Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

107. Circular Telegram From the Department of State to Certain Diplomatic Missions⁰

September 17, 1959, 7:43 p.m.

316. Following is suggested text draft note dollar discrimination:

For many years BLANK and many other countries have enforced quantitative controls over imports to safeguard monetary reserves and the balance of payments. In many cases these controls have been applied with varying degrees of severity with respect to different countries or currency areas. Where such discrimination continues to exist, it usually is most adverse to the trade interests of the United States and of the other countries of the dollar currency area.

Last December the main trading currencies previously inconvertible were made externally convertible with the dollar in international trade. In consequence the bulk of world trade is now conducted in currencies readily convertible into dollars. On various occasions in recent months the United States has pointed out that the establishment of external convertibility generally removed the financial justification for discrimination against imports from the dollar area. The United States has welcomed the steps which a number of governments have taken since the advent of external convertibility in further removing non-tariff trade barriers. Added to earlier advances, the progress that has been made is substantial. Clearly, however, more needs to be done; the United States is of the view that the remaining discriminations should be rapidly eliminated.

The ease of access to the United States market which foreign countries have enjoyed has contributed to the growth of foreign exchange reserves outside the United States and, in turn, to the move to external convertibility. The trade policies of the United States have been an important contribution in this regard. During a period when duty reductions granted on products exported by the United States have been impaired by quantitative import restrictions, the United States has given effect to the negotiated reductions in its customs duties, and has resisted pressures to resort to non-tariff restrictions on imports. Considering the favorable economic conditions which prevail in the industrialized countries and general convertibility of world currencies, continued discrimination against United States goods would affect the U.S. attitude toward the 1960–1961 tariff negotiations, and weaken the support of the American public, the business community, and the Congress on which the ability of the United States to carry forward a liberal trade policy depends. Moreover, the use of nondiscriminatory quantitative restrictions that unjustifiably deny United States exporters competitive access to foreign markets would have a similar effect. The consequences of such a development for the world trading community would be grave.

For these reasons, which accord with the commitments embodied in the General Agreement on Tariffs and Trade and in the Articles of Agreement of the International Monetary Fund, the United States believes that the time is at hand for a new general advance toward the objective of expanding nondiscriminatory multilateral trade among the free world countries. To this end it is approaching the governments of the principal trading nations which impose quantitative import restrictions. Accordingly, the United States Government urges, as a matter of great importance, that the Government of BLANK take the following measures:

1. As soon as administratively practicable, and at the latest in a matter of months, to remove licensing or other quantitative restrictions on the importation of U.S. products, to the same extent that such restrictions have been removed with respect to imports of the same products from other countries.

2. With regard to imports subject to licensing or quantitative restriction irrespective of source, to remove the restrictions on a nondiscriminatory basis product-by-product as rapidly as its balance of payments and foreign exchange reserves permit; and, pending the removal of such restrictions, to administer them so as to afford equitable and progressively increased access to the domestic market by foreign suppliers.¹

Dillon

0. Source: Department of State, Central Files, 400.116/9–1759. Official Use Only. Drafted by Emerson M. Brown, International Economist in the Commercial Policy and Treaties Division of the Office of International Trade; cleared by Leddy, Hadraba, OT, and FN, and with Cameron, Southard, Gleeck, GEA, SPA, BNA, AFS, GTI, RA, and the Agriculture, Treasury, and Commerce Departments; and initialed for Dillon by Mann. Sent to 14 European posts, Canberra, Ottawa, Pretoria, Tokyo, and Wellington.
1. A second telegram, circular telegram 317, September 17, was sent with special instructions for approaching the Governments of Italy, Germany, Australia, Denmark, Norway, and Finland. (Ibid.)