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

289. Memorandum From the Special Representative for Trade Negotiations (Herter) to President Johnson¹

Washington, August 9, 1965.

SUBJECT

• Agriculture in the Kennedy Round

We have come to another critical point in the Kennedy Round negotiations. All the negotiating countries agreed some months ago that on September 16 they would exchange offers on agricultural products in order to achieve the Ministerial objective of significant liberalization of world trade for all classes of products, agricultural as well as industrial. Doubt has been cast on the observance of the September 16 tabling date because of the internal crisis which has paralyzed the EEC. The question facing us is whether we, along with other principal negotiating countries, should submit concrete and specific offers even if the EEC does not.

After full discussion with the interested departments and careful consideration of the pros and cons of various courses of action, I recommend that we announce promptly our intention to abide by the internationally agreed timetable and to table the agricultural offers of the United States in Geneva on September 16. This step would be taken in the expectation that other principal negotiating countries will also table concrete and specific offers on agriculture at the same time, even if the EEC does not. An essential part of my recommendation is that we approach the United Kingdom, other EFTA countries, Japan, Canada, Australia, and New Zealand at a high level, urging them to join us in the submission of agricultural offers. If it develops that the key countries other than the EEC do not agree to go along on September 16, we would then also withhold our agricultural offers.

Although there are some risks in following this course of action, I believe that it is the best approach for the following reasons:

1. The U.S. interest in the successful conclusion of the negotiations on both industry and agriculture requires that we take the lead in proceeding with the tabling of our offers and in urging other countries to do the same.

2. The alternative appears to be an indefinite postponement of the agricultural negotiations and the clear danger of the collapse of the entire Kennedy Round. This would put our national objectives—with respect to the expansion of trade, the less developed countries, and Europe—in jeopardy. Failure to move ahead would also let the initiative in the negotiations slip away to the EEC and the French.

3. While it is impossible to tell what, if any, effect the proposed action will have on the EEC, I believe it will maximize our chances of getting the EEC to modify its unacceptable approach and to make significant agricultural offers. With everyone going ahead without the EEC, there will be pressure on the Community, and a rallying point for those within the EEC who want to see the negotiations succeed.

4. The tabling of offers even without the EEC will permit useful negotiations on agriculture to begin (along with the cereals negotiations already under way with the EEC and others) and ensure that the industrial negotiations continue.

5. The position taken by the Administration both domestically and internationally is that agriculture as well as industry must be included in the Kennedy Round. To postpone further the start of the agricultural negotiations would risk compromising this objective.

The disadvantages and risks in the course of the action I propose are related primarily to the reaction of the American farm community. They will undoubtedly be concerned about making offers to produce U.S. duties without simultaneously obtaining offers from the EEC inasmuch as lowering EEC agricultural protection is our primary target.

I intend to minimize those risks in the following ways:

1. In submitting our offers, we would include an introductory note (Tab A) which would make it crystal clear that the United States is tabling its offers on the assumption that it will receive reciprocal concessions in agriculture from its negotiating partners, or it will withdraw its offers to the extent deemed necessary, even if this means withdrawal of all offers. In addition, this headnote would reiterate the basic position that the United States must achieve overall reciprocity in the Kennedy Round.

2. Since the EEC will not be tabling significant offers on September 16, items of primary interest to the EEC countries will be withheld from the U.S. offer list until the EEC is ready to submit its offers.

3. Other politically sensitive items (e.g. beef) will be excluded from our offer list on the ground that they are covered by special commodity groups, are of primary concern to countries not participating in the negotiations, or are excepted for reasons of “overriding national interest.”

It should be remembered that under the rules of the negotiations the offer lists are kept secret, although we can not of course be sure that some information about them will not leak.

For the dual purpose of explaining our action to the U.S. agricultural community and maximizing the pressure on other countries to join us in tabling offers on September 16, I would propose to issue a statement if you approve my recommendation. Such a draft statement is included at Tab B.²

These recommendations have the approval of the interested agencies, with the exception of the reservations expressed by Secretary Freeman in his separate memorandum to you.³ If my recommendations meet with your approval we will, prior to September 16, submit to you the specific list of products we would offer for a tariff cut of 50 per cent, subject to the qualifications in our proposed introductory note. This list would be drawn from the list of products on which you have already authorized a 50 per cent cut in approving the economic exceptions list last November.⁴

Christian A. Herter ⁵

Tab A⁶

HEADNOTE TO ACCOMPANY AGRICULTURE OFFERS

1. The following United States offers on agricultural products are made in accordance with the resolutions of the GATT Ministerial Meetings in 1963 and 1964, and in response to the TNC decision of March 18, 1965 to table concrete and specific offers, designed to achieve the objectives of the Ministers.

2. The United States is tabling these offers—

(a) in the expectation that other principal negotiating countries will also table concrete and specific offers on agricultural products, and

(b) on the understanding that, if the other principal negotiating countries are not willing to implement concrete and specific offers on agricultural products which are of a trade coverage and of a degree of liberalization equal to that of the U.S. offers, the United States will withdraw such offers in whole or in part, to the extent it deems necessary.

3. The United States wishes to make it clear that it will implement its agricultural and industrial offers only on the condition that it achieves over-all reciprocity in the Kennedy Round. Further, the United States reiterates its determination that the final bargain must include substantial liberalization of trade in agricultural as well as industrial products.

1. Source: Kennedy Library, Herter Papers, Chronological File, August 1965, Box 3. Confidential. Transmitted to President Johnson on August 10; see Document 290.
2. Not printed; the purport of the statement is stated above.
3. Document 288.
4. See Documents 262 and 263.
5. Printed from a copy that bears this typed signature.
6. Confidential.