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

83. Memorandum From the Assistant Secretary of State for Economic Affairs (Waugh) to the Under Secretary of State (Hoover)²

Washington , February 14, 1955 .

SUBJECT

• Dodge Memorandum³ on Cartel Aspects in the Schuman Plan⁴

Problem

To define the Department’s position in response to a memorandum from Mr. Dodge (Tab B) describing report cartel developments in the European Coal and Steel Community (CSC) and raising the question whether, if these reports are substantially correct, U.S. policy concerning the Community should be subject to further consideration.

Discussion

In summary, the reports cited by Mr. Dodge in his memorandum of February 5 are that the steel producers of the Community now openly fix export prices and allocate markets; that the U.K. and the High Authority (Executive branch) of the Community have entered an accord which may have price stability as a primary purpose; that scrap for the Community is purchased centrally, with the High Authority designating the source of supply, the recipient companies and the tonnages to be taken; and that the U.S. by its loan of $100 million to the CSC ⁵ may have indirectly approved restrictive policies and practices of the CSC, which are “contrary to the laws and practices that govern American industry”.

Specific detailed comments on the points raised by Mr. Dodge may be found at Tab C.⁶

It is apparent that various restrictive arrangements, including the steel export cartel, exist among the industries of the CSC, and that action by the High Authority to promote competitive conditions is of vital importance to the success of the Community. It was not expected, on the other hand, that the establishment of the CSC would quickly lead to the abolition of all such arrangements in view of the complexity of the problem; the long history of such arrangements in Europe; the limits on the High Authority’s powers for dealing with restrictive arrangements outside the Community; the pioneering character in Europe of the High Authority’s efforts; and the long and careful preparation required in undertaking an anti-trust action, as shown by U.S. experience. Consequently, although progress is slow, to some extent this is inevitable in the circumstances.

Some steps have already been taken by the High Authority against restrictive arrangements and we have been assured that further measures are now in preparation. We consider that there are reasonably good prospects for further progress by the Community in combating such arrangements.

Recommendations

(1) That the State Department take the following position in response to Mr. Dodge’s memorandum:

(a) That the United States should continue its strong support for the High Authority and the Community especially in view of the far-reaching significance of the CSC as a major step toward European unity;

(b) That the United States should continue to take every opportunity to encourage the High Authority to use its powers firmly and expeditiously in order to develop a competitive common market for coal and steel; and

(c) That the facts currently available to the Department concerning the points raised by Mr. Dodge, in conjunction with the steps which the High Authority has taken and is anticipating in implementing the anti-cartel provisions in the CSC Treaty, do not warrant a reconsideration at this time of U.S. policy towards the Coal and Steel Community.

(2) If the Council on Foreign Economic Policy desires further information on Mr. Dodge’s points, Tab C should be tabled. In addition, if amplification of any of these points is desired by the Council, the Department should offer to supply it promptly.

2. Source: Department of State, Central Files, 850.33/2–1455. Secret. Drafted by Roger C. Dixon, Chief of the International Business Practices Division (BP), Office of International Trade and Resources (ITR); Harvey J. Winter of BP; and Louis C. Boochever of the Office of European Regional Affairs (RA). Isaiah Frank, Deputy Director of ITR; E. Edward Scoll of the Office of International Financial and Development Affairs (OFD); and Walworth Barbour, Deputy Assistant Secretary of State for European Affairs (EUR), concurred.
3. This memorandum of February 5 by Joseph M. Dodge, Chairman of the Council on Foreign Economic Policy (CFEP), is not printed. (Ibid.)
4. On May 9, 1950, French Foreign Minister Robert Schuman outlined a set of proposals for the creation of a supranational authority or community in Europe. The so-called Schuman Plan evolved into the European Coal and Steel Community (ECSC), comprising France, the Federal Republic of Germany, Italy, and the Benelux countries (Belgium, the Netherlands, and Luxembourg).
5. This Export-Import Bank loan was concluded in April 1954.
6. Not printed.