130 Dedman to Chifley

Cablegram IT0262 GENEVA, 8 August 1947, 5.45 p.m.

SECRET

Further penult paragraph my ITO 253 Wilcox has advised Coombs informally that Clayton willing recommend to the President- (A) A protocol to general agreement which will permit departures from nondiscrimination during a transitional period.

(B) The waiving of article 9 of the Loan agreement by which non- discrimination is imposed on the United Kingdom.

The waiving of article 9 would be secured by regarding it as replaced by terms of general agreement. It will be argued that such action was contemplated since the loan agreement refers to provision being made 'in anticipation of more comprehensive arrangements by multi-lateral agreement'. Unless such action is taken the addition of protocol would of course not permit discrimination against United States America.

Wilcox considers that such action will be politically difficult and can be achieved only by President with approval of Congress leaders both democrat and republican. This he thinks unlikely unless they can be assured of reasonably satisfactory outcome of current negotiations for the United States. On this question he referred to following matters as critical for them.

1. The Charter (A) Maintenance of prior approval for protective measures for Industrial development inconsistent with Chapter V.

(B) Some recognition for rights of international investors.

(C) Recognition of authority of I.M.F. on matters relating to International reserves and exchange arrangements.

2. The Tariff Agreements Reductions in imperial preferences which can be presented as a significant breach in system of such preferences. In this connection he stated that they were willing to narrow range of their requests on preferences and to spread time for reductions to become fully effective, but they must have something which could be justified as a real contraction of system. We have offered no comment.

[AA : A1068, ER47/1/28, ii]