225. Memorandum From the Assistant Secretary of the Treasury for Trade, Energy, and Financial Resources Policy Coordination (Parsky) to Secretary of the Treasury Simon 1

SUBJECT

  • Treatment of Agriculture in the Multilateral Trade Negotiations

Issue: The U.S. and the European Community are heading toward a confrontation on the treatment of agriculture in the MTN which could stalemate the negotiations. We need a policy level decision on the degree of flexibility which should be allowed our negotiators. Bill Eberle is sending the problem to the Economic Policy Board for consideration next week.

Recommendation: When the matter is brought up in the EPB, I recommend that you seek agreement on the flexible approach outlined in Option 4 of the attached paper (Tab 1).2

Background: The European Community, supported by Japan and others, believe the trade issues associated with agriculture are sufficiently distinct to require separate attention in the upcoming Multilateral Trade Negotiations (MTN). The U.S., with varying degrees of support from Australia, New Zealand, Canada, and Argentina has taken the position that many of the questions encountered in agriculture are no different from those in the industrial sector and should therefore be treated together on a functional basis in the MTN. A solution to this issue must be found before the February 11, 1975, Trade Negotiations Committee meeting (TNC) if we are to avoid a deadlock on further discussions which could risk the success of the Negotiations.

The U.S. position has been based to a large extent on USDA’s strong opposition to separate industrial and agricultural negotiations. It is USDA’s belief that little if any progress was made on agriculture in the "Kennedy Round" because these items were treated separately. They feel that by not treating industrial and agricultural questions together in the upcoming MTN, U.S. bargaining leverage to obtain agricultural [Page 781]trade liberalization will be diminished—resulting again in little if any progress on agricultural matters.

We do not share USDA’s assessment of the situation. Events of the past year have clearly shown that there are certain unique agricultural issues which must be dealt with in an independent group. We could still reach our goal of assuring that

  • "To the maximum extent feasible, the harmonization, reduction, or elimination of agricultural trade barriers and distortions shall be undertaken in conjunction with the harmonization, reduction, or elimination of industrial trade barriers and distortions"

if agricultural and industrial issues were treated in separate but closely linked negotiations which would assure comparable progress in both areas. We believe therefore the U.S. should be prepared to support a flexible approach which would encourage the inclusion of both areas in the overall negotiations while recognizing the need in certain instances for separate, but coordinated treatment of unique agricultural questions.

I am attaching a copy of an Agricultural Negotiations Options Paper drafted by STR and USDA (Tab 1) along with a copy of a memorandum from Bill Eberle to the President dealing with this question (Tab 2).3 Eberle’s memorandum favors Option 4. Commerce and State also favor Option 4. I agree.

Eberle’s staff has told us that he will forward his memorandum and the Options Paper to Bill Seidman today. The issue should then be discussed at the EPB early next week.

  1. Source: Ford Library, L. William Seidman Papers, Box 77, Economic Policy Board Subject File, Multinational Trade Negotiations (1). No classification marking. Drafted by Treasury staff member E.A. Greene on January 31; reviewed by Treasury staff member J.E. Ray on January 31. Simon wrote at the top of the memorandum: "To Bill Seidman—this should be discussed @ EPB early next week. Agree? Bill."
  2. Tab 1 is printed as Tab A of Document 226.
  3. Tab 2, attached but not printed, is the memorandum from Malmgren, as the Acting Special Representative for Trade Negotiations, to the Executive Committee of the Economic Policy Board, attached as Tab B to Document 226.