Geneva, 6 March 1961
120. Secret
The United Kingdom and the Common Market
1. You have no doubt seen reports of the statement made by Heath to Paris meeting of Western European Union on 27th February.1 This seems to have been a careful statement incorporating a real change in some aspects of the United Kingdom’s position regarding association with the ‘Six’.
2. Although we have no advice that the United Kingdom proposes raising matter at Prime Ministers Conference,2 I find it difficult to believe it will not now come up in one way or another. In any event, the apparent important shift in United Kingdom thinking disclosed by Heath’s statement puts a new complexion on the whole matter, and I do not think we should let pass the occasion of your visit to London to get certain points across to United Kingdom Ministers.
[ matter omitted ]
4. I am concerned about the circumstances of Heath’s statement and its leak to the Press. United Kingdom Ministers have given us a whole succession of assurances that they would keep us in closest touch with developments. You will recall the quite explicit statement by Macmillan to us when he was here in 1958. Again, Heathcote Amory3 (then Chancellor) is on record at the 1959 meeting of Finance Ministers to effect that the United Kingdom fully accepted the agreed view of the Meeting ‘that effective methods must be adopted to keep the Commonwealth informed of each development in the context of European trade negotiations as soon as it becomes apparent, so that Commonwealth countries might be alerted and have the opportunity to make representations and discuss them as necessary’. The Chancellor concluded by saying that ‘the essential point was for the Commonwealth to be informed of each development as it appeared over the horizon’. Similarly at the meeting of Finance Ministers last September they promised to keep us in closest touch with developments.
5. In the light of all these assurances it is a matter for concern that we should have first learned of these latest developments in the United Kingdom’s position through the Press. All their assurances must count for little if in respect of what Heath himself described as a fundamental change of principle in their position we are not advised some reasonable time beforehand.
6. I would judge from the content and setting of Heath’s statement (I have received no explanation about his statement at Government level) that the United Kingdom Government had decided to make a real effort to break through the barriers blocking actual negotiations between them and the ‘Six’ and that there is now a momentum which they will feel obliged to maintain. It is therefore important for us in respect of likely further developments to remind them in quite sharp terms of the need for fullest, frankest, and earliest advice if the Australian Cabinet are to have due opportunity to comment at an effective time and if the scene is not to be marked by misunderstandings and hard feelings.
7. Heath’s statement has stimulated Press requests here for comment on substance of the matter and also on question of whether we had prior advice of United Kingdom policy change. So far I have refrained from comment but expect to have to say something when the House resumes.
8. Regarding the issues at stake, Heath’s statement makes more or less definite proposals to the ‘Six’. Whilst clear enough in outlining the United Kingdom’s position on some aspects, the statement is vague (and perhaps dangerously vague) on the United Kingdom’s intentions for thinking regarding Commonwealth agricultural trade. But they no longer completely exclude it from a possible arrangement and not having been taken into their confidence we have to think of agriculture being involved at least to some extent. For Australia the agricultural items on which we enjoy, under the Trade Treaty, free entry (and in almost every case preferences) account for £A130 to 150 million or 55 to 60% of our total exports to the United Kingdom and include wheat, flour and other grains; meat; dairy produce; sugar; canned, dried and fresh fruit; wine, etc. Our growing trade in manufactures is over £ (Australian currency) 6 million and under the Trade Treaty is nearly all entitled to duty free entry.
9. Moreover, whatever reassurances the United Kingdom may be able to give us with respect to their initial position, they have said repeatedly that after the 1958 breakdown they could not afford a second failure. It therefore seems clear that once they have embarked upon formal negotiations, whatever their initial position might have been, it could be subject to most substantial changes if they judged such changes necessary finally to get agreement. This gives added weight to the need for us to insist on adequate advance advice and consultation. Only thus would we retain scope for any timely initiative to protect our own interests or to judge whether any action jointly with the United Kingdom would be helpful to us both. If we are not allowed to enjoy the United Kingdom’s confidence before the event, it is much more likely that a brittle situation could develop over some forthcoming offer by the United Kingdom to the ‘Six’.
10. You will recall that at Finance Ministers’ Meeting last September which Holt attended we refused to be drawn on our attitude on hypothetical questions about our willingness to accept changes in our trading position in the United Kingdom that might arise if they got into negotiations with the ‘Six’. For reasons I have indicated above I still consider it essential for us to remain completely uncommitted in respect of the proposals the United Kingdom has made to the ‘Six’. Since it is the United Kingdom who are proposing a change in the status quo it is up to the United Kingdom to take the initiative in trying us out on proposals—and not just hypothetical ones. If they are making proposals to the ‘Six’ they should also be making proposals to us.
11. We have been less forthright than others (notably Canada and New Zealand) in expressing in public and private our forebodings about the implications for our trade interests of the United Kingdom’s involvement in Europe. [ have the impression that the United Kingdom may have concluded from this that we will go along with any arrangements she may make. I therefore believe that we should not only avoid any commitment in advance of our own decisions, but should make it clear that we will want to speak for ourselves where our interests are involved—including, if we judge it desirable, our participation in relevant negotiations.
12. I do not of course overlook the point that in the final analysis our attitude towards an association of the United Kingdom and the ‘Six’ will be influenced by the totality of considerations, not confined to our trade and economic interests. This is no reason why we should not do our utmost to protect these interests—at the moment by re-emphasising the need for the United Kingdom to keep us fully in her confidence and by remaining quite uncommitted.
1 The Australian Government was given no forewarning of Heath’s address to the WEU, even though great significance was widely attributed to it. The crucial passages in his speech were: ‘The development of two separate economic groups in Europe must hamper the expansion of production and trade in Western Europe and will lead to wasteful use of resources. These economic effects will eventually lead to ill feeling which in turn must have political consequences detrimental to unity. That is why we in Her Majesty’s Government have been lending our efforts through the last year to finding a solution … The main point of the new approach is that if the Six can meet Commonwealth and agricultural difficulties, the United Kingdom can then consider a system based on a common or a harmonised tariff on raw materials and manufactured goods imported from countries other than the Seven or the Commonwealth. This is a fundamental change of principle in Her Majesty’s Government’s position. They have never before envisaged adopting a common tariff over a sector of the economy.’
2 McEwen was referring to the March 1961 Commonwealth Prime Ministers’ Conference in London attended by Menzies.
3 Derick Heathcote Amory, Chancellor of the Exchequer, 1958–60.
[NAA: Al838, 67/3/3]