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

213. Telegram From the Secretary of State to the Embassy in Belgium¹

Washington, January 26, 1957—1:14 p.m.

971. This is first of two telegrams on aspects common market developments which particularly trouble us and are basis for concern re position US will eventually be able take regarding the final arrangements particularly in relation GATT. Purpose these telegrams is: 1. Summarize our understanding present provisions on certain subjects; 2. Request clarification where necessary; 3. On assumption our understanding correct, provide instructions for immediate approaches. These approaches should be carried out soonest in view meeting Foreign Ministers of Messina countries at Brussels Jan. 25 on common market and apparently imminent finalization common market arrangements. Canadians planning similar approach.

This telegram deals with agriculture; following telegram² with QRs and Tariff questions.

1. Our understanding current status agricultural provisions (based primarily on Colux 111³) is following:

a. Messina countries would endeavor establish common agriculture policy by end transition period. Object this policy would be stabilization market for agricultural products, guarantee sources of supply and assurance equitable prices common market consumers.

b. Member states would be required eliminate discrimination against each other in application their price support programs. Thus, French could sell agricultural commodities in Germany under same price conditions as those maintained for German producers under German price support program. Evidently operation this system would be supplemented by quantitative restrictions against imports from non-member countries.

2. Recognize that creation real common market for agricultural products would imply need establish common agricultural policies among the Six by end transition period. To this extent, recognize that objective of provisions described para 1a above necessary part of common market arrangements. We are not yet clear, however, that these provisions are in fact designed make possible situation at end transition period in which agricultural commodities would circulate as freely within Six-country area as they now do within single country, and we would appreciate any possible clarification this point. If purpose “common agricultural policy” were only to permit maintenance autarchic national agricultural markets within Six countries for indefinite period, it would be difficult maintain that common market met GATT Article XXIV standard on coverage “substantially” all trade with area.

3. Re para 1a and 1b plan apparently would not require removal of all controls on intra-area trade during transitional period but would probably continue and may well intensify many such controls especially state trading as means securing preferential access for agricultural products of Messina countries in each other’s markets at expense third countries.

Re para 1b above, if effect proposed system should be increase present margin discrimination against outside countries to greater extent than is inherent in removal internal barriers within customs union, then provisions would be difficult reconcile with GATT requirement that barriers against outside should not on whole be higher or more restrictive than existing barriers. These provisions would be particularly difficult reconcile with GATT obligations in Article XI against quantitative restrictions and in Article XXIV relating barriers against outside countries if treaty should require member states to limit or exclude imports from third countries to extent necessary to permit absorption supplies from any common market producer at domestic support price of importing countries.

4. Prospect that agricultural provisions might create new discriminations against agricultural products of United States and other countries would create serious difficulties not only for United States but also for Six countries at time treaty comes before GATT for waiver, which they will undoubtedly have to seek. It seems clear that at that time common market arrangements will be strongly attacked by many countries outside Europe who will feel their interests injured. Acceptance common market and any necessary waiver will therefore depend to important extent on whether United States in position to give active support to these arrangements as we did in case CSC. United States would be bound to object in GATT if these arrangements in agriculture were such as to set up permanent discrimination beyond what is necessary create common market, and in addition held prospect material injury United States agricultural exports to Six countries. This would be unfortunate both from our and European point of view.

5. To supplement foregoing, following are objectionable features agricultural arrangements:

(a) Although supposedly designed specifically meet present French economic and political problems, arrangement apparently covers agriculture of Six countries and may make permanent and intensify non-tariff barriers.

(b) No limitation on operation of program either in terms of time, commodities, or quantities covered despite fact agriculture of Six countries would enjoy enlarged market and therefore should be able become more efficient and adjust production patterns in accordance global advantages, making possible progressive reduction price supports.

(c) Absence Six country program designed correct agricultural situation preferential arrangement designed to meet.

(d) Absence adequate safeguards assuring third countries, including United States, of continued opportunity develop Western European markets.

Re point (a) above, we not clear whether contemplated arrangement designed solve specific French agricultural problem, general French agricultural problem, or Six country agricultural problem. Missions should seek information this point in making approach.

Foregoing objectionable features agricultural arrangements appear indicate conflict with Point 4 CFEP policy statement on agriculture.⁴

6. For Paris: You should approach Marjolin⁵ urgently to discuss agricultural problem on very frank basis, drawing on above line of argument as required. Tuthill has participated in Washington discussions this cable and can provide more background. If Marjolin unavailable Paris next few days, suggest Tuthill might arrange see him in Brussels along with appropriate officer Embassy Brussels or CSC Mission.

7. For Brussels: As part of general approach of Spaak on common market issues, you should inform him of our approach to French and explain problem in terms paras 1 through 5 above.

8. Other action posts should also inform appropriate high level officials of our position at earliest opportunity and report reaction soonest.

Dulles

1. Source: Department of State, Central Files, 840.05/1–857. Confidential; Priority. Drafted by Blake and Cleveland; approved by Weiss. Also sent to Bonn, Luxembourg, Rome, Paris (priority), and The Hague, and repeated for information to London.
2. Telegram 972 Brussels, also January 26, not printed. (Ibid., 840.05/1–1957)
3. Colux 111, January 8, summarized the latest French proposal on agriculture. (Ibid., 840.05/1–857)
4. Reference is to Document 200.
5. Robert Marjolin, Economic Adviser to French Minister Pineau.