Canberra, 8 July 1961
Secret
The United Kingdom and European Economic Community Consultations
1. The Prime Minister, in welcoming Mr Sandys, said that the Australian Government considered that the issues involved in the United Kingdom’s decision whether to enter or not to enter the European Economic Community were not only complex but of the very greatest and abiding importance. They involved both political and economic aspects. Associated with the latter were the detailed effects on Commonwealth commodity trade. There was a tendency for the political question to be ignored in public debate. The economic aspects inevitably attract greater attention and speculation. This present meeting provided the first major opportunity at high political level for consultation between the two Governments and he believed frank speaking was desirable.
2. Mr Sandys agreed that it was convenient to consider the political and the economic aspects separately. It was agreed that at the first session the political aspects could be dealt with, followed in later sessions by consideration of the economic aspects. It might be appropriate at a later stage to have officials consider some of the more detailed effects of the United Kingdom’s entry into the European Community on Commonwealth Commodity trade.
3. Mr Sandys then summarised the United Kingdom’s view on the political considerations, a detailed statement of which is included in paragraphs 1 to 42 of the appendix to this record.2
4. Commenting on Mr Sandys’ statement, the Prime Minister referred to the distinction which Mr Sandys had drawn between the way in which the European Community might develop with the United Kingdom outside it and what might be expected if the United Kingdom were to join. He raised the question of whether economic development in the Community would not in fact mean more and more political cohesion until finally the Community would be regarded not as a group of a number of individual countries but rather as a single world power. He felt that there would be strong centripetal tendencies and asked whether these same influences would not operate with equal effect if the United Kingdom were also a member.
5. In reply, Mr Sandys suggested that there were two possibilities—either a federation would be formed or there could be close consultation between individual members. It was the United Kingdom’s belief that if it did not become a member of the Community the prospect of the development of a federation would be far less remote than it would be if the United Kingdom were to become a participant. There was the danger that if the United Kingdom remained outside, and if a federation did develop, the Community would become inward-looking and detached from the West. With the United Kingdom as a member the Community would be unlikely to become a federal system and, in fact, this would occur only in the unlikely event that the United Kingdom was favourably disposed towards the idea. Any attempt by a number of members of the Community to form a partial federal system excluding other members would be likely to result in the destruction of the Community as a united body. The adoption of membership of the Community would present the United Kingdom with the prospect for a great new sphere of influence. The United Kingdom accepted that if it stayed out of Europe its influence in world affairs must inevitably decline.
6. The Prime Minister suggested that the sphere of influence argument is somewhat speculative. The United Kingdom as a member of the Community would either fail or succeed to exercise the influence which it hoped. If it failed, the United Kingdom would have given away some of the substance of its influence through the Commonwealth for the shadow of possible influence in Europe. Success would surely lead to an increasing disposition in the United Kingdom to consolidate in Europe, leading to greater absorption with this and less with the Commonwealth. This, to his mind, was the dilemma which was facing the United Kingdom and the Commonwealth in the political field. Taking as an example the General Agreement on Tariffs and Trade, which he considered to have political as well as economic aspects, he pointed out that at present there is joint consultation between Commonwealth countries and the United Kingdom for the development of an agreed policy in the GATT. In these consultations the United Kingdom has complete freedom of action. But, as a member of the European Economic Community, she would have a binding obligation to consider the economic policies of the Community and, once being subject to this obligation, she would be inhibited by it in her relations with Commonwealth countries.
7. Mr Sandys said that he did not ignore or conceal that there were risks involved, but they had to be considered jointly with the advantages which could result. The United Kingdom did not feel that freedom in political matters with the Commonwealth would suffer. As regards the GATT even if she could not retain as much freedom as before, she would be in a position to take Commonwealth views into the councils of the European Economic Community.
8. Regarding pre-GATT consultations, Mr McEwen suggested that once the United Kingdom became a member of the Community, other European countries would also join. This could lead to a situation in which the United Kingdom became involved in continental pre-GATT consultations rather than in Commonwealth consultations.
9. Mr Sandys considered that the two were not incompatible. Consultations already took place with other members of the European Free Trade Association. There were both advantages and disadvantages in relation to the GATT. In some cases the United Kingdom may be able to bring in EEC support, while on others it would be unable to support a Commonwealth line as such. It should not, however, be assumed that EEC interests would necessarily be opposed to those of the Commonwealth.
10. The Prime Minister said that Australia could accept this latter point, but the possibility of divergence of interest remained. Also, he would point out that the United Kingdom’s influence in the Community need not be dominant.
11. Replying, Mr Sandys said that the composition of the Community was such that it was highly likely that the United Kingdom would, in fact, be in a position of influence. At present, on many matters there tended to be a cleavage of view between France and Germany, with the others ranged on either side. The result is a position of some balance. Therefore, should the United Kingdom assume membership, she could be in a position to come down with effect either with France or with Germany. He instanced the clash between France and Germany which was likely to occur regarding the common agricultural policy.
12. Mr Holt said that it appeared to him that the United Kingdom had become noticeably more favourably disposed to membership of the Community over the past twelve months. She now seemed to be contemplating entry at a price which may need to be a good deal higher than one which was a year ago regarded as unacceptable. He asked whether there were political reasons for this—for instance, was the United States tending to press the United Kingdom into accepting membership?
