Foreign Relations of the United States, 1958–1960, Western European Integration and Security, Canada, Volume VII, Part 1

103. Telegram From the Mission at the North Atlantic Treaty Organization and European Regional Organizations to the Department of State⁰

Paris, February 10, 1960, 5 p.m.

Polto 1562. For USEC. Pass Treasury. Economic Organization. As result meetings during last ten days of Group of Four, hearings of international organizations and informal bilateral—and at times spirited though friendly—conversations with representatives of various OEEC countries, we have arrived at following preliminary views.

A. Consultative Activities of OEC

It is clear that a draft charter for new organization, probably called Organization for Economic Cooperation (OEC), should be prepared by Group of Four. We feel that Preamble of January 28 Department draft charter¹ sets forth the aims in generally satisfactory manner. We feel that charter should emphasize major challenges facing prospective member countries. Approach, as set forth in draft Article 1 of Jan 28 draft charter, is designed to achieve this purpose.

It seems clear that two major types of activity will be: (1) consultation on basic economic and financial policies and (2) general policies regarding aid to less-developed countries. In effect, this means concerting basic policies in Western World not only for internal reasons but also in order to create an improved long-term relationship with vast less-developed areas of free world. Council of an organization so dedicated would, according to Vice-President Rey of EEC, be “economic conscience of free world”. Perhaps this over-dramatizes possibilities, but it is clear that high-level, frequent consultation by key policy officials of North American and European governments concerned is required on these problems. These major activities can be carried on almost entirely on a consultative basis. European countries will come to recognize that there is a very limited area of activity that could be called “decision making” in these broad policy fields.

Organizationally, in terms of [garble—draft charter?], it should not be difficult to provide for this broad consultative area. For economic and financial policy it is simply necessary to elevate activities of Economic Policy Committee of OEEC, with US and Canadian participation as full members, to position of major attention by Council. As Wyndham White pointed out in his presentation,² external commercial policy must of necessity be incuded in area for such consultation. Thus trade on a broad policy basis would be part of such consultation.

For aid to less-developed countries, a satisfactory arrangement should also not be difficult, including definition of relationship with Development Assistance Group. It is clear that all members of Council should be kept fully informed and be given a full and adequate opportunity to discuss in Council general policies of the Group. In addition to activities in the development assistance area, there are many present activities of OEEC relating to under-developed areas which should be carried forward in new OEC.

B. “Decision Making” Problems

While we would not expect have any difficulty with European countries on consultative aspect of these—the main significant policy areas—of OEC, we can expect problems in field of remaining activities regarding “decision making” responsibilities unless we interpret our position somewhat more flexibly. Starting with Dillon speech on Jan 12,³ we have attempted to resolve this issue by stating that we would refrain from participation in certain primarily European activities (such as EMA, Nuclear Energy Agency, etc.) in order that these organizations could continue unchanged with their “decision” authority. Unfortunately our statement of position in this connection has resulted in some doubts.

Every European spokesman who has mentioned this subject has stressed desirability of reducing to an absolute minimum any difference in nature of membership of Canada and US on one hand and European countries on other. This position has been supported by other members of Group of Four in terms of desirability of creating a unified and cohesive OEC. Other OEEC countries (Swiss, Swedes, Irish, Italians, Norwegians) have raised informally what they feel is a more fundamental issue. Amongst this Group there are many who have been suspicious, or at least are skeptical, concerning motivation of American proposals. They tend to feel that US has accepted an alleged French position of advocacy for a weak OEC. They feel objective is to do away with a strong “decision making” OEEC and to replace it by mere watered-down consultative group, thus presumably leaving decisions to major powers acting independently of OEC. Our emphasis on consultative aspect of new organization and our indication of reluctance to participate in “decision making” body has fed these fears. We feel in talks here that we have made some progress in putting this issue into better perspective and believe today that legitimate concern of certain European countries has been considerably reduced. Nevertheless some concern remains on this issue and, as indicated above, others feel in principle that it is highly undesirable to set up a new organization with widely different types of membership and participation.

Accordingly we have asked for and received an OEEC analysis of so-called “decision making” powers of OEEC. As Department is well aware, decisions in OEEC are taken on basis of unanimity with provisions in Article XIV that a noninterested country may disassociate itself entirely from a particular issue without responsibility and without in any way hindering progress of others. There is also the intermediate type of Council action fairly frequently used, which takes the form of a “recommendation” used when one or more members are unwilling to adopt a decision binding them to implementation but are not opposed in principle to the organization taking position concerning subject in question. Nevertheless, considerable myth of “decision making” activity has developed. Europeans have by and large been satisfied with OEEC and believe “decision making” powers an important aspect of success of organization. They would oppose vigorously dropping of all “decision making” responsibilities.

