Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

411.4931/7–3051: Telegram

The Secretary of State to the Embassy in France

secret

Washington, July 30, 1951—7 p.m.

695. For Leddy.¹

1. Re trade relations with Czecho Dept has proposed and TAC has agreed to fol course.

2. Dept will send to Wyndham White² and will release fol for Wed morning newspapers: (a) ltr to Wyndham White requesting that, in circulating provisional agenda for Sixth Session, an item shld be included entitled “Termination of Obligations between US and Czecho under Agreement” and requesting that statement be circularized to CPs in explanation of proposed agenda item; and (b) text of such statement, as contained in para three below.

3. Begin text. US has determined withdraw from Czecho benefits trade-agreement tariff concessions.

Since US and Czecho are CPs to GATT, US proposes that at Sixth Session all of the obligations existing between it and Czecho by virtue of provisions of Agreement shld be formally terminated. This statement is brief explanation of factors involved in US decision.

When in 1947 CPs framed obligations to one another which are contained in GATT, it was assumed polit relations of countries concerned wld be such that it wld be in their mutual interests to promote movement of goods, money, and people between them. It is now apparent that this assumption is no longer valid as between US and Czecho. On contrary, relations between US and Czecho have been progressively impaired by manifestations Czecho ill will toward US. Property Amer nationals in Czecho has been confiscated, without compensation or any serious attempt on part of Czechs to settle matter. Amer firms have been persecuted and harassed to such degree that it is virtually impossible for them to do business with Czecho. Procurement ordinary trade info essential conduct commercial enterprises has been declared crime. US has been forced on extremely short notice drastically reduce personnel its Emb in Prague. Amer citizens have been imprisoned without justification. Amer charitable and welfare orgs have been forced discontinue their work.

Impairment econ relations has been aggravated by progressive integration Czech economy into Soviet bloc. Czecho has openly declared its intention administering its economy solely in interests of bloc. It has granted a special and guaranteed position to Soviet bloc corporations in its economy. It has left no room for doubt that its commitments to US are being subordinated or disregarded in carrying out its undertakings as part of Soviet econ bloc.

US attaches considerable importance maintenance GATT as an instrument through which nations which are in agreement on its broad objectives can work together in econ sphere. US is of view, therefore, that in interests maintaining integrity of GATT in its application to trade among nations with normal relations, existing situation between US and Czecho shld be frankly and unequivocally recognized by CPs and obligations between two countries embodied in Agreement, already rendered a nullity by polit events, shld be formally dissolved. End text.³

4. Note statement does not cover two pts: (a) exact timing withdrawal concessions from Czecho and (b) exact provision of GATT on basis of which action wld be requested of CPs. For urinfo, our present thinking is that concessions wld not be withdrawn until after Sixth Session and that we wld resort to Art 25. If queried here on (a), we will state this is technical issue which is being fitted into broader program of withdrawal trade agreement concessions from all of Soviet bloc pursuant Sec 5 TA Renewal Act.

5. Note also that CPs not being asked make judgment on merits of dispute between US and Czecho, as wld be case if US were asking for waiver its obligations alone. CPs simply being asked recognize abnormality Czecho-US relations and inevitability resultant econ consequences.

6. Above release will be simultaneous with release basic Presidential proclamation which sets basis for withdrawing trade agreement concessions from Soviet bloc pursuant Sec 5.⁴

7. Ottawa, London, Oslo, Brussels, Hague, will be requested communicate proposed action re Czecho to accredited govts before Wed morning, together with statement regret that pressure events had made it impossible to engage advance consultations.⁵ Assume you will wish make same disclosure and explanation to Fr Govt on Tues.

Acheson

1. John M. Leddy, Deputy Director of the Office of International Trade Policy. Leddy was in Europe at this time with a small group of Department of State experts from the Commercial Policy Staff, to engage in an exchange of views on GATT matters regarding the Sixth Session meeting scheduled for September, with their counterparts in the British, French, Belgian, Netherlands, and Norwegian Governments.
2. Eric Wyndham White, Executive Secretary for the Interim Commission for the International Trade Organization. ICITO had been performing the services of a secretariat for GATT. The Department’s telegram to Wyndham White was No. 84 to Geneva, July 30, 8 p. m., not printed.
3. This text is printed in the Department of State Bulletin, August 20, 1951, p. 290.
4. This refers to the Presidential Proclamation of August 1.
5. This was done on July 30, 8 p. m., in Department telegrams 146 to Brussels, 700 to London, 93 to Oslo, 24 to Ottawa, and 150 to The Hague (394.31/7–3051). An information circular was sent on July 31 (No. 94) to 43 diplomatic missions (including the foregoing); HICOG, Frankfurt; SCAP, Tokyo; and the Consulate General at Salisbury, Southern Rhodesia (394.31/7–3151). After an exchange between the Department and the Embassy at Praha, the Department decided on August 8 not to communicate directly with the Czech Government but to send its notification through Wyndham White, the ICITO Executive Secretary.