Cablegram TE14 LONDON, 24 October 1946, 5.52 p.m.
Discussions  have indicated general support for the Australian
proposals to provide for undertakings to maintain full employment
and to make full use of currently accruing International Monetary
resources. The United Kingdom has now decided to propose the
conclusion of a separate employment convention embodying these
I would like your guidance on one aspect of the proposal. In our
draft we provided that in the event of one country failing to live
up to these undertakings, a country whose economy was adversely
affected could complain to I.T.O. and if the complaint was
sustained, I.T.O. would determine the extent of release from its
obligations to the offending country. At present this provision is
included in the United Kingdom draft, but United Kingdom Officials
are divided on it and United States Officials do not like it, in
view of its allowance of discrimination.
We are inclined to think discrimination important to prevent
spread of unemployment through balance of payments differences,
but recognise that this will make proposals unacceptable to the
U.S.A. I suggest, therefore, that we adhere to our proposal for
the time being in order to bring out the reason for discrimination
in this case, but accept later a provision which merely gives an
injured country the right to have its obligations reviewed-relying
on the possibility of convincing Organization at the time that it
would be less restrictive for obligations to be reviewed only in
relation to country failing to maintain employment or use
International resources fully.
Discussion of this will probably be resumed on Monday.
Draft convention (prepared by the United Kingdom but not yet
released to the conference) is being telegraphed separately. You
will have had our own draft.