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SECRET - 6 - be much easier for us to oppose the more limited type of arrangement they are contemplating (as per Option 3, Page 13). In short, it would be a positive position which would provide the basis for a negative one if it failed. There are two additional steps we could take, either in addition to the foregoing or as alternatives in case we decided to be completely negative toward the preferential planning at the outset: -- We could inform Spain that we would support its eligibility for tariff preferences under the generalized preferences scheme now being negotiated. Spain wants badly to be treated as an LDC for this pumpose but we have neveryindicated that we agree. In fact, Spain would not be eligible under the conditions we have announced so far if it extended "reverse preferences" to the EC, as it is now planning to do. Spain would probably come out about as well economically from the global preferences (which would of course include some preferences in the EC) as from the special deal with the EC. However, this would eliminate any "special" move toward Europe and would not have the political implications envisaged by the Spanish government. (This is probably the overriding drawback to Option 4, page 14, which would have us condone EC preferences to Spain now as a "advance" on the generalized scheme but oppose Spain's preferences to EC goods. I understand however that State has tentatively decided to support this option.) SECRET

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