CAB129-33 — Page 111

Page 111

Page 111

Page 111

55

In the circum-

the tot pageaffy offery last resort, to avage 13 we might

figure put forward by the importers.

stances authorise our representatives to go to 195 million bushels, but in no circumstances beyond this.

E. C. A. financing of Canadian wheat purchases.

The effect of a refusal to finance Canadian wheat purchases would be so serious that, as urged in paragraph 3 of Frame telegram 1256 (D of Annex), it should be made an essential condition of our entering the agreement that there is a firm understanding that the United States Administration will seek an amendment of the Economic Co-operation Act so as to make such financing possible, at least up to the maximum of the price range accepted in the agreement. And we should make it clear that our ratification of any agreement would be dependent upon the enactment of such legislation. Indeed, it might be sound tactics to get the firmest possible assurance on this point before embarking on further negotiation on the other out- standing points.

3.

Finally we should not close our eyes to the fact that if we sign this agreement, we shall be pegging the price of a crucial import at specified minimum prices over a term of years and on a falling market. The Chancellor has just urgently warned me and other purchasing Ministers against making long-term contracts which have this effect. The International Wheat Agreement is precisely a long-term contract, made with a number of purchasers, for the most important of all our imports, the price of which is now falling rapidly; the agreement is to be made over a period of four years, extending beyond the Marshall period; it is largely, though not exclusively, a dollar commitment; it must have a markedly sustaining influence on the prices of the other primary products which we buy, while it can only sustain the prices of the manufactures which we sell indirectly and as a secondary repercussion. I therefore regard the signing of the International Wheat Agreement on these terms with great apprehension. I recommend these further concessions only because I feel that we are in effect faced with force majeure, and can hardly break the Conference for the sake of the now fairly narrow gap which divides the proposals which we have already made from what the exporters will probably take.

40

Accordingly, my recommendations are that our represen- tatives should be instructed that the following represents the final firm position of the United Kingdom Government:-

(a) We should be prepared in the last resort to accept a maximum price of $1.80 for a four-year agreement with a minimum price range of $1.50 falling to $1.20. But every effort should be made to persuade exporters to accept a maximum price of $1.75. We should, however, make no further concession on the minimum price range to secure this.

(b) We should refuse to commit ourselves to a quantity in excess of 190 million bushels unless other importing countries were prepared substantially to increase their offers and unless Russia were given an export quota of not less than 75 million bushels.

It should be a firm condition of our entering the agreement that the United States Administration will seek amend- ing legislation which will permit of the financing: of our Canadian wheat purchases both in the current and subsequent years from European Recovery Programme funds at least up to the maximum price spage 112 of 488 agreement and until the 12 of 48811, 1950,

gly, when our Canadian contract expires. We should make that even if an agreement is concluded our ratification would be dependent upon the enactment of such legislation.

clear

nistry of Food, S. W. 1.

4TH MARCH, 1949.

m3mm

J. S.