7. Memorandum of Conversation0
SUBJECT
- Common Agricultural Policy of the EEC
PARTICIPANTS
- Dr. Walter Hallstein, President of the Commission of the European Economic Community
- Dr. Berndt von Staden, Executive Assistant to Dr. Hallstein
- The Honorable Orville Freeman, Secretary of Agriculture
- Ambassador W. Walton Butterworth, U.S. Representative to the European Communities
- Mr. John P. Duncan, Jr., Assistant Secretary of Agriculture
- Mr. Gerald E. Tichenor, Deputy Administrator, Agriculture, FAS
- Mr. Gustave Burmeister, Assistant Administrator, Agriculture, FAS
- Mr. Raymond Ioanes, Deputy Administrator, Agriculture, FAS Mr. Richard D. Vine, Department of State, EUR/RA
President Hallstein, after an exchange of amenities, began by noting that he was not an expert on the problems of agriculture and would not be able to talk in detail on its various aspects. He did wish to make some general comments, however.
He noted that the greatest problem he had encountered thus far in the execution of the treaty was agriculture. The treaty rules for industry were different than for agriculture and he and his Commission were charged with working out these rules. The basic rules have in fact already been laid down by the Commission. He explained that the Commission was independent of the national governments and was [Page 16] responsible only to the Council of Ministers. Both must agree before specific measures are taken; the Commission must propose a course of action to the Council of Ministers which must agree or dissent.
The President indicated that they were slowly making progress. Progress was slow largely because of the recurring problem of national elections.
The Commission, he said, recognized the need to take into account the interests of the trading partners of the Six in its proposals. There were problems, however. He noted that there were two times as many farms in the EEC countries as in the United States, but those in the United States covered ten times as much area. Moreover, there was the problem of merging the national policies of six countries, which meant in effect, undoing all the mistakes of the past one hundred years.
The goals of a common agricultural policy, he continued, were to assure farmers in the six countries income relatively as favorable as other members of their societies, while rationalizing production and avoiding the creation of surpluses. The secret to achieving these objectives was price policy, but there were many problems in lowering existing price levels. It had to be done moreover, in a framework which was as little protectionist as possible.
Variable levies were the instrument which the Commission had selected to carry out its policies. While there has been a great deal of dispute over the merits of variable levies, there is nothing intrinsically good or bad in them. Whether they are good or bad depends upon the price level which is established to make them operative—these levels may be good in one case and bad in another. Wheat is a case in point. The French have unused land which can be devoted to increased wheat production and want protection. The Commission, on the other hand, has worked up figures indicating the extent to which U.S. imports must be maintained and knows what the U.S. problem is.
The Commission, moreover, has obtained the services of some of the best experts available to solve the problem. Manshold, the Commissioner charged with the responsibility for agriculture, has had 12 years experience in the Netherlands and is not narrow-minded or protectionist. He makes a great effort to reconcile the legitimate needs of farmers with the larger interest. He is interested in maintaining a greater flow of agricultural imports to balance the exporting interests of certain of the larger countries in the Community.
Secretary Freeman said that he had followed the negotiations carefully. He said that our primary interest is in the future of new trade agreements legislation which the administration had said has first priority. The Secretary said that he hoped we could go forward with this but that in order to do so we would need to have balanced concessions to [Page 17] demonstrate to the Congress and American people the efficacy of our efforts.
President Hallstein said he realized that there is a great need to find solutions. Both sides must recognize this need to find a solution and work toward that end. President Hallstein said that, as regards industry both the Six Governments and the Commission recognize the problems of third countries. Agricultural problems, however, the GATT mechanism has not solved. The GATT technique is commercial and agricultural problems cannot be solved on commercial policy grounds.
The GATT rules, he continued, are not effectively applied to agriculture. His analysis of the problem is some source of encouragement since progress is being made. He warned that they are coming to the place where countries were producing more than they are consuming and efficiency was taking a secondary place. An understanding of this fact is of primary importance since food consumption cannot be increased. There is some flexibility on this in the EEC but not much.
Secretary Freeman in this respect commented on the poultry problem which was geared to the pattern of increasing consumption in Europe. President Hallstein compared this with the problem of increasing imports of textiles from low-wage areas.
President Hallstein said that the Commission was interested that protectionism be avoided to permit order in the whole of world trade. No longer could one make a distinction between internal or external affairs since sovereignty was no longer so important in modern international relations. The answer is not to escape the problem but to attack it.
Secretary Freeman said he was most encouraged by this outlook. President Hallstein continued that one-quarter of the population was working in agriculture in the EEC countries as against one-tenth here and still its surpluses are seeking markets. Secretary Freeman said that one farmer is now feeding about 25 people in the United States whereas 20 years ago one farmer fed only 11. This is an alarming but wonderful development. President Hallstein said that the problem in Europe was somewhat different since agriculture is not so much a branch of production but a way of life. The trick consequently has been to encourage the movement of industry into economic areas. This is the reason for the emphasis in the EEC on regional development which enables less-developed areas to solve the problems less painfully.
Secretary Freeman said that he could see the problem. We are coming to the point where famine can be prevented, and resources must be guided to other areas. To a certain extent the same rule applies to industry. One sees this in the GATT negotiations. In the long run the goal is to produce efficiently; in the short run the goal is to avoid protection. This is the same point that the EEC has in mind.
- Source: Department of State, Central Files, 375.800/5–1761. Official Use Only. Drafted by Vine on June 29.↩