394.31/10–1251: Telegram

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

confidential
niact

Tagg 81. Ref Tagg 60, rptd Paris 83, Brussels 11; Tagg 75, rptd Paris 88, Brussels 13; Gatt 88, rptd Paris 2154, Brussels 498; Repto 5093,1 rptd Geneva 83, Brussels 352.

1. USDel has recd copy of report EPU Managing Board on Belg EPU surplus prob. Understand summary and copy of report transmitted Washington by OSR. However, wish call attention Fon Section’s report dealing with dol import restrictions:

a.
Part I, para 7, states: “The Board wishes to emphasize that the extent to which these restrictions will enable a market to be developed in BLEU2 for further goods from EPU countries, will depend to a large extent on the firmness and resoluteness with which the restrictions are administered, and the extent to which Belg importers are forced, thereby, to look to EPU countries for the goods which they formerly obtained in the dol area.”
b.
Annex giving factual statement represent and proposed measures deal surplus prob states in part:
  • “(1) The Belg and Luxembourg Govts have imposed further restrictions on imports from the dol area.

    “In principle all imports from the dol area which can be bought in the EPU area will in future be prohibited. Exemptions will be granted in the case of raw materials and essential goods as well as imports which if prohibited wld lead to substantial price increases.

    “These measures cover all imports payable in dols but will, in fact, chiefly affect purchases from the US and Canada, since the other countries of the dol area only supply essential raw materials”. Total cut in dol imports from US and Canada apparently will run at about $80 million annually.

2. Appreciate fact that MB report not binding on govts until approved by OEEC and that specific conclusions and recommendations in report merely state MB “welcomes these measures as useful contribution to solution of problem” and does not specifically approve dol restrictions. Nevertheless, approval by OEEC of recommendations in context whole report wld inevitably be taken to mean OEEC and US approval of restrictions.

3. Connection para 2, USDel continues receive statements from Belgs here that OSR reps in Paris have taken position implying approval of dol restrictions or at least have not effectively objected. Belgs obviously seeking split US Govt on matter by playing off our interest EPU versus our interest GATT and Fund. Most effective way US can make its position clear is for OSR to file written statement specifically [Page 1493]disavowing approval by US of restrictive measures in absence of convincing demonstration in GATT and Fund that they are necessary on balance payments grounds. USDel strongly urges that such statement be made immediately during period next few days when Belg del GATT will be consulting Brussels.

4. View USDel on basis facts available here is that dol restrictions cannot be justified balance of payments grounds. It shld be recalled that Belgs have not yet attempted officially or in informal conversations to justify dol import restrictions on foreign exchange position of country and in fact have stated it constitutes a step backward on the road to convertibility (see OEEC Doc C(51) 298 Sept 5, 1951).3

View foregoing, only tenable position US can take, without seriously undermining GATT and Fund balance of payments principles, is that balance of payments justifications must be shown. To be effective, this position shld be held with equal force in Paris, Washington and Geneva. Accordingly, USDel wld appreciate prompt reply Tagg 75. Pls also confirm whether if Belgs proceed under Art XIV of Fund US Fund reps will institute scrutiny Belg position under Fund Art XIV, para 4.

5. Appreciate analysis export controls aspects GATT but our primary concern now is with dol import controls and US position thereon.

Sent Dept niact Tagg 81; rptd info Paris (for OSR) 92, Brussels 14.

  1. Not printed.
  2. Belgo-Luxembourg Economic Union.
  3. Not printed.