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alone. In 1968, U.S. agricultural exports (to the nine Member States) were worth only US$1.8 billion. Community exports, on the other hand, were on an extremely small scale, totaling $1.1 and $1.2 billion for 1973 and 1976 respectively. Finally, the agricultural trade balance for 1976 showed a surplus of $5.2 billion in favor of the United States.
EC FARM POPULATION
The Community, therefore, was the United State's main trading partner, despite the common agricultural policy and the well-known structural problems with which it was faced. Approximately 9 million people were employed in agriculture within the Community, as against 4 million in the United States. The Community's farm population had almost halved over the last 20 years and its room for maneuver was consequently very limited, particularly in the present economic situation.
Mr. Baas pointed out that the two basic principles of the common agricultural policy were first security of supply and, secondly, guaranteed reasonable prices for consumers and fair prices for producers.
On the question of security of supply, a point to remember was the soya bean crisis of 1973: this was precisely one of the sectors in which the Community had agreed to complete liberalization although at the time, soya had admittedly not yet become the vital animal feed it is today.
U.S.-EC PROTECTIONISM GROWING
Mr. Nolan of the United States agreed that one should not throw stones if possible but he reserved the right to disagree with Mr. Baas' contention that there is not a trend toward protectionism in Europe. To the American farmer it certainly appears that there are trends in that direction as indeed there are similar trends in the U.S. economy. As to the recommendation for the liberalization of agricultural trends the United States is looking with much interest toward the results of the trade discussion in Geneva. The new Secretary of Agriculture, Mr. Bergland, has expressed interest in a variety of approaches designed to discourage protectionism. Such approaches have set minimum and maximum prices as well as stock and destocking arrangements, and could serve as stabilizing vehicles. Also Europeans are necessarily apologetic at times about the relative efficiency of European agriculture. The much vaunted U.S. efficiency was always based on energy. With the change in the energy situation, this relative efficiency has decreased. Now the United States is looking for new methods to substitute for our labor intensive ways to produce in the agricultural sector. Secretary Bergland in fact described U.S. agriculture as the most energy efficient.
Mr. Prescott agreed that Europeans are frequently apologetic about protectionism. Many do not admire the system which now exists in Europe. With such excess capability for example in shipbuilding and textiles, economic growth will not be like past decades. European countries are being left with real problems of how to absorb a cutback in capacity.
The first reaction to the problem of how to guarantee markets is usually dumping.
Laizze faire or free trade is now largely nonsense. Protectionism is the new economic reality and political factors are increasingly determining trade policy.
Mr. Bordu felt that protectionism was bound up with the crisis in that each country was trying to shift its own crisis onto the others. Everything depended, therefore, on the balance of forces involved. Hence the need for a new balance based on some measure of control over the various economies allied with efforts to prevent continued. squandering of resources on the present substantial scale. Mr. Bordu also believed that multinational companies were to some extent to blame for the difficulties encountered in certain sectors such as textiles. He supported an agricultural storage system under international control. A system of cooperation should be established to insure that trade was based on reciprocity, which was not the case at present.
Mr. Scott-Hopkins, referring to the speech by Mr. Nolan, asked whether direct payments could be made to farmers in the United States, and whether they operated a system of control through quotas. If so, caution was called for, as such systems often acted as an encouragement to the least efficient. On the subject of access to the American market for Community products, he said he was aware that the Community policy of export refunds was the target of some criticism. But if these were offset, as had already been done to some extent, would the Americans be prepared to import cheese without restrictions?
BUILDUP OF SOY STOCKS
Mr. Nolan pointed out that the deficiency payments scheme introduced in 1973 had never been implemented as the market price of wheat had held its own. The situation might be quite different this year. Attempts were now under way to build up stocks of soy beans to preclude the necessity of imposing an embargo at a later stage, although the final decision on this matter would lie with the President of the United States.
Mr. Baas expressed interest in the American storage proposals as they would make it possible to hold down price movements. There was an undoubted need to seek new methods in the agricultural policy sector, possible alternatives, perhaps being direct aid to producers, channeling of production, or price modulation.
At a more general level, he considered it extremely important that the Ministers for Economic Affairs should be looking into the question of protectionism, as they were doing at that moment.
Mr. Frenzel said that all countries had certain leanings towards protectionism, and he was well aware that the Trade Act had caused some concern within the EEC. But the United States did not fully understand the nature of the agreements signed by the Community, such as the Lomé Convention or the agreements with the countries of the Mediterranean basin.
Mr. Gibbons said he could not go along with the views expressed by Mr. Prescott. The protagonists were not the same as at the time of the 1930 crisis, but the danger of protectionism remained the same,
and it should not be forgotten that inward-looking economic policies had undoubtedly been one of the contributory factors in the outbreak of the Second World War.
Lord Bruce of Donington did not wish to give the impression that the U.S. agricultural policy was the sole target of criticism. In his view, the Common Agricultural Policy too had to be reorganized to take fuller account of the interests of marginal producers. The Community had a growing agricultural trade deficit with the United States, and its was therefore up to the United States to take action.
Mr. Blumfeld introduced the second question from the European Parliament delegation:
In EC relations with the Near and Middle East the Arab boycott against European enterprises trading with Israel is considered clearly unacceptable. Could the U.S. Congress delegation tell us of legislative or other measures, that have been taken or are being considered in the United States, at the Federal or State level, against such discrimination? Could the delegation tell us what are the results of these measures so far?
Mr. Stanton said the problem of the boycott had existed since 1965 when the administration had declared that participation in foreign or restrictive trade practices was against U.S. policy. The 1976 analysis by the U.S. Commerce Department showed, however, that compliance with the boycott conditions had actually increased. The California State Legislature had taken legal steps to outlaw such compliance-an action in which Mr. Ryan had played a major part.
