Office of the Historian

86. Telegram From the Mission at the North Atlantic Treaty Organization and European Regional Organizations to the Department of State0

Paris, December 13, 1959, 1 p.m.

Polto 1139. For USEC. From Dillon. Following highlights discussion with representatives Seven:1

A.
Seven represented by De Besche and Hagglof (Sweden), Schaffner (Switzerland) and Sommerfelt (Norway). De Besche and Schaffner principal spokesmen.
B.
Seven reps emphasized great economic significance for their countries of discrimination which will result from development of Common Market and pleaded for US understanding of motivations which led to decision establish EFTA. Stating that very existence their [Page 202] small nations involved, called for US sympathy if not support, alluding to irony of situation in which friends of US in EFTA, which have traditionally followed low-tariff and liberal commercial policies, must plead even for US neutrality.
C.
Presentation by Seven reps included lengthy review of circumstances which in view of EFTA countries made it impossible for them to join in federated Europe such as envisaged by Six and reasons for failure of Maudling FTA negotiations. Following points were emphasized:
(1)
EFTA though economic in motivation and form has significant political content since hoped would be stage in resumption all-European cooperation.
(2)
Problem of European split must be solved before investment decisions create forces which might make split irrevocable.
(3)
Aware of US support political objectives of EEC but hoped this did not mean US would always support economic policies of Six when these inimical to broad European cooperation.
(4)
EFTA countries not opposed to political objectives of Six and no suggestion to this effect can be found in EFTA Convention. See no reason why Six cannot continue develop political community in wider trade grouping.
(5)
Trade policies of their countries traditionally liberal and would continue to be.
(6)
In response to US feeling that EFTA simply establishes new area of discrimination against US have only one answer—that free trade area with separate national tariffs provides effective inducement to lowering of higher tariffs in the area, especially with respect to raw materials and semi-manufactures. Felt this consideration particularly important in arriving at judgments re possible all-European FTA.
(7)
Given operation of this factor, no basic contradiction between two aims of wider European FTA and US insistence avoid new discrimination. (Quota problem felt to be on way out.)
(8)
Desirability tying UK closer to Continent and significant development in UK policy this direction in establishment EFTA, including acceptance majority decisions in many cases and one country one vote arrangement instead of insisting on weighted voting as provided in EEC.
(9)
Firm desire continue working together in OEEC.
(10)
Six using US as shield behind which to refuse to open talks on grounds “US won’t like it.”
D.
Dillon made following comments:
1.
Reviewed basis US support EEC stressing US insistence Six avoid protectionism and develop liberal commercial policy.
2.
Noted US had no objection to original proposals for an all-European FTA though involved greater discrimination against US, so long as did not destroy political concept of Six.
3.
Similarly US has never interposed slightest objection to Seven though feels motivation here primarily economic and doesn’t see why political split in Europe must necessarily result from creation EEC.
4.
If establishment EFTA puts Seven in better position deal with their problems as they see them, we welcome such development.
5.
US will not accept just any economic policy of Six and has been making this clear. Noted US representations on List G items and common agricult policy.
6.
US will treat Seven in GATT no more or less stringently than Six.
7.
Will not object to wider FTA if it can be achieved without upsetting EEC and be in conformity with GATT. However, pointed out that US public opinion now very sensitive to trade discrimination against US and might be disturbed by increased discrimination against US inevitably involved in any broad European FTA. This could result in increasing protectionist sentiment in US which would be bad for all concerned.
8.
Noting widespread feeling talks looking to broad solutions not now practical, emphasized should attempt to deal on MFN basis with specific problems as they arise perhaps through direct Six-Seven negotiations.
9.
Any decisions between Six and Seven of interest to US which would wish take part in any talks in order (a) see that any agreements based on multilateral concepts (b) do what it can to help minimize political and economic frictions and thereby help find solutions. Emphasized US willing and eager to help as much as possible in contrast to US posture during FTA negotiations when emotions ran high on both sides.
E.
During discussion both sides agreed desirability use OEEC as forum for talks. Dillon noted major difficulty was tendency in some Six quarters to view OEEC as instrument for undermining EEC and suggested some reorganization of OEEC might be necessary. Agreed that EEC Commission should be brought into OEEC picture to greater extent.
F.
In response Dillon questioning whether Seven saw any solution short of European trade area and what ideas Seven had on timing, Seven reps replied first problem is to persuade Six (especially French) that opening talks with Seven did not involve danger to EEC. Felt US must undertake this persuasion. Did not regard Hallstein proposals including that for Contact Committee as leading in desirable direction.2 In short Seven reps indicated their thinking confined to broad FTA as solution to problem. Nothing else would do and it was up to US to persuade EEC to go along. Dillon commented this posed difficult problem as he agreed with UK feeling that revival broad FTA negotiations not practicable at this stage.
G.
In conclusion, Dillon emphasized importance joining in GATT tariff negotiations with Six to lower common external tariff. Seven reps stated this had always been the intention of their govts. They made it clear that earlier reluctance to commit Seven to such negotiation was solely UK idea.
Burgess
  1. Source: Department of State, Conference Files: Lot 64 D 560, CF 1547. Confidential. Drafted by Stibravy. Pouched to the OEEC capitals.↩
  2. The discussion was held in Paris at 3 p.m. on December 12.↩
  3. See footnote 2, Document 70.↩