193. Memorandum From the Deputy Assistant Secretary of State for African Affairs (Westerfield) to the Assistant Secretary of State for Economic Affairs (Greenwald)1
- U.S. Trade Policy—NSSM 16: Tariff Preferences for LDCs
We are concerned that the paper which went to the NSC Review Group on April 7 does not reflect the views on tariff preferences for LDCs which we have repeatedly stated and which were partly accommodated in the revised draft paper you circulated on March 28.2 The essential point which was lost in the paper which went forward is that reaffirmation of the U.S. position on preferences for LDCs would cause problems for U.S. relations with African countries associated with the EC.
For example, the revised draft stated (p. 27, paragraph 2), “If some LDCs continued to extend preferences to other DCs, our relations with those LDCs, which would not receive U.S. preferences, would undoubtedly be strained.” This was weakened in the final paper (p. 12, paragraph 1) to read, “The immediate and certain foreign policy gains from a decision to move ahead might be offset in the longer run by strains arising from, for example, … the withholding of preferences from some LDCs because they continue to extend reverse preferences.”
As I noted in my memorandum of March 27,3 implementation of generalized preferences would mean calling on Africans to pay what they regard as a stiff price for something of little or no value to them. The African associates of the EC depend on exports of primary products and are not in a position to sell manufactured goods to developed countries, even with preferences. If they participate in the generalized arrangement envisaged, they would not lose preferential access to the EC market for their primary products, but would risk losing EC and French aid, which they are convinced is predicated on reverse preferences. If they should decide to hold on to their present benefits and refuse to participate in generalized preferences, they would be denied entry into the U.S. market on the same terms as other LDCs. As a result, [Page 507]the associates would probably reinforce their special ties with the EC, especially since the U.S. has phased out bilateral aid to most of them. The end result could well be further insulation of a European-African trade and aid area, with inevitable unfavorable effects on U.S.-African relations.
We believe that the NSC Review Group should be aware of the damage which option B-2 would be likely to cause to U.S. relations with very underdeveloped countries with special ties to selected developed countries. The Review Group should also understand that this difficulty could probably be avoided if the U.S. made it clear in reaffirming support for generalized preferences that it expected that the arrangement would be designed so that no individual LDC would suffer a net loss from participating in it.