Final Communiqué

The North Atlantic Council convened today in Washington in its second session. The Council considered and approved a report of the Working Group on the establishment of a "Defence Financial and Economic Committee" under the North Atlantic Treaty as follows:

Defence Financial and Economic Committee

In accordance with the decision of the North Atlantic Council on September 17, 1949, and in further implementation of Article 9 of the Treaty, there is hereby established a Defence Financial and Economic Committee. It shall be responsible for advising the Council on the financial and economic aspects of measures for the defence of the North Atlantic area.

The following general provisions shall govern the operation of the Defence Financial and Economic Committee:

1. The Defence Financial and Economic Committee shall be composed of a representative at Ministerial or similarly high level of responsibility from each signatory country. It shall report directly to the North Atlantic Council. It shall consult with the Defence Committee as appropriate.
2. The Committee and any subordinate bodies which it may set up shall establish and maintain close working relations with the North Atlantic military organization, and particularly the Military Production and Supply Board.

The Committee or its subordinate bodies shall provide them with guidance on all relevant economic and financial factors; shall obtain from them information on those requirements of defence programs which are relevant to the consideration of economic and financial questions; and shall provide them with guidance on financial and economic arrangements to meet the requirements of defence programs.

3. The Defence Financial and Economic Committee is in particular responsible to the North Atlantic Council for the performance of the following functions, having regard for the principle of self-help and mutual aid in the field of military production and supply, and for the primary importance of economic recovery and continued economic stability:
1. To develop in co-operation with the Military Committee (including the Standing Group) and the Military Production and Supply Board overall financial and economic guides to and limits of future defence programs, including military production programs, which North Atlantic Treaty countries as a group and individually should undertake within available financial and economic resources.
2. To appraise the financial and economic impact on member countries of major individual defence projects formulated by the Military Production and Supply Board or the Military Committee (including the Standing Group), including con- sideration of financing problems and availability of raw materials, capital equipment, and manpower, and, on the basis of such review, make recommendations as to action on such projects.
3. To recommend financial arrangements for executing military defence plans, and particularly financial arrangements for the interchange among North Atlantic Treaty countries of military equipment, surplus stocks, or materials and equipment to be used in producing military equipment.
4. To measure and to recommend steps to meet the foreign exchange costs of imports of materials and equipment from non-member countries required by defence programs under the North Atlantic Treaty.
5. To consider, as may be found desirable and appropriate, plans for the mobilization of economic and financial resources in time of emergency.
4. The Committee may delegate to any Regional Defence Finan- cial and Economic Committee which may be established by the governments of a Region any of its functions which, in its judgment, can be better performed by regional committees. Actions of regional committees under such delegations shall be under the general guidance of, and in accordance with the general policies laid down by the North Atlantic Committee, and shall be subject to its co-ordination and review.
5. The Committee shall provide itself with such subordinate bodies and staff assistance as may be necessary to carry out its functions. In particular, there shall be a permanent working staff in London, composed of qualified personnel representing interested countries to carry on the day-to-day work of the Committee and to which the Committee may delegate such of its functions as it deems appropriate. The Committee shall have a Secretary, with suitable assistance, to perform the secretarial and administrative functions.
6. The Committee shall meet at such times and places as shall be required. Its secretariat and working staff shall be located in London. The Committee shall decide its own rules of procedure. Chairmanship shall be held in turn by the Parties according to the alphabetical order in the English language beginning with the United States. Each Party shall hold the office for one year. If any Party does not wish to accept the Chairmanship, it shall pass to the next party in alphabetical order.

The Council took note of and approved the action of the Defence Committee in establishing a"Military Production and Supply Board" . The Military Production and Supply Board has already met in London in its first session and has initiated a work program which was summarized in a communique issued in London on November 2.

The directive issued by the Defence Committee in establishing the Military Production and Supply Board, and approved by the Council, is as follows:

North Atlantic Defence Committee Directive to the Military Production and Supply Board

In accordance with the decision of the North Atlantic Council on September 17, 1949, and in furtherance of Article 9 of the Treaty, there is hereby established a Military Production and Supply Board.

The following general provisions shall govern the operation of the North Atlantic Military Production and Supply Board:

1. The North Atlantic Military Production and Supply Board shall be composed of a representative at the sub-ministerial level from each signatory country. It shall report directly to the Defence Committee.
2. The Board shall establish and maintain close working relations with the appropriate military bodies set up under the Defence Committee. It shall look to them for information on military requirements and work with them to insure that, insofar as feasible, the military production and procurement program supports defence plans effectively. The Board shall also work in close co-ordination with the military bodies on the promotion of standardization of parts and end products of military equipment, and provide them with technical advice on the production and development of new or improved weapons. To facilitate the fullest co-operation and exchange of information between them on matters of joint interest, the Board shall establish and direct a suitably representative liaison group on a working level in Washing- ton to work with the Standing Group.
3. The Board shall maintain close working relations with the finance and economic machinery to be established by the Council, and look to it for guidance on all relevant economic and financial factors.
4. The North Atlantic Military Production and Supply Board is responsible to the Defence Committee for the performance of the following functions, having regard for the principle of self-help and mutual aid in the field of military production and supply.
1. The review of the military supply situation on the basis of data to be secured from the appropriate military bodies on military material requirements and on the current availability of military material to meet such requirements.
2. The recommendation to the Defence Committee of ways and means of increasing available supplies where they fall short of requirements, either from production, surplus equipment or equipment economically capable of rehabilitation. In preparing such recommendations, account shall be taken of strategic factors, of physical capabilities of individual countries to produce military material, of the importance of securing maximum efficiency and integration of production, and of the guidance furnished by the finance and economic machinery with respect to financial and economic considerations.
3. The promotion of more efficient methods of producing military equipment and of the standardization of parts and end products of military equipment, including conservation in the use of strategic and critical materials, and including advice to the appropriate military bodies on the production problems involved in proposed new weapons or modifications in existing weapons.
5. The Board may delegate to any Regional Supply Board which may be established by the governments of a Region any of its functions which in its judgment, can be better performed by regional boards. Actions of regional boards under such delegations shall be under the general guidance of and in accordance with the general policies laid down by the North Atlantic Board, and shall be subject to its co-ordination and review.
6. The Board shall provide itself with such subordinate bodies and staff assistance as may be necessary to carry out its functions. In particular, there shall be, in addition to the liaison group in Washington, referred to in paragraph 2, a permanent working staff in London, composed of qualified personnel representing interested countries, to carry on the day-to-day work of the Board. The Board shall have a Secretary, with suitable assistance, to perform secretarial and administrative functions.
7. The Board shall meet at such times and places as may be required. Its secretariat and working staff shall be located in London. The Board shall decide its own rules of procedure. Chairmanship shall be held in turn by the parties according to the alphabetical order in the English language beginning with the United States. Each Party shall hold the office for one year. If any party does not wish to accept the Chairmanship, it is passed to the next Party in alphabetical order.