394.31/3–3151: Telegram
The Acting Chairman of the United States Delegation to the Torquay Conference (Corse) to the Secretary of State
niact
631. USTAC. For Brannan, Andrews1 and Zaglits2 from Schwenger.
1. This is for your advice in connection our dissent from today’s TAC decision (reported Deltel 630) to conclude agrmt with Canada basis revised package substantially inferior agriculturally, and substantially superior non-agriculturally, to package previously approved by Pres over Agri’s dissent.
2. Revised package cld not include reductions UK prefs (such as cheese). Can agrees have record show Can was willing release right to preference in UK market if US–UK agreement complete. Exact text not yet determined. This wld help in future negots and, if made public, might help somewhat domestically.
3. Can unwilling break pref block by going against wishes other Commonwealth countries if pref items important those countries, altho Can apparently made high level effort persuade those countries release claims. Hence, revised package omits important concessions to US on raisins, canned peaches, currants, and hog casings.
4. Revised package contains no new agri concessions by Can to offset these omissions. In fact, Can informs status in revised package five relatively minor offers (canned poultry or game, NOP; poultry and game, NOP, Cheddar cheese; evap milk, dried skim, whey and buttermilk for feed) somewhat precarious shld Australia hear and object prior to conclusion agrmt.
5. Can offers somewhat increased concessions ground mustard (22 to 15 percent instead of 17½ percent) and apples (duty period from 37½ to 18¾ cents per bushel instead of 25). Unable assess value accurately. Judge useful but not cut deep enough to produce striking results, as might reciprocal treatment requested apples.
6. My considered judgment agrmt possible without our cheese con-cession, based fol facts:
- (a)
- In discussions preliminary to preparation revised package, Corse asked whether, in view failure break pref block, Can wld conclude basis somewhat decreased offers by US. McKinnon replied no agmt unless US offers included aluminum, canned salmon (particularly for Brit Colom) and birch plywood (particularly for New Brunswick). No mention cheese. On other hand, McKinnon interrupted subsequent Canadian del consideration possible revised package to [Page 1312] telephone Corse asking whether additional half cent cheese cld be offered without consulting Washn if Can made larger agric offers.
- (b)
- Can recognizes difficulty US cheese problem accentuated by
failure UK agmt. In preparing revised package Can apparently
foresaw possibility no US cheese concession, and made offers to
permit them accept agmt without cheese. Thus, these offers
include:
- (i)
- very large concessions (larger than US requests) insecticides; agric machinery, other items calculated satisfy Can farmers despite no US cheese concession.
- (ii)
- no substantial improvement agric items.
7. Political desirability agmt Can great. Wld keep Can nearer our side in conflict between multilateral trade objective and Commonwealth pref objective, so sharply pointed up last two weeks here.
8. Consider proposed agmt good as whole. TAC members recognize difficulty position Agric. We might have asked TAC consideration going back to Canadians without cheese offer, except that original position several influential members to not oppose concessions in canned salmon, birch plywood and aluminum was stimulated by and conditional on, our original offer recommend you consider not opposing cheese as part earlier package. In del discussions, this position forcibly reiterated. Our view improved Can non-agric offers and [garble] Can agric offers shld alter this position.
9. View this situation as whole, recommend you ask Pres change revised package to eliminate cheese, perhaps authorizing minor changes Can offers in light such elimination. View desirability conclude by midnight tonight Torquay time, you might concur Pres give substantial approval TAC revised package if Can adamant on cheese. Convinced Corse wld make full and fair effort conclude without cheese if so ordered, even though larger authority available. [Schwenger.]