92. Telegram 120720 From the Department of State to the Mission to the European Communities1
For Ambassador Hinton. Subject: Memcon: Conversation with EC Officials. Participants: EC Commission—President Ortoli, Vice President Sir Christopher Soames, Commissioner Finn Gundelach, Soames’ Chef de Cabinet David Hannay. U.S.—Ambassador Frederick B. Dent, Ambassador Deane Hinton. Date and Place: May 12, 1976, Strasbourg, France—7:30 pm to 10:00 pm. Subject: Bilateral Trade Issues.
1. Shoes and autos: Sir Christopher expressed his appreciation for recent U.S. decisions on shoes and autos and asked Ambassador Dent to thank Secretary Simon regarding autos. Amb Dent said his staff had consulted with the minority members of the Senate Finance Committee that morning to head off an effort in the Senate to have the ITC reopen the shoe investigation. He expected success. He also mentioned that assurances from manufacturers would be necessary to end the automobile cases unconditionally.
2. Cognac: Sir Christopher raised the subject, stressing it would be ill advised to roll back the price break, thereby virtually putting the French out of the U.S. market. Ambassador Dent said that recently a U.S. file search had produced evidence that the French had clearly understood the two-year nature of the U.S. cognac concession when initiated and that it was contingent upon subsequent community action to open the poultry market. The French had, however, requested us not to make public the two-year nature of our contingent action on cognac. Sir Christopher said the two year XXIV (6) sweetener for the French had nothing to do with the Community. Action on poultry depended on the commission and such was impossible until it could be included as part of the large MTN package. Gundelach said some poultry concessions could be included as part of the Community Tokyo round package. Soames and Gundelach said that as far as they knew the French had never tried in the Community to loosen the poultry regime. They suggested that since the original two years apparently had been related to the target date which was then envisaged for the end of the MTN and since the delay had been due in part to the slowness of the U.S. Congressional procedure the wisest course for the U.S. would be to leave cognac alone for another year. (They said “year” and Ambassador Dent [Page 351] specifically asked Gundelach if he thought that it could be instituted as an early portion of the big package. Gundelach confirmed the possibility.) Ambassador Dent said we plan to communicate further with the French before Giscard’s visit in an effort to reduce the danger of misunderstanding and hopefully to reach agreement with the French.
3. Specialty steel: Sir Christopher raised. Ortoli, Soames and Gundelach made it clear the Community would not negotiate an OMA. They said, however, that in the spirit of solving problems pragmatically the commission would oppose the Community seeking compensation for the U.S. restrictions. Gundelach said the U.S. would have to agree to waive the 90 day GATT limit and that the Community would reserve its rights to seek GATT relief. Ortoli reiterated his belief that the U.S. had a bad case but said he agreed with his colleague’s proposal to avoid retaliation on the understanding that the U.S. quotas would reflect equitable treatment. Ambassador Dent said it had been our intention to give the Community tonnage in categories where there were real export possibilities. Ortoli asked that we be careful about the overall number which inevitably would be compared in the press with the ITC recommendations. Soames declined an invitation to send negotiators to Washington either for further OMA talks or concerning the quotas. He said, “do what you have to do, taking into account our concerns.” He said the commission would inform member governments May 13 via the 113 Committee of the U.S. proposal and the community rejection thereof. They would also meet with the steel industry on May 18. They would convey their definite decision by May 20 but he expected it would be as he and his colleagues had outlined it, i.e., no retaliation now provided GATT rights were reserved with U.S. assent and U.S. quotas took account of EC interests.
4. Non-fat dried milk and soybeans: Soames raised, saying Lardinois earlier in the day had told Parliament again that the non-fat dried milk scheme would not be renewed. Amb Dent said U.S. soybean producers have been advised of the proposed settlement and some in the industry were resisting. Secretary Butz and Amb Yeutter were to meet with industry representatives in an effort to persuade them that the proposed arrangements were in their best interest. He, Dent, had recommended that they talk to the industry about the advantages of the proposal as well as the broad national interest indicating that the administration would after the consultations make the decision it judged to be best for overall U.S. trade interests. He asked about the commission’s intentions to carry out the actions they had proposed. He said that in his judgment it was too early to reach a written understanding but that at the right moment, i.e., after the Parliament and Council acted on commission proposals, the understanding should be on paper so that the kind of ambiguity surrounding the cognac ar [Page 352] rangement with the French could be avoided. If all went well, the U.S., while reserving its GATT rights for compensation, would not exercise them. Gundelach agreed that the understanding would be reduced to paper at an appropriate later date.
5. U.S.–EC bilateral consultations: Sir Christopher asked Amb Hinton when the next bilateral consultation should be held. Hinton suggested as early as possible in October. After some discussion in which Ortoli also argued for early October, it was left that Sir Christopher would reflect and that the commission would propose to us possible dates.
6. OECD Trade Pledge: Dent raised and Soames said the Community was all for its renewal at the Ministerial. Soames expected to attend only the first day of the Ministerial and Ortoli indicated that he did not presently intend to be there at all.
7. Bilateral Trade Consultations: Dent, Soames and Gundelach agreed that the bilateral MTN consultations were helpful and should be continued.
8. Multilateral Fiber Agreement: Dent raised, proposing that a meeting be called in early October to complete the Annula review and that another meeting be held in early December to consider renewal of the MFA as required. Gundelach agreed to these proposals and commented on the importance of getting MFA renewal out of the way so that textile issue would not be caught up in MTN crunch in ’77.
- Summary: The Department reported a meeting among
Dent, Ortoli, Soames, and other U.S. and
EC officials to discuss
U.S.–EC trade issues.
Source: National Archives, RG 59, Central Foreign Policy Files, 1976. Confidential. Drafted and approved by Dent.
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