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

337. Telegram From the Mission to the European Office of the United Nations to the Department of State¹

Geneva, April 20, 1967, 1546Z.

3299. For Bator from Roth deliver 12:00 noon.

1. This will be first general report on negotiating situation and should not be discussed outside your small group. It is impossible to send detailed balancing figures at this time because negotiating situation is too fluid and there are too many imponderables. As this thing moves along we will attempt to keep you informed but you must bear in mind our time pressure here.

2. As general cable yesterday indicated,² we agreed in Steering Committee that positive offers would be tabled Monday³ or, if negotiations were going well, perhaps somewhat later in week. It is question whether Community would join this exercise. Our main strategy is to use tabling of positive offers as a club to force Community into meaningful negotiations.

While tabling of positive offers is in any case necessary before end of Kennedy Round threat to do so in next few days is however a weapon which, once used, could have a decidedly negative impact on the negotiations because it could mean a settlement after the inevitable unravelling process at the lowest common denominator. Therefore, in our private negotiations, particularly with the Community, we will be doing everything possible to work out agreements on individual parts of the Kennedy Round before the positive offers are tabled. EEC has been told for instance that the present US–EEC imbalance of approximately $300 million would be increased by another $300 million if chemicals have to come out of the negotiations. This indicates kinds of problems that would arise in tabling positive offer before we have reached agreement in basic areas, in this instance of decoupage.

3. Yesterday, I met privately with Rey while Hijzen and Blumenthal were trying to agree on improved offers in next room. After they were finished we met together. Hijzen and Rey were shocked we did not accept disparity list they had tabled and Rey made very strong speech about it. I expressed shock at small agricultural improvement they have made and then made statement that this in effect indicated agriculture not being included in negotiations in meaningful way. Our position was quite clear that, unless this was done, we could not conclude Kennedy Round. Rey was rather defensive and said that of course if we wished to take responsibility for scuttling Kennedy Round that was our business. After this exchange we agreed to meet again today. It is my feeling that if further progress is not made today, that I will want to make a similar statement in multilateral steering committee tomorrow. It is now necessary to build up crisis atmosphere if we are to make progress.

4. Meanwhile, I have come to conclusion that only way in which negotiations can be successfully concluded is to put together a package including all problem areas and at right time and in right manner, surface it. This would include a new approach to the grains situation that John⁴ knows about and can discuss privately with you; secondly, a chemical package including decoupage; third, meaningful non-group agricultural offers and certain machinery offers from the EEC; and, fourth, on our part, acceptance of a good proportion of the disparity items indicated by the Community. My thinking on latter point is that even if we get most of what we want from EEC there will still be some imbalances. We could use this imbalance to accept a good portion of their disparity list without hurting our interests. I have asked a small group here to work privately on this question. I would come back and discuss proposal in Washington at the appropriate time. As we are working on these problems on a day-to-day basis I hope you will appreciate that anything I have said here must be kept entirely to yourselves and that circumstances here could shift quite rapidly. We will, in no way, in anything we do, commit ourselves in such a manner that the President’s options are narrowed or either agriculture or industry is disadvantaged. I hope our friends in Brussels and EUR will appreciate the fact that, unless we go through certain crises here, there is absolutely no chance in my view of saving the Kennedy Round. Therefore, they must be patient as we try to work through these problems in as careful and sensitive way as possible.

Tubby

1. Source: Department of State, Central Files, FT 13–2 US. Limited Official Use; Immediate; Limdis-Potatoes. Passed to the White House.
2. Telegram 3292 from Geneva, April 19. (Ibid.)
3. April 24.
4. Reference possibly is to Under Secretary of Agriculture John A. Schnittker.