394.31/7–1051: Telegram

The Secretary of State to the Embassy in Czechoslovakia


21. Sec 5 of Trade Agreements Extension Act 19511 directs Pres soon as practicable deny trade concessions Sov bloc countries and areas. Notes denouncing or proposing modification agreements with USSR, [Page 1382] Rum, Bulg, Hung and Pol delivered and anticipated new tariff rates effective in one to 12 months time.2

Multilateral nature GATT obligations makes problem implementation Sec 5 re Czecho difficult.3 Action under Art XXI studied but rejected because difficult show natl security involved in merely raising rates to limited extent involved. Art XXIII prescribes consultation with Czecho which Dept wishes avoid. Other GATT Arts. provide for consultation (and remedies) for dumping and discrim state trading, so Interdepartmental Trade Agreements Committee4 feeling is US shld attempt obtain waiver under Art XXV which requires two-thirds vote contracting parties voting, which must also constitute majority of all CP’s. However, recent informal discussion problem with Can officials indicate wld be easier obtain required vote if documented case prepared showing impairment, for use in informal discussion with other CP’s, although US intends to ask CP’s for waiver under XXV rather than proceed under XXIII.5

Case under XXIII difficult develop on product basis since major items on which Czecho granted concessions to US now on export control lists. Dept therefore favors showing denial by Czecho to US of m-f-n treatment sufficient to constitute impairment. Case wld be based on privileged position enjoyed by USSR Exim trade of Czecho, discrim practices Czecho state trade corps and discrim suffered by US business reps and firms. Any evidence Emb can contribute in building up such case either by citations relevant previous material or new data needed urgently.

[Page 1383]

Dept needs citations of regs, decrees, and official statements clearly demonstrating special position Sov agencies in Czecho, examples of denial of US reps access Czecho officials, effect of Law on Protection of Republic which makes impossible obtain credit ratings or market surveys, discrim treatment of US commercial traders and samples, virtual Czecho embargo on certain US product such as films, books, etc.

For maximum usefulness material shld reach Dept by July 25.

Dept’s action in this matter based on aforementioned TA legislation and is not specifically related to question of econ reprisals in Oatis case.6

  1. For documentation regarding the 1951 trade agreements legislation, see pp. 1373 ff.
  2. For texts of the notes to the U.S.S.R., Romania, Hungary, and Poland on June 23, June 27, and July 5, respectively, see Department of State Bulletin, July 16, 1951, pp. 95 and 96. Public announcement of this action was made by the Department of State on July 6; see ibid., p. 95. Notice by the United States of intent to terminate the agreement with Bulgaria was transmitted to the Bulgarian Government, through the Swiss Government, on July 12; for the Department’s announcement on this, see ibid., October 1, 1951, p. 550. On August 1 President Truman signed a proclamation ordering the suspension of trade-agreement concessions with respect to Communist-dominated countries, the actual dates of termination to be consistent with the international commitments of the United States; for text, see ibid., August 20, 1951, p. 291. In a letter from the President to the Secretary of the Treasury, released to the press on August 1, certain “nations and areas” were named for which the suspension was to take effect after the close of business August 31, 1951; for text, see ibid., pp. 291 and 292. (The Soviet Union itself was not named in this list, and the only states were Albania and Romania; all other listings fell within the category of “Communist-dominated” countries or areas, such as “any part of China which may be under Communist domination or control”, “the Soviet zone of Germany”, Communist-dominated or controlled areas of the Associated States of Indochina and Korea, Estonia, Latvia and Lithuania, etc.)
  3. For information on the General Agreement on Tariffs and Trade (GATT), see footnote 3, p. 1245.
  4. For information on the Interdepartmental Committee on Trade Agreements (TAG) and its role in the U.S. tariff negotiating process, see footnote 2, ibid.
  5. The implicit reference here is to action to be initiated by the United States at the Sixth Session of the Contracting Parties of GATT (cited hereafter as CP’s when used in the collective sense), scheduled to convene at Geneva, Switzerland on September 17, 1951.
  6. For documentation on the Oatis case, see vol. ii, pp. 735 ff.