Foreign Relations of the United States, 1964–1968, Volume XV, Germany and Berlin

142. Memorandum of Conversation¹

Washington, December 21, 1965, 10 a.m.

SUBJECT

• Kennedy Round

PARTICIPANTS

• Chancellor Erhard
• Prime Minister Schroeder
• State Secretary Dr. Carstens
• Ambassador Heinrich Knappstein
• State Secretary Karl von Hase
• Minister Georg von Lilienfeld
• Assistant Secretary Franz Krapf
• Assistant Secretary Karl Hohmann
• Press Spokesman Jorg Kastl
• Secretary Rusk
• Secretary Fowler
• Under Secretary Ball
• Governor Herter, President’s Representative
• Mr. Donald Hornig, Presidential Science Adviser
• Under Secretary Mann
• Ambassador McGhee
• Ambassador Thompson
• Assistant Secretary Leddy
• Assistant Secretary Solomon
• Ambassador Hand
• Mr. William S. Gaud, Deputy Director—AID
• Ambassador Roth
• Mr. Bator—White House
• Mr. Puhan—GER
• Mr. Finn—GER

Secretary Rusk opened by asking whether there were any points the Chancellor wished particularly to discuss.

Chancellor Erhard asked about US views on the Kennedy Round. He said the FRG was working for the full success of the KR and felt that there would be a great loss in cooperation between North America and Europe if the KR failed.

Governor Herter said he was delighted to hear this. Since May 1963 there had not been much progress at Geneva and things were now completely stalled. Governor Herter said that he did not see that the United States could do anything to disentangle the Common Market impasse and that, although there was talk of various possible alternatives to the KR, he could not see that they were equally viable. The United States hopes for a resolution of the current difficulties so that we can all move ahead.

Regarding the timetable, Governor Herter said that we have a year and a half ahead of us. Substantial or complete agreement on the KR must be obtained four or five months before this time elapses. Therefore by mid-March 1966 at the latest, the resolution of the Common Market nations to move ahead must be in evidence. Regular meetings must be under way by May 1966.

To get moving, Governor Herter said that it would be necessary for the Six to reach a commitment for the successful conclusion of the KR and especially that a flexible mandate should be given to the Common Market negotiators rather than faits accomplis. The US has made its position clear and reciprocal agreements on both sides are needed. Furthermore, progress must be made regarding agriculture, either by direct negotiations or by international agreements. On agriculture we recognize that the Common Market has an internal problem.

Governor Herter said that the Trade Expansion Act (TEA) expires in June 1967 but an agreement on the Kennedy Round must be signed before that time since a number of matters will have to be worked out before the Act expires. The Governor noted that protectionist forces may grow in strength.

Under Secretary Ball said he wished to emphasize that there would be enormous difficulties in obtaining any extension of time from Congress, even though we might be well down the road to agreement when the TEA expires. Under Secretary Ball said that the Congress would very carefully examine the results of the KR negotiations.

Secretary Rusk described the political background of President Kennedy’s decision to ask Congress for the TEA. The Secretary said that President Kennedy had decided to press for far-reaching legislative authority to expand trade rather than asking for a one or two-year extension of the Reciprocal Trade Agreements Act. President Kennedy had also asked Governor Herter to take charge of the program.

The Secretary noted that the spirit of Atlantic partnership had been strong at the time President Kennedy made this decision. Strong support for the TEA had been obtained. If we are still having major problems by June 1967, the idea of trade expansion will be in very serious straits. The United States therefore appreciates the efforts of Chancellor Erhard and the FRG to move ahead.

Chancellor Erhard said that he was fully aware of the great economic and political significance of the KR, noting that he had personally been involved when he was Economics Minister. The Chancellor said that the EEC has a mandate to continue negotiations on industrial items but that a Common Market decision is needed on agriculture. The Chancellor said that the FRG would be encouraged to take up new initiatives as a result of his visit to Washington.

The Chancellor noted that French views on agriculture are different from those of the FRG. The FRG is the largest importer of agricultural products in the EEC. The other members are not so interested in agricultural imports. The Chancellor stressed the economic and political importance of the KR and the significance he attached to it.

Foreign Minister Schroeder said that the EEC problem is linked directly to the present state of relations among the Six. He thought that it might be possible in January to get the French back to the negotiating table by a roundabout way—in Luxembourg. He noted that there are extremely difficult questions involved requiring major decisions.

The Foreign Minister said that a further mandate must be given on the basis of unanimity for KR negotiations. This will not be easy to obtain but the Foreign Minister was not pessimistic. He thought that problems with France would come to some resolution and that a mandate would be given. The Foreign Minister said the problem is up to the Six but he thought the US could give useful encouragement as regards speeding up the KR.

1. Source: Department of State, Conference Files: Lot 67 D 305, CF 2571. Confidential. Drafted by Finn and cleared in S on December 29. The meeting was held in the Under Secretary’s Conference Room. The source text is marked “Part I of II.”