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

59. Memorandum of Conversation⁰

June 9, 1959, 4:30 p.m.

SUBJECT

• Meeting with European Community Presidents—General Questions Pertaining to European Integration; the European Economic Community; Economic Development of Underdeveloped areas¹

PARTICIPANTS

• [See Attached List]²

1. The Acting Secretary welcomed the three Presidents on behalf of the United States participants. He referred to the warm United States support for the objectives of European economic integration and political unity. He also summarized briefly some of the reasons underlying our support; for example, our hope for continued reconciliation between Germany, France and the other Community countries.

2. Dr. Hallstein expressed his thanks for the United States invitation to visit Washington and for the hospitality shown. He said that the EEC Commission attaches great importance to close cooperation with the United States and establishment of relations on a solid basis. He then summarized the general status of the Communities and said that by any realistic estimate the situation was good. The Community institutions are working well and in a cooperative spirit. Members of the Commission enjoy a frank and intimate relationship and the Commissions are genuinely independent of the national governments. Relations between the Commission and the Parliamentary Assembly are also good. Dr. Hallstein noted that the Parliamentary Assembly is not yet fully developed since its members are still designated by national parliaments. He desired to see a strengthening of the dynamic political elements in the assembly and noted that a working group has been established to study the possibility of direct elections for assembly deputies.

3. Dr. Hallstein said that relations between Community institutions and the Member Governments were also good although there has been some cooling off of support for “supranationalism” as an abstract concept. In his view, however, the important thing is that the Member Governments are firmly committed to carrying out the European treaties and that without exception they are living up to their obligations.

4. Dr. Hallstein then turned to policy problems facing the European Economic Community. He said that the routine work of implementing the Treaty was exceedingly difficult from a technical standpoint but that things were moving along. The paramount policy problem he foresaw was the necessity for economic expansion within the Community. In his view the success of the entire undertaking depends on how fast meaning can be given to the Community’s growth potential both in industry and in agriculture. A sound investment policy is needed in the Community. He emphasized that he was not a proponent of a planned economy, but he thought that it was necessary for the Commission to follow developments very closely with a view to giving advice and coordinating efforts of the Member States. Some of the areas demanding attention were: free movement of capital within the Community; business cycle policy; transport; and energy. Agriculture was an especially difficult problem. He said that he thought national ministers of agriculture would be delighted to transfer their problems to the Community. The Commission hoped to have a plan for common agricultural policies available by the end of the year, as a minimum something to serve as a basis for discussion with the Member States.

5. Dr. Hallstein turned to the Community’s external relations, touching first on relations with the other Western European countries. He referred to the Commission’s memorandum of last March on the problem of European economic association.³ He said that the Commission feels very strongly that despite preoccupations with the problems of the other OEEC countries, the Community’s role in over-all world trade must be kept in the forefront. He said that opinion in some of the Member countries was unfavorable to the Commission’s report due to a belief that it didn’t go far enough in the direction of a European solution. The Commission felt that it had to proceed carefully in order to avoid any split within the Community. Time was needed so that non-Member countries would come to realize that their fears of the Common Market were exaggerated. In fact, he said, recent data showed that exports from the Eleven to the Six were rising faster than the exports from the Six to the Eleven.

6. As for relations with the rest of the world, Dr. Hallstein said the Commission believes firmly in the liberal approach to international trade. The Commission took a vigorous line in favor of the Dillon proposals for new GATT tariff negotiations and now looks forward to positive results from the negotiations. The Commission was making every effort to speed up completion of the common external tariff including the List G items. He asked whether Mr. Dillon had any questions.

7. The Acting Secretary said that we had noted the great interest of business enterprises in the Community in making various kinds of arrangements to take advantage of the potential of the Common Market. There was also great interest on the part of the United States firms. We hoped that with a greater market potential in Western Europe, the result would be expanded production, lower costs, and increased efficiency. We wondered, however, whether the Commission was studying the new agreements among European Community enterprises from the point of view of the Treaty’s anti-trust provisions. Dr. Hallstein said that thus far the Commission has not found it necessary to intervene directly. In fact, the speed with which private enterprises in the Community are moving to adapt to the new situation is of great significance and is an encouraging omen for the future. Thus far, he saw no reason to fear that private business agreements would violate the Treaty’s anti-trust provisions. He noted that only three of the Member countries have as yet adopted legislation in this field. The Commission was consulting with Member Governments about the necessary legislation and the Community’s implementing regulations in the anti-trust field.

8. The Acting Secretary said that we would appreciate receiving any views Dr. Hallstein might have on the possibilities for closer fiscal and monetary harmonization within the Community. Dr. Hallstein said that this was an important problem for the future success of the Community. The Treaty contains a general mandate for the Member States to harmonize their policies in this field, and it confers on the Commission a responsibility for coordination. The Commission is trying to encourage movement toward closer coordination by periodically bringing together national Ministers of Finance for informal working sessions.

