Australian Embassy, Brussels, 10 February 1967
Saving No. 3. Secret
Britain and the EEC—Australian Interests and Policy
The joint statement by the Prime Minister of New Zealand on 3rd February that ‘British entry into the Common Market would produce problems for both countries’ was reported by the Brussels press as though it were the sole subject of a joint communiqué. It was headed ‘Inquietude (concern or uneasiness) en Australie et en Nouvelle Zélande’ and printed under an item ‘Mr Atlee reaffirms his hostility to the Common Market[’].
2. This reaction to Mr Holt’s statement is no doubt due in part to the fact that our public attitude towards the ‘Wilson Round’ has not indicated much Australian interest. Our emphasis has been that the British probing, like the eventual decision whether to open formal negotiations and the decision whether to sign the Treaty of Rome, are matters primarily for the British Government. The impression has been created, at least amongst the public and casual observers, that Australian trade (as distinct from New Zealand’s) has been so diversified since 1963 that Australian exports to Great Britain would not constitute a major problem in any negotiations, and that at most a transition period would be required to cushion the shock.
3. Those who are aware of the continued importance of the British market for Australian trade (and we have tried to ensure that key ministers and officials are under no illusions) have probably interpreted our recent restraint and reticence as due to a desire to assist the British Government in this phase of their programme. They may well have assumed that we are making our specific interests known and having consultations on tactics with the British Government. They may now be asking the reason for the change in the Australian attitude, from one of studied relaxation to one of high level concern.
4. We assume that the Prime Ministers’ statement was designed partly to underline the vital need of New Zealand for a special regime. Although this has been universally conceded in principle in British soundings in Rome and Paris, the Belgians indicated in their talks with Wilson that they would prefer any derogation from the Common Agricultural Policy to be at most temporary.
5. The statement also raises, however, the question of Australia’s interests, the extent to which they are at risk in British entry, under the conditions which Wilson’s probing has so far elicited, and whether any change in Australia’s tactics is required. We look forward to receiving in due course background on the joint statement and the tactics you feel appropriate to present circumstances. Meanwhile we have attempted to summarize briefly the situation as seen in Brussels so far as Australian interests are concerned.
6. The British Government is now thoroughly committed to this second attempt to enter the EEC. Belgians say Mr Wilson shows not only willingness but eagerness to enter. However much he may continue to call it only a probe a personal negotiation has been initiated and failure to succeed would be a major reverse for him.
7. The reactions in Paris and the support evident in Rome and Brussels have, we gather, been more favourable than expected and have almost certainly raised British hopes that they will be able to proceed to formal negotiations. What seemed only barely possible a few months ago is now beginning to look almost probable.
8. Apart from any political prerequisite which the French may yet raise, and the broad question whether entry of Britain and several EFTA countries is possible without fundamental revision of the character of the Community, the factors which seem most likely to be crucial to the success of the negotiations in the light of discussions in the last month, are:
(i) the risk seen by some members of the EEC, or at least by individual ministers, that holdings of sterling by third countries like Australia could involve embarrassing automatic support by the other members if UK were in the Community. Contrary to some early reports the Belgians have not shown much concern about sterling, but the French with or without conviction still keep stressing it. There might be a temptation for the British, if monetary problems in general are still a stumbling block, to concede points of interest to Australia, e.g. to abandon free or preferential capital movements to sterling area countries;
(ii) the burden on the UK budget and balance of payments which would arise from paying in of levies and other contributions to the EEC Agricultural Fund. The Europeans have pointed out that this charge could be greatly diminished by a rapid switch by the United Kingdom to Community sources of supply for soft wheat, sugar, pigmeats, butter, fruit, etc. Special concessions (other than transition periods) which could reduce the burden on Great Britain and at the same time assist the Commonwealth suppliers of temperate products do not seem to be in contemplation. The only specific case the British have mentioned is the Commonwealth Sugar Agreement and that as a difficulty!
(iii) the determination of the British to avoid a tangle of negotiation on exceptions to, or prolonged delay in, full implementation of the Common Agricultural Policy. This desire to avoid involved discussions seems to amount to almost an obsession with Wilson and would not dispose him to fight for points of interest only to Australia, particularly if raised at a late stage. The Commission and the Europeans would also prefer not to have to find solutions for ‘kangaroo meat’ which has become the symbol of absurdly detailed negotiation.1
9. Australian interests are closely involved in all the above key issues, and our attitude could clearly be of importance. The timing and method of assertion of Australia’s interests will no doubt take into account the reaction not only of the British Government but also of the Five who will be taking some risks in their relations with France if they give Britain strong support. The United States presumably also has a residual interest in Western European integration and in any Australian action which could help or hinder this. We shall presumably seek financial or trade compensation for any eventual detriment to Australian exports contrary to British obligations to Australia. How best can Australia maximize the diplomatic compensation or quid pro quo, which it could receive in return for actions or statements or abstentions which help the negotiations along? Or would the effect of British entry still be so serious for Australia as to justify even at this stage an attempt to delay or even prevent it?
10. It has been my understanding that we had already accepted two years ago the inevitability of British entry into the EEC at some time , that we would not be trying to prevent or even delay the process and that our diplomatic task has been to use the time available to diversify Australian trade, to negotiate international commodity agreements, and to turn to our best advantage the bargaining coin which would accrue to us through the eventual disappearance of British preferences. There has also been the prospect that in return for assurances that we would not seek to prevent British entry into EEC we might expect the British Government to advocate (to the extent that this could be done without endangering the negotiations) policies of advantage to us at the time of entry and subsequently within the Community. We might also, if we assisted or did not hinder British entry, and this had the beneficial economic results hoped for by the British Government, hope for continued British (and perhaps some Western European) support of various kinds east of Suez.
11. Policy and decisions on these broad issues can of course only be determined by Ministers as the situation develops. The following questions already, however, call for some consideration:
(a) Should assistance be given to the British Government in its efforts to convince the Six of the political will to enter Europe by signature of the Treaty ofRome? Should support be expressed by Australian representatives for the objective of European integration as a general principle?
(b) Should positive steps be taken to let it be known in Europe that Australia has no intention of withdrawing from the sterling area or running down its sterling balances? Should Australian representatives take the initiative in combating suggestions that British entry would, because of sterling’s role, involve major risks for the EEC?
(c) Should Australian representatives refrain from comment on allegations that British entry would pose only transitory problems for Australia, or should they make clear in Europe that Australia still has important trade interests in the British market? Should the point be made that Australia will be looking to Britain to find ways of carrying out its contractual obligations to us?
(d) Should we at the same time indicate that we shall not expect Britain to take up minor issues on our behalf? Or should we simply continue to stress that the whole question is a matter for the British Government?
Guidance on these points would seem desirable, if we wish to make any attempt to influence the outcome. Even if our main objective is to avoid giving the British Government grounds for pinning responsibility on Australia for British failure, our silence could in certain circumstances be constructed as an act of policy.
1 References to ‘kangaroo meat’ appear frequently in the British record in the post-1963 era but hardly ever in the record of the 1961–63 negotiations, and there is no evidence that any time was wasted in the Brussels negotiations over entry rights for the carcasses of kangaroos. The most likely explanation is that kangaroo meat was listed in one of the many weighty commodity annexes circulated by the Australians, and was taken up as a symbol of narrow-minded Australian pettiness by an exasperated British negotiating team. It is, nonetheless, significant that by 1966–67 kangaroo meat had become a metaphor for self-defeating attention to microscopic commodity details.
[NAA: A1838, 727/4/2 PART 6]