411.566/8–3051

Memorandum of Conversation, by Mr. Daniel M. Lyons of the Office of Western European Affairs

restricted

Subject: Netherlands Complaint re U.S. Restrictions on Cheese Imports.

Participants: Dr. J. G. de Beus—Minister, Netherlands Embassy
Mr. J. H. J. Van Kretsehmar, Netherlands Embassy
Mr. J. Kaufmann, Netherlands Embassy
Mr. Harold F. Linder—Acting Assistant Secretary for Economic Affairs.
Mr. Raymond Vernon—EDT Mr. Daniel
M. Lyons—WE

Dr. de Beus stated that he was under instructions to present a note to the Department placing the views of his government on the record regarding the United States restrictions on imports of dairy products.1 He pointed out that:

1.
The restrictions were harmful to the Netherlands dairy industry.
2.
The restrictions reduced Netherlands exports of dairy products.
3.
The restrictions will inevitably affect the desire of Netherlands businessmen to expand exports to the United States because of the uncertainty that the United States will permit continuous exports.
4.
Netherlands cheese manufacturers have spent large sums to acquire machinery and equipment designed to process and package cheeses according to American tastes. These investments would be lost.
5.
The Netherlands stood to lose substantial dollar earnings. The reduction in the earnings would make it more difficult for the [Page 1444] Netherlands to solve its dollar problem and the Netherlands preferred to earn dollars than to receive them under grants or loans from the United States.
6.
The restrictions impaired the value of certain tariff concessions obtained under GATT and that they might request adjustments under Article XXIII.

Mr. Linder replied that the position of the Administration in this matter was very clear and expressed the hope that legislation would be passed which would repeal the section of the DPA under discussion. He observed that the Administration was doing everything in its power to demonstrate to the agricultural groups that the present legislation was not in their broad interest. Mr. Linder stated that every effort would be made to improve the situation.

Dr. de Beus in a further statement pressed the point that his government was not concerned with the rationale on which the base period was established or other administrative provisions, but rather that the restrictions were being objected to on principle. The only remedial action he could see was repeal of the section of the DPA which made these restrictions possible.

In discussing the legal aspects of the case, Mr. Kaufmann asked why the President had delegated his authority to the Secretary of Agriculture when the DPA clearly gave him the final authority and he presumably could have prevented the implementation of the disputed clause. Mr. Linder stated that the legal authorities had informed him that the Secretary of Agriculture had full competence over the administration of the clause.

  1. Note dated August 29 not printed.