394.31/3–2651
Memorandum of Conversation, by the Acting Chief of the Commercial Policy Staff (Beale)
Subject: Tariff Negotiations with the United Kingdom at Torquay
- Participants:
- Mr. C. E. Steel, Minister, British Embassy
- Mr. R. Burns, Counselor, British Embassy
- E—Mr. Willard L. Thorp, Assistant Secretary of State for Economic Affairs
- BNA—Mr. Livingston Satterthwaite1
- CP—Mr. W. T. M. Beale
Mr. Thorp said that he had asked Mr. Steel and Mr. Burns to come in to talk about the Torquay negotiations. He explained that Mr. Acheson would have talked with them but that his schedule was completely filled with meetings with the 20 Foreign Ministers from the Latin American countries.
Mr. Thorp recalled that in the past the United States had been the country at tariff conferences which was accused of being motivated by protectionist sentiment, but the experience at Torquay indicated that the United States no longer played this role. He said that it would appear from the negotiations at Torquay that the United Kingdom was now one of the recalcitrant countries. He said that during the present period, when there were evidences of increasing protectionism throughout the world, the importance of continuing the movement towards liberalization of trade was greater than ever. He said that as the situation now stood at Torquay it seemed possible that the Conference there might end with no accomplishment along these lines. He [Page 1302] pointed out the importance of having successful negotiations on a reciprocal basis. He said that the offers that the United Kingdom had made to the United States were limited and there was considerable question as to their value. He therefore wanted to urge that the United Kingdom Government take one last look at their offers to see whether they could not improve them in such way as to enable both countries to make a significant contribution at Torquay. He said that we had considered the offers made by the United Kingdom very carefully and that, rather than reach a limited agreement on the basis of their offers, we were quite prepared to consider no agreement if our Delegation at Torquay should recommend that course of action. He said that we felt that our situation might be worse if we were to reach only an insignificant agreement with the United Kingdom than if there were to be no agreement at all. He then went on to note the complications which arose in connection with the Dominions. He said we had reached the basis for a very satisfactory agreement with Canada but that our ability to conclude that agreement depended in part on the willingness of the United Kingdom to take action in connection with preferences granted to Commonwealth countries on certain key agricultural products.
Mr. Steel in response pointed out that, as Mr. Thorp was aware, the present U.K. Government had a slim majority in the Parliament and any reduction in preferences would lay them open to attack, particularly from the Conservative Members of the House of Commons, since the imperial preference system was an important part of the Conservative program. He said that the political situation in Australia was also very critical in that an election was coming up shortly and it would be extremely difficult for the present government to defend the loss of preferential positions in other Commonwealth countries. Mr. Burns said that he was under the impression that the British Delegation had raised no difficulties in connection with the preferences that the U.K. enjoyed in Canada. Mr. Beale pointed out that the problem at issue had to do with preferences which Canada was willing to release in the United Kingdom but which required reductions in United Kingdom tariff rates. Mr. Steel asked how the latter problem arose, and Mr. Beale explained that the Commonwealth countries required payment not only for the concessions which they gave in their own tariffs but for the reductions in margins of preference which they enjoyed in other Commonwealth countries. In response to a question from Mr. Burns, Mr. Beale pointed out that two of the items of particular concern to the United States in the United Kingdom market, in connection with the Canadian negotiations, were Cheddar cheese and canned salmon. He pointed out that the margins of preference on these items were bound not only to Canada but to other Commonwealth countries. In connection with [Page 1303] Mr. Steel’s observations on the forthcoming election in Australia, Mr. Thorp pointed out that the United States had offered a most important concession to Australia at Torquay.
Mr. Beale also pointed out that the Australian election would take place on April 28 and the results of Torquay would not be known until May 9.
Mr. Burns said that it was his understanding that the U.S. Delegation had been very reluctant to make known precisely what it wanted of the United Kingdom. He said that Mr. Corse had some-time ago given the British Delegation a “must list” which Mr. Burns felt was obviously a bargaining list and represented much more than Mr. Corse really expected could be given. He mentioned a few of the items on the list in addition to those of particular interest to Canada, and asked whether it was possible to indicate just what the United States felt it must have from this list. Mr. Beale said that he felt that the decision on this matter rested with Mr. Corse and it would not be appropriate to make any suggestions in that connection. He pointed out, however, that none of the items on the list was of concern to domestic producers in the United Kingdom and that what was really needed was a cooperative attitude on the part of the United Kingdom in agreeing to reductions if and when the Dominions concerned indicated their willingness to release the bound margins of preference on such items.
Mr. Steel reiterated very briefly the difficulties which the negotiations presented to the United Kingdom and said that he would communicate to his government the points made in the conversation.
- Deputy Director, Office of British Commonwealth and Northern European Affairs.↩