Foreign Relations of the United States, 1969–1976, Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972

42. Letter From Secretary of Agriculture Hardin to Secretary of State Rogers¹

Washington, July 18, 1970.

Dear Mr. Secretary:

I refer to National Security Decision Memorandum (NSDM) 68, of July 3, 1970 which directs U.S. policy toward the European Community, and NSDM 45 of March 2, 1970 which directs U.S. policy toward the Spanish Trade Agreement with the European Community.² It is my understanding that NSDM 68 resolves the question which has held up implementation of NSDM 45.

NSDM 68 directs the Under Secretaries’ Committee to coordinate the implementation of U.S. policy toward the European Community. There is a clear and compelling need for the Committee to move quickly. Action must be taken to restore confidence in the agricultural trading community that this Administration intends to defend U.S. agricultural interests. Accordingly, we propose that the Committee decide without further delay to:

1. Formally notify the parties to the Spanish/EC and Israeli/EC preferential trade agreements that we oppose implementation of these agreements, “in the context of opposition to all preferential arrangements illegal under the international trading rules of GATT” (NSDM 45), and that we intend to inscribe the matter on the agenda of the September Session of the GATT Council under the complaint procedures of Article XXIII:2. The two agreements were signed in Brussels on June 29, 1970. They will enter into force soon, possibly October 1, 1970. They are inconsistent with GATT provisions.

2. Formally notify the parties to the Tunisia/EC and Morocco/EC preferential agreements of our opposition to these agreements also. These agreements violate GATT provisions in the same way as the two agreements mentioned above. We should tell the parties at the same time that we intend to inscribe these agreements also on the September GATT Council agenda under the complaint procedures of Article XXIII:2. These two agreements were signed in Brussels on March 31, 1969. They have been in force since September 1, 1969.

3. Formally notify the EC and the applicant countries that we are able at this time to identify agriculture as a critical area for the United States in the accession negotiations and that within agriculture, grains and soybeans are particularly sensitive. Accordingly, the U.S. expects the present EC duty-free status of soybeans to be extended to the enlarged Community, and the grain prices for the enlarged Community to be reduced by $15 per ton from present EC levels.

It is clear that the European Community’s Common Agricultural Policy is already seriously curbing agricultural exports from the United States and the rest of the world. U.S. exports to the EC subject to variable import levies have declined 47 percent since 1967. This decline is largely attributable to the Community’s protective system. On grains, for example, the Community’s high support prices, variable import levies and export subsidies have reduced Community net imports from 12 million tons to less than 4 million tons in the last three years. If this system is extended unchanged to an enlarged Community, further U.S. agricultural trade losses will be heavy as a result of curtailed market opportunities in Europe and subsidized European competition elsewhere. Losses will be in such critical commodities as grains, fruits, and tobacco. We suggest that the Committee meet within the next week to take decisions on the matters set out above.³ Prompt action in these cases is imperative. At an appropriate time, we will wish to make additional proposals to the Committee respecting the legality of the EC’s variable levy system and other such matters.

Sincerely,

Cliff

1. Source: National Archives, RG 59, S/S Files: Lot 81 D 309, NSC-U/SM 73A. Secret.
2. Neither printed. (Ibid., Lot 83 D 305)
3. Under Secretary of State U. Alexis Johnson replied to Secretary Hardin’s letter on July 25, informing Hardin that Deputy Under Secretary Samuels would chair the Under Secretaries Committee to carry out NSDM 68 and would hold a meeting of the Committee on August 12. (Ibid., NSDM 68) See Document 43.