262. Editorial Note

During the Rome G-10 Ministerial November 30-December 1, 1971, the Finance Ministers agreed to an immediate launching of trade negotiations to complement the resolution of the international monetary crisis, which was emerging from the Rome discussions. Trade officials did not concur as readily. For late 1971 trade-related documentation in the context of the monetary negotiations, see Foreign Relations, 1969-1976, volume III.

U.S. and EC trade negotiators did meet in Brussels December 21-22 for an exchange of views on the outstanding issues. William Eberle was head of the U.S. delegation; Theodorus Hijzen headed the EC delegation. Eberle reported on the negotiations in telegram 4268 from Brussels, December 22. He set out the U.S. and EC positions on grain storage, citrus, tobacco, and grain trade. Regarding grain trade, the United States wanted the benefits of exchange rate realignments that the CAP variable levies denied. The EC maintained that the variable levies were the cornerstone of the CAP, but that it would negotiate elements of the CAP on a global basis provided the agricultural policies of its negotiating partners were also on the table. In the short term, within the limits of CAP rules, the EC would seek to price its grain exports above the price of U.S. exports to third country markets so as not to create trade diversion.

Paragraphs 7-9 of the telegram reported on the discussions of preferential agreements:

“7. Preferential agreements: US position—The US and the EC should agree to a mutual standstill on preferential arrangements during a specific time period in which longer term solutions could be negotiated. Membership agreements and generalized preferences would be exempt from the standstill. A special exception would be made for the EFTA neutrals whereby negotiation of the free trade [Page 669]agreements could continue by the EC and EFTA neutrals would agree to protect the US and other third countries from any trade distortions that would result from these arrangements. The EC would consult with us during these negotiations in order to protect the interest of third countries. These consultations would parallel but not impede or slow down the negotiations with the neutrals. This should help to resolve possible trade distortion problems. Any problems of trade distortion that remain upon completion of the EC negotiations with the neutrals would be taken up in subsequent negotiations. EC position—A standstill is out of the question. It would affect basic policies of the EC which are in the process of being carried out, e.g., Mediterranean policy and the construction of Europe. The EC cannot agree to go beyond the procedures of GATT which are adequate to safeguard the interests of third countries. The EC is engaged in negotiations with Cyprus, Egypt and Lebanon and has commitments to the UK Commonwealth countries in Africa and the Caribbean. The EC would hardly admit consultations about ‘trade distortions,’ but the question of consultations can be discussed further. EC refuses to undertake any commitments regarding trade ‘distortion.’

“8. Second phase: 1972 commitment—US position—We reiterated our interest in negotiating promptly in 1972 on specific trade problems resulting from EC enlargement and in having US and EC agreement to support GATT negotiations to resolve all trade problems capable of resolution in 1972 including but not limited to the list of problems identified in GATT. EC position—The EC stated that in accordance with its declaration of December 12 it would notify the accession treaty to the GATT immediately upon signature. It was not in a position to agree to negotiations before ratification by the European parliaments concerned. (Commission officials indicated that preparatory work could begin earlier provided this was done informally and was not construed as ‘negotiations.’) The EC was prepared to negotiate in 1972 on matters now under consideration in GATT committees. The EC declaration of December 12 expresses willingness to negotiate.

“9. Third phase: 1973 trade negotiations—US position—The US and EC should agree to proceed in good faith during 1972 to begin to prepare for a full-scale review of the entire trading system, including measures which obstruct and distort agricultural, raw material and industrial trade. Such review would aim for negotiations beginning in early 1973 (subject to any necessary internal authorization). EC position—The EC stressed that on the basis of its declaration of December 12 it was prepared to enter into such a review aimed at preparing for negotiations.”

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Paragraphs 10-12 covered the discussion of reciprocity, an agreed press statement, and guidance regarding the telegram’s use and follow-up reporting. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 402, Trade, Volume IV 7-12/71, attached to a December 28 memorandum from Hormats to Kissinger)

The U.S.-EC trade discussions/negotiations continued in 1972, and on February 11 the two sides signed in Brussels a declaration averring their intention to undertake and actively support multilateral and comprehensive trade negotiations within the GATT framework beginning in 1973. See Department of State Bulletin, April 3, 1972, pages 515-517, for the declaration and the February 11 exchange of letters between Hijzen and Eberle regarding short-term agricultural trade commitments and other matters.