Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

73. Letter From the Assistant Secretary of State for Economic Affairs (Solomon) to Secretary of Commerce Connor¹

Washington, October 7, 1965.

Dear Mr. Secretary:

At the balance-of-payments meeting on September 30, you surprised me a bit when you said that European countries were restricting tourism, and indicated that a change in such practices might be of significant help to the United States balance of payments.² Upon checking again we have verified that all the major European countries have already liberalized restrictions over tourist expenditures. They either exercise no exchange restrictions and formalities at all—that is they are de jure liberalized—or they exercise formalities only to establish the bona fides of transactions (to prevent evasion of regulations over capital outflows)—that is they are de facto liberalized. The only exceptions in Europe are among the smaller countries including several in the less-developed category: Finland, Norway, Iceland, Greece, Turkey, and Yugoslavia.

Outside Europe, the only developed Free World countries still restricting tourism are Japan, New Zealand, and South Africa. I agree, of course, that efforts should continue to be made to obtain liberalization in these countries. Work in this direction is going on in the OECD and the IMF.³

With respect to less-developed countries, I believe that a more selective approach is desirable. Many of these countries are short of foreign exchange and allocate such exchange as they have to high priority items, such as essential imports. We may well not wish to urge them to allocate their scarce foreign exchange instead for tourist travel by those of their residents with a high enough income to permit travel. Relaxation of restrictions in such instances would benefit the United States balance of payments very little in any case.

The big gains from liberalization have already been made.

With best regards,

Sincerely yours,

Anthony M. Solomon ⁴

1. Source: Department of State, Central Files, FN 12 US. No classification marking. Drafted by Leocade Leighton (E/OMA) and R.N. Cooper (E/IMA).
2. See Document 71.
3. The source text identifies an enclosure, “Status of Liberalization of Tourism Among OECD Countries,” which has not been found.
4. Printed from a copy that bears this typed signature.