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

394.31/9–2751

Memorandum of Telephone Conversation, by the Assistant Chief of the Commercial Policy Staff (Weiss)

confidential

[Washington,] October 1, 1951.

Subject: Belgium–EPU Surplus Problem

Participants:	Mr. Weiss—CP
	Mr. Willoughby—Counselor, American Embassy, Canada

The attached cable¹ was received by the Department from the American Embassy at Ottawa inquiring (1) what the United States position was with regard to the handling of the Belgium–EPU surplus problem, including the question of imposition of import restrictions by Belgium against the dollar area, and (2) as to the accuracy of a report by Mike Hoffman in the New York Times of September 23 that the Council of the OEEC, with the full approval of the ECA, had recently advised Belgium to “buy more from Europe and sell less to Europe, buy less from United States and sell more to the United States”. The Embassy requested to be informed by telephone on these points.

After a check with Messrs. Boochever² and Srole³ in the Department and with Mr. Salant⁴ in ECA, it was agreed to inform Mr. Willoughby as follows, and Mr. Weiss telephoned Mr. Willoughby accordingly:

With regard to the first question raised by the Embassy, Mr. Weiss informed Mr. Willoughby that the position of the United States so far as handling this matter in the GATT was concerned, was indicated in a cable (Gatt 33, September 22) which had been sent our Delegation to Geneva and which Mr. Weiss had repeated to Ottawa in response to the Embassy inquiry. This cable indicated that it was not self-evident that the Belgian reserve position was such as to require the imposition of restrictions against the dollar area; that whether such restrictions could be justified would depend on a number of imponderables which had yet to be determined, such as the size and method of settlement of the Belgian surplus in EPU; that no decision on the justifiability of Belgian restrictions against the dollar area could be reached until decisions had been made by the EPU Managing Board on the Belgian problem and until the Fund’s views on Belgium’s reserve position had been obtained. Mr. Weiss further informed Mr. Willoughby that, on the basis of the present Belgian reserve position and in the absence of decisions by the EPU which might affect the situation, it did not appear that the Belgian reserve position was such as to justify import restrictions against the dollar area. He also informed Mr. Willoughby that if Belgium had not as yet applied any such restrictions, our Delegation at Geneva would probably try to persuade Belgium to continue to hold off on such restrictions and not to come into the GATT with this problem at this time. If, however, the Belgians were in fact applying such restrictions, there would be no alternative, in the light of the provisions of the GATT, but to take this question up at the present GATT meeting. Mr. Willoughby told Mr. Weiss that, according to Canadian information, the Belgians had announced that they would apply import restrictions against the dollar area beginning in November.

With respect to the second question regarding the accuracy of the Hoffman story, Mr. Weiss informed Mr. Willoughby that a cable had been received from OSR, Paris (Repto 4541, September 12)⁵ which indicated that no recommendation had been made by the Managing Board of EPU or by any OEEC organ for the restriction of dollar imports by Belgium. He further informed Mr. Willoughby that to the knowledge of the people in the Department and of Mr. Salant in ECA, ECA had not encouraged or approved the imposition of restrictions by Belgium against the dollar area. Mr. Weiss suggested that a possible source of the confusion might lie in the fact that about a year ago the OEEC had recommended that Belgium take measures to reduce its dollar deficits and European surplus. In making this recommendation, however, the OEEC made no statement with regard to applying import restrictions against the dollar area and, of course, there are various ways other than import restrictions against the dollar area by which Belgium’s dollar deficits and European surplus might be reduced.

1. Ottawa telegram 53, September 27, 5 p. m., supra.
2. Louis C. Boochever, Jr., Financial Economist, Office of European Regional Affairs.
3. Saul R. Srole, International Economist, Monetary Affairs Staff.
4. William A. Salant, Chief, European Trade Policy Division, ECA Headquarters, Washington.
5. See the second footnote 1, p. 1480.