394.31/2–1051: Telegram

The Temporary Acting Chairman of the United States Delegation to the Torquay Conference (Phelps) to the Secretary of State

confidential
priority

427. USTAC. Pass ECA/W.

1. Sixth private meeting on MN held February 9 with Benelux, UK, France, Italy, Austria, Germany, Norway, Sweden, Denmark, Canada and US present.

2. Blankenstein submitted following report of Working Group on commodity list:

a.
Of lists submitted, three items and a portion of a fourth item not Objected to for limited MN Torquay.
b.
Inconclusive discussion textiles.
c.
Difficult to commit to items in a list until decision on methods. Hence proposes proceed later.

3. Canada deplored fact accepted list so limited, no agricultural items. The more restricted the list, the more restricted Canadian interest.

4. US (Schwenger, Blick) supported Canadian statement—also stated we felt results of Working Group not conclusive. No consideration of quality or nature of objections to including particular products. Agreed reasonable to make some effort get concurrence on method before returning to limited MN here.

5. Working Party report accepted. Chairman opened discussion of paragraphs 4 to 6 Benelux paper, calling attention particularly to paragraph 6.

6. UK (Edgar, Cohen1) asked Benelux whether “method” implied automatic leveling or negotiation encompassing related practical problems in unemployment, subsidization, dumping, QR’s, et cetera. Latter is whole integration problem. Does Benelux consider its proposal a short cut?

7. Benelux (Blankenstein) pointed to words “as far as possible”. Emphasized obligation find some method to lower tariffs and assist integration as recommended by October 27 OEEC resolution.

8. UK felt necessary take into account social, historic, economic reasons for tariff disparities, not apply automatic formula.

9. Blankenstein submitted modified formula, reduction disparities by 25 percent each year for three years. After three years stop and examine special situations in regard to last 25 percent.

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10. French (Larre) opposed, said would subject European economies to world competition, result unemployment and economic disruption. Must first have leveling of living standards. Different from original Benelux proposal and required study. Would support original proposal.

11. Italy concurred France.

12. Benelux stated purpose to reduce European tariff disparity as obstacle to integration and strengthen European economy. Selection items avoid danger outside competition except US, Canada, from whom compensation would be sought. If insufficient compensation, envisage other method. Differences in living standards and productive efficiency in Europe not great enough justify present tariff disparities. Second proposal did not differ greatly from original proposal. Willing consider another proposal. Further delay steps toward integration may mean too late for outside reasons known to all.

13. Cohen stated plan is “simple, but completely unacceptable”. UK would never commit to new formula. Would consider original scheme, although believed no practical results. New formula assumes only last 25 percent disparities has economic justification. Not so.

14. Benelux replied “present European tariff disparities unacceptable to Benelux”. High tariff countries cannot justify sit tight and kill all proposals. Willing to listen to other proposals. As example, asked UK why artificial silk duty disparities.

15. UK charged Benelux maintaining QR’s until disparities removed. UK not criticizing. UK said (in OEEC) 75 percent liberalization if satisfactory results Torquay, otherwise retain 60 percent. UK has no plan, but maintains Benelux plan impractical. Avoided silk discussion.

16. Blankenstein summarized his differences UK views:

(a)
Disparity in tariffs not justified by differences costs of production or otherwise unchangeable.
(b)
Liberalization held up by tariff disparities. Action must be taken.
(c)
Disparity is European problem, not low-tariff-country problem.
(d)
UK action in bilaterals (as well as on multilateral discussion) indicates little desire facilitate. UK would not open bilaterals with Benelux until January, were insisting concessions from Benelux that would increase disparity.
(e)
Latest Benelux formula similar automatic formula proposed by UK and accepted OEEC for QR liberalization.
(f)
If UK has no plan and refuses consider other plans, other European countries must decide if they will proceed without UK.

17. Denmark (Sveinbjornsson) stated complete support Blankenstein view “for same reasons”.

18. Norway suggested that, if no solution Torquay, some proposal be made to OEEC.

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19. Next meeting 16 February to continue discussion.

20. Heated clash Cohen–Blankenstein probably indicates Blankenstein decision (forecast in conversations before meeting) no multilateral results possible Torquay. We foresaw this (Blankenstein inquired re our position a.m. ninth) but were unable take forceful enough position prevent, particularly in view urtels 379 and 363.2

21. Judge effort will be made agree on authoritative communication to OEEC describing results Torquay in terms which will prevent application deliberalization aspects October 27 resolution. UK may block even this. Becoming apparent UK may want no substantial success Torquay—either multilateral or bilaterals. This view widely held—shared by Canadians who concerned Cohen’s analysis (reported paragraph 15 above) relation to OEEC may be important reason UK attitude. Blankenstein proceeding Hague today.

Sent Department 427; repeated information Paris for OSR 38, London 195, Rome 9.

Phelps
  1. E. A. Cohen was Under-Secretary of the British Board of Trade and presumably was with the British Delegation at this time although he is not on the available official list. The other British official is perhaps John William Edgar, British Foreign Office, on service in Luxembourg.
  2. Neither printed.