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

53. Memorandum From Secretary of Agriculture Freeman to President Kennedy⁰

Washington, November 26, 1962.

SUBJECT

• European Trip—Brussels, Common Market Conference—OECD Agriculture Ministers, Paris¹

I. Conclusions.

A. It is the consensus accepted almost matter of factly by European statesmen and also Americans in Europe that the basic issue of U.K. entry into the Common Market has been determined. I found nowhere any doubt of this although the details have not been settled, and the period before final settlement remains uncertain.

This fact, I think, is important for the gentleness and reserve with which we have urged upon the Community and associated nations our own interests in light of the overwhelming political fact of furthering the community and accomplishing the U.K. entrance need no longer inhibit our action.

B. The European Nations will not accord any trade opportunities to American agriculture unless vigorous coordinated consistent pressure is brought to bear. Without attempting to evaluate each nation’s posture, it is clear that in both Germany and France prominent and effective political leadership is very responsive to what is felt to be national interest and as such not concerned with the rights or interests of the United States. They will respond, I submit, only to a coordinated evidence of firm intention of our Government to be treated fairly or to resort to reprisals if we are not accorded fair treatment. The fact that we have contributed enormously to their present strong economic position and also to the furtherance of the Community as a practical matter has almost no influence. It makes nice drawing room conversation, but it is of little practical use at the bargaining table.

II. Basic factors to consider.

A. The French are intractable. The French Agricultural Minister is the strongest personality of the Agricultural Ministers and as such will exert, even if French agriculture was not generally speaking dominant, great influence. Add to this that the gentleman in question has strong political ambitions and will be motivated almost exclusively by political factors, primarily domestic, and we have a very sharp customer to deal with. It would be my evaluation that he will respond to only one thing and that is power rather than persuasion. There are strong political forces in agriculture in all the countries of the Six, but so far as I can determine in most of the countries the political leaders in agriculture are much more vociferous than their followers, and those who hold public office, including the Ministers, are following rather than shaping what they feel to be public opinion.

The following by way of background should be noted in connection with Mr. Pisani. I am informed that until very recently he was not an outspoken DeGaullist. DeGaulle’s recent successes, according to some members of the Agriculture Ministry, have changed this and he now is a strong supporter of the General.

When I discussed Article 23 of GATT where we had gotten certain directives issued calling on the French to comply with concessions they had withheld contrary to GATT, Pisani all but said that he would not do as GATT had directed regardless of the decision rendered. He included in this statement a charge that the United States had been dumping wheat in Africa to the detriment of French markets. I countered this almost intractable attitude by responding that I would personally review the wheat question in Africa and if French markets had been adversely affected we would act accordingly, and in that spirit I called on him to personally review the items which the French had been mandated to act upon under GATT Article 23. To this he grudgingly agreed. He did state that we were in agreement on attempting to keep grain prices low and that he hoped that they would be very close to the French grain price rather than the German although he acknowledged that something would have to be given. This was encouraging and we did agree to work together on this, which of course is the single most critical decision which will be made in connection with the Common agricultural policy. As it now stands, it is scheduled for determination next April.

Pisani’s activities are quite erratic, I have not yet had the opportunity to review the transcript of the discussions at the closed session of the Agricultural Ministers although parts of it were leaked to the press. His response to my sharp but friendly statement of American policy where agricultural trade in the Community is concerned was not to dispute it on the merits but rather to counterattack obliquely by contending that this was an effort to undermine the Common Market. He spoke, I thought, rather sharply although the translation from French was clumsy and I couldn’t be sure. After having spoken positively and strongly the day before I responded to him relatively mildly, rather than getting into any direct confrontation either Nation-wise or personality-wise, but made certain that I reiterated repeatedly in subsequent discussion on resolutions and statement of policy what the policy of our country was.

Subsequent discussions resulting in the passage of resolutions and a statement of policy which was released to the press found Pisani as presiding officer reasonably cooperative and we succeeded in getting the Ministers to adopt both a resolution and a statement of policy acknowledging the importance of International Trade and that such trade must not be jeopardized by internal policies. His press conference also was moderate, particularly when his previous statements would have led us to expect a very sharp public statement. All in all, his actions and statements of policy were most erratic, showing on the one hand inconsistency and lack of resolution, and on the other a determination to touch every political base and to not give an inch if it involved any political hazard.

B. The key decision to be made by the Community will be to set the target price on grain which will, according to present plans, be done early next year, probably in April. If the Community grain price is close to the French, we believe that uneconomic production will not be substantially stimulated. The German price, on the other hand, will result in bringing millions of acres into production, which together with modern technology will seriously threaten our markets in Western Europe not only for grain but also of poultry and related items where the variable fee will be set, based on the differential between Community support prices and American prices, much lower.

C. I was very pleased and consider it significant that the Council of Agricultural Ministers did adopt a resolution on International Trade and issue a statement incorporating that resolution. It will be of critical importance that the State Department, and particularly Under Secretary Ball, follow up firmly in support of our position. Otherwise there will be doubt if the Departments of State, Agriculture, and the American Government are really insistent that we receive fair treatment.

I believe it fair to say that my policy statement was well received but there is some skepticism that we might not really mean it which makes the position subsequently taken by the State Department crucial.

III. Miscellaneous.

Certain background information is important.

A. Minister Mansholt of the Community told me himself confidentially that although Adenauer and the German Cabinet recommended to the Community that the poultry fee be lowered, that Schwartz, the German Minister of Agriculture, strongly and vigorously opposed and that the fact the Commissioners cut the recommendation of the German Cabinet in half resulted from the insistence of Minister Schwartz. Therefore, it is clear the Germans are playing both sides of the street on this one.

