London, 25 June 1971
Confidential
Mr Rippon said he hoped that the letter from his Private Secretary to the Australian High Commissioner had clarified the Community’s understanding on measures to avoid disruption of agricultural trade with Britain’s traditional trading partners. 1 It was clear that this was a general undertaking. In addition, agreement had been reached in Luxembourg this week on the need to work towards a world agreement on dairy produce. These would be reflected in the Treaty of Accession. As Mr Anthony knew, we had also made special arrangements in respect of certain industrial raw materials such as lead and alumina.
2. Mr Anthony said he was still uneasy after a close reading of the Community’s undertaking. The reference to ‘significant volumes of trade’ meant that there could be severe disruption in one commodity without this constituting a significant disruption in overall trade. Mr Rippon replied that the Community’s assurance applied to each individual commodity. Mr Anthony said he was also concerned that the Community’s undertaking spoke of taking into account the state of the markets in the enlarged Community. There could be cases of surplus in certain commodities in the Community adversely affecting Australia’s position. In particular, there was no assurance on butter. The Australians had asked for an assured transitional period for butter. Mr Rippon said that butter and sugar were included in the assurance. It was better not to seek references to specific commodities since this could exclude those commodities which were not specified.
3. Mr Dixon said that the fact that the Community proposed to take into account the market situation obtaining at the time was not sinister. It was necessary to take all the relevant factors into account. The understanding also referred to ‘current and prospective conditions and outlets on world markets’ and the need to take account of the effects of sudden and significant changes in trade on third countries and on any relevant international trade agreements.
4. Mr Anthony said that he would have preferred reference to specific commodities and that he had not been informed that this was not the case. He said that there could arise circumstances in which the butter industry would be severely affected but that this would only represent, say, 1% of Australia’s trade. This might not be considered to be a severe disruption of overall trade but would cause considerable disruption in the individual commodity. He said that Britain’s undertakings to secure transition had not been honoured.
5. Mr Rippon said that there had been full consultation at every stage. Our intentions had been transmitted to the Australians. It was very serious for a Minister to make such allegations in public. The Australian people must not be told that they were facing disaster. After our statement in the Deputies meeting on 21 April, Sir Con O’Neill had briefed Commonwealth representatives in Brussels on the general lines on which we were thinking of dealing with the Community approach to agricultural transition.2 Mr Rippon said that we had tried to reach safeguards for all. The problems of the developing sugar producers and New Zealand on the one hand and of Australia on the other were admittedly different. But safeguards had been obtained for all. We had obtained a framework within which we could raise problems which might arise.
(At this point Mr Rippon had to leave the meeting.)
6. Mr Ford3 said that the implications of the general political background must be taken into account. The Community had given a clear declaration about third countries. Australia’s butter exports might not be disrupted at all; if they were, the declaration would have to be honoured. It would not be politically possible for the Community to do otherwise. We had felt that a safeguard which laid down quantitative amounts was in the first place not negotiable and in the second place not in Australia’s best interests, since the minima included in any agreement would have been very low and would have given no room for expansion.
7. Mr Anthony said that the tragedy of this exercise had been that the British approach had been changed, and that no formal application had been made to the Community for Australia on two major items. If Australia faced serious problems over these two commodities, the blame must rest with the United Kingdom for not having raised the matter.
8. Mr Ford said that this was only true if it were assumed that the Community’s offer was less valuable as a safeguard than a specific approach. In the view of the British Government it was better.
