394.31/5–2651: Telegram
The Acting Chairman of the United-States Delegation: to the Torquay Conference ( Corse ) to the Secretary of State
niact
604. Following is text of proposed note to UK:
I have the honor to acknowledge the receipt of your note of (date) with further reference to the tariff negots between the US and the UK in Torquay.
In making an approach directly to you, my govt was hopeful that your govt wld find it possible to reconsider the position which has resulted in the impasse which has been reached at Torquay. This position, which is reiterated in Your Excellency’s note, was, briefly, that the agreement reached at Torquay shld go some way toward the rectification of the imbalance in the trade between our 2 countries, or in other words, that in the agreement the US shld grant important concessions but shld not expect to receive substantial and significant concessions from the UK.
My govt has been keenly aware of the problems raised by the imbalance of trade to which you refer. Indeed, I am sure you appreciate the efforts which my govt has made and is making toward the improvement of the basic econ position of the UK and the other countries of Western Eur and the correction of the difficulties which prevent the re-establishment of a system of multilateral trade and payments.
At the same time, my govt has made it very clear on every possible occasion that in its tariff negots with the UK it cld not make an agreement except on a reciprocal basis. Last July reps of your Emb in Wash raised this question with officer of the Dept of State and implied that a strictly reciprocal agreement wld not be in accord with the spirit of the joint communiqué of Sept 12, 1950. In reply it was pointed out by the US reps that, while the concessions which the US wld offer at Torquay wld in fact be unilateral, inasmuch as UK concessions wld continue for the foreseeable future to be substantially nullified by quantitative import restrictions the Govt of the US cld neither publicly nor privately commit itself to come out of the Torquay negots without reaching an agreement which the US cld call mutually advantageous and satisfactory.
A further discussion took place between reps of your Emb and of the Dept of State on Aug 11, 1950,1 at which time a memorandum was handed to the Emb reps setting forth the US position in some detail. It was stated in this memorandum that while the US was prepared to live up to its responsibilities as a creditor nation and to [Page 1299] continue the process of reducing its tariff to a moderate level, the fact that the US was a creditor nation did not mean that other countries shld be entitled to maintain high tariffs or continue tariff preferences. It went on to stress the necessity for improving the ability of the UK and other Western Eur countries to compete in dollar and and other markets rather than relying on the protection of their home industries by high tariffs, and the protection of their export markets by preferences and other forms of discrimination.
Bearing in mind the importance of increasing the dollar exports of the UK, my govt sent its delegation to Torquay authorized to make valuable concessions on almost every item on which a request was made by the UK, as well as on many other items. Offers were in fact made on all the items which are particularly important, in the UK’s export drive, including wool and cotton textiles, china, earthenware, automobiles, whisky, shoes and other leather goods, and many other products. The granting of concessions as extensive in coverage and depth as those offered wld have aroused a great deal of opposition from affected interests in the US, as well as considerable criticism from members of Congress, but my govt was prepared to face this opposition provided it was able to obtain from the UK concessions which cld be defended as contributing to the objectives of reducing excessive tariff barriers and eliminating discrimination, which are the bases of the general agreement. To meet this test, the concessions offered by the UK wld have had to be broad in scope, to cover a good range of American export products, and to include significant reductions in preferences. The offers made by the UK cover a very limited part of our trade, include no concessions at all on the agricultural products which are among our most important exports to the UK, and contain no significant reduction in preferences. An agreement on this basis cld not be defended in the US from any point of view.
From the outset of the negots, the del of the UK has endeavored to obtain agreement upon a limited list of products on each side, on the US side including only the most valuable and (from my govt’s point of view) controversial of our offers, and on the UK side omitting any really important concession on any US request.
Your Excellency’s note refers to the rights of other Commonwealth countries with regard to preferences and states that such rights cannot be ignored or impaired except as part of negotiated agreements which make for genuine mutual advantage. The US Govt considers that the concessions which it is prepared to offer to the UK and to the other countries of the Commonwealth wld, if reciprocated, constitute agreements of great mutual advantage. It is for this reason that my govt has urged your govt and the other Commonwealth Govts, in accordance with the rules of procedure of the tariff negots, to agree [Page 1300] to make the releases in preferences which are essential to the conclusion of these mutually advantageous agreements.
During the course of the present negots, my govt has continued to bear in mind all these considerations, and particularly those raised in Your Excellency’s note. In accordance with Your Excellency’s request, my govt has again re-examined the relative value of the offers which have been made on each side at Torquay. It has not been possible to do other than conclude, however, that the only agreement which cld be concluded on the basis of the UK offers as they now stand wld be one which wld serve no useful purpose and which wld in fact be indefensible in both our countries.
My govt still hopes that the Govt of the UK may find it possible to meet the requests of the Govt of the US to the extent necessary to arrive at a broad, comprehensive and mutually advantageous agreement. In view of the Torquay time schedule, and in order to complete important negots with other countries in time to be included in the Torquay protocol and thus take advantage of my govt’s present authority to negotiate under the Trade Agreements Act, my govt believes it will be necessary to decide not later than Wednesday, March 28, whether negots between our 2 countries shld or shld not be continued.
Accept, et cetera, signed Corse.
Sent priority London 239; rptd info niact Dept 604 for USTSC [ USTAC?].