Marlborough House London, 11 September 1962
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MR MENZIES said that Mr Macmillan had given the Meeting a distinguished statement of the high political and historical reasons which had led Britain to apply for membership of the European Communities. Mr Heath had explained vividly and in great detail the stage reached in the negotiations so far. Perhaps he had ended on too optimistic a note by referring to very considerable safeguards for Commonwealth interests: as far as Australia was concerned the safeguards seemed a little sketchy. The problem with which they were confronted was of historical importance. He had attended many previous Commonwealth Meetings, but none in which the issues at stake had been graver or more significant. He thought it was right to feel a proper, though controlled, emotion in facing these issues and to pay particular regard to the economic considerations without getting them out of perspective.
The political issues deserved analysis. If Britain acceded to the Rome Treaty, this would, as far as he could see, be an irrevocable decision. There had been a good deal of comment about sovereignty. When a sovereign state limits its own autonomy, it was limiting sovereignty by exercising it and normally no problem was presented since most treaties had either a terminal date or provision for denunciation. It seemed that the Treaty of Rome was one of the rare exceptions and that it could only be dissolved in favour of one of the parties to it by the unanimous consent of the other.
He would like first to consider the position of Great Britain. He understood the deeply-felt reasons that had led to a decision which, if carried to a conclusion, would be revolutionary in its effect and would mark a new era in British history. They deserved close attention, although he must point out that they were not endorsed by everyone in United Kingdom and therefore could not just be accepted by the rest of the Commonwealth in silence. He understood that the British Government considered that the balance of power theory was no longer tenable; that it had been falsified twice in this century by the two great wars; that if Britain were a member of the Community she would be able to play a greater part in removing possible causes of conflict and that the influence of an outward-looking Britain was needed to counteract inward-looking tendencies in the Community.
MR MENZIES said that on Britain’s entry the Commonwealth as an association would sustain changes—nominal or substantial. These changes might be accepted for purely practical reasons if individual members could be convinced that they would have genuine prospects of increasing their trade with an enlarged Community. But this did not seem to be in prospect and he would therefore like to ask what economic price the other members of the Commonwealth would be expected to pay if Britain decided to join the Community. In spite of all the negotiations Australia did not yet know the answer to their question. It was clear that Commonwealth preferences would disappear by 1970, and that the proposal for comparable outlets had not been acceptable to the Six. There had been some general talk about world-wide commodity agreements but nothing like a commitment. Price policies and reasonable price levels had been referred to—without specifying whether they would be reasonable from the point of view of European domestic producers or of outside exporters. Some commodities such as sugar, meat, metals and processed food covering indeed the bulk of Australia’s trade had not yet been dealt with in the negotiations. He was not making criticism and was well aware of what had been achieved in so limited a time: nevertheless these were the facts. It seemed to him, therefore, that it might be necessary to hold further talks when the Brussels negotiations had been brought to a conclusion but these could perhaps be related to separate sectors of the negotiations.
Mr Menzies said that no unnecessary delay could be afforded in reaching a decision on Britain’s relationship with Europe because of the damage that uncertainty did to the business confidence. On the other hand, it was obvious that every point in the negotiations had to be thoroughly discussed. So far he did not believe that the Six had moved at all in the direction of the Commonwealth. The Community did not seem prepared to offer adequate access to European markets or any certainty of proper prices. Commodity agreements provided a possible hopeful element and the United Kingdom, who had not always been keen on them, might play a decisive role if they were now to state their firm support and the principles on which they thought they should operate.
Great Britain had apparently decided that the economic losses entailed in joining the European Community would be outweighed by the economic gains. This could not have been an easy decision to reach and he hoped it was right. It was clear, however, that part of the initial price, and perhaps part of the final price, would have to be paid by the rest of the Commonwealth, and this was a compelling reason for them to do their utmost to influence the negotiation and to modify their results. He hoped that Australia had behaved constructively. They had their own great problems; the need for growth demanded a large volume of immigrants, the development of manufacturing industries and the continuous stimulation of agricultural production. There had been a great deal of expansion in Australia in the last ten years, but the terms of trade had moved against Australia in a phenomenal way. Between 1951 and 1961 Australian export prices had fallen by 42 per cent while import prices had risen by 6 per cent. This was not a process that could continue: Australia had to have a level of exports that would at least pay for imports.
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In any circumstances Britain’s entry into the Community would cause some damage to Australian interests. There had to be compensating factors, and of these there was as yet little sign. What Australia wanted was access to the European market on fair conditions and at fair prices so that she could continue her own development.
[NAA: A3917 VOLUME 8]