394.31/1–1251: Telegram
The Secretary of State to the Acting Chairman of the United States Delegation to the Torquay Conference (Corse)
niact
315. Reurtel 343, January 12. Fol is text of message sent by State and ECA to OSR in response their earlier inquiry re US position on EUR preferential tariff. Sending further instrs to you directly in response reftel. Text of message to OSR follows.
“1. Agree we are at crossroads in liberalization program. Appreciate that if some attack not made on tariffs of high-tariff countries, we will have considerable difficulty in overcoming resistant of Europeans to achievement 75 percent target.
2. As we understand it there are two types of tariff proposals which are intended to break the jam in QR liberalization program:
- a.
- The Blankenstein proposal for lowering Eur tariff without violation MFN principle. We have been informed that this will shortly be presented at Torquay.
- b.
- Other proposals for a low-tariff club in Eur, particularly those developed in the Stikker-Pella-Petsche discussions, which we understand all involve violation of MFN against US.
3. As we understand high-tariff problem, considerable part of reluctance to reduce is due to fear of intra-Eur competition, e.g., Fr fear of Ger competition. This fear obviously cannot be overcome by violation MFN formula through exclusion US producers. We understand also that part of reluctance to reduce is due to desire avoid giving to US secondary benefits of reductions, thereby losing bargaining power to obtain US tariff reductions. This fear can be overcome by changing techniques of tariff negot, possibly along lines Blankenstein proposal mentioned above, without breaching MFN principle. Problem which cannot be overcome except through breach of MFN principle is that arising from fear of increased US competition. We are not sure as to [Page 1324] extent of cases falling in this last category. Feel need for more info on this point to gauge both economic consequences and tactical value of preferential arrangement.
4. EGA and State feel we shld proceed energetically along lines Blankenstein proposal. Decision on this step, however, wld require concurrence TAC.
5. On basis present info, EGA and State doubt wisdom on economic or political grounds of supporting proposal preferential arrangement. Moreover, we wld anticipate strongest opposition from other agencies. Objection which will be raised in Exec Branch to proposal based on (a) doubtful economic consequences such arrangement, (b) precedent it creates for maintenance and extension Imperial Preference system, other regional preferential systems, (c) strong and longstanding US public and Congressional opposition to discrimination against US products. On other hand wish to leave no stone unturned in effort to find solution to problem trade liberalization progress in Eur. Consequently, with your assistance, ECA prepared to develop best case that can be made for discriminatory low tariff club you consider best approximates our standards.”