177 Coombs to Dedman

Cablegram TE14 LONDON, 24 October 1946, 5.52 p.m.

SECRET

Discussions [1] 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 undertakings.

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.

1 At the first session of the ECOSOC Preparatory Committee for the United Nations Conference on Trade and Employment from 15 October.

[AA:A1067, ER46/1/28]