792.FOREIGN RELATIONS, 1950, VOLUME I


granted by the U.S. at Torquay were not counterbalanced by U.K.
concessions". The U.K. intended to "play along" and would
make some
concessions but its main interest would be in "making the program
work" rather than in buying market values in concessions to the
United States. Mr. Burns added that the September discussions had
certainly been taken by other people at least to mean ithat creditor
nations would reduce their tariffs faster than debtor nations.
  Mr. Leddy pointed out that conditions today were not greatly dif-
ferent than ;they had been in 1947 or 1945. The imbalance of payments
situation had been clearly recognized at that time, as evidenced by the
GATT-,ITO exceptions for quantitative restrictions. The U.K. was
now asking the U.S. to go even farther ,and accept the argument that
it was justifiable for a debtor country to maintain restrictions in addi-
tion to balance-of-payments restrictions. He asked how under such
a situation it would be possible to achieve the results we had been
trying to reach.
  Mr. Burns said that when the loan agreement and GATT-ITO had
been drafted neither of us had realized how difficult it was going to
be to put their provisions into effect (e.g., the convertibility problem
in 1945). He thought that last September it had been shown that the
struggle would be difficult and long, that progress would be slower than
expected. and that there was need for faster action on one side. The
U.K. had taken the extreme action of devaluation, but could not be
expected to contemplate continued devaluations and the resultant
forcing down of its standard of living.
   Mr. Vernon thought there was nothing in the U.S. advocacy of
 reducing tariffs and preferences that looked toward such a result. On
 the contrary the U.S. had been stressing the need for improved tech-
 nological methods and greater productivity. Discussing the use of
 quantitative restrictions he pointed out that at the Fourth Session of
 the Contracting Parties the U.K. had agreed that all possible pressure
 would be put on U.K. industry to lessen its reliance or assumption of
 reliance on protection from such restrictions.
   Mr. Burns agreed but said the dispute was over the question of
 timing. The U.K. did not like QR's as protective (measures, but they
 inevitably became such in the eyes of the industries affected. If a
 country moved away from tariffs and preferences it would find its
 industries more than ever convinced of the need for QR's. Mr. Leddy
 said that U.K. industry must be aware that the U.K. is committed to
 remove the balance-of-payments QR's. Mr. Burns asked whether we
 had seen the reports of the violent reactions which had been expressed
 in the House of Commons on the subject of possible tariff reductions
 at Torquay. Mr. Leddy pointed out that we had the same sort of
 problem in the U.S. Mr. Leddy went on to say that he frankly did not


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