Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

479. Telegram 2046 from Bonn, December 7¹

Bonn, December 7, 1963, 11 p.m.

Brussels also for USEC; Paris also for USRO.

Poultry. State Secretary Lahr called in DCM (in absence Ambassador who at Berlin) to receive reaction to announcement suspension US tariff concessions.

Lahr said list of tariff concessions selected by US for withdrawal caused “very bad echo” in FRG. Germans could not understand why with only 40 percent of EEC exports to US they should bear 54 percent of burden withdrawals. In overall interests of Community, Federation Government had not sought special treatment from US re withdrawals. Instead had assumed burden would be allocated in proportion to each country’s share of EEC exports to US. Lahr said Italians however had pleaded for special treatment and now had received their reward.

Lahr read from German Embassy’s report of Washington meeting and said he found it “completely unbelievable” that from list of items totaling $110 million US had not been able make more equitable selection. US statement that impossible devise list distributing burden in proportion exports to US was “completely unsatisfactory.”

Lahr asked why Germans had been hit hardest. Such treatment was not deserved. FRG had been only country to open its market to imported poultry. French had told Germans they were stupid (schoen dumm) ever to have opened market and US action now confirmed that French had been right. At time, however, FRG had taken different view of matter, had opened market and trade had flourished as long as national German regime applied. Subsequently competence for policy in this field was taken over by EEC. FRG had not liked policies articulated in Common Market CAP but had accepted them in larger interests of Community. Now Germany, who deserved the least punishment, had received the worst.

Lahr then said matter also had to be considered in broader context. 1) FRG had been best cooperator with US on balance of payments problems. Its performance under offset arrangement had been good. It had met foreign exchange costs of troops who were defending not only Germany but also other European countries. French, British, Belgians and Italians were however not helping offset costs of US forces. 2) FRG had been and continues be excellent trading partner. US had extremely favorable balance of trade and trend has continued improve. Thus for first nine months 1963 total FRG imports increased 5.2 percent, imports from rest of EEC 7.2 percent, and imports from US 17.6 percent. 3) FRG was best cooperator US had in Kennedy round. Federation Government was glad cooperate and placed no price on its cooperation. Was cooperating in its own interest, and Lahr was glad US and German interests were in such harmony.

Lahr went on to say FRG would be under great strain in year-end EEC Council meetings at Brussels. FRG was best supporter of US viewpoint at these meetings. He was not asking that FRG be treated better than others, but only on equitable basis. He therefore had to reproach US bitterly for its action. Moreover, US action made FRG position (and Lahr’s personal position) at Brussels look ridiculous. Lahr recounted how he had consistently taken position that chicken war should be given quiet burial, and that he had made clear he would prevent counter retaliation. He had taken considerable risk in following this line and now had been struck from behind. FRG and he personally were now in an impossible situation. “US action was a disaster.”

Lahr said foregoing facts described new situation and problem now was to find way of removing FRG from its impossible position. When DCM referred to Herter statement stressing that concessions would be suspended, not withdrawn, and could be reinstated when agreement reached, Lahr reverted to question of 11 pfennig reduction. List of withdrawals selected by US greatly reduced chances of making such reduction, since Italians and Belgians, being safely off the hook, would have little interest in matter for which Germans would be paying price. Effort should be made find better solution, however. If no more equitable settlement of matter were found, bad blood would continue for long time. In this connection, Lahr said though Berg (President German Industries Association) and Schneider (President German Chambers Commerce) made public statements in strong support Kennedy round, at level of individual industries there was distinct lack of enthusiasm for tariff cuts, and sour taste left by inequitable US withdrawals could have significant braking effect on Kennedy round.

Lahr concluded by saying he simply did not understand how US could have come to take such inequitable action, and again noted that Italy had been completely spared.

DCM responded along lines Circulars 1005 and 1017. Lahr completely unpersuaded that more equitable list could not have been worked out. DCM again pointed out US readiness reverse withdrawal action if US poultry given reasonable access. Lahr’s reply was that would be hard do anything, since US action removed any incentive Belgians or Italians had for constructive solution. Lahr terminated call by saying he had never thought US would take such action. Had hoped poultry war could be brought to quiet end, but this hope was obliterated by US action stirring up controversy.

In separate conversation, Krapf, head of Political Division II in Foreign Office, told DCM that Erhard during visit would probably raise inequitableness of US action with President.

Comment: Lahr’s words, which we have reported without embellishment, need not comment. We wish stress following:

1. Forcefulness of Lahr’s expression of dismay and disappointment was not diminished by calm and deliberate tone. He was deadly serious and obviously felt that he and FRG had been let down badly by US action. Symbolic aspect has obviously assumed importance far beyond any economic loss involved for FRG exporters.

2. It seems clear that hope suspension concessions would bring chicken war to quiet end has not been fulfilled.

3. In all matters relating to trade and agricultural policy, Lahr is German official in best position directly influence matters affecting US interests. His words about bad blood and Kennedy round should be given considerable weight.

4. At very least, we require clear demonstrations that no other selection of items would have imposed burden of suspensions more equitably among EEC countries. Request such material soonest.

5. More constructively, we consider US interest in matters in which we are relying importantly on German cooperation require careful re-examination of poultry question with view to possibility of reaching some better solution. Specifically, prospective approval of reduction levy for West Berlin by 28 pfennig, and 11 pfennig reduction in supplemental levy, could be examined as possibly offering basis for holding up suspensions. If this should prove be case, we would urge that at least for trial period we see whether 11 pfennig reduction would do our poultry trade some good, instead of standing on legal requirement that reduction be bound.

McGhee

1. Poultry: German reaction to U.S. suspension of tariff concessions. Confidential. 6 pp. Department of State, Central Files, INCO–POULTRY US.