89. Memorandum From Secretary of State Vance to President Carter 1
[Omitted here is discussion of FRG-Brazilian nuclear developments and Berlin.][Page 279]
3. European Protectionism: I am increasingly apprehensive over the degree to which European governments are succumbing to protectionist pressures. If the trend of recent events continues, there will shortly be no credibility left in the Downing Street commitment to reject protectionism. This has serious implications internationally as well as for our ability to meet your domestic economic objectives.
The Europeans have just agreed in the EC Council to a steel program2 which, if carried out, will tend to undermine domestic support for Tony Solomon’s market-oriented approach which you approved. Our program was intentionally designed to deal with dumping and to have minimal interference with trade. Our steel industry will see the EC plan as more restrictive than ours and will press us to imitate.3
Although the EC has agreed to renewal of the Multifiber Agreement, it is doing so only after negotiating highly restrictive bilateral textile agreements with the LDC exporters. We can fully expect our textile industry to bring considerable pressure on us to seek equally restrictive agreements. The Nordic countries and Canada are already responding to this kind of domestic pressure.
In the MTN it looks as if the French and the UK will prevent the EC from meeting the commitment to table by January 15 a substantial tariff cut offer—on the order of 40 percent. They are also insisting on freedom of action in taking discretionary import relief actions. This will brake the substantial progress which was so arduously worked out by Bob Strauss over the past few months.
These actions reflect a growing pessimism in Europe over governments’ ability to deal with the serious economic problems and adjustments brought on by the recession. The risk is that this protectionist mood will now gather steam, threatening to overwhelm our efforts to stimulate the economy and reduce unemployment. Such a development will have profound adverse effects on international political as well as economic relations. Most importantly, it will greatly reduce your own political flexibility in dealing with our own economic difficulties.[Page 280]
Bob Strauss has done a first-rate job in deflecting protectionist pressure here and, thereby, keeping your international commitment to resist protectionism. Unless Europe shows courage and leadership, these efforts could well prove to have been in vain. I believe that you will have to bring home the serious implications of their recent actions to the European leaders you meet on your forthcoming trip.
Since these developments occurred after the preparation of your briefing papers, I am sending over through Zbig additional points to add to your briefing materials.4
[Omitted here is discussion of Belize, Ethiopia, Indian nuclear policy, and Philip Habib.]
- Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 19, Evening Reports (State): 12/77. Secret. Vance wrote at the top of the page: “Merry Christmas. Cy.” Below his note, Carter wrote “cc Cy. J.”↩
- Meeting in Brussels December 19–20, the EC Council of Ministers agreed on a steel program involving import controls, EC-wide price increases and market restraints, and industrial reorganization. Telegram 19130 from USEC Brussels, December 21, transmitted the EC press release detailing the new steel program. (National Archives, RG 59, Central Foreign Policy File, D770476–0409) Telegram 18991 from USEC Brussels, December 20, discussed the import controls. (National Archives, RG 59, Central Foreign Policy File, D770474–0196) Telegram 19129 from USEC Brussels, December 21, described the measures to be taken within the EC. (National Archives, RG 59, Central Foreign Policy File, D770476–0394)↩
- Carter wrote “We should protest strongly” in the margin adjacent to this paragraph.↩
- Not found.↩