8. Circular Instruction From the Department of State to Certain Diplomatic Missions0

CA-7021. Paris pass Embassy. Polto 2193.1

Our understanding present situation in negotiations is that despite agreement on certain (mostly minor) issues and clarification of others, work of CIG since October meeting has not made substantial progress towards fundamental agreement on nature and scope of proposed Free Trade area. Principal reasons are British and French positions:
British Govt anxious obtain agreement on FTA but has not moved substantially from initial conception of FTA limited in essence to trade and closely related questions, and not involving any commitments (e.g. on Agriculture) which would substantially affect economic relations with Commonwealth.
Despite conciliatory statements majority of French have not really made up minds that any FTA at all is desirable. Basic reasons are 1) economic interests feel they have in Common Market bitten off as much competition as they can chew; 2) same interests feel that FTA falling much short of Common Market-type economic union does not present sufficient additional advantages to make up for economic disadvantages; and 3) FTA has no positive and overriding political objective and hence lacks essential feature which permitted French National Assembly accept Common Market Treaty despite economic reservations.
Other OEEC countries, both within and outside Common Market, appear fundamentally in favor some form of FTA; while they favor in varying degrees British or French conceptions they would probably be prepared make substantial compromises in order reach agreement.
In this situation seems clear there is little chance of early agreement on Treaty for FTA. Some danger that as recognition this situation [Page 15] grows, both sides may become impatient and negotiations could be broken off. British might be tempted to seek alternative (probably illusory) arrangements with Commonwealth, and possibly with Scandinavian countries, and Six to attempt reach bilateral deal with British on more restrictive basis than would be likely in multilateral FTA. We do not see these as necessarily immediate dangers but as contingencies to be avoided.
US objectives in connection FTA remain as stated in position paper for October Meeting summarized Topol 1019 Oct 10:2 a) to avoid delay in implementing Common Market Treaty; b) to promote creation multilateral framework for association of EEC with UK and other OEEC members which would be consistent with continuing objective expansion world-wide multilateral trade; c) to protect important US commercial policy interests in connection with development of FTA Treaty. We also concerned that breakdown of negotiations and scramble for more restrictive solutions could be harmful at time when entire US commercial policy under review by Congress in connection renewal TA program.
In present circumstances, our immediate objectives are a) to prevent negotiations from breaking down and to insure that discussions continue even if for present no substantial progress can be made on major issues; b) to do what we can to help create conditions for working out basic area agreement between British and Six on nature and scope of FTA which could make fruitful negotiations possible; this must be done, however, in manner which does not compromise essentially European nature of negotiations. Consistent with above objectives, we may of course wish as appropriate make clear informally to parties concerned our views on particular questions.
Believe key to French position lies in common action of Six, as others will tend mitigate extreme French positions. Such common action most likely be fruitful and constructive if based on preparation by Common Market Commission of a Six-country position which takes fully into account long-term interests of Common Market Area as a whole and is sufficiently flexible to permit effective negotiations. Encouraged to hear from Marjolin that Common Market Commission has already established group under Rey to study development such a position. Would assume that in order to be fruitful this process of developing Six-country position will have to proceed in light of or perhaps in conjunction with conversations between Commission and UK designed seek basis understanding on fundamental principles of proposed Free Trade Area. Only when such fundamental agreement has been reached does it [Page 16] seem probable that Paris negotiations can make much progress. Therefore principal US objective should be prevent negotiations from breaking down, and encourage UK and Six countries, latter acting as unit and under leadership Commission, to get together on fundamentals.
Above is for guidance and comment addressee posts. Specific guidance for action posts:
USRO’s primary goal consistent foregoing should be use good offices keep negotiations from breaking down. In this connection could be highly useful on unofficial basis and outside formal meetings to offer suggestions and compromises in effort bring parties together in manner consistent objectives stated para 3. Appearance of “taking sides” should, of course, be carefully avoided. Should also keep in mind that fundamental issues of nature and scope unlikely be resolved in meetings of seventeen in Paris but will depend on development common position of Six in conjunction conversations with British.
Butterworth should discreetly encourage Common Market Commission pursue attempt develop constructive common Six-country position as suggested para 5 above and discourage submission of negative French paper at March CIG session.3
  1. Source: Department of State, Central Files, 440.002/2–1358. Confidential. Drafted by Cleveland and cleared with EUR, EUR/RA, E, W, and EUR/BNA. Sent to Luxembourg and Paris and repeated to London, Brussels, Bonn, Rome, The Hague, Copenhagen, Reykjavik, Oslo, Lisbon, Athens, Ankara, Dublin, Stockholm, Bern, Vienna, and Ottawa.
  2. In Polto 2193, January 24, Burgess reported that some of the representatives on the CIG were becoming pessimistic about the negotiations for a Free Trade Area and believed the United States should more actively intervene in the negotiations. Burgess suggested that a “somewhat more active mediating role on certain occasions might be of considerable importance” and requested guidance from the Department of State. (ibid., 440.002/1–2458)

    The CIG was an Inter-Governmental Committee on the Establishment of a European Free Trade Area set up by the OEEC Council on October 17, 1957. For the Council’s resolution of October 17 creating the CIG and for the agenda submitted to the Council on October 30 by the Chairman of the CIG, Reginald Maudling of the United Kingdom, see Negotiations for a European Free Trade Area, pp. 48–59.

  3. Foreign Relations, 1955–1957, vol. IV, p. 564.
  4. The addressee posts all expressed general agreement with the substance of CA-7021, although Butterworth, in Colux 157 from Luxembourg, February 25, expressed certain reservations about the tactics and objectives outlined in the circular instruction and stated his particular concern that the United States, in pursuing its primary objective of preventing a breakdown of the FTA negotiations, might obscure the various qualifications and assumptions on which U.S. policy rested. (Department of State, Central Files, 440.002/2–2558) Other responses from the addressee posts are ibid., 440.002.