394.31/12–2250: Telegram

The Acting Chairman of the United States Delegation to the Torquay Conference ( Corse )1 to the Secretary of State


323. 1. Delegation has been considering question of general policy re preferences with particular reference Article XXVIII negotiations.

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2. Other than general commitment Article XXIX, paragraph 1 appears be no prohibition in GATT against increasing margins by negotiation up to maximum of pre-GATT margins permitted by Article I (4) and annex G.2

3. Rules for Torquay negotiations (GATT/TN.2/16, Section III)3 taken from Charter Article 174 provide, paragraph 1 (c) (IV), that in negotiations no margin preference shall be increased. Furthermore, Section VI (III) states Article XXVIII negotiations will be conducted within framework of Torquay negotiations. Nevertheless, question might be raised whether preference rule cited above could be construed encompass Article XXVIII negotiations.

4. Certain proposed Article XXVIII modifications, e.g. all French and some South African would increase existing margins. (Understand UK is pressing South Africa to make such increase in case at least one item.) French items complicated by necessity converting specific rates effective January 1, 1939 to ad valorem equivalents in order calculate margin since present comparable rates ad valorem.

5. Canada sometime ago informally and confidentially expressed concern to us over danger establishing precedent in Article XXVIII negotiations for increasing margins preference, having especially in mind empire and Commonwealths.

6. Seems clear US agreement to increase aforementioned margins preference would be difficult defend in light our long-established objective eventual elimination of preferences. Additional background this connection, in conversation between Clayton, Cripps et al in 1947 when Holmes UK delegate said under ITO charter any preference which British agreed reduce or eliminate could never be restored.5 However in view of status of Charter6 perhaps this position no longer [Page 1266] tenable by US, and increase of certain US preferences Cuba resulting from termination Chinese concessions seems further to compromise this position.7

Your views would be very helpful.

  1. Carl D. Corse, Chief of the Commercial Policy Staff, Department of State, was the designated Vice Chairman of the United States Delegation to the Torquay Conference, and became Acting Chairman after the departure of Winthrop G. Brown in mid-December.
  2. The references are to articles of the General Agreement on Tariffs and Trade, of which there were 35. The original agreement had nine annexes, Annexes A-I. Annex G fixed the dates for establishing the maximum margins of preference referred to in paragraph 3 of Article i.
  3. These were formulated by the Fourth Session of the CP’s at Geneva in 1950.
  4. This refers to the Charter for the International Trade Organization (ITO) which was drafted by the United Nations Conference on Trade and Employment which met at Habana, Cuba, November 17, 1947–March 24, 1948 (see Foreign Relations, 1948, vol. i, Part 2, pp. 802 ff.). For text of the ITO Charter, see United Nations Document ICITO/1/4 (a document of the Interim Committee of the International Trade Organization set up by the Final Act of the Habana Conference), or Department of State Publication 3117 (Commercial Policy Series 113), Havana Charter for an International Trade Organization and Related Documents (Washington, Government Printing Office, 1948).
  5. The references are to certain American and British principals at the 1947 Geneva Conference which negotiated the General Agreement, respectively, William L. Clayton, Under Secretary of State for Economic Affairs, and Chairman of the United States Delegation; Sir Stafford Cripps, Chancellor of the Exchequer, and head of the British Delegation; and Stephen Holmes, then Second Secretary, British Board of Trade. For documentation on the 1947 GATT Conferences, see Foreign Relations, 1947, vol. i, pp. 909 ff.
  6. This refers to the action taken by the United States Government on December 6, 1950, announcing that President Truman would not reintroduce legislation in the Congress for United States ratification of the ITO Charter. This in effect meant the end of the United States policy for the establishment of the ITO. For documentation on this subject, see ibid., 1950, vol. i, pp. 779 ff.
  7. There is ample documentation in the Department of State’s central indexed files (394.31) on the Cuban negotiation, which is not printed here. The Cuban negotiation consisted (as did others) of two negotiations, the one relating to the revalidation of the Geneva and Annecy concessions under Article XXVIII, the other looking toward new concessions to be given at Torquay. The question of United States preferences on Cuban products related to both, but particularly to the latter.

    Likewise, there is extensive documentation in the files on the withdrawal of the Republic of China from GATT in 1950, resulting in the termination of concessions offered and received by China under GATT. This had widespread and often unexpected results on trading relationships between GATT members, contrary to basic GATT objectives, as, in this case, the raising of the margin of certain United States preferences with respect to Cuba.