Reference; Our letter No. 2647 of September 7, 1954.?

Repeat London No. 26; Washington No. 10.

We have recently been giving renewed consideration to the possibility of making some moves toward the implementation of Article 2 in the field of economic collaboration. In the past, studies on implementation in the Department have centred on the question of whether NATO might take over a measure of international responsibility for certain subjects and it was discovered that, almost without exception, they were better handled in other organizations, where machinery had been set up to deal with them and where the membership was more appropriate. While we have always been in agreement with this view, it leaves open one very pertinent question.

2. The second sentence of Article 2, as Mr. Robertson pointed out in his letter of February 11, 1954, is a positive statement of international policy requiring member countries to "seek to eliminate conflict in their international policies and ... encourage economic collaboration between any or all of them". It is apparent that this statement of policy cannot be invoked in other organizations. Unless it is exactly invoked in NATO it can only remain a faint call on the conscience of member countries which has and may be expected to continue to dwindle in strength as the years pass.

3. What we are now considering is the possibility of providing for discussion on the broad politico-economic aspects of economic collaboration in the NATO Council - preferably at ministerial level. The procedure for the discussion of political issues is a good precedent although economic issues raise separate and more complicated problems.

4. The best method to initiate thought and discussion of economic collaboration raises a series of problems. One avenue of approach might be through the Annual Review process. This general question could be the subject of a special study to be conducted initially by the international staff and reviewed by a special Working Group or the Annual Review Committee itself if necessary. It could then be mentioned, along with other issues, in the general chapter of this year's Annual Review Report. This method may present an opportunity for NATO to take official cognizance of the economic provisions of Article 2. Without setting up any special machinery to examine these questions, a review of the situation could be prepared for the information of ministers when they were considering the Annual Review at the December meeting of the Council. This would afford the opportunity for any minister, who so desired, to raise a question pertaining to economic collaboration.

5. We are not unmindful of the difficulties connected with the preparation of the Review on Economic Collaboration, but in our view a review which could serve as a basis for discussion could be drawn up. We do not have in mind any particular aspect of the question of economic collaboration which we would wish to raise at the Council meeting next December. That would depend on the circumstances prevailing at the time. We feel, however, that the matter should be approached cautiously. For example, the ministerial discussions might not, at this stage, result in any positive recommendations to individual countries. They would serve to keep the Article 2 provisions alive and as a minimum we might wish to say that the special study had served a useful purpose and that we would hope that it would be continued in the future as a regular part of the Annual Review process.

6. While we might not have anything to say next December, a number of countries could have points to raise. We would then begin to have a useful discussion in NATO of the broader aspects of the economic policies of member countries particularly with regard to political considerations and objectives. This should serve to supplement, and thus give clear direction to, what is being done in other international organizations and should not in any way conflict with the work of these other bodies.

7. My immediately following telegram gives the draft text of a memorandum which the Canadian Delegation might submit to the Annual Review Committee proposing a special study on economic collaboration. We would request your authority to sound out, first of all, a number of other delegations and then, if they do not offer too much opposition to the whole idea, to submit the memorandum officially. We should like to have your instructions without undue delay as it would be necessary to submit the memorandum before March 24, when the preparatory work for the first stage of the Annual Review process should be nearing completion.

[L.D.] WILGRESS