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

50. Telegram From the Embassy in the United Kingdom to the Department of State⁰

London, February 25, 1959, 7 p.m.

4428. Luxembourg for Embassy and USEC. Paris for Embassy and USRO. Brussels for Embassy and USEC. Following summary meeting February 25 Embassy officers with Coulson and other UK officials re FTA developments:

1. Clear from Hallstein visit¹ no prospect in near future of acceptable long-term solution problem association Six and Eleven. Neither UK nor EEC able find European solution consistent with GATT provisions in view French refusal agree now to ultimate objective eliminating tariffs and quotas either in FTA or Customs Union. Some marginal possibilities tariff reduction in GATT framework over next 3–4 years and quota liberalization in OEEC but not sure enough scope in either context achieve satisfactory solution intra-European trade problem. Re further OEEC liberalization, Figgures (UK Treasury) argued need not involve a simultaneous OEEC exercise on dollar liberalization. Increased dollar discrimination could be avoided by individual countries acting unilaterally to liberalize dollar imports. (Comment: Figgures made similar remark in discussion with Hunter and Bean last Saturday, which suggests UK in seeking further OEEC liberalization concerned that tie-up with dollar liberalization may unduly limit scope.)

2. Coulson reported that meeting other Six plus Portugal at Oslo last week² reached substantial agreement (except perhaps Denmark) that hopeless continue seek FTA as long French not ready agree on ultimate objective. All other Six worried about being picked off singly by EEC and very eager to hang together. Agreed dangerous sit back and do nothing so possibility working out FTA of other Six or Seven given serious consideration. Strong feeling some other Six that their negotiating position would be improved if they were organized into an FTA. Assumed non-Six FTA would permit increased trade to offset loss to Common Market. While arguing real community of interest among non-Six and limited FTA among themselves would make economic sense, Coulson made clear UK considered such move primarily as means promoting European-wide arrangement. Indicated when decision made non-Six would move quickly and would have simpler plan with shorter transition period than EEC.

3. Other Six also discussed problems of EEC tariffs. Examination action by Six in generalizing tariff reductions on basis decision of December 3 revealed number factors which result in outside countries being at tariff disadvantage:

(A) Tariff cuts on list G items not extended to non-Six and this affects large portion of trade;

(B) Arithmetic average only worked out for about one half of common tariff and tariff reductions to outside countries limited to these items;

(C) Some of Six using legal tariffs as basis for reductions to non-Six but lower de facto tariffs for Six.

4. Other Six also discussed proposed GATT tariff negotiations and Coulson said unanimous in their opposition to apparent US position which appears coincide with that of Six, that all phases GATT treatment except EEC common tariff should be dealt with together. Although recognizing US has timing problem, UK particularly concerned that negotiations for compensation under paragraph 6 Article XXIV be kept separate from negotiations for new concessions. Figgures saw this problem as serious divergence between US and UK.

5. Coulson reported “some progress” in bilateral talks with French re modus vivendi.³UK negotiating team now in UK to report (apparently on terms of agreement) and will return to Paris next week. UK will not conclude with French until satisfied other interested non-Six have chance to negotiate similar agreements. French have accepted form of words to effect that others have been or would be given opportunity to work out agreement on “analogous basis”. Coulson said other Ten completely satisfied with course UK-French discussions and no suspicion of UK revealed at Oslo meeting.

Whitney

0. Source: Department of State, Central Files, 440.002/2–2559. Limited Official Use. Repeated to Bonn, The Hague, Rome, Copenhagen, Oslo, Stockholm, Bern, Vienna, Luxembourg, Paris, and Brussels.
1. Walter Hallstein, President of the Commission of the EEC, visited London on February 16.
2. February 21.
3. Talks between the French and British Governments took place on January 19 and February 18. Sir Paul Gore–Booth headed the British Delegation and Olivier Wormser headed the French negotiators.