394.31/7–1654: Telegram

The Ambassador in the United Kingdom (Aldrich) to the Department of State1


303. Geneva for Greenwald.2 Limit distribution. Waugh, Gordon, Corbett,3 Lewis4 called on Frank Lee and Edgar Cohen BOT at latter’s request to discuss Japanese GATT. They said unqualified membership Japanese unacceptable to them; if had to would invoke Article 35.5 However we trying to find middle ground and proposed following on informal personal basis, details not yet worked out: [Page 204]

Amend Article 35 in review so that without invoking it GATT would apply to UK-Japanese subject to a bilateral agreement registered with CPs.
Bilateral would permit emergency action UK to raise duties or impose quotas if excessive imports from Japan threaten disrupt normal trade patterns (no precise wording devised—this was as stated at one point).
Problem of Australia, perhaps New Zealand (Australia now applying higher than MFN rates to Japan).
Australia would make similar bilateral with Japan, permitting application to Japanese higher than MFN rates in instances where if Japan given full GATT MFN treatment it would be necessary to raise MFN rate to level of present rates for Japan. (This would be in most instances apparently.)
There might be something along lines of recent preference waiver, to provide that existing discrimination could be continued but not increased; or,
The bilaterals could have specified tariff rates on the items involved.
UK would want actual signing or implementation all agreements held over until Japan takes effective action to stop design copying and similar unfair practices (as UK has asked Japan to do).

British felt proposal was logically consistent with US ideas on methods of dealing with organizational problem whereby a CP would be permitted in effect retrospectively to invoke Article 35 to terminate certain obligations. British also stressed their proposal was maximum politically acceptable in UK.

After stressing political problems faced by US in connection Japanese negotiations, Waugh said first reaction to UK proposal was that it would weaken GATT, especially if others would want similar bilaterals. British agreed this was danger but suggested bilaterals could be limited to CPs which had invoked Article 35 in past or had to do so this occasion. Possible time limit on bilateral discussed—best thought could be provision for review and possible termination if no longer needed, say after five years.

British stressed their intention of limiting scope of bilateral, probably to cover only (a) non-automatic removal of discrimination and (b) more flexible emergency action of kind not now possible under GATT. Probably Anglo-Japanese tariff concessions would be in regular GATT schedules, not in bilateral.

British will not be ready to discuss this proposal in intersessional and still want to avoid defining their position at that meeting. Proposed further discussions on details between Embassy and BOT, and in September when Lee and Cohen visit Washington prior to Commonwealth meeting. Urged importance of keeping proposal [Page 205] confidential since situation obviously very difficult for them if known BOT had advanced proposal for getting Japan into GATT.

  1. Repeated for information to Tokyo and Geneva.
  2. Joseph A. Greenwald, Economic Officer at the Consulate at Geneva.
  3. Jack C. Corbett, Director of the Office of Financial and Development Policy.
  4. James H. Lewis, attaché in the Embassy at London.
  5. Article XXXV of the General Agreement on Tariffs and Trade permitted any Contracting Party to withhold the application of its schedule of tariff concessions, or of the entire Agreement, from any other Contracting Party with whom it had not previously entered into tariff negotiations. The article was added to the original Agreement in Protocol 1, dated Mar. 24, 1948.