Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

227. Memorandum From Secretary of Agriculture Freeman to the President’s Special Assistant for National Security Affairs (Bundy)¹

Washington, February 14, 1964.

At a recent meeting you suggested that when conversations had been held between the Ambassador and the Secretary of Agriculture that you would like to be informed of agreements reached.

The following constitutes a recap of discussions held by the undersigned and Ambassador Blumenthal on February 14 which set down a procedure which I understand has been reviewed also with Governor Herter.

1. That an inquiring posture be adopted for the coming Agricultural Committee GATT meeting next week, probing thoroughly the Mansholt negotiating plan and other EEC proposals.

2. That following such examination and review on February 18, rather than reject the proposal out of hand our representatives will report back for review and instruction.

3. When Mansholt appears on March 5 and 6 he will be told firmly, if his plan is as we think it today, that it is unacceptable. Whereupon a counter proposal will be made which hopefully will break the current deadlock.

4. The counter proposal will provide that agriculture be recognized as presenting special problems and therefore not subject to the 50 percent rule which is being applied across the board to industrial commodities. Such a proposal will emphasize that our objective is global market sharing and real liberalization rather than quotas. It’ll emphasize that liberalization is what the Kennedy round has been designed to accomplish. In the Ambassador’s judgment this will put us in a strong position for the EEC must accept that objective or else be in a very poor light not only with the United States but all GATT countries.

As a part of this counter proposal to treat agriculture differently we will make it crystal clear that this will not preclude the kind of bargaining that might exchange an industrial concession for an agricultural one. In other words, cross bargaining will be a definite possibility even though agriculture will be approached procedurally on an item by item basis rather than with the application of the 50 percent cut across the board rule. We agreed that we must not get agriculture separated from industry in the sense that would preclude cross negotiations.

5. Assuming then that this new proposal liberalizing our position is acceptable we come to what will probably be the first crisis. Between the discussion and hoped for agreement with Mansholt and company early in March and the opening of the GATT negotiations formally in May we will proceed aggressively with preliminary discussions. These discussions will involve meetings of the Agricultural Committee of GATT to review on an ad hoc basis commodity by commodity possible agreements. Certainly the Cereals Committee will be meeting during this period. It will be our specific objective at such meetings to determine whether the Community is actually going to proceed in good faith to bargain and live up to the commitments we expect they will make to move towards liberalization. We will proceed in these discussions on a flexible basis, recognizing that liberalization may not be possible for a given commodity, but attainable in another and that our goal will be to maintain our trade and a fair competitive access to a growing market.

If during this period it is our judgment that the Community is not proceeding in good faith, but rather is conducting a systematic slowdown so that we will end up in the same position as agriculture found itself at the end of the Dillon round, to wit, everything else decided and agriculture still out on the limb, we will then refuse to proceed further in the negotiations. This will be a hard, tough judgment to make. I emphasize that fact at this time for it is one which has been faced in discussions now and which will need to be implemented at the time.

6. Finally, once negotiations have started there will no doubt be a number of other critical places but we ought to be able to determine before the negotiations formally open whether they really will bargain in good faith. If they are evasive in the pre-May Agricultural Committee meetings this will be the time to let them know we mean business.

This recap has been personally dictated from notes that I took during our consultation and embodies my interpretation of the conference this date with Ambassador Blumenthal. A copy has been sent to the Ambassador and to Governor Herter.

1. Source: Johnson Library, National Security File, Subject File, Trade—General, vol. I [1 of 2], Box 47. No classification marking. Bundy wrote on the source text: “Are these two guys in agreement?” In response to this query, Bromley Smith wrote Bundy a note, February 20, saying in part that “Freeman and Blumenthal are in agreement—State is also on board—on our current position and our strategy for the immediate future, i.e., for the next six weeks.” Smith also noted that “Everyone agrees that many problems lie ahead” and mentioned some State concerns about Freeman’s memorandum. (Ibid.) Notations on another copy of Freeman’s memorandum indicate that Herter and Roth saw it. (Kennedy Library, Herter Papers, Agricultural Policy, 1/30/64–7/1/64, Box 5)