363. Memorandum of Conversation1
SUBJECT
- Rey Visit, Agricultural Trade Problems
PARTICIPANTS
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European Communities:
- Edmund Wellenstein, Director General for External Trade
- Theodorus Hijzen, Director, Multilateral Political Commercial Aff.
- Michel Hedreul, Asst. Chef de Cabinet to Vice President Barre
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United States:
- John Evans, STR
- Harald Malmgren, STR
- Theodore Gates, STR
- Morton Pomeranz, STR
- John Ray, EUR/RPE
Mr. Malmgren explained that our willingness to review our “chicken war” retaliation is related to the conditions of access for our poultry into the Community. We could not now trade off reduction in our retaliation for a reduction in EC export subsidies. We would need something on access.
He said that in Brussels Mr. Schlosser had told us that the ball is now in our court on poultry. So we went ahead in Geneva. We are surprised and disappointed that the EC is not ready for an Article XXII consultation. If the EC’s reservations are due to their having a better way to handle the poultry problem, Mr. Malmgren said he’d be happy to learn of it. So far we haven’t heard of any other ideas.
He explained that we are under very strong political pressure to act. US poultry producers want unlimited export subsidies. Mr. Malmgren pointed out that the money and the authorization for such a program are available. He said that we could even give the birds away. The USG doesn’t want to start such a program. It would be foolish to start competition in subsidies between the CCC and the FEOGA. But we must have some action. If not, we will be forced into a large subsidy program.
Mr. Malmgren said that both sides must give a little. He explained that to do so now would be easier than waiting until later when both sides are locked in. If we are forced to move on subsidies, everyone will become angry. Negotiations will have become just that much more difficult.
[Page 856]Mr. Evans underlined that, although Mr. Deniau had said that there wasn’t much use in talking unless our “Chicken War” retaliations were also on the table, these are related to access and not to subsidies. The EC export subsidies on poultry were not involved in the “Chicken War.”
Mr. Hijzen replied that poultry is a political problem for both sides and hence very difficult.
He did not like the idea of discussing in the GATT a problem which involves only the United States, the EC and the Danes. He said it is very difficult to talk usefully in public. Although he strongly preferred bilaterals, he couldn’t guarantee success. In fact, as we had failed to come to an agreement in the KR, where offsets in other sectors were possible, he feared that the chances of success in a negotiation limited to poultry are small. He wondered where we can now find counterbalancing offers?
Mr. Hijzen added that, unlike the dairy problem, he didn’t feel that the poultry problem was of worldwide scope. An Article XXII consultation just risked exciting everybody’s domestic public opinion to no avail.
Messrs. Evans and Malmgren replied that an Article XXII consultation doesn’t need to be public, that the press can be kept out. The group doesn’t need to meet too often, provided that substantive bilateral discussions are actually taking place and solutions are actively being sought. An Article XXII consultation would be a good place to formalize any agreements reached in such bilateral talks.
Mr. Evans explained the political need for us to take some visible action soon. Useful Article XXII consultations might provide a substitute for unfortunate unilateral action on our part. Although we’re not subsidizing our exports now, we will be forced to do so in the near future in the absence of useful talks.
[Here follows discussion of the impact of EC regulations on U.S. exports of canned fruit and tobacco, and of demands by U.S. producers for countervailing duties on canned ham.]
- Source: Department of State, Central Files, INCO–POULTRY 17 EEC. Confidential. Drafted by John E. Ray on February 26.↩