FOREIGN ECONOMIC: AND COMMERCIAL: POLICY 771

Everyone was agreed on the following points: that the Fund
should not just give us a mass of undigested statistics; that this was
a full and frank discussion in which everybody was to get his ideas
off his chest; and that the form in which any government or institu-
tion expressed its views was for it to decide. I said that by entering
into the GATT we all had accepted the principle established in
Article XT that quantitative restrictions were not an accepted method
of trade control. I pointed out that certain specified trade exceptions
are provided in the GATT, e.g. short supply, which were not under
consideration in this Working Party, but that what we were dealing
with was import restrictions imposed not on any trade basis but on
the basis of overriding financial necessity for which provision was
made in Article XII. These restrictions which were the subject of
discussion in the Working Party were only acceptable under GATT
to the extent that they can be justified by financial necessity. The
judgment on that point seemed to me to be clearly a financial judg- —
ment, entirely within the province of the Fund. I then pointed out
that the first five sections of the Fund report on the United Kingdom
dealt entirely with balance-of-payments and reserve problems, and
that even the United Kingdom delegate took no exception to what
was stated therein. At the end, the Fund stated its view that the
present level of reserves and the current rate of gold and dollar earn-
ings “make feasible” a progressive relaxation of restrictions. It seemed
to me that this was essentially a financial judgment and a per-
fectly proper one for the Fund to make, even on the most narrow
interpretation of its responsibilities under the GATT. I also pointed
out that trade and balance of payments are inextricably interrelated.

[Here follows a brief account of procedural points affecting the
Article XII consultations and discussion of other agenda items. ]

Sincerely yours, | Winturor G. Brown

 

International Trade Files, Lot 57D284, Box 165, Folder “Balance of Payments”’

The Chairman of the United States Delegation to the Fifth Session
_ of the Contracting Parties to GATT (Brown) to the Acting Direc-
tor of the Office 0 f I nternational Trade Policy (Leddy)

PERSONAL AND CONFIDENTIAL 7 - [Torquay] N ovember 22, 1950.

Dear Joun: We have completed the consultations with the
United Kingdom, Southern Rhodesia and Australia. I enclose copies
of my statement about Australia.t Could you see that a copy gets to
the Treasury! g

* Not printed.