26. Circular Telegram From the Department of State to Certain Diplomatic Missions0

33. For the Ambassador.

Dept becoming increasingly concerned possible repercussions for European economic cooperation of difficulties in Free Trade Area negotiations. Crucial phase negotiations may be approaching. Six scheduled reconsider matter about July 24. OEEC Intergovernmental Committee on FTA expected meet immediately thereafter with OEEC Ministerial Meeting before end month. If negotiations ultimately fail there would be risk disagreements could carry over into other fields.1 [Page 48] While we think unlikely irreparable split will develop at series meetings late July marked divergences could cause considerable difficulties and recriminations in OEEC. In addition to longer-term U.S. aims re FTA negotiations explained below, immediate problem is how assure some progress at these meetings or as minimum avoid open split at OEEC Ministerial.
While details complex Dept understands major problems preventing further progress negotiations at this time are:
French have not worked out agreed position with Common Market partners because have not yet taken basic political decision move ahead with negotiations;
UK has still not indicated sufficient willingness compromise on key issues. Agreed position for Six would seem necessary first step however before UK or other OEEC countries could be expected change present positions. Meanwhile impression received from various sources is that UK plans maintain maximum pressure for early decision.
Detailed statement US position FTA negotiations contained CA–8151,2 8152, 8153.3 Major elements as follows:
We attach major importance to achievement multilateral trading system which would be mutually acceptable to European states concerned and which will provide means associating other OEEC countries with Common Market of the Six.
In accordance US position of strong support six-country Communities believe important that any wider arrangements neither delay Common Market timetable nor interfere with cohesiveness its institutions.
In interest Europeans themselves and other countries arrangements should contribute expansion world trade.
Initiative in negotiations must come from Europeans but US prepared make above general views known as appropriate.
You should seek early opportunity informally convey Foreign Minister or at your discretion Chief of Govt or other appropriate official, US hope that countries directly concerned will be able find some means assuring continuance negotiations, reconciling differences and making early progress toward sound trading system to link others with Six. Suggest recall basic elements US position para three above which has been consistent since beginning FTA negotiations. Butterworth should discuss with Hallstein along same lines. Embassy London may wish see Heathcoat-Amory also since he is Chairman OEEC Council.
Should make clear that in raising matter with Govts concerned US not associating self with any particular plan nor endorsing position any country re specific issues. Rather as interested outside country our [Page 49] present concern is primarily broader issues including hope that FTA negotiations will lead to strengthening Europe and Atlantic Community by supplementing Common Market. To emphasize foregoing and especially in order avoid any implication US singling out French, should indicate that identical instructions sent US Ambassadors to UK, Six and US Rep European Communities.
Dept aware January 1, 1959 seen by some countries as deadline for some general agreement since Common Market tariff reductions scheduled begin then. Understand initial tariff reduction by Six not expected have significant trade impact other European countries and problem for latter essentially one of principle. Should indicate our attitude that most important consideration now is resumption negotiations in atmosphere patience and restraint and some progress toward reconciling differences. FYI—Dept recognizes presentations must be adapted local circumstances. May wish assure French that US appreciates fact France’s special economic problems require consideration in OEEC negotiations. End FYI.
FYI—Question may be raised re U.S. attitude toward possible interim FTA arrangements. Such arrangements in principle might include ten percent tariff reductions among all OEEC countries effective Jan 1. If matter raised suggest you indicate U.S. assumes any such arrangements would be drawn up bearing GATT provisions fully in mind and that naturally U.S. would have to reserve its attitude until it knew nature such arrangements. End FYI.
Appreciate your comments and recommendations following approaches.
  1. Source: Department of State, Central Files, 440.002/7–1258. Confidential. Drafted on July 10 by Myerson; cleared in EUR, EUR/RA, EUR/BNA, EUR/GER, EUR/WE, E, E/OT, and W; and signed for Dulles by Dillon. Sent to Bonn, Brussels, The Hague, Luxembourg for the Embassy and USEC, Paris with instructions to pass to USRO, Rome, and London.
  2. At this point in the source text, the following sentence was deleted before transmission: “Failure could also create serious strains among Six since all Common Market countries except France seen favor moving ahead now toward some compromise arrangements.”
  3. Document 12.
  4. See footnote 2, Document 12.