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  4. Document 90

90. Memorandum From the Assistant Secretary of State for Economic Affairs (Waugh) to the Under Secretary of State (Hoover)1

Washington , April 18, 1955 .

SUBJECT

  • Dodge Memorandum on Cartel Aspects in the European Coal and Steel Community

Problem

To define the Department’s position with respect to CFEP 520/3, as revised,2 (Tab C) setting forth a position which might be taken by the Council on Foreign Economic Policy toward the European Coal and Steel Community (CSC).

Discussion

In a memorandum of February 53 (Tab D) Mr. Dodge described four reported cartel developments in the CSC and raised the question whether, if these reports were correct, United States policy concerning the Community should be subject to further consideration.

The Department’s comments4 (Tab E) stressed the following points: (1) The High Authority has made some progress in enforcing the anti-cartel provisions of the CSC Treaty and there are reasonably good prospects for substantial further progress. While its pace appears slow, this is inevitable in the light of the complexity of the problem, the length of time entailed in preparation of antitrust actions, the pioneering character of these steps in Europe, and the consequent political and social resistances which are met. (2) The problem cannot be considered apart from the general cartel problem in Europe. (3) The CSC is of central importance as a step toward European integration.

The Department’s comments concluded that (1) the United States should continue its strong support for the CSC; (2) the United States should continue to encourage the High Authority to use its powers to develop a competitive market for coal and steel; and (3) the facts currently available do not warrant a reconsideration of United States policy toward the CSC at this time.

Recommendations 1 and 2 of CFEP 520/3 (Tab C) revised are consistent with the Department’s position. Recommendation 3 of CFEP 520/3 revised suggests a further study be made by the Department [Page 281] of the CSC cartel problem with a view to making recommendations for further United States action concerning the development of a competitive market in coal and steel. We believe that such a study may be useful as a guide for future United States action in this field.

The “discussion” section of CFEP 520/3 contains certain points with which the Department takes issue. We have prepared a brief paper of comments on these points which we believe should be made a matter of record at the CFEP meeting.

Recommendations

1.
That the following points be made with respect to CFEP 520/3 revised:
a)
The Department strongly endorses Recommendations 1 and 2 and has consistently followed the course advocated in Recommendation 2.
b)
The Department believes the study proposed in Recommendation 3 would be useful and could serve as a guide for additional United States actions in line with Recommendation 2 of CFEP 520/3.
c)
The Department would like to place in the records a brief paper of comments on the “discussion” section of CFEP 520/3 (Tab F).
2.
That, if a broad substantive discussion of the CSC cartel problem develops, and particularly if members of the Council express the view that United States policy toward the broad purposes of the CSC should be reassessed in light of its handling of cartel problems, the following position be taken:
a)
It is premature to attempt to draw conclusions on the effectiveness of the High Authority’s actions against restrictive practices. The High Authority, in dealing with restrictive practices, is faced with very complex problems the solutions to which are inherently time-consuming, as demonstrated by United States experience. The progress being made is reasonably encouraging, particularly in the light of the pioneering nature in Europe of the Treaty’s anti-cartel provisions.
b)
The best present policy to pursue and the one which will achieve the greatest progress toward the development of a competitive economy in the Community is helpful encouragement to the High Authority’s efforts in this field.
c)
Any indication of a weakening of United States support for the CSC at this time could have extremely prejudicial effects on current developments in the Community and in the general area of European integration.
  1. Source: Department of State, E–CFEP Files: Lot 61 D 282A, CFEP 520. Secret. Drafted by Winter, Dixon, and Boochever.↩
  2. Document 86.↩
  3. Not printed, but see Document 83.↩
  4. Document 84.↩