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SECRET -9- OPTION 2 -- Raise pro forma objection reserving the right eventually to take the matter to GATT in an effort to restore the balance of trade advantages to the United States. OPTION 3 - Oppose forthrightly such an arrangement making clear that we would challenge it in the GATT and insist on restoration of the balance of United States trade advantages with the United States action to restore this balance possibly falling only on the EC. OPTION 4 - - Not object to the granting of preferences to Spain in the EC market, but ask the EC either to forego Spanish preferences for its goods or compensate the United States and other countries through reductions in its common external tariff; if the EC does not agree with either of these courses of action, consider selective retaliation against the Community. OPTION 5 - - Approach the EC to seek a modification of the agreement with Spain that would make it consistent with the GATT Article 24. [p.9 of 9] SECRET NLN 08-H-01/8

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