FOREIGN ECONOMIC AND COMMERCIAL POLICY


Agreement of July 1949 was justified in view of 0the. then existing
situation. In previous discussions with Mr. Southard on this subject
I had furnished him with the record of the Geneva meeting of the
Contracting Parties which called for a consultation on the "recent
changes in the import programs" of the sterling area countries and
indicated that the British had agreed to "discuss fully all relevant
questions" connected with the recent changes in their import pro-
grams. I had also indicated that in my view the consultations con-
templated under Article XII 4 (b) of the GATT were not intended to
be restricted to questions of "justification" for acts previously
taken
but should also include questions relating to the modification of pro-
grams in effect ,at the time of such consultations. Before expressing
these views, I had discussed the matter with Mr. Levy-Hawes (BNA))2
and with Mr. Weiss (CP),3 who had indicated agreement with this
opinion.
   Following my conversation with Mr. Southard I discussed the mat-
ter with Mr. Leddy4 ,and we agreed that the consultations contem-
plated in the GATT should be of the comprehensive character
indicated above and that the record of the Geneva meetings lends
support to this view. Mr. Leddy also pointed out that ilt might be
undesirable to laccept the British position in view of the precedent for
future GATT consultations. I then called Mr. Southard land trans-
mitted to him the substance of these views. He said that he would
proceed along the lines of the NAC action, anticipating that the U.S.
Delegation to the Fifth Session would follow the same line at Torquay.

  2Maurice Levy-Hawes of the Office of British Commonwealth and Northern
European Affairs.,.
   Leonard Weiss, Assistant Chief of the Commercial Policy Staff.
   John M. Leddy, Deputy Director of the Office of International Trade Policy.


International Trade Files, Lot 57D284, Box 112
Merorandum     by the Chief of the Monetary Affairs Staff (Me.
  Diarimid) to the Director of the Ofice of International Trade Policy
  (Brown)

CONFIDENTIAL                      [WASHINGTON,] October 20, 1950.
  As I have indicated in discussions with Messrs. Leddy and Weiss,
a sharp issue has been drawn in the Fund regarding the scope of the
forthcoming consultations on the sterling area import restrictions.
This issue emerged when the Fund's Committee on the ITO and the
GATT began the consideration of the Fund's reports to the CP's on
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