307. Analytical Summary of a Study Prepared by the Ad Hoc Interdepartmental Group for Europe1

ANALYTICAL SUMMARY

Review of US-French Bilateral Issues

Background and Summary

NSSM 166 of December 26, 1972 requested the agencies to submit a review of all bilateral and multilateral issues either currently under discussion or likely to be the subject of discussion between the United States and France during the first half of 1973.

The NSSM 166 response has been prepared by the IG/EUR and has been forwarded by State for consideration by the Senior Review Group. State has also forwarded a summary of the response identifying interrelationships among the more significant issues.

In format, the NSSM response is as follows: I. Summary, pages 1–5; II.A. Bilateral Political Issues, pages 6–12; II.B. Bilateral Economic Issues, pages 13–25; II.C. Bilateral Politico-Military Issues, pages 27–43. Section III, Multilateral Issues, is organized as follows: A. Air Security Enforcement Convention, pages 45–46; B. Trade Issues, pages 48–52; C. EC Trade Issues, pages 53–57; D. Monetary Reform, pages 58–59; and E. Post-Apollo Space Program, page 60. It also includes as an appendix Section IV listing additional, non-controversial US-French Issues.

The paper is summarized below with our comments in parentheses. (While some of the material has understandably been overtaken by events, the NSSM 166 response provides a useful catalogue of bilateral and multilateral issues currently under active consideration by the United States and France. Most of the material will not require consideration during the SRG meeting.) As noted in my covering memorandum, you will probably wish to focus the meeting on bilateral political-military issues such as negotiation of the FRELOC Claim and the Military Line of [Typeset Page 937] Communication through France as well as certain of the bilateral economic issues including GESNECMA, EXIM Financing of Aircraft Components and the multilateral EC Trade Issues.

I. Overview and Interrelationship Among Issues (pp. 1–5)

French foreign policy is currently affected by three important political considerations: US-Soviet entente in key areas of security policy, the de facto resolution of the German problem and the concomitant removal of postwar restraints on the Germans, and the détente atmosphere likely to be induced by the CSCE. The French thus see a Europe emerging in which there will be a resurgent and economically dominant FRG, and in which there is the fear that the United States may withdraw or diminish its presence—US security presence is, therefore, important in French priorities.

Continuing French insistence upon independence in the defense and economic fields has led to the sharpest areas of conflict between the United States and France. At the same time, the French are reacting pragmatically to the current international political realities: for example, by encouraging British entry into the EC as a counterweight to the Germans and by expanding their cooperation in security matters with the United States.

Over the past two years, the French have attached priority to reestablishing US-French military relations—accounting for recent movement on FRELOC and the Lines of Communications issues. We have also experienced increased cooperation on narcotics enforcement, as the French have come to recognize that their citizens as well as ours are threatened by drug abuse.

At present, the sharpest areas of US-French conflict stem from economic causes. The French wish either to establish or maintain advanced technologically based industries which are independent of the United States. This has translated into three specific problem areas:

Aviation questions, including Concorde, GESNECMA licensing arrangements and Eximbank financing of aircraft components—with the French determined to maintain an independent aviation industry;

Export of aircraft and arms: France, the third largest exporter behind the US and USSR is extremely sensitive to any moves that might further damage lagging aircraft and arms export sales; and linked to these two issues,

US Policy on strategic trade controls and export of technology, with the French chaffing at US policy that blocks French sales of high-technology items to Communist countries.

Added to these specific problems are US-French differences on international monetary reform, France’s policy of preferential trading arrange[Typeset Page 938]ments with its old colonies, and France’s policy on agriculture, transformed as it has been into the EC’s Common Agricultural Policy.

The NSSM response notes that virtually all these trade problems emerge within the EC context where they are magnified in importance and effect as they influence the views of other EC members. This suggests that prior to the forthcoming multilateral trade negotiations, advance bilateral preparation and consultations with the French should be held if we are to expect a successful multilateral outcome.

(While making these points, the study does not do a satisfactory job of underlining that France has as one of her fundamental foreign policy objectives that of being the driving and guiding force in the EC. Nor does it point out how France’s desires in this regard have been complicated by the UK’s entry into the EC. Both points, of course, are of central importance to the United States at this point in our dealings with France in bilateral and multilateral forums.)

II. Bilateral Issues

Rather than analyze the 36 separate issues, some of them minor or overtaken, which are described in the NSSM, the following treats only those which are likely to come up at the meeting. The presentation format in the NSSM response (for each issue, description, status, and prospects for agreement) lends itself to easy analysis of other issues that might arise for discussion.

II.A. Political

Narcotics Cooperation (p. 12)

Cooperation between American and French officials has improved, as a heroin problem has emerged in France itself. We have often indicated our satisfaction publicly about the level and intensity of cooperation. Problems arise when the French seek extradition of French criminals whom we have sentenced here on narcotics charges. In some cases imminent extradition will be possible only in the case of a Presidential pardon.

(There may be scope for Presidential action on the extradition cases.)

