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

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

Geneva, April 25, 1967, 2040Z.

3374. Roth to Bator.

1. We met this morning with Rey and Hijzen and explained our three list approach. Also said we would show them the lists before they are officially distributed. As indicated para. 3 Geneva 3356,² WW and the British feel strongly that Rey must have specific withdrawal lists in order to make governments focus on real situation at the Council meeting next Tuesday.³ Rey himself has made (and repeated it again today) the point to us several times that by the end of the week he must know where we stand in each of our major areas of mutual concern.

2. At meeting today Rey welcomed way in which we planned to indicate our necessary withdrawals under different assumptions. He particularly appreciated fact that our presentation made clear what changes were being proposed in original U.S. offers and fact that our three package approach would allow EEC to see clearly range of possibilities (presumably so they could make intelligent choices). Our approach had added advantage of showing relationships between specific offers on both sides, i.e. what were consequences of EEC movement or lack of movement in a particular sector.

3. This favorable reaction was in sharp contrast to Rey’s negative attitude toward British list which is in form of entirely new offer unrelated to previous offer—in other words, it is impossible to tell from British list what is being withdrawn without much difficult technical analysis. Rey also concerned that British positive offer list will probably be based only on what is not presently offered by EEC (not clear what assumptions UK will make about others).

4. This morning’s meeting made a small breakthrough on chemicals. For first time Rey agreed to discuss overall package and decoupage concurrently. This is, of course, only on a hypothetical basis and I wouldn’t want to make too much of it. We are having a technical chemicals meeting tomorrow on this basis and we may then get a better feel for possibilities in this sector with the EEC.

5. Re your 181484,⁴ you correctly surmise that each package differed on the industrial side but was static in agriculture. The reason for this is that we have already retreated from our original non-group agricultural request to a hard-core list of some seventeen items. We do not expect to get all these but unless we get a sufficient number of them, it will create a very difficult political decision for the President in that he will be unable to say that agriculture had been included in a meaningful way by the EEC.

From a Congressional point of view, we need not only a grains agreement but something of value in each of the agricultural product groups, i.e. citrus, canned fruits, meats, etc. produced in the various states. Therefore, the minimum package we are suggesting goes considerably beyond the present token non-group agricultural offers of the EEC. To ask for even more in the maximum package is unrealistic. We would expect to negotiate something less in non-group agricultural than presently appears in the minimum package. You may call this a hard line but we are convinced it is the only possible line at this point. We intend to make it more attractive to the Community by tying certain possible industrial offers into the agriculture items. I do not agree that the abandonment of two package approach in chemicals would buy us anything significant in the agricultural section and, as you know, would open an almost unbridgeable gap in industry.

6. The question of ASP is, of course, by far the most difficult in the negotiation. In my view, the one package approach raised two insurmountable obstacles in the negotiations. First, the Swiss and the British would probably have to withdraw other non-chemical industrial offers and put them in the second package because we and the Community would have withdrawn all chemicals offers in the KR and they could not rely on Congressional action to restore the balance. On our side, we would be going back on a commitment both the Governor and I gave the Congress, i.e., we would not put them in the position that unless Congress approves conversion of ASP, the KR would not be reciprocally balanced for the U.S. Let me say, however, I have no personal problem about being on a cut-off limb but I think this would substantially hurt the President’s relationship with Congress. As you well know, many members of the Senate Finance Committee and some in Ways and Means have strongly objected to the Executive branch facing them with faits accompli. To put the burden of achieving a balance in the KR on the Congress will give them no real option and further exacerbate this situation.

7. Secondly, and perhaps even more important taking the chemical section out of the KR and putting it into a separate package would upset our balance with the EEC, the UK and Japan by almost a half-billion dollars, as our chemical exports are that much greater than our imports. In effect, the third package we will be presenting on Thursday will indicate for everybody exactly what the one package approach would mean. In other words, the balance problem is the same whether we take chemicals out of the KR and put it in a separate package or merely take it out period.

Tubby

1. Source: Johnson Library, National Security File, Subject File, Trade Negotiations, Kennedy Round, “Potatoes,” Box 47. Confidential; Limdis-Potatoes; Flash. Passed to the White House.
2. Document 339.
3. May 2.
4. Dated April 25. (Department of State, Central Files, FT 13–2)