Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

276. Telegram From the Mission in Geneva to the Department of State ¹

Geneva, June 25, 1965, 1739Z.

TAGG 3210. For Governor Herter from Blumenthal. Subject: Evaluation of Cereals Group Meeting, June 10–18.

Meeting of Cereals Group adjourned late Friday, June 18 with agreement as reported in reftel² to resume July 5 at technical level to prepare factual reports considered essential by group to expedite its work. Following are summary conclusions about results first round of discussions:

1. On whole, meeting was constructive and some progress was made. There was genuine effort on part of importing and exporting countries to identify areas of agreement and disagreement and explore existing degree of flexibility for resolution of central issues.

2. Session marked definite change in group’s orientation. Beginning of negotiation distinct from previous sessions characterized merely by discussions was evident.

3. Nevertheless, progress during this first round of talks limited because timing of talks awkward for several major participants, i.e. EEC because of tense situation in Brussels, US because of uncertainty with legislation up before Congress.

4. In spite of rather shaky start in Washington exporters’ discussions, relations between exporters moved to considerably more satisfactory plane as specific negotiating issues had to be faced in Geneva. By common consent issue of international price remained in background. There seemed to be at least tacit acceptance of US argument that international price issue best dealt with in light progress rest of negotiation at somewhat later stage. Exporters thus able maintain relatively solid common front vis-a-vis importers and collaborated in pressing a list of desiderata for improvement in importers’ offers.

5. Position of EEC somewhat better than expected. While making expected defense of Montant de Soutien bindings, there was little emphasis on theory of Mds approach and, instead, some indications that EEC not insisting on Mds bindings, from others, as long as basic principle of including commitments on domestic policies is achieved. Secondly, while EEC delegates, Rabot and Malve, made expected effort argue that URP at DM 425 not excessive, they accepted in good graces strong doubts expressed by exporters as well as their suggestions for addition within EEC of some other control device on excess production. EEC promised study possibilities and ideas put forward. In our view, EEC statement that EEC grain policies, including device of UGP level guided, inter alia, by desire maintain imports at present ratio between production and consumption was important step forward. It obvious that this statement not made accidentally. Might provide opening which, if exploited adroitly, could result in basics for EEC agreement to specifically stated trade objective as one element in grains arrangement. On surpluses, EEC also seemed make conscientious effort to show flexibility. Most important development was their acknowledgment that EEC as importer and other importers share responsibility for the creation of world surpluses and, hence, for possible disposal and food aid measures to be included in an agreement.

6. Least flexible approach was that of UK. Position that UK contribution to grains arrangement fulfilled by subsuming present bilaterals with major exporters in broader arrangement was not satisfactory. While being more forthcoming as regards willingness accept clear statement of international trade objectives in context of an agreement, UK delegation showed no movement on possibility making any commitments regarding internal policies or on precise means by which UK would amend internal policies, if trade objectives not met. Exporters, therefore, forced to adopt position clearly recognizing flexibility of EEC proposals while at same time deploring lack of any apparent disposition for movement on part of UK. UK also declined to follow EEC’s recognition of importing countries’ sharing responsibility for surpluses and adopted quite negative attitude to any idea of participation in joining program for food aid and financing of surplus disposal. We will need do much work with UK on these points.

7. Position of Japan mainly reflected fear of being put under pressure for commitments on internal policies similar to those being asked of UK and EEC. While there was general recognition that assurances on domestic policies not as important for Japan because of limits on possibility major internal production increases and while Japanese were not directly criticized on this point, Japan generally supported UK simply as defensive measure. This includes rather negative attitude to idea of contribution to surplus disposal. On balance, would seem that Japan will follow UK and accept any arrangement acceptable to former.

8. On exporters’ side, Australia, which maintained an air of suspense up to the opening of the meeting regarding its participation, was cooperative and made no further issue over US unwillingness to express a position as to level of international minimum price for wheat. Contrary to earlier indications, Westerman represented Australia throughout the session. On the whole, Australia played constructive role, although obviously its objectives in a cereals arrangement tend to coincide more closely than other exporters with those of EEC. Australia’s main interest is to obtain a higher international minimum price for wheat and reduce competition Australia faces from EEC wheat in third markets.

Canada was cooperative and its position and presentation on major issues essentially parallel to that of US. There were no particular surprises from Argentine delegation.

We believe, therefore, that Cereals Group negotiations off to reasonably good start. In weeks and months ahead, we will have to work closely with UK and press them to review their position with view to taking more flexible attitude on question of commitments on internal policies going beyond present bilateral arrangements. We will also have to seek push EEC toward agreement to specific statement of trade objectives, following up their statement on general intentions made at first meeting.

Much will depend on degree to which EEC willing add additional control measures to present internal price system. Also important that exporters continue common front now established here and that facing issue of international prices avoided until later stage when specific commitments re other parts of arrangement have emerged more clearly.

Tubby

1. Source: Department of State, Central Files, INCO–GRAINS GATT. Limited Official Use. Repeated to Bern, Bonn, Brussels for USEC, Buenos Aires, Canberra, Copenhagen, The Hague, London, Luxembourg for USEC, Oslo, Ottawa, Paris for USOECD, Rome, Stockholm, Tokyo, Vienna, and Wellington and passed to the White House.
2. Not further identified.