694.001/8–951: Telegram
The Special Representative in Europe for the Economic Cooperation Administration (Katz) to the Secretary of State
Repsec 15. Charpentier called at his request today to inform me re Fr position on proposed most favored nation clause in Jap treaty. He said that Fr Govt had made its position clear to Dulles in opposition to reciprocal extension of MFN treatment and that this attitude was well known in Wash. Reason he advanced for taking this up with me was the possible deleterious effect which granting of MFN treatment wld have on further economic integration in Eur. He said this was particularly true in case of textiles and that certain continental countries such as West Ger and Fr including overseas wld not be prepared to extend MFN treatment. Therefore important that econ agencies US Govt be aware of reasons for Fr attitude. I replied by indicating that a number of Eur countries had extended MFN treatment to non-European countries in spite of possible effects on European economic integration to which Charpentier replied that while that was true and while efforts to remove trade barriers were continuing in GATT, the low costs of Japanese labor and the ability to undersell in such markets as North Africa and Indochina were so well known as to make it difficult for such countries as France to agree to gen MFN treatment for Japan. What the Fr Govt desired was MFN treatment by Japan and then the right to engage in bilateral trade negotiations with Jap Govt.
I assume that Dept is fully aware of this problem and do not intend to pursue it further here unless so instructed from Wash.1
Dept pass ECA. Paris Emb for Amb.
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In its note AF/DL No. 441 to the Department, August 11, the French Embassy in Washington stated in part that the insertion in the text of the Treaty of the most-favored-nation clause would encourage the O.E.E.C. countries to maintain customs barriers whose abolition might benefit Japan, an exporter of relatively low-priced products, and that this would result in nullifying attempts at European economic integration. The French Government reserved the right to invoke paragraph (d) of Article 12 in order to avoid extending to Japan the benefit of the bilateral agreements resulting from decisions taken within the O.E.E.C. (Lot 54 D 423)
In its reply of August 29 to this note, the Department in part stated its belief that reciprocity in most-favored-nation treatment would not have effect upon the O.E.E.C.’s or other efforts to secure European economic integration. O.E.E.C. members who were signatory to the Peace Treaty would have the option of according or withholding Japan most-favored-nation treatment; if they withheld it, Japan would not be obliged to grant it to them. “The Department notes that the French Government reserves the right to invoke, paragraph (d) of Article 12 in this regard.” (Lot 54 D 423)
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