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

96. Memorandum of Conversation⁰

MC/1

Paris, January 11, 1960, 5 p.m.

Under Secretary Dillon’s Visit to Paris

January 11–16, 1960

PARTICIPANTS

• United States
  • The Under Secretary
  • Ambassador Burgess
  • Assistant Secretary of Treasury Upton
  • John Leddy
  • John Tuthill
• United Kingdom
  • Chancellor of the Exchequer Heathcoat-Amory
  • Sir Frank Lee
  • Sir Paul Gore-Booth

SUBJECT

• Reorganization of OEEC

The Chancellor opened the meeting by stating that HMG warmly welcomed the American initiative. He stated, however, that the British position would have to reflect the British role in (1) the Commonwealth, (2) the EFTA and (3) the OEEC. Mr. Amory asked about the Wisemen.¹ He stated that in general the small countries would be horrified if they were omitted from any “continuing body” or any body to replace the OEEC. This was particularly true of the Irish.

Mr. Dillon stated that the long range plan was to propose the reorganization of the OEEC in such a way as to allow the U.S. to participate as a full member. The U.S. did not, however, wish to interfere or to participate as a member in any of the purely European operations, such as the European Monetary Agreement, the atomic energy work, etc. These operations could continue as at present under the general umbrella of the OEEC.

Mr. Dillon realized that if the OEEC were to be reorganized, all of the twenty OEEC governments must participate in the reorganization. In this area, the “13 plus” group has only the role to make recommendations to the twenty governments. Mr. Dillon noted the concern of some of the small countries that the small study group might go too far. Accordingly, he had refined his proposal. He favored a meeting of the officials of the twenty governments “sometime in the Spring” to consider this task. In order to facilitate their work, they would need certain working documents. These could be prepared by the small working group. The documents could then be considered by the officials of the twenty governments and conclusions turned over to the Ministers to settle any remaining disagreements. He felt it might be less rigid if the working group reported to officials rather than directly to Ministers.

Mr. Amory stated that this was “a great advance” over the earlier form of the proposal.

Mr. Dillon stated that he hoped that the twenty governments on Thursday would approve the plan to explore the possibilities. He felt it important to have the approval of the twenty governments rather than that of the OEEC Council. He felt that the staff of the OEEC should not conduct the study although the small working group would of course use the staff as well as consult with the twenty governments.

Mr. Amory asked how would the small group be chosen. Mr. Dillon stated a hope that the group would be kept to 3—one from the EFTA, one from the EEC and one from the OEEC countries. As for the last, he hoped that an American would be selected. He felt that if one increased the number above 3, there would no longer be any firm limit to the size of the group.

Mr. Amory agreed that this group should be as small as possible. Mr. Dillon stated that it would mitigate the feeling of the opposition if it was clear that the group would simply report to officials. Mr. Dillon doubted if it would be possible to settle on names at the January 14 meeting.

Sir Frank Lee agreed with Mr. Dillon that it is much easier if the group can be kept to 3.

Sir Paul Gore-Booth stated that the problem of the non-NATO members was also less important if the report went directly to officials.

Mr. Dillon, in reply to a question from Sir Frank Lee, stated that the U.S. government planned to propose Ambassador Burgess as its nominee.

Sir Frank Lee stated that perhaps the EFTA meeting on January 12² could accept the proposal in principle. Sir Paul Gore-Booth stated that the EFTA countries might oppose a meeting of the twenty OEEC governments outside of the OEEC Council.

Mr. Amory stated that he agreed that one should not use the OEEC staff. He asked what would happen if some countries objected to the proposals.

Mr. Dillon stated that those agreeing could proceed with the understanding that the others could join later if they so desired.

Mr. Amory stated that the Swedes and Swiss were worried about the US proposals.³ Mr. Dillon agreed and stated that they seem to think that there is a scheme against the OEEC and in favor of the 6. He pointed out that the Italians believed there is a plot against the Six and a “sellout” to the British.⁴

Sir Frank Lee asked if the 13 plus group would continue.

Mr. Dillon replied in the negative as to the “Wisemen” operations. On the trade problems, however, the 13 plus group could continue although the US views are not entirely settled on this point. He felt, however, that it would probably be desirable. Mr. Amory agreed. Mr. Dillon stated that as the new organization would probably take approximately 18 months to build, arrangements should be made to “keep talking” during the interim.

Mr. Amory agreed that “somebody must deal with this.” (i.e. trade)

Mr. Dillon remarked that some members of the Six are reluctant to start talking on trade. Mr. Amory stated that there is a need for a “restricted group.” Twenty is too large and it is necessary to find a formula for a group subordinate to the Twenty. Responding to the suggestion of Mr. Amory, Mr. Dillon again stated the belief that a restricted group was necessary.

