Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

254. Memorandum of Conversation¹

Washington, October 27, 1964, 4 p.m.

PARTICIPANTS

• STR:
• Honorable Christian A. Herter
• Honorable William M. Roth
• Mr. Kenneth Auchincloss
• White House:
• Honorable McGeorge Bundy
• Mr. Francis Bator
• State:
• Honorable George W. Ball
• Honorable G. Griffith Johnson

SUBJECT

• Agricultural Rules for the Kennedy Round

Mr. Ball saw two problems confronting the U.S.: (1) how to handle the US–EEC discussions of agricultural rules in Geneva on Thursday,² and (2) what action to take on November 16.

He recommended that we make whatever deal on rules that we could on Thursday and then table our efforts on November 16. His arguments were:

1. That the real negotiations on agriculture would not take place until January anyway. The outcome would not depend upon the semantic difference between words such as “substantial reduction” and “liberalization” in the rules, but upon hard bargaining on products.

2. That the onus would then be clearly on the EEC for any postponement of the November 16 date. If no prior agreement on rules were reached, he thought it very likely that the French would use our insistence on rules to justify a refusal on their part to go forward on November 16 and would pin the blame on our rigidity.

3. That we had to avoid a crisis this week.

Mr. Roth contended that it was necessary to reach final agreement on agricultural rules this week and doubted that this could be done anyway. In his view, the EEC would not be ready with its exceptions list by November 16 and consequently would not agree to any agricultural rules, because to do so would bring its unpreparedness on exceptions into the open. He suggested, as an alternative course of action to Mr. Ball’s, that the United States announce next week that considerable progress on agricultural rules has been made but that there are still areas of disagreement. The United States would table its exceptions on November 16, but on the assumption that the effort to arrive at agreed rules would go on, looking forward to the opening of detailed negotiations in January.

Mr. Bundy felt that we might say that after November 16 we would press for certain objectives within whatever rules were agreed upon. But he shared Mr. Ball’s view that the precise wording of the rules made little difference; he believed we would have a difficult time meeting our agricultural objectives solely within the context of the Kennedy Round. He was chiefly concerned about the very serious danger of the French using lack of agreement on rules to fix the blame for delay on the United States.

Gov. Herter pointed out that there seemed to be only two points of disagreement between ourselves and the EEC on rules:

1. Whether soybeans and soybean oil should be subject to a commodity agreement. Our interests here seemed protected by the EEC’s agreement that nothing in the rules should be construed as permitting present bindings to be broken.

2. Whether on fixed tariff items the rules should call for “reductions” or “liberalization”, the latter being the wording of the May 1963 and 1964 Ministerial Resolutions.³ On this point the Governor felt that “liberalization” would be acceptable, especially since the EEC knows that we will insist on overall reciprocity.

One important question, he emphasized, is whether we should table both our agricultural and industrial offers or just our industrial. In any case, he maintained, we must have a time limit for the EEC’s making agricultural offers, or else we will have a Dillon Round situation again.

In the Governor’s conversation with Mr. Blumenthal the night before, Mr. Blumenthal had urged strongly that nothing be foreclosed until he returns this weekend. He also wanted to know by Thursday whether the U.S. could give anything on rules with respect to “oilseeds” and the “liberalization-reduction” issue, and whether we wanted to table agricultural offers November 16.

A State Department draft message to Mr. Blumenthal was then considered. At Governor Herter’s suggestion, it was changed to call for Mr. Blumenthal to try to obtain agreement ad referendum at the Thursday meeting. Mr. Roth stressed that an instruction calling for him to reach an agreement would be extremely unfortunate. He reiterated his feeling that the rules should be left open till after the end of the year, when hopefully they would no longer be enmeshed in internal EEC politics. Mr. Johnson thought it was most unlikely that the EEC rule would be broadened and that the crucial thing was getting offers on the table.

Mr. Ball pointed out the larger political implications of this issue: if the U.S. could be accused of taking an overly rigid stand on agricultural rules, we would be very badly off over the MLF and any new overtures that the Administration might want to make. If the November 16 date were postponed, he thought it would spell the end of the Kennedy Round, since it would get entangled with the GPU issue.

It was agreed to send out the cable, as amended, and request Mr. Blumenthal to give his reaction as soon as possible. Meanwhile Governor Herter would discuss the issue with Secretary Freeman.

The cable as sent was Gatt 2213.⁴

1. Source: Johnson Library, Bator Papers, Kennedy Round, 1964–1965 I, Box 12. Secret. The source text bears no drafting information. The meeting was held in Herter’s office.
2. October 29.
3. Regarding the May 1963 resolutions, see footnote 2, Document 228. For text of the rules for the Kennedy Round negotiations adopted by the GATT Trade Negotiations Committee Ministerial meeting on May 6, 1964, see American Foreign Policy: Current Documents, 1964, pp. 1210–1213.
4. To Geneva, October 27. (Department of State, Central Files, FT 13–2 US)