280. Memorandum of Conversation0
SUBJECT
- The Tariff Negotiations
PARTICIPANTS
- U.S.
- The Secretary
- Mr. William R. Tyler, Assistant Secretary, EUR
- Mr. Johannes V. Imhof, EUR/WE
- French
- Ambassador Alphand
- M. Bruno de Leusse, Minister
Ambassador Alphand said that the atmosphere surrounding the forthcoming tariff negotiations1 was a matter of concern. He said that there was no desire on the part of France to become protectionist. The French economy had prospered greatly under the liberalization of the past four years. The French welcomed liberalization not only within the Six but also in relations between the Six and others. However, there might be trouble with the formula proposed by the U.S. for these negotiations. The U.S. formula was too rigid. The U.S. had high tariff peaks and the linear reduction would disarm the EEC while certain U.S. commodities would remain protected. French experts believed the EEC formula would be compatible with U.S. legislation and that its employment would not require a new authorization from Congress.
[Page 605]The Secretary asked whether the EEC formula would require commodity by commodity or sector by sector negotiations. Ambassador Alphand said neither would be required. The formula called for a tariff on finished products at 10 to 15 per cent, semi-finished products at 6 to 10 percent and a zero duty on raw materials within a certain period of time.
Ambassador Alphand said that he did not wish to go further into the details of the proposal. If it was necessary to go into details to remove misunderstandings, Messrs. Wormser and Clappier could come here for such discussions. The point he wished to stress was that a disagreement on the formula to be employed should not be allowed to rekindle a political controversy. If the EEC formula did not agree with ours this did not mean that France wishes to destroy the Atlantic Alliance.
Mr. Tyler asked why it was necessary to advance a new formula at this stage. He noted that our formula made allowances for exceptions and for discussions of tariff peaks. He said he feared that the proposal of an alternative formula at this stage would be considered a political maneuver and that there would be a political reaction here, particularly in Congress.
Ambassador Alphand said that the Trade Expansion Act was an important and beneficial piece of legislation. It was, however, a U.S. law, and the other countries had not been consulted. Mr. Tyler pointed out that the formula proposed under the TEA had been known for a long time. Ambassador Alphand said that the EEC proposal was compatible with U.S. legislation. Also, the formula had been advanced originally not by the French but by the Germans. He briefly explained how the EEC proposals would work: As a first step, the difference between the tariff goals in the EEC formula and actual tariffs would be cut in half.
In reply to a question by the Secretary, Ambassador Alphand said that the zero duty applied only to industrial raw materials, not to agricultural products. On agriculture there should be a worldwide agreement. Ambassador Alphand concluded his presentation by reiterating that differences on method should be seen as what they are and should not be allowed to give rise to a political controversy.
The Secretary said that he would wish a briefing on this subject. He noted that Mr. Ball had been closely concerned with these problems. The Secretary said that the balance of payment aspects must also be considered. For example, U.S. tourists abroad contributed heavily to the balance of payments picture. Ambassador Alphand said that from a practical point of view it was clear that U.S. exports could not be increased without a corresponding increase in European exports.