Canberra, 15 September 1970
Confidential
Mr Rippon began by expressing appreciation of the Australian Government’s understanding attitude. He then referred to the change in the pattern of Australian–British trade relations since the time when Britain supplied Australia with manufactures in return for foodstuffs and raw materials. He could understand Australia’s purchase of non-British aircraft and the use of its tariff policy to promote its industrial development. He accepted that these things were part of a changing world. There had been tremendous industrial development in Australia; its mineral resources were the envy of the world. Australia was not like a developing country—not like Martinique or Chad. Britain could not make Australia a Community responsibility, like the Windward Islands or Fiji. There would be a vast amount of trade between Australia and the enlarged Community. Only nine per cent of Australia’s employment was in rural industry.
Mr Rippon went on to indicate that the British Government’s view was that Australia’s trade interests in relation to British entry into the European Communities could best be protected by a long transition period, but added that Britain would always put Australia’s case as high as it could. So Britain would seek the longest possible transaction period, which would provide time to put things right. He visualised Britain being a member of the Community by 1st January 1973, following which there would be a transition period.
Mr Rippon said it was impossible to foresee what developments would take place during the next eight years. Britain also wanted (that is, in addition to a long transition period) a more satisfactory attitude, on the part of the Community, towards world commodity agreements. Britain did not want a trading world just made up of large trade blocs. He mentioned that as regards sugar there was not just the problem of the CSA; there was also the problem of the ISA. Also, he did not want to see the Community dumping agricultural products and was aware of the case of butter in Hong Kong.
According to Mr Rippon , some of Australia’s fears were exaggerated and he believed that some problems would be worse if Britain failed to join the Community. Britain too, (that is, like Australia) had to protect its standard of life. No country could maintain the status quo.
Mr McEwen remarked that he heard what Mr Rippon was saying but said that Mr Rippon was not seeking to discuss the problems with him. He then said that he understood Britain’s reasons for seeking to join the Community—the background of the wars in Europe, and Britain’s economic reasons for wishing to join. These reasons were Britain’s business. In 1962 Britain had scorned Australia’s ideas of the costs to Britain of joining the Community. Britain had since analysed the costs of joining the Community. He was not in a position to discuss that analysis.
Mr McEwen said that he had never pretended that the impact of Britain’s entry would ‘shake’ Australia. He was simply saying that Australia had this problem and wanted to discuss how to ameliorate those problems. Australia could not tell its dairy farmers and its sugar producers that their industries were gone. It was not a balance of payments problem; it was a human problem. It could not be solved by writing out a cheque. Australia was not saying to Britain ‘Don’t go in’.
Mr McEwen said that on the last occasion Britain had tried to get in without hurting Australia. He then recalled that he had given Mr Barber a paper indicating what Australia wanted and said that it had become clear to him in Brussels that there was no consciousness of Australia’s problems and no disposition to deal with them. He had talked to members of the Commission of the European Communities. They were utterly indifferent to Australia’s interests. He had seen that pleading and attempting to explain our interests would get us nowhere. That had led him to turn back to the legal issues. At the time when the present Community was formed, Australia had not said anything (that is, about damage to Australian trade), as Australia was not an important supplier to the present Community. The situation was quite different in the case of an enlarged Community that included Britain. The GATT provided that a customs union could not raise new trade barriers. So Australia had no alternative but to argue in terms of the GATT.
Mr McEwen said that he had talked in Brussels about predatory dumping on the part of the Community. No one to whom he had talked could avoid being red-faced about it and about not being in the ISA. Now they were talking about a butter agreement. He feared that they wanted merely to make their present (illegal) selling legal. He was disappointed at the lack of suggestions (that is, in relation to Australia’s problems) from people in Europe and from Australia’s old friends in Britain.
Referring to sugar, Mr McEwen said that some three years ago Britain had put Australia on notice that its CSA rights would disappear in 1974. Now Britain would say that it had no commitments to us. Mr McEwen then cited what Mr Barber had said on sugar in his opening statement at Luxembourg[,] that is the reference to Commonwealth sugar exports, and said that subsequently the British had indicated to him that they were thinking in terms of the Commonwealth developing countries who produced sugar.
Mr Rippon in reply indicated, in effect, that the difference between the statements in Luxembourg and London was explicable by their having been made to different audiences, and the one in Luxembourg left the position in relation to Australian sugar open. He then went on to say that he could not get Australia treated as a ‘half’-developing country.
