FOREIGN ECONOMIC AND COMMERCIAL POLICY


NAC Files, Lot 60D137, Box 367
     Memorandum by the NAG CStaff Committee to the National
                         Advisory Council

CONFIDENTIAL                      [WASHINGTON,] January 16, 1950.
Doc. No. 948
Subject: Proposed European Clearing Union
Problem
  The ECA has submitted for the consideration of the Council its
draft plan for a European Clearing Union, which is now under
discussion with the OEEC participating countries.' (The proposal is
outlined in NAC Document No. 942 of December 20, 1949.2) In
addition to provisions for net multilateral settlement of balances
between members (including the sterling area, and possibly the sterling
transferable accounts system as a whole), the proposal suggests the
substantial elimination of quantitative restrictions on trade between
the OEEC participating countries and the establishment of incentives
and administrative methods for attaining coordination of monetary
and economic policies between those countries.
  The clearing union would in effect establish a regional monetary
organization which in part would perform functions essentially similar
to those exercised on a global basis by the International Monetary
Fund.
  A United States contribution to the union could best be effected if
ECA legislation were amended.
  The scheme is conceived as a possible economic measure in a step-
by-step approach to the progressively closer association, political, mili-
tary and economic, of the countries of the free world. The most
pressing problems and the greatest opportunities are believed to be
among the countries of Western Europe and those areas directly tied
to them. Measures centered on Western Europe are within the frame-
work of what will probably be somewhat slower progress toward
closer association of the entire North Atlantic Community.3
  These broad goals are not an issue in this paper. The specific
proposal for a clearing union, however, raises certain questions of
relationship to other areas of United States policy which are set
forth in this paper, together with some specific problems relating to
operation and financing of the proposal.

  For documentation regarding European economic integration, see vol. iii,
pp. 611 ff.
  Not printed.
  8For documentation concerning the North Atlantic Treaty Organization, see
vol. iii, pp. 1 ff.


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