CAB129-45 — Page 556

Page 556 and would fall under the definition of "enterprises" in Article 80. Thus, if the Germans adopt the holding company" form of structure as a link between their coal and steel industries, there would be no risk of these industries falling outside the provisions of the Schuman Treaty.

(e) Control of Investments under the Treaty

The French gave explanations on various aspects of Article 54:—

(i) They confirmed that the first two sub-paragraphs of the Article referred to different types of investments, the second (for which the unanimous agreement of the Council is required) covering investments outside the iron and steel industry but of benefit to it. The example given was a scheme of railway electrification.

(ii) The French explained that the phrase "ses fonds propres referred exclusively to self-financing by the companies concerned and that the prohibition in the case of an unfavourable opinion by the High Authority was intended to cover all forms of unsecured loans (e.g., from Govern- ments or banks).

(iii) When asked about the practicability of enforcing such restrictive controls, the French maintained that the High Authority's power of procuring and checking information and of imposing heavy fines in cases of contravention would render the enforcement of controls possible. (iv) The French were asked directly whether the effect of Article 54 would be to provide a check on excessive expansion of the German steel industry. They made the formal and pious answer that the High Authority would reach its decisions under Article 54 in the light of the interests of the community as a whole, and the Article was not conceived as restraining capacity in any country. The only limitation which they envisaged was on nationalistic autarchic expansion tending to need direct or indirect protection contrary to the principles of a free market. Mr. Tomlinson, the Financial Attaché of the United States Embassy, intervened to say that he had been given to understand that the emphasis of the Schuman Plan would be on the expansion of production.

(f) Exports in time of shortage

There was some detailed discussion of Article 59 (iii) about the procedure to be followed by the High Authority in times of shortage. Hirsch gave the following interpretation of this article:-

(i) The High Authority makes a general estimate of, e.g., the coal consump- tion of the community as a whole and of the coal which it is necessary to export outside the community. He said that the phrase " en fonction de was fairly vague since it was impossible to be precise over a 50-years' period. It means tenant compte des affaires existantes." (ii) In the light of these estimates a division of total resources will be made among the participant countries, including an estimate of the amount which participant countries should export to the others.

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(iii) Governments of participant countries may then deal freely with the quota allotted to them, so long as the amount reserved for delivery to other participant countries is not affected.

(iv) Governments must, however, consult the High Authority about the amount which they export outside the community or allocated to the coal and steel industries in their country. If their exports to countries outside the community are decreased, or increased at the expense of their domestic coal and steel industries, the High Authority will again inter- vene. The High Authority has, however, no powers of intervention if exports outside the community are increased at the expense of general 'home consumption.

The French confirmed that non-participant countries had no safeguard under the Treaty against cuts in coal exports from the community. The community would take its decisions in the light of the interests and obligations of its members. Hirsch implied that it would try, in regard to coal and steel exports, to act as if it were one country. He also mentioned obligations under G.A.T.T., which the com- munity would have to honour like its constituent member States. He did not specifi- cally aefer5t56United Kingdom coal exports last winter. Page 556 of 587.