London, 24 July 1962
Confidential
As Mr. Macmillan told you on 9th June before you left London, despite further forceful and repeated efforts in Brussels, including meetings of both Deputies and Ministers, as well as by personal conversations in capitals, we have not been able to persuade the Six to accept our ‘comparable opportunity’ formula as a basis for discussion. We have therefore been considering the best way of proceeding.
2. Signor Colombo, the Chairman of the Conference, put forward counter-proposals on 28th May and Commonwealth authorities were informed of these proposals. Since then they have slightly improved on them in a further text tabled and given to your representatives in Brussels on 20th July.
3. In our view the best way of making progress will be to explore the possibility of building on the formula now presented by the Six and to try to improve it so as to enable us to achieve in a different form the real substance of our original proposals. We shall keep the latter on the table unless it becomes clear that an acceptable solution based on the proposals of the Six is within sight.
4. The approach of the Six recognises and attempts to deal with three problems
- the approach to world-wide commodity agreements
- the problem of price and production policies within the E. E. C.
- transitional arrangements up to 1970.
5. In regard to the first two of these, there is already considerably common ground. We have already accepted the possibility of working towards world-wide agreements over as wide a field as possible as quickly as possible. The main point of disagreement is over the proper treatment of the question of ‘access’ and we shall continue to press them to include a suitable reference to this aspect. The Six have also said that if world wide agreements prove to be impracticable they would be prepared to consult with Commonwealth countries who were prepared to conclude such agreements.
6. If we are to secure our objective of outlets for Commonwealth temperate foodstuffs a great deal will depend on trade and production policies pursued by the Community. The Six are prepared to make fairly forthcoming statements about these policies particularly as regards cereals. This is all to the good, if we can ensure that the Community adopt the right price and production policies this will provide better assurances for the Commonwealth than any precise quantitative arrangements we may be able to negotiate and which may well break down if the Community’s price and production policies are wrong. Further, the undertakings about price and production policy would not be limited in time while any quantitative arrangements we could obtain certainly would be. Our objective therefore will be to ensure that the undertaking will be as specific as possible and that it should be linked to the question of ‘access’ as well as to other considerations. We also hope to persuade them to accept a formula which commits them to consultation with the Commonwealth if there is marked impairment of trade and also to taking appropriate remedial measures.
7. If we can reach a satisfactory agreement on these two general subjects then we have a sound foundation for protecting Commonwealth interests in the longer term. There remains the question of transitional arrangements on which the proposals of the Six are manifestly inadequate. As regards ‘access’ our aim will continue to be to seek an understanding that we shall not be required to apply quantitative restrictions on Commonwealth exports of temperate foodstuffs until imports in any year have reached traditional levels.
8. As regards conditions of competition we have to recognise that it is the aim of the Community to be non-discriminatory as between third countries. We are being reluctantly forced to the conclusion that this means there is virtually no prospect of retaining the existing Commonwealth preferences after the transitional period and that we shall probably have to accept that they should be phased out by 1970. During the transitional period however our aim is to retain as much of the preferences as possible. We shall aim also at securing as much of the benefit of the intra-community preference as possible for Commonwealth countries against other third country suppliers. We shall also do our best to ensure that the intra-community preference arrangements during the transitional period are not such as to put Commonwealth exporters at a serious competitive disadvantage in the British market as compared with community suppliers.
9. I am giving you the above outline so that you may know our present thinking about the prospects and possibilities. But we cannot determine now the precise terms of a possible solution. We propose therefore to keep in the closest touch with Commonwealth representatives in Brussels as the discussions develop.
[NAA:A3917 VOLUME 3]