294. Memorandum of Conversation0
SUBJECT
- Brussels Negotiations—Kennedy Round (Part 1 of 5)
PARTICIPANTS
- [Here follows an extensive list of participants. President Johnson, Secretary Rusk, Under Secretary Ball, and Christian Herter were accompanied by 8 U.S. officials; Chancellor Erhard and Foreign Minister Schroeder were accompanied by 12 German officials.]
The meeting opened at 3:15 p.m. At the President’s request, Secretary Rusk started the discussion by asking the Chancellor and Foreign Minister Schroeder for their evaluation of the recent EEC talks at Brussels.
Foreign Minister Schroeder described the situation that existed at the time of the Brussels meeting. It had been agreed on May 9 that there would be a synchronized program of negotiations. For the Federal Republic that meant that there would be not only internal development within the Common Market, especially agriculture, but also outward development looking toward the Kennedy Round. This situation culminated in the Brussels negotiations.
Mr. Schroeder went on to say that difficulties existed at Brussels because the interest of France and some other participants related more to agriculture than to the Kennedy Round, and also because it was obviously impossible to lay down specific positions regarding the Kennedy Round at this early point. There was therefore a danger that the negotiations could fall apart before any decisions were reached.
The French had come to recognize, however, that the Federal Republic was serious about the importance of the Kennedy Round. As a result, the French position has become somewhat better. Reasonable compromises were achieved, Mr. Schroeder felt, both in agriculture and in the Kennedy Round position.
The change in the French viewpoint, the Foreign Minister continued, was illustrated by the latest meeting between General De Gaulle and the German Ambassador in Paris. De Gaulle said to the Ambassador that the Kennedy Round was an Anglo-Saxon matter but because of the German attitude France would take a different view than before.
[Page 641]Secretary Rusk asked when that conversation had taken place. The Foreign Minister said that it had occurred a few days before the recent Brussels talks.
The Foreign Minister continued that the Rome treaty and its implementing regulations provide not only for internal development within the Common Market but also for consideration of its external aspects. World trade and external conditions must also be considered by the Common Market nations.
Disparities had been the most difficult question to resolve at Brussels, Mr. Schroeder said. The Germans were able to bring about agreement on a new two-to-one formula. This would mean, according to German experts, a reduction in the number of disparities: previously the number would have been twelve hundred US items and a few for the Europeans, whereas now the ratio would be about four to one—eight hundred US to two hundred European. This is the conclusion of German experts.
The Foreign Minister emphasized that there are a number of details which are not yet clear. The EEC Commission directive is not yet available. When this is available more detailed discussion can be useful. Nevertheless, German experts believe that sufficient agreement was reached at Brussels to enable the Commission to formulate a position for the Kennedy Round. The French position is definitely more favorable than before.
The Foreign Minister repeated that Chancellor Erhard had succeeded in convincing De Gaulle in November that the Kennedy Round was as important or more important to Germany than the agricultural regulations. The French now clearly recognize this, as illustrated by recent statements by Pompidou and Giscard.
In summary the Foreign Minister expressed the belief that the Brussels compromise had been fairly good in balancing Community and Kennedy Round interests.
Foreign Minister Schroeder said he would like to add one thought. No decision was taken on cereal prices. This is to be done in April 1964. The Mansholt Plan1 will be the basis of consideration but it will not be accepted without change in the establishment of Common Market cereal prices. Mr. Schroeder noted that the French and other Community members object to some portions of the Mansholt Plan. Mr. Schroeder also said that the Germans had got a clause inserted in the agreement on this subject which would make agricultural policy more negotiable; this had [Page 642] not been easy to do in view of the Common Market agricultural regulations on the one hand and the preparations for the Kennedy Round on the other.
Governor Herter said that the US had followed the Brussels negotiations closely, had realized the difficulties faced by the Federal Republic both in its own agricultural problems and in the French position, and was most appreciative of the efforts made by the Federal Republic at Brussels to insure consideration of the position of third parties. Governor Herter noted that the US is handicapped by not having the text of the arrangements agreed to at Brussels.
Governor Herter went on to say that what was most satisfying in Foreign Minister Schroeder’s comments was the point that agricultural matters would be subject to negotiation. It would have been most difficult for the US had it been presented with a fait accompli.
As regards disparities the initial analysis by the US indicates that the new formula presents many complications. The new formula would by this analysis add 250 items to the US list of disparities and nearly 500 to the European list; this complicates rather than simplifies the problem. Governor Herter expressed the view that US experts should meet with Common Market experts and attempt to reach agreement on the facts. The problem of disparities could then be worked out. Governor Herter stressed the difficulty of this problem for the United States and said that it would be difficult to say that the US is pleased by the new formula.
Under Secretary Ball agreed that it is highly desirable for experts on both sides to get together and agree on the facts. A common understanding could thereafter be developed. Mr. Ball added that if the German analysis is correct, the Brussels agreements represent a step forward.
Foreign Minister Schroeder said it is unfortunate Mr. Lahr,2 one of the senior experts of the Foreign Office, was not present for these discussions. The Foreign Minister said he could only sum up the results as he understood them but he could not of course prove his points.
Governor Herter noted that the EFTA countries consider the Brussels formula unacceptable. Their reasons are not clear but they obviously feel that there are very many complexities to be worked out.
Chancellor Erhard said that he has a great interest in this problem. Governor Herter and he in a sense had baptized the child at the GATT conference earlier this year. The Chancellor added that he wants the Kennedy Round to be a success. The Chancellor went on to say that the Federal [Page 643] Republic had relatively little interest in the Common Market regulations but was highly interested in expanding trade as much as possible. Nevertheless it must take its partners into consideration. The Federal Republic feels that it has succeeded in getting adequate agreement in preparation for the Kennedy Round. It had also succeeded in getting the interests of EFTA, Commonwealth nations and other third parties taken into account in the agricultural regulations. The Chancellor noted that less developed countries are also concerned by the EEC agricultural regulations. The Chancellor commented that the GATT negotiations will bring forth some solid opposition to the EEC regulations. The Chancellor said that he is not afraid of this opposition and that he believes positive results can be achieved.
Chancellor Erhard went on to say that it is possible to get lost in details. Foodstuffs which affect the entire world raise larger and more general problems; worldwide agreements are called for. This however is contrary to the thinking of the EEC. Nevertheless this is a worldwide problem and the EEC is not the only factor.
Regarding disparities the Chancellor said that the point is not their number. Again there is a danger of being lost in detail, especially at the GATT conference. The Federal Republic will pursue this problem in Brussels and with the United States, on the basis of factual criteria. Then there will be a sound basis for proceeding.
The Chancellor commented that there is not only the matter of the number of items involved but also a difference of trade value. Dr. Westrick noted that economic criteria had also been discussed at Brussels; complete information on the criteria adopted at Brussels is not available and this information may explain the difference in the number of disparities mentioned earlier in the conversations.
[Here follows discussion of the Common Market and European integration.]
- Source: Department of State, Conference Files: Lot 66 D 110, CF 2354. Confidential. Drafted by Finn and approved in S and U on January 1, 1964, and in the White House on January 8, 1964. The full text of this memorandum is printed in vol. XIII, pp. 242–248.↩
- See Document 291.↩
- Not further identified.↩