CAB129-45 — Page 553

Page 553 417

Printed for the Cabinet. May 1951

SECRET

C.P. (51) 147

28th May, 1951

CABINET

Copy No.

31

SCHUMAN TREATY: ALLIED CONTROL OF GERMAN HEAVY

INDUSTRY

MEMORANDUM BY THE SECRETARY OF STATE FOR FOREIGN AFFAIRS

In C.P. (51) 108 of 13th April, Ministers were asked to consider the situation created by the French proposals:-

(a) To initiate discussions between the three Occupying Powers and, to the extent that they are concerned, the Benelux countries, about the conflict of jurisdiction between the Schuman Treaty Institutions on the one hand and Allied Controls over German coal and steel and the International Authority for the Ruhr (I.A.R.) on the other.

(b) To inform the German Government, in advance of these discussions, of the line which they proposed to pursue, i.e., that as soon as practicable after the Schuman Treaty comes into force, through ratification in the Parliaments of member countries, the functions of the I.A.R. and of the High Commission in respect of German coal and steel should cease, and that the present limitations on German steel production and capacity under the Agreement on Industrial Controls should be removed.

2. As the result of consideration of C.P. (51) 108 on 16th April Ministers:

(i) Authorised the Foreign Secretary to announce that the United Kingdom Government would be willing to participate in the discussions proposed by the French Government.

(ii) Invited the Foreign Secretary to do his utmost to persuade the French Government to limit any public statement, or any statement to the German Federal Government, to a similar promise to enter into discus- sions on this question, and to refrain from indicating at this stage their readiness to abandon these Allied controls as soon as the Schuman Treaty came into operation.

(iii) Invited the Chancellor of the Exchequer to arrange for the committee of officials which had considered the Schuman Plan at an earlier stage to prepare, for the Cabinet's consideration, a report on the implications of the Plan as finally agreed on the future of the United Kingdom coal and steel industries. (C.M. (51) 28th Conclusions, Minute 2.)

3. Since Ministers reached these conclusions, the following important developments have occurred on this front:

(i) The Schuman Treaty has been signed by the six participating Govern- ments. In order to secure German signature, the French Government found it necessary to inform the German Government that they intended to press at the forthcoming discussions for the abolition of the existing Allied controls over German heavy industries. The announcement on this step was, however, deferred as a result of our representations, and the French Government introduced some modifications into the letter in order to make it clearer that His Majesty's Government was not committed. 406age 553 of 587

Page 553

2

Paghem&al Working Party are preparing a full report 55ut the Schuman Treaty as it affects United Kingdom interests, and about the advantages and disadvantages to be derived from United Kingdom participation or association with the Treaty. This report will be ready shortly. In the meantime, an interim report by the Working Party, containing a summary of the provisions of the Treaty has been circulated to the Economic Policy Committee (E.P.C. (51) 44).

(iii) A preliminary and exploratory meeting has been held at official level with the French and Americans. The object of this meeting was to elucidate those aspects of the Schuman Treaty which have a particular bearing on the continuance of Allied controls in Germany, and to provide Ministers with information on which they could decide whether the institutions set up under the Treaty will render unnecessary the continued operation of existing Allied controls. It was made clear at this meeting that the United States Government is in full agreement with French intentions to abolish existing Allied controls. A record of this meeting will be found in Annex A.

(iv) The German Federal Chancellor has decided to

submit a Bill on the Schuman Treaty to Cabinet on 30th or 31st May. It will go immediately thereafter or at a week's interval to the Bundesrat (Upper House) and thence to the Bundestag (Federal Parliament). Although it should be possible to count on ultimate ratification the process in both Houses would certainly be eased by an indication of Allied intentions to remove the existing controls over German heavy industries as the Schuman Plan took effect. Conversely, any indication that the removal of these controls was the subject of serious debate between the Occupying Powers might cause considerable trouble for the Federal Chancellor both on his Right and on his Left Wings.

.4. In my view we have now received, as the result of tripartite official discus- sions, as much information as we can get about the working of the Schuman Treaty institutions in the field now covered by Allied controls over German heavy industries. I do not think that the official Working Party's final report, covering the implications of the Schuman Treaty for the United Kingdom coal and steel industries, will help us to decide whether the institutions of the Schuman Treaty will adequately replace the existing Allied controls in their essential aspects. Further, I regard it as impor- tant that an urgent decision should be taken by Ministers about our policy towards the future of Allied controls if we are not to be subjected to damaging accusations by the French, Americans and Germans of holding up the discussions of substance proposed by the French and thus in effect hindering the ratification of the Schuman Treaty by the German Federal Parliament.

5. The information about the Schuman Treaty given to us by the French strengthens my previous conviction that with the coming into force of the Schuman Treaty it would be both desirable and wise for us to give up the existing Allied controls over German heavy industries, which are becoming increasingly difficult to enforce and at least one of which we have maintained solely in the interests of the French. To summarise briefly arguments developed at greater length in Annex B:

:

(i) We have no interest in maintaining the I.A.R. in existence; the effect of its main function (dividing German coal between internal consumption and export) will be attained by the operation of the High Authority under the Schuman Treaty.

(ii) The essential function of the Allied Coal and Steel Control Groups is to supervise the completion of the reorganisation process in the German coal and steel industries. The French have confirmed that this function will not be affected by the Schuman Treaty, and there is little difficulty in abandoning any secondary functions.

(iii) The raising of the limit on German steel capacity may involve us in some immediate loss of scrap. Supplies of German scrap have, however, decreased very rapidly in any case; and it is increasingly difficult to enforce the existing limitation on capacity. Over the long term the Schuman Treaty (Article 54) is likely to be our most effective safeguard against any excessive increase through foreign investment of German Page 554steel capacity.

Page 554.