NAC files, lot 60 D 137, “Documents”
Position Paper Prepared in the National Advisory Council on International Monetary and Financial Problems 1
Document No. 1657
U.S. Position for OEEC Ministerial Meeting on Problems of Convertibility
1. U.S. recognizes the importance of OEEC as an effective forum for coordinating work on international trade and payments of European member countries and their internal economic policies, particularly during the impending transition to currency convertibility and liberalization of imports on a global basis. It appreciates the desirability of preserving and strengthening the real gains which trade liberalization has brought for the OEEC countries and attaches importance in this connection to the willingness which this homogeneous group of countries have previously demonstrated in this forum to abide by quite rigid trade rules and to submit internal policies to continuous and intensive multilateral review.
2. Closer liaison should be maintained with the IMF and GATT, including greater participation as appropriate of IMF and GATT representatives in the work of the OEEC in the trade and payments field. Approaches to the IMF for drawings or stand-by arrangements should be made by member countries and not by OEEC as such.
3. The OEEC should undertake a firm commitment to establish global trade liberalization programs for member countries to be approved at its next Ministerial Meeting this coming fall. These programs should involve (a) immediate steps for moving ahead toward full intra-European and dollar liberalization as rapidly as balance of payments positions permit and (b) provisions for the control of deliberalization if subsequent developments require.[Page 367]
These programs should not be spelled out in detail in this meeting. However, the OEEC rules should provide, subject to appropriate escape clauses, a general policy of non-discrimination as between currency areas in new measures of liberalization or deliberalization following a general move toward convertibility. The OEEC rules should also seek progressive elimination of existing discrimination by increasing liberalization toward the dollar area without impairment of existing intra-European liberalization. These rules could well call for the elimination of discrimination by convertible countries within a reasonable period of time, and in the case of the inconvertible countries, could involve a reduction in trade barriers and a reduction in discrimination looking toward the introduction of full convertibility as rapidly as feasible. In formulating and operating the escape clauses referred to above, full consideration would be given to the effect of the new rules on the balance of payments of OEEC countries, on progress toward higher levels of trade and on the integration of Europe.
The program should be harmonized with existing member commitments to the GATT, should not prejudice GATT discussions re organization and trade rules and should be reexamined automatically in the light of new agreements as they are reached in the GATT. The programs should not preclude the stronger countries from moving more rapidly toward liberalization and non-discrimination nor should they prejudice arrangements which may be made in connection with drawings and stand-by arrangements from the IMF.
4. A European Fund should be set up under OEEC auspices through the use of the convertible capital assets of the EPU remaining at the time of liquidation in order to facilitate adequate temporary financing for liberalization programs of member countries. The U.S. would welcome contributions by the stronger European countries of additional financial and credit facilities on a multilateral basis to assist the weaker countries to maintain liberalized trading arrangements.
5. The work of the IMF and GATT and that of the OEEC in this field will necessarily be closely coordinated. This must be accomplished primarily through effective coordination of the positions taken in each forum by the individual countries concerned, nearly all of whom do participate in all three organizations. In this field the U.S. will, of course, continue to associate itself closely with the OEEC, as it has in the past, and to provide full support and cooperation on problems of common interest. The U.S. preliminary inclination, as expressed in instructions for the Alternates Meeting, was not to favor additional international organizations but rather improve working arrangements and coordination among international [Page 368] organizations now dealing with these relations. Coordination might be further facilitated by improving and strengthening the administrative machinery of the GATT, and improvement of the procedure for consultation between the IMF and GATT. (Additional statement illustrating improved procedures in preparation.)
6. The suggestion that additional provisions be made for the treatment of countries in extreme creditor positions is one of great concern to the U.S. We believe that this topic is adequately covered by existing provisions in the Articles of Agreement of the International Monetary Fund.
7. While the OEEC should not undertake to sponsor tariff negotiations, the OEEC may appropriately discuss tariff problems incidental to other OEEC activities, and we welcome such tariff reductions by individual countries as may result from such discussions. The function of sponsoring tariff negotiations should be left to the GATT. In any case the U.S. would not wish to see any departure from the global or most-favored-nation principle with respect to tariffs by introducing a preferential system which does not now exist.
8. Furthermore, the U.S. believes that most determined efforts should be made by the OEEC to avoid bilateral arrangements either within the OEEC or with non-member countries. It is believed that bilateralism constitutes a most serious threat of breaking down progress which has been made in a freer system of trade and payments both globally and within the OEEC area.
9. The special problems of continued implementation of the Code by countries unable to return immediately to convertibility will need further examination by the OEEC: but it should be pointed out that steady and persistent debtor positions will need to be dealt with through proper policies in debtor countries (including exchange rate adjustment).