My telegram G. No.29. [1] Commercial Policy.

We have now received the United States recommendations as to
revised programme for international discussions. These
recommendations are designed to deal with difficulties arising
from delays in passage of the United States loan. The United
States administration consider it inexpedient until the loan is
through to give go days notice required by their legislation of
intention to enter into tariff negotiations. On the other hand,
they tell us in strict confidence that they do not wish to give
such notice subsequently before their elections in November.

Notice, therefore, cannot be given until the middle of November
which means tariff negotiations cannot start until about March
1947. The United States Government suggest the following
timetable:-

(a) 1st July to 15th August. Meeting of preparatory committee of
Economic and Social Council in New York to begin work assigned to
it by the Council and to discuss United States proposals on
genera' exploratory basis without necessarily aiming at definite
agreement and without any detailed tariff bargaining.

(b) August 15th to October 15th. Meeting of drafting sub-committee
also in New York of five or six members of preparatory committee
to draw up detailed charter for International Trade Organisation
in light of views expressed during (a).

(c) March 1947. Second meeting of preparatory committee to
coincide with meeting of original 'drafting countries' and to
consider draft charter simultaneously with tariff negotiations.

2. We see the following disadvantages in this programme.

(a) it has always been a cardinal point of tactics with us not to
be drawn into anything like commitments on non tariff questions
ahead of detailed negotiations of tariffs. We hold to the view
that it is of great advantage to us and we assume to the Dominions
also that negotiations on the Charter of I.T.O. and non tariff
questions should proceed simultaneously with tariff negotiations.

(b) We, therefore, see strong objections to a proposal [to] set up
drafting committee of the preparatory committee of Economic and
Social Council and consider that Governments would have to make
repeated reservations in connection with drafting of Charter until
they knew to what extent tariffs were likely to be reduced.

(c) We doubt whether we or other countries could spare manpower
for long period involved in the latest United States programme.

(d) We are not prepared to enter into negotiations which publicly
commit us on commercial policy until we know the United States
loan is through which will probably not be before July.

3. on the other hand we do not want flatly to reject the United
States programme. We agree with the Americans that some action is
necessary this year in order to prevent interest evaporating. If
no progress is made, either the preparatory committee or Economic
and Social Council itself may feel called upon to intervene and
disturb the careful balance of proposals agreed with the
Americans. Also a meeting this year would provide a useful
opportunity for discussion with foreign countries that are less
familiar with many of the proposals and for ascertaining what
differences of view exist.

4. We, therefore, propose to reply to the United States Government
on the following lines. We share their desire to keep interest
alive until tariff negotiations take place next March and we,
therefore, see advantage in a meeting of the preparatory committee
(which would last about four weeks) for purpose of exchanging
views, removing doubts and explaining intentions of United States
proposals and enlisting support for them. On the other hand, we
oppose the appointment of a drafting subcommittee for the reasons
explained in 2 (b) above. We consider July to be too early for a
meeting of the preparatory committee because the fate of the loan
may still not be known and we think the Governments concerned
ought to have six weeks notice before the meeting of the
preparatory committee starts. We think, therefore, that a decision
on the date of the meeting of the preparatory committee should be
deferred. Provided Congress has acted in time, the aim should be
to hold a meeting of the committee in early autumn preferably in
London or Geneva (we think this would probably mean October rather
than September to avoid a clash with the General Assembly, U.N.O.

and Economic and Social Council meetings).

5. If the Americans accept our views on timetable, there would
remain the question of fixing dates for prior British Commonwealth
discussions. We assume that Dominion Governments would share our
view that if negotiations on tariffs with foreign countries are to
be postponed until March it would be preferable also to postpone
say until January, British Commonwealth discussions on tariffs and
preferences. We think, however, that there would be advantage in
holding a separate British Commonwealth meeting for preliminary
discussions of all questions other than tariffs and preferences
which will come up at meeting of preparatory committee in October.

We understand that it will not be convenient to the Australian or
New Zealand Governments to hold such a meeting in August or
September and we therefore suggest that we should adhere to the
date previously suggested i.e. July 1st. If nearer that date loan
prospects still seem highly doubtful, reconsideration of the date
of the British Commonwealth meeting would be necessary.

6. We shall be glad to learn whether the Dominion Governments
agree with the line we propose to take in reply to the latest
United States suggestions and with our proposal that subject to
satisfactory developments in regard to the United States loan, the
British Commonwealth meeting should take place on July 1st for
discussion of commercial policy questions other than tariffs and
preferences. We should be grateful for a reply by 15th May.