96. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1
- Tokyo Round
The United States and other countries participating in the multilateral trade negotiations are scheduled to table their detailed tariff-cutting offers in Geneva this Friday.2 Bob Strauss’ status report is attached.
The working hypothesis of the tariff negotiations is that each country will make offers to cut its tariffs an average of 40%, with high tariffs to be cut proportionately more than the low tariffs. The US offer about to be tabled would reduce tariffs on the average by about 45 percent. If the other countries were to match our offers, the negotiations would result in deeper cuts than the Kennedy Round (35 percent). This is not likely to be the case, for reasons indicated below:
The Council of the European Community agreed yesterday to indicate that the EC would be prepared to begin negotiations on the basis of an average tariff reduction of 38 percent. But the Council qualified this statement by making an entry in the Council minutes indicating that the reduction of the EC external tariff should be between 25 and 35 percent.3 This means that the EC, prodded by the French, will be looking for excuses to back off from its initial offer.[Page 303]
The US offer will provide opportunities for the EC to do this.4 Because of political sensitivities in this country, about 8 percent of US total dutiable imports of non-agricultural and non-petroleum products will be excepted from the initial US offer, and another 5 percent will be subject to less than 40 percent tariff cuts. These exceptions will be mainly apparel, leather, electronic, and other light manufactured products. Some of these products are of interest to EC member states. Thus France and others will be able to insist that the EC respond to these US exceptions by pulling back on some items of interest to the United States. This will probably mean that the tariff-cutting results of the Tokyo Round will be less far reaching than realized in the Kennedy Round.
Developing countries will argue that the US offer fails to give them the special and differential treatment agreed on in the Tokyo Declaration. They will also point out that the US offer would result in an average cut of about 33 percent on products of primary interest to them, substantially less than the offer we are making on products of interest to the industrialized countries.
In reply, US negotiators will cite the limited reciprocity offered by the developing countries and stress that our tariff-cutting offer on items of interest to the LDS,5 other than textiles and light manufactures, will range from 46 to 77 percent. Nonetheless, we can expect the LDCs to take every opportunity to put pressure on us to be more forthcoming.
I see no practical alternative to going ahead on the current basis. Even if we had enough time to improve our offer marginally, and even if this could be done without unacceptable domestic political risk, the overall configuration would not be altered materially. Thus I conclude that the US offer, as it now stands, should be tabled in Geneva this Friday.[Page 304]
- Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Japan: 1–5/78. Confidential. Sent for information. Carter wrote at the top of the page: “ok. J.”↩
- January 20.↩
- Telegrams 994 and 1016 from Geneva, both January 17, reported on the EC Council decisions on the multilateral trade negotiations. (National Archives, RG 59, Central Foreign Policy File, D780025–0714 and D780025–0655, respectively)↩
- Dodson noted in a January 11 memorandum to Hutcheson that “State, Treasury, and CEA are suspicious of the EC’s intentions and are concerned that the U.S. not table an offer that will make it easy for the EC to pull back from its agreement in principle to table an average tariff cut of 40 percent.” (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 89, Economics/International: 1/77–7/78)↩
- Carter underlined the abbreviation “LDS.” “LDS” appears to be a typographical error and should read “LDCs.”↩
- Limited Official Use. Carter initialed “C” at the top of the page.↩
- See Document 43.↩
- Memoranda of conversation of Carter’s meetings with Giscard in Paris and Jenkins in Brussels, both on January 6, are in the Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 36, Memcons: President: 1/78.↩
- Among other things, the Trade Act of 1974 granted the President the authority to negotiate changes in tariff and non-tariff barriers and conclude trade agreements with foreign countries.↩