48. Memorandum of Conversation1
SUBJECT
- Grain Price Unification and Related Issues; Hallstein’s Personal Situation
PARTICIPANTS
- President Walter Hallstein, Commission of the European Economic Community
- Under Secretary Ball 2
- Ambassador George C. McGhee
- Ambassador John W. Tuthill
- Ambassador W. Michael Blumenthal
- Mr. George Springsteen, Special Assistant to the Under Secretary
Unified Grain Price
President Hallstein stated that while there was movement on the problem of grain price unification within the German Government, a final decision has not yet been taken by Chancellor Erhard. Defhues is one of the few key members of the CDU who remains adamantly opposed to a decision at this time. Hallstein’s view is that even though it is more difficult to take a decision now than it would have been six months ago, the decision is nevertheless necessary and will probably be taken within the next few weeks.
The Under Secretary agreed with President Hallstein’s assessment, and advised him that, in his conversation with Chancellor Erhard yesterday, he had urged that Germany take this step. He also felt it was likely that the decision to move ahead would be taken in the near future.
Hallstein took considerable satisfaction in the Community’s decision to table its exceptions list on November 16th. He emphasized, however, that there were many key issues to be resolved within the Community in the next few weeks.
President Hallstein stressed his hope that the timing of decisions on MLF would be such as to avoid complicating the decisions that must be taken within the European Community. He came back to this theme several times. He indicated no doubt in his mind as to the desirability of the MLF, but he placed considerable emphasis on the desirability of allowing the Community to resolve its problems first.
The Under Secretary pointed out that Foreign Minister Schroeder would be visiting the United States and the United Kingdom in the next few weeks; that Prime Minister Wilson would be visiting the United States, and that he, Mr. Ball, would be returning to Paris and possibly to London. He said that, with these diplomatic talks, it would be quite clear that the MLF was an important issue under active discussion. Therefore statements would be made and, of necessity, publicized. Their tone would be such as to indicate forward movement on the MLF. The Under Secretary left President Hallstein with no illusion that the United States would slow up progress on the MLF. He did indicate that the various diplomatic discussions would necessarily take some time.
President Hallstein described what he felt could be accomplished in a year-end package negotiation within the Community, assuming that the Germans agree to unified grain prices. He felt that agreement should be reached on acceleration of the EEC internal tariff reductions and progress on a number of items involved in the Erhard proposals. He considered that the words “political unity” were far too strong to describe the specific Erhard proposals, but he felt, nevertheless, that there were a number of elements on which agreement would be possible.
Ambassador Tuthill expressed surprise that President Hallstein had not mentioned the need for change in the December 1963 Community [Page 111] mandate in the field of agriculture and the Kennedy Round. President Hallstein asked what in fact would be necessary. Ambassador Blumenthal and Ambassador Tuthill then listed three elements which, in their view, would have to be changed or reinterpreted in order to allow meaningful agricultural negotiations in GATT. These were: (1) Clarification that the Community was not expecting its partners to adopt the montant de soutien themselves as a basis for negotiations. (2) An understanding that the use of the montant de soutien as a basis for Community offers would not be so wide as to result, by this means, in a de facto extension of the levy system to a significant range of agricultural products not presently under the variable levy system. (3) Some improvement in the mandate in order to give meaning to the GATT Ministers’ decision to achieve “significant liberalization” i.e., to achieve reduction of protection for some agricultural products.
President Hallstein appeared somewhat surprised at this position, but Ambassadors Blumenthal and Tuthill pointed out that these essentials had been discussed in some detail with Mansholt in Brussels, and with Rabot and Hijzen in Geneva. President Hallstein inquired whether formal agreement on the kind of general rules language discussed at the last bilateral Geneva meeting would fulfill the requirements for creating a better basis for agricultural negotiations. Ambassador Blumenthal explained that this was probably not so, since the language involved had been designed to protect both the United States and the EEC position while postponing further elaboration of the basis for agricultural negotiations. The language in question would not serve to assure that the Community was in a position to meet the three points mentioned above.
President Hallstein asked when the United States Government felt the Kennedy Round negotiations would be concluded. Under Secretary Ball and Ambassador Blumenthal stated that, while the United States Government would like to see the negotiations concluded sometime in 1965, it was recognized that in fact they might run into the early part of 1966. It was clear that Hallstein raised this question in the context of possible future action on the part of the French blocking the progress in the Kennedy Round. He pointed out that as of January 1966, the French would not have the veto right on the Kennedy Round and similar issues. He stressed once more his well-known conviction that it is essential to get past this date.
The Under Secretary asked President Hallstein whether he felt that the French might raise questions during 1965 about the January 1, 1966 termination of the unanimity rule in Community decision making on commercial policy and similar matters. President Hallstein replied that there had indeed been some indication to this effect. The picture was not clear and one could not be certain what the French Government really had in mind in this regard. With respect to the questions as to the German [Page 112] attitude regarding the loss of veto, Ambassador McGhee pointed out that if Germany had made the decision on the unified grain price, it would not have any reason to fear the veto. President Hallstein agreed.
Philosophizing on tactics of the Commission, he stated that it was basic Commission policy to concentrate on weaving every thread in the fabric in order to strengthen the Community and thus to make it more difficult for De Gaulle to break it up. He stated that the decision to go ahead on November 16 was one such thread and the unified grain price decision would be an even more important one.
Hallstein’s Personal Political Plans
President Hallstein confirmed the newspaper reports that he had been offered a “good” (meaning undoubtedly a safe) constituency in Wuerttemberg-Baden. He stated that he could not have received a more attractive offer should he decide to return to German politics. He stated that he had not made a decision but that he would have to give his friends an answer “early in 1965”.
- Source: Department of State, Central Files, ECIN 6 EEC. Confidential. Drafted by Tuthill and Blumenthal and approved in U on December 12.↩
- Ball visited Berlin and Bonn November 14–17 for talks primarily on the MLF and the EEC unified grain price. For a report on his trip, see Document 49.↩