394.31/3–1351: Telegram

The Secretary of State to the United States Delegation to the Torquay Conference


461. From Leddy and Catudal.

1. We in Dept feel phrase in Art XIX (ur 537, Mar 13) “to the extent and for such time” clearly applies to withdrawal or modification concessions and are aware of no Geneva or Havana doc suggesting [Page 1540] contrary interpretation. Moreover, original US Proposals (Nov 1945) described escape clause in terms of “temporary action”. Withdrawal hat body concessions without specified time limit does not mean that withdrawal necessarily permanent but that it was not possible to predict specific time when threat of serious injury wld cease.

2. US position shld recognize that literal terms Art XIX in principle contemplate eventual restoration concessions if serious injury to domestic industry no longer threatened. However, if hat body concessions restored, compensation being given supplying countries for withdrawal wld likewise have to be restored or its equivalent. We recognize right of CPs which are not given compensation to suspend substantially equivalent concessions to US within terms Art XIX. It wld be intolerable situation if compensation regarded as permanent whereas withdrawal by US only temporary.

3. Accordingly, there appear to be 3 possible alternative methods for handling problem:

Recognizing in principle US hat body concessions must eventually be restored if serious injury domestic industry no longer threatened, it wld likewise be necessary either (1) to restore particular concessions paid by US as compensation for withdrawal and to restore concessions withdrawn under Art XXVIII negots or (2) to agree to negotiate for equivalent concessions to US at time of restoration hat body concessions. Consider (A) (1) above objectionable from public relations standpoint because it wld require earmarking specific concessions involved in compensation process. This objection wld be avoided by (A) (2).
CPs by res might decide that since compensation for withdrawal was permanent, withdrawal cld also be permanent since whole tenor Art XIX and GATT contemplates reciprocity. If found whole absolutely necessary, this cld be done by waiver procedure Art XXV para 5(a).
US cld suggest that while initial withdrawal on temporary emergency basis Art XIX, withdrawal hat body concessions might now be made permanent through technical use Art XXVIII. In this event all elements involved, including compensation, wld be made permanent. In this connection, it cld be pointed out that since withdrawal concession had actually preceded Torquay negots, this technical resort to Art XXVIII with respect this one item in these special circumstances cld not be reasonably regarded as backtracking from our initial and general position that we wld not propose Art XXVIII withdrawals.

4. USDel may wish lay these alternatives before interested CPs. USDel shld use own discretion re which alternative to press for.

5. Above is Dept position only, without consultation other agencies. [Leddy and Catudel.]