Foreign Relations of the United States, 1958–1960, Western European Integration and Security, Canada, Volume VII, Part 1

40. Memorandum of Conversation⁰

November 21, 1958.

SUBJECT

• The Impasse in Free Trade Area Negotiations

PARTICIPANTS

• The Acting Secretary
• Mr. Ernst van der Beugel, Netherlands State Secretary for Foreign Affairs
• Ambassador van Roijen
• WE—Mr. Cameron
• RA—Mr. Black
• AE—Mr. Walsh

In the course of his call on Acting Secretary Herter today, Mr. Ernst van der Beugel, the Netherlands State Secretary for Foreign Affairs, stated that he was greatly concerned about the current impasse in the Free Trade Area negotiations. Although he did not wish to sound unduly alarmist about this matter, he felt that the potential consequences of a permanent breakdown would be very serious for the Western Alliance. He said that the Benelux countries were in full agreement about the necessity of developing an outward-looking Common Market. This coincided with the view of West Germany and, in large part, Italy. Unfortunately, France did not share this view. He felt that the French attitude was particularly regrettable because it so clearly underestimated the true economic strength of France. He added that it was not possible to explain in economic terms why the French would be prepared to accept within the EEC the competition of German industry and still be unwilling to accept the competition of a far less significant industrial country such as Switzerland.

He stated, however, that the current impasse was not particularly surprising. The efforts at integration in Europe involved very great problems for all of the countries involved. It had seemed probable to him that a point of crisis ultimately would be reached which could only be resolved by high-level discussions and high-level political decisions. This point was now at hand.

He said that personally he was not particularly impressed by the significance of the date of January 1, 1959, in arriving at a definitive decision to fuse the European Economic Community with some form of a Free Trade Area. On the other hand, he did feel that it was imperative to get the negotiations resumed and to work out some form of a transitional arrangement between the EEC and the other OEEC countries. In this respect he was not sanguine about the prospects of the provisional proposal advanced by Benelux to extend the EEC tariff reduction and quota arrangement to the other OEEC countries and the tariff reduction to GATT. He felt that extending the quota arrangements to the other OEEC countries probably would be unacceptable to the French because of the implied recognition of a Free Trade Area.

The political consequences of a split between the EEC and the rest of the OEEC countries could be great. He felt that such a split could endanger much of the accomplishments of the postwar period, including NATO and the OEEC. Furthermore, he doubted that a restrictionist EEC could long survive.

Mr. Van der Beugel went on to express considerable perturbation over the developing course of French-German relations. He felt that all should be grateful that Chancellor Adenauer has made such a determined effort to bring about a French-German rapprochement. Great progress has been made in this direction but he feared that the French were pushing the Germans too hard, particularly in respect to the FTA issue. In his opinion an inward-looking Common Market was contrary to basic German interests. If the French forced German acquiescence in this respect, he feared that German industrial leaders ultimately would rebel with potentially dangerous consequences to French-German relations.

Mr. Van der Beugel recognized the significance of the November 26 meeting between General De Gaulle and Chancellor Adenauer.¹ He said that the Netherlands Government feared that the Chancellor might at this meeting again grant undue concessions to the French viewpoint on the FTA in an effort to conciliate the French. The Netherlands Government, he added, had for some time felt that the most efficacious American role in the EEC–FTA problem might be found in an attempt to influence the Chancellor to take a fairly strong line with the French in respect to the need for a liberal orientated Common Market.

The Acting Secretary stated that this Government was very much aware of the importance of the issues involved in this matter. He said that it was difficult to visualize how we could be helpful at this time except by urging moderation and trying to help to get the door open for further negotiations. He assured Mr. Van der Beugel, however, that the United States position in this respect is under constant review.

The Acting Secretary went on to say that he had been struck by the personalized interpretation of the current impasse which had been given to him by M. Louis Joxe, Secretary General of the French Foreign Office. In a conversation on the previous day,² M. Joxe seemed to take the position that the basic reason for the current impasse was the rigidity and negotiating inadequacies of Mr. Maulding, the British Postmaster General. This interpretation, he added, was not in full accord with his own understanding of the facts.

In reply, Mr. Van der Beugel said that he understood the Department’s caution in respect to intervening in the current dispute. He supposed that the “Ghost of the EDC”³ could still be sensed in the Department’s halls. However, he felt that the Department should take cognizance of the fact that the friends of trade liberalism within the EEC were in rather desperate need of assistance. In respect to M. Joxe’s causal interpretation of the current impasse, he said that it did not coincide with the views of the Netherlands Government. The Netherlands Government believed that Mr. Maulding had exhibited a very high degree of patience and skill during the past 18 months of frustrating negotiations with the French.

0. Source: Department of State, Central Files, 440.002/11–2158. Confidential. Drafted by Walsh and approved by Herter.
1. French Ambassador Alphand reported on the November 26 De Gaulle–Adenauer meeting in a conversation with Secretary Dulles 2 days later. According to Alphand, De Gaulle and Adenauer “had agreed that they must uphold the Common Market idea for both political and economic reasons. They want, however, to avoid a conflict with the UK and other members of the OEEC. They hope that measures they will propose will be helpful and that time will be available to arrive at a solution. They had agreed that Hallstein would handle this task.” In answer to a question from Dulles, Alphand said that “it was his understanding that the French proposal would provide for extending the ten per cent Common Market reduction on January 1, not only to the other OEEC members but also to all GATT members.” (Memorandum of conversation, November 28; ibid., 440.002/11–2858) On the same day, German Embassy representatives in Washington provided the Department of State with a similar, but more detailed briefing on the De Gaulle–Adenauer talks as they pertained to European integration. This information was summarized in circular telegram 698 to certain European posts, November 28. (ibid.)
2. A memorandum of the conversation between Herter and Joxe on November 20 is ibid., 440.002/11–2058.
3. Reference is to the rejection of the European Defense Community Treaty by the French National Assembly on August 30, 1954.