850.33/1–1553: Telegram

No. 148
The Minister in Luxembourg (Mesta) to the Office of the United States Special Representative in Europe, at Paris1


Topol 36. For Embassy and SRE. From Tomlinson. Subject is European coal–steel community. Re Topol 35.2 Following are major points raised at Common Assembly Session re opening of common market and related problems:

1. Procedure on Common Market.

Some deputies complained insufficient information in report on specific measures to be taken when common market opens. Etzel replied impossible to predict far in advance what situation will be on February 10. If there is a German coal strike between now and then special situation would be created which might require special measures.

High Authority has been discussing problem with interested parties and government experts. It will hold formal consultation with council and consultative committee prior to opening of common market and will also discuss common market measures with common market committee of assembly.

2. Date of Common Market.

No opposition expressed to creation of common market on dates set by treaty. A number of deputies (especially Germans) were insistent that there should be no delay. Monnet and Etzel both made clear High Authority intends respect treaty deadlines. Scrap is only product where delay has even been considered, and High Authority has as yet taken no decision to propose postponement for that.

3. Coal Allocation.

In reply questions on coal situation, Etzel stressed no shortage of coal exists at present except for coking coal and anthracite. Imports from United States cover these shortages. Etzel stressed United States coal is “abnormal” import. However High Authority does not intend to institute allocation procedure under Article 59. High Authority wants at all costs to avoid dirigiste measures unless they are absolutely necessary. Etzel pointed out that OEEC [Page 269] has made allocation for first quarter 1953 and High Authority has used its powers under Article 96 to give legal force to distribution pattern established by OEEC. It is not yet possible to tell whether allocation will be necessary for second quarter 1953 and if so what kind.

Several German deputies pointed to fact that Germany now imports high priced American coal and exports lower-priced German coal to other member countries. They thought some way should be found to share this price burden. High Authority replied that this problem should be solved by reducing and as soon as possible eliminating American coal imports.

4. Iron Ore.

Etzel stated there is no major obstacle to creation common market for iron ore in 6 countries on February 10. High Authority must await repercussions of creation common market before it can tell definitely whether transitional measures may be necessary. In any case, prospects are that situation will improve.

5. Scrap End.

Several deputies expressed concern about effect on steel prices of creation common market for scrap. De Menthon pointed out that if French scrap price should rise to level of others in common market additional cost to French steel industry would be around 15 billion francs ($43 million). Italian deputy said machinery needed to avoid price fluctuations and suggested single buying agency as best means. Etzel replied that problems raised by special nature of scrap market are under serious consideration in High Authority but no decision on special measures had been taken. None can be taken until the matter has been discussed between the High Authority and the council.

6. Perequation.

In reply to question by Belgian deputy Motz, Coppe stated perequation mechanism would be ready by February 10 as treaty required. Belgian Government has agreed to pay its share into perequation funds if and when necessary. Final determination of certain questions in connection with size of levy and beneficiaries of perequation fund will depend on effects of creation common market on price structure within community.

7. Double Pricing.

Coppe stated flatly that all double pricing within community must be abolished on date creation common market. This is spirit and letter of treaty, and no special measures are provided in transitional convention.

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8. Subsidies.

Subsidies are also to be abolished in principle on date creation common market. However Coppe explained, distinction must be made in initial phase: Those subsidies which correspond to serious distortions and whose abolition would therefore result in sudden serious price rises may be authorized temporarily until reasons for them can be reduced or eliminated. Other subsidies must go when common market is created.

9. Distortions.

Several French and German deputies stressed that account should be taken of differences in competitive conditions among various countries and means should be found to reduce or eliminate them. High Authority replies on this subject did not add anything to High Authority report and Monnet’s speech.

10. Transport.

A number of deputies stressed inequality of competitive conditions because of differences in transport rates. Motz also pointed to position of Belgium as transit country and saw in establishment of direct international tariffs for coal and steel danger to financial position of Belgian railroads.

Spierenburg’s reply stressed that transport problems are to be dealt with in stages. Straight discrimination on basis country of origin or destination will be eliminated on creation common market. High Authority is sending recommendations to governments on this subject within next few days and expects no difficulties. Other problems, such as establishment direct international tariffs and uniformization of rate structure for coal and steel are more complex and will take more time. Commission of experts established under transitional convention is now beginning to work on these longer-range problems.

11. Cartels and Concentrations.

High Authority questioned sharply by Teitgen and Dutch deputy Blaisse re intentions on enforcement anti-cartel articles. These problems also mentioned by German delegates: Henle stressed that there should be no discrimination in size of productive units permitted in various member countries. Preusker said Germany had been placed at a disadvantage because of deconcentration.

In reply Coppe took same line as High Authority report: Regulations required under Article 66 raise complicated and delicate problems and High Authority must work out sound policy, which may take “a few more weeks”.

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12. Impact of Common Market on Payments Situation.

In reply to question, Etzel stated High Authority did not foresee any upheaval in credit and debit balances of member countries in EPU on account of creation common market.

Several deputies pointed out that treaty requires elimination of QR’s but not of payments restrictions and asked how High Authority will deal with this problem. Coppe replied that, while High Authority had no direct powers in this field, Article 86 of treaty provides that member states will make necessary arrangements for payments connected with coal and steel trade. High Authority interprets this language as meaning that coal and steel are to have privileged position on payments.

13. Impact of Common Market on Rest of Economy.

Several deputies emphasized that importance of coal and steel industries is such as to give decisions in this field important repercussions in other sectors of economy. High Authority acknowledged this and said would be in constant consultation with member governments on subject.

  1. Repeated to London, Bonn, Paris, The Hague, Brussels, Rome, and the Department of State, which copy is the source text.
  2. Supra.