practices which particularly infringe upon other OECD countries. The third deserves a word or two of explanation.

At the end of 1958, after long and intensive negotiation, the project for a European-wide free trade area collapsed." Contrary to the hopes of some European countries, the basis for a resumption of negotiations has not yet been found." If such negotiations were to be resumed, they would take place in the Trade Committee of the OECD. We shall therefore have the opportunity of being present at such negotiations and thus assuring that any agreements reached fully take account of the trading interests of the United States or other countries. I have mentioned the major functions of the OECD. There will also be a number of other activities related to these principal aims. What is perhaps more important than specific activities is the spirit of cooperation which has guided the work of the OEEC and which we hope to see carried forward into the OECD. By building upon this spirit we hope to create a forum in which, by consultation and cooperation, we can join with our friends in meeting the growing challenges of the sixties.

Our aim is admittedly ambitious and therefore worthy of our best efforts: to reach new heights of prosperity and to bring a part of the large resources of the West to bear at critical points as the peoples of other continents move to improve their condition. We believe they can do so in freedom; we do not believe that systems acting by compulsion rather than by consent need have a competitive advantage. But it will mean that we must put ourselves in position to act promptly and vigorously to demonstrate that free institutions can combat misery, ignorance, and disease as well as maintaining the dignity which, too, is a universal human aspiration.

166. THE NEED FOR AGREED PRINCIPLES OF BURDENSHARING IN THE ATLANTIC COMMUNITY: Message From the President of the United States (Kennedy) to the North Atlantic Council, February 15, 1961 15

In my Inaugural Address 16 I pledged to the members of this great organization "the loyalty of faithful friends."

In the three weeks since I became President I have been increasingly impressed by the magnitude of the perils which confront the United States and free nations everywhere. But I have also been increasingly convinced that we can face down those perils, if we mobilize the unified strength and will of the nations of the Atlantic Community.

We of the Atlantic Community are the single most effective obstacle between tyranny and its desire to dominate the world. Our historic

13

See American Foreign Policy: Current Documents, 1958, pp. 539-557. 14 See ibid., 1960, pp. 335–359.

15 White House press release dated Feb. 15, 1961 (text as printed in the Department of State Bulletin, Mar. 6, 1961, pp. 333–334).

bonds of friendship have been strengthened by common values and a common goal-the creation of a world where free men can live at peace and in dignity, liberated from the bonds of hunger, poverty and ignorance. If we act together, this goal is within our grasp. If we falter, then freedom itself will be in mortal danger.

Therefore I pledge the United States, and my own unremitting efforts, to the support of the principles which guide our effort, to the basic concept of unity which gives us strength, and to the institutions we have created to give working life to our common intent.

Effective collective defense is the first mission of our great alliance in NATO. Our task here is to convince any aggressor that an attack on the territory of NATO members would be met with swift and punishing resistance. While relying also on the growing strength of all, the United States will continue its full participation in the common defense effort. I am convinced that the maintenance of U.S. military strength in Europe is essential to the security of the Atlantic Community and the free world as a whole. Strength in Europe, like strength here in the United States, is an essential condition of peace. But the interests of NATO, and the Atlantic Community as a whole, are not military alone. The dangers to our security and the challenges to our enterprise take many forms-economic, ideological and political. Through its various instruments the Atlantic Community must equip itself to respond with speed and unity of purpose on every front-by improving our processes of consultation-by expanding the area of our cooperation to include common problems of trade and money, and by uniting in the effort to construct a sound, growing economy for the entire noncommunist world.

This last undertaking-the task of economic development-is vital to the preservation of freedom in the turbulent, emerging continents of Asia, Africa and Latin America; it is also a duty which the strong owe to the weak. It is an undertaking unmatched in scope, in difficulty, and in nobility of purpose.

It is an important and heartening fact that the adventure of assisting the underdeveloped areas has captured the imagination and the idealism of the young on both sides of the Atlantic. This undertaking will require the efforts of all of us-and other nations too. In accomplishing all our economic tasks we must work together in a new intimacy in the OECD [Organization for Economic Cooperation and Development], and I hope that through the OECD we shall come firmly to grips with this fundamental problem of aid.

17

Although the technical task here is economic, our ultimate purpose transcends material considerations. The challenge is to create a new partnership between the old nations in the north and the new nations to the south. In the end, we must build that partnership not merely on a common interest in economic growth, but on a common commitment to the principles of political freedom.

The United States, because of its larger resources, is prepared to bear a heavy share of this burden. But I am confident that the nations

17 See post, doc. 176.

of Western Europe will wish to commit an equitable proportion of their own growing resources to the common effort of economic development, as well as to the tasks of the common defense. Without that willingness our effort will surely fail. In all our common enterprises we must establish principles, clearly understood by our governments and our peoples, on which burden-sharing can be based.

We shall also continue to support and encourage the movement toward European integration.18 This movement is a powerful and unifying force which can multiply free Europe's strength and prestige, can assure increased security and progress for European peoples, and can contribute greatly to meeting the goals of the broader Atlantic Community.