II.B. Economic

GESNECMA (p. 16)

GE and the French aircraft engine manufacturer SNECMA have agreed to develop and produce jointly a 10-ton thrust jet engine. The issue for the US government is whether to license export of the “core” for this engine, which GE developed with government money for the B–1 bomber.

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DoD has security reservations, which may be lessened by a compromise which CIEP is trying to arrange with the manufacturers to proceed with the project mainly in the US, delaying the export of the core until 1974. This compromise might be acceptable to DoD which, joined by Treasury, now believes that an effort must be made to “recoup” the costs to the American taxpayer of R&D on the core. Secretary Shultz is strong for recoupment, we understand.

(CIEP seems to be working toward acceptance of the compromise, but Treasury’s insistence on a large amount for recoupment may delay resolution of the issue. There is no indication yet of (a) what amount we might ask for—perhaps in the range of $100 million; or (b) how the French will react to our demand, which is unprecedented.)

Exim Financing of Aircraft Components (p. 19)

EXIM’s Advisory Council last year rejected a French request to help finance the US content of the European Airbus and the Dassault Mercure, both transport aircraft. The main reason was that sales of these European planes might weaken the potential sales of competitive American-built aircraft. However, the Bank promised to keep its decision under review, since GE is interested in supplying the European aircraft. Requested by the French to reconsider, Treasury believes that EXIM’s decision should stand and is about to inform the French by letter.

(This is probably not a high priority item in the French catalogue of economic desiderata. Treasury could be requested to defer its reply, however, and EXIM to review the decision again.)

II.C. Politico-Military

FRELOC (p. 28)

After years of silence, the French offered last year to settle our claim (originally $378 million) for $40 million. We countered with a request for about $200 million and have heard nothing from the French yet. The French interest in a “political” rather than a narrow legal-financial settlement is evident.

(This could be brought to early resolution if a decision were made to do so. Defense and State are both interested in a quick decision. The main problem will probably be with Treasury, which will want to keep the settlement sum high. An issue which much concerned former Secretary Laird is what amount will be sellable to the Congress, which in the past has taken an interest in this problem. Laird thought $100 million was right.)

LOC (p. 29)

Secretary Laird raised with Debre last July our wish to re-establish a wartime line of communication through France, since our military be[Typeset Page 940]lieve that the planned LOC through the Low Countries would be easily attacked in hostilities. The French Chief of Staff has received from us information on the nature of the LOC in which we are interested. He may discuss it when he is here this week.

(Defense wants to push on this. State believes that it would be possible to negotiate some definitive contingency arrangements for wartime availability, provided we accept the long-standing French view that French agreement at the time would be necessary for our use of the LOC. A French agreement would certainly require prior decision by President Pompidou.)

Nuclear Testing (p. 37)

France intends to continue its nuclear test program this year. It may begin soon. The AEC would like to announce the French tests on the same basis as we do Soviet and Chinese. Repeatedly in the past the French have expressed appreciation at a high level for our policy of silence.

(It is unlikely that any other agencies will support the AEC. If we changed our silence policy, the French would be upset, since it would complicate their relations with the Latin Americans, New Zealand, and Australia.)

III. Multilateral Issues

French EC Trade Policy (pp. 47–57)

France is the critical country on most of the EC economic policies that damage our interests. Its reaction to the Trade Reform Bill has not been favorable.

The NSSM response discusses France’s role in preparing for the multilateral trade negotiations (pp. 48–50), its position on agriculture (p. 49), its attitude toward our view that the EC owes us compensation for the non-application of concessions which we previously negotiated with countries which later became EC members (p. 49), tariffs (pp. 49–50), preferences and reverse preferences (p. 50 and pp. 55–56), commodity agreements (pp. 51–52), arrangements between the EC and EFTA non-applicants which we feel impair our trade (p. 54), citrus (p. 56) and French opposition to our DISC program (p. 57).

(The NSSM does not sufficiently stress France’s spearhead role on issues such as agricultural protectionism in Europe and preferences-reverse preferences. Nor does it try to rank these economic issues in terms of their relative importance to us or their capability of resolution. If we accept the NSSM point that bilateral preparations with France in advance of the multilateral trade negotiations are important, such a rank ordering is important. What is it that we most want the French to [Typeset Page 941] do for us on EC economic policies that they can do politically? Probably alter the preferences and reverse preferences policy?)

  1. Summary: The paper provided an analytical summary of the study prepared in response to NSSM 166, Review of U.S.-French Bilateral Issues.

    Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–67, Meeting Files, SRG Meeting—NSSM 166 US-France Bilateral Issues 4/24/73. Secret. Sent by Sonnenfeldt as an attachment to an April 23 briefing memorandum to Kissinger covering the April 24 SRG meeting on NSSM 166. Attached but not published is the 62-page study prepared in response to NSSM 166. For NSSM 166, see Document 163, Foreign Relations, 1969–1976, vol. XLI, Western Europe; NATO, 1969–1972.