740.5/9–2451: Telegram
The Secretary of State to the United States Deputy Representative on the North Atlantic Council (Spofford), at London1
Todep 242. Ra D–D (51) 2482 and Depto 374.3
1. Our goals are to (a) push implementation Ottawa infrastructure agreement with utmost speed (b) put NAT countries on notice of necessity in immed future considering ways and means of our complying with policy concerning taxes reflected in Sec 521 MSA Act 1951.4
A. Without specifically relating it to Ottawa agreement, you shld make frank presentation of situation which has arisen as result of Sec 521 MSA Act and indicate this is matter of concern to all NAT nations because of its relationship not only to present but also future aid legis.
B. At Ottawa this problem had not emerged in its present form. We are nevertheless faced with present situation and we know other nations will join with us in seeking solution that will not delay implementing infrastructure urgently required. The situation is one which other NAT countries must face realistically as matter of selfinterest.
C. You shld state studies are being conducted in US to ascertain types of taxes covered by statutory prohibition and to recommend appropriate procedures to comply with Congressional intent. We hope to have further details on this at very early date. However, as each country has different tax problem, arising from tax structure and tax laws, matter does not appear susceptible of multilateral approach, nor wld multilateral approach provide adequately speedy solution. It is our conviction such details can be developed in due course and must not be allowed delay estab procedure per para E this tel. The accomplishment of second-slice projects, supported by internatl financing, is no more than start of infrastructure program and will overlap further infrastructure projects which will arise in near future. This aspect of problem shld therefore be considered as small aspect of problem of total effort to meet MTDP.
D. As earnest of US desire to minimize difficulties and delays, US is prepared to meet any reasonable calls by SHAPE for financial advances, [Page 319] subj to exception of taxes, under fol procedure, which we believe will be most expedient.
E. To permit speedy application of financing arrangement set forth in D-D(51)248, US believes SHAPE fiscal system shld be utilized and CD participation in these details minimized therefore. Accordingly, SHAPE shld be instructed estab and put into operation procedures as may be advisable subj review by Budget Comite and approval by CD. US believes essential maintain central admin over expenditure subj funds and specifically agrees with functions B, C and D, para 4 reftel. Re function D, shld be clear SHAPE will be no more than paying agent for respective contributing nations. (FYI only rpt only, this is to provide for bilateral arrangements not involving SHAPE re taxes.) As to para 4A, believe this covered by para 7 of D–D (51) 248. Procedure shld accord generally with existing fiscal procedures for admin budget insofar as applicable, with adjustments as necessary.
4.5 FYI only, in interim, until SHAPE has time to estab mechanics, believe Fr Govt will be prepared continue make advances and in contemplation this, US is developing basis for entering into bilateral base right negots with Fr at earliest possible date. This based on statement Mayer to Pace at Ottawa of his pleasure over agreement which obviated need his applying Oct 1 cut off.
5. FYI only, implications Sec 521 are very broad and we feel every caution must be taken so as to abide by and not to commit beyond Congressional intent. We urge you to spare no effort to have other Deps realize seriousness of implications this tax point which wld be aggravated shld they not agree to above proposals.
6. Unless you perceive major objections to foregoing procedure as means obtain goals para 1, you shld pursue soonest.
- Drafted by Joseph J. Wolf of the Office of European Regional Affairs and cleared with Ernst of Defense, Henning of Treasury, Yingling of L/EUR, Tannenwalt of the Executive Office of the President, and Hefner of EUR; repeated to Paris for MacArthur, Harriman, Schuyler, and Tomlinson, to Wiesbaden for Norstad, and to Heidelberg for Handy.↩
- Transmitted in telegram 1713 to Paris, September 20. p. 281.↩
- Dated September 24, p. 286.↩
- For the text of Public Law 165, see 65 Stat. 373. For documentation concerning the Mutual Security Program, see vol. i, pp. 266 ff.↩
- No paragraphs 2 and 3 in source text.↩