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    "title": "Background Memorandum Regarding United States Military Assistance to Great Britain",
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    "seq": 7,
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    "ocrText": "-7-\n\"NATIONAL\nARCHIVES AMD\nRECORDS\nSERVICE\"\nAdministrative Expenses\n19. It follows that H.M. Government would also be obliged to scrutinize\nwith the greatest care the commitments into which they might be expected\nto enter on account of United States administrative expenditure under\nArticle V of the Draft Bilateral Agreement. It is appreciated that the\nsums which the U.S. authorities have in mind are not large, but it\nmust be pointed out that in the case of military aid no \"counterpart\nfunds\" arise from which these administrative expenditures of the U.S.\nGovernment could be met. Any funds provided for this purpose would\ntherefore have to be voted by, and accounted for, to Parliament and this\nis bound to raise difficult questions of principle.\nControl over transfers of equipment\n20. A further serious difficulty arises in connexion with Article I,\nparagraphs 2, 3 and 4 of the draft Agreement, which deal with the use and\ndisposal of equipment, materials and services supplied under the Mutual\nDefence Assistance Act. H.M. Government are of course perfectly in\naccord with the general proposition that such equipment etc. shall be\nused to further the purposes of Atlantic defence, and shall not be dis-\nposed of to other Governments without agreement, but they could not\naccept the restrictions proposed in the draft agreement. These restric-\ntions, apart from being insufficiently defined and probably unworkable\nin practice, would apparently lead to a degree of supervision and con-\ntrol over the whole armaments industry and export trade of this country\nwhich neither H.M. Government nor Parliament could possibly agree to.\nIn particular H.M. Government would be obliged to have regard to the\nfulfilment of their commitments (in some cases treaty commitments) to\nthe Commonwealth and foreign countries which rely on the J.K. for\ntheir military supplies.\n21. In addition to the major points indicated above on which the draft\nAgreement is unacceptable to the United Kingdom, there are a number of\nother points which would need either to be substantially modified or\nto be made the subject of separate Agreements. In particular, Article II,\nrelating to United States stockpiling, and Article IV, relating to\nreciprocal arrangements regarding patents, would require close examina-\ntion and appear somewhat out of place in the context of the Mutual\nDefense Agreement.\nConclusions\n22. H.M. Government therefore reach the following conclusions in regard\nto the programme of military assistance as it now stands:-\n(1) The value of aid receivable by the United Kingdom under the\nMutual Defence Assistance Act falls below the aid which H.M.\nGovernment expected to receive when they entered on their\nshare of the Western Union defence programme.\n(2) The United Kingdom contribution to the Western Union defence\nprogramme involves the diversion to munitions production of\n381 million of resources which would otherwise have been avail-\nable to promote economic recovery. It is the intention of\nto\nH.M.G."
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