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

315. Telegram From the Department of State to the Embassy in the United Kingdom¹

Washington, March 11, 1966, 1:17 p.m.

5316. The following letter from Governor Herter to Minister of Agriculture Peart was delivered to Philip W. Ridley, Commercial Counselor of the British Embassy, today.

You may wish to follow up with representation at appropriate Government levels with the U.K. Government in London.

Begin text. My dear Mr. Minister:

I am writing you again to express our disappointment in the results achieved to date under the US–UK Bilateral Cereals Agreement effected by the exchange of notes between our two Governments on April 15, 1964.²

In spite of the price restraints introduced by the UK Government on domestic production in 1965, UK cereals imports for 1965 were 900,000 tons below the level specified in paragraph 11 of the Agreement, and even further below what would be required to maintain a fair and reasonable balance between UK domestic cereals production and imports. By the end of the current marketing year, the cumulative short-fall in imports below the levels required to maintain the fair and reasonable balance envisaged in the Agreement promises to be in the region of three million tons.

At the meeting which the UK Government held with its principal cereals suppliers December 8–9, 1965³ the US representative pointed out the serious view which his Government took of this short-fall in imports, emphasized that the restraints on financial assistance to its producers already applied by the United Kingdom Government were not effective in maintaining cereals imports, and that additional measures were needed. He also pointed out that, unless further effective remedial measures to restore cereals imports to the levels envisaged under the Agreement were forthcoming as a result of the next UK Annual Agricultural Review, the US would have to give serious consideration to terminating the Agreement.

We would of course take such a step with reluctance, since the US attaches great importance to the Agreement and the commitments our two Governments have undertaken thereunder. In the press release announcing the Agreement at the time it was signed we hailed the Agreement as an important precedent for the negotiation of acceptable conditions of access to world markets for cereals and other major agricultural products in the Kennedy Round of trade negotiations. We are still of the view that the Agreement could serve this purpose. I must reluctantly point out, however, that if it is not implemented according to its terms the Agreement could have quite the opposite effect. Unsatisfactory performance under the Agreement would negate the value of its underlying principles and could jeopardize the prospect for negotiating a broader cereals arrangement aimed at expanding world trade in cereals and bringing about greater stability in world cereals markets.

As the time approaches for the UK Government to conclude its current Annual Agricultural Review, I very much hope that your Government will keep these considerations in mind and introduce the additional remedial measures required to give full effect to the Agreement. End text.

Rusk

1. Source: Department of State, Central Files, INCO–GRAINS 4 UK-US. Limited Official Use. Drafted by Irwin R. Hedges (STR) on March 10; cleared by Schnittker (Agriculture), Julius L. Katz (E/OT), and Fred H. Sanderson (E/OR/ICD/TEP), all in draft; and approved by Herter. Repeated to Brussels for USEC, Buenos Aires, Canberra, Ottawa, and Geneva for GATT.
2. See Document 215.
3. A British draft summary of this meeting was transmitted in airgram A–1396 from London, December 16. Comments and suggestions by the U.S. delegation on this draft were sent in telegram 4038 to London, January 13, 1966. (Both in Department of State, Central Files, INCO–GRAINS 4 UK)