Foreign Relations of the United States, 1955–1957, Western European Security and Integration, Volume IV

180. Circular Airgram From the Secretary of State to Certain Diplomatic Missions¹

Washington, July 13, 1956.

CA–454. Subject: Common Market Negotiations.

The following is for the guidance of the addressee posts in connection with the Brussels negotiations on the common market:

Part A

(1) United States Attitude Toward Preferential Arrangements.

The United States has generally opposed preferential arrangements in international trade because of the discrimination against the trade of third countries which they involve. The United States has taken a different and generally favorable attitude, however, toward customs unions and free-trade areas, since both involve, in addition to discrimination against the trade of third countries, the elimination of restrictions on substantially all of the trade among the participating countries, thereby making possible the more efficient allocation of economic resources among the participating countries with a consequent over-all expansion of international trade.

The United States support of such arrangements as the Benelux Economic Union and the Nicaragua–El Salvador Free Trade Area is based on this appraisal of their potentialities.

The United States opposes preferential arrangements involving a system of selective competition. These are arrangements which protect individual industries against competition from third countries and also against competition on the common internal market of the countries party to the arrangement. Such arrangements cannot by their nature contribute to the United States objective of expanding world trade, inasmuch as they insulate particular, and often important industries, within the preference area against all sources of competition, thereby distorting the flow of international trade, rather than expanding it.

The United States opposition to preferential arrangements which do not involve the elimination of restrictions on substantially all of the trade of the participating countries has also been modified to some extent by a willingness to accept such arrangements where they contribute to the attainment of United States political or economic objectives in a particular area. Thus, this country supported a waiver under the General Agreement on Tariffs and Trade which made possible the establishment of the preferential trading arrangements limited to coal and steel among the six countries of the European Coal and Steel Community. Its position with respect to the ECSC was based on the desirability of encouraging the closer political integration of Western Europe and the opportunity which the supranational institutions of the ECSC offered for such integration.

Thus, the attitude of the United States toward proposals for regional preference arrangements is based on an evaluation of the extent to which the arrangement will contribute to the attainment of United States political and other objectives in a particular area and a higher level of international trade.

It is in the light of these considerations that the results of the common market negotiations will be evaluated.

(2) Relationship of the Common Market to EURATOM.

The basic United States position towards the common market discussions now going on in the context of the Brussels Conference on European integration is as set forth in paragraph 6(b) of Deptel 1390 of May 24 to Brussels² (repeated to Paris 4387, Bonn 3368, Rome 3779, Luxembourg Luxco 18, The Hague 1984): the United States is sympathetic to the desire of the six countries to establish a common market, but hopes that approval of a treaty for EURATOM, which is of such immediate importance for the reasons outlined in the reference telegram, will not be held up until Common Market negotiations are completed. We see no need for a linking of the common market and of EURATOM at this time.

(3) The Intergovernmental Committee Report on the Common Market.

We regard the Intergovernmental Committee Report on the common market³ as a welcome step toward the integration of Western European countries. We are gratified by the recommendation to include agriculture in the project, the attention given to the international obligations of the participating countries, and the open-ended character of the proposed membership arrangement making possible the admission of new countries. We appreciate the fact that various gaps in the report reflect the need to avoid getting bogged down in negotiating details and offending national sensitivities on such questions as institutions. In sum, we believe the common market report represents a basis on which further progress may be made.

Part B

Action for Missions.

The Department desires to be kept informed of the evolution of the common market negotiations, and particularly of the negotiations on the following points:

(1) Means whereby momentum of project will be maintained:

While the 12–15 year period for the attainment of the common market appears reasonable in view of the magnitude of the task, the long period envisaged contains the risk of the project sagging or collapsing as national and international political patterns change, original suporters leave the scene and the international trade picture alters. The risk is increased as the dismantlement of national protective devices reaches sensitive economic areas and critical stages at which time the demand from affected groups for a “stand-still” on further integration could evoke considerable support, particularly if coupled with a period of economic recession.

Therefore, it would appear to be most important that the irreversibility concept in the report be maintained and be buttressed by institutional arrangements assuring to the maximum extent possible the automatic dismantling of the six-country barriers without the necessity for new decisions. The Intergovernmental Committee Report is not clear on how this can be done. We are particularly concerned by the fact that the Intergovernmental Committee Report does not appear to provide for effective institutions capable of acting independently of national governments in the coordination of domestic economic policies, and that such bodies as the Council of Ministers and the European Commission might not be able to withstand domestic, economic, and parliamentary pressures for slowing down the dismantling of trade barriers among the six countries.

(2) Restrictive business practices:

The nature of the arrangements designed to prevent private restrictive arrangements in the common market and the formation of export ententes covering trade with third countries are of special interest to us. The obscurity of the report on the latter point and the reference to conciliation and mediation procedures for the former are disappointing. We consider it important that the treaty include effective provisions preventing private arrangements from replacing governmental barriers and thus frustrating the objectives of the common market.

(3) The role of agriculture:

We are interested in learning the extent to which agriculture will actually be integrated into the common market. Specifically, we are interested in the arrangements which will govern the import quota policy toward third countries, and also in the methods used for the selection of agricultural commodities referred to on pages 50–51 of the report and the nature and duration of the “temporary” exemptions for them from the rules of competition on the common market.

Missions should seek appropriate occasions to make known the continuing serious United States interest in common market negotiations, and in specific aspects of the problem described in Part B of this instruction, but should bear in mind the primacy of United States interest in EURATOM as noted in Part A, point (2) above.

Dulles

1. Source: Department of State, Central Files, 840.05/7–1356. Confidential. Drafted by James J. Blake of TAD and approved by Isaiah Frank. Sent to Bonn, Brussels, The Hague, Luxembourg (for the Embassy and the CSC Mission), Paris, and Rome. Repeated for information to London.
2. Document 173.
3. See Document 175.