with British.

[
Bronz
]
Brown
  1. George Bronz, Special Assistant to the General Counsel, Department of the Treasury, and member of the United States Delegation to the Fifth Session of the Contracting Parties to GATT.