94. Letter From the Under Secretary of Agriculture (Morse) to the Under Secretary of State (Dillon)0
Dear Mr. Dillon: We have followed with much interest your activity in recent months in spearheading the U.S. drive for trade liberalization. Your efforts are especially appreciated in the Department because Agriculture’s stake in the foreign market is important. Having in mind the informal January 14 meeting in Paris on economic problems, we take this opportunity of outlining United States Department of Agriculture views in the hope that they might prove useful to you if an opportunity is presented to further our specific trade policy objectives.
As you know, American agriculture has been a strong supporter of the trade agreements program, despite the continued existence of numerous barriers to trade in farm products. This support has been based largely on assurances that most of these barriers were of a temporary nature and, under the GATT, would disappear when postwar dollar shortages were relieved. Now that this position has been reached in many countries, we are most anxious that exports of agricultural commodities share fully in the advantages of freer, nondiscriminatory trade. If this promise of our trade agreements program is not borne out by performance, we can expect a growing reaction in the form of demands for increased protection of agriculture at home that will be difficult to counter.
Widespread international discussion of trade liberalization in the light of improved economic conditions has served to re-define the issue for many important farm products. Despite public assurances to the contrary by responsible spokesmen, it is becoming increasingly evident that trade restrictions on farm products from the dollar area, formerly justified by balance-of-payments difficulties, actually stem from deep-rooted agricultural protectionism and from national policies of bilateral trade which are not consistent with the spirit and objectives of GATT.
West Germany’s reluctance to accelerate its program of liberalization is an outstanding case in point under the GATT. With Article XII no longer applicable, German representatives have been outspoken in their determination to take shelter in plans for a “separate code for agriculture” as, indeed, is also provided (and now being implemented in various plans for regional integration). Other examples of failure to include important agricultural commodities in recently announced liberalization [Page 225] moves are afforded by France, Italy, Austria, and Japan. Agricultural commodities are conspicuous by their absence from lists of newly liberalized products.
The tendency has been noted in some quarters to suggest that the United States cannot actively pursue the subject of agricultural protectionism because we, ourselves, are vulnerable. We should not accept this attitude. In your statement to Ministers at the recent GATT session in Tokyo,1 you pointed out that import restrictions on agricultural commodities in the United States represented only a small percentage of our total agricultural imports. In the same statement, you also recalled the strenuous efforts which have been made to effect necessary adjustments in our domestic farm programs. Progress in this direction has been notable. Finally, the trade benefits we now seek have been bought and paid for by previous concessions and undertakings in the GATT.
Agricultural protectionism is a matter of degree, and that degree is admittedly difficult to measure. But it is not difficult to demonstrate that restriction of agricultural imports into the U.S. has been characterized by judicious use of carefully defined legislative authority. We seek no more than equal treatment from our trading partners.
Another matter of grave concern to the Department is the draft of proposals for EEC Common Agricultural Policy.2 You will recall that the original public statement of the United States position on the Common Market3 welcomed its development in the light of “... our longstanding devotion to progress towards freer, nondiscriminatory, multilateral trade....”4 The specific proposals now being considered for agriculture in the area are pointed in the opposite direction.
Up to now we have sought comfort from assurances that the generalities dealing with agriculture in the Rome Treaty would be translated into “liberal” or “outward-looking” policies. The draft proposals now in hand for major groups of agricultural commodities, however, seem to combine the restrictive systems now in effect in individual countries by simply adding all into one “common policy” for the area. In most cases, the “lowest common denominator” is found in the most restrictive system. Thus, for wheat and feed grains, for example, we find the essentials of the tightly controlled West German system imposed on the relatively liberal policies of the Netherlands. Add to this the significant tariff increases (as measured in terms of U.S. trade—not arithmetic averages) proposed for many agricultural commodities in List F, and it is difficult [Page 226] to see how the level of protection will not be substantially increased. The extent to which specific provisions of the agricultural policy will meet the test of GATT remains to be seen. Developments thus far, however, are not reassuring to the agricultural interests of third countries in general, and of the United States in particular, whatever the political advantages might be.
Finally, we are deeply concerned about the additional problems that are being created by the fact that countries outside the Common Market are seeking bilateral accommodation with countries inside in order to lessen the impact upon them of the preferential regime that is beginning to take shape within the Common Market area. This fear, of course, also applies to any possible deals that might be in the offing as between the Common Market as such and the Outer Seven as such.
The foregoing views are brought to your attention for such use as you may be able to make of them in your discussions. We wish you well in your quest for further trade liberalization and seek to enjoy its benefits. Only in this way can a reciprocal trade program have real meaning for American agriculture.5
- Source: Department of State, EUR/RPE Files: Lot 65 D 265, Agriculture. No classification marking.↩
- For text, see Department of State Bulletin, November 23, 1959, pp. 739–742.↩
- Not found.↩
- For text, see Department of State Bulletin, February 2, 1957, p. 182.↩
- Ellipses in the source text.↩
- Beale replied to Morse’s letter on January 22. His reply stressed the commitment of the Department of State to the liberalization of agricultural tariffs by the EEC. (Department of State, EUR/RPE Files: Lot 65 D 265, Agriculture)↩
- Printed from a copy that bears this typed signature.↩