Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

141. Airgram From the Mission to the Organization for Economic Cooperation and Development to the Department of State¹

CEDTO A-270

Paris, November 17, 1967.

SUBJECT

• DAC Meeting November 6–7, 1967; Private Enterprise

REF

• (A) Paris 6428;² (B) CEDTO A-265;³ (C) DAC/A(67)14⁴

1. Ref. (C) agenda item 7 reported herein. Agenda items 3 through 5 reported REF. (A). Agenda item 6 reported ref. (B).

2. Agenda item 7. The discussion on private enterprise centered entirely on the previous U.S. proposal for a WP on private enterprise,⁵ rather than any consideration of the substantive issues set forth in the Secretariat documentation. In the most open, verbal confrontation in the DAC for some time, France, categorically opposing any procedural arrangement for further work on private enterprise, was pitted against the DAC Chairman and U.S. delegation, supported by Canada, favoring some type of procedural arrangement which would at least permit a systematic examination of the subject. The DAC Chairman and the U.S. reps employed timely interventions to achieve an agreement that an early DAC meeting be scheduled for the purpose of substantive discussion (which has not taken place to date) on private enterprise issues raised in the Secretariat documentation, with the exception that an ad hoc group would carry on the work based on terms of reference to be developed at the meeting. Further, the Chairman made it clear that “expectation,” as used above, means that the burden of proof that an ad hoc group would be a waste of time rests with those in opposition.

3. The Chairman opened the discussion with a review of DAC interests in private enterprise, the increasing importance of private sector financial flows, the former ad hoc working group,⁶ the U.S. proposal for a WP, etc., and suggested that a WP be created for a limited period (as previously proposed by the U.K.). After a long silence, France stated categorically that it was not in favor of a WP of whatever duration and could not agree. No substantive support for the position indicated by France was offered—only an allusion to no need for a WP and opposition in principle to any additional WPs. In a surprising change of position the FRG supported France, stating that many items in DAC(67)37⁷ needed no discussion in DAC (the item on capital markets was particularly noted) and there was no need for a WP now. The U.S. delegation clearly restated the U.S. position on private enterprise and the need for procedural arrangement which would ensure continued examination and attention to the subject in the DAC. The U.S. position was supported by Canada and Norway. The FRG somewhat qualified its position by noting it did not oppose discussion of private enterprise in the DAC, or, perhaps, an ad hoc group, but did oppose a WP. France sought to reinforce its position with its well-known logic designed to obstruct progress, pointing out the lack of knowledge concerning the private sector role, and, thus, it is unrealistic to go on since we don’t know where we are going (which, from the U.S. point of view, is one of the principal reasons why a WP would be useful). Belgium supported France and the FRG (see below).

4. The Chairman then noted the disagreement appeared to be not on discussing the issues, but rather on procedure. The position of France, the FRG and Belgium, appears to be that discussion of the subject in the DAC would be acceptable and, if very special situations come up, maybe in an ad hoc group. The Chairman continued that this is not a major issue and that the important thing is to move ahead. Therefore, it would be possible to have DAC meetings with the entire agenda devoted to private enterprise and, in a sense, this gives the subject special importance. We will simply have more DAC meetings (for this purpose). Belgium (in a curious intervention) appeared to reverse its above position supporting France and the FRG, by stating that if it opposed a WP it was because the problem was so important that it belongs in the DAC context rather than a DAC WP context. It was unclear whether this was truly a reversal of position or whether the Belgium delegation did not fully comprehend the trend of the discussion.

5. The Chairman’s foregoing remarks led to further interventions by France, FRG and U.S., basically restating their positions, but also permitting discussion of an ad hoc group and what it might accomplish in, for example, one year. This discussion became somewhat extended and, while positions did not appear to have changed, the passage of time and the weight of the U.S. and the Chairman’s exchanges with France and the FRG permitted the Chairman to suggest, and seek specific agreement from the U.S., France and the FRG, the compromise set forth in para. 2 above.

6. Comment. The FRG statement was surprising, since, at the last meeting on this subject, the German rep informed the U.S. delegation that they had been instructed to support a WP.

In the Mission’s view, the arrangement in para. 2 above, is the best which could be obtained under the circumstances. The important point is the Chairman’s interpretation of “expectation,” with which there was no dissension. In discussions after the meeting, it seemed clear to the Mission and the DAC Secretariat that the proposed DAC meeting (which could take place in late February or early March) must be very carefully prepared for, and deal with the substantive issues in depth, which the DAC has, heretofore, avoided. The current thinking is for a meeting of three to four days with participation of experts from governments and the private sector. As the next step, the Mission intends to discuss with the Secretariat and concerned delegations the approach to be taken to this meeting and preparation of the necessary documentation.

Trezise

1. Source: Department of State, Central Files, OECD 8–4. Limited Official Use; Priority. Drafted by J. W. Koehring on November 16; cleared by Edward C. Fei and I. A. Heyman (in draft), and P. R. Cook, Jr.; and contents approved by Fei. Repeated to Bonn and London.
2. Dated November 9. (Ibid., AID 1)
3. Dated November 16. (Ibid., OECD 8–4)
4. Not found.
5. Reference probably is to the undated “Note from the United States Delegation Concerning a Working Party on Private Enterprise,” which was circulated as DAC(67)27, June 29, for consideration at the DAC meeting July 4–5. (Washington National Records Center, RG 286, DAC Material: FRC 70 A 5922, Private Investment 1967)
6. Regarding the ad hoc working group on private investment, see Documents 117 and 118.
7. “Further Work on Private Investment Flows to Developing Countries,” October 23. (Washington National Records Center, RG 286, DAC Material: FRC 70 A 5922, Private Investment 1967)