138. Current Economic Developments1

Issue No. 483

[Here follow sections on Western offers of assistance to Egypt in building the Aswan Dam, and on an agreement reached between Syria and the Iraq Petroleum Company.]

Economic Questions at UN General Assembly

At its recently concluded tenth session, the UN General Assembly dealt with the following items in the economic field: (1) Special UN Fund for Economic Development (SUNFED); (2) the problem of self-determination and its economic aspects; (3) the technical assistance program; (4) the International Finance Corporation (IFC); (5) problems relating to international trade, under the report of the Economic and Social Council (ECOSOC); (6) economic assistance to Libya, and (7) the report of the Agent General of the UN Korean Reconstruction Agency (UNKRA).

The dominant theme in the Economic Committee continued to be the problem of the economic development of underdeveloped countries. Ninety percent of the discussion dealt with one or another aspect of this problem, and the underdeveloped countries continued to press for establishment of a new UN development fund to finance investment in basic facilities, so-called “infrastructure” projects.

The question of economic self-determination, which was considered in the Social Committee, was the most controversial and occupied most of that Committee’s time. On this question, although the language used in setting out the right of economic self-determination was improved in the course of debate, the US was unable to make its views prevail and the delegation found it necessary to vote against the majority position. Of the other items, technical assistance and the IFC involved no difficult questions at this session. As to the proposal for SUNFED, no attempt was made to take any decisive step at this time toward establishment of the fund or drafting its statutes, as was the case last year. While keeping up the pressure in general debate, the tendency so far as action by the GA was concerned was to concentrate on the more modest task to be performed by the Ad Hoc Committee set up under the resolution on this item. The US was able to accept this resolution in its final form.

The Soviet bloc countries continued to exhibit apparent reasonableness in their analysis of international economic problems and at the same time strongly emphasized their concern for the problems of [Page 360] the underdeveloped countries and stressed that they were prepared to assist the underdeveloped countries, particularly in their efforts at industrialization.

At this session, attention tended to focus more on efforts to expand multilateral programs to assist the underdeveloped countries through the UN than on what had been done and what was being done for them through other channels.

SUNFED Consideration of the Special UN Fund for Economic Development proceeded on the basis of the final report to the Assembly by Mr. Raymond Scheyven pursuant to last year’s Assembly resolution2 and the resolution of the ECOSOC,3 adopted at its summer session, calling for the establishment of an Ad Hoc Committee—presumably of government representatives—to carry on the work of the proposed special fund. The position of member governments on the establishment of a fund had not changed materially from what it was the previous year. The underdeveloped countries all strongly favored it. The Netherlands continued to support its immediate establishment and was prepared to contribute to that end; a number of countries, such as the Scandinavians and Belgium, were prepared to support establishment of a fund before disarmament provided the US and other large contributors came in; and the US, UK, Australia, Canada and New Zealand continued to insist on prior internationally supervised world-wide disarmament before supporting establishment of a fund. The Soviet bloc expressed support in principle and indicated readiness to consider participation in an international development fund, while at the same time recognizing that disarmament must provide the greatest source of resources for it.

The US delegate, while maintaining our position of disarmament first and the special fund later, did emphasize our concern for the problems of the underdeveloped areas, our determination to continue to assist them in other feasible ways and our conviction that postponement of the establishment of a SUNFED was not tantamount to postponement of economic development.

A draft resolution of 32 countries, taking its cue from the ECOSOC resolution, proposed that governments be invited to comment on Mr. Scheyven’s latest report and that these comments be analyzed by an Ad Hoc Committee of government representatives. For various reasons, this draft resolution was unacceptable to the US and UK. It was thereupon referred to a small informal working party [Page 361] on which the US participated. After considerable discussion, agreement was reached on a revised draft of the resolution and particularly in a precise statement of the task of the Ad Hoc Committee. The task of the Committee is now to prepare: (a) a summary of the views submitted by Governments on the establishment, role, structure and operations of a SUNFED; (b) an analysis of those views, that is, their presentation in such a form as to facilitate the understanding of them by ECOSOC and the Assembly; and (c) such conclusions as clearly emerge from the above analysis.

Since it was made clear that the Committee is not empowered to draft the articles of agreement of a SUNFED or otherwise to bring a SUNFED into existence at this time and since member states are in no way committed by the report to be rendered by the Committee, the US delegation decided that it could support the resolution,4 which was adopted by unanimous vote. The President of the Assembly, pursuant to the terms of the resolution, appointed the following countries to serve on the Committee: Canada, Chile, Colombia, Cuba, Egypt, France, India, Indonesia, the Netherlands, Norway, Pakistan, Poland, the UK, US, USSR, and Yugoslavia.

Economic Self-Determination Two months of discussion in the Social Committee dealt with draft article I on self-determination to be included in two Draft Covenants on Human Rights. Paragraph 3 of article I stated that the right of peoples to self-determination shall also include “permanent sovereignty over their natural wealth and resources” and that in no case might a people be deprived of its own means of subsistence on the grounds of any rights that might be claimed by other states. The US delegation opposed the paragraph in the belief that it might tend to undermine the confidence of the private investors in the security of his investments in underdeveloped areas and thus discourage the flow of capital to those areas. Although the phrase “permanent sovereignty over their natural wealth and resources” was removed from the draft by the working party established by the Social Committee, the US was obliged to vote against the revised text, as it did not make sufficiently clear that the paragraph was not intended to impair legal rights of individuals or authorize expropriation without adequate, prompt and effective compensation. The US did, however, vote in favor of the postponement of the question of self-determination under a subsequent article until the eleventh General Assembly.

