London, 5 June 1962
Secret
[ matter omitted ]
6. Common Market
MR MENZIES said that Britain’s entry into the Common Market would present serious difficulties for other Commonwealth countries. It was all the more important that, in the coming months before the Meeting of Commonwealth Prime Ministers in September, we should not get into avoidable difficulties in Commonwealth relations. At the moment he was specially concerned about two points.
First, he thought that unnecessary difficulties would be created if the conclusions reached in the Brussels negotiations on particular aspects of the problem were presented to public opinion as though they were final agreements. He himself understood that these groups of problems must be discussed seriatim in the negotiations, and that provisional conclusions must be formulated on each group as the negotiations proceeded. He also recognised that the negotiations could not be conducted in complete secrecy. But if, when these separate conclusions became known, they were presented in the Press as though they were final agreements, it was inevitable that other Commonwealth Governments should make public comments on those aspects which were of special concern to them2 If this continued, a series of public disagreements would be progressively built up which would greatly increase the difficulties confronting the Commonwealth Prime Minsters at their Meeting in September. To avoid this he suggested a sustained effort to make it clearly understood by the public that the object of the present phase of the negotiations was to establish, in respect of each of these groups of problems, provisional or tentative conclusions on what might be feasible plans; and to build up in this way the general pattern of possible arrangements which would be considered as a whole at the Meeting in September. This would avoid the impression that a series of final decisions were being taken in this phase of the negotiations. It should be made clear that, on the contrary, all these issues remained open for final decision when the package could be considered as a whole.
Secondly, it would be useful if other Commonwealth Governments could be given, in confidence, some indication of the economic advantages which Britain hoped to secure by joining the Common Market. The political advantages were already plain. The economic advantages, however, had not been clearly stated. It seemed obvious to other Commonwealth Governments that some industries in the United Kingdom would suffer seriously in the short run: would these losses be offset by greater gains, for these or other industries, in the longer term? Could it be said that Britain’s membership of the Common Market would add substantially to her trade—thus increasing her living standards and purchasing power and, in consequence, providing a larger market for Commonwealth suppliers? This sort of information, if it could be given, would influence other Commonwealth Governments and enable them to put the problem into better perspective.
On the first of the two points raised by Mr Menzies, MR HEATH said that, when the Commonwealth Prime Ministers met in September, they would expect a fairly precise picture of the sort of conditions on which the United Kingdom might expect to be able to secure entry to the Common Market. To get this degree of precision, the negotiators had to ascertain pretty definitely what concessions the Six would be prepared to make. This meant that, on each of the various groups of problems, the negotiations had to be brought to a conclusion. These conclusions were not in fact final agreements. It was understood that, at the end of this phase of negotiations, the package would have to be considered as a whole. But it was impossible to keep secret the conclusions which were being reached on each of these groups of problems in turn and it was this which gave rise to the current misunderstanding. The true position was as stated by Mr Menzies: the difficulty lay in getting this clearly understood by other Commonwealth Governments and by public opinion throughout the Commonwealth. He would certainly do his best to make the position plain. He would emphasise this point in speaking in the debate in the House of Commons later in the week, and would subsequently seek other opportunities to remove the misunderstanding.
MR MACMILLAN said that it would be helpful if some formula could be devised for describing these provisional conclusions so as to make it plain that they did not constitute final agreements. If the Secretariat of the European Economic Community could devise some suitable form of words, this could be used, as the standard form, for describing all the provisional conclusions arrived at in the current phase of the negotiations. It could also be emphasised that, throughout this phase, the closest consultation would continue to be held between the United Kingdom and the other Commonwealth countries.
It was agreed that MR HEATH should consider what further steps could be taken to avoid the first of the difficulties to which Mr Menzies had referred. Meanwhile Mr Menzies undertook to send to Mr Heath a draft of the public statement which he would like to be able to make on this point.
On the second of the points raised by Mr Menzies, MR MACMILLAN said that it was difficult to quantify the economic advantage which Britain was likely to secure through membership of the Common Market. It was however clear that, because of her small size, Britain’s economic future would be seriously prejudiced if she remained outside the Common Market. The countries of the Six were not yet fully industrialised: in some of them as much as 20 per cent of the population was still employed in agriculture. They were therefore in a position greatly to expand their economic power by increasing their industrial labour force. Unless therefore Britain had access to this market on even terms, it would represent a great threat to her economic growth. Even more serious was the potential exporting power of the Common Market: unless Britain gained access to it, it was likely to encroach on many of her export markets, including those in the Commonwealth.
MR MENZIES said that he saw the force of this negative argument. But it would be useful if other Commonwealth Governments could also be given some indication of the positive gain which Britain expected to secure by entering the Common Market.
Australia was apprehensive of increased industrial competition from Europe. It must be an objective of any Australian Government to find assured employment for an increased population. This could not be secured from primary production for, with increasing mechanisation, the rural population was bound to decline. Australia must therefore expand her secondary industries and services; and must continue to protect these from competition from the more industrialised countries in Europe.
MR HEATH said that some attempt had already been made to calculate the economic advantages which Britain would derive from membership of the Common Market. This work could not be completed until the Brussels negotiations had been carried to a further stage. It would however be completed in time for presentation to the Commonwealth Prime Ministers at the September meeting.
MR MENZIES then raised a question about the duration of the transitional arrangements which were now being negotiated with the European Economic Community. He had seen a formula which provided that, if Britain entered the Common Market, the enlarged Community should undertake, not less than one year before January, 1970, to review the working of these arrangements in consultation with the Commonwealth countries concerned. Did this imply that all concessions would cease to operate on 1st January, 1970?
MR HEATH said that this formula was included in the proposals relating to processed foodstuffs. The United Kingdom negotiators did not contemplate that the special concessions secured in respect of these should finally be extinguished in 1970. The formula was intended to provide an opportunity to negotiate modified arrangements to ensure, in the circumstances existing at the time, the maintenance of the opportunities for trade in these products which Commonwealth countries had previously enjoyed.
1 Menzies had arrived in London at the end of May 1962 for a two-week visit.
2 On the day of Menzies’ arrival in London, the British delegation in Brussels had reached an agreement with the Six on the phasing out of preferences for manufactured goods from Canada, Australia and New Zealand by 1970. The Six had never viewed the case for Commonwealth industrial goods to be as compelling as the agricultural problems. Although the Australians had been consulted, they had never consented to the phasing out of these preferences. Menzies therefore felt bound to express his disappointment publicly in forthright terms. Following a brief discussion with the New Zealand Deputy Prime Minister, Jack Marshall, who was also in London at the time, Australia and New Zealand issued a joint statement strongly condemning the arrangements. Menzies and Marshall denounced the UK-Six agreement as a ‘disturbing development’ which ‘fell far short of providing adequate safeguards’ for the products concerned. Although industrial exports were not the most vital items at stake in the Brussels negotiations for Australia and New Zealand, they voiced their concern that a similar formula might be applied to the all-important temperate agricultural sector. They therefore insisted that the agreements in Brussels ‘must not in any circumstances be taken as a pattern for the type of settlement which might be reached in other products of even greater concern to Australia and New Zealand’. The announcement was widely reported in the British press. See for example the Times, 2 June 1962; the Guardian, 31 May 1962; the Sunday Times, 3 June 1962. The anti-Common Market Daily Express fervently declared that Menzies had ‘changed from the suave Empire politician to a hot-tempered Australian-on the warpath’, 31 May 1962.
[UKNA: CAB 1301186]