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- 2 -
Option 1: Do not object to the agreement. (Preferred by Defense. Strongly
opposed by State, Commerce, Treasury, Agriculture, STR Gilbert.)
Pros:
1. Avoids prejudicing our objectives in the base negotlations.
2. Avoids risk of possible economic retallation from Spain, which
they have also threatened.
3. Permits Spain to forge a link with the EC, which is in our
long-term political interest.
Cons:
1. Would hurt U.S. trade with Spain and the EC.
2. Would make further EC preferential arrangements virtually
inevitable, seriously hurting U.S. trade and therefore jeopardizing domestic
support for our policy toward European Integration and our trade policy.
3. Would represent total U.S. submis sion to Spanish threats,
which would embolden the Spanish to use this tactic during the base negotia-
tions. (State feels strongly on this point.)
Option 2: Oppose the agreement as presently proposed, in the context of
opposition to all preferential arrangements illeg. under GATT, but indicate
our acceptance of any arrangement consistent with GATT (such as a more
ambitious arrangement which provided for eventual complete free trade
between Spain and the EC). (Favored by State, Commerce, Treasury,
Agriculture, STR.
Pros:
1. By putting our opposition in terms of all illegal agreements,
would avoid singling out Spain.
2. If Sp in and the EC did work out a free trade arrangement
as a result, it would:
(a) reduce likellhood of proliferation of EC preferences, since
fewer countries could qualify for free trade arrangements than
for ad hoc preferences on particular products, minimizing speed
of discrimination against U.S. trade;
spread
(b) benefit U.S. economically, because much closer Spanish
ties with the EC would generate more U.S. trade with Spain and
Increase Spain's attractiveness for U.S. investment;
(c) serve our political objectives, by forging closer Spain-
European ties.
SECRET
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"ocrText": "SECRET\n- 2 -\nOption 1: Do not object to the agreement. (Preferred by Defense. Strongly\nopposed by State, Commerce, Treasury, Agriculture, STR Gilbert.)\nPros:\n1. Avoids prejudicing our objectives in the base negotlations.\n2. Avoids risk of possible economic retallation from Spain, which\nthey have also threatened.\n3. Permits Spain to forge a link with the EC, which is in our\nlong-term political interest.\nCons:\n1. Would hurt U.S. trade with Spain and the EC.\n2. Would make further EC preferential arrangements virtually\ninevitable, seriously hurting U.S. trade and therefore jeopardizing domestic\nsupport for our policy toward European Integration and our trade policy.\n3. Would represent total U.S. submis sion to Spanish threats,\nwhich would embolden the Spanish to use this tactic during the base negotia-\ntions. (State feels strongly on this point.)\nOption 2: Oppose the agreement as presently proposed, in the context of\nopposition to all preferential arrangements illeg. under GATT, but indicate\nour acceptance of any arrangement consistent with GATT (such as a more\nambitious arrangement which provided for eventual complete free trade\nbetween Spain and the EC). (Favored by State, Commerce, Treasury,\nAgriculture, STR.\nPros:\n1. By putting our opposition in terms of all illegal agreements,\nwould avoid singling out Spain.\n2. If Sp in and the EC did work out a free trade arrangement\nas a result, it would:\n(a) reduce likellhood of proliferation of EC preferences, since\nfewer countries could qualify for free trade arrangements than\nfor ad hoc preferences on particular products, minimizing speed\nof discrimination against U.S. trade;\nspread\n(b) benefit U.S. economically, because much closer Spanish\nties with the EC would generate more U.S. trade with Spain and\nIncrease Spain's attractiveness for U.S. investment;\n(c) serve our political objectives, by forging closer Spain-\nEuropean ties.\nSECRET"
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