It occurred to us therefore that rather than reading ourselves completely out of all activities which involve “decision making” areas, we should attempt to break the “decision making” areas into two parts: (A) those in which US could participate, and (B) those which should proceed without US participation. We would hope to limit part (B) to those fields in which there are responsibilities that we would not wish to accept or where a reorganization designed to eliminate such features might itself be so disturbing as to be counter-productive (for example our feeling is Articles 13 and 11 of EMA fall into this category). However, we believe there may be other areas where we could safely participate in a so-called “decision making” activity provided there is clear provision for recourse to “not interested” formula and other escape provisions as appropriate. If we can find a way to accept current OEEC formula for at least certain areas (EPA?) we could avoid creation of an unfortunate and perhaps unnecessary distinction between ourselves and other members. We believe European countries would understand why we might not wish to participate in certain activities, but we feel a rigid rejection of any participation in activities beyond those labeled consultative would be a political and psychological mistake.

We will make more specific recommendations shortly on “decision making” as between (A) and (B) above. In meantime, I hope that Wash position will remain flexible on this point. There is a useful comparison in NATO where power of decision is essential and has not proved embarrassing.

C. Public Relations Aspects

Part B. above is related to another more general point, namely that significance and effectiveness of OEC will be conditioned by manner of its public presentation during next few weeks and months. It is essential that picture emerge of determination Western World (i.e., Atlantic countries) in a dignified association with other parts of free world, to approach cooperatively major problems of present and immediate future. We shall be developing views as we proceed on this question of presentation as we must do our best to have people concentrate on basic objectives rather than specific difficulties.

D. Trade

As indicated above trade must be included in consultation of general economic and financial policies. In addition it is evident that there are some trade developments of a regional nature which are transitional toward a wider multilateral development. Clearly Charter should provide an appropriate frame for such matters. We are as yet unclear as to how code of liberalization should be handled. We feel that resolution of this issue will not become clear until after Trade Committee has made some progress on its substantive work. In any event, we feel that responsibility of Group of Four is primarily on Charter itself and in this connection that Charter must be broad enough to be permissive regarding trade. We would hope that general orientation of Charter would make clear that such matters should be handled, if originally on a regional basis, with a basic orientation towards multilateral approach.

E. European Communities

We feel it essential to find a formula which will permit three European organizations to play an effective role, when appropriate, as a unit representing the six nations. At the same time it is essential that we not put forward a proposal designed to force such a development. The three organizations are asking for membership on OEC Council. We feel that instead they should be offered a participating status which would allow their representatives to discuss issues before Council. They would not however have voting rights except in cases where six governments decide to delegate their voting rights in Council to one of three communities. This delegation would presumably be in special cases where treaties forming communities authorized organizations to speak on behalf of community. In cases of conflict of interpretation, Council would of course have to support member countries, any one of whom could veto use of one of organizations. In event that issue under consideration involved possible recommendation of Council, the recommendation being passed upon by qualified majority, we would think it appropriate that organization would cast ballot counting as six votes. If it were matter of decision by unanimity, number of votes would of course be of no importance. We assume in addition that communities as appropriate would have participating status, same as on Council, on subordinate organizations as for example EURATOM on the Nuclear Energy Agency.

F. Secretary General

We feel provisionally that Secretary General should also be president of ministerial and permrep Council but that sub-committees should be chaired by nations on a rotating basis. We feel this would give increased stature to Secretary General and at same time encourage appointment of high-level national officials to chair the working [garble—committees?].

G. Other Comments

Country presentations beginning today. In course of these presentations we may of course modify above tentative conclusions. We feel however that at least general lines are now sufficiently clear to allow some firming up on basic approach. We would hope that during meetings with Canadians in Wash on Feb 16 and 17 agreement could be reached on (1) high level consultation on two fields mentioned above, (2) necessity to leave at least some areas in OEC with “decision making” responsibilities subject to all well-known escape clauses. We would also hope that we could settle on role of Secretary General and perhaps on some general views regarding the participation of European communities.

We plan prepare comments on Jan 28 draft Charter to reach Washington by February 15.⁴

Burgess

0. Source: Department of State, Central Files, 374.800/2–1060. Limited Official Use. Repeated to the OEEC capitals, Tokyo, and Geneva for the U.S. Delegation.
1. Not found.
2. Eric Wyndham White spoke to the Group of Four on February 2. A summary of his statement is in Polto A–445 from Paris, February 6. (Department of State, Central Files, 374.800/2–260)
3. For text of Dillon’s speech, see Department of State Bulletin, February 1, 1960, pp. 140–145.
4. In Polto 1576, February 12, Burgess reported that Tuthill would return to Washington on February 13 for discussions on this matter. (Department of State, Central Files, 374.800/2–1260)