Canberra, 20 June 1961
Confidential
United Kingdom and European Economic Community:
Visit by Mr Duncan Sandys to Australia
An Interdepartmental meeting was held at the Prime Minister’s Department on Tuesday, 20th June, 1961, in connection with the proposed visit by the United Kingdom Secretary of State for Commonwealth Relations, Mr Duncan Sandys, regarding the United Kingdom’s entry into the European Economic Community.
2. The primary purposes of the meeting were–
- to get general agreement between Departments on what the issues for Australia are; and
- to make arrangements to bring together the various studies which have been or still need to be made.
Although the meeting did not set out to develop an attitude which might be recommended to Australian Ministers for their discussions with Mr Sandys, it was intended that it would provide a first step to that ultimate objective.
3. The following were present at the meeting:–
(Chairman) Mr E. J. Bunting, Secretary, Prime Minister’s Department
Sir Arthur Tange, Secretary, Department of External Affairs
Mr A. L. Senger, Acting Secretary, Department of Primary Industry
Mr G. Warwick Smith, Acting Secretary, Department of Trade
Mr M. W. O’Donnell, Acting Deputy Secretary, Department of the Treasury (representing Sir Roland Wilson)
[ matter omitted ]
5. Discussion ranged over a wide variety of political defence, trade, finance and general issues. The principal points made were:
(a) It will be difficult to recommend adoption of a definitive attitude for Australian Ministers, as the nature of Sandys’ mission has not been fully stated. However, there is reason to expect that Sandys will endeavour to obtain the agreement, in principle, of the Commonwealth countries to the steps which the United Kingdom is about to take so that when a decision is announced it can be stated also that Commonwealth countries acquiesce. It is a matter for consideration how Australia re-acts to this—i.e., complies or refuses to be linked with the United Kingdom’s decision.
(b) The tactic of the United Kingdom in approaching Commonwealth countries in bilateral talks may be based on a policy of ‘divide and conquer’. There may, however, be some advantage to the other Commonwealth countries in this approach, as it will be less easy for the United Kingdom to play some Commonwealth countries off against others as may be possible in a full Commonwealth forum. The Treaty of Rome, which establishes the Community, makes it plain that these are political objectives.
(c) The development of the Community has been building up since the war and could, in the long run, result in the establishment of a Federated Europe. However, even if the Treaty of Rome does not lead to an institutional change as far-reaching as this, the economic provisions of the Community are bound to have political repercussions in the direction of binding the United Kingdom closer to Europe and by corollary away from the Commonwealth and individual Commonwealth countries. Already there is evidence of this in the financial field, and this has led to some discrimination against Australia and other members of the sterling area as the London sterling balances of some European countries have now been guaranteed in relation to the value of the dollar whereas the holdings of the members of the sterling area have not. This is a matter of very considerable interest to Australia which has large sterling balances.
(d) If the United Kingdom becomes part of a more closely knit European community, the result will be to place limitations on its freedom of action, both in relation to itself and in relation to Commonwealth countries. Already there are limitations imposed by membership of NATO; membership of the Community would extend these in the political, military, finance and trade fields, e.g., continued United Kingdom participation in the joint United Kingdom/Australia defence projects at Woomera could be vetoed.
As far as Australia is concerned, this could have important implications for security, as there may well be a tendency either to regard the area east of Suez as not applicable to Europe, or to differ within the Community as to what action should be taken. This is a situation which may, of course, differ only in degree from that which would occur in any event, as the United Kingdom is finding it increasingly difficult to bear its defence burdens. The United Kingdom ‘10 year’ paper is relevant to this.1(e) Australia’s political bargaining power is generally weak and it may be necessary to rely on a broad appeal to the United Kingdom which boils down to sentiment. There may be some bargaining power vis-a-vis the United Kingdom, and the Europeans also, if they wish to resist Australia’s becoming too closely tied in with the United States, but the strength of this is likely to be slight.
(f) Australia’s bargaining strength in the trade field is not considerable and will almost certainly diminish once the United Kingdom has announced a firm decision to enter into negotiations with the Community.
(g) It may be possible to obtain some general trade assurances from the United Kingdom before negotiations begin, but doubts were expressed as to whether these would prove to be satisfactory because the types of assurances we may require are likely to vary appreciably from commodity to commodity.
(h) In conjunction with Canada and New Zealand, it may be possible to make the United Kingdom’s position very difficult. But to do so would first require an assessment of the question whether, in the long run, there might not be greater trade advantage to be obtained by Australia from the United Kingdom’s entry into Europe. In other words, we should consider the ‘plusses’ as well as the ‘minuses’.
(i) Australia has been pressing for direct participation in the United Kingdom trade negotiations with the Community. Acceptance of this proposal may be difficult for the United Kingdom, but it can be argued that it should not provide such a great hurdle, as there are three levels of interest in the negotiations:–
- Countries having no concessions with the United Kingdom—these can be disregarded.
- Commonwealth countries with concessions on tropical products—these could be covered by a broad formula.
- Other Commonwealth countries with concessions. Only the latter need be directly involved in the negotiations, although there may also be a problem of political presentation if other Commonwealth countries were not allowed to participate.
6. Regarding the talks with Mr Sandys, it was agreed that Australian Ministers may be asked to agree in principle to some general propositions. This could place them in a position of some difficulty, as it would seem that the United Kingdom may regard the Sandys discussions as the last opportunity to consult on the policy about to be adopted. Failure to come out firmly with a point of view could be interpreted as an unwillingness to consult. But against that, if we were to state certain minimum requirements, these could well become maxima rather than minima. While the difficulty of reaching a firm position must be recognized, particularly as the United Kingdom’s initial negotiating point with the Community is not known, it may be necessary to do so from the outset for major exports. It would be possible to do this under certain assumptions. This would provide us with a base from which to probe the United Kingdom’s intentions.
7. For the purpose of briefing Ministers, it was agreed to work towards a series of papers, namely:–
- A background paper on the issues.
- A paper on political aspects (which might later be combined with papers subsequently prepared).
- A paper or papers on the commercial and financial aspects.
- A paper drawing the whole subject together and suggesting a line to be taken at the Sandys discussions.
The first of these would need to be prepared by 23rd June and those on the political, commercial and financial aspects by early in the following week. When these were completed, a further meeting would be held with the object of examining the attitude to be taken in the light of the analyses made.
8. Some observations made concerning the attitude to be taken in the discussions with Sandys were:–
(a) If we contend that Sandys’ visit is inadequate consultation, we should know what else we require—for example, detailed ministerial negotiations? Direct participation in the negotiations between the United Kingdom and the Community?
(b) Information should be sought on the United Kingdom’s timetable and the reasons for it—for example, what makes the present climate especially favourable? Is the desire to be a member of the Community before a common agricultural policy is resolved? Is the onset of the parliamentary recess in the United Kingdom a factor?
(c) Agreement in general terms to a United Kingdom proposal would not be satisfactory. It could result in a situation where some action taken by the United Kingdom under such an agreement would not be acceptable […] We should, therefore, be clear on what we regard as unacceptable conditions.
(d) We should not be inhibited by past expressions of policy as the basic United Kingdom situation in relation to the Community has changed considerably over time.
9. It was agreed that Australian representatives overseas shotld intensify their interest in the relations between the United Kingdom and the European Economic Community. It was also thought it would be highly desirable that the High Commissioner in New Zealand should be asked to report on the negotiations between Mr Sandys and the New Zealand Government and that advice concerning the negotiations in Canberra should be sent to the Canadian Government.
1 See Document 1, notes 2 and 4.
[NAA: A4940, C3368 PART 1]