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

211. Telegram From the Secretary of State to the Embassy in the United Kingdom¹

Washington, January 15, 1957—7:47 p.m.

4880. Re Embtel 3547,² CA 4530.³

1. Inclusion OEEC underdeveloped countries: Complexity problems with possible major political as well as economic ramifications precludes Dept’s taking any kind of firm position at this time. On one hand, there are number of important commercial and economic policy considerations (para 2 below) which must be weighed in balance. Rather full discussion commercial policy aspects provided for your guidance and use your discretion. However, Dept also fully shares UK concern regarding potential gravity political repercussions should issue inclusion less developed countries create serious strains in context unity OEEC countries or in broader context Western Alliance and unity. FYI New element in picture since receipt reftel in final para Brussels 749⁴ bearing on Portuguese, Greek and Turkish attitudes. Brussels telegram (which is subject separate message from Dept) raises issues, validity and possible consequences of which we not in position evaluate until more information available. End FYI. Accordingly, in any discussions with UK officials Embassy should make clear that US appreciates full complexity of problem, and that we are looking at economic questions against background sensitive political issues referred to above. Pending further examination all facets of problem here, most important that impression not be conveyed to British that Washington thinking yet firm.

2. From economic viewpoint we also fully share United Kingdom’s concern over effect of including in free trade area OEEC countries not now prepared accept obligations of free trade area. Inclusion such countries obviously inconsistent with GATT Article XXIV which envisages mutual benefits based on mutual obligations in order to achieve better utilization resources through competition. Same point was made even more forcibly during preparation report OEEC Working Party 17 in consideration operation escape clauses during transition period free trade area. Draft Annex to report dated December 6 (C/WP17/W(56)49) noted reciprocity, equilibrium and non-discrimination as “essential conditions for the proper functioning of a free trade area.” Para 17 same document pointed to necessity countries which decide to participate in free trade area recognizing very essence of the free trade area is that it will result in redistribution of production and greater specialization in industries. While this view substantially modified in final report WP we believe this concept of basis for membership free trade area was sound one. Accordingly, US would have marked reservations regarding accession to free trade area of OEEC underdeveloped countries on terms reported reftel. Believe such countries should make every effort accommodate themselves to free trade area arrangements especially view length proposed transitional period in order to make possible attainment benefits in which they desire share. Otherwise, result could be indefinite postponement or loss those benefits to all participating countries, e.g. through increased complexity arrangement and frictions resulting from inequality of trade liberalization measures.

3. Independent Sterling Area Countries: Re possible inclusion in free trade area of independent sterling area countries such as Australia, New Zealand, Federation Rhodesia and Nyasaland, reaction here similarly sharply adverse.

4. Inclusion DOT’s of Messina countries in common market: US position re European economic integration set forth refgram was based on awareness Messina countries might wish include their dependent overseas territories in common market and FYI that such inclusion on basis no more discriminatory against US than is inherent in a customs union did not appear portend at that time serious adverse impact US trade interests. See CFEP 539, pages 13–14 and 24, which was enclosure refgram.⁵ End FYI. Consequently, reported French-Belgian proposal comes as no surprise particularly view assurances Mollet to National Assembly that French overseas territories would be taken care of in common market treaty. US policy on inclusion DOT’s in common market would be conditioned by standards set forth CFEP policy statement and need to take account of political interest associating Morocco and Tunisia with West in face growing disassociation these areas from France.

5. British DOT’s: FYI. While we would be loath see such territories included in free trade area on basis described reftel, appreciate fact inclusion dependent overseas territories Messina countries in common market might create pressures within UK and precedent working for inclusion British dependent overseas territories in free trade area. Cannot however state at this time what US attitude would be toward such inclusion, but foresee real problem certain US agricultural products especially if self-governing territories included. End FYI.

Embassy should stress US awareness magnitude and political implications project which Messina and other OEEC countries have set for themselves and our desire not see that project weakened by attempts accommodate every economic interest and geographic area.

Dulles

1. Source: Department of State, Central Files, 440.002/1–257. Secret; Priority. Drafted by Blake and Jacob M. Myerson of RA and approved by Frank. Repeated for information to Ankara, Athens, Bonn, Brussels, Lisbon, Paris, Rome, The Hague, and Luxembourg (for the Embassy and Butterworth); Paris was instructed to pass the telegram to USRO.

2. Telegram 3547, January 2, reads in part as follows:

   “Embassy informed by UK officials Dec 31 that HMG faced with necessity making early decision on two important points relating free trade area which have emerged from recent discussions: namely, (1) whether admit colonies to free trade area and (2) treatment to be accorded under developed countries OEEC who wish join free trade area but insist they not able accept its obligations. Latter would be Portugal, Greece, Turkey, Ireland, Iceland.”

   The Embassy further stated that the British had indicated that a decision on both issues must be taken shortly and had asked for comments from the United States on the political and economic aspects of these issues. (Ibid.)

3. See footnote 4, Document 200.

4. Telegram 749, January 8, reported a conversation held the previous day with Baron Jean-Charles Snoy et d’Oppuers, Chief Belgian Delegate to the Intergovernmental Committee. The last paragraph of the telegram reads as follows:

   “While confident British firm in desire for free trade area Snoy unsure whether they ‘willing pay price’ but hopeful agreement possible on inclusion some specific agricultural products at beginning. In discussion free trade area Snoy reported Greek, Turkish, and Portuguese indications that should they be unable enter as seems likely they will lose advantages OEEC and may as consequence need to review their NATO membership.” (Department of State, Central Files, 840.05/1–857)

5. See Document 200.