330. Telegram From the Department of State to the Embassy in Australia1
69437. GATT. Wheat exporters—Canada, Argentina, Australia, U.S.—have been meeting in Washington in effort develop agreed exporter position for Kennedy Round cereals negotiations. Considerable progress has been made in narrowing differences and in developing common position on market access, supply restraints by exporters when prices approach the minimum and food aid. Basic issue among exporters remains level of minimum prices in new agreement. U.S. position has been in favor modest increase present International Wheat Agreement minimum but could not go along with excessive increase because implication that substantial increase might give rise to need for heavy use export tax arrangement wheat which politically difficult, and because price rise would give impetus to wheat production in other exporting countries.
Canada and Australia at current round of meetings insisted that exporters go to Geneva with proposal for 40 cents a bushel increase in minimum. They also asked U.S. to go along with increase of 32 cents as firm position to be held by exporters. To accommodate their views U.S. in the end offered to go along with 25 cents increase (up from our initial offer of 10 cents) with appropriate differential between U.S. and Canadian wheats and for initial position in Geneva negotiations to support other exporters proposal for 40 cent increase.
Canada finally said minimum price would have to be one that would enable them to say that agreement guaranteed $2 Canadian wheat. This presumably means $2 (Canadian) at Lakehead for Manitoba #1 but implications this formulation not clear. Australians said 25 cent increase with current differentials between Canadian and U.S. wheats would result in only 6 cents increase for Australian wheat. Basis of this calculation not clear.
Discussions broken off at this point at request of Canadians to seek instructions from Ministers. Australians and Argentines went along with Canadian move.
Comment: Australian representative (Westerman) said this issue of critical importance to Australian economy and sensitive in domestic politics. Said Australians likely raise at “highest political level” and indicated privately might be raised with President during current visit.2
[Page 801]U.S. has made maximum effort accommodate its views to those of other exporters in attempt to present unified exporter position at Geneva negotiations. We agreed support 40 cent increase in minimum price as opening offer and said we prepared make necessary adjustments if such price or anything close to it was acceptable to importers. We also committed ourselves to hold to 25 cent increase if obtainable in Geneva. We concerned however that very large increase in minimum price will not be acceptable to importers and we refused commit ourselves in advance to break off Geneva cereals negotiations and possibly jeopardize entire Kennedy Round by insisting on unrealistic minimum prices. We would hope that market price will in fact be substantially higher than minimum and we prepared cooperate fully in measures that will make this possible, but we do not believe that we should jeopardize the prospects of reaching a grains agreement by binding ourselves to minimum price provisions that may not be negotiable.
Believe we offered Canadians and Australians essential elements effective agreement they could sell at home but which still might be negotiable in Geneva. In our view ball now in their court. We expect Canadians will be back next week.
- Source: Department of State, Central Files, INCO–WHEAT GATT. Confidential; Immediate; Limdis. Drafted by Irwin R. Hedges on October 19; cleared by Julius L. Katz (E/OT) and Fred H. Sanderson, Raymond A. Ioanes, and Schnittker (Agriculture), and Roth; and approved by Fried (E/OR). Repeated to Buenos Aires, Ottawa, and Geneva.↩
- President Johnson visited Australia October 20–23.↩