Since our cable of 25th February was despatched Committee has concluded consideration of Chapter VIII but report still requires formal adoption. We shall try to have an amended note incorporated. We have discussed the suggested amendment with U.S. who feel that it makes no difference to substance but merely increases their political difficulties. They have however reluctantly agreed to include draft reference to unemployment and agree to the following text.
'(B) the Sub-Committee was of the opinion that in case of widespread unemployment or a serious decline in demand in the territory of another Member, a Member might properly have recourse to Article 89, if the measures adopted by the other Member under the provisions of Article 3 had not produced the effects which they were designed to achieve and this did not result in such benefits as might reasonably be anticipated.' We ourselves strongly urge the retention of the last part of the sentence since Article 89 is expressed in terms of nullification or impairment of a 'benefit accruing directly or indirectly explicitly or implicitly' and the essential point of the note is to remove any possible doubts that the maintenance of full employment and effective demand is a 'benefit accruing implicitly' under the Charter.
We believe present text to be reasonable and probably preferable to one which places 89(1)(B) and (C) on the same basis as 89(1)(A).
An attempt to reopen question in Plenary Session would we feel be fruitless and accordingly we recommend that you authorise us to accept it.