179. Airgram From the Secretary of State to the Embassy in Luxembourg1
Luxco A–4. Subject: CSC Cartel Problem. To: ECSC Luxembourg.
The Department has been reviewing developments in the Community relating to the cartel problem. Even though the High Authority has taken some significant actions against cartels (e.g. breakup of GEORG), there are major areas about which we continue to be concerned, namely, the national steel cartels and the steel export cartel. [Page 449] As you know, the Council on Foreign Economic Policy (Dodge Council) has also been concerned about the CSC cartel problem and had this matter under review twice in 1955. We believe the time has now come to talk with President Mayer on an informal but frank basis about the CSC cartel problem along the following lines.
The Department is concerned about the lack of action against the national steel cartels because it is our belief that if the Community is to attain its goal of the establishment of a common market operating under “normal conditions of competition”, effective action must be taken under the Treaty’s anti-cartel provisions in the near future against these restrictive arrangements. Further, the continued operation of the steel cartels tends to color the attitude of some observers in the U.S. concerning the positive gains toward the development of a free common market for coal and steel. Restrictive arrangements in the domestic steel market apparently have been operative since the common market for steel was established in May 1953. Since that time no action has been taken against these arrangements and the problem will become more acute the longer effective action is postponed. With the present sellers’ market, it would seem that this is an exceedingly propitious time to proceed against the national steel cartels.
Another aspect of the CSC cartel problem which continues to cause concern here is the Brussels export cartel. For your information, we are aware that the domestic cartel problem has priority and therefore we have no specific time in mind about High Authority action with respect to the export cartel. However, we do feel that this matter should be called to the attention of President Mayer lest our silence for the past several months be interpreted as acquiescence or lack of interest in the activities of the export group. Much of the criticism of the Community in the United States is based on the belief that ultimately the CSC will prove to be a reincarnation of the prewar international steel cartel. The continued existence of the steel export cartel lends weight to this belief. Further, the operations of the cartel during the past three years have tended to be a source of friction between the Community and third countries as evidenced by the discussion on export prices and the export cartel in the Ninth and Tenth Sessions of the GATT. Whether the high export prices are the result of collusive agreement by the producers or are the consequence of continued strong demand in world markets is beside the point. The fact is that the export agreement has come to be identified as the principal determinant of world steel prices. Finally, the steel export agreement is an example of the manner in which the CSC producers may act in concert to the detriment of outsiders. The combined power represented by the producers of the six CSC Member States acting in agreement places the individual steel importing countries [Page 450] at a distinct disadvantage. Such agreements serve to undermine the confidence of outside countries that the CSC Treaty and other European projects of economic integration are benign instruments which will serve to encourage international trade.
It is left to the discretion of the U.S. Representative to choose an appropriate time to discuss these subjects with President Mayer.
- Source: Department of State, Central Files, 850.33/6–2256. Confidential. Drafted by Winter and approved by Frank.↩