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

346. Memorandum From the President’s Deputy Special Assistant for National Security Affairs (Bator) to President Johnson¹

Washington, May 1, 1967, 10:15 p.m.

SUBJECT

• Meeting Tomorrow on Kennedy Round (Bill Roth, Mike Blumenthal, Bator—11:30 a.m., Tuesday, May 2)²

Attached is a briefing paper from Bill Roth.³ He and Blumenthal will be prepared to give you a full rundown on each issue as well as a general picture of the road ahead. All we will need from you is a general approval of our proposed tactics (summarized in #3 below). If you are pressed for time, the essentials are as follows:

1. Status Report. Roth and Blumenthal have conducted an effective campaign in the last week to convince the EEC we are near the end of our rope. They may be beginning to believe us. Their Ministers meet today and tomorrow; there is a small chance of significant movement on the key items—chemicals, grains, and agricultural tariffs. More likely, however, they will throw us a small bone or two and try to ignore our deadline. (Roth has said the negotiation must end by next week if we are to sign before the TEA runs out on June 30.)

2. Major Issues. Most of the elements of a reasonably successful Kennedy Round are present, but we are in deadlock—largely with the EEC—on two major fronts.

• —Grains. Things are moving well on the food aid part of a grains agreement. We will have trouble with Canada and Australia on a minimum wheat support price, but Roth thinks this is manageable. We cannot, however, agree to the EEC demand for a support price for feed grains. The only way out is probably to drop our demand for a guaranteed percentage share of the EEC market (“access”) in return for elimination of feed grains from the agreement. (This will take work on the Hill; Schnittker has already begun.)
• —Agricultural tariffs. The EEC has been giving us progress on our “must” items in bits and pieces. We will probably get a tolerable deal in the end.
• —Chemicals. We are still playing “chicken” with the Community on American Selling Price (ASP). They insist on putting the whole chemical sector into a single package which our Congress would vote up or down. We maintain we must separate out ASP items and reciprocal chemical concessions by the EEC into a second package which would stand on its own feet and could be presented to Congress separately. Roth is now convinced that the EEC will come around on this, but it could be the stopper in the whole Kennedy Round bottle. You will want to question him closely on the Congressional and other costs of conceding this point—and on what we could buy if we did.

3. Tactics/Timing. Assuming the current meeting of EEC Ministers doesn’t produce significant movement, your Kennedy Round “command group”—including Roth and Blumenthal—recommends that Roth return to Geneva and announce that he is under instructions to leave for good on the evening of Tuesday, May 9. (Confronting the EEC with the limit is the only way to get them to face the tough political decisions necessary for a successful bargain.) Bill would say that if there were no agreement by May 9, the U.S. would consider the Kennedy Round a failure. He would add, however, that we are ready to join in a final meeting of Foreign Ministers the week of May 8–12 if other countries so desire—though we would be happy to strike a bargain before that if possible. We think there would be a groundswell for such a ministerial meeting, and that it would give us a pretty good chance of bringing the negotiations to a successful close.

Francis

1. Source: Johnson Library, National Security File, Subject File, Trade Negotiations, Kennedy Round, “Potatoes,” [2 of 2], Box 47. Confidential. The source text bears the handwritten notation “Mr. Rostow” in the upper right corner of the first page, presumably indicating this was his copy. It also bears numerous handwritten notations possibly by him.
2. The President met with Roth, Blumenthal, and Bator on May 2 at 11:47 a.m. (ibid., President’s Daily Diary), but no record of this meeting has been found.
3. Document 345.