Office of the Historian

340. Telegram From the President’s Deputy Special Assistant for National Security Affairs (Bator) to the President’s Special Assistant (Rostow), in Bonn1

Washington, April 24, 1967, 1808Z.

CAP 67324. From Bator to Rostow for the President. Subject: What we want from the Germans, Part II:2 Kennedy Round.

After making clear to Kiesinger3 that both Kennedy Round and liquidity negotiations represent major political events, and failure of either could lead to serious difficulties in US-European relations, you may wish to emphasize, with respect to Kennedy Round that:

1.
We are really down to the wire. Essential that Germans push EEC partners into speeding up decision process, and giving EEC negotiators flexible enough mandate to permit striking of final bargains in Geneva. Must have initial understanding on shape of overall package by end of next week (May 6). Critical EEC Ministers meeting next Tuesday, May 2.
2.
In agriculture, we need movement by EEC on two fronts:
(A)
On grains, they should come up with combination of more food aid and access rule which will assure us growing commercial market. Critical relationship is between food aid commitment and percentage of EEC consumption reserved from non-EEC producers. (FYI. With present three million ton food aid proposed, EEC should reserve 13 percent of EEC markets for imports. So far, they have only offered three million tons and 10 percent. If EEC would agree to overall food aid program of five million tons, reservation of 12.5 percent for imports would be good enough. You may not wish at this stage to spell out these numbers but only to point out that they must go up both in food aid pledge and share of markets reserved for imports.)
(B)
Single most important move needed in agriculture (since EEC has made some progress in grains) is significant reduction on items protected largely by tariffs, where EEC has made only nominal offers. Improvement by EEC on tobacco, turkeys, offals, fruits and vegetables per U.S. list advanced to EEC in March absolutely essential. U.S. must be able to show results in agriculture apart from grains.
(C)
You might also say that you have instructed your negotiators to look carefully at EEC agricultural demands from U.S., including question of feed grain prices, to see what more we might offer.
3.

The most important part of the industrial negotiation is an agreement in the chemical sector. Major reductions in chemicals on both sides, including our converting from American selling price, would probably result in a $300 million benefit surplus in our favor. Most of this necessary to right current overall imbalance between U.S. and EEC offers. We are willing to propose elimination of ASP to our Congress (you agreed to this in meeting with Roth), but politics are such that Congressional agreement much more likely if ASP package presented separately. (Problem with one package is Finance Committee resistance to gun-at-the-head proposal on ASP with entire Kennedy Round at stake.)

The two packages would yield respectively, (1) a Kennedy Round chemical tariff reduction which will contribute to overall Kennedy Round balance; and (2) a post-Kennedy Round legislative package negotiated now which would eliminate ASP in exchange for a significant additional EEC quid quo pro in chemicals. This second package must stand on its own.

4.
Above has been fully cleared with Kennedy Round “command group” (Gene Rostow, Solomon, Schnittker, Rehm for Roth. Trowbridge out of town.).

  1. Source: Johnson Library, National Security File, Subject File, Trade Negotiations, Kennedy Round, “Potatoes,” [2 of 2], Box 47. Secret; Eyes Only. Rostow was with President Johnson in Bonn April 23–26 to attend the funeral of Konrad Adenauer, April 25.↩
  2. Part I was transmitted in CAP 67323 from Bator to Rostow, April 24. (Ibid.)↩
  3. President Johnson conferred with other heads of state and government in Bonn including West German Chancellor Kiesinger.↩