288. Telegram From the Department of State to the Embassy in Belgium1

116198. BUSEC/CEDTO/NATUS/IAEA. Subj: Evaluation Rey Visit.

EC Commission President Rey’s first official visit to Washington, February 7–8 concentrated on B/P issue. We achieved our primary objective of impressing on Rey and his party high priority we assign to restoring equilibrium, relation this objective to broad political and security issues and our view of responsibility of EC surplus countries. In course of meetings with Secretaries Rusk and Fowler and Under Secretary Katzenbach, these points were made forcefully with stress on unfinished task of measures necessary to improve our trade account. In meeting between Rey’s party and inter-agency group at Under Secretary level, [Page 665] chaired by Katzenbach which lasted 2–1/2 hours in two sessions (see septel),2 U.S. presented rounded view of B/P problem requiring EC cooperation. Rey and Deniau were obviously impressed by seriousness of the problem. We believe that as result his talks Rey appreciates political necessity for him to be cooperative on trade side and recognizes role this can play in containing protectionist pressures particularly as manifested in Congress. Since Commission’s powers limited with respect to economic expansion, interest rate management and capital markets, measures in these fields were only discussed in technical presentation and not in terms of action by the Commission. Rey also indicated little likelihood EC could take trade measures benefiting U.S. trade account in short term. Rey apparently sees his responsibility to consult with the Commission and member countries on whether it will be possible for the EC to stand still should the U.S. find it necessary to take moderate action in trade field. He promised U.S. fairly precise indication of the Commission’s thinking when Trezise mission arrives Brussels February 22.
Rey repeatedly stressed the importance of achieving U.S. program in fiscal field (income tax surcharge) in connection with obtaining European cooperation on B/P. He also stressed need to maintain KR agreements and specifically to abolish ASP. Amb. Roth made clear that it would not be possible to wait until after Congress acts on ASP before making a decision on B/P trade measures.
Other major U.S. substantive point concerned NPT discussed by Secretary, Chairman Seaborg, Messrs. Fisher & Leddy. Messrs. Fisher and Leddy impressed on Rey and his party need to begin informal talks with IAEA ASAP. Rey responded Commission’s objective was to facilitate signature of NPT by member countries not to obstruct. He said Commission would seek negotiating mandate from Council of Ministers at end of month. It was also agreed in meetings with Seaborg and Fisher that it would be desirable have close contacts between U.S. and Commission while informal talks were going on. On staff level, Foch confirmed our earlier understanding from Spaak that Commission staff’s thinking on nature of verification agreement well advanced.
Rey’s visit was relatively uneventful with respect to UK-Six. Leddy stressed our opposition to association or free trade area solution. Rey on several occasions said such solution not in cards because unacceptable to UK. Rey’s main line on UK/Six issue was that Communities have been in crisis since December 19 and he was optimistic that in few months crisis would be on way to solution by some major compromise as in 1964. Problem was to find adequate interim solution for UK and three other applicants. Benelux proposals were acceptable provided measures and activities contemplated thereunder would be within Communities [Page 666] framework. He repeated several times his opposition to development of technological policy outside Communities framework.
It is clear from what has been said above that Rey’s first visit was an occasion for significant worthwhile discussions on substance. U.S. side, from President,3 Cabinet and sub-Cabinet officers to staff level, made clear to Rey and his party that U.S. looked to Commission and to European Communities for important cooperation on B/P problem as well as other economic problems, e.g., agriculture (see septel).4 Rey heard our views expressed at all levels with a good deal of unanimity and singularity of purpose. We in turn heard Commission views on a variety of important issues. Given the collegial nature of the institution which he chairs, which in turn represents an organization of six member countries with widely differing views, Rey’s response on B/P problem, while qualified and tentative, was remarkably forthcoming. The forthcoming nature of his response was influenced by the fact that he was deeply moved by the warmth of his reception. His conversation with the President and the Vice President’s luncheon and toast in his honor were high points in this regard. But he was also influenced by the fact that U.S. was actually asking Communities for cooperation in a specific substantive area appealing not only to goodwill but to hard mutual self interest.
Finally, ground work firmly laid for future consultations on highest level as needed. The President told Rey he welcomed these consultations and said they would be useful in future development of relations between U.S. and EC. Principle to hold U.S.-EC consultations as needed in the future was incorporated in the Joint Statement5 following Rey’s call on the President. Combined meeting on B/P constituted useful precedent. During course of visit Rey and Solomon agreed that another subject for such consultation might well be entire question of association and preferences in the wake of UNCTAD and before Yaounde Convention is renegotiated.
In sum, Rey was clearly pleased with his visit. He clearly understands U.S. position and we believe he has undertaken a rather difficult assignment with respect to his Commission and member states. We, for our side, are pleased that his first visit as President of the Commission went beyond reiteration of long-standing U.S. positions on Atlantic partnership into specific useful discussion of what such partnership means at the present time.
Recipient posts may draw on above in conversations with officials of host governments. However care should be exercised to speak of [Page 667] Rey’s response to our B/P presentation in most general terms. Line we are taking in response to inquiries is that there was thorough airing of the problem and Rey indicated he would consult with Commission and member countries and give us more precise indication of Commission’s thinking when Trezise mission arrives in Brussels.
  1. Source: Department of State, Central Files, EEC 7. Confidential;Limdis. Drafted by Katz on February 12; cleared by U, E, EUR, STR,AEC, ACDA, the White House, and Treas-ury; and approved by Leddy. Also sent to Geneva, Paris, Bonn, Rome, The Hague, Luxembourg, London, and Vienna.
  2. Not found.
  3. For a memorandum of President Johnson’s conversation with Rey, see Document 287.
  4. Telegram 113390 to Bonn, February 10. (Department of State, Central Files, EEC 7)
  5. See footnote 2, Document 287.