Mr McEwen said: ‘Don’t say that. That’ll only get a laugh’.
Mr Rippon said that the best hope was to get the transition period. He went on to say that, once in, Britain would begin to change the application of the CAP and the Community’s attitude to various other matters (not specified). There were people in the Community who wanted Britain to do this, though they could not say so. This explained the attitude of General de Gaulle, and there was a good deal of truth in what the General believed. (That is, that the enlargement of the Community and Britain’s membership of it would change the Community in ways that the General did not like).
Mr Rippon , reverting then to his comment about the CAP, said that there was basically nothing wrong with the CAP if it was applied sensibly. Whether Britain was in or was out of the Common Market, ‘we’ (evidently meaning the British and Australian Governments) had to tell our producers to produce what the world wanted; the pattern was shifting all the time. Mr Rippon remarked that a Community of ten countries would still need some imports of sugar. The mountains of butter in the Community had got smaller. Maybe these problems would be solved in the transition period.
Mr McEwen said that the Community’s very high support arrangements for butter would provide a new incentive to produce butter in the UK. The enlarged Community might well be self-sufficient in butter or draw on New Zealand only to meet its residual import needs. He was not going to try to climb on New Zealand’s back. New Zealand’s situation was one of being utterly vulnerable. Then, picking up Mr Rippon’s point that there might be no problem by 1990 or so, he asked how would Australia’s producers survive over the next few years (before 1990). He envisaged the transition period as being one that could cut off suddenly; so there would need to be a tapering transition period. Therefore, there would not be five real (full) transition years. Should Australia be given a quota for butter?
Mr Rippon then posed the question of what would happen if Britain did not join the Community.
Mr McEwen replied by presuming that Britain would continue to support its producers and to buy what it needed, but not becoming a ‘dear food’ country.
Mr McEwen said he agreed that trade patterns changed. Evolutionary changes were different from sudden changes; people could adJust to gradual changes.
Mr McEwen then commented that Australia’s industrialisation had simply meant that Australia imported, not less, but different kinds of industrial products than before.
Mr Rippon replied by saying that Britain might buy different things from Australia in future.
Mr McEwen said that Australia’s problem was not an exchange-earning problem. He referred by illustration to the situation of the sugar industry—the importance of the sugar industry as a source of employment in the large part of Australia that lay north of the Tropic of Capricorn. This was the ‘sugar’ problem.
Mr Rippon said: ‘Whose responsibility is it?’ If we do not join the EEC we have less capacity to import. We can accept responsibility for Fiji, but not for North Queensland.
Mr McEwen commented that there was no burden on Britain in buying butter from Australia rather than from France.
Mr Rippon indicated that Britain would be obliged to buy from France.
Mr McEwen then contrasted the British position in 1961 with its position today. In 1961 Britain had sought complete protection for the Commonwealth. Now it had no thought of doing so, apart from New Zealand and sugar. Britain had no positive thoughts about dealing with the problems that were involved for Australia.
Mr Rippon said that one should not under-value the transition period. He then said that Britain had the problems of its hill-farmers.
Mr McEwen said he was talking about important sectors of the Australian economy and not about hill-farmers and that he could not understand the equanimity of Mr Rippon’s attitude. He contrasted the attitude of the Community towards countries like Spain and Israel with its attitude towards Australia.
Mr Rippon said that Spain was part of Europe; Greece and Turkey were vital to the southern flank of Europe. Then (apparently to indicate that the present British Government did feel some responsibilities in relation to our part of the world), he referred to the British Government’s east of Suez commitment but said there was a limit to Britain’s ability to accept responsibility. Australia was manifestly going to be a country able to contribute to the developing world.
Mr McEwen said that Australia was not pleading ‘poor mouth’, nor was it asking Britain to accept a burden. Britain would have to pay for French butter.
Mr Rippon said that Britain needed to have access to the markets of Europe in order to pay for the butter it needed to import. Australia had decided not to buy the TSR 2 aircraft. He was not questioning Australia’s right to take that decision. But it had forced Britain to look at the markets where it could sell.
Mr McEwen said that Australia was not turning away from Britain in buying aircraft elsewhere. It was a case of buying aircraft suited to Australia’s needs.
Mr Rippon , going back to Britain’s general approach in its negotiations with the European Community, said that Britain was going to bargain hard. He would say he was under pressure from Australia, but that approach was not likely to make much headway with the EEC countries. So he would say to them that if they would not respond to that approach they must do more in relation to the transition period.
Mr McEwen : That solves nothing.
