82. Editorial Note

President Richard Nixon met with the Executive Committee of the Council on International Economic Policy on September 11, 1972, to discuss general trade issues relating to the European Community (EC). The United States supported the enlargement of the EC primarily for political reasons, setting aside its concerns over economic incompatibilities between the Treaty of Rome and GATT. Yet enlargement and expansion of preferences created potential difficulties in the months [Page 341]ahead. At the meeting, Nixon stated, “more is involved here than just questions of ‘horse-trading’ between soybeans and cheese. The question is what Europe wants its position to be vis-à-vis the US and the Soviet Union. We hear about Finlandization of Europe. If Europe should adopt a trade policy which is anti-US, it could affect attitudes in the US—bring about an unenthusiastic attitude toward Europe—and will carry over into the political area. There will be pressure to withdraw divisions and NATO would come apart. The idea that Europe can defend itself without the US is ‘bull.’ If NATO comes apart, they will be an economic giant but a military and political pigmy. The USSR will encroach on them. It will not be in the traditional way but a new-style invasion. European leaders are terrified at that prospect. European leaders want to ‘screw’ us and we want to ‘screw’ them in the economic area.

“But political relationships should be overriding for us and for them. What will matter in trade is its relationship to the total problem—what we want our relationship with Europe to be. Between now and the election we should say nothing, but we should give careful thought about how trade relations fit in the context of our overall relations. We should examine what price we might have to pay on the trade side for this political relationship, and they should do so as well. We should not allow the umbilical cord between the US and Europe to be cut and Europe to be nibbled away by the Soviets. We need to strengthen the bonds of trade, monetary relations, exchanges, etc.” (Printed in full in Foreign Relations, 1969–1976, volume III, Foreign Economic Policy, 1969–1972; International Monetary Policy, 1969–1972, Document 100)

As a result of this meeting, the President authorized CIEP Decision Memorandum 14, “Trade Negotiations with the European Community,” September 25, which called for a “policy of modified confrontation exerting controlled but mounting pressures on issues involving both our trade interests and the principles of the present system. This should be done bearing in mind the overriding importance of our political relations with Europe and the probability that our trade problems cannot be satisfactorily resolved except in the context of larger policy considerations. (Printed ibid., volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972, Document 277)