Mr. Dillon stated that he felt that it was also advisable to have a restricted group for development aid. This problem was not as pressing as trade. He felt that the countries who participate should be those who are making or will make a contribution over and above their Bank and IDA contribution.

Mr. Amory asked how far Mr. Dillon planned to press this program this week.

Mr. Dillon replied that the aid group should not interfere with the “more important” tasks and could be subordinate either to the 13 or the 20.

Mr. Amory stated that Mr. Dillon’s formula made it unnecessary for the 13 to specify which countries would participate. He hoped there was a way to get the main creditor countries together without “nominating” them.

Ambassador Burgess stated that this proposal would “muddy the waters.” The reorganization of the OEEC is itself a big hurdle.

Mr. Leddy stated that the U.S. government had received little opposition to this proposal from the various Embassies in Washington.

Sir Paul Gore-Booth stated that the Turks say they know about aid—being recipients—and therefore should participate.

Mr. Upton remarked that the OEEC is about to embark on broad studies in this field.

Sir Frank Lee suggested that if the atmosphere is good, an attempt should be made to set up the aid group.

Mr. Amory stated that the problem of Japan was “a bit awkward.” Things would be complicated if Japan were brought into a European organization. The complication would be in the field of trade. Mr. Dillon suggested that it was not necessary to cross this bridge today. The group might invite Japan to sit in with it. He felt that the real problem was in the field of trade and asked for Mr. Amory’s comments on discussing the problems of Sixes and Sevens under the “13 plus” group.

Mr. Amory was not optimistic concerning starting with the “13 plus.” Sir Frank Lee stated that the 13 plus was too large and would not endure. Ambassador Burgess stated that there was “an avalanche of opposition” against the 13 plus and stated that the entire twenty should be used.

Sir Frank Lee recommended a group of 8, 3 from the EFTA, 3 from the EEC, one from the US and one peripheral.

Sir Paul Gore-Booth noted that the Italians wished to use the Contact Committee.

Sir Frank Lee stated that the “13 plus” should not extend beyond this week. It was possible, however, to have a small trade group but one must be arbitrary. A group of 8 might be possible. Sir Frank Lee also asked what the trade group would do and stated the hope that it would not interfere with the Steering Board and GATT.

Mr. Dillon agreed that in the new OEEC the trade group would pass out of existence. Mr. Amory suggested the trade group could work on the “harmonization of tariffs” and the “sector by sector approach.” Sir Frank Lee felt that a number of things, short of an ETA, could be done which would “ease things”.

Mr. Dillon commented that the Six get concerned if one mentions the planned July 1, 1960 tariff adjustments as being a subject for consideration by the trade group.

Mr. Amory stated that he was “greatly relieved by our talk.” He said, “Now I can see more daylight.” He felt that one should proceed informally.

In answer to a question by Mr. Upton, Mr. Amory stated that trade and aid matters should be referred back to the 20 governments but not to the OEEC. The work must be parallel to, but not mixed up with, the OEEC.

Mr. Amory stated that Australia had asked whether they should ask for participation at the January 12–13 meeting and the British had said no. They stated, however, that the British would keep the Australians informed.

Ambassador Burgess stated that as a result of the NATO meeting the “13 plus” group is dead.⁵ Mr. Amory stated that the 20 governments represent the answer for the peripheral countries. There is no need for unanimity.

In answer to a question, Mr. Dillon stated that there would be no new aid pool. He reminded the others that the U.S. Congress has a constitutional interest in trade and tariffs. The Congress doesn’t trust the Executive Branch and the Executive Branch must not give the impression that it was taking tariff policy away from the Congress. If this impression were given, there would never be Congressional approval. As for the Steering Board,⁶ Mr. Dillon did not mind if they continued on their current type of activities.

0. Source: Department of State, Conference Files: Lot 64 D 559, CF 1583. Limited Official Use. Drafted by Tuthill on January 13 and approved by Brewster. The meeting was held at the British Embassy.
1. Reference is to initial U.S. proposals that a preparatory working group of three study the reorganization of the OEEC. A similar group of three, known as the “Wise Men,” prepared the studies that led to the creation of EURATOM.
2. The first EFTA Ministerial Meeting took place in Paris on January 12.
3. The Swedish and Swiss Governments had expressed fears that the meeting was called in haste and would damage both the OEEC and EFTA.
4. In a January 10 conversation with Dillon in Washington, Carlo Perrone Capano, Italian Chargé, expressed his government’s concern that the United States would make large concessions to the British over the EEC in order to achieve unanimity on other issues. (Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199)
5. Apparent reference to the NATO Ministerial Meeting of December 15–17 and 22, 1959. The meaning of Burgess’ comment is unclear.
6. The Steering Board for Trade, the OEEC body responsible for monitoring tariff regulations of the member states and recommending rules for the improvement of trade relations.