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

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

Geneva, May 10, 1967, 1607Z.

3597. GATT for Freeman from Schnittker. Ref: Geneva 3538.² Subject: Steering Committee meeting, end of day, Tuesday May 9.

1. Meeting scheduled close KR marathon ended with proposal by WW to not consider KR dead but give countries, especially EEC and UK, opportunity consult Ministers as requested and return Geneva Thursday³ night for continuous talks beginning Friday morning ending Sunday night May 14.⁴ Predictably this would mean about dawn Monday May 15. In a sense, this consistent with US agreed deadline per Washington consultations last week which set weekend as absolute finish KR. It does not, however, include possible Ministerial within deadline. I continue to believe Ministerial probably essential, especially as leverage during final three days and as means of ending KR successfully or unsuccessfully. Roth tells me possibility Ministerial still open.

2. In final mission consultations here just prior last Steering Group meeting which set new deadline I argued strongly Sunday deadline be met, including possible Ministerial to be held Sunday if needed after two days of talks following EEC and UK consultations. Very important in my view stick to dates once set and keep pressure on all negotiators, especially Rey who rejects idea of Ministerial but who has finally accepted Sunday night as ending date for negotiations. Also need pressure on countries where we have bilateral problems, like Canada and Japan on grains.

3. Re grains, US advanced new position on access 3 A.M. Tuesday, May 9, after five-hour deadlock meeting on chemicals and non-group agriculture. Community expressed shock we would do this so late in negotiations. We repeated had concluded no meaningful access possible and no point in negotiating for worthless concession. Community showed softness on food aid commitment after our access move, but my judgment this not serious. Our move on access should terminate further discussion of need for coarse grain price range but EEC may press this again. In case that discussion resumed, want your advice soonest whether US binding of minimum loan rate one dollar per bushel corn, average farm location, for next three years politically plus or minus at home. Unless we can buy something very valuable for this, assume this of negative value. My concern is that farmers who today have $1.05 loan rate will not be overjoyed if we say we will not cut them below one dollar for next three years. Hence I conclude should not consider this, but would value Washington advice.

4. Re food aid, have advanced three-year formula 4.5, 5.0, 5.5 million tons over three-year agreement with country division as proposed earlier. Some objection food aid no longer relevant grains agreement if access not included. US and Canada met this point sharply. Doubt this major problem.

5. During next two days will continue detailed talks bilaterally to set stage for final grain settlement, assuming chemicals etc. settled. Key questions will be: (1) to get Canada down from $1.75–1.77 for US ordinary at Gulf and UK and Japan up from $1.70 and solve difficult price differential questions at same time; (2) make sure our need for “loose” interpretation and role of minimum indicator prices is accepted; (3) attempt minimize possibility last minute fight by Australians regarding basing point system; (4) lay groundwork for retention negotiating rights under standstill agreements with EEC and insure that other partners, i.e., UK and Japan, accept fact that grains agreement will not impair existing duty concessions on grain.

6. By now you have seen Geneva 3538 [3588?] reporting the complete deadlock with EEC on non-group agriculture. They remain principal problem in this area although there are some problems with others.

7. I am concerned about the fuzzy nature of these EEC negotiations. We will have a struggle with them. In next meeting they may not improve, and may even withdraw some or all of their offers in response to our balancing offer given them Monday night. In that case, struggle would be over getting more EEC offers put on table while holding line to keep US offer list from becoming unbalanced in their favor.

8. The background here is that the US had put revised offer on table to EEC at $150 million value in expectation of EEC improvement to $200 million. This would have required an improvement by EEC from $23 million already tabled to $200 million. Before deadlock EEC had offered on ad referendum basis improvement to roughly $100 million. On basis this situation US indicated to EEC that it would have to reduce value its offer to roughly $75 million. It was this US attempt to improve EEC offers to $220 million by reducing US offer in accordance with 4:3 ratio which resulted in deadlock.

9. Questions will be (1) can KR be completed “with substantial agricultural settlement” if EEC offer remains at $100 million, and (2) if EEC improves value of offer will US be able to maintain the indicated 4:3 ratio? I foresee great pressure from EEC to have US put offers on 4:4 ratio or more despite fact we have repeatedly said 4:3 ratio in favor US appropriate balance, and in spite fact 2:1 ratio justifiable considering US export trade position, possible offer both sides, depth of cut, and other possible negotiating measurements.

10. I consider ham withdrawal still open question,⁵ especially in view of EEC situation. If EEC offers not substantially improved, I would continue recommend hams be withdrawn. I recognize Ambassador Roth has full authority this item.

Tubby

1. Source: Department of State, Central Files, FT 13–2 US. Confidential; Immediate; Limdis. Passed to the White House and USIA.
2. Telegram 3538 from Geneva, May 8. (Ibid., SCI 30–3 WMO) Reference may be to telegram 3588 from Geneva, May 10. (Ibid., Eyes Only Reels)
3. May 11.
4. See footnote 3, Document 349.
5. See Document 348.