FOREIGN RELATIONS, 19-5 0, VOLUME I


Alternative A and Alternative B, but were closer to Alternative A.
One difficulty was the uncertainty as to whether South Africa could
find investment funds in the private market for the expansion of gold
mining. There were some other minor points, and the State Depart-
ment suggested that Alternative A be modified to read as follows:
  "The National Advisory Council advises the United States Execu-
tive Director on the International Monetary Fund: (1) that he should
seek a determination by the Fund that no adequate basis has been
established for the maintenance on financial grounds of discrimina-
tory restrictions by the Union of South Africa; (2) that he should
advocate a report from the Fund to GATT that the Fund has not
found adequate basis on financial grounds for the maintenance of
discriminatory import restriotions by the Union of South Africa;
and (3) that he should advocate consultation with South Africa to
obtain appropriate modification of the South African restrictions."
  In connection with item (1) Mr. Stinebower commented that the
State Department had some question -as to whether we should be
,addressing ourselves exclusively to South Africa, since pressure may
have been brought on South Africa by the United Kingdom with the,
price being accessibility to the British market. With respect to sub-
division (3) he thought the position in the present Alternative A
might be difficult to maintain. What appeared to be appropriate today
was the elimination of restrictions. After there had been consultation
with South Africa the Fund might have different views on what would
be appropriate, and these could be brought back to the Council for
subsequent consideration if necessary.
  Mr. Szymczak thought it would be much better for the United
  [States] Executive Director to present his case in the Fund on the basis
of the original Alternative A. To state that he did not think South
Africa had "established a case" would indicate uncertainty. Mr.
Szymczak believed that the position should be that on financial grounds
there is no case for discrimination.
   Mr. Hooker observed that he could not assure the Council that the
 Fund would agree upon the exact wording that there was no adequate
 basis for discrimination, but he would take that position and would
 try to get it adopted by the Fund. He added that the Fund was trying
 to establish jurisdiction and had reached a decision in the Committee
 that the South African restrictive system had, in addition to import
 restrictions, exchange restrictions. The probable course of events was
 that the Fund would shortly send a mission to South Africa to look
 into the system, and after consultation with South Africa, the Fund
 would make a definitive determination as to whether South Africa
 should remove the restrictions.
   The Chairman observed that it was clear that the majority of the
 Council favored the general approach indicated by Alternative A. The


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