Letter LONDON, 14 October 1946
The British Commonwealth talks [1] have now been completed and have proved, I think, well worth while. They enabled us to clarify our ideas quite a lot and they indicated a much wider area of agreement than I anticipated. I attach a summary of the matters dealt with which you might be interested to read. A longer statement has been forwarded to the Departments.
Our suggestions to strengthen the employment provisions by extending them to cover development in the full use of current international resources as a means to increasing the international demand for goods received general support. The proposal to enable us to modify our obligations under other parts of the Charter in the event of major countries failing to maintain full employment got better support than I expected, and I think we may get somewhere with it.
Our proposals for making specific provision for industrial development and establishing the right to use tariffs and other protection measures to promote industrialisation were well supported in general principle. The U.K., however, are afraid of the effect on their own export trade, while New Zealand and Eire seem to think that perhaps they might be freer if no specific provisions were included in the Charter at all. It seems pretty clear that the U.K. still intends to press strongly for membership of the international Monetary Fund being a requirement for membership of the I.T.O., although they agree that it should be possible to belong to the Monetary Fund without being a member of the trade organisation. Their main argument is that unless this is required, it would be necessary to write into the Charter of the trade organisation practically all the provisions of the International Monetary Fund relating to alterations of the exchange rate.
It does not seem likely that we will get much support in our proposals for objective criteria for the application of quantitative restrictions. The U.K., who also are very keen to have the United States proposals modified, argue very strongly that the establishment of objective criteria would make it very difficult, if not almost impossible, for a country to take action if those criteria were not fulfilled. Consequently every country would press for criteria that would be so high as to leave them practically complete freedom.
I am seeing some of the Treasury people today and will probably have a preliminary talk about London balances.
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1 Preceding a meeting of the ECOSOC Preparatory Committee for the United Nations Conference on Trade and Employment. See Documents 154 and 159.
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[AA:A1067, ER46/1/27]