Conference Files: Lot 59 D 95: CF 24

Agreed United Kingdom/United States Report 1
top secret


The United Kingdom Relationship to Western Europe

Since the end of the war the Western European countries have tended increasingly to work together to solve their economic problems. [Page 968] Underlying the European Recovery Program was the concept that through joint efforts, self-help, and mutual aid much could be done to make Europe prosperous and strong. The O.E.E.C. has made impressive progress in bringing about mutual appraisal of individual economic plans and in furthering a concerted approach to common problems.
It is desirable to continue this cooperative approach. If there were no problem of Germany and no Soviet threat, existing arrangements might suffice for this purpose. Given the urgency of orienting the German economy westward and the increasing intensity of the Soviet offensive, however, even greater cooperation is a necessity.
In any system of Western European cooperation, the leadership of the United Kingdom is essential. It is essential not only because of her dominant economic position, but also for a whole range of less tangible reasons which are implicitly recognized by most of the Western European countries. Furthermore, for various reasons, partly economic and partly political, only the United Kingdom in Western Europe can provide the necessary counterweight to a reviving Germany.
The United States has felt that the United Kingdom has been unduly cautious in moving toward greater unity with the continent and that it has not at times exercised the required leadership. The United States believes this caution stems from two principal causes: in part, from an uncertainty as to what the United States means by “integration” and an uncertainty as to whether or not the United States is endeavouring “to push” the United Kingdom into full union with the continent; and in part from an unwillingness on the part of the United Kingdom to subject its domestic economy to the impact which would result from greater freedom of movement of goods, capital, and persons within the Western European area generally. The United Kingdom, on the other hand, while recognizing that they have from time to time been regarded as “dragging their feet”, feel that the very fact of their leadership has made it necessary for them to exercise particular caution in sponsoring or encouraging proposals where it is feared that they are likely to fail of their purpose or to be found impracticable.
The United Kingdom has responsibilities to the Commonwealth and in other areas as well as to the continent, and there is a point beyond which their “integration” with the continent will adversely affect these ties with other areas to an extent which in the light of our common objectives would be undesirable. The question of the point at which action taken by the United Kingdom with respect to Europe prejudices other common objectives cannot be answered in advance. [Page 969] It can only be answered on a case-by-case basis as specific questions arise. Because no firm line can be drawn in advance, the problem will be a continuing source of irritation, but it is an inevitable one.
Another source of misunderstanding between us with respect to the United Kingdom’s relationship to Europe stems from the essential differences between the United Kingdom and the United States on the relative priority to be given to internal stability on the one hand and to the liberalization of trade and payments on the other. This fundamental difference in emphasis is brought out in some detail in paper [blank]. The United States believes that the emphasis which has been placed on the necessity for further integration of the European market is fundamentally correct, and that it is necessary to press forward as rapidly as possible with the removal of trade, payments, and other restrictions to the free movement of goods, peoples, and capital within the OEEC area. The United States believes that the pressures of a substantially free market will lead to the most efficient use of European resources and the United States does not believe that Europe can afford anything less than the most efficient use of its resources. Although the United States does not believe that the European countries, at the moment, could stand full competition with the dollar area, it does believe that the economies of the continental European countries and the United Kingdom could stand increased competition from their neighbours; and that they must have this competition, if they are to make the necessary adjustments. The United States also believes the removal of barriers within Europe is a step to the achievement of a world-wide multilateral convertible trading system which has always been a basic economic objective. The United Kingdom, while generally sharing these views as to the desirability of removing barriers within Europe, feels that the primary importance on political as well as economic grounds of the maintenance of high and stable levels of employment throughout the Western democracies limits the pace at which progress can be made in this direction.
Both countries agree that a fundamental reason for proceeding as rapidly as possible with the programme for closer economic cooperation as it has taken shape in recent discussions in the O.E.E.C. is to strengthen German ties with the West, both through the joint consideration of mutual economic problems and by the opening up of trade channels so that the reviving Germany can find in the West both a source of supplies and an outlet for its products and so that German resources can contribute to the strength of the West.
The strengthening of Western Europe economically requires action apart from direct assistance on the part of the United States. However, both the United States and the United Kingdom agree [Page 970] that although European cooperative action alone is not sufficient, it is an essential element in the building of a strong North Atlantic system.2

  1. Attached to the source text was a cover sheet, not printed, which indicated that this paper would be considered at the U.S.–U.K. plenary on May 5 and, if approved, would be submitted to the Foreign Ministers.
  2. This paper was approved at the seventh U.S.–U.K. bilateral meeting on May 6 and, with the addition of MIN/UKUS/P/2 in the blank in paragraph 6, was submitted to Bevin and Acheson as MIN/UKUS/P/8. For a report on the seventh bilateral meeting, see Secto 181, infra; regarding the further discussion of MIN/UKUS/P/8, see Secto 216, May 10, p. 1024. For the text of MIN/UKUS/P/2, see Secto 108, May 3, and footnote 3 thereto, p. 957.