Mr. Ryan continued by regretting the lack of time to examine the background and legal details fully. He described the boycott as an attempt by the Arab world to impose its rigid attitude towards contacts with Israel on other nations. But U.S. trade with the Arab world-in common with the European trade with it—had increased many times, particularly trade in oil. The Western nations were very vulnerable to restrictions on this.
At the same time, the United States was hostile to, opposed to and resentful of any discrimination based on race or religious belief.
DEVELOPMENT OF U.S. LAWS
During the congressional hearings on the Rosenthal Antiboycott bill business witnesses appeared reluctant to testify; while very keen not to appear antisemitic, they were unprepared to jeopardize their commercial opportunities. The hearings took 3 weeks to arouse public awareness of the secondary and tertiary boycotts in the United States, Arab and European nations, and to restructure the bill, so that it would not dissuade business from dealing with the Arabs. Furthermore, under the U.S. legal system, the California, New York, and Federal laws could differ.
One had to recognize that the building of a modern Saudi Arabian state, for instance, with its demands for the skills and technology that
it lacked, presented a major business opportunity in the last third of the 20th century. To give business the moral protection, legislation was prepared and had been enacted.
Mr. Prescott noting that was without doubt a boycott, and that this was being condemned, pointed out however that if legislation included clauses prohibiting trade with countries denying human rights, and that if recent allegations of torture by Israel on Palestinians were substantiated, then what would the U.S. view of trade with Israel then be? If the Arab countries claimed that they were boycotting Israel because of Israel's denial of human rights, what would the U.S. position toward such a boycott be?
Mr. Cousté explained that the antiboycott legislation in the United States would protect U.S. companies from the damaging consequences of an indirect boycott (i.e., secondary or tertiary). But what would happen to U.S. companies currently on the blacklists under such legislation?
As the European reaction differed from state to state and as the United States would like the European Community as such to take initiatives, what initiatives did the United States have in mind?
In reply to Mr. Cousté's questions, Mr. Stanton explained that the legislation was aimed at indirect boycotts, that is secondary and tertiary ones. He felt the EC support would depend on the extent of Arab demands on EC Member States and companies. Turning to Mr. Prescott's questions he commented that the press reports on Israeli torture of Palestinians had been more numerous than in the United States, but that the issues he raised should be dealt with during the working group meeting on human rights.
STRONG U.S. ACTIONS
Mr. Ryan added that so far the United States had taken the more significant and more aggressive action against the boycott. But only within the last decade had the world's nations recognized the vital nature of their interdependence. Such activities as this boycott could lead to military or economic disaster and the Arab countries had to know about our concerns. He concluded by voicing his concern about the U.S. President's current emphasis on human rights, for the United States had a somewhat blemished past. He felt more should be known about the current claims of Israeli torture before drawing any conclusions.
Mr. Blumenfeld summarized the discussion by outlining three common themes:
1. It was important for both the United States and the EC to enact antiboycott legislation, so that United States and EC companies were able to compete on an equal footing, and to avoid one country's legislation putting its companies at a competitive disadvantage.
2. The indirect boycott affected many small- and medium-sized companies.
3. The anti-Israel measures were a political weapon only effectively used since the 1973 oil price rises. This "oil weapon" should be fought both legislatively and politically.
He concluded by suggesting that the human rights issue did not appear relevant in this context.
THE BELGRADE CONFERENCE
What effects are the Belgrade meetings following up the
Mr. Fraser said he was aware of the misgivings caused in Europe by President Carter's determination to emphasize the human rights issue, particularly in relations with the Soviet Union. What the question amounted to, then, was whether the European considered this to be an overzealous application of the principles of human rights to East-West relations. But it was important to recall that against a general lack of U.S. enthusiasm for CSCE, Western Europe has insisted on the importance of the "third basket" on human rights in Helsinki and Belgrade.
Mr. Maurice Faure replied on behalf of the European delegation. He pointed out that it was difficult to give a single reply to the question under discussion. Helsinki represented a spectacular rather than a substantial attempt to codify the rules of détente. Détente signified both the desire for a closer alinement of economic, social, and political systems, and an agreement to disagree in the pursuit of peace and cooperation.
There was no point in placing exaggerated hopes in the Helsinki Conference. The two concepts of national sovereignty and noninterference in other countries' internal affairs were interpreted differently by the Communist and Western countries. The Western countries were thinking in terms of preventing the Soviet Union from engineering a repetition of the events of Budapest or Prague. The Soviet Union, however, was thinking in terms of halting the West's attempts at ideological infiltration, which jeopardized the very bases of Communist regimes. Two further misunderstandings compounded the mixture. The Eastern countries considered that all information transmitted from a given country was the responsibility of that country. The Eastern countries had agreed to the dissemination of ideas, but on condition that these ideas were "good ideas" promoting peace and friendship between peoples.
What had happened over the last 2 years as regards the three baskets?
REVIEW OF HELSINKI ACCORDS
The first basket (the principles on which our security was based) of the Final Act of the Helsinki Conference went no further than previously existing texts. The inviolability of frontiers had already been recognized under the policy pursued by Chancellor Brandt. The only innovation, of relatively minor importance, was the undertaking to give prior notice of military exercises. The problems of disarmament were dealt with elsewhere.
The second basket, dealing with economic, technical, and scientific cooperation, contained nothing very original or new. Trade was developing satisfactorily between the Eastern and Western countries. It should be pointed out that this was the first time that the Eastern countries recognized the European Community as such.
As regards the third basket on human rights, Americans and Europeans were entirely at one on the essential issue, namely the concept of