Australian Embassy Brussels, 4 June 1971
327. Confidential
In Brussels I have talked in turn to four of the Commissioners of the European Communities, beginning with Mansholt (agriculture) and then Dahrendorf (trade), Malfatti (President), and finally today Deniau (enlargement negotiations).
I have also had talks with Fayat, Belgian Minister for Trade, and Dondelinger (the Luxembourg permanent representative in Brussels).
2. I explained in detail the very serious impact which Britain’s entry would cause for Australian agriculture.
I made it clear that the Government fully recognised that it was for Britain to decide whether it would enter the Community on the terms which emerged from her negotiations.
I also made it clear that whilst Australia recognised that Britain would not be seeking to negotiate any special arrangements for Australia, I was disturbed on several counts.
3. Britain had apparently given in on the question of securing the sort of transition period which would have given us some time to adjust to the new trading circumstances.
Their overriding motivation seems to have been to achieve entry.
4. The British acceptance of immediate application of Community preference from the date of her entry means that in the case of the products subject to the Common Agricultural Policy, Australia (and other countries) would not have a transitional period during which there would be a progressive phasing out of our existing access and levels of trade.
This stark prospect, which emerged from the marathon negotiating session in mid-May,1 is in sharp conflict with the line which Rippon had taken in Australia last year.
He then stressed the value to us of having a transition period of several years in which to adapt.
5. Whilst I emphasised the effects on Australia I did so in the context of our concern at the failure of the negotiating parties to take adequately into account the trade problems and interests of third countries generally.
6. In summary, my presentation (in the course of which I rejected as invalid or irrelevant such familiar arguments as ‘you’re a rich country’ and ‘you’ve been developing new markets such as Japan’) was met by (I) the argument that Britain’s entry would be a great political and economic benefit for everybody and it was a pity that our trade interests would inevitably be hurt and (II) that things on the trade side would be better (or we should ‘hope’ they would be better) than we feared.
Malfatti, as expected, expounded the broad philosophic gospel asking us to trust the bigger community to show responsibility.
Mansholt, although more sympathetic, could really offer us no more than the hope that the world market situation would allow us to maintain a market for butter in the UK.
He mentioned that he had in mind that perhaps Britain could be given longer to align its price for butter with that of the present EEC and so counter the anti-consumption effect of higher butter prices in Britain.
On sugar I emphasised, as I did again with the other Commissioners, the responsibility which the EEC would have to accept, as we were already doing to a great [sic] extent than any other country, the discipline required to make the ISA work in the post-1974 situation.
7. I was not any more encouraged by Dahrendorf’s very frank account of the justification of the enlargement exercise, his candid acknowledgment that we were being asked to have faith and hope without any real basis for either and his own belief that the enlarged Community would shoulder its increased responsibilities some time in the future—he couldn’t say when.
He did offer a crumb when he said that later this year, possibly at the GATT session in November, the Community would take an initiative in putting forward some proposal (at one stage he said ‘formula’) to take account of the implications of enlargement for third countries, especially those like Australia.
He never really explained what is obviously still a fairly vague idea in his mind.
8. Today’s talk with Deniau was more directly to the point of the value to us of the transitional period.
In the case of those trade items subject to tariffs only, such as canned fruits, he made it clear that our preferences would be gradually phased out as a function of the progressive reduction of British duties vis-à-vis the Six and the progressive alignment of Britain’s external tariff with the existing CET.
In regard to the CAP items, particularly butter on which I had expressed great concern, he and his Director General, Wellenstein, drew my attention to the clause which had been hammered out at the May marathon.
This is the clause which Rippon quoted in his subsequent statement in the House of Commons:
‘On trade with third countries, we have secured explicit recognition by the Community that if circumstances arose during the transitional period in which significant volumes of trade risked serious disruption, then the enlarged Community would deal with the position’.
9. As Deniau explained, this would operate where there was a demonstrable risk of serious disruption (the word ‘forestall’ was rejected but clearly action is not taken only post facto).
The means used would be what he called an ‘institutional solution.’
The enlarged Community would so manage its complicated protective system (levies, export restitutions and montant forfaitaire) so as to avoid too big or too sharp reductions in the trade of third countries, only during the transitional period, particularly in butter and bacon, but also in any other products to which the CAP mechanisms applied.
10. Deniau was adamant that the Community would not agree to give any quantitative access assurances during the transitional period other than those specially negotiated in the case of New Zealand dairy products and sugar.
This meant the immediate abolition of British butter and cheese quotas on entry.
11. My response was that such a clause was not at all a firm assurance and that it did not therefore remove my apprehension that from the very beginning of the so-called transitional period we could face a drastic reduction, and indeed, perhaps a total elimination, of our trade with Britain in CAP items.
12. My talks with Fayat and Dondelinger covered much the same ground.
13. In my talks I referred also to the problem of Papua New Guinea.
I emphasised the unique nature of this territory and the fact that its exports were hardly a size as already to make it difficult for the enlarged Community to suitably accommodate them.
Deniau in particular showed a good deal of sympathy and said he will ensure that our recent note verbale and the New Guinea problem in general will be looked at carefully.
14. I propose to continue to take a strong line in my further talks with the Europeans and the British.
By doing this I believe we can create a climate of opinion conductive [sic] to useful broad ranging trade discussions in the period immediately after the entry negotiations are over.
15. I feel that my discussions thus far have led to a much clearer understanding of Australia’s position.
- 1 Document 278.
[NAA:AI838, 727/4/2 PART 12]