London, 23 July 1962
Confidential
[ matter omitted ]
2. Commonwealth Temperate Foodstuffs
The Committee had before them a note by the Lord Privy Seal (CMN (62) 44) on Commonwealth temperate foodstuffs.2
THE LORD PRIVY SEAL said that it had become clear in the negotiations that the Six were not going to accept the specific arrangements we had proposed in our general paper on comparable outlets and in various commodity papers, and that, for the French at least, this was probably a breaking point. It seemed to him therefore that we should try to adapt the ideas put forward by the Six and modify them to give us the substance of our original proposals. There was not a great deal of difference between ourselves and the Six on worldwide commodity agreements, although the Six had not yet accepted that such agreements should cover access. We should be able to agree on a formula. Transitional arrangements, however, were extremely difficult, with access and terms of competition, including the future of Commonwealth preferences, being the main point at issue. The Six wanted Commonwealth preferences to go. They were prepared to give the Commonwealth a part of the intra-Community preference but this was much less than the preferences at present enjoyed by the Commonwealth on various commodities and was to disappear by the end of the transitional period. A middle way might be to phase Commonwealth preferences out by the end of the transitional period also. On access in terms of quantities, which the Six had shown great reluctance to envisage, he proposed to seek agreement that we should not have to apply quantitative restrictions against the Commonwealth for any particular commodity until Commonwealth exports to the United Kingdom in any year had reached traditional levels. The Six were likely to object and argue that a declaration of intention to follow a reasonable price policy—as they are ready to declare their intention of doing—would give sufficient assurance. The French feared that any quantitative arrangements might afford an opportunity for the Germans to reopen the common agricultural policy agreements reached with so much difficulty on 14th January, which French public opinion regarded as one of the most important advantages gained for France in the Community. If the Six were not willing to concede a quantitative assurance for the whole of the transitional period, we should try for a general clause to the effect that if there were a substantial decline in imports from Commonwealth below traditional levels, the Community would consult with the Commonwealth and take appropriate remedial measure. Finally, arrangements would have to be agreed for the so-called bridge: i.e. arrangements after 1970 in the event of world-wide commodity agreements not having been reached. The Six had said that, in the case of failure to reach commodity agreements with all the main supplying countries, they would be willing to negotiate with those countries who were prepared for such agreements. He would like to take this a step further and seek their agreement that they would be prepared to negotiate trade agreements with Canada, Australia and New Zealand on the principle they had already agreed for India, Pakistan and Ceylon.
THE COMMONWEALTH SECRETARY agreed that there was very little prospect of getting the Six to accept the approach we had hitherto adopted. We had therefore to try to get our requirements by adapting their philosophy and methods and phraseology. It might just be possible to persuade the Commonwealth that the proposals in the paper protected their vital interests, but a good deal of explanation would be needed. We might have to make use of the argument—difficult and involved though it was—that if we did not enter the European Economic Community, the Commonwealth could not expect its sales to the United Kingdom to continue at their present level. The next step should be to tell Canada, Australia and New Zealand what we proposed, stressing that we were not abandoning our original approach but exploring whether the same result could be obtained by other methods. Sharp reactions could be expected and he hoped that there would be intervals in the negotiations during which we could explain any moves so that Commonwealth criticism of them would not get out of hand.
He considered that nothing appreciably less than the arrangements proposed in the paper could be put to the Commonwealth Prime Ministers’ meeting. The damage clause was vital. If agreement could not be reached on them with the Six, he would prefer us to accept this position for the present and explain the differences to the Prime Ministers’ meeting rather than settle, even provisionally, for anything less. It would be important for this purpose to register a position in the negotiations reserving rather more than we hoped eventually to obtain.
THE LORD PRIVY SEAL said that at the meeting on 20th July they had been able to get down to proper negotiations involving all seven participants and the Commission, and that he hoped they would continue in this vein on the 24th July. Comparable outlets, he thought, would be dealt with by a thorough initial discussion and then be referred to the Deputies for further drafting, while Ministers dealt with other matters, such as our zero tariff proposals and the problems of the Asian Commonwealth. We should only be able to keep discussion going on comparable outlets so long as we were actually negotiating. If we were getting nowhere, the French would insist on an adjournment.
In discussion there was general agreement with the proposed procedure. The following points were made:
(a) The world-wide agreements apparently envisaged by the Six would not be specifically aimed at providing safeguards for the Commonwealth. The Six were not prepared in the Common Market period to discriminate in favour of the Commonwealth against third countries. On the other hand, the Commonwealth countries concerned would benefit by stabilisation of prices and such agreements were more beneficial to producers than to importers.
(b) During the Common Market period, it would be possible for French wheat to undercut Australian wheat by being sold in the Community between the target and intervention prices where the difference might be as much as 10 per cent. A device would have to be found to circumvent this difficulty, possibly by relating the levy to the intervention rather than to the target price, although this would help all third countries and not only the Commonwealth.
(c) The Commonwealth would argue that they would suffer from the imposition of the levy. The Australians wanted a high guaranteed price in addition to guarantees of access. However, Australian officials had admitted when pressed that if Australia had the advantages of the intra-Community preference she would be in no worse a position than at present. The real Australian worry was that the Community price would rise too high and over-stimulate Community production.
(d) Although the Six had expressed themselves ready to make a forceful statement about following a reasonable price policy, what they regarded as the reasonable price for wheat would be likely to stimulate production in France and the United Kingdom, although production in Germany and Italy might come down. It was noted that the level of production varied inversely with price for some commodities, e.g. coffee, but it was not thought that this had any relevance to temperate foodstuffs.
(e) It was noted that suggestions had been made about a special protocol for New Zealand on the grounds that the extent of her dependence on the United Kingdom market was of a different order from that of Canada and Australia. Nevertheless, this would be very difficult politically.
(f) Presentationally, there would be a considerable problem in convincing Parliament and public opinion that an agreement on the lines summarised in the Lord Privy Seal’s memorandum would provide adequate safeguards for the Commonwealth. It would be very important to show that we were not abandoning our attempt to get comparable outlets for the Commonwealth but were getting them by different methods. An agreement that there would be remedial measures if Commonwealth exports declined substantially below traditional levels would be very important in this context.
THE FIRST SECRETARY OF STATE said that it was agreed that further progress could not be made on the basis of our comparable outlets formula and that we should now explore the possibility of building on the proposals advanced by the Six and adapting them to provide the substance of our original proposals. Messages should be sent to the Commonwealth Governments concerned to this effect, emphasising that we were not abandoning our requirements for the protection of their interests, but seeking to secure them by other means. The proposals in the Lord Privy Seal’s paper seemed to the Committee to offer a solution which would fulfil our obligations to the Commonwealth, but anything appreciably less might not be adequate. The proposed provision for reviewing and remedying damage seemed particularly important. The Lord Privy Seal should report what progress he was able to make to the Committee at their meeting arranged for 30th July.
The Committee:–
1. Approved, subject to the points made in discussion, the proposals outlined by the Lord Privy Seal for the next stage of the negotiations on the treatment of Commonwealth temperate foodstuffs.
2. Invited the Commonwealth Secretary, in consultation with the Lord Privy Seal, to arrange for the Commonwealth Governments concerned to be informed of the proposed procedure on the lines agreed in discussion.3
3. Invited the Lord Privy Seal to report the position reached in the negotiations at their meeting on 30th July.
1 Attended by Butler, Sandys, Heath, Maudling, Soames, Fredrick Erroll (President of the Board of Trade) and William Deedes (Minister without Portfolio).
2 Document 192.
3 Document 194.
[UKNA: CAB 134/1512]