200. Memorandum of Conversation1
SUBJECT
- Austria and the EEC
PARTICIPANTS
-
Austria
- Dr. Ernst Lemberger, Austrian Ambassador
- Dr. Karl Gruber, State Secretary in the Office of Austrian Federal Chancellor
- Dr. Otto Zundritsch, Press Counselor, Austrian Embassy
-
United States
- Mr. John M. Leddy, Assistant Secretary for European Affairs
- Ambassador Douglas MacArthur II
- Mr. Walter J. Stoessel, Jr., Deputy Assistant Secretary for European Affairs
- Mr. Walter M. Kotschnig, Deputy Assistant Secretary for International Organization Affairs
- Mr. Robert M. McKisson, Eastern European Affairs
- Mr. Robert H. Kranich, ACDA
- Mr. Wells Stabler, Country Director, Austria-Italy-Switzerland
- Mr. Arthur D. Foley, Austrian-Swiss Affairs
Gruber said that it is not a love affair but economic necessity which leads Austria to seek arrangements with the EEC. Austrian industry must specialize in, for example, machine tools and needs export markets. Austria is beginning to feel the effects of EEC trade barriers in its industry and agriculture. If economic troubles come, Gruber observed, political troubles will follow.
Gruber continued that Austrian neutrality forbids membership in the EEC but Austria is seeking an affiliation. The Soviets do not like an Austrian connection with the Common Market in any form. However, following the Klaus visit to Moscow,2 the Austrians feel that the Soviets now understand Austria’s economic needs better. The Austrians have supplied the Soviets with a long paper on the justification for Austrian association, including a factory-by-factory analysis. But the Soviets suggest separate trade agreements with the countries of the Common Market. Gruber expressed his personal opinion that the Soviets themselves realize that they one day must recognize the Common Market. Gruber said he feels that the Soviets will do nothing dramatic as regards Austria’s association with the Common Market.
As regards EFTA, the Austrians have felt from the beginning that EFTA was an instrument of negotiation with the Common Market. The Austrians see no problem in this connection. The French position is important to Austria, he continued. As a member of the Common Market and a signer of the State Treaty,3 their attitude is significant, and France has been helpful in Austria’s dealings with the Soviets.
Mr. Leddy asked if it is not a fact that Austria’s trade with the Common Market has increased. Gruber replied that this was so as long as the general European economic boom was on. But with the present economic setbacks, Austria feels the effects of Common Market tariffs. Mr. Leddy asked if the success of the Kennedy Round negotiations followed by trade agreements with the Common Market would take care of Austria’s trade difficulties. Gruber said he hoped so, but that trade agreements were not enough.
Mr. Leddy asked about the Soviet position. Are the Soviets completely opposed to any arrangement with the Common Market, including a trade agreement? Gruber replied that the answer really will be found in giving Austria’s affiliation the proper title, which will not be objectionable to the Soviets. The Soviets will never give their official blessing.
[Page 533]In response to Ambassador MacArthur’s question, Gruber said that approximately 50 percent of Austria’s trade is with the Common Market, 15 percent with the East and 17 percent with EFTA.
Mr. Leddy asked Gruber’s estimate of the possibilities of UK entry into the Common Market. Will De Gaulle continue to oppose this? Gruber replied that when the UK decides to enter they will get sufficient support. But, he said, he foresees long negotiations with the UK on this.
Gruber asked Mr. Leddy for the US attitude toward countries making arrangements with the Common Market. Mr. Leddy replied that the US does not like preferential arrangements now being negotiated with a number of countries. If such negotiations would lead to full membership, the US, he said, would not object. Mr. Leddy added that the US recognizes that Austria is a special case, being inhibited by the State Treaty from full membership. But, he added, the US does not like the piecemeal moves being made by other countries for special and preferential deals with the EEC, if these lead to discrimination against US trade.
Ambassador MacArthur said that we hope that it will be clear that an Austrian arrangement is a special case and will not be a precedent. Gruber replied that he is sure this will be clear.
Mr. Stabler asked about the requirements for approval in the Austrian Parliament of the EEC arrangement. Is a two-thirds vote required, he asked?
Gruber replied that the wording of the text of the agreement will determine if a two-thirds vote is necessary. He added that the Austrian Government will want Socialist Party support anyway. Gruber said he has the feeling that the trade unions now support an arrangement.