245. Memorandum From Charles
Cooper of the National Security Council Staff to the
President’s Assistant for National Security Affairs (Kissinger)1
Washington, August 16, 1973.
SUBJECT
-
NSSM on International Cooperation in
Agriculture
Attached at Tab A is a NSSM on the above
subject, redrafted according to your instructions.2 A transmittal note to the President is attached at Tab
I.3
I had extensive discussions with Joe Greenwald on this subject as a result of
which he prepared an excellent memorandum, attached at Tab B, which is well
worth reading. (Greenwald, by the
way, is very impressive.)
I feel strongly that State should take the lead in the NSSM. USDA
doesn’t have the imagination, nor can we count on their being open minded.
CIEP doesn’t really have the right
people, nor can we count on their taking as constructive an approach as
might be desired. Although State isn’t well-staffed for this job, there are
some good staff
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people there who
can do much of the work. Jules Katz,
the Deputy Assistant Secretary for International Resources and Food Policy,
who would presumably lead the study, is good, and I think will do the job
the way you want it done.
As regards substance, there is near unanimity that a frontal attack on the
CAP would be folly. However, the
domestic political aspect of this problem will require careful handling. For
the most part, U.S. farm interests can be expected to oppose strenuously
anything that smacks of international commodity agreements. This problem
could be serious if publicity about a more flexible U.S. approach to
international cooperation in agriculture were to cause trouble while the
Trade Bill is still pending. In my judgment, we have to get started—but
carefully.
Recommendations
- 1.
- That you sign the memorandum for the President at Tab I.
- 2.
- If the President approves, that you sign the NSSM at Tab A.
Tab B
Washington, August 15, 1973.
Paper Prepared by the Representative to the European
Communities (Greenwald)4
AGRICULTURE AND FOREIGN POLICY
With the embargo of U.S. soybean exports,5
agriculture joined energy and money as top issues in U.S.-European
relations. These economic problems have moved to the center of the
Atlantic stage along with political/military affairs.
Agricultural policy has long been a source of conflict in our relations
with Europe. We have argued and negotiated for access for our
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exports. The Europeans have
developed a common agricultural policy (CAP) designed to favor domestic producers. The CAP is one of the concrete achievements of
the European Community (EC) and it has
major domestic political importance for most of the nine member states.
The EC has made clear that its CAP is not “negotiable” in the next GATT round. At the same time, there are
pressures within the EC for modifications
to make the CAP less costly to both
governments and consumers.
The recent emergence of protein and grain shortages has brought a new
dimension to the agricultural problem. Previous discussions were based
on the assumption of surplus production for commercial sale; it is now
being suggested that we are entering a period of chronic shortages.
There is no consensus on the long-term supply/demand prospects.
The resistance to changes in the CAP
through the traditional negotiations for liberalization of imports and
the possibility of a structural change in world agricultural supply and
demand has led the EC to propose
international commodity arrangements as the main approach to the
agricultural phase of the GATT
negotiations. The U.S. has in the recent past (February 1972), opposed
commodity arrangements for temperate foodstuffs. Unless positions are
modified, we are heading for another confrontation with the EC.
The present course of unwillingness to explore the commodity arrangement
approach with an open mind seems calculated to continue the U.S.–EC stalemate in the agricultural area. Until
the protein and grain crises, there was some support in the EC for the traditional trade liberalization
(access) approach to agriculture. With the apparent change in the
supply/demand situation, the Europeans are united in favor of the
commodity arrangement formula. The only prospect of getting ahead in
agriculture is for us to indicate a willingness to consider the European
approach and find out what the practical possibilities are.
The first opportunity to signal this flexibility is at the GATT meeting in Tokyo.6 In a
Presidential meeting and/or the Shultz speech, we could state our willingness to explore
the commodity arrangement approach to see whether it can be used to
achieve the objectives of the GATT
negotiations. In terms of our relations with Europe, there are
substantial political advantages in emitting this signal as soon as
possible.
Once the present impasse is thus unblocked, we can pursue discussions
with our negotiating partners formally and informally, multilaterally
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and bilaterally. Although
the EC has a common agricultural policy
and the Commission is responsible for implementing that policy, it is of
such domestic political sensitivity that informal, bilateral talks with
key member states (first of all with France) and the Commission will be
necessary. These bilateral exchanges can, of course, proceed in parallel
with more formal multilateral discussions in GATT and OECD.
Multilateral meetings (in existing organizations or ad hoc) can be
useful in demonstrating publicly that we are trying to deal with the
world food problem through international cooperation. But such meetings
cannot replace, and should not be allowed to interfere with, serious
substantive exchanges looking toward agreement among the major producers
and consumers.
Before entering into these international discussions, we will need a
better idea of (a) the long-term supply/demand picture for major
agricultural products (b) the impact of the U.S. agricultural
legislation on our trade and stock position (c) the kind of commodity
arrangements which could serve U.S. interests and (d) the negotiability
of various types of commodity arrangements. Such a study should not aim
at a blueprint for world-wide commodity arrangements. Its purpose should
be to provide broad guidelines or parameters for exploratory talks this
fall. These talks should not be limited to the Europeans but also
include other major suppliers (Canada and Australia) and consumers
(Japan). Separate talks might be held with the LDC’s. After these preliminary discussions with our trading
partners, another interdepartmental exercise will be necessary to
provide more precise negotiating instructions.
Recent developments in the protein and grain markets may provide the
basis for a mutually satisfactory deal with the Europeans and Japanese.
They are seeking reliable suppliers and we are looking for continuing
access. If we try directly to force changes in the CAP and refuse to consider alternative
solutions to agricultural problems, the likely outcome is a continuation
of the present unsatisfactory situation. Continuing conflict in
agricultural policy will inevitably have adverse effects on other
aspects of U.S.-European relations.
