away from Peiping some of the safeguards in the use of armed forces which might be present if the Soviet Union were not involved in underwriting the violent action of Peiping. POSSIBLE ADVANTAGES One real advantage to us may well be in the nuclear weapons field. We have had some extremely good intelligence out of Peiping which indicates that Peiping is now, in effect, resigned to the fact that if they are in a war in the next several years, they will have to fight with the weapons that they now have. We are very doubtful that under those circumstances the Soviet Union is interested in helping Peiping in any way in getting the most sophisticated weapons or getting nuclear weapons, but we are watching that one very closely. I think also, however, we should not suppose that the basic power relation, seen worldwide, is changed yet in terms of this rivalry between Moscow and Peiping, because if there were an allout confrontation with either Moscow or Peiping by the West or by the United States, it would be very doubtful that either Moscow or Peiping could afford to see the other submerged in a struggle with the United States. In other words, they have an underlying basic power interest in the existence of the other in somewhat like their present form. Nevertheless, this debate does involve a considerable expenditure of energy and effort on competition within the Communist world. In one country after another there are signs of direct competition between the Chinese and the Russians and that, I suppose, works to our advantage. If this break should move to the point of completion, if there should be a hostility developed between Peiping and Moscow on interstate relations, say, the position in Central Asia, or a direct clash on what to do in a particular crisis, whether in Berlin or in Southeast Asia, then it may be this split could work very dramatically to our advantage. A POSITION OF WATCHFUL WAITING But at the present time, we are inclined to be somewhat careful about any official statements we make on the far-reaching nature of the split because we do not wish to put pressures on Moscow and Peiping to go to extraordinary lengths to heal the break. So we are at the present time in a position of somewhat watchful waiting on the matter. The President made a passing reference to it in the State of the Union Message, but we do not feel that this is the time yet to gloat about it or to challenge them on this point, because that might help them to ease some of their own problems. FORTHCOMING REPORT FOR COMMITTEE Let me repeat, we will have a full report on this for the committee within a very few days. We hope very much that members will have a chance to study it to help us think about its implications and consequences. Turning to the North Atlantic community, I would like to comment just on three or four aspects of that at the present time. Senator LAUSCHE. May I ask just one question? Secretary RUSK. Yes. Senator LAUSCHE. Last week you submitted a document discussing the deterioration of the relationship between Peiping and Moscow. Is the report which you contemplate giving, a supplement? Secretary RUSK. It is much more extensive than that, Senator. Senator LAUSCHE. Yes. CONSULTATION WITH NATO ALLIES Secretary RUSK. In the North Atlantic community, there are three or four things that might be worth a passing comment before we come to discussion. One is that during the past several months, we have attempted to undertake far more intensive political consultation on the world problems within the framework of NATO. Those problems are not formally the responsibility of NATO. NATO is not the forum in which they are to be worked out and resolved, but nevertheless, it was apparent that many of these problems are there on the periphery of NATO, and were gnawing into the unity of the alliance and of the West, and rather than concentrate our discussions within NATO solely on those questions in which we could get maximum agreement, we thought it was important, at least, there be discussion within NATO of some of these other problems. For example, there has been a quiet committee in the North Atlantic Council which has been talking about problems in Africa; others on other parts of the world. DIFFERENCES OF OPINION One effect of this is, I think, to increase the vigor of NATO, because it is tying into real problems and real difficulties. But another effect is that occasionally there will emerge from that discussion some impressions of differences simply because they are being discussed in that forum. I contrast, for example, with the British Commonwealth of Nations. When we have talked to our friends in the Commonwealth about taking up within the Commonwealth some of their own disputes between members of the Commonwealth to try to settle them within a Commonwealth framework, the reply has consistently been over the years that the bonds of the Commonwealth are not strong enough to bear such discussion; therefore, if the Commonwealth is to survive, it is important that these matters be dealt with outside the Commonwealth framework. I would not suggest that is wrong policy for the Commonwealth, but I do want to say we feel we should take the other view in NATO, because these problems which come up in, outside of Western Europe, inevitably gnaw away at the unity of NATO. U.N. VOTING RECORD OF UNITED STATES I think there is one point that might be of some interest and perhaps surprise to members of the committee. Before I went to the last meeting of the NATO Ministers in December, I anticipated there might be some complaints raised by other members that we ourselves were not adequately supporting our allies in NATO in such forums as the United Nations. So I had a study made of the important votes that had already, up to that point, been taken in the General Assembly of the United Nations, and there were 21 of those. As it turned out, we and Greece were the only members of NATO who voted with the majority of NATO on all 21 issues. The score ranged from that all the way down to Portugal, who found itself apart from the majority of NATO on nine occasions. I do not believe this discussion means that we are breaking up the unity of NATO nor building a wall between the United States and NATO. I do believe it leads to more understanding and more adjustment of policies in the interest of the Western World as a whole. COMMON MARKET ACTIVITIES On economic action, the Common Market of the Six has just completed its negotiations on moving into the second phase of the Common Market arrangements. The second phase, in essence, means that there will be a further reduction of internal as