Repeat London, Washington, NATO Paris, Paris, Rome, Bonn, Geneva, Hague, T&C Ottawa, Dept of Finance, Bank of Canada (Information).

FTA - COMMON MARKET COMMISSION VIEWS

I called informally on Rey who is the member of EEC Commission responsible for External Relations: Mansholt's imminent visit to Canada gave me a good chance to do so.³²⁴

2. Rey spoke first of his frequent contacts over the years with Dana Wilgress at OEEC, GATT and elsewhere and of his consequent awareness of the importance which Canada attach-ed to liberal multilateral trading policies. The Commission, said Rey, also attached the greatest importance today to finding a multilateral solution which would facilitate a close association between the Six and the other major trading powers of the free world. The Commission's report which was in its final stages of preparation³²⁵ would not repeat not be devoted to recommending any specific plan exclusively for the Seventeen. In Rey's own words the Commission hoped to show the way towards a new co-operation between the Six, the UK and the North American continent. The over-riding objective should be to keep the free nations of the West economi-cally strong and politically united. He suggested that to some degree the UK had been deceived by promises which the Six had made when they sought the forbearance and patience of outsiders during the delicate negotiation and pre-ratification stages of the Rome Treaty. Since that time the issues had been niggled down in a spate of frustrating technical meetings; and the present state of negotiation for an FTA was pretty close to failure. Like Snoy, Rey felt the need for raising the question back to the broad political level from which it had been launched. Rey intimated that the Commission's report might point in such a direction.

3. The report itself would not repeat not be secret although agreement had not repeat not yet been reached on way in which it would be released. Rey then expressed certain Commission views on some points rumoured to be in the report. He did so with conviction, which sugges-ted to me that he was fairly certain from his soundings with individual Common Market governments that the final recommendations in the report would emerge along the lines of his comments.

4. It is the view of the Commission that all quotas must disappear in the near future. Rey emphasized that he meant general liberalization and not repeat not just OEEC liberalization. (Christofas of the UK Mission to the communities told us that a similar view had been expres-sed in London during Hallstein's visit last week although we were interested to see that para-graph 4 of CRO's memorandum quoted in London's telegram 547 February 19? suggested that Commission was less optimistic about removal of quotas on a wider field than OEEC.)

5. The Commission, according to Rey were not repeat not sure that comparable progress could be made in abolishing tariffs on a multilateral scale. The important thing was to ensure that tariffs were kept as low as possible; and GATT held out the bargaining mechanism by which tariffs (including the common external tariff of the Six) could be brought down by negotiation.

6. From these comments of Rey's which struck me as extremely outward looking and liberally inclined, I also gathered the following general impressions. There is of course no repeat no way of measuring the influence of the Commission at this stage and the degree to which its view will be accepted by individual governments of the Six.

(a) The Commission is less inclined than public opinion in the community and even some national officials of the Six, to doubt UK motives today. Rey was aware of difficulties which would have to be faced on this score with French, but his remarks suggested that Commission had some hope of overcoming the French objections.

(b) The Commission would like to lend its full support to removal of quotas probably along lines favourable to the USA and ourselves although French and German pressure for discrimination may continue to be strong.

(c) The common external tariff will have to be brought down in GATT by negotiation. Rey's comments suggest that while Commission favoured low tariffs, there would be strong pressure within Community to set tariffs high, particularly if quotas were to disappear.

(d) The Commission's report on March 1 may be drafted in such a way as to hold out an opportunity for the leaders of the West to reinsert some vital political drive behind the associa-tion of the Six with other major NATO trading partners. This would reflect desire of Commis-sion to avoid a split in Europe but at the same time extend the solution beyond merely a new preferential association in Europe. Rey was thinking in terms of importance of Atlantic com-munity in which Six could be an influential and well-disposed partner.

7. All the Belgians I have talked to who have influence in the negotiations - Rey, Snoy, Van Offlen and Forthomme - see the need to recapture the original breadth of outlook in European integration and are trying to find the best way to do it.

[SYDNEY] PIERCE

³²⁴Mansholt se rendit à Ottawa le 4 mars. Il devait rencontrer des ministres et des fonctionnaires, mais son avion fut retardé et la rencontre fut annulée.
Mansholt visited Ottawa on March 4. He was to have met with ministers and other officials, but due to the late arrival of his flight the meeting was cancelled.

³²⁵Premier Memorandum de la Commission de la Communauté Économique Européenne au Conseil des Ministres de la Communauté, en exécution de la décision du 3.12.58, relatif aux problèmes posées par la création d'une Association économique européenne, COM (59) 18 rev. 2.