Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

OAS files, lot 60 D 665, “Memorandums of meetings”

Memorandum of a Meeting of Certain Members of the United States Delegation¹

confidential

[Quitandinha,] November 25, 1954.

• Participants: Secretary Humphrey, Treasury
• Under Secretary Hoover, State
• Assistant Secretary Waugh, State
• Assistant Secretary Overby, Treasury
• Assistant Secretary Anderson, Commerce
• Assistant Secretary Holland, State
• Dr. FitzGerald, FOA
• Dr. Hauge, White House
• Mr. Cale, State
• For only a portion of the meeting:
  • Isaiah Frank, State
  • George H. Willis, Treasury
  • Hawthorne Arey, Export–Import Bank

The above group met to discuss and to attempt to resolve a number of problems now faced by the delegation.

1. Regional Trade Arrangements

There was considerable discussion of the recent amendment, made on the initiative of Treasury, of the portion of the NSC policy statement on Latin America dealing with regional arrangements. Mr. Overby maintained that the amendment meant that we would not approve regional trade arrangements if they involve discrimination against the US as compared with countries either inside or outside of the arrangements. In this position he was supported by Mr. Anderson. Mr. Holland stated that our position paper on regional arrangements² for the conference had contemplated that we would not oppose regional trade arrangements which discriminated against us as compared with countries in the trading area, provided we received nondiscriminatory treatment as compared with countries outside the area and that the arrangements met a number of other conditions. Mr. Humphrey took the position that the amendment to the NSC policy statement had to be interpreted in such a way as to permit arrangements of this nature, if it was to have any meaning at all. Mr. Hoover agreed with this position and recounted some of the legislative history on the development of the present NSC policy on Latin America, including the amendment in question. He also called attention to the fact that our position contemplates that the arrangements would be proposed on Latin American initiative, and that we would examine each on its individual merit.

The resolution³ on which the Argentine Delegation has asked our comments regarding Latin American trade arrangements was then discussed. During a part of this discussion Mr. Frank was asked to participate. It was decided that Mr. Frank, without releasing the text to the Argentine Delegation, should suggest to the Argentine Delegation that if that delegation introduced a resolution along the following lines, the US would support it:

“Resolves:

To entrust to the IA–ECOSOC the preparation of a study analyzing the possibilities of regional trade arrangements as the basis for the expansion of trade and the promotion of economic development among the countries of the area which may be permissible under the provisions of the GATT as now constituted or as they may be amended.”⁴

It was also agreed that a subcommittee of Mr. Waugh, Mr. Frank, Dr. Hauge and Mr. Atwood would constitute a working group on this matter and would make any further recommendations needed with respect to it. Since Mr. Waugh was leaving for Rio de Janeiro in a short time, it was decided that Dr. Hauge would act as Chairman of the group during the day.

At this point Secretary Humphrey had to leave for another appointment.

2. Inter-American Bank

Mr. Arey and Mr. Willis were invited to participate during the discussion of this item and remained for the rest of the meeting.

After rather full discussion of the Maschke Plan⁵ for an Inter-American Bank it was agreed that we would, for the present, take no position. It was also agreed that if asked for our views we would state that we would like to know more about the position of Cuba and Venezuela before making up our minds. It was also agreed that we would indicate that it would also be desirable before reaching a decision to have the views of the IBRD, of which many of the Latin American countries are, of course, members.⁶

3. Economic Development Programs

The group approved the suggested position on economic development programming⁷ which had been developed by Messrs. Holland, Willis and Cale, with suggested amendments that had been proposed by Mr. Atwood subject to the following further changes.

a. That the paragraph from Secretary Humphrey’s address to the conference dealing with programming should be added to the paper.

b. That the following sentence should be added after the first sentence of paragraph 2(c). “Call attention to the availability of assistance in programming from the International Bank.”

c. That the expression “in which the United States is included” should be inserted between the word “commission” and the word “should” in the last sentence of paragraph 2(c).

d. That the brackets should be removed from the final sentence on page 3.