13. In response, Mr Sandys said that the new United States Administration was rather more sympathetic towards United Kingdom membership of the Community, but they had not put any pressure on the United Kingdom. The United States’ attitude, however, would be helpful if the United Kingdom proceeded to negotiations. Two factors have tended to increase United Kingdom interest in joining the Community. The first was its realisation that the Community was a success and that its importance both as an economic community and as a factor in world politics was rapidly increasing. The second was that the United Kingdom had become convinced that there could be no half-way house in the matter. Association with the Community as a solution would not be acceptable to the Europeans and a definite decision was required as to whether the United Kingdom was going to stay out or was going to assume full membership.
14. Mr Holt suggested that France was not enthusiastic regarding United Kingdom membership of the Community. He asked how far this is likely to affect the negotiations. For example, would the French seek to obstruct the United Kingdom’s entry by laying down terms so high that the United Kingdom would not be prepared to accept them?
15. Replying, Mr Sandys said that much depends on De Gaulle, but this is possible. However, it must be remembered that negotiations will be with the Six not with individual member countries of the Community. The United Kingdom has now revised its earlier view that it would be able to find out before negotiations began whether the Community would agree to special conditions for agriculture. It now accepts the fact that the only way to find out is to begin negotiations. To begin negotiations, the United Kingdom will have to notify the Community of her readiness to subscribe to the principles of the Rome Treaty, but subject to the special arrangements necessary to protect Commonwealth interests. This would need to be a sincere notification. At the same time, it would need to be understood by the Community that the United Kingdom would not be willing to accept membership merely on the best terms available. That is, it would have to reserve its position as to the final decision. However, once negotiations had begun, it would be very difficult for the United Kingdom to break them off if reasonable conditions are proposed. On the other hand, it would be difficult for De Gaulle to stand out and exercise a veto in the present worsening world situation. He would, in effect, be starting a process of increasing division among the Western countries. There were various factors which might influence the course of negotiations. For instance, members of the Community would have to recognise that if the United Kingdom, being outside the Community, got into financial difficulties, she might be unable to maintain the level of her forces in Germany.
16. Mr McMahon said that as it was impossible to feel convinced as yet of the case for the United Kingdom to proceed, the proposal for entry into the Community at this time might be premature at least. Further, he asked whether there might not be some value, not only for the Commonwealth but for the whole Western world, in the United Kingdom remaining outside the Community so that it would remain in a position, as leader of the Commonwealth, to exercise stronger influence in the policies of the emerging African and Asian States.
17. Mr Sandys replied that leadership depends on influence. The United Kingdom Government believed that if Britain remains outside the Community, its influence will decline, including within the Commonwealth. If it becomes a member, it will maintain or develop its influence. Further, it is necessary for the Western world to be solid. The United Kingdom cannot stand aside from the Western world and leave the problems of defence to the United States and Europe. But it would be even more disastrous if the European Economic Community should stand aside; and the United Kingdom from within Europe can play a part in preventing that from occurring. Regarding the suggestion that the United Kingdom might be premature in considering membership at this stage, he said that the United Kingdom considered that it is already late. Had negotiations been entered into earlier, the United Kingdom would have been in a position to secure looser and generally more agreeable Community arrangements.
18. But the crucial point now is that the Community will, after the West German elections in September, be proceeding to decisions as to its agricultural policies. It would be desirable if the United Kingdom is to enter into negotiations, she should do so before this policy is worked out. The safeguarding of markets for agricultural producers is of the utmost importance for members of the Commonwealth. Adoption of some of the ideas already being examined would be against the best interests of both the United Kingdom and Commonwealth countries. The United Kingdom has been given to understand that if it announces now that it is willing to negotiate with the Community, members of the Community will agree that the United Kingdom should be associated with the formation of the common agricultural policy. If there are not early negotiations, the common agricultural policy will be settled and only marginal variations will be possible to a policy which will have been agreed upon by difficult negotiation between Germany and France in particular.
19. As to the possibility of influencing France, which Mr McEwen had seriously questioned, Mr Sandys said that probably if the United Kingdom were negotiating with France alone, this would be impossible. But it must be remembered that the United Kingdom would be negotiating with the Six generally, and not with France alone.
[ matter omitted ]
21. In answer to further questions by Mr McEwen and Mr Hasluck, Mr Sandys said that he felt that as far as the political side goes the balance was much in favour of United Kingdom entry. The economic side brought up other considerations. But he felt convinced of the political wisdom. It was not a case of moving into closer association with Europe as a result of a declining Commonwealth position in the world; the Commonwealth and the United Kingdom role in the Commonwealth remained undiminished. He saw no conflict between the United Kingdom’s Commonwealth role and the European role it may decide to assume. On the contrary, membership of the European Economic Community would provide the United Kingdom with the opportunity to help shape events in line with Commonwealth ideas. The United Kingdom outside the Community would not be in a position to do this.
22. The Prime Minister returned to his original point about the risk that Europe would develop under the Treaty of Rome into a tight system and Community and that this would occur whether the United Kingdom took membership or not. If it were a member, then the risk was that it would be caught up in the system. He felt that the United Kingdom was underestimating the effect which a regime of common tariffs, common agricultural policy, and uniform labour and social conditions would have on the political development of Europe. Once these arrangements are established and experienced, Europe would be halfway along the road to a federation.
The meeting concluded at 1.05 pm.
1 Sandys was accompanied in all of his meetings in Canberra by the British High Commissioner, Sir William Oliver, Sir Henry Lintott (CRO), Eric Roll (MAFF), Bill Hughes (Board ofTrade), and F. Mills (Private Secretary).
2 See NAA: A1838, 727/4/2 part 1.
[NAA: A1838, 727/4/2 PART 1]