230. Memorandum From the Under Secretary of State for Economic Affairs (Ball) to President Kennedy0

In the attached memorandum1 I have set forth a proposal for dealing with the trade agreements problem. This suggests an alternative to the course of action recommended by Mr. Petersen.

Mr. Petersen has sought to design a new trade program within the basic framework of the old reciprocal trade agreement program. I believe that this is the wrong approach. I think that the old trade agreements program was well suited to the conditions of the trading world which has [Page 494]existed until recently, but in today’s world that program is substantially bankrupt. Even if Mr. Petersen’s proposals were adopted by the Congress without further watering-down I do not believe they would be good enough.

Mr. Petersen’s proposals are, in my view, too little and too soon. Within the next year the conditions of a whole new trading world will be largely established. A new trading community in Europe, with a larger population and over twice the imports of the United States, will be emerging. The pattern of world trade in such temperate-zone products as wheat, coarse grains, and dairy products will be undergoing radical alterations. The trade arrangements for tropical products such as cocoa, coffee, and oilseeds may be subject to similar far-reaching changes. These developments will unlock new political pressures from various directions—from US exporters, from Latin American countries, from the British Commonwealth, and from the European Economic Community itself.

My earnest suggestion—arrived at after considerable soul-searching—is that we announce the general directions of a new policy appropriate to the changed conditions of the trading world, but that we hold off the drafting and introduction of an explicit legislative proposal until 1963, which will not be an election year.

The principles which the American people must be prepared to accept are these: We shall have to give up the item-by-item tariff negotiating approach of the past and shall have to negotiate for a major across-the-board reduction on our import restrictions and those of the European Economic Community, aimed at opening both economies further to one another’s exporters. At the same time, we must find a coordinated way of opening the markets of all industrial nations to the expanding industrial exports of developing countries. We shall have to develop an assistance program for a limited number of domestic industries which may have difficulty in absorbing the adjustment impact. And we shall have to negotiate explicit international trading arrangements in a number of key agricultural products.

By next fall, if we use the intervening year wisely the American people should be much better prepared to accept the need for major changes of this sort. They will see and, I hope, begin to understand the shape and implications of the new trading world. We ourselves will have a great deal clearer conception of the exact legislative tools that are needed. Against the background of this understanding we can ask Congress in the Spring of 1963 for the necessary legislation with far greater assurance of success.

This course seems to me preferable than to attempt to obtain legislation next Spring that will be inadequate for the problems that will confront us. There is no compelling reason why we should ask for new [Page 495]legislation immediately on the expiration of the negotiating powers provided under the 1958 extension. Existing agreements will remain in effect even though the authority lapses.

There is a further consideration of great importance. If we seek legislation next Spring we shall run grave risks of confusing the Congression-al debate with the sensitive and difficult negotiations in which we shall be engaged in Europe. The negotiations to expand the Common Market to include not only the United Kingdom but other Western European countries will be of major concern to the United States. It is essential that you and the Executive Branch have as much maneuvering room as possible in order to influence those negotiations in a way beneficial to the whole complex of our national interests.

But we may seriously compromise that maneuvering room if we must, at the same time, engage in a debate on trade policy. We can count on the protectionists doing everything possible to tie your hands and to try to force the United States to take positions in the European negotiations that run counter to our long-range interests, both political and economic.

These are only certain of the considerations that have led me to recommend against an immediate decision to begin the trade fight next Spring. In the attached memorandum I have attempted to argue the case fully as well as to suggest in some detail a course of action that I recommend you follow.2

George W. Ball3
  1. Source: Department of State, Central Files, 411.0041/10-461. Confidential. Secretary Rusk forwarded this memorandum to President Kennedy under cover of a memorandum. (Ibid.)
  2. For text of the enclosed memorandum from Ball to President Kennedy, October 23, see the Supplement.
  3. Not printed.
  4. Printed from a copy that indicates Ball signed the original.