FOREIGN RELATIONS, 1950, VOLUME I


   4. We plan to approach Brit in Washington along following lines.
Del is authorized make similar approach privately if Del considers
desirable. We will express regret that Brit tabled paper. Indicate US
not attempting to force issue of sterling area solidarity at this time.
Evidence of this is provided by US approach in IMF. US refrained
from pressing finding which wld state that Ceylon was in violation of
obligations under IMF and GATT by maintaining restrictions on
dollar imports beyond the necessities of its own balance of payments
while contributing to common reserve pool. Further evidence is fact
that US recognized inconvertibility of sterling holdings of sterling
area countries as some reason for maintaining restrictions. US is
asking only for relatively mild statement of progress toward re-
laxation, clearly in accord with facts. Therefore, US thinks it un-
fortunate that Brit chose to sharpen issue by tabling paper. US still
hopes issue can be avoided. However, Brit shld be informed that if
they choose to force issue by attempting to include in GATT action
language supporting principle of common criterion, US will offer
strong resistance. Point shld be made that, in offering such resistance,
Ceylon's anomalous position in relation to GATT obligations might
be pointed up to such degree as to lead other govts to take much
sftronger position on Ceylon than US has heretofore taken, thereby
-forcing US support position which it has heretofore avoided. For
,example, if motion were put that Ceylon has right under GATT to
-continue restrictions in order to build up central reserves rather than
deal with its own B/P and reserve position, we wld have to vote no.
This wld imply corresponding position in Fund. US basic position is
-that each country accepting membership in Fund and GATT accepts
obligations and commitments to those institutions as separate member.
   5. If necessity to take position in GATT mtg arises without oppor-
tunity for further consultation with Washington you are authorized
take above line.
                                                          AcuEsoN

394.31/11-850: Telegram
The Chairman of the United States Delegation to the Fifth Session
  of the Contracting Parties to GATT (Brown) to the Secretary of
  State

CONFIDENTIAL     PRIORITY      TORQUAY, November 8, 1950-5 p. m.
   146. For State and Treasury from Brown and Bronz.' Your 133,
November 6. British last night made substantially same points
Brown as to Thorp and Treasury. They confirmed prepared consult
-de novo and anxious avoid fight on merits sterling area. Plenary dis-
,cussion scheduled for November 9. hoped it will be brief.
   British main concern was avoid formal acceptance by CPs of IMF
,report conclusions or any formal action CP's. They hinted they could

  George Bronz, Special Assistant to the General Counsel, Department of the
Treasury, and member of the United States Delegation to the Fifth Session
of
the Contracting Parties to GATT.


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