FOREIGN ECONOMIC AND COMMERCIAL -POLICY


sent risks to dol position, it rwld be appropriate to question justification
such steps if end result is failure to relax discrimination. Rowan ob-
served extension transferable acct area might be proper subj US-UK
discussions. As for Brit emphasis on basic differences raised by Fund
report, we indicated that in our view Brit overstress degree to which
Fund has taken issue with basic sterling area arrangements, and we
see no reason why validity such arrangements need be subj of
controversy at Fifth Session.
   If Brit challenge Fund conception proper scope of consultations, US
 Del shld of course support Fund position along lines previously con-
 sidered. It might be agreed that terms of reference this particular
 consultation not clearly defined at Geneva. Nevertheless Del should
 insist that Fund view entirely reasonable common-sense interpretation
 of request from GATT for report, as alternative interpretation not
 consistent with meaningful consultations. If Brit and other sterling
 area countries indicate willingness to consult individually on current
 situation de novo and allow such consultation to reach conclusions,
 Del might indicate that issue is not substantive in our view. If, how-
 ever, Brit and others refuse to consult on individual country basis or
 refuse admit Fund report as pertinent to all phases consultations, we
 must reject such position.
 Message will follow on substantive issues raised by Brit.
                                                           ACHESON

394.31/11-850: Telegram
The Secr etary of State to the United States Delegation to the Fifth
       Session of the Contracting Parties to GATT, at Torquay'

CONFIDENTIAL                WASHINGTON, November 8, 1950-11 a. m.
   138. Following State-Treas views re import restrictions of sterling
area countries for your guidance:
  1. Del shld attempt ensure that majority CP's give positive accept-
ance to conclusions Fund reports.
  2. Despite circulation of Brit paper stressing common criterion for
import policies of sterling area countries, Del shld if at all possible
avoid sharpening issue with respect to validity of basic sterling area
arrangements insofar as consistent with strong support of Fund views
that start toward relaxation by net dollar earners is appropriate step
at this time.
  3. With this in mind Del shld take position in GATT that Fund
report does not attempt to decide question of common criterion for
trade policies of sterling area countries and that US, while not accept-
ing this principle, is not raising that issue at this time. Del shld make
clear that US will feel free to raise issue at later date if it so desires.
  Sent to London for information as telegram 2394.


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