Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

61. Telegram From the Mission to the European Communities to the Department of State¹

Brussels, September 26, 1977, 1602Z

12692. USEEC. Geneva also for MTN. Subj: Visit of Ambassador Strauss to EC Commission. Ref: Brussels 12518.²

1. Summary: Strauss visit was marked by highly positive tone, stiff Commission resistance for a while to specificity and at the end mutual recognition that difficult question of tariff formula needed to be resolved or failure to do so publicly acknowledged. After intense talks, both sides agreed on a joint communiqué which revealed the establishment of a “joint working hypothesis” on tariff reductions.³ To ensure that there would be no ambiguity about what was agreed upon, the two sides also agreed to produce an agreed minute for internal use going into details of this hypothesis. As a result of Strauss visit, EC Commission is now committed to seek greater tariff reductions than previous EC proposals and US to greater degree of harmonization. End summary.

2. Ambassadors Strauss, McDonald and Wolff, accompanied by Ambassador Hinton and STR staffers Feketekuty and Wynne,⁴ met with EC President Jenkins, Vice Presidents Haferkamp and Gundelach, Commissioner Davignon, Director General for External Relations Sir Roy Denman, and other high-level EC officials during series of meetings September 21–22. Prior to leaving Brussels, Ambassador Strauss gave press conference presenting joint communiqué and answering questions (see reftel for transcript). Although all areas of MTN negotiations received some attention during US–EC meetings, bulk of discussions was devoted to effort to obtain a joint position on tariff reductions which would allow agreement to be reached by all potential formula participants in the MTN by early October. Meetings were marked by US assertion and eventually EC recognition that failure to reach agreement would threaten entire US–EC understanding to conclude present phase of negotiations by January 15, 1978. Ambassador Strauss emphasized the necessity of agreeing upon specific common language on an approach to tariff reductions and that, failing this, he would feel it necessary, in order to preserve credibility, to state publicly that we had reached an impasse on tariffs with the EC.

3. After September 21 preliminaries,⁵ during five-hour series of negotiating sessions September 22 US and EC worked together to produce an agreement, embodied in the joint communiqué contained in reftel. US side also insisted that joint communiqué be buttressed by an internal understanding which would not be revealed in its entirety publicly but which would prevent any further misunderstanding about what had been agreed with respect to tariff reductions. Denman reading from rough notes set it forth at final session with President Jenkins present when it was accepted by all participants subject to being polished by Ambassador McDonald and Denman in Geneva. It is to indicate that both sides agreed to work toward adoption of the Swiss formula,⁶ with an average depth of cut of 44 percent, as the goal for tariff reductions, plus or minus 5 percent. This left open the possibility that some participants might adopt a deeper cutting formula or higher formula cuts than the other participants to offset a greater number of exceptions. Content of agreed understanding was described by participants on both sides at various times during the discussions in varying details and nuances and therefore posts should await receipt of definitive version.

4. Earlier versions of the communiqué, though not the final one included an EC sentence emphasizing that no exceptions should be made to initial tariff offers. Discussion of exceptions revolved around continued EC Commission statements that they would seek to avoid any exceptions and the US noting that some exceptions beyond those mandated by US law would no doubt be necessary.⁷

Hinton

1. Source: National Archives, RG 59, Central Foreign Policy File, D770349–1246. Confidential; Priority; Exdis. Also sent Priority to Geneva, all EC capitals, Ottawa, and Tokyo.
2. Telegram 12518 from USEC Brussels, September 22, transmitted the transcript of Strauss’ September 22 press conference. (National Archives, RG 59, Central Foreign Policy File, D770345–0846)
3. Telegram 12499 from USEC Brussels, September 22, transmitted the text of the joint U.S.–EC communiqué issued at the end of Strauss’ visit. (National Archives, RG 59, Central Foreign Policy File, D770345–0358)
4. Gordon Wynne.
5. Telegram 12571 from USEC Brussels, September 23, reported on Strauss’ September 21 meetings with EC officials. (National Archives, RG 59, Central Foreign Policy File, D770346–1304)
6. Telegram 6090 from Geneva, July 21, summarized Switzerland’s positions on various MTN issues, including its tariff reduction proposal. (National Archives, RG 59, Central Foreign Policy File, D770259–1259)
7. In an October 6 memorandum to Blumenthal, Solomon and Bergsten wrote: “The touted US–EEC Agreement on Tariffs covers up a major discrepancy. The Committee has agreed only to cut by 26% over five years, whereas Strauss envisages a 44% cut over a longer period. The EC has made no commitment to cut after the first five years. In addition, there has been no agreement on exceptions. Hence there is less progress than meets the eye.” (Carter Library, Anthony Solomon Collection, 1977–1980, Chronological File, Box 2, 10/1/77–10/17/77)