20. Circular Telegram From the Department of State to Certain Missions in Europe 0

793. Department is studying intricate problem of possible association of countries with EEC posed by entry of UK and Denmark. This message sets forth current thinking.

Our political objective with respect an enlarged EEC (i.e., Six plus UK plus Denmark) is to have tightly knit core group of major European powers united on common basic principles within economic union and dedicated to same political objectives. Our position on negotiations between EEC and EFTA as a group was designed to give UK leeway to disengage and negotiate separately to achieve end of enlarged, but strong and cohesive European Community.

Department recognizes that element of leeway only temporary. UK has undertaken important commitment to other EFTA partners to see that their interests are safeguarded and has made clear that successful conclusion UK-EEC negotiations depend upon satisfactory resolution this problem. Issue is bound to come to a head prior to the end of UK-EEC negotiations.

At the same time we recognize that there are some interests that must be met of EFTA countries, and in strict justice, of all Western European and affected third countries who will not be included in enlarged EEC. These interests are largely economic and in this respect do not differ in kind from problems the U.S. has, although they differ in degree.

Way most commonly discussed of meeting economic problems of countries outside EEC is association under terms of Article 238 of Treaty of Rome. While Department has not precluded this possibility and has said too early to opine on eventual solutions, in our view this procedure not only has little to recommend it, but could produce results contrary to our major political objectives in Europe. It would do this by creating patchwork quilt of association agreements which have only one feature in common, i.e., preferential trade arrangements. This moreover, is process which has no clear end, since number of potential associates is legion. Without defining maximum size for workable economic-political union, it is evident that increasing number of states associated with it could so burden Community as to destroy its effectiveness and its ability to move ahead in both economic and political fields. By same token, while argumentation is often used that U.S. can afford discrimination of [Page 44] one or two small additional countries occasioned by new association agreements, we would in fact be faced over long term by a growing number of associated countries united in single Europe-wide preferential trade grouping. Clearly this would not be in our best interest and would encounter strong resistance on part of U.S. business community.

Presently posed alternative of membership of these countries in enlarged EEC appears equally undesirable in foreseeable future since strongly conservative and neutral tendencies of number of them would inevitably slow down moves toward political integration. Reservations they have privately advanced demonstrate extent unwillingness to join in political process to which Heath’s statement1 commits U.K.

Finally, solutions of varying degrees of association tend to ignore the fact economic problem involved is not purely European, but one in which other members of Atlantic Community, particularly United States and Canada, have stake as well.

In Dept’s view, one promising approach which could avoid or minimize difficulties outlined above and permits achievement of our political objective of a tightly knit and united group of European states is effective utilization of OECD. As we have suggested to several European countries in response to probing on association (Rusk-Kreisky exchange and Kekkonen-Rusk recent conversation)2 we conceive OECD as umbrella under which problems arising out of developing regionalism can be discussed and solutions examined.

We are not thinking of Trade Committee of 21, which has not proved useful.

U.S. is prepared to utilize OECD for thorough examination of the problems arising for members and third countries arising out of an enlarged EEC. (See separate cable this subject.)3 We prepared examine what solutions might be appropriate which would take account of economic and political interests of all members and at same time be sensitive to posture of OECD countries toward less developed countries of world. We believe premature to suggest when this examination should begin on kinds of solutions possible. Should also be clear, however, that whatever steps may ultimately be required need not necessarily be taken in OECD framework.

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Within procedural framework outlined above we can visualize discussions leading to recommendations for common policies for OECD members regarding tariffs designed to eliminate dangerous economic split growing up within Atlantic Community and to avoid increased discrimination against U.S. exports. We are already exploring kinds of U.S. legislation best suited permit us work with enlarged EEC to achieve lowest possible level industrial duties.

With applications for association from EFTA neutrals likely in December and possibility that Norway may apply even sooner, a constructive OECD approach will facilitate channeling these pressures along constructive line. Thus way can be kept open for a generalized solution rather than one which involves association or membership in EEC for what are essentially commercial reasons.

Department would appreciate soonest comment from posts most directly affected by these suggestions along with assessment of difficulties and opposition which U.S. likely to encounter along way.

Posts will recognize from this analysis importance of avoiding in any presentations to foreign officials of arguments inconsistent with this analysis.

On this problem, as well as others which will be raised in process of UK-EEC negotiations, it is likely that there will be increasing number of general comments from U.S. public and private sources, which may in some regards not accord with our position. Department wishes again stress para 2 Department’s circular 2714 and note that if posts have any question on use of material not in accord with outstanding instructions or guidances, specific guidance should be requested from Department.

Rusk
  1. Source: Department of State, Central Files, 375.800/10–2761. Confidential;Noforn. Drafted by Vine and Schaetzel; cleared with Fessenden, Burdett, and S/S. Sent to 19 missions in Europe.
  2. On October 10 at a meeting with Common Market officials, Heath had presented the British proposal concerning its entry into the European Economic Community. An analysis of his statement was transmitted in Ecbus 249 from Brussels, October 17. (Ibid., 375.800/10–1761)
  3. A memorandum of Rusk’s conversation with Kekkonen on October 17 is ibid., Conference Files: Lot 65 D 366, CF 1972.
  4. Not further identified.
  5. Dated August 16, it asked recipient posts to report “on current basis” developments that bore on the UK-EEC negotiations. (Department of State, Central Files, 375.800/8–1661)