(See copy attached.)⁸

4. US Participation in UN Advisory Committee on International Commodity Trade

Mr. Hoover, at Dr. FitzGerald’s suggestion, informed the group of the contents of a telegram which he had just received from Washington indicating that the United States had been elected to membership in the above-mentioned commission and raising the question, in view of the relationship of this development to some of the items on the agenda for the conference, whether the United States should reverse an earlier decision and accept membership in the commission. Following a brief discussion during which it was pointed out that Secretary Humphrey might very well have a definite opinion on the subject, it was decided to defer consideration of this item until tomorrow.⁹

5. Tax on Transportation in the Caribbean

This item was mentioned but it was pointed out that no definite position could be taken on it until the precise views of Secretary Humphrey were known. Further consideration was, therefore, deferred until tomorrow.¹⁰

6. Consultation¹¹

It was indicated that further consideration would have to be given to this question but it was agreed that the United States should always be willing to sit down and discuss outstanding problems with other countries which so request. Mr. Anderson said that he would like to have this item on the agenda for tomorrow morning’s meeting since he believed that we should develop a definite position on it as soon as possible.¹²

7. Loans Falling Outside the Scope of Activities of the IBRD

Mr. Holland pointed out that various statements have been made by spokesmen for the U.S. Government indicating that the Eximbank would be prepared to make certain loans falling outside the normal scope of activities of the International Bank. He said that as a result he had been asked the question by Mr. Eugene Black and by others as to just what were the types of loans that we considered as falling outside the normal scope of activities of the International Bank. Mr. Holland said that he believed that there was a need for a definite statement that we could make to persons asking this question. He then requested that Mr. Arey, Mr. Overby and Mr. Anderson prepare a paper¹³ giving the best possible answer to this question for consideration at tomorrow’s meeting. Mr. Overby said that the group would attempt to comply with the request.

8. Taxation and Tax Treaties

Mr. Overby reported that the US Delegation would introduce a resolution later during the day on this subject if the Conference Secretariat should decide that it is necessary, procedurally, to do so in order to have a working group set up on the subject of taxation and tax treaties at the conference.¹⁴

9. Resolution on Financing of Economic Development

Mr. Overby called attention to a resolution which the US Delegation had been authorized to present on the above subject. He said that Secretary Humphrey, after reading the resolution, thought it rather meaningless and that he himself did not intend to introduce it unless the group should decide otherwise. Mr. Anderson indicated that it was his view that the resolution should be introduced. Mr. Holland took a similar position and indicated that he would be glad to participate along with Mr. Overby in a discussion of the subject in Rio with Secretary Humphrey. It was agreed that Mr. Overby would telephone Mr. Willis from Rio, after discussion with Mr. Humphrey, before the closing time for submitting if the resolution is to be submitted.

10. Resolutions and Statements on Tourism and Transportation

Mr. Anderson indicated that he intended to authorize the transmission of our resolutions¹⁵ on tourism and transportation to the Secretary of the conference this afternoon and to make statements¹⁶ on the subject at the meeting of the subcommittee on transportation this afternoon.

11. Colombian Resolution¹⁷ Regarding Consultation and Cooperation Among Central Banks

Mr. Overby called attention to the above mentioned resolution. Mr. Willis pointed out that the Federal Reserve System would probably not wish the US Delegation to agree to the consultation among Central Banks envisioned under the first paragraph of the operative part of the resolution. Mr. Overby called attention to the fact that the matter dealt with in the second operative paragraph of the resolution is one that should be handled directly between the International Monetary Fund and member countries.

Mr. Anderson called attention to Article 27 of the Charter of the Organization of American States¹⁸ which provides that:

“If the economy of an American State is affected by serious conditions that cannot be satisfactorily remedied by its own unaided effort, such State may place its economic problems before the Inter-American Economic and Social Council to seek throught consultation the most appropriate solution for such problems.”

He then pointed out that we might suggest to the conference that this article provides a means whereby the governments which choose to do so may ask for consideration of their exchange problems. It was Mr. Willis’ view that the Federal Reserve System would not wish us to take such a position. Mr. Holland pointed out that this article is contained in a treaty which had been approved by the Senate of the United States and that it is, therefore, our obligation to respect it.

