469. Telegram 259 to Luxembourg, May 21
US Mission Geneva for GATT. Trade negotiations and EEC matters discussed in scheduled call today on Acting Secretary Ball by FonMin Schaus during State Visit Grand Duchess Charlotte.
Ball reiterated President’s statement yesterday in separate meeting that development EEC position on trade negotiations matter great concern to us. We look forward real liberalization trade resulting from negotiations. US has definite positions on two matters: firstly, inclusion agriculture in trade negotiations. Ball recalled Schaus’ statement yesterday to President that despite many difficulties, this acceptable in principle. Secondly, Ball stressed necessity acceptance principle linear tariff cuts with only limited exception list. After negotiation linear cuts, could be adjustment individual commodities, US hopes EEC Ministerial [Typeset Page 1858] Meeting May 7 and GATT Ministerial later will result in EEC accepting principle linear tariff cuts without French ecretement proposals. Ball noted 50% cut in high tariff item could result in greater flow trade than 50% cut in low tariff item.
Schaus believed Six prepared for linear cuts. Although exceptions should be rare as possible, there would nevertheless have to be exceptions. Schaus [Facsimile Page 2] commented EEC probably had more low-tariff items than US, and problem would be that 50% cut in high-tariff US items would still result in some protection, whereas 50% cut from European low tariff for example of 10% would leave only 5%, affording practically no protection. Ball replied we prepared look at facts and examine possible exceptions.
Speaking frankly, Schaus said he thought opinion expressed by Blumenthal in Geneva that US could not participate in negotiations based on ecretement principle was “too extreme”. Schaus read message from EEC reps Geneva urging Schaus impress USG how important adjustment high US tariffs is to EEC. Message also said US proposal include agriculture in negotiations would be “difficult”.
Ball said he would also speak frankly. Before drafting trade expansion legislation, we had discussed problem informally with French, Germans, and others, as well as with EEC Commission. On basis European desire linear cut principle, we drafted TEA for linear cuts. Nobody had mentioned ecretement problem at that time. French, in raising it now, interposing objection after fact and we wonder if motivation create obstacle successful negotiations. US does not believe this problem as serious as EEC does. Individual exceptions can be examined and worked out in good faith later. Ball also noted US had many items on free list as well as many low tariff products.
While agreeing possibility French raising ecretement as pretext, Schaus believed French would not oppose negotiations in view risk isolation. On other hand, better have possible French objections expressed early date than after lengthy negotiations as in UK/EEC negotiations. Ball indicated would be helpful if US view necessity [Facsimile Page 3] principle across board negotiations fully understood at EEC Ministerial meeting May 7. Schaus replied it most important have benefit US thinking since he would chair meeting and said he would “do his best”. Schaus stated he conscious importance success negotiations both sides, including future EEC itself. Negotiations test continuation EEC and success imperative. Schaus emphasized however US must understand EEC problems and make concessions. Climate in EEC was “difficult”.
Schaus also raised anti-dumping question. Ball replied we reviewing whole problem and would be prepared discuss it. We considering international approach to problem although US position not yet fully [Typeset Page 1859] formulated. In reply question from Schaus Ball indicated we prepared discuss cereal prices on global basis in Cereals Committee in GATT.
On broad question future EEC, Ball said although we disappointed failure UK/EEC negotiations, we still had faith ultimate success EEC. Far from wishing Five attempt frustrate integration, we hope Six keep up momentum toward integration. Schaus said he pleased have this clarified because “some elements” within Six advocate no further progress toward integration until UK accepted as member. Schaus thought UK view was similar to US view and he had reacted against tendencies to “freeze” situation. He thought April 2 Ministerial meeting resulted in renewal forward movement. Ball remarked Schroeder proposals for synchronization were very useful. Schaus agreed and said would be impossible situation have some members Six insisting upon preconditions.
- Readout of Schaus’ meeting with Ball on trade negotiations. Confidential. 3 pp. Department of State, Central Files, FT 7 GATT.↩