B. Poultry—The doubling up of the gate price on poultry has been rectified. This was a matter of administration that we were able to correct by vigorously bringing it to the attention of the authorities who acted as a result of our strong representations including our statement of the President’s personal interest in this matter. It is our contention, of course, that the use of gate prices to set a levy is contrary to GATT, as well as an abuse of the whole gate price concept which is to prevent dumping, not to set fees. As a practical matter I do not believe they will eliminate the gate price any more than we were able to get them to eliminate variable fees. However, Mansholt did agree to review again the level of the gate price and it is possible that it will be lowered. We found out that the Commissioners had set it lower and the Council of Ministers had raised it to its present level of 33.43.

Mansholt indicated the Commission would welcome a German request to lower the fees on poultry beyond the end of 1962 when the present reduction (not yet actually passed on by the Bundestag and therefore not in effect) runs out. We should push the Germans very strongly on this. If we can get the German Cabinet to act again we will be very alert to try and prevent the Community from cutting it as they did last time. (The Council rather than the Commissioners cut the German Cabinet request from 4-1/4 cents to 2 cents.) He was also receptive to our request for adjustment on chicken backs and necks now totally shut out because they increased the evaluation ration to whole birds from 35 percent to 125 percent and then to 75 percent equally prohibitive.

C. The Council of Ministers showed some understanding that food for economic assistance purposes has very real possibilities, but that it requires good administration and has practical limitations. I was concerned that the idealistic goal of using food and fiber to reach hungry people might be a rationale to encourage over-production everywhere. Should this be the case and surpluses mount, the practical problems utilizing them could be critical resulting in dumping, international trade conflict and general international trade chaos. Some of Pisani’s speeches had led me to believe that he might follow this route, but during the conference he had little to say about it. Most nations seemed, if anything, conservative rather than liberal in connection with food aid.

On balance, it would appear to me that they would need stimulation rather than any effort to hold them back. In this connection Jean Monnet is strongly emotionally involved, as is incidentally Pisani’s wife, a very intelligent woman who recently wrote a book on French history during the Colonial period and I would estimate has very real influence on the French Minister of Agriculture.

There are certain semantics involved in the question of international agricultural trade and historic practice that need to be kept in mind. I found that the statement “historic markets” results in immediate emotional response. One of the rationales for the Common Market is to look forward, not back, and reference to the concept “historic market” stimulates an immediate adverse response.

IV. Key facts about American agriculture to keep in mind.

A. That American policy as a major importer and exporter of agricultural commodities is the most liberal in the world. We admit great quantities of agricultural items duty free; for example, over $300 million worth of beef killed and on the hoof each year. It will be impossible for us to maintain low tariffs in the United States and face high levies and restrictions on the same commodities in Western Europe. Where we use export subsidies they have been used with discretion so that we have not disturbed historic markets, disrupted international trade or stimulated price fluctuations. Rather than do so, we have ourselves accumulated substantial surpluses at heavy costs. Thus, our own responsible conduct in agricultural international trade merits considerate attention on their part.

B. This Administration has been highly responsible in its agricultural policy. We have sought to bring surpluses into balance and to cut back production in excess of our needs, rather than to dump on the world market—witness the Farm Act of 1962, particularly the Wheat Bill which includes both acreage and bushelage controls, and the Feed Grain program. By the end of 1963 we expect to have the feed grain surplus down to essential security and stabilization reserve. By 1966 we expect wheat surpluses to reach that same position. Our programs have been sufficiently successful to reduce grain surpluses over 700 million bushels while at the same time they have increased net farm income over $1 billion $100 million a year—something which it was said was impossible. Thus the United States has been under the Kennedy Administration both responsible and successful in its agricultural policies.

In this connection it is to be noted that Finland, Sweden and some other countries among the North Atlantic Nations have acted to do something along the supply management line, but it has been primarily to get land out of production by curtailing its sale or use rather than by having supply management applied to commodities. I found no willingness on the part of European agricultural leaders at this time to take on the difficult task of applying supply management in terms of acreage, bushel, bale, or pound limitations.

Pisani was particularly outspoken in his opposition to any such program, stating that French farmers with income down and resistance to price increases everywhere evident could only look towards increased acreage to improve their income position, completely ignoring of course the whole factor of improving productivity.

V.

On balance I believe it is fair to say that my trip was successful. The statement of policy in connection with agricultural markets received very wide attention. It will now provide a rallying point for other countries which had previously been lacking as the political dominated the economic.

I expect some domestic objections to our offer to bargain where our own restrictions are concerned, but the flat statement that we did not expect other countries to do what we were unwilling to do was and will be, I predict, very important.

Now we need to move vigorously ahead, missing no opportunity to bargain effectively and to represent at all levels privately and publicly that we mean business. I look forward to talking with Mr. Herter, as you suggested, immediately upon his return from Paris. I believe it essential that one of his assistants be thoroughly versed in agricultural trade matters.

We will continue to give this strong, vigorous attention here in the Department and in cooperation with the balance of the Government. I am confident that we can protect our markets so that we won’t be apologizing come 1964 for losing hundreds of millions of dollars of Common Market agricultural markets when the Trade Expansion Act has led to high expectations of progress rather than losses.

VI.

Attached herewith is a more detailed and technical report of my trip,² including some specific action recommendations.

VII. Domestic.

A. Consultations continue with commodity groups concerning our legislative program. At the same time detailed staff work is going forward on all commodities. There is little new to report. The various elements of the cotton world are not getting together on a program acceptable to us as quickly as I had hoped.

B. Reaction to the reorganization of ASCS has been generally good both by the public and within the Department.

0. Source: Kennedy Library, National Security Files, Belgian Country Series. No classification marking. No drafting information appears on the source text.
1. November 16–21.
2. Not printed.