Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

470. Memorandum of Conversation, May 3, among Herter and his EEC Counterparts¹

May 3, 1963, 10:30 a.m.

SUBJECT

• Agricultural Problems in Forthcoming Trade Negotiations

PARTICIPANTS

• Mr. Robert Marjolin, Vice President of the Commission, EEC
• Commissioner Jean Rey, Member of the Commission, EEC
• Mr. Louis Rabot, Director General for Agriculture, EEC Commission
• Mr. Pierre Millet, Director General for Internal Market, EEC Commission
• Mr. Theodorus Hijzen, Director of General Affairs and Relations with International Organizations, Directorate General for External Relations, EEC Commission
• Mr. Pierre Schloesser, in the Directorate General for External Relations (Specializing in GATT Affairs), EEC Commission
• Mr. Pierre Cabuy, Chef de Cabinet Adjoint, Commissioner Rey (Executive Assistant), EEC Commission
• Mr. Robert Toulemon, Chef de Cabinet, Vice President Marjolin (Chief Executive Assistant) EEC Commission
• Mr. Pierre-Emile Fay, Acting Director, Commercial Exchanges Directorate General for Overseas Development, EEC Commission
• Honorable Christian A. Herter, Special Representative for Trade Negotiations
• Honorable William T. Gossett, Deputy Special Representative for Trade Negotiations
• Mr. Irwin R. Hedges, Agricultural Economist, Office of the Special Representative for Trade Negotiations
• Mr. Michael W. Moynihan, Public Affairs Adviser, Office of the Special Representative for Trade Negotiations
• Mr. Bernard Norwood, Chairman of Trade Staff Committee, Office of the Special Representative for Trade Negotiations
• Mr. Addison W. Parris, Executive Secretary, Trade Expansion Act Advisory Committee, Office of the Special Representative for Trade Negotiations
• Mr. John Rehm, General Counsel to the Special Representative for Trade Negotiations
• Mr. Kenneth Auchincloss, Executive Assistant to the Special Representative for Trade Negotiations
• Mr. Lawrence B. Krause, Economic Consultant to the Special Representative for Trade Negotiations
• Hon. Charles S. Murphy, Under Secretary of Agriculture
• Hon. Roland R. Renne, Assistant Secretary for International Affairs, Department of Agriculture
• Mr. Raymond Ioanes, Director, Foreign Agriculture Service, Department of Agriculture
• Mr. A. Richard DeFelice, Acting Assistant Administrator for International Affairs, Department of Agriculture
• Hon. Robert McNeill, Deputy Assistant Secretary for Trade Policy Department of Commerce
• Mr. Lawrence Fox, Director, Office of Commercial and Financial Policy, Department of Commerce
• Mr. Morton Pomeranz, International Activities Assistant, Resources Program Staff, Office of the Secretary, Department of the Interior
• Hon. G. Griffith Johnson, Assistant Secretary for Economic Affairs, Department of State
• Hon. Michael W. Blumenthal, Deputy Assistant Secretary for Economic Affairs, Department of State
• Mr. Leonard Weiss, Director of Trade and Finance, Department of State
• Mr. Hoyt Price, General Counsel, U.S. Mission to European Economic Communities, Brussels, Belgium
• Mr. Ralph Hirschtritt, Special Assistant to the Assistant Secretary of Treasury, Treasury Department
• Mr. Robert Schwenger, Chief, Division of Foreign Economic Policy, Office of International Organization Affairs, Department of Labor

The morning’s conversation centered upon the possibility of arranging new Interim Agreements on agriculture to cover the period during which the Kennedy Round negotiations take place. There was also discussion of opening negotiations under the Standstill Agreements concluded during the Dillon Round.

The United States position, as presented by Undersecretary Murphy and Mr. Blumenthal, was that negotiations on agricultural products, particularly commodity agreements on cereals and wheat, are likely to be long and difficult. Since it will be so long before the agreements take shape, we feel that at the outset the parties to negotiations should make a simple statement to the effect that during the course of negotiations, they will make no change in regulations or policy that would adversely affect the access of agricultural imports into their markets.

