18. Telegram From the Mission to the European Communities to the Department of State 0

Ecbus 177. Luxembourg also for Embassy, Paris also for USRO. From Schaetzel.1 Under Secretary Ball, Ambassador Bruce met with Lord Privy Seal Heath and Ambassador Pierson Dixon on September 14 for extensive discussion of imminent negotiations between British and Six.2

Re organization of negotiations, Heath referred to his recent conversations with Couve de Murville which led to agreement on roundtable approach beginning, hopefully, second week in October. Ministerial level discussions, in which Ambassador Dixon would be British representative, would cover month or six weeks, agreeing and disposing of such matters as possible and remanding other issues for study at expert level. Heath would remain Minister in London primarily responsible for negotiations but would not become directly involved in aforementioned Ministerial activities which would be Dixon’s job. Locus of negotiations not yet determined. In answer Heath’s question who would be concerned with these matters in Europe for US Government, Ball replied would look to Ambassador Butterworth and USEC as our primary point of contact.

Regarding enigmatic attitude of French and particularly De Gaulle Dixon recited again mildly optimistic impression drawn from his recent discussion with General, noted that De Gaulle had affirmed importance of France and Britain consolidating their historic association. General alluded to convenience of community in providing effective means for post-war relations between France and Germany which would otherwise have been very awkward if handled on bilateral basis.

Ball set forth in detail US attitude toward negotiations against backdrop of US economy today—our balance of payments problem, high level of unemployment aggravated by continuing pressures on labor force due automation and war babies now of age to seek jobs. Country therefore increasingly restless in face of prospective discrimination and fearful of consequences on US interests of expanding and possibly [Page 41] autarchic economy. Ball warned that while strong underlying support of US for European integration remained, confluence of American economic difficulties and prospective UK adherence brought to surface latent US fears about effects on our own exports. Of these fears agricultural exports to Europe loomed most important. Europe is America’s largest market and agricultural interests remain significant and vocal element in US Congress. Support of this segment of US economic and political society vital to general program of administration and particularly to acceptance of President’s 1962 commercial policy program.

Ball repeated central US thesis, namely that US had always accepted inevitability degree of discrimination implicit in European common market but acceptance of this discrimination remained conditional on maintenance and vigor of political content of community and on community adopting liberal policies. In principle, US could not accept continuance or extension of Commonwealth preferences under expanded EEC arrangement.

In response Heath called attention to dependence of such countries as New Zealand on UK market. Said major Commonwealth problems were centered in Canada, Australia and New Zealand. He reiterated that Britain would honor obligations she had undertaken to Commonwealth not to join common market if terms of agreement unacceptable to Commonwealth. He referred specifically to insistence of Parliament that Commonwealth be satisfied.

Heath noted once more obligations British had undertaken to EFTA partners and said that Britain would not enter community on basis unacceptable to Seven. Heath speculated that of course Danes would seek full membership but was less certain of early Norwegian action in view of their recent election. He thought that Portugal might seek membership rather than association. Austria, Switzerland and Sweden would presumably be candidates for association under Article 238.

Ball expressed concern over certain implications of picture Heath painted. While not prejudging arrangements yet to be devised, Ball warned that outcome could be nothing more than European free trade area by another name. Heath recognized that US could not give any advance assurances and accepted fact US would examine proposed arrangements on their merits. Dixon and Heath discoursed at length problems of neutrals and argued value Swiss-type neutralism to Western world.

In response inquiry Heath said British had not overlooked and were studying administrative dangers inherent in expanded community coupled with concentric circles of associate members. Organization of such complexity might be unable conduct effective business.

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Heath and Ball agreed on value of maintaining close but informal contacts during developing negotiations with patterns of contact differing according to subject. For instance British welcomed close US collaboration on discussion of tropical products and manner in which Commonwealth African states should be associated with expanded community. Heath also saw value of working out critical and difficult agricultural problems within framework larger than that of UK-Six negotiations.

  1. Source: Department of State, Central Files, 375, 800/9–2161. Confidential. Repeated to Canberra, Wellington, Ottawa, and 13 posts in Europe.
  2. Ball and Schaetzel visited Europe in mid-September for talks relating to the British application for membership in the Common Market.
  3. A memorandum of this conversation is in Department of State, Central Files, 375.800/9–1561.