159. Memorandum for the President’s File by the President’s Assistant for International Economic Affairs (Flanigan)1

SUBJECT

  • Meeting with Sir Christopher Soames, February 16, 1973, 9:35 a.m.

On Friday, February 16 the President met in the Oval Office with Sir Christopher Soames, Vice President of the European Community Commission for external trade relations. Helmut Sonnenfeldt of the NSC and Peter Flanigan also attended the meeting.

The President opened the meeting by reaffirming his belief that 1973 is "the year of Europe"—not to the exclusion of the PRC, but as he had said to Prime Minister Heath, "in this year we must work with Europe more than we have in the past."2

He pointed out that there is a strong strain of isolationism growing in the United States, with the old internationalists becoming the new isolationists. These people do not feel the U.S. should maintain its strength. One basis for this position is the belief that the Soviet Union [Page 604]is no longer a threat to the free world. Those who believe in international cooperation will be fighting an uphill battle, both the U.S. and Europe, to maintain NATO strength and to cooperate on trade. Nevertheless he stated his belief that the U.S. cannot turn inward; in that event the Europeans and Japanese would be neutralized.

Sir Christopher replied by noting the remarkable change in the world, thanks to the President’s initiatives. He pointed out that Europe’s only single voice at this time relates to trade, and that trade was his responsibility in the European Commission. The current time is propitious for trade negotiations because Europe has to find its place in the "unfrozen world" which the President created. However, the current time is also unfortunate because our trade deficit has created a malaise regarding cooperation on both sides of the Atlantic. Sir Christopher pointed out his belief that negotiations on trade can bring some benefits, but the real benefits to be gained lie in the political arena.

With regard to specifics, Sir Christopher indicated his concern, based on conversations the previous day, that the United States believed it could benefit from GATT negotiations on (1) EC enlargement, (2) EC arrangements with the EFTA countries, and (3) multinational trade. He agreed that there may be some "give" with regard to negotiations on EC enlargement, but felt that the "door is closed" on negotiations regarding EC’s arrangement with EFTA countries. He stated that Europe is convinced there is no legal or moral obligation for compensation. On the major trade negotiations to begin in the Fall, the U.S. should recognize the problems that Europe has with agriculture and also recognize the growth it has enjoyed in agricultural exports to the EC.

Regarding negotiations on industrial tariffs, Sir Christopher indicated some possibility of success, subject to the connection between these negotiations and the problem of Japanese exports.

Soames indicated that by the end of March he must put before his Council of Ministers a politically realistic trade proposal. In designing such a proposal he is concerned that the Europeans will be loath to enter negotiations if too strong positions are taken in advance by the U.S. because of its internal situation. He is disturbed by the implication that it is the responsibility of Europe to help the U.S. "put its deficit right," rather than the responsibility of the U.S. to work harder on exporting.

The President pointed out that agriculture is not only important as an export to the U.S., but also that given the make-up of our Senate it must provide the necessary votes to pass a trade bill. In addition, our position on trade must effectively replace the Burke–Hartke bill which would be economically disastrous both for us and our trading partners. The Europeans should recognize that Burke–Hartke has wide support in this country, although the Administration has been outspoken [Page 605]in its opposition. The President stressed that our alternate to Burke–Hartke must reassure reasonable Americans that our products have a fair shake in world trade. Finally, the President noted that while Japan is the major part of the problem, many Americans regret the formation of the EC.

The President agreed with Sir Christopher that the two dangers of the upcoming negotiations are that the Europeans and the United States get into an ugly confrontation on economic matters, and that Japan becomes a "wild card" and is left out of the trading arrangements. Sir Christopher expressed the opinion that the only solution to Japan is to have it break down its barriers and accept Europe and the U.S. in their market.

Sir Christopher remarked that he had heard the previous day considerable complaint regarding the preferential rights given to other countries by the Community. He pointed out that these preferential rights reflect responsibilities to former Commonwealth countries and to the Mediterranean countries in which Europe must take an interest. The President replied that he would instruct the Administration to take a "hard look" at the Mediterranean preference problem. He pointed out that our own proposed system of generalized preferences might well be particularly attractive to Latin America. He also recognized that it is in the interest of the security of the free world that Europe maintain its ties to its former colonies. He agreed that politically it is not in the U.S. interest to "dabble in every country in Africa." He commented, however, that while perhaps one should not get excited about an individual product like citrus, we cannot ignore the real political complications this causes us.

The President and Sir Christopher discussed energy briefly and agreed that we should stay in touch.

At the close of the meeting the President indicated his hope that President Ortoli would visit him in Washington at an acceptable date to be mutually agreed upon.

  1. Source: National Archives, Nixon Presidential Materials, White House Special Files, Staff Member & Office Files, President’s Office Files, Box 91, President’s Meeting File, Memoranda for the President’s File, Beginning Feb 11 (1973). No classification marking. The meeting lasted from 9:46 until 10:32 a.m. (Ibid., White House Central Files, President’s Daily Diary)
  2. Heath visited the United States February 1–2.