The countries participating in the Organisation for European Economic Co-operation are setting up a clearing house for their current payments to each other, to be known as the European Payments Union. The object of the scheme is to ensure the complete transferability of the currencies of the members of the Union for all payments on current account so that the exchange of goods and services between members may take place free from all impediments arising from payments difficulties. The E.P.U. is part of the general policy of liberalisation of trade leading to the creation of a large European market. The E.P.U. will be part of the O.E.E.C.

The O.E.E.C. proposes to adopt certain principles of commercial policy in association with the E.P.U. Agreement. These involve the removal of discrimination as between member countries in the case of import quota restrictions.

The memorandum examines the question whether Ireland should join the E.P.U. and, if so, whether Ireland should enter as a member of the sterling area or should seek separate entry.

The Minister for External Affairs taking all the circumstances into account proposes that Ireland should sign the E.P.U. Agreement following the precedent of the previous Intra-European Payments Agreements of 1948 and 1949. He also proposes that the reservation made when signing the previous Agreements should be modified, in view of the difference in character between the E.P.U. and the previous Agreements. The wording proposed is 'As Ireland is a member of the sterling area, the provisions of the present Agreement require no specific action by her, and signature of the present Agreement on her behalf is subject to the understanding that its operation will not modify the existing arrangements governing payments between her and the other contracting parties. Ireland however retains the right to withdraw the foregoing reservation should she at any time decide to become a direct participant in the E.P.U.'.