Mr. Holland then suggested that we abstain on the resolution, if it is brought to a vote and point out the possibility that the problem might be met under Article 27 of the Charter. Following further discussion, he suggested that the Treasury representatives develop a definitive position for consideration at tomorrow morning’s meeting. Mr. Overby stated that he thought that this might be somewhat early since it was his opinion that the views of the Federal Reserve System authorities should be sought before we take a final position.¹⁹

1. Drafted by Mr. Cale.
2. Apparent reference to the undated position paper on “Latin American Proposals for Regional Preference Arrangements,” designated MFE P–1c/1 Rev 1, which was approved by the Interdepartmental Committee on Aug. 2, 1954; a copy is included in Position Book 1, OAS files, lot 60 D 665.
3. A copy of the referenced draft resolution, which the files indicate was not an official document submitted to the conference, is in Conference files, lot 59 D 95, CF 406.
4. For text of the resolution on this subject actually adopted by the conference, see USDel Report: Quitandinha, p. 30.
5. A plan developed in Chile which proposed the establishment of a fund consisting of the gold and dollar reserves of the Latin American countries in the United States. Each country would deposit dollar reserves in the fund and would be able to borrow up to the amount of its deposit. The United States would agree to discount up to an amount equal to one-third of the capital deposited in the fund, and this would be protected by the amount of gold reserves.
6. Resolution 62/54, approved by the conference on Dec. 2, resolved to create a committee of experts to draft a plan for a regional financial institution; for text, see USDel Report: Quitandinha, p. 58. The U.S. Delegation abstained from voting on the resolution; for text of its statement of abstention, see ibid., Appendix 13.
7. Reference is to a paper titled “Suggested Position on Economic Development Programming”; a copy, dated Nov. 29, 1954; is in Conference files, lot 59 D 95, CF 411.
8. Not attached to the source text.
9. In the memorandum of discussion at the meeting of the heads of the U.S. Delegation on Nov. 26, drafted by Mr. Cale, Mr. Humphrey is recorded as having indicated “that our aim should be to stay out of the commission entirely.” (OAS files, lot 60 D 665)
10. The memorandum of discussion on Nov. 26 also records Mr. Humphrey as having stated the following: “we should not support a resolution proposing amendment of the tax but … we could state in explaining our negative vote or abstention that we would give further study to the situation with a view toward removing the tax on transportation between points in the United States if some practicable way can be found of so doing and still enforce the tax uniformly within the United States.”
11. Reference is to consultation procedures concerning economic and financial matters, particularly in connection with serious problems resulting from fluctuations in the prices or markets of basic commodities.

12. In the memorandum of discussion at the meeting of the heads of the U.S. Delegation on Nov. 27, drafted by Mr. Cale, Mr. Hoover is recorded as having stated, in part, that “our position for this conference be to point out that the matter is actively under consideration in Geneva [at the Ninth Session of the Contracting Parties to the General Agreement on Tariffs and Trade] and that whatever is agreed to there on our part will apply to the Latin American countries that are not members of GATT.” (OAS files, lot 60 D 665)

    For documentation relating to the Ninth Session of GATT, see volume i .

13. Not found in Department of State files.
14. Draft resolutions concerning taxation and tax treaties were submitted to the conference by various delegations. After considerable discussion of the subject, Resolution 69/54 was approved; for text, see USDel Report: Quitandinha, p. 68.
15. No drafts of these resolutions are printed.
16. For text, see USDel Report: Quitandinha, Appendix 10.
17. A copy of the draft resolution as submitted to the conference by the Colombian Delegation is in Conference files, lot 59 D 95, CF 406. It was adopted, with certain modifications, as Resolution 66/54; for text, see USDel Report: Quitandinha, p. 64.
18. For text of the Charter, signed at Bogotá, Apr. 30, 1948, and entered into force for the United States, Dec. 13, 1951, see TIAS No. 2361, or United States Treaties and Other International Agreements (UST), vol. 2 (pt. 2), p. 2394.
19. The United States abstained on Resolution 66/54; for text of the abstention statement, see USDel Report: Quitandinha, Appendix 14.