69. Memorandum of Conversation0
SUBJECT
- Relationships Between the EEC and the Outer Seven
PARTICIPANTS
- German Economic Minister Erhard1
- Under Secreatry Dillon
Erhard opened the conversation on this subject by saying it was vital that Europe not be split into two groups and that some sort of agreement be reached between the Six and the Seven. He felt the possibilities for agreement were better than they had been and indicated that the EEC Commission had developed a better understanding of the problem. He said that the development of the EEC must continue as there was not only an economic but a strong political reason for it. However, there were some problems on the political side since Debre did not seem willing to move at all in this direction. He felt that it was probably unwise to push the French too hard in the political direction at this time. I agreed that probably the best approach was to work towards the completion of the economic unity of the EEC which could create, by its very nature, a pull for political unity.
I said that the United States had favored a Free Trade Area and when that had proved impossible we had done everything we could to influence the EEC towards adopting an outward-looking attitude with [Page 149] as low external tariffs as possible. I said that if the Outer Seven was created in such a way as to be consistent with GATT, we would support it also. However, there was one thing which gave us real concern and that was any sort of discriminatory arrangement between the Six and the Outer Seven which would operate to the detriment of the rest of the world and particularly the United States. Erhard avoided a reply to my remarks about discriminatory relationships between the Six and the Seven, and repeated several times his strong belief in the principles of free and liberal trade and his zeal in working for a liberal attitude toward the whole world on the part of the Six. I repeated my concern regarding any discriminatory arrangement between the Six and Seven and stated that if such a discriminatory arrangement came into being the United States would have to oppose it in the GATT. I mentioned the recent proposals of the European Economic Commission made by Hallstein at Strasbourg, and said that they seemed reasonable to us. Erhard agreed that they were a good set of proposals and should be supported. It was these proposals that made him feel more confident about the future relationship of the EEC and the Outer Seven.
Erhard then pointed out that Germany has a real interest in trade with the Scandinavian countries. He said that if the Outer Seven developed in competition to the EEC, Germany might well suffer substantial losses in this important market. I told him that we favored any relationships that could be developed between the Six and the Seven as long as they were not discriminatory against the United States and the rest of the world. I said that I felt that if tariffs generally could be lowered, the problem would be greatly eased. Erhard stated that he agreed with me and finally said that he recognized our concern about discriminatory arrangements within Europe which he conceded would be bad for EEC’s relationships with the rest of the Free World. He said that there must be an effort to work out the relations with the Seven in some way that would not discriminate against the rest of the world. We found ourselves in full agreement at this point.