166 Attlee to Commonwealth Government

Circular cablegram D235 LONDON, 22 April 1943, 10.30 p.m.

SECRET

My immediately preceding telegram. [1] Following is text of draft aide memoire, begins- As has been stated on many occasions His Majesty's Government favours a commercial policy designed to promote general economic expansion and joint action directed towards the removal of the obstacles to international trade. While during the transitional period immediately after the war when we are seeking to restore our balance of trade we may have to retain some special measures of control, we hope that we and other countries will be able to emerge from this stage without undue delay. It is with this in mind and as a contribution to the conversations to which we are committed under Article VII of the Mutual Aid Agreement that His Majesty's Government submits for consideration the following points which form a practical approach to this problem and which might prove suitable for discussion among the United Nations.

(I) An international commercial policy capable of helping towards the solution of the postwar economic and political problems would have to be accompanied by some form of multilateral financial clearing and the adopting of a system which allows and encourages an expansive world economy.

(II) The policy should also be based on the assumption of a multilateral commercial agreement embracing as many countries as possible. As Great Britain is compelled to rely on imports for a large proportion of its food and raw material some modus for exporting an equivalent amount is absolutely essential. Mere bilateral agreements, however advantageous, cannot meet the situation whereas a multilateral agreement laying down certain principles for the freer exchange of commodities can be of great benefit.

(III) The United Kingdom, both by tradition and experience, regards an increased freedom of trade as particularly in her interest. We shall join in any movement to secure it and when it comes down to practice, we should have every motive to encourage it both from our own point of view and on account of the general international benefit. Our sympathy is entirely with those who are seeking to remove barriers to trade. Any qualifications we may have to make will be due to the special difficulties of the immediate postwar period and the present uncertainty as to what will in fact lie within our power and that of other countries.

(IV) We would accept a moderate ceiling for tariffs for incorporation in a multilateral agreement.

(V) We should be prepared to make all our agreements, including particularly quantitative restriction of imports, on a basis of mutual nondiscrimination. Preferences which we do not regard as discriminatory in a strict sense of the word are dealt with below.

(VI) Quite apart from our own position, a general plan should leave room for special arrangements within political and geographical groups since these are likely to be asked for and could be properly conceded in many cases. As part of a comprehensive scheme for the betterment of the trade of the world as a whole we should be prepared to play our full part in any general scheme for reducing preferences.

(VII) We consider that the quantitative regulation of imports should not ordinarily be employed for the primary purpose of protecting home industries but rather regarded as a mechanism appropriate and useful for special purposes, including among others the safeguarding of a country's balance of payments, and for implementing approved international commodity agreements and on security grounds we should be prepared to agree from the outset that such regulations should be on a nondiscriminatory basis. In so far as quantitative regulation is used for safeguarding a country's balance of payments we suggest that common agreement might be reached concerning a more or less automatic and objective test of the conditions under which such action should be permissible. For example it might be found that the statistics resulting from the creation of an international monetary authority could be used for this purpose.

(VIII) We should be prepared to agree to measures designed to prevent export subsidies.

(IX) Room should be left for state trading but it would be desirable that it should be conducted in accordance with a code to be agreed.

(X) We believe that these points could best be covered by the formulation of a general commercial code to which all countries would be invited to subscribe.

1 Document 165.

[AA:A989, 43/735/57/1]