Mr Rippon : It gives time. There are many people within the EEC who want us in to bring about a change from within the Community. A lot of the fears (of Australia) will just melt away when we get down to it. What are your commodity problems? Sugar, fruit. …
Mr McEwen : Butter will be our biggest problem. There is a world market for sugar but there is no world market for butter.
Mr Rippon postulated that Hong Kong could be a growing market for butter.
Mr Anthony said the market there was really infinitesimal. Australia had not had much success in selling butter to Japan. There had been more success with cheese.
Mr Rippon then postulated that Australian producers might shift from dairying into beef.
Mr Anthony indicated that that was not a sound idea. The situation was that the Australian agricultural sector was going through its worst crisis since the Depression. It was a terribly serious situation. Apart from meat, no rural industry was in a sound position. If the UK went into the EEC the pressures would get worse. There were great pressures on the Government; there could be pressures for retaliation. Mr Anthony concluded by saying that he feared that Britain was not sufficiently concerned about Australia’s problems. It seemed that Australia was being over-looked.
Mr Rippon denied that Australia was being over-looked. That was why he was in Australia. Britain had to argue the case of those countries that were dependent on Britain, but it had to have priorities. Britain, too, needed a transition period. He could understand that Australia’s problems were worse because of the depression than they would otherwise be. Britain’s position was that at present it was excluded from a Power bloc. There were some things that it could not negotiate from the outside, but it could do more from inside.
Mr Rippon then said that, without giving a guarantee, Britain would do all it could to ‘hold the ring’ and then would do its best from inside.
Mr McEwen remarked that Mr Rippon was laying emphasis only on the transition period. How long a transition period would there be?
Mr Rippon said that a transition period of about three years would be quite satisfactory for British (secondary) industry. The problem was the length of the transition period that the EEC would agree to go for agriculture, and the EEC would want one transition period to cover everything. Britain would therefore like a transition period of five to seven years. That was quite a long time in modern life. Once in, Britain would see how the EEC policy could change. Of course, it was not sound policy to engage in dumping; the sensible people in the EEC knew that it was not. But Britain could not make it a condition of its entry that the EEC agree to change its policy.
Mr McEwen said he agreed that Britain could not make it a condition but he expected Britain in its negotiations to have regard to Australia’s problems. Mr McEwen then referred briefly to Australia’s links with Britain—‘we’ve been on too many rough tracks together’ (that is, for Australia not to be entitled to expect Britain to have regard to Australia’s problems). ‘But I don’t see you putting up ideas’.
Mr Rippon said that the Commission might come up with some ideas but of course it was not able to give anything away at the start.
Sir Alan Westerman said that given the techniques of the EEC’s CAP system he couldn’t see how anything could be done for New Zealand.
Mr Rippon agreed that there were technical difficulties. Britain might have to take New Zealand butter and pay the levy. The EEC might offer Australia a bilateral deal—concessions given for concessions gained from Australia.
Sir Alan Westerman said that in relation to imports of butter from third countries into the EEC, the EEC’s variable levy was a problem and, again, the EEC had no provision for quotas. So he could not see how one could solve the problem of New Zealand butter.
Mr Rippon said that where there was the will, a way would be found. Then, reverting to the UK’s general approach to the negotiations, he said he would not be negotiating on the basis of Britain’s going in at any price. There were major problems and minor problems. If the EEC could not help Britain on the major problems—the cost to Britain of the CAP, sugar, New Zealand, the transition period—it would be a case of ‘Sorry, we’ll have to try again some other day’.
Mr McEwen (who had been briefly absent during part of the discussion about New Zealand butter) queried how New Zealand could be protected.
Mr Rippon said that British entry would be an asset to the EEC so the EEC should make some concession in regard to New Zealand butter. Britain would be providing a market for the French farmer.
Mr McEwen said that if the effect of Britain’s entry was to create a situation which destroyed the ISA (because, without its CSA outlet, Australia would have more sugar to sell than its ISA quota), Australia would have to set out to sell its sugar. That would be a terrible consequence.
Mr Rippon said that more world commodity agreements were needed. Britain and Australia should work more together for them. He then remarked that the United States was a bit worried by the EEC but there were also the European defence aspects which were important to the United States, so it had to balance one consideration against another.
Mr McEwen said there was no reason why Britain should not question the price of entry into the EEC.
Mr Rippon said that it would be nice if he achieved more than he thought he could. That would be a bonus.
[NAA: A10206, EHEC5]