143. Memorandum From Secretary of State Herter to President Eisenhower0
SUBJECT
- Tariff Negotiations with the European Economic Community
I wish to refer to your memorandum of December 7, 19601 which was brought to my attention immediately upon my return from Paris.
I am in agreement with the point expressed in your memorandum that it is now desirable for the Europeans to give continuing evidence that they too subscribe to the liberal trading policies which we have followed with mutual benefit to all of us over the past decade. In large measure, this is the basis on which we are about to enter the forthcoming negotiations with the EEC in Geneva. The EEC, in proposing a 20 percent reduction in its common external tariff, has been fully aware of the difficulties we would have in offering adequate reciprocity. With this in mind, the member countries of the EEC have, on several occasions, indicated that they were prepared to construe a smaller overall tariff reduction on our part as adequate reciprocity for a larger reduction on their part. It is my concern with our inability to make even this essential smaller tariff reduction in the forthcoming negotiations to which my letter of December 52 was addressed, for we risk the loss of a larger and significant tariff reduction on the part of the EEC, a reduction which in itself would be of great importance in solving our balance of payments problem by affording better competitive conditions in European markets to American exporters.
[Page 287]You asked whether a 20 percent reduction by the EEC of its common external tariff is going to amount to anything like a 20 percent reduction in the individual tariffs its members now apply to imports from the United States. As you know, the formation of a customs union involves the merging of the national tariffs of individual participants into the single external tariff of the union. This process means that the tariffs of individual members will move both up and down toward the common external tariff.
The proposed common tariff is now under negotiation at Geneva to test its conformity with GATT standards, including the requirement that the incidence of the common tariff must not, on the whole, be higher than the national tariffs which it is to replace. In this process, the EEC may have to use some part of its offered 20 percent reduction in order to satisfy the United States and other contracting parties that the common tariff is just and equitable in terms of the pre-existing national tariffs. Beyond that point, the extent to which the EEC will go toward the full 20 percent reduction will depend on the adequacy of the concessions offered to it in the reciprocal negotiations which are to begin early next year. In answer to your specific question, the reduction of the common external tariff by 20 percent could mean that certain high national rates will come down much more in their movement toward the common external tariff than would otherwise be possible. Conversely, certain low national rates will not rise as much as they would if the offered reduction were less.
It was for these reasons that I desired to bring directly to your attention the serious impairment of this Government’s bargaining strength resulting from the Tariff Commission’s peril point findings. However, we shall use to the utmost what bargaining strength we have, including appeal to the Common Market nations on the basis of the good-will our assistance to them in the last ten years should have engendered.
Source: Eisenhower Library, Whitman File, Dulles–Herter Series. Confidential. Initialed by Eisenhower. Attached to a copy of a December 24 memorandum from Goodpaster to Herter which reads: “The President asked me to tell you he appreciates your memorandum of December 22nd on tariff negotiations with the European Economic Community. He assumes that U.S. representatives will examine the proposed common tariff closely to assure that it is not, on the whole, higher than the national tariffs it is to replace. He also reiterated that U.S. recent and present trading policies should give strong reason to press for a liberal trade policy on the part of the EEC.”
Another copy of Herter’s memorandum states it was drafted on December 20 by Kallis, Hartman, and Richard D. Vine, of the Office of European Regional Affairs, and cleared with Adair, Hadraba, Weiss, EUR, RA, and WE. (Department of State, Central Files, 374.800/12–2260)
↩- Document 141. Herter was in Paris to attend the 36th Ministerial meeting of the North Atlantic Council.↩
- Document 140.↩