237. Letter From the Under Secretary of State (Ball) to Secretary of Agriculture Freeman0

Dear Orville: As you know, a week ago I brought our experts back from Geneva and Brussels to make a complete review of the tariff negotiations. They have restudied the entire problem as carefully—and, I hope, as objectively—as possible and have prepared the attached memorandum.1

This memorandum shows conclusively, I believe, that we have no practical alternative but to close the negotiations substantially on the basis of the last package offer from the EEC. If we do not do so promptly—and the 111 Committee meets toward the end of this week—I think we must surely anticipate that the EEC will withdraw its offers and the whole negotiation will collapse. Without overstating the consequence of such an event I think it could very well mean the destruction of the GATT and a return to anarchy in our international commercial relations.

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The memorandum I have sent to you makes clear that the overall results of the negotiations, if we were now to accept the EEC offer, would be highly advantageous for the United States. Except for the 30 percent of agricultural trade covered by the Common Agricultural Policy, the results are not disadvantageous even with respect to agriculture. As to that 30 percent, I am convinced that the best we can do is to try to preserve our rights and obtain the agreement of the EEC nations to negotiate regarding these products when they have reached a larger measure of agreement among themselves regarding their Common Agricultural Policy.

Concretely I would propose the following course of action:

Go back to Geneva with a request that the EEC obligate itself to negotiate with respect to rice after the Common Agricultural Policy is decided upon, as it has offered to do with respect to corn, sorghum and poultry.
Seek joint approval of a declaration along the lines of the one attached, recognizing the special circumstances of the 1960-1961 negotiations and looking forward to new negotiations when the EEC has worked out its Common Agricultural Policy.
Upon receiving agreement regarding these two points, accept the EEC package.

I am convinced that this program is the best course for us to follow under all the circumstances. We have carefully considered the possibility of trying to mobilize support from other countries and we have concluded that nothing would be gained by such an effort. Certainly the United Kingdom would not join with us in trying to exact a better deal from the EEC at a time when it is desperately trying to negotiate entrance into the Common Market. On the contrary, it would simply withdraw its industrial and agricultural offers from us (which on the whole we consider quite advantageous) and would then make its own deal within the EEC and avoid generalizing the benefits under the most-favored-nation principle. The same is undoubtedly true of the other EFTA countries.

If one eliminates the EFTA countries there are no trading nations left that have any effective bargaining power with the EEC. Canada, Argentina, etc., are trying to ride on our coat tails rather than the other way around.

Nor do I think there is any chance at all that we could obtain any firmer commitments to assured access to the EEC market for the products that are to be covered by the Common Agricultural Policy. The EEC is having an enormously difficult time arriving at a Common Agricultural Policy and the member nations are simply not going to complicate their lives by postponing the effective operation of the policy through offering us assured access over even a limited period of time.

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These represent the conclusions we have come to after the most sober and careful review of the situation with our experts who have been on the firing line conducting the negotiations and who are most familiar with the views of the EEC and its member nations.

I would not think, however, that the long-range result would necessarily be unfavorable even for our trade in those commodities to be covered by the Common Agricultural Policy. We would certainly pursue negotiations with the Europeans vigorously and persistently, after they arrive at a measure of agreement regarding the form and operation of the Common Agricultural Policy. I would hope also that we would be able to obtain sufficient new powers through the new trade legislations to give us the ability to make better industrial concessions in order to obtain concessions on the agricultural side.

I recognize that you face a difficult problem in attempting to explain the closing of the negotiations to American agricultural interests. I do not believe, however, that the problem is an insuperable one. I had a discussion the other day with Mr. Herschel Newsom and Mr. Joseph Parker of the Grange. After reviewing the situation with them, I found them quite understanding of our predicament. I should be very glad to see any representatives of farmers’ groups that you might suggest.

Nor do I believe that the political consequences are likely to be too serious for our trade bill. We could certainly make a very good showing on the industrial side. Even in the case of those Congressmen primarily interested in tobacco and Common Agricultural Policy products a careful explanation, coupled with a promise to pursue a vigorous negotiation at an appropriate later date, should in many cases be effective.

I am sending copies of our memorandum to the other interested Departments. I spoke with Doug Dillon before he left for Europe and he expressed complete sympathy with the point of view I have outlined in this letter and strongly endorsed the need for an immediate closing on the basis of the offers we have received. Against the background of his long experience, not only with the current negotiation but with events preceding it and with the structure of the Common Market itself, he was quite categorical in stating that in his view the European nations would not—and indeed could not—negotiate at this time for maximum variable levies for CAP items nor would they be prepared to give us any assured access to the EEC market for such items for even as much as a year.

I understand that he passed these views on to the President.

I am advised that the Department of Commerce also joins in the views expressed in the memorandum.

I am looking forward to our discussion this afternoon in the hope that we can bring this matter to a resolution. I would hope that we could arrive at an understanding between us, but if not I believe it essential that [Page 509]we discuss it with the President tomorrow. We must get some word to the 111 Committee when they meet later this week or I think we shall be in very bad shape. As you know, the Council of Ministers is meeting on December 22 and this seems to me to be our last clear chance to dispose of this long and painful negotiation.

The President is intending, I believe, to outline his new trade program in the State of the Union message. I am sure he will be reluctant to do so unless the Geneva negotiation has been closed out first.

Yours ever,

George W. Ball2
  1. Source: Kennedy Library, National Security Files, Subject Series, Trade, General, 10/61-12/61. No classification marking. Drafted by Ball.
  2. This memorandum has not been found. Freeman and Ball discussed the conclusion of the Dillon Round of tariff negotiations on the telephone on November 22. Ball conveyed to Freeman his belief that ending the tariff negotiations were vital to carrying out President Kennedy’s proposed plans for a new trade program. (Memorandum of telephone conversation; Kennedy Library, Ball Papers,GATT, Telcons, 4/12/61-8/14/62) In another telephone conversation, October 2, Ball and Wyndham-White discussed concluding the tariff negotiations quickly in order to avoid the possibility of the EEC seeking U.S. concessions. (Memorandum of telephone conversation; Department of State, Central Files, 394.41/10-261)
  3. Printed from a copy that bears this typed signature.