well as certain external tariffs, and that decisions now will be taken in the second phase by a system of weighted voting which moves on toward the supra-national arrangements, as they are called, within the Six. It also means that in discussions between the United Kingdom and others about joining the Common Market, the discussion will be on the basis of joining the Common Market where it is, that is, in the second phase, rather than having these other nations start back at the beginning. U.S. NEGOTIATIONS I am sorry that I have not been able to get a full report on those negotiations that were concluded over the weekend. We have a delegation there now, Mr. Howard Peterson and Mr. Charles Murphy, who have been there the last few days working at our own trade relations with these new adjustments in the Common Market. They will be back on Tuesday, and I would hope they could come down and brief the committee in full on the results of those discussions. Senator SYMINGTON. Is that Mr. Murphy of Agriculture? What they are working on is to get the most advantageous arrangements possible with the second phase Common Market for American products, both industrial and agricultural, in the European Common Market situation. Senator AIKEN. Mr. Secretary, did I hear on the radio this morning that Mr. Peterson signed an agreement last night? Secretary RUSK. I have not had that information, Senator, officially, so I do not think that Senator SPARKMAN. I heard the radio report; I heard it two different times. I did not hear his name mentioned, but it said the U.S. representatives signed- Senator AIKEN. Mr. Peterson, representing the White House, signed it. Senator SPARKMAN. I say, I did not hear the name. Secretary RUSK. They had authority under the Reciprocal Trade Act to bargain for mutual reduction of tariffs. Senator SPARKMAN. Up to 20 percent. Secretary RUSK. That is correct; and what they were trying to do there, Senator, is to get as advantageous a settlement as possible for American products in the European market. ARRANGEMENTS REGARDING AGRICULTURAL PRODUCTS One of the difficulties on certain points has been that although the Six apparently did reach some compromise on their own internal agricultural policy, the details of that have been put over for further negotiation and arrangement, and the European side was not in a firm enough position to be able to make specific commitments on certain aspects of it. Senator AIKEN. The report said that they agreed on 20 percent reduction for the importation of hundreds of articles into the United States. Secretary RUSK. Yes. I gather from the preliminary reports that we got quite favorable arrangements on many industrial products and, I gather, about 70 percent of the agricultural products where there was something specific on the other side with which to trade, but that certain agricultural items have to be put over for further negotiation. But we will have a full report. I apologize to the committee for not being up to the minute, but our official reports just have not come in. FULL DISCUSSION FORTHCOMING Senator SPARKMAN. I heard over the radio or read in a news article that yesterday was the deadline of some kind. What was that, was that between the first and second phase? Secretary RUSK. I think technically December 31 was the Common Market deadline for moving into the second phase of the Common Market arrangements, but they met that by changing, stopping the clock and the calendar while they went ahead with their discussions. Then, of course, the trade matter will be here for full and exhaustive hearings and discussion, but we do hope very much that we can be in a position to bargain extensively and hard with the Common Market to protect American markets in Western Europe. Unless the committee wants to get into it further, I would prefer not to get into details of that particular trade program today because the message has not come down here, and the details of the legislation are not suggested. Senator GORE. Let me ask one question. Secretary RUSK. Yes, sir. Senator GORE. Is this agreement, if it is yet an agreement, in consequence of negotiations at GATT 2 or is this a bilateral between the United States and the Common Market countries? Secretary RUSK. Both types of negotiation have been involved here. Senator GORE. OK. ALLIES URGED TO INCREASE FOREIGN ASSISTANCE Secretary RUSK. On the development assistance side, we have been trying to encourage our Western European allies to step up their development assistance to underdeveloped countries. We have urged upon them a target of not less than 1 percent of their gross national product in this field. There has been some expansion of their effort, but we have been a little discouraged in the last 2 months, since the Congress went home, because of growing reluctance on the part of both France and the United Kingdom, because of their own fiscal and balance of payments problems, to move a long as rapidly as we had hoped. Indeed, a matter of even greater concern is some suggestion that France is going to try to reduce its commitments to many of its African and French-speaking associates. We hope very much we can prevent that. IMF AGREEMENT You will also have before you, Mr. Chairman, the IMF agreement with respect to reserves, which is an effort through the general discussion of the OECD and the IMF 3 to stabilize balance of payments problems in the West. Secretary Dillon will be here to make a full exposition on that. Senator HUMPHREY. Mr. Secretary, that was interpreted in the press as being somewhat designed to stabilize the dollar; isn't this more so the British pound? Secretary RUSK. Î think in the next few years, Senator Humphrey, we are more likely to be a borrower than a lender under these arrangements. I think it is related to the pound, but it also means that certain other countries, such as Germany, who have been building up surpluses in foreign exchanges, will be on the lending side, and we might be temporarily on the borrowing side, but it is a long term effort to stabilize all of these principal currencies. I think for the moment we expect the presence of the availability of this technique, to be a stabilizing factor both on the dollar and on the pound. NATO NUCLEAR FORCE DISCUSSIONS There are some very important defense matters that are under discussion within the North Atlantic community. The first of those, in terms of its complexity and difficulty, is the question of establishing some sort of a NATO nuclear force. 2 General Agreement on Tariffs and Trade. 3 Organization for Economic Cooperation and Development and the International Monetary Fund. |