9. Mr. Dillon said that we appreciated the efforts of the Commission to speed up preparation of the common external tariff. In fact, the end of this year would appear to be the latest practicable date for receipt of the tariff if the United States was to have sufficient opportunity to study it and prepare for the GATT negotiations. With respect to Dr. Hallstein’s other comments, he said that he welcomed the Commission’s emphasis on a world-wide approach to trade policy problems and its recognition of the interests of all GATT countries in connection with the problem of European economic association. He noted that the United States believed strongly in the necessity for good economic relations between the Six and the Eleven, but that we would be concerned at the possibility of European preferential arrangements which would adversely affect the economic interests of non-European areas. He wondered whether Dr. Hallstein might have any views on the current discussions among seven European nations in Stockholm concerning a limited free trade area.

10. Dr. Hallstein said that he was very interested in the United States views on non-discrimination. Frankly, the Commission was faced with something of a dilemma. Following the breakdown of the negotiations in the Maudling Committee,⁴ it appeared that it would be possible to satisfy some of the European countries only by departing from GATT rules. The Commission had been well aware all along of United States views regarding the necessity to adhere to GATT standards. The question was a delicate one within the Community. There were strong tendencies in certain quarters, based on sentimental grounds, for some kind of a larger European solution. Studies by the Commission had shown that the Community’s economic relationships with some non-European countries were of even greater significance than their relationships with some of their European partners. On the other hand, there were cases like Austria which has a large proportion of its trade with the Community. Dr. Hallstein said he was personally convinced that Austria would “join the Community tomorrow” if not for the Russians. There is a firmly held idea in many quarters that Europe consists of more than the Six and that any arrangements should include all of the countries in the Council of Europe and the OEEC. There is strong pressure on Community institutions in this regard. The Commission has to take account of these political pressures. At the last GATT session,⁵ the leader of the United States delegation had expressed very clearly United States views on the importance of avoiding a discriminatory regime in Europe. Anything the United States could do along these lines to follow up in bilateral discussions with the OEEC countries would be of considerable assistance to the Community in withstanding pressures for preferential arrangements. Mr. Dillon said that adoption of liberal trade policies by the Community and a general lowering of trade barriers through the GATT might serve to ease some of the difficulties of the Eleven and serve to ease tensions which have developed.

11. Dr. Hallstein said that the Commission was not informed in detail on the Stockholm discussions. The Commission was following this matter with interest but would not wish to express concern or to be critical of the Stockholm group. He did question whether such an association would solve any problems for the Seven. It might mean a considerable commercial sacrifice for the British. The Danes and Austrians would have special problems because a large volume of their trade is with the Six. To sum up, he said that the Commission was adopting a wait-and-see attitude toward this new development.

12. Dr. Hallstein said that, although there was insufficient time to do more than mention the subject, he was anxious to touch on the question of assistance for underdeveloped areas. This is one of the most pressing problems of the age. As he saw it, the European Community had a double responsibility: There was first, the problem of the associated African territories where the French were making a considerable effort. He did not believe this was the end of the Community’s responsibility, however, because the problem is a global one. The Community was beginning to study the problem. Dr. Hallstein concluded by saying that the United States had carried the burden alone in the past, and that he now hoped the Community could increasingly assume its responsibility in cooperation with the United States.

13. The Acting Secretary said that the underdeveloped areas problem was, indeed, a matter of paramount importance. As Europe’s economic strength grew, he believed it both necessary and appropriate that the European share in economic assistance efforts should increase. He thought that the United States might be approaching the limit of the resources it could make available for this task even though the needs of the underdeveloped areas were great. He appreciated having Dr. Hallstein’s views and thought that in due course the United States and the Community would have to work toward greater coordination of their efforts in this field.

0. Source: Department of State, Central Files, 840.00/6–959. Official Use Only. Drafted by Myerson and approved by Brewster on June 29. The meeting was held at the Departmentof State. Separate memoranda of this conversation were prepared; see Documents 60 and 61.
1. The representatives of the EEC visited Washington June 9–12 for discussions to improve cooperation between the United States and the EEC.
2. Not printed. Brackets in the source text. Attending for the European Communities were Walter Hallstein, President of the Commission of the European Economic Community; Etienne Hirsch, President of the Commission of the European Atomic Energy Community; Paul Finet, President of the High Authority of the European Coal and Steel Community; and five other officials. Acting Secretary Dillon and Ambassador Butterworth headed the Department of State contingent of 14 officers. Eleven officials from other U.S. Government agencies also attended.
3. Reference is to the “Hallstein Report;” see Document 52.
4. See Document 39.
5. The 14th Session of the General Agreement on Tariffs and Trade opened at Geneva on May 11.