9. Mr Dixon said that there had been two possible approaches. After extensive informal contacts with the Community we had chosen the second and had not wanted to spoil our chances on this general assurance by pressing to obtain specific commodity quantitative agreements. Mr Anthony had said that the settlement presented him with acute political problems but there were many positive elements in what had been agreed which the Australian Government could stress in its presentation of the matter. Further negotiations would be necessary on this subject and it was therefore important that the background against which they were undertaken should be positive and helpful, otherwise the British Government’s ability to press for further action within the enlarged Community would be weakened. The positive aspects of the agreement which could be emphasised were that the UK had not neglected Australian interests but on the contrary had constantly emphasised the need to avoid third country trade disruptions. Secondly, the UK had, to this end, secured an undertaking from the Community recognising this and providing for effective remedial action. The full details of the understanding could then be set out. The point should then be made that the agreement was a general one which covered all levy products including butter and sugar. Equally, although many of the details remained to be worked out, it had been agreed that all the mechanisms of the Community would be made available to deal with these problems and that action could be taken both at the higher policy level and at the day to day level of the Management Committees. The understanding also made special reference to taking into account the position in world markets and the effect on international commodity agreements; and this could be linked, in particular, to what the Community had said this week about their intention to work energetically for a world agreement on dairy products. Finally, Mr Anthony could say that he had left the British Government and the Governments of the Six in no doubt as to the serious consequences for the Australian industries concerned and the disturbance of world trade that would ensue if Australia’s present butter and sugar quotas were abruptly thrown onto over-supplied world markets; and he could say that he was confident that this would be taken fully into account when the situation was being considered at the beginning of the transitional period.
10. Mr Ford said that fundamentally this was a question of good faith and there were other political factors to back up this firm guarantee. Mr Donovan4 said that it was difficult to envisage how arrangements could be made that would be to the detriment of French butter exports. In the light of past experience he would not like to rely too much on the good intentions of the Community.
11. Mr Dixon said that there were other means of supply management than action at the frontier. As regards Mr Donovan’s second point it was inevitable that in a negotiation of this sort certain matters had to be taken on trust; and we had not treated Australian interests worse than British interests in this respect. For example many details remain to be worked out on the arrangements for corrective action to deal with difficulties in the operation of the transitional arrangements which would affect a range of British agricultural products which in many cases were as important to us, if not more so, than Australian exports of butter and sugar to Britain.
12. Mr Anthony remarked that the transition for Britain was a question of prices and not of markets. Mr Dixon said that there was nevertheless a strong analogy between the type of agreement we had made in these two cases. Mr Anthony said that it should now be left to officials to discuss this in detail but that he was not reassured. Australia had been treated in the same way as any other third country.
13. Mr Ford said that the problem seemed to fall into two parts. First there was the general picture of the situation which included the Community’s firm assurance, together with the political aspects of the situation which meant that Australia would be able to ensure that the undertaking was carried out. On the more practical side, it was important that the closest possible links between the British Ministry of Agriculture, Fisheries and Food should be maintained with Australian officials both in Brussels and in London to ensure that any problems that might arise should be dealt with.
14. Mr Anthony said he had done his best to be frank. He could not discount the possibility after having reported to his Prime Minister that Mr McMahon might come to Britain. He asked whether he should take it that the British Government was not prepared to press the Six now for specific quantitative guarantees for Australian butter and sugar.
15. Mr Dixon said that if we were to press for this now it would be regarded by the Six as reopening a fundamental feature of the political settlement that had just been reached. The time would certainly come for consideration of what action might be necessary to ensure an orderly transition for Australia’s exports of butter and sugar. But so far as could be seen at present it was unlikely that there could be detailed answers to these specific questions until we came to work out with the enlarged Community the details of the prices and other factors for the first year of transition. This would probably not be until late 1972 or the early months of 1973 by which time the supply and market prospects for the 1973 season would be much clearer and would provide a firm basis for decisions about third country suppliers.
16. Mr Anthony asked if he should report that there was no willingness on the part of the British Government to go back to the Community now. Mr Ford confirmed that this was the case.
1 Document 287.
2 Document 277.
3 J.A. Ford, Assistant Secretary of State, Foreign and Commonwealth Office, 1970–71.
4 Francis Patrick Donovan, Special Commercial Adviser, Australia House, London, 1968–73.
[UKNA: PREM 15/367]