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

394.31/10–451: Telegram

The United States ( GATT ) Delegation to the Secretary of State

confidential
niact

Geneva, October 4, 1951—2 p. m.

Tagg 60. Leddy, Corbett, Bronz,¹ Hight² met with Suetens, Janson, Cassiers, Belgian Del last evening.

Suetens confirmed fact that no license to import dollar goods had actually been denied but some applications not being acted on. He did not suggest this state of affairs due to indecision on part of Belgians to go ahead but to difficulties involved in working up prohibited list with Luxembourg. Suetens further explained that Belgians were contemplating 3 alternative courses of action with respect to restriction:

1. Justify import restrictions under Art XII GATT.

2. Impose exchange restrictions under Art XIV IMF and corresponding import restrictions under Art XV Sec 9, GATT.

3. Seek waiver under Art (XXV), GATT.

From foregoing it can be seen that failure of Belgians actually to deny dollar import licenses gives them time to select among above 3 courses. USReps made clear to Belgians fol:

1. Belgian restrictions against dol imports wld not have any effect upon US attitude in negots on gold-credit settlement under EPU or upon other negots we might have with Belgs bilaterally or multilaterally. Although Belgians vigorously denied import measures were bargaining device, they expressed keen interest in various sources dol income (e.g. off-shore purchases, etc.) as possible solution to their difficulties. Consequently, we are still left with impression that the restrictions are tactic rather than fundamental change in trade policy.³

2. While we cld make no definitive statement on applicability of IMF Art XIV to Belgian case, we believed this approach amounted to technical circumvention of GATT given the background against which Belgs imposing restrictions. Consequently, avoidance of GATT procedures wld have very serious implication upon integrity and future of organization. As a matter of policy, felt advisable Belgians shld proceed under GATT Art XII.

Remarks in part based upon assumption that Belgian financial position wld not receive [Fund’s] scrutiny if IMF Art XIV applies. Some doubt within USDel whether invocation Art XIV requires thorough examination of Belgian financial position by funds to determine if necessary for Belgians to apply these restrictions. If such exam required we wld have no real objection to this approach by Belgian and Bronz considers it decidedly preferable. At same time, any Belgian preference for IMF Art XIV procedure might well disappear since in our discussions Belgians seemed to hold views that scrutiny their financial position cld be avoided by IMF Art XIV alternative.

Belgians here seem to favor that course and we understand De Selliers⁴ has discussed matter with Southard⁵ and others at Fund.

Belgians, while making frequent refs to financial plight, do not seem convinced cld make case called for under GATT Art XII except under completely pessimistic and probably unrealistic assumptions as to dol revenues.

Suetens proposed joint meeting Monday with Saad.⁶ Wld appreciate your comments advice by then.

Sent Dept Tagg 60 rptd info Paris 83, Brussels 11.

1. George Bronz, Special Assistant to the General Counsel, Department of the Treasury, member of the United States Delegation at Geneva.
2. John W. Hight, Economic Specialist, Office of the Special Representative in Europe (OSR), Economic Cooperation Administration (ECA), Paris.
3. Documentation on these matters is in volume iv.
4. Ernest De Selliers, Executive Director for Belgium, IMF.
5. Frank A. Southard, Jr., Executive Director for the United States, IMF.
6. Ahmed Zaki Saad, Executive Director for Egypt, IMF. In this context Saad is referred to in his liaison capacity as the Fund’s consultative representative at sessions of GATT when consultations with the Fund were required.