split the Western European and other free nations. and it is the top objective of the Communists to try to separate and to foster working together and cooperation in every way in Europe, Congress, and it is at present of General Eisenhower's administration It has been a clearly established policy of this committee and of the

(A chart was shown, entitled "European Organizations," as foldiscussion to put up a rather basic outline chart of the members of I thought it might be well for a background in this first part of our

OEEC and relative organizations.

lows:)

March 23, 1953

OEEC-April 16, 1948: On this date 16 CEEC members plus the occupying powers for Western Germany signed an agreement establishing OEEC (June 1950 United States and Canada became associate members).

NATO-August 24, 1949: The date North Atlantic Treaty entered into effect with deposit of necessary number of ratifications.

Council of Europe-May 5, 1949: The date on which the statutory agreement setting up the Council of Europe was signed by the 10 original members.

EPU-July 1, 1950: The date on which the accounting period for EPU commenced. On September 19, 1950, the actual EPU agreement was signed by respective members making retroactive to July 1, 1950, the accounting period.

CSC July 25, 1952: The date of ratification of the Coal-Steel Community. EDC: No date is given because the EDC has not yet been ratified. On May 27, 1952, the EDC Treaty was signed by the six nations.

Mr. STASSEN. This is what we have in mind in the different organizations.

You see, the OEEC was the earliest organization for European Economic Cooperation, April 16, 1948. It has the entire group with the United States and Canada being associated members. Of course, the two dollar area countries are associate and not full members.

NATO, as you there see, does not have Germany in it, it does not have Austria or Switzerland, Sweden or Ireland, but it does have the United States and Canada as full members, and not as associate members.

The Council of Europe is the organization which Mr. Merchant may discuss a bit more with you, but it is in a relatively early stage of development. It does not have Portugal, it does not have Austria, it does not have Switzerland, but it does bring in Sweden and Ireland, who are not in NATO.

The EPU has exactly the same membership as OEEC but it does not have United States and Canada as associate members. The European Payments Union, an organization of the nondollar nations is working together on a clearinghouse basis, and therefore the United States and Canada are not in it but do sit in from an observation and cooperating standpoint.

The Coal and Steel Community, and the EDC, have the six central or western European nations, France, Germany, Italy, Netherlands, Belgium, and Luxembourg.

With this background, and the OEEC meeting just concluded, which had as one of its main subjects the European Payments Union and its continuation, we might look at the next chart which is the up-to-date status of this clearinghouse approach.

(A chart was shown entitled "European Payments Union" as follows:)

Mr. STASSEN. This meeting that has just been held has renewed EPU for another year. This European Payments Union chart shows the status of the clearinghouse operation between the OEEC members in their trade.

Two observations can first be made.

The top line is Belgium-Luxembourg, in the strongest position so far as its clearinghouse position is concerned. In other words, they are exporting much more to the rest of the members than they are importing from them. They are getting a very favorable balance.

This line is Germany coming up with their increased production, increased export to other countries and up into this position.

33064 534

EUROPEAN PAYMENTS UNION
Cumulative Payments Positions of Member Countries
July 1950 To Date

JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 1950 1951 1952 1953

March 23, 1953

Here is the Netherlands, the third strongest on the plus side, and here is the whole group of others, Sweden, Italy, Portugal, Iceland, Denmark, Norway, Austria, Turkey, and Greece. There are slight variations.

Here are the two other very significant things. Here is the United Kingdom. This was that long drop they had after the high point reached due to the great demand for their materials which resulted from the Korean war. After that they began to get into a weaker position. They were on their way down to this point in July and August of 1952 when the present Government of the United Kingdom put very tight restrictions on imports from the EPU members, in order to straighten themselves out.

You see how their position has responded to those restrictions on imports and they have begun to climb back up.

Now when they did this, and tightened up, it was hard on France, because it meant they began to take less goods from France. It was also hard on Italy, and Italy began to pull down. That is the direct reflection, the very tight restrictions, which the United Kingdom had to put on to stop that downward trend which had reached a very serious aspect.

Now then as to this meeting just concluded. In the first place it continued for another year, on what we considered to be a very satisfactory basis, the European Payments Union, which, according to present agreements, was to expire June 30. Secondly, it adopted certain trade and tourist liberalization measures which we consider to be very constructive. The United Kingdom, having pulled up this way and being in a stronger position, eased up on their trade restrictions, vis-a-vis Italy and France, and therefore the trouble that Italy and France were having with their exports to the United Kingdom is likely to be decreased and the basis of their economic strength improved.

Germany, who was pulling up in this very strong position also liberalized their import rules so that they will be taking more goods in from France and more goods in from Italy. Thus, these two countries will be given a chance to earn somewhat more in their overall European trade.

Those two very marked liberalizations that came out of Germany and out of the United Kingdom then sparked a liberalizing approach on the part of others who were in a stronger position and thus could help those who were weaker in their trade position. The result has been that some of those participating in the conference have called it one of the most constructive conferences they have had since EPU and OEEC were established.

Both the United Kingdom and Germany have liberalized their tourist allowances, meaning that a tourist going from these countries to Europe can spend a little more of his own money on his trip. That, cf course, immediately means that France in its tourist season can earn a little more from the tourists who come in from Britain and the tourists who come in from Germany.

And so can Italy during their tourist season.

I think it might be interesting right at this point to comment on the way in which we have worked approaching this meeting.

The functioning of the European organizations and the economic policies that are involved have been the subject of quite intense study by the administration since inauguration day and to some extent even before that.

And, you will recall that when I returned with Secretary Dulles we had some discussion of certain aspects of these economic problems. What we did in the administration is that a little more than a week before this OEEC meeting we developed here in the administration a combined position as to what we would like to see happen in the OEEC meeting. Then a joint message went from the Secretary of State, the Secretary of the Treasury, and the Director for Mutual Security to Ambassador Draper and his staff as to what we felt should be the United States position and what we would like to see come out of the meeting. We emphasize that it should be done without an overt display of American leadership or interference, that is, that we should do a constructive job and get the results without being in any ostentatious position.

That has, in the conferences, worked out very satisfactorily.

Three days before the meeting we sent a followup joint message from the Secretary of State, the Secretary of the Treasury, and the Director for Mutual Security on what our views then were on any further questions that had been raised in the staff work leading up to the conference itself.

From the broader standpoint of the European economic picture I think you may recall some of the facts about defense burdens being carried and some of the other aspects of the situation.

(A chart entitled "Defense Expenditures and Gross National Product, Dollar Per Capita," was shown. (See p. 47.)

Mr. STASSEN. This shows the defense expenditures and gross national product expressed in terms of dollars per capita.

You will see that the tall gray columns indicate the approximate dollars per capita of gross national products in each of these countries. You see our own country, of course, at the high point of $2,234 per capita gross national product.

You see the United Kingdom at $781, France at $814, the total European NATO plus Germany at $588-that is an average. In the middle on the lower line of charts, the German Federal Republic at $630, and Italy at $349.

The red bars show what part of that is being put into defense. You see our own participation at $313; the United Kingdom at $102; France at $93 the total European NATO plus Germany at $55; German Federal Republic at $41.

You may recall from our earlier conferences that, as the occupaоссираtion declined and the German divisions were not yet formed, Germany had a relatively light defense burden and has at the present time, which shows up in this chart. Italy is $21.