25. Telegram From the Department of State to the Embassy in Sweden0

336. Brussels pass USEC; Paris pass USRO. Re Stockholm’s 416.1 Apparent from reftel Department’s thinking re complicated question of association with EEC not fully understood. Our position this question falls naturally into two categories: first, an appraisal of the developing [Page 54] European Community, the directions in which we wish to see it develop taking into account our ability to influence these developments; second, American tactics in immediate future.

Stockholm’s 416 contains a major misinterpretation of Department’s reservation regarding extension use of association under Article 238 Treaty of Rome. In addition to our natural concern about widening circles of discrimination against U.S., other third countries exports and effect of such discrimination on the Administration’s 1962 trade program, Department has been consistently and deeply concerned about possible erosive effects of association on political content of European Community. Scrutiny of Greek association enforces this worry.

Phrase “European integration” to encompass variety forms European cooperation reflects conceptual ambiguity and leads to same semantic confusion which occurred in debate over free trade area and EFTA, in which non-Six insisted development of European Community was breaking up “unity” of Europe. This permitted them to turn over coin and argue that any move which associated Western European countries was ipso facto unifying. Department construes “integration,” as it always has, as pragmatic economic and political movement among six European nations leading toward economic fusion on a broad front. Out of this process we have anticipated that political integration would emerge, as Bonn declaration seems to demonstrate. Association of states willing merely to accept limited commercial arrangements with European Community does not fall within Department’s concept “European integration.”

There has been tendency to construe our reservations regarding association as springing from antipathy for political or military neutrality. U.S. of course prefers and has worked for commitment of Western nations to common defense against a common enemy within the NATO framework. Therefore it is impossible to ignore the fact’ that we are at policy odds with European neutrals on this central point. However, this disagreement is not at the root of our differences with EFTA over association. Here we are concerned about their insistence on “economic neutrality” with their assumption that it is possible to become a part of one limited aspect of European integration process as conceived by Six. Neutrals have made abundantly clear that they must reserve their full rights for independent action field of economic policy, in short, insistence on sovereign powers in support of policy of economic neutrality.

Reftel suggests that our coolness towards association aimed at neutrals. Quite the contrary—these reservations strike at association in general and rest on concern about the dilution and compromise of the Community which might well flow from overly broad interpretation of Article 238. For instance, British continue reiterate determination obtain association or equivalent for both EFTA partners and Commonwealth. [Page 55] After July 31 Macmillan speech British Government hard pressed to explain its tendency to give greater importance to accommodating EFTA than to Commonwealth. Backtracking of British in face this Commonwealth attack makes certain that achievement association for neutrals would unquestionably create a major political problem for London. Two unpleasant alternatives would then be on British back: one, U.K. Government would be accused of getting better deal for neutrals than they able to get for Commonwealth or, two, an all-out drive for similar association for Commonwealth which would mean nothing more than creation new far flung preferential area.

Department keenly sensitive to increasing awareness of Soviets to mounting strength and purpose of European Economic Community. Evident that USSR has been slow in assessing this development and extent to which EEC can contribute to frustration of broad Soviet objectives. We expect step-up of Soviet political and propaganda moves aimed at the Community. We are not, however, persuaded that only way to counter these moves to extent they are directed at the neutrals is to promote association of these countries with Community. For sake of argument, if association should be negotiated for Sweden, Switzerland and Austria this could increase rather than decrease Finnish isolation and that of other European non-Six. Alternative case can be made that concerted action by enlarged European Community and U.S. towards substantial MFN lowering of duties only effective way of dealing with problems of non-members. This could meet real needs of countries unprepared to accept full economic and political commitment to the European Community while at the same time exposing non-member countries to market and economic dynamism of EEC.

Thrust of trade legislation to be submitted Congress early 1962 is to empower U.S. Executive with authority to create foregoing situation. The goal would be to establish through negotiation with enlarged European Community a tariff regime so liberal that it would not be significant factor in distorting or diverting trade between Community and non-members. Already signs that this alternative is attractive to important elements in neutral and other third countries.

Department remains of view that on balance broadest U.S. interests not served by extensive use Article 238. All missions should take position when asked that U.S. feels must be continued effort made by all parties to examine actual and specific economic and commercial problems arising out of prospective U.K. adherence to Common Market. In course coming weeks we should join in objective analysis of best means of dealing with these problems. We do not exclude association as one possible answer. We do object to insistence at this juncture that it is only answer. [Page 56] (See Circular instruction CW 4872, December 13.)2 While U.S. cannot get in front of Six and assume posture greater opposition to association than EEC, on other hand we cannot afford to act in such a way as to prejudge negotiations between U.K. and Six, a process which has just begun. Department not therefore prepared to endorse Stockholm’s suggestion that we should take association as inevitable and garner whatever good-will might fall to us from embracing their ambitions.

  1. Source: Department of State, Central Files, 375.800/12-1661. Confidential. Drafted by Schaetzel on December 19; cleared in draft with Tyler, Vine, Bruce, and S/S; and approved by Ball. Repeated to Ottawa and 14 posts in Europe.
  2. Dated December 16, this 5-page telegram stressed that antipathy to neutral association with the EEC seemed to be playing into Soviet hands and that the short-term disadvantages of association would be balanced by a long-term liberal commercial policy and the strengthening of Western political ties. (Ibid., 375.42/12–1661).
  3. Not found.