This is a personal letter about things at the Seventh Session, because I know you are interested. It is not intended, of course, as a substitute for official messages. Please do net feel under any obligation to reply.

We have been busy, indeed, for the first ten days - and nights. The session is more largely attended than other recent ones. The substance of the issues is more important than we had supposed in advance. As a result, our Delegation of four is rather thin on the ground. Five would have been better. With LePan and Reisman, the quality of the team is very high and we can take on anything that arises. Kilgour is fitting in well, too, and being very useful.

Most of the larger issues at this Session have by now been pretty well settled in principle - Japanese accession, Belgian import restrictions, United States restrictions on dairy products, and the general approach to the balance of payments consultations.

We have had several talks with Hagiwara, the Japanese representative, and our two delegations are on good terms. Hagiwara is accompanied by no less than fifteen associates who extend in meetings as far as the eye can see. We have already sent messages to you about Japan. I am going to draft one more today.

Our position on Japan seems to fit quite neatly into the general pattern of the other countries. We have made friends with all the Asiatics here by our view that, even if there are special difficulties to be faced, we must live and trade with Japan and should, therefore, try to find mutually acceptable agreements on which to conduct trade. All the delegations seem anxious to avoid forcing Japan into an aggressive regionalism by excluding her from G.A.T.T. On the other hand, there is no immediate sense of urgency about admitting her. The Japanese themselves seem to accept the fact that their application to G.A.T.T. in advance of this session may have been premature.

In discussions with other delegations, we have put into circulation the idea of meeting special problems of the various countries by writing appropriate safeguards into the eventual terms of accession of Japan, to be applicable for perhaps a limited period of years, and Japan otherwise to participate fully in G.A.T.T. This approach has taken hold and seems to be pretty generally acceptable in principle.

We are very close to agreement with the Belgians on their import restrictions. The Americans and ourselves have had some exasperating meetings with the Belgians but our relations have been harmonious throughout. The Belgians have now taken a text back to Brussels, by which they will announce a list of relaxations to take affect in the near future. They are prepared to have us express views on particular items we wish to be included in the list. They will imply strongly that this is just a first step, unless their position deteriorates. If and when the Belgian Government says they will accept the text, to which we have not committed ourselves as yet, we shall send it along. The United Kingdom does not seem to be at all worried about this solution, as yet, at any rate. You will remember that last year the United Kingdom supported the Belgian restriction more strongly than the Belgians did.

We have not yet reached agreement with other delegations on what to do in the Contracting Parties about the United States restrictions on dairy products, but this should not be too difficult. The Americans have removed or greatly increased the quotas applicable to some types of cheese and they have increased all the quotas by a nominal 15%. They have three quota periods in the year, however, and by making the whole of the 15% available for the current 4-month period, the effective rate of increase is really 45%. If things go well, they will try again to get rid of the remaining quotas early next year.

We had some troubles with the United States on the balance of payments consultations, but these seem to have been fairly well overcome. The Leddy mission told us in Ottawa of their interest in laying a greater emphasis on trade aspects and upon general techniques of import control in the consultations this year. We agreed and even approved of this idea, provided it was intended merely to change the emphasis, and not to divert attention from the basic questions of whether countries are entitled to have any quantitative restrictions and, if so, whether their restrictions are excessive.

We were given to understand that the Americans wished to refer to commodities to increase their own information about techniques of import controls and to provide concrete examples of general principles. What the Americans did not tell us, in Ottawa, was that they were sending official messages to several countries in advance, and in one or two cases rather brusque messages, with lists of products and a stiff notice that the United States would utilize the balance of payments consultations to have a searching and detailed discussion of these commodities.

This approach was evidently established carefully and interdepartmentally in Washington and the Department of Agriculture has sent three people here to the balance of payments working party. One of these is our old friend, Fred Motz. State Department provides the spokesman and George Bronz, the single Treasury representative, looks most unhappy and keeps quiet.

This new American approach threatened at first to be difficult to change, and it certainly threw the other delegations into a turmoil. For the other exporting countries, it raised the question of whether they should also submit lists. The importing countries were perturbed at the possibility of these lists mushrooming into hundreds of items. American prestige was weakened by the appearance on their lists of a number of inconsequential items which have obviously been the subject of representations to the State Department and have been included on their lists for parochial political reasons. The important items were all fruits and vegetables and, of course, these latter are highly important to us.

