88. Memorandum of Conversation0
PARTICIPANTS
- United States
- The Secretary of State1
- Mr. Tyler
- Mr. Meloy
- Netherlands
- Foreign Minister Luns
- Ambassador Boon
- Chargé Jonkheer Quarles van Ufford
SUBJECT
- Common Market and European Integration Matters
The Secretary asked how much of a crisis is building up in Europe. What will happen by December 31? Will an agreement be reached on a common agricultural policy and if not what will happen? Foreign Minister Luns said that depends on the French President. He cannot read General de Gaulle’s mind. It was agreed in May that the Common Market countries would reach agreement on agricultural matters by December 31 but it was also agreed that progress would be made on industrial [Page 240] matters as well. There are now more than 1200 “peak” or high points on the tariff chart, many of which are not negotiable. The Dutch want a more flexible formula than has thus far been proposed. The European Commission is not very unified. This is particularly due to the position of Marjolin who opposed de Gaulle in the last French election. Marjolin’s position is very weak and the Commission is therefore hesitant. The French have not shown much flexibility with regard to industrial tariffs. The Dutch are fearful that if agreement is reached on agriculture, the French will thereafter do very little on industry.
Foreign Minister Luns continued that the agricultural matters discussed May 9 were different from those now under discussion. It was agreed in May that a common price would be worked out for cereals for 1964 and 1965 by the end of December. That is what was agreed on. Mansholt has confronted the Commission with more far-reaching proposals. Mansholt says he will not accept another mandate and the Commission is being pressed to reach agreement on broad agricultural matters upon which they had not expected to reach agreement until 1970. The Dutch have two major problems: (1) they are fearful that Dutch prices will go up and there will be a resultant rise in the cost of living; and (2) they are hesitant to put large sums of money into Hallstein’s hands with no Parliamentary control whatsoever.
The Dutch believe the U.S. wants to export its agricultural products. The Dutch agree. They also wish to export and must therefore envisage a situation which permits the possibility of imports. Production therefore must not exceed consumption.
It is difficult to refute Mansholt’s arguments but the Dutch feel that instruments must be laid down now to control the situation automatically if production increases. This is the heart of the problem and it is important also for the U.S.
The Secretary asked the Foreign Minister if he had assessed the chances of a French withdrawal from the Common Market. Would he say they were 1 in 10? The Foreign Minister replied: “1 in 20.” He thought the French were playing a war of nerves and engaging in brinkmanship. It is always possible that the French might withdraw, but he did not think it likely. Mr. Luns said he thought most countries, especially Germany and the Netherlands, will insist that the effective date of the Mansholt proposals will be such as to allow time to see how progress goes forward on industrial matters.
The Secretary asked what proportion of Dutch exports goes to countries outside the Common Market. Mr. Luns said approximately 30% of Dutch export trade is with Common Market countries. About two-thirds is with countries outside the Common Market. The Secretary noted that the Dutch and the Germans are thus in roughly the same position. [Page 241] Both have important trade interests outside the Common Market which must be considered.
The Secretary emphasized that political, as well as technical considerations, must be taken into account.
The Foreign Minister said that it would become evident that the Common Market discussions are linked with political matters. The Dutch are not prepared to accept political integration of Europe at this time. Just before Mr. Luns had left a previous meeting that morning, Mr. Pflimlin had asked if there were any chances in the air for anything like the Fouchet plan. Mr. Lun’s parting remark, as he walked out of the meeting, was that there was no chance whatsoever. The Foreign Minister was concerned nevertheless. Mr. Spaak has been giving signs of having ideas and Italy, although weak, may want to take a political initiative.
The Secretary said he was glad that the Dutch have been able to announce they will participate in the MLF discussions. Mr. Luns said that he also was pleased but it was necessary to avoid internal political complications in the Dutch domestic scene.
Mr. Luns said he hoped the U.S. would not be resigned to seeing the creation of a tightly organized political unity of the six Common Market countries. This would mean that the U.K. would definitely be out of Europe. Such a tightly knit inward looking political organization would be a divisive element in Europe and would make an agreement with EFTA impossible. The Secretary said he was not quite sure what the Foreign Minister meant. He would like this point clarified. Mr. Luns said he hoped the U.S. will not support or passively accept the political organization of Europe on the French plan which would result in a closed Europe. The Secretary replied that the Foreign Minister need not have any concern on this point. He continued however that many of these problems are European problems for Europeans themselves to decide.
Mr. Luns said the French have been very prudent in their approaches on the political side. They realize they are suspect. In the Erhard-de Gaulle conversation, it was Erhard himself who raised the matter. When others take the initiative, the French will pursue the discussion, but they quickly drop the matter when they encounter opposition. Nevertheless, the Dutch are concerned about the dangers of a revival of interest in European political integration which under present circumstances would be likely to be on the French model.