145. Telegram from the Embassy in Italy to the Department of State1

9552. Subject: Rome Visit of Secretary Fowler.

Secretary Fowler accompanied by Under Secretary Deming, Fried, Willis, Ambassador and TreasAtt met morning November 18 with Minister Colombo flanked by State Accountant General Stammati, Treasury [Page 303] DirGen Nuvolini and new Treasury member WP-3 and G-10 Deputies Palumbo.
Secretary Fowler mentioned his hope ratification SDR amendments could be achieved by early next year. Colombo said shared this hope. Indicated that in Italy, after inevitable interruption Parliamentary consideration due forthcoming government reorganization, both Parliamentary chambers would be pressed to complete ratification quickly.
Secretary noted Johnson administration together with liberal minded members of Congress had been able hold back strong protectionist tendencies, but liberals becoming discouraged by developments in EC and Japan. EC Common Agricultural Policy creating ever larger surpluses which cutting into U.S. export possibilities, European border tax adjustments growing in detriment to U.S. trade and talk preferential commercial arrangements between EC, UK and other countries further aggravating situation. Trade measures should be made integral part B/P adjustment process. While said did not know what views next U.S. administration would have in trade area, Secretary stated hope EC in next months could cooperate in measures which would improve atmosphere in which new Congress would consider trade measures. Specifically suggested EC go through with acceleration KR, without insistence removal ASP, and move constructively in border tax area such as by recognizing legitimacy relief for countries whose tax system depended mainly on direct taxes.
In reply Colombo expressed appreciation U.S. efforts in resisting protectionism. Stated ASP was linked with acceleration KR at French insistence. Italy’s basic idea KR acceleration is good-will gesture which ought to be reciprocated by some motion on U.S. side toward ASP passage.

On proposed commercial arrangements with UK, Colombo stated personal opinion any arrangement for trade preferences should be tied with specific objective for achieving economic integration. Italy and Netherlands feel strongest about this. Germany not as staunch as before and Colombo hoped Secretary Fowler in visit to Bonn could help to firm up German position. Colombo said 1969 will be critical year for CAP. He personally feels CAP costs too much, creates agricultural surpluses and favors status quo rather than progress. In his opinion, export differential payments should be narrowed while expenditures for agricultural productivity improvement should be increased. Finance Minister Strauss agrees with this. But not clear that Italian or German Government as a whole does.

Colombo depressed general agreement trade policy was stagnant area in which all believing in liberal trade policies should seek resume constructive forward movement.

Secretary mentioned positive results of NATO meeting in Brussels.2 This connection Under Secretary Deming explained to Minister Colombo proposal which he had made separately to Carli November 16 regarding Italian purchase of special U.S. Treasury securities to help neutralize U.S. military expenditures in Italy. Colombo promised consider this in concert with Carli.
Meeting closed with mutual expressions appreciation past collaboration and hope close working relationship would be continued by successors. (Colombo did not say what his future would be but remarked he speaking for government which would cease exist in 24 hours.)3
This message not cleared with Secretary’s party.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967-69, ORG 7 TR. Confidential. Repeated to Bonn for Fowler, to Paris, and to the EC Mission in Brussels.
  2. The NAC Ministerial meeting was held November 12-16.
  3. The government offered its resignation November 19, and Mariano Rumor formed a center-left government on December 12.