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165. Memorandum of Conversation1

PARTICIPANTS

  • Ambassador Olivier Long, Director General, GATT
  • Dr. Gardner Patterson, Deputy Director General, GATT
  • Under Secretary Richard Cooper, E
  • Mr. Ernest Johnston, E
  • David R. Moran, EB/OT/GCP—Notetaker

SUBJECT

  • MTN

The following is a non-verbatim summary of the discussion. Following pleasantries, Mr. Patterson noted that the issue of the CVD waiver extension2 may be just what is needed in terms of establishing a credible date for the conclusion of the MTN but that the EC was most upset at developments.

Cooper: Of course, there is no way of getting an extension of the waiver without agreement on the codes. I would be interested in your interpretation of why the EC considers this such an intense issue. It certainly is not a new problem and they are not being taken by surprise. That is why we pushed for agreement by July 15th, to give the Congress time to consider the matter.

Long: As I see it, there are three factors. First, the EC has always considered it a purely US issue. Second, the US did not make clear to the EC the link between the July 15 deadline and this issue. Third, the community has taken the position that it will not negotiate under threat.

Cooper: At least on the second point the EC was well informed. I told Haverkamp myself and I know Strauss has made it clear.

Long: Perhaps, but it didn’t register. Never once did I hear anyone from the EC make the connection.

Cooper: Well, you have talked to Ambassador Strauss so you know our plans about going to the Congress. I admit they are risky.

Long: If you want to reach agreement by December, you need movement from the UK and France. I would be interested to know if [Page 512]you see any way something can be done. It is obvious in France that the Prime Minister is interested, but Deniau is not being helpful. He has political ambitions. The way to become popular is to take protectionist positions. France wants selective safeguards without fail. We must have more flexibility in the French position and the only way to get that is to go directly to Barre. You can’t rely on the Germans. They are interested in preserving EC unity on these issues and may hide behind the fact that they are in the chair to avoid taking a position. Their silence makes it difficult for the Commission, which is the least protectionist of all, in the EC’s international deliberations.

Cooper: It is your impression that the UK has maintained its sticky position since July?

Patterson: Yes. There has been no movement.

Long: The British are very interested in the subsidy question. With their nationalized industries, they are very suspicious of anything dealing with industrial subsidies. They also feel they must have selective safeguards.

Patterson: With loose selectivity and sloppy dispute settlement, they would have a free hand.

Long: The position of the EC is just that—loose selectivity and weak dispute settlement management means the big powers have a free hand.

Cooper: What position do the Nordics take?

Long: On selectivity, they are afraid their markets will be flooded so they side with the EC. On dispute management, they are small countries so they do not.

Patterson: Other small countries may go along with the EC on selectivity, such as New Zealand. They may see others, Singapore, Brazil, etc. as the trouble makers and believe they won’t be affected.

Long: Safeguards and dispute settlement are important. If we provide for a highly permissive atmosphere, we will have hurt trade for the next 20 years, even with a good package otherwise.

Cooper: I agree entirely. We have already said that we may be able to accept tightly circumscribed selectivity. That has been and remains our position. To yield now could undermine the whole trading system. State and some other agencies would oppose any compromise on this. Ambassador Strauss knows this position.

Patterson: Lining up on selectivity, the Nordics are out front of the EC, the LDCs are dead against it. New Zealand may be with the EC, but not Australia.

Cooper: What about dispute settlement. I was not aware the EC would attempt to undermine a tight procedure.

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Patterson: Perhaps some of the background. The EC advanced a draft proposal. The US negotiators didn’t know what they were doing and gave the EC reason to believe the US would accept the EC proposal. In the Secretariat, we saw the danger in the EC position and put forward an alternate draft of our own. We talked to the US negotiators and got them to support the Secretariat draft. The EC, of course, then thought they had been cheated.

Long: Even worse. The EC felt they had been cheated and that the US had used the Secretariat to do it, which was not true. It was our own draft based on our dissatisfaction with the EC position, but the EC is sure the Secretariat was a US tool.

Patterson: Time is getting short. The EC still has not agreed to negotiate on the basis of the Secretariat draft on dispute settlement. If we wait too long we will run into problems, for the fundamentals of the dispute settlement mechanism will need to be worked into the various codes. It is difficult to focus the attention of the top negotiators on this.

Long: There are increasing problems with the LDCs. They are increasingly taking a unified position and their positions are stiffening. They are coming under the influence of UNCTAD. We must disabuse them of the notion that they have anything to gain by seeking to delay the final MTN results until UNCTAD V,3 when they would hope to get more. The time has come to try and speak in leading LDC capitals—India, Brazil, Yugoslavia, which are key. They also do not recognize that the trade system for the next ten years will have to provide some differentiation between say Brazil and Upper Volta.

Cooper: What is your impression of the role the LDCs have played in the Codes?

Long: In so far as they are given a chance to participate and get what they want, they are prepared to take part in at least some of the codes, government procurement and subsidies. If we are honest, up to now the LDCs have been kept out. The subsidies draft was drafted by 5 DCs. Now we need to take the LDCs in to anything being done on the codes. This is our only chance to bring them along.

Patterson: Another problem is to work out something in the codes to accommodate some of the LDC concerns. What they would really like is no countervailing duties on subsidies for LDCs, but that is not practical.

Long: It is important to get Argentina, Nigeria, Yugoslavia, Brazil, and Mexico to go along. The others will then follow along out of the [Page 514]herd instinct. The Yugoslav delegate is very important, Tomic4 is very good. He is a reasonable man.

Long: Have you given any thought to the post Tokyo Round yet? We need to initiate formal discussions as soon as the MTN is finished. What kind of GATT do we want after the Tokyo Round for example.

Cooper: Yes, that is important and we have been giving it some thought.

Patterson: There is a danger of delay. We cannot leave things dangling. We need to decide how to implement the codes. We can expect trouble right away given the general mood of protectionism.

Long: Let’s assume we have a package by December 15. Then we have six months to prepare. By July 1, we must know what we want to do and how to do it.

Cooper: I agree completely. I would also like to note that we feel completely stymied by agriculture. We have offers on the table but have nothing from the Community. What is the situation?

Long: Gundelach still has to deliver. You know, now they have nobody of stature after Rabot’s death. The only thing to do now is to press Gundelach to deliver. The new EC Director General for Agriculture Villain will not become involved.5 He is an internal man and won’t get involved in the MTN. He knows he can only bloody his fingers.

Cooper: We could use some help from the GATT on this. It is a very serious issue. Grains are very important.

Patterson: The EC view is that the US doesn’t want to do anything on wheat. There is a wide impression that the US is dragging its feet. There is no real negotiation on prices, stockpile levels and financing even though some of these points have been tabled. The issue is tied up with the subsidy question. We need to quantify things. There are large differences and time is short.

  1. Source: National Archives, RG 59, Office of the Secretariat Staff, Records of the Under Secretary of State for Economic Affairs, Richard N. Cooper, 1977–1980, Lot 81D134, Box 3, Memorandum of Conversation, July–December 1978. No classification marking. Drafted by David Moran on September 28 and cleared by Ernest Johnston, Cooper’s Executive Assistant. The meeting took place in Cooper’s office.
  2. See Documents 150 and 152.
  3. See footnote 2, Document 148.
  4. Petar Tomic was a Yugoslav representative in the MTN negotiations.
  5. After the death of Louis-Georges Rabot in June 1978, Claude Villain became EC Director General for Agriculture in July.