MEMORANDUM INTERNATIONAL WHEAT AGREEMENT
1. His Majesty's Government believe in the establishment of commodity agreements to promote greater stability in the prices of primary products and agree with the Government of the United States as to the desirability of concluding an International Wheat Agreement. They also fully accept the view of the President of the United States that, if the present negotiations for an agreement fail, the possibility of reaching agreement on other commodity control schemes will be much reduced.
2. His Majesty's Government have already given proof of their desire for an International Wheat Agreement by ratifying the agreement of March 1948, and they were disappointed that this agreement never came into force.
3. In approaching the negotiation of a new agreement, His Majesty's Government's position is governed by the same considerations as those which led them to accept the agreement of 1948. They believe that it is in the common interest of both parties that the wheat importing countries should accept commitments which will guarantee the wheat exporting countries against the danger of a disastrous fall in prices to unremunerative levels, and that the exporting countries should accept commitments which will relieve the importing countries of the grave burden of excessively high prices such as resulted from the recent world shortage of wheat.
4. Had the Agreement of 1948 been put into operation from the beginning of the current crop year, the importing countries would have been receiving their wheat requirements at the controlled - but still high - price of $2.00 per bushel. But in fact the importing countries, which have already paid very high prices for their wheat requirements in recent years, will have paid by the end of next July millions of dollars more than they would have done if the agreement had come into force. His Majesty's Government are sure that the U.S. Government will agree that this fact must be taken into account in fixing the minimum prices in a new agreement, since it was the fact that the importing countries were going to receive immediate relief from the agreement (which they failed to receive when the agreement broke down) that justified them in accepting the obligation to sustain the price of wheat in future years at the levels provided in that agreement.
6. His Majesty's Government fully appreciate the immense assistance which the United States are giving to European recovery through Marshall Aid, but they believe that this should not be regarded as an argument for fixing higher prices in a new International Wheat Agreement than are justified on sound economic grounds. An International Wheat Agreement can be successful, and will facilitate the negotiation of other international commodity control schemes having the same objectives, only if it is freely accepted by producers and consumers as being fair to the interests of both. The introduction of any other considerations would prejudice the success of the agreement itself and make the conclusion of other similar agreements more difficult
7. His Majesty's Government have already shown their desire to meet the views of the exporting countries in the current negotiations by allowing their delegation to accept a fixed maximum price of $1.65 instead of the falling maximum which the delegation originally proposed, by agreeing to an increase of the United Kingdom's guaranteed purchases, and by not asking for a reduction of the minimum price accepted by all parties to the 1948 agreement. In agreeing to increase the guaranteed purchases of the United Kingdom the U.K. delegation has gone much further than the delegations of the other importing countries to find a solution to the difficult problem of matching guaranteed purchases and guaranteed sales which has been much aggravated by the Soviet Union's announcement of its desire to join the agreement as an exporter. The U.K. figure of guaranteed purchase is now some 80 per cent of estimated requirements and cannot be increased further, but His Majesty's Government would be willing to instruct their delegations to try once again to persuade the delegations of other importing countries to increase their guaranteed purchases. Acceptance of the U.K. price proposals would be an inducement to the other importers to do so. The U.K.'s offer of 190 million bushels was, however, made on the assumptions (a) that Russia would receive a substantial export quota, and (b) that agreement would be reached on prices acceptable to his Majesty's Government, and this offer will have to be reconsidered if either of these assumptions is not realized.
8. After reviewing the whole situation in the light of the above considerations, His Majesty's Government have decided that, in order to facilitate the conclusion of an International Wheat Agreement, they are prepared to make yet another concession in regard to the medium price beyond that which they have already made since they originally stated their position and to agree to a maximum price of $1.75 throughout a four year agreement. For the reasons stated in paragraph 4 above, however, they do not think that they can reasonably be expected to agree to an increase in the minimum prices for the years 1949/50 to 1952/53 which the exporters willingly accepted a year ago, when open market prices were so much higher than they are now. His Majesty's Government earnestly hope that in view of these further concessions, the United States Government will agree to give its delegation at the conference such instructions as will allow them to enter into an agreement on the terms stated above.