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UN Expanded Technical Assistance Program Discussions of UN expanded technical assistance reflected the interest and enthusiasm of the underdeveloped countries for the program. No special problems relating to technical assistance operations were before the Assembly this year. A resolution co-sponsored by the US invited governments to continue their support of the program and to announce their pledges to it at the Technical Assistance Pledging Conference, held during the General Assembly.

During the debate in the Economic Committee and at the pledging conference, the US was able to reaffirm its support of the program, and to announce a pledge of $15,500,000 for the calendar year 1956, subject only to the limitation that the US contribution not exceed 50% of the total contributions from all governments. This was a larger amount than we have pledged heretofore for any one year. A number of other countries also announced increased contributions during the discussion of the item. The Soviet bloc continued its support of the program, although the USSR, Poland and Czechoslovakia argued that too small a proportion of the funds available was being devoted to technical assistance for industrial development and complained that their contributions were not being utilized as quickly as they should be.

The pledging conference brought in pledges of approximately $30 million, to set a new record high for financial support of the program. Twenty-six pledges represented increases over 1955, with no country pledging less for 1956 than for the preceding year.

International Finance Corporation The General Assembly in its action on this item last year left it to the International Bank to draft the Charter of the Corporation and to obtain agreement on it among its members. When the Assembly took up this matter again at this session, 20 governments, including the US, had already signed the Charter prepared by the Bank and 29 others had indicated that they were in favor of membership in the Corporation. Extensive debate on the IFC Charter was avoided although a small number of countries complained that the Bank had flouted the prerogatives of the Assembly by failing to provide an opportunity for such discussion.

The US delegation emphasized that the IFC would not provide the answer to all the problems facing the private investor interested in going abroad and that countries desiring the assistance of private capital would have to continue to work to encourage it.

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A resolution5 which the US joined in sponsoring expressed appreciation to the International Bank for its work on this matter and looked to early establishment of the Corporation.

Report of the Economic and Social Council Discussion of the ECOSOC report centered around problems of international trade, particularly east-west trade and the question of machinery for international cooperation in the field of trade. During the east-west trade debate, the Western countries analyzed the situation in some detail, the reasons for the relatively low level of east-west trade and the manner in which this problem was dealt with at the Geneva Foreign Ministers meeting. The Soviet bloc replied with the usual argument about the relationship between strategic controls and the confidence necessary to expanding trade and attempted to cast the blame for the Geneva failure in this field on the Western powers.

The Soviet bloc also devoted considerable time to the question of appropriate machinery for international trade cooperation. They argued that the General Agreement on Tariffs and Trade (GATT) and Organization for Trade Cooperation (OTC) were too restrictive to provide a truly global framework for such cooperation, that this matter should be looked into by the UN, and that the ECOSOC should prepare recommendations on this subject for Assembly consideration next year.

During the discussion, the representative of Afghanistan strongly attacked Pakistan for blockading his country and a lengthy exchange on this matter developed between the two countries.

Other Matters The Assembly also debated the question of economic assistance to Libya, in which the Arab states took a leading role. A resolution, similar to an earlier one, which elicited no favorable response, was passed requesting the UN Secretary General to inquire about the willingness of the member states to contribute toward Libyan economic developments through the UN.

In explaining its acceptance of the resolution, the US delegation reviewed the assistance being made directly available by us to Libya and stated that we intended to continue to use these channels to assist Libya as against using the channels of the UN.

A resolution on the report of the Agent General of the UN Korean Reconstruction Agency (UNKRA) reflected general recognition that there was little prospect of substantial additional contributions to UNKRA, although satisfaction with the work of the Agency was expressed by a number of delegations.6

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[Here follows a section on rising Japanese textile imports into the United States.]

  1. Source: Department of State, Current Economic Developments: Lot 70 D 467. Official Use Only. Regarding Current Economic Developments, see Document 25.
  2. G.A. Resolution 822 (IX), paragraph 5, ninth session, December 11, 1954.
  3. Resolution adopted by the Economic and Social Council at its 892d meeting, paragraph 2(b), August 10, 1955. For text, see Economic and Social Council, Official Records, Twentieth Session, Annexes, Agenda item 6, p. 2.
  4. Resolution 923 (X), adopted at the 553d plenary meeting of the General Assembly, December 9, 1955. For text, see Resolutions adopted by the General Assembly during its Tenth Session from 20 September to 20 December 1955, p. 10 (hereafter cited as Resolutions, Tenth Session).
  5. Resolution 922 (X), adopted at the 539th plenary meeting of the General Assembly, November 3, 1955. For text, see ibid., p. 10.
  6. For a summary of the overall accomplishments of the tenth session, see U.S. Delegation press release 2332A issued December 16, 1955, printed in Department of State Bulletin, January 16, 1956, p. 97.