314. Current Economic Developments1
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PARTICIPANTS IN KENNEDY ROUND HOPEFUL OF SUCCESSFUL CONCLUSION BY EARLY 1967
A tone of prudent optimism with regard to the Kennedy Round dominated the recent meeting of the GATT Trade Negotiations Committee. The general feeling of the participants was that it will be possible to complete successful negotiations on time, and everyone pledged the necessary political will and hard work. All the participants, including the EEC, welcomed the GATT Director’s schedule which calls for the period of intensive negotiations to begin immediately after the August recess and for the negotiations to be concluded in the early part of 1967. Essential to this schedule, however, is the tabling of the EEC agricultural offers by the end of July.
The ability of the EEC to table its agricultural offers is dependent on a series of decisions on regulations and prices for certain agricultural commodities, and the EEC Agricultural Ministers were unable to agree on the latter at their meeting July 13–14. They will continue their deliberations [Page 834] July 21—just before the Foreign Ministers’ meeting.2 EEC Vice-President Mansholt remains moderately optimistic that agreement can be reached on the agricultural regulations and prices and on the KR agricultural offers before the August recess.
TNC Meeting
The Trade Negotiations Committee met in Geneva July 8 to discuss progress in the Kennedy Round negotiations, a general timetable looking toward conclusion early in 1967, and more specific plans for the summer months.3
GATT Executive Director Wyndham White gave a mixed verdict on the progress of the negotiations, referring to his January report4 outlining the steps necessary to bring the negotiations to a successful conclusion in the early part of 1967. He said that most of the outstanding industrial offers have now been tabled. This, inter alia, has created the possibility of activating negotiations in such sectors as pulp and paper, chemicals, aluminum, and steel. The negotiations on these products have been, or will shortly be, actively engaged. Countries other than those participating on the basis of a linear reduction have largely specified their non-linear offers. Little progress has been made, however, with regard to the special offer made by Poland and to the negotiating proposals for Czechoslovakia.
On textiles, a pragmatic basis has been established for continuing discussions on a bilateral basis without awaiting the outcome of the pending discussion of the fate of the GATT Long Term Agreement on Cotton Textiles. The result of the discussion of the latter, however, will have important repercussions on the scope of the tariff reduction in the course of the present negotiations.
The major lacuna, Wyndham White said, is the absence of comprehensive offers on agricultural products. The April 30 deadline was missed. He expressed confidence that such offers can now be expected by the end of July at the latest and said that this is the last possible date if we are to achieve our objective. Such a move would make it possible to engage in intensive and continuous negotiations on agricultural products from the beginning of September. In one important agricultural sector—cereals—an earlier start can be made. All the principally interested countries have tabled proposals on the various elements which have been defined as relevant to the negotiation of a cereals arrangement. Discussion [Page 835] on cereals will, therefore, be resumed later this month. (We have proposed that the major exporters meet here just before the Cereals Group meeting.)
All the offers on tropical products have been tabled. A representative group of interested governments is now reviewing these offers.
Wyndham White has defined as the second major objective of the KR “a series of activities to meet the urgent trade and economic development problems of the less-developed countries,” and at the TNC he urged the developed countries to give more concrete form to the desiderata of the less-developed countries. He outlined the desiderata as: a) the elimination from exception lists of products of special interest in the LDCs; b) reduction of duties on these products beyond the 50 percent which is the general working hypothesis; c) accelerated application of the reduction agreed upon for these products by exempting them from the phasing which is proposed for the tariff reductions in general; d) an effort to maximize reduction of tariff and non-tariff barriers on tropical products; and e) for some countries, consideration of the problem of compensation for the loss of preferences consequent upon reduction in MFN rates of duty.
Wyndham White suggested that the period of intensive negotiation, beginning immediately after a brief August recess, should be directed toward building up a position of maximum negotiating opportunities which would provide the basis on which the participating governments can, by the middle of November, reach an assessment against which they can reconsider their initial negotiating position. The fruits of these assessments and reconsiderations would then be shared with the other negotiators so that by the end of November governments would be in a position to consider against a comprehensive background the negotiating instructions with which to equip negotiators for the final bargaining stage, which Wyndham White envisages as starting in mid-January and hopefully leading to an over-all and positive settlement in the following weeks.
Constant themes voiced at the TNC meeting were the crucial importance of the agricultural negotiations and the negotiations with the LDCs, both of which are lagging. The LDCs expressed impatience and unhappiness with the results of the Kennedy Round to date, recalling the initial promise of the Kennedy Round and the repeated assurance of industrialized countries in international forums. The EFTA countries without industrial exceptions cited the need for flexibility in timing the modification of offers, i.e., withdrawals. They and others hoped that emphasis in the autumn would be on improvement in offers and on positive balancing.
Our delegate stressed the importance of completing the offers, especially agricultural, by the end of July and our readiness to do so. He [Page 836] stressed that the Kennedy Round cannot succeed without complete inclusion of agriculture. He welcomed the tight but realistic schedule. He hoped for closest possible approximation of 50 percent cuts on the tariffs on industrial products. He reaffirmed our commitment to help the LDCs and noted our efforts in this area. (The US is now considering additional offers for LDCs.) He said that we look for further progress in the discussions of non-tariff barriers but emphasized the importance of reciprocity in this difficult period.
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- Source: Washington National Records Center, RG 59, E/CBA/REP Files: FRC 72 A 6248, Current Economic Developments. Limited Official Use. The source text comprises pages 5–7 of the issue.↩
- For an excerpt from Hallstein’s optimistic statement on July 24, see American Foreign Policy: Current Documents, 1966, pp. 387–388.↩
- A summary of Herter and Roth’s informal conversations with the U.S. and other delegations and the full TNC meeting on July 8 is in Tagg A–932 from Geneva, July 24. (Department of State, Central Files, FT 7 GATT)↩
- Attachment to Document 302.↩