The new Agreements need be no more complicated, Undersecretary Murphy maintained, than the Standstill Agreement on quality wheat. The principle would be the same as that reflected in the Standstill Agreements concluded in 1961. This principle is regarded by the United States as a test of how agricultural trade is to operate. Since the Dillon Round, Governor Herter said, U.S. experience has led us to fear that in the period while negotiations are in progress, we may be faced with a sudden change in the status quo of our agricultural access to the EEC which will require us to negotiate on a new basis.

Mr. Rey and Mr. Rabot then described the Commission’s view as follows: the Cereals and Meat Groups, they agreed, should be set up to try to work out commodity agreements. It will be difficult enough, however, to obtain these agreements, and the problem would be further complicated and deliberations much delayed if the negotiating parties had to spend time arranging an Interim Agreement. Such an Agreement would create considerable problems among the Six and would probably be quite difficult to obtain. The EEC countries, said Mr. Rey, would not want to commit themselves on agriculture before the terms of the agreement on industrial goods were clear.

Mr. Rey reported that when he had last seen Mr. Mansholt, the latter had not been in favor of trying to obtain Interim Arrangements at the start of agricultural negotiations, though he was quite willing to try to do something about the poultry problem. Poultry, said Mr. Rey, is currently a subject for discussion in the Council, and he saw no difficulty standing in the way of the Commission’s recommendation.

The Europeans repeatedly made it clear that while Interim Agreements would be very difficult, there would be no problem if the United States wished to open negotiations on the basis of the 1961 Standstill Agreements. Undersecretary Murphy felt that this might be a good idea; he envisaged the United States using its rights under the Standstill Agreements to negotiate new Interim Agreements. This point did not seem completely clear to the EEC delegation, and for a time conversation continued with the impression that a satisfactory basis for agreement had been found.

This impression was eventually shown to be quite weakly founded. Mr. Blumenthal reiterated the United States and other countries’ concern over EEC agricultural price levels. Suppose, he said, the EEC agrees on a wheat price near the German level—this would suddenly present wheat-exporting countries with a damaging fait accompli, possibly at a time when international negotiations on wheat were in progress.

At this point, Mr. Marjolin interjected his frank opinion that it would be impossible for the Commission, through an Interim Agreement, to agree to give non-member countries a voice in setting the EEC’s internal price levels. There would be very great objections to the suggestion that the EEC must clear its price arrangements with the United States.

On the other hand, Mr. Marjolin did not believe that there were serious grounds for fear, on the part of the United States, that EEC agricultural prices would be set in the midst of the Kennedy Round. He was not optimistic on a speedy settlement of the differences between France and Germany on prices. And in any case, the United States had excellent representatives in Brussels who would know of pricing proposals well in advance of a decision and could present the U.S. case.

Governor Herter then put two specific questions to the EEC delegation:

1) How does the EEC justify the very high Netherlands tariff on imports of flour, much higher than the Netherlands flour tariff previously bound in international agreements? And how does it justify the apparently substantial subsidy to flour exports from Italy and other countries to the Middle East and elsewhere? Governor Herter pointed to the Netherlands flour tariff, which vitiated a long-standing U.S. agreement with the Netherlands providing for an allotment of duty-free imports, as a good example of the sort of unilateral action that worries the United States.

Mr. Rabot agreed that the Dutch protection for its millers was perhaps too high. He would look into this and the other points and reply to Governor Herter’s questions before the Ministerial Meeting.

2) When can negotiations with the EEC on manufactured tobacco begin?

Mr. Rey replied that the EEC would be ready just after the Ministerial Meeting, in late May or early June. It was agreed that they would be held before July 1, probably in Brussels, though final agreement on the site would have to await clarification of Mr. Wyndham White’s feelings and possible conflicts with other meetings.

At the end of the session, the question of the scope of commodity agreements was brought up. Governor Herter said that they should clearly be on a global basis. Mr. Hijzen agreed that work should begin on cereals and meat, and that a committee should be established to decide whether other commodities should be treated in the same way. Mr. Rabot, in response to a query, concurred in the view that commodity agreements should certainly not be limited to the question of access, that prices should also be discussed.

Governor Herter closed the meeting with a request that certain agricultural points be raised again at the afternoon session, after the U.S. representatives had had a chance to discuss them among themselves.

1. “Agricultural Problems in Forthcoming Trade Negotiations.” Confidential. 5 pp. Kennedy Library, National Security Files, Kaysen Series, Trade Policy, Trade Expansion Act, 5/1/63–5/15/63, Box 379.