Brussels, 16 July 1970
I have now had the benefit of discussions with various members of the Commission.
In these discussions I have made clear the grave consequences to Australia and other third countries which are important exporters of agricultural products, if the existing policies and levels of protection given to agriculture in the Community are applied without modification to the proposed enlarged Community.
A Community which would embrace more than 40 per cent of the international trade of the western world.
The United Kingdom, the world’s principal market for many agricultural products, has protected its agriculture by various means.
But the degree of protection it has offered its agriculture has been modest by comparison with the virtually unlimited protection afforded producers in the Community of many farm products.
The objectives of GATT and the principles it has developed are aimed at decreasing barriers to trade.
The GATT specifically provides that in the formation of a Common Market the external barriers to trade must not be increased, and the trading opportunities of third countries decreased.
In some areas of commodity trade, the enlarged Community could adhere to GATT principles best by effective world commodity agreements.
In some other sectors of trade in agricultural products, adherence to GATT principles would require the enlarged community to reduce the levels of protection afforded by the various mechanisms of the Common Agricultural Policy—be they variable levies, guide and intervention prices, tariffs or other devices of protection.
Such adjustments would have to be in harmony with the principle that the barriers to trade after the enlargement were no greater on average than before in the existing Common Market and in the countries now seeking membership.
Another GATT principle with which the enlarged Community should conform relates to fair trade practices in the disposal of surpluses.
The Australian Government must take the strongest stand against a European Community which, aiming at self-sufficiency through very high protection to producers of certain farm products, develops surpluses which it pushes out with the aid of huge subsidies on world markets and so destroys the traditional trade of third countries relying on the export of farm products for their livelihood.
Australia looks at the formation and behaviour of great trading blocs such as the Common Market through the eyes of a country traditionally dependent upon exports of farm products for much of its livelihood.
It seems quite clear, from my discussions with Commission authorities here in Brussels, that the Commission itself is powerless to take any initiative on proposals to reconcile the obligations of an enlarged Common Market with the clear rights of other trading countries and with the trading principles of GATT.
Indeed, I have formed the opinion that it is only by bringing home to the member countries the proper feeling of responsibility for observance of the basic trading principles embodied in GATT that Australia and countries depending upon agricultural trade can avert the serious hardship which otherwise appears certain to arise from the enlargement of the Common Market.
Australia and other third countries in the like situation must fight to ensure the adherence of the enlarged Community to the basic principles of trade developed and accepted in the post-war period by members of GATT.
It has no alternative but to oppose the enlargement of the Common Market if it is accomplished at the expense of a blatant breach of these principles and ruthless disregard for the GATT rights of countries which have enjoyed and are entitled to continue to enjoy the trading opportunities upon which their industries have developed and their livelihood depends.
Certainly the enlargement of the Common Market should not bring a disregard for the trading rights of others embodied in the GATT.
It should bring to its members a greater sense of responsibility for the consequences of their policies upon third countries.
This sense of responsibility must extend to supporting international commodity arrangements where appropriate to prevent the chaos and hardship that otherwise would come in world trade and production of such bulk commodities as sugar, wheat, dairy products and meat.
This sense of responsibility must lead to a willingness to modify the levels of its protection for various agricultural products where necessary to comply with the principles of GATT covering the formation of a Common Market.
This sense of responsibility also must ensure that aggressive dumping of surpluses supported by the financial power of the vast enlarged Community does not gravely injure third countries.
The Australian Government is not opposing the enlargement of the Common Market by the inclusion of Britain, Denmark, Norway and Ireland.
However, it must oppose terms and conditions of such entry if they offend the basic objectives and principles of the western world as expressed in GATT.
Australia has a record of behaviour during the whole of this Century which should entitle it to expect its trade interests and rights to be comprehended and understood by European countries.
This is especially so because of the very close association in the post-war period of the rules of trade now embodied in the GATT.
I regard the issues raised by the proposal to enlarge the Common Market as of the utmost importance to the whole future of world trade.
The formation of such a vast trading bloc, if accomplished without sufficient regard for the interests of others, could well result in a defensive retreat by other large trading countries towards further restrictions on their markets.
This process and its consequent cumulative effects threatens not only the progress of small countries like Australia but the prospects of the whole trading world.
[NAA: Al838, 727/4/2 PART 9]