Canberra, 26 January 1971
401. Confidential
Discussions were held in Canberra on 22nd January 1971, between a delegation led by Mr J De Lipkowski, French Secretary of State for Foreign Affairs, and the Hon Ian Sinclair MP, supported by representatives from the departments of trade, primary industry, treasury, external territories, national development and foreign affairs. A summary of the discussions are as follows: (fuller details by bag)
In his opening statement Mr Sinclair stressed Australia’s concern at the EEC enlargement negotiations including the loss of the UK market for sensitive trade items, the consequences for rural communities, the future of PNG’s exports, effects on third markets of EEC enlargement policies and the spread of EEC association agreements and the development of protectionist trading blocs.
Mr Lipkowski stated that, on average, the EEC has one of the lowest tariff structures of any major trading group, with 7 percent as compared with 9 percent in the UK and 11 percent in the USA (he conveniently overlooked agricultural levies).
Agricultural surpluses are a world problem, and world agreements are necessary to solve commodity problems. The EEC is prepared to take a positive attitude on this matter as it has done with the IGA. A world agreement on tropical products would also be the best solution to Papua and New Guinea’s problem. The CET was reduced on various tropical products in January 1971 following the re-negotiation of the Yaounde Convention.
He claimed that Australia’s quota of some 300 tons of canned fruit, into France in fact protects Australia’s interests against cheaper Mediterranean, USA and South African imports. (Our share of the German market does not support this novel idea). He stated in the case of fresh fruit, France herself suffers severe competition [from] Italy.
On the question of damage to Australian exports by British entry Mr Lipkowski stressed that only a relatively small percentage (around 5 percent) of Australia’s total exports might be affected. In addition over the transitional period there would be a gradual phasing in of the CAP.
In reply we pointed out that although the total effect may be relatively small on Australia’s trade, the effects on particular rural communities would be extremely severe. On the question of the transitional period we emphasised that according to the latest British proposals, there could well be a sudden cut-off in our access to the British market. This was because the British had made the proposal of granting preferences to Community products immediately upon entry by imposing higher threshold prices against third country supplies. Lipkowski commented if that is so we had better prepare for immediate difficulties.
[ matter omitted ]
Mr Lipkowski felt that although the Six are anxious for the UK to join, negotiations will continue for some time, particularly over the level of participation of the UK in Community financing and the Sterling question.
Mr Sinclair drew attention to the importance of Sterling as a reserve currency for Australia and of the advantages Australia currently has on the London market.
Mr Lipkowski said the problems of British entry concerning financing and agriculture could be solved and that the problem of Sterling as a reserve currency would be the most difficult issue. He saw no possibility of UK joining EEC and Sterling remaining a reserve currency.
Returning to the question of Papua/New Guinea Mr Lipkowski advanced the disconcerting theory that as the territory was part of Australia Papua/New Guinea was Australia’s responsibility …
Mr Sinclair concluded that, as a multilateral trader, Australia is anxious not to be isolated from the major trading blocs of the EEC and the USA.
In summary Mr Lipkowski felt that ‘Australia’s doubts and concerns in relation to the EEC were not justified in the long term’. The EEC was concerned about the problem of its agricultural surpluses, it favoured world commodity agreements, the CET was generally low and the EEC was trade expansive in outlook.
Comment: Mr Lipkowski’s approach during the discussions was in keeping with most of his press and other comments while in Australia. He put out strongly the line that there was nothing for Australia to be worried about. The EEC was a very outward looking body which had made a significant contribution to the expansions of world trade. In fact one could be forgiven for believing that the EEC were the greatest free traders in existence today.1
1 An unidentified source in Foreign Affairs has minuted at the foot of this document: ‘Cynical, sarcastic, and reflecting Trade’s aggressive attitude to the Community. No wonder there is little sympathy for us and no wonder Lipkowski was rigid. It’s time we looked at results of McEwen approach.’
[NAA: A1838, 727/4/2 PART 11]