Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

271. Memorandum From the Under Secretary of State (Ball) to President Kennedy⁰

Washington, March 8, 1963.

SUBJECT

• Objectives and Strategy for the Trade Expansion Act Negotiations

Mr. Blumenthal is leaving for Europe at the end of the week as head of the American component in a Working Group being set up in the GATT to plan for the forthcoming trade negotiations. The recommendations of this Working Group will be considered by a Ministerial Meeting of GATT beginning May 16,¹ at which time the American side will be led by Governor Herter.

Immediate Objectives

We hope by the end of May to reach an agreement in the GATT covering the following points:

(a) The commencement of tariff negotiations as early as possible in 1964;

(b) The main elements of a negotiating plan and the framework of the negotiations;

(c) An undertaking that separate negotiations would begin this summer looking toward special arrangements to cover certain key agricultural commodities, including grains.

Longer-Run Objectives

We should seek to improve access terms for American exports and assure greater certainty of access over the long run, by negotiations that include the following major elements:

(a) Full participation in the negotiations by the United States, the U.K., the EEC, Japan, Canada, Australia, New Zealand and the principal less-developed countries;

(b) Deep across-the-board tariff reductions, using to the maximum the fifty percent authority provided by the Trade Expansion Act;

(c) The restriction to a minimum of items and categories to be excepted from the full fifty percent across-the-board reduction;

(d) Effective arrangements for safeguarding access for United States agricultural products to the markets of Europe. The achievement of this last objective will depend in particular on the avoidance of substantial increases in Common Market price support levels for grains.

Decisions Necessary to a Successful Negotiation

1. If we are to have reasonable hope of achieving our objectives—taking into account protectionist pressures in other countries and the opposition of General De Gaulle’s policies—we must make a firm decision to use the Trade Expansion Act authority to the maximum. Moreover, we must make it clear to our trading partners that that is, in fact, our resolute intention. This involves on the domestic side a willingness to withstand the pressures and complaints of industries that will oppose thorough-going tariff reductions.

2. We must recognize that, particularly with respect to agriculture, our negotiators will face a very tough job. The United States can succeed in protecting access for our agricultural products only if we are prepared to put our own agricultural support and import policies on the international bargaining table. This means that our internal price support policies for such key commodities as grains may become the subject of international agreement along with the internal price support policies of other major countries.

Basic Strategy

1. We shall not achieve our objectives easily. We can already foresee difficulty with several major countries, even with regard to our short-term objectives. Canada and Japan have expressed doubt about their ability to face the competition resulting from deep linear tariff reductions—and other countries no doubt share the same fear. We believe, however, that these countries can probably be brought along if there is the promise of full and effective participation by the EEC.

2. As in other matters, France is the problem within the EEC. It must be the principal object of our diplomatic effort in the next few weeks.

3. French agreement is an essential condition to successful trade negotiations. Under the terms of the Rome Treaty, the member nations of the EEC are required to work towards a common commercial policy in their relations with the rest of the world. That means that the EEC must negotiate with a single voice on the basis of a position agreed by all six members. After January 1, 1966, the other Common Market countries will be able to override a French veto because majority voting will then apply to EEC commercial policy decisions. But until that time, the French can effectively block EEC participation in the negotiations by refusing to participate themselves.

4. The essence of our tactical problem is how to exert pressure on France to acquiesce in a Community decision to participate in far-reaching trade negotiations—and to participate on a basis that meets our essential requirements. We have little bilateral leverage on France, but leverage does exist within the EEC framework. The principal element working in our favor is that—either for economic or political reasons, or both—the UK, Italy, Germany, and the Benelux countries all desire successful negotiations.

5. The leverage of the Five over France is that the French need certain actions that can only be taken by the agreement of the whole EEC. These include the signature and ratification of the Convention associating most of ex-French Africa with the EEC, the establishment of a special relationship for Algeria, continued progress on the common agricultural policy, and further movement this summer toward completion of the customs union of the Six.

6. At present, the French are saying to the Five: “If you don’t give us what we want with respect to these matters, we shall see to it that there is no Kennedy Round.” Our problem in the next few weeks is to work with the Five to use these French demands to extract a French agreement. We must persuade the Five to say to the French: “Unless you agree to full participation in the Kennedy Round, you will not receive any satisfaction in the EEC.”

7. The leverage of the Five is, however, a wasting asset. We must encourage the Five—especially Italy and The Netherlands—to use their bargaining power with France now. They will be less able to hold out against de Gaulle in the EEC as time passes, since each country desires to make progress on EEC matters in its own self-interest.

8. It is unrealistic to expect that France can be pinned down now on all the details of the Kennedy Round. At the same time, a simple agreement “in principle” will not be enough. We must try to extract commitments that are as specific as possible, on such crucial points as the undertaking of substantial linear tariff reductions and the inclusion of agriculture in the negotiations.

9. Our strategy for the next few months must, therefore, be directed at bringing pressure on France by pressing the European Community as a whole to come to an early decision about its participation. We should try to accomplish the greater part of the strategic plan by the end of the Ministerial Meeting in May.

George W. Ball

0. Source: Kennedy Library, National Security Files, Kaysen Series, Trade Policy, Trade Expansion Act. Confidential.
1. The GATT Ministerial meeting was held in Geneva May 16-22.