Foreign Relations of the United States, 1961–1963, Volume XIII, Western Europe and Canada

42. Circular Telegram From the Department of State to Certain Missions⁰

Washington, June 7, 1962, 8:17 p.m.

2978. Brussels for Embassy and USEC. Paris for Embassy and USRO. Geneva for GATT.

1. Following for your background information connection EEC decision re carpets and glass:¹

For reasons indicated previous messages we consider EEC Council decision to resort to tariff increases for U.S. escape clause actions carpets and glass most unfortunate and unwise. We had prepared compensate EEC in form new tariff concessions and our representative Geneva had been consulting EEC representative to this end. We believe this would have been appropriate manner to deal with situation.

In view EEC decision, however, there is no further point proceeding with consultations with EEC Geneva. We have accordingly instructed our representative to terminate EEC consultations. We intend however to proceed with consultations Geneva with UK and Japan (as well as Sweden and Canada) in order provide compensation for our action. (British have reportedly decided withdraw concessions on kraft paper; we are taking steps to dissuade British from such action and instead to negotiate for new compensatory concessions.)

Our major concern now is to prevent EEC action from being blown up unduly in U.S. with possible prejudice to trade bill. We are thus taking public posture to effect that given our escape clause action, it was up to us to provide compensation; because of limitations authority under existing trade legislation, we were not able provide full compensation to EEC; lacking compensation on our part, EEC countries were acting within their rights under GATT to make compensatory withdrawals to restore balance under the agreement. We believe public statements should refer EEC action as “compensatory withdrawals” rather than retaliation.

In discussions with officials other countries, however, we wish make clear our keen disappointment that EEC had resorted to tariff increases rather than seeking work out modus vivendi in accordance usual GATT manner of new concessions. We intend (a) stress that retaliation is shortsighted way dealing with this sort of situation and has traditionally been avoided by U.S. and other GATT countries and (b) make clear EEC decision precludes possibility early U.S. review of escape clause action. In making these points we intend avoid becoming engaged in exchange of polemics and do not intend press EEC withdraw or modify their present decision. We wish close whole matter with air of finality so far as EEC concerned.

2. Dept proposes take following line with Spaak over weekend² and other posts should draw upon this line and conform closely with it in their discussions this subject:

(a) U.S. disappointed that EEC elected follow path compensatory withdrawals rather than compensation negotiations.

(b) EEC decision follow retributive path when, as we repeatedly stressed, U.S. had no other alternative, noted here with regret.

(c) In face this attitude, U.S. considers that EEC Council decision has closed matter and no point in further consultations. This will of course preclude possibility early U.S. review of escape clause action. U.S. has consequently terminated the consultations with EEC in Geneva.

3. Posts should also emphasize in any discussion this subject (a) that U.S. made a significant partial compensation offer in Geneva which held major benefits for Belgium and was fully prepared complete settlement when President received additional authority; and (b) that there is no possibility further postponing June 17 date for tariff increase.

4. Bonn should express U.S. appreciation German efforts prevent EEC retaliation and fact agricultural items were omitted.

5. Dept agrees substance last para Ecbus 988³ and is considering possibility of instructions this effect. Dept believes, however, that there should be no linkage EEC Council action to representations on QRs for short period of time in order to allow passions cool. Linkage will only tend perpetuate spiral of retaliation which U.S. considers undesirable. Instruction CW 9557⁴ should therefore be made for time being completely on own merit without reference to EEC Council action.

Rusk

0. Source: Department of State, Central Files, 411.004/6–762. Limited Official Use. Drafted by Vine, Weiss, and Coster (OTF) and cleared with RPE and E. Sent to Tokyo and Ottawa, and 19 missions in Europe.
1. Despite U.S. efforts to prevent it, on June 4 the EEC decided to retaliate against the U.S. tariff increases on carpets and glass.
2. A memorandum of Spaak’s conversation with Rusk at 10:30 a.m. on June 9 along these lines is scheduled for publication in volume IX. A memorandum of his conversations with Rusk at 11:40 a.m. and 3 p.m. on European integration and NATO is in Department of State, Secretary’s Memoranda of Conversation: Lot 65 D 330. A brief memorandum of his conversation with the President at lunch at the White House, in which Kennedy asked Spaak’s view on the best way to deal with the British application for membership in the Common Market, is ibid., Presidential Memoranda of Conversation: Lot 66 D 149.
3. Dated June 6 Ecbus 988 recommended that the United States step up the pressure on both the EEC Council and its individual members to remove the restrictions they maintained on U.S. exports. (Ibid., Central Files, 375.800/6–662)
4. Dated May 29 it instructed the Mission to the Economic Communities at Brussels to discuss with the appropriate EEC officials the need to avoid establishing procedures on fruits and vegetables that ran counter to previous assurances given to the United States. (Ibid., 375.800/5–2962)