30. Telegram From the Embassy in France to the Department of State0

285. Reference Department telegram circular 58, July 16.1 Tuthill advised Wormser today along lines of reference telegram and stated that Ambassador Houghton requested this information be passed on to Couve de Murville.

Wormser stated that French were thoroughly opposed to 10 per cent tariff reduction limited to OEEC. This would imply agreement on objectives free trade area. Wormser stated that French were only interested in reaching agreement after detailed discussion all significant aspects of problem and are not interested in a general agreement. Wormser stated that British have not altered their position “one iota” on basic matters since fall of 1957.

French favor 10 per cent unilateral reduction (to include agricultural as well as non-agricultural products) for all GATT and other countries with whom French have trade treaties with MFN clause. They favor this for two reasons: (A) It involves no commitment regarding free trade area but allows sufficient time (2 years) to negotiate FTA, and (B) it is consistent with GATT.

Wormser explained proposal as follows: Common Market countries would, in general, reduce by 10 per cent external tariffs across the board. There might be however an exception regarding tariffs which are already 10 per cent or under. This would remove anomalous situation of BENELUX reducing certain tariffs from say 5 to 4-1/2 per cent when, [Page 55] under common market averaging formula, tariffs on such items would ultimately be increased. (In cases where arithmetical average would be above the figure resulting from 10 per cent reduction, full 10 per cent reductions would nevertheless be affected, thus making application external rate below the arithmetical average.)

As for list G items, Wormser recognizes that it would not be possible to determine what the agreed common market external tariff would be, but feels that France can take the risk (probably small) that in some cases the agreed external tariff will be higher than the rate resulting from the 10 per cent reduction. Wormser does not see how this risk can be avoided if any general formula is to be applied.

Wormser is aware that the British may raise the question of quantitative restrictions but he feels that this is an unreal issue. Within GATT the British have maintained that quantitative restrictions should only be retained pursuant to article 12 of GATT, i.e., event of balance of payments difficulties. Recent GATT session2 British, together with US, championed this position, especially as related to German QRs against agricultural products. Accordingly it would seem too inconsistent for British to insist upon an extension of liberalization of QRs to OEEC area in absence of an agreement on free trade area, unless same extended all GATT countries.

In any event, Wormser pointed out that QRs represent problem primarily for France. France has maintained that it will not agree to any formula relating to other OEEC countries which will increase its difficulties in implementing Common Market. However, France might be prepared to spread among the whole seventeen the quota increases she is obligated to grant the Six, if everyone agreeable. (For example, if France gets 100 units product Y from Six, and 150 units from eleven, she might generalize her 20 increase so that total OEEC quota would be 270.) French do not yet know whether they will ask for relief in whole or in part from QR provisions of Rome treaty. This decision will not be made until late in year in light of conditions then prevailing. As indicated above, Wormser convinced British cannot push this issue too far because of inconsistencies in their own commercial policy.

Before leaving this subject, Tuthill asked if EEC had taken a position re French insistence need of Germany to retain QRs for agricultural products in order implement agricultural provisions of Common Market. Wormser replied that he felt EEC has “implicitly” supported French (and German) position but couldn’t be specific.

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As might be expected Wormser regards apprehensively negotiations of next few days. He asked whether under current US trade legislation it would be possible for United States Government to grant some tariff reductions to Six in event of application of tariff formula outlined above. Wormser recognized that no 10 percent general reduction would be possible but asked if at least some more limited action might be possible. Tuthill recalled earlier conversations in which Embassy indicated inability of US to reciprocate to 10 percent tariff reduction. However offered to inquire of Washington whether there was any action which might be possible in US in response to initiative of Six which might be helpful in terms of public opinion in France. Wormser had pointed out that French proposal might bring adverse reactions amongst French industrialists and stated that if the US could take any action favorable to French trade this would be helpful.

Wormser asked if it might be possible to discuss this matter informally with Dillon during his stay in Paris next week.3 We offered to advise Dillon of this inquiry.

  1. Source: Department of State, Central Files, 440.002/7–2158. Confidential. Transmitted in two sections. Repeated to Bonn, London, Brussels, The Hague, Rome, and Luxembourg.
  2. See footnote 2, Document 29.
  3. Presumably a reference to the GATT Intersessional Committee at Geneva April 14-May 2. Actions taken at this meeting are summarized in Current Economic Developments, May 13, 1958, pp. 8–13. (Department of State, Current Economic Developments: Lot 70 D467)
  4. Dillon was scheduled to attend the OEEC Ministerial Meeting in Paris the last week in July; see Documents 31 and 33.