FOREIGN ECONOMIC AND COMMERCIAL POLICY


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see how the U.S. could move in the right direction unless there was
cooperation on both sides. If the U.K. had the right to maintain fur-
ther protection and preferences, the U.S. would have no justification
for carrying forward its program of tariff reduction.
  Mr. Burns said that if, for example, the U.K. made tariff reduc-
tions to the extent of eliminating preferences, the impact of unre-
stricted competition from the U.S., when quantitative restrictions
were removed, would be very violent indeed. There was an enormous
pent-up demand for dollar goods in the U.K., and there would be a
flood of imports, with the result that the U.K. would be back in
balance-of-payments difficulties immediately. Then QR's would be
back for good, he thought. Mr. Vernon pointed out that QR's would
go by progressive stages, and would not be removed at the same thie
for all products. He said there had been no flood of imports after the
recent OEEC liberalizations. Mr. Burns said it had so happened that
these liberalizations took place at a time when there was no difficulty
in selling British exports in the U.S. Mr. Vernon said there was some
assurance that such a condition would prevail for some years to come.
  Mr. Burns, reverting to -the Torquay negotiations, said that if in
fact at Torquay the U.S. wanted pretty strict equivalence there were
very few things the U.K. would be willing to give away for the con-
cessions the U.S. would have to offer. He said: "If you are prepared
to use substantial concessions on the U.K. side to include on the U.S.
side significant unrequited concessions, the U.K. will maintain its
present request list intact and will make a substantial body of offers.
If we do not indulge in such screening, our people will weed out
concessions which are not of great importance, e.g., whiskey." There
was some discussion of the meaning of equivalence, and Mr. Lewis
pointed out that in the past equivalence had not been defined in terms
of the value of trade covered, but various other factors such as levels
of duties, extent of reductions, et cetera, had been taken into account.
The U.S. would certainly not expect to make a statistical balance with-
out taking all factors into account.
   Mr. Leddy said the fundamental question remained, that is whether
 the U.S. would give economically more significant concessions than
 the U.K. would give us. Not only was there no economic justification
 for such a position, but it would be politically impossible for the U.S.
 He referred in this connection to certain unilateral measures the U.S.
 was already taking, such as the Customs Simplification bill.
   Mr. Burns said he thought that in the circumstances the U.K. would
 want to "prune down" its request list sharply. He said that on
 preferences, for instance, he doubted that the U.K. could give us
 anything significant. Mr. Leddy said we got the impression that the
 U.K. attached great importance to preferences not because of any