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

394.31/10–2351: Telegram

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

restricted

Geneva, October 23, 1951—7 a. m.

Tagg 106. Summary Oct 22 plenary.¹ Belg restrictions.² Belg del outlined BLEU prob of rapidly increasing credits to EPU countries which necessitated fol measures: (1) limitation exports to EPU countries; (2) control payments recd from EPU countries; (3) suspension obligation repatriate fon currencies EPU countries; (4) five percent levy on proceeds export transactions to EPU (funds blocked for six months); and (5) restrictions imposed purchase certain dol imports. Explained latter necessary encourage purchases payable EPU currencies. Stressed purpose all measures to limit amt new credits and asked point 5 be considered element integrated policy to be judged basis whole. Pointed out EPU managing board accepted measures and decided BLEU shld take all measures within power to encourage imports from member countries. Pointed out Belg press has noted increased Belg holdings inconvertible currencies as result surpluses. Stated Belg cld not claim substantial lowering monetary reserves but did claim threat to gen Belg financial stability. Belg feels measures fall within Art XV of GATT. Felt GATT language complicated, not precisely applicable this particular problem, but that GATT rules in gen applied and willing to consult. Asked case be judged spirit comprehension and justice.³

US del stated US Govt extremely disturbed Belg decided impose QR’s against imports from US, both because effect on US and because this step backward in goal of expansion multilateral trade and convertibility taken by country which made such great steps recovering from war and enemy occupation. Stated restrictions, already in effect altho not published, will reduce dol imports about 18 percent, which substantial cut. Pointed out gold and dol reserves increased. Referred Belg obligations under Arts XII 2(a), XII 4(a), X. US feels integrity, usefulness GATT jeopardized if country imposes QR’s without abiding by GATT rules that such restrictions only justified by country’s BOP position. US unable to accept view that because these measures taken under Art XV and fund Art XIV this exempts them from scope of XII. Decision must be on whether justified by BOP reasons. US feels history case shows Belg QR’s devised provide special preference West Eur goods and not protect reserves. Pointed out OEEC Council decision was that BLEU cld take measures “open to them” to reduce surpluses; US feels measures taken by Belg not open to them. US does not share belief restrictions necessary to EPU. Suggest normal procedures agreement be adhered to and WP in consultation IMF determine whether measures meet agreements BOP criteria.

Canadian del questioned Belg lack of consultation until now, felt added doubt about measures. Canadian urged removal restrictions, consultation under XII prior reimposition. If Belg wanted to claim QR’s and exchange restrictions as well, XII consultations shld commence and IMF might initiate own consultations. Canadian also felt problem arises whether agreement is to continue as effective internatl instrument.

UK del pointed to difficult problems facing EPU and urged CP’s avoid hasty decisions which might affect EPU. UK feels matter essentially trade restrictions, shld be dealt within GATT under Art XII 4(a). Suggested WP be established to proceed with consultation, entering into all aspects Belg problem, and report CP’s. Fr del, referring complicated legal problem, number texts applying, suggested not going too closely into texts but rather into gen spirit of agreement as in US-Czech withdrawal.⁴ Agreed with UK on setting up WP and on importance from point view EPU as well as gen agreement. Cuba opposed restrictions not justified BOP grounds, also felt agreement impaired by such restrictions. Supported consultations under XII 4(a).

Belg del pointed out Belg reserve situation not as healthy as appeared because part of reserves inconvertible. Nevertheless, stated clearly and emphatically Belg justification not based on dol balance of payments. Belg insists Art XV text applying this case and willing engage in consultations under XXII. Wld agree to WP but cld not agree to ref to specific art under which action taken, particularly cld not agree to XII, which implies BOP justification.

US del supported UK proposal for consultations under XII 4(a) with terms ref of WP similar South Africa.⁵ Felt WP with gen terms ref wld serve no useful purpose, and that only suitable provision XII 4(a). Stated Belg applying both QR and exchange restrictions. Latter within jurisdiction of Fund, former within jurisdiction of GATT. Again disagreed with view that resort Art XV eliminated need for justification under Art XII.

In summarizing chairman stated agreement on one point—Belg shld consult with CP’s. Since division of opinion on art or arts applicable suggested question of terms ref be reverted to latter, after agreement reached outside plenaries.

Sent Dept Tagg 106, rptd info Paris for OSR 101, Brussels 16.

1. Meeting of the Contracting Parties.
2. The Belgian and United States statements cited in this telegram are in GATT Files, Lot 66 D 209, Box 454, “GATT 6th Session—Reports”: Doc. GATT/CP.6/44, 22 October 1951 (the Belgian statement) and Doc. GATT/CP.6/50, 24 October 1951 (the United States statement). Both were made on October 22.
3. The official text of the Belgian statement included a protestation that the Governments of Belgium and Luxembourg “had no protectionist aim in view” and that they hoped “to limit to a minimum the duration of these measures.” The restrictions were described as having “been envisaged exclusively with a view to easing the Belgo-Luxembourg Union’s credit position in the European Payments Union.” The Belgian Delegate stated with emphasis: “Nothing in our recent action, at all events, is ground for the assumption that Belgium is about to alter the fundamentals of its commercial policy.” (Doc. GATT/CP.6/44, 22 October 1951, GATT Files, Lot 66 D 209, Box 454)
4. For documentation regarding this subject, see pp. 1381 ff.
5. For documentation regarding the question of the South African import restrictions, see Foreign Relations, 1949, vol. i, pp. 651 ff., and ibid., 1950, pp. 721 ff.