242. Memorandum of a Conversation, Department of State, Washington, September 26, 19571
SUBJECT
- Discussion with Sir David Eccles on the Common Market and Free Trade Area
PARTICIPANTS
- Mr. Douglas Dillon—Deputy Under Secretary for Economic Affairs
- Mr. John A. Birch—TAD
- Sir David Eccles—President, British Board of Trade
- Mr. LP. Garran—Commercial Minister, British Embassy
Sir David Eccles and Mr. Garran called on Mr. Dillon to discuss informally certain issues relating to the Common Market and Free Trade Area. The following broadly summarizes the views expressed by Sir David in this connection:
[Page 563]GATT and the Common Market
Mr. Dillon emphasized our interest in supporting the development of the Common Market and mentioned the problem of finding a suitable way of relating the Common Market to GATT principles in order to prevent the creation of an inward-looking, protectionist trading area in Western Europe. He mentioned some of the difficulties involved in getting the Six to agree to a waiver under GATT (as they apparently feel there is nothing to be waived). Sir David felt that it might be possible for some form of “watch” committee to be formed within GATT to ensure that the Common Market develops in consonance with GATT principles. He suggested the desirability of our exchanging views on these issues with UK representatives prior to the GATT Session and mentioned Cyril Sanders as the man with whom these questions should be discussed. Mr. Dillon agreed that this would be useful and desirable.
Sir David said that he understood that there were serious issues emerging within the Six over the “German problem” (including the mark-franc relationship) which could conceivably delay the entry into force of the Common Market and remarked (with some humor) that because of this perhaps the FTA would come into being in advance of the Common Market. The fact that Germany is not behaving like a “good creditor” loomed as a large problem, he felt, and any conviction on the part of the French that they could “deal” with Germany on the side in the hope that this would result in bringing other members of the Six into conformity was unrealistic. He was much impressed, he continued, with the view of a Portuguese “elder statesman” that complete Franco-German harmony “is too violent for history”.
Sir David doubted that the Six knew what was meant by an “organized agricultural market” and that in any event the UK could probably not participate in any such organized market because it would undoubtedly result in higher food prices to British consumers.
Free Trade Area
The UK is very much in favor of a Free Trade Area but cannot participate in it if injury to the Commonwealth is likely to result. The Commonwealth is very worried indeed over the question of the possible inclusion of agricultural products, just as the Latin American countries are concerned over the possible adverse effects of the Common Market on their export trade. In response to Mr. Dillon’s question on timing, Sir David said that he thought that the FTA problem would ultimately have to go to the Prime Minister, possibly in November, and that the issues might be expected to be settled, one way or the other, by January 1958.
[Page 564][Here follows a brief discussion of matters unrelated to the Common Market and Free Trade Area.]
- Source: Department of State, Central Files, 440.002/9–2657. Confidential. Drafted by Birch.↩