The Acting Secretary of State to the United States ( GATT ) Delegation 1
Gatt 33. Following are comments requested Tagg 11 re reintroduction Belg restrictions on import dol goods:
1. Belg has been chronic creditor in EPU and exhausted its EPU quota in Aug. EPU Managing Board now considering method of settlement surpluses beyond quota. Belg interested not only in satisfactory arrangement for settlement excess surplus but also in undertaking measures by which it hopes surplus wld be sharply reduced. Encouragement imports from EPU area, through imposition restrictions dol area, among such measures being considered. Corbett will provide additional details.
2. Belg will presumably attempt justify imposition dollar import restrictions at this time on basis standards Art. XII–2. If they do so, US Del should take following line:
On basis known facts it is not self-evident Belg has reserves “unduly low” or “seriously” declining or that serious decline imminent. Whether Belg will in fact experience decline dollar reserves justifying imposition restrictions against dollar area depends number imponderables whose effect cannot now be judged by CP’s. For example, it depends on size and method settlement Belg surplus EPU. These are questions answers to which will have to be obtained other forums, [Page 1483]notably EPU Managing Board. Furthermore, in accordance Art XV GATT, necessary obtain views Fund2 on financial aspects involved before CP’s can reach decision on whether QR’s against dollar area justified or not. Fund’s views on Belg reserve position should therefore be requested. Until these views obtained and until other factors referred above are worked out, decision by CP’s on whether authorize imposition QR’s by Belg could not properly be made.
3. Belg-Lux gold and short-term dollar assets in July 1951 totalled (in mil dols) 738. Fol are year-end figures for 1938, 1945 through 1950; 828, 940, 918, 744, 722, 836, 722. On basis tentative ECA 1951–52 B/P projections, which prepared before present Belg problem and assume no dol import restrictions, serious decline reserves not anticipated. Projections indicate relatively small current account deficit dol area, thus only small reduction gold and dollar holdings.
4. FYI, while US wishes issue to be considered in Fund, it would prefer avoid actual consideration by Fund until after Managing Board of EPU has completed work on problem and until after Rome NATO meetings.3