50 Years of Conflict and Convergence
Chapter 1: The emergence of transatlantic agricultural tensions (1957 to 1971)
The formation of the European Economic Community (EEC) in 1957 posed a critical dilemma for the US. On political grounds it provided a capstone to the rebuilding of Western Europe as an ally against the USSR and as a bulwark of democracy in an unstable world. A strong European economy was also beneficial to the US as a market for US exports and the countries could be co-leaders of the path towards open markets and an entrepreneurial private sector. But the US was also concerned about the potential emergence of protectionist policies in the EEC, in particular in the agricultural sector. The six members of the EEC each had, to varying degrees, interventionist agricultural policies, and it was clear that there was to be a common agricultural policy. The fear was that the EEC would adopt some of the more protectionist aspects of the national policies. This led to attempts to negotiate tariff reductions within the GATT. The EEC in any case had (under GATT rules) to negotiate with those trade partners that suffered from increased tariffs as the Common External Tariff was introduced. This negotiation merged into the Dillon Round in 1961, when the EEC and the US traded tariff-cutting offers but ultimately failed to reach an acceptably ambitious deal. As a consequence the US tried a broader approach and in 1964 launched the Kennedy Round, which was to achieve a substantial tariff reduction in manufactured goods.