I finally went to Willard Thorp and referred in very general terms to our hope in Canada that it might be possible before long for everybody to take a new look at extending multilateral trade, removing restrictions and doing something about convertibility. I told him I thought it would be disastrous to create the impression that North American concern about these large problems is focussed on a desire to get rid of a few surplus agricultural products overseas. I told him I thought this would be the consequence of pursuing the course they were proposing in the balance of payments consultations. Willard picked up this point and proceeded to discuss it. I think he was already a bit embarrassed by the whole situation they had created. I feel sure Willard had not himself been aware previously of the sharp text of the note they sent to South Africa. I don't think any of the Americans had really thought their way through all the implications in advance of making their new proposals,

The upshot was that Willard made quite a good statement in the Contracting Parties and their questions about commodities are to be "fitted in" to the balance of payments consultations in a natural way, and without too much fuss. This seems to be in accordance with the sort of procedure which we had envisaged and are well prepared to follow.

Reisman is carrying the balance of payments working party as his major job although he is, of course, getting into numerous other things in addition. The United Kingdom made a good statement yesterday in the working party, in which they were quite objective in describing their own situation, in which they mentioned the harmful effects of import controls, and referred to the importance of internal policies to rectify the underlying problems. Most of the countries wish merely to retain previously formulated positions in the balance of payments consultations this year, so there is not much in the way of new doctrine.

The waiver for the new European Coal and Steel Community is one of the most important items at this Session. The subject matter is new to us and very complicated, and LePan arrived at just the right moment to represent us on this working party. He is succeeding admirably in helping to formulate the problems of a waiver under the G.A.T.T. and, at the same time, is taking a friendly, sympathetic attitude towards this new European plan. The Europeans themselves are very excited about it and they have all sent special people to deal with this item. As you may know, Spirenburg has left the Netherlands Government to serve on the High Authority, as has Cecil Weir from the United Kingdom.

There is a considerable amount of talk about the need for an important session next year. Some are referring to it already as a constitutional session, although I am not perfectly clear on what that is supposed to mean. Sometimes the talk takes the form of asking what do we do three years after Torquay. Sometimes it takes the form of asking whether the present agreement can contain Japan or whether there will be a widespread withdrawal of bound items in the face of Japanese accession. There is some speculation also about reconsidering some of the basic provisions, if the United States Government should adopt a new and more liberal approach to commercial policy next year. All of this is very hypothetical, but, added to the Schuman Plan, I think it is the underlying reason why there is a good deal of bustle and interest attaching to this Session. As an example, even the innocuous item of special Italian customs treatment for Lybian products provoked a surprisingly serious debate on the principles of tariff preferences.

Parenthetically, the steam has all gone out of the European tariff equalization issue. Perhaps the Europeans are waiting to see what the United States will do next.

Melander has asked me quite seriously how we feel about holding next year's session in Canada. I promised to return to this discussion with him. I don't know whether our Government would want to have it in Canada in an election year. If we were certain that the next Session would be able to assemble in the light of brave new commercial policies in the United States, I suppose we would be more interested. It would certainly be helpful to receive any guidance you might care to give on this one. You will remember that last year we said we thought regular business sessions should be held in Geneva.

I have been a bit busier myself at this Session. In addition to our own Delegation's business, I have been asked to take on the chairmanship of one of the three important working parties, this being the one to deal with all of the cases of commercial complaints and difficulties. There are seven or eight such cases, some of them quite interesting. It is expected that this working party will be appointed and start work this week.

I have also been asked informally to try my hand at mediating between Pakistan and India on a difficult problem which has arisen. It is a problem to which an early solution is very desirable. I have undertaken to see them both to try to find what common ground there is. Pakistan has imposed export control on jute going to India and it seems likely to cause immediate damage and endless friction unless something can be done.

Wyndham-Whyte remarked that when you were Chairman you would have resolved this one yourself by interviewing the two delegations, but the present Chairman is not good at this sort of thing.

Wyndham-Whyte is doing a first class job, as always. Suetens is spokesman for the European countries on the Schuman Plan and always speaks of you, as, in fact, do most of the delegation heads. . . .

This has turned into a longer letter than I initially intended. I shall send a copy to Bull and Deutsch in London.

Yours faithfully,

CLAUDE ISBISTER