The years ahead will be difficult and dangerous for the friends of freedom. There will be setbacks as well as gains. But if we face candidly the agenda that confronts us, our national differences will fade and assume tolerable proportions. If we summon to the real tasks we face our resources of mind and will and material strengthif we never lose sight of our common goals-then we will have carried forward in our time the old task of our community: to preserve and extend the values of a civilization which has lighted man's way for more than 2,500 years.

167. UNITED STATES PREFERENCE FOR MULTILATERAL RATHER THAN BILATERAL MEASURES WITHIN THE ATLANTIC COMMUNITY TO CORRECT THE BALANCE OF PAYMENTS SITUATION: Aide-Mémoire of the Government of the United States to the Government of the Federal Republic of Germany, February 17, 1961 19

The Government of the United States has examined the measures which the Federal Republic of Germany would be prepared to undertake in the light of the present international payments situation.20

It is the view of the Government of the United States that such measures must now be viewed in a new light.

We are on the eve of creating a new phase in the history of the North Atlantic Alliance. We have new tasks; and the recovery of Western Europe in the 1950s has given us new resources. Together, the resources which we dispose are much larger than those we could command in the immediate post-war years, and they are better distributed among us.

18

19

'See post, docs. 180–197.

Department of State press release No. 76, Feb. 20, 1961 (text as printed in the Department of State Bulletin, Mar. 13, 1961, pp. 370-371). The aide-mémoire was handed to the State Secretary of the German Foreign Office (Van Scherpenberg) by the Under Secretary of State for Economic Affairs (Ball) at the Department of State.

20 Not printed; see the New York Times, Jan. 31, 1961.

To deal with these new tasks we must begin by recognizing that we are inter-dependent in all we do; and that our common burdens must be shared in a way that our peoples will recognize as fair.

The economic questions now under discussion between the United States and Germany are not bilateral questions. The deficit of the United States arises wholly from its commitments and actions in the common defense of the Free World. Without these freely assumed obligations the United States would now be running a heavy surplus in its balance of payments. These matters therefore must be approached in terms of a rebuilding of the alliance and in terms of the principles which should govern the effort over coming months and years.

Specifically, we must examine how we can share fairly two burdens: the burden of the common defense; and the burden of long-term economic assistance to the underdeveloped areas.

It is clear that we must design formulae which take account of the proportions of our total resources now flowing to these two common purposes; and which make allowance, as we do in our domestic taxation systems, for the principle that the richer among us shall bear a higher relative burden than the poorer.

In addition, we must all come to recognize a principle on which the United States has acted in the years after the Second World War. That principle is that a sustained accumulation of gold and other international reserves by any one country is disruptive to the international community. Especially now, when trade is expanding faster than gold production, we must learn to use our reserves on a communal basis, recognizing that one nation's gain can only be another nation's loss.

It is in the light of these principles that the Government of the United States views the specific matter in hand; that is, the imbalance which has developed in the international payments situation of the Free World. The present situation is marked by a persistent basic deficit of some countries and a persistent basic surplus of other countries. This had led to a substantial increase in foreign liquid dollar holdings and, in recent years, to an outflow of gold from the United States which has resulted in a reduction of United States reserves. A substantial part of the German surplus has resulted directly from the defense programs of the Free World. For example, the net increment to the Federal Republic's foreign exchange reserves derived from U.S. military spending in Germany is approximately $375 million annually. The United States shall continue to bear its just share of the common responsibilities and burdens of the alliance; but it is essential that our affairs be so conducted as to avoid structural disequilibria in the reserve positions of individual nations.

Healthy over-all equilibrium in the international balance of payments structure can only be achieved by continuing and concerted measures. Each member of the Western alliance should therefore take such actions within its own capacities, as are required to fulfill its responsibilities for further economic growth, stability and security in the Free World.

As concerns the specific proposals of the Federal Republic of Germany, the United States appreciates the expressed willingness of the Federal Republic to take helpful measures. Certain among them may prove to be effective and in the common interest. We believe they should be explored on an individual basis, each on its own merits. If the Federal Republic of Germany should be prepared to carry out certain of these measures, the United States Government will be pleased to participate, as appropriate, in discussions concerning the details and techniques by which individual measures may be accomplished.

But such measures will not solve the fundamental problem of international payments imbalance on a stable, long-term basis.

Our common task is to design a reserves policy for the alliance which will recognize the responsibilities to the common interest of surplus and deficit nations alike.

In order to give effect to this principle, the outflow of long term capital from surplus nations, especially to the developing countries, should approach or exceed their export surplus to the world as a whole. This would not only ameliorate the disequilibrium in the international payments situation, but would also help the Free World meet the vital needs and expectations of the developing countries.

The United States welcomes the announced intention of the Federal Republic to inaugurate a new program of assistance to the developing countries to be administered on an untied basis.21 It would express the hope that this program be adequate in size and of a continuing nature.

The Government of the United States believes that the question of equitable shares in the common effort to assist the underdeveloped nations of the Free World should be urgently examined within OEEC [Organization for European Economic Cooperation], in anticipation of the OECD [Organization for Economic Cooperation and Development] coming into effect; and that the question of equitable shares in the common defense be urgently examined within NATO. The Government of the United States is prepared to participate in such discussions. It is our hope that these discussions will take place in the spirit of the President's message to the North Atlantic Council of February 15, 1961.22

"See ibid., Feb. 18, 1961.

22 Supra.