London, 13 August 1971
Australia and the EEC
1. I submit a draft letter from Sir C O’Neill in reply to Sir Morrice James’ letter to him of 9 July. 1 It is written in the light of Mr Tickell’s minute of 5 August on my submission of 30 July.2 I also attach for reference a copy of Sir C O’Neill’s minute of 16 July.3
[ matter omitted ]
Australia and the EEC
1. I am sorry to have kept you waiting so long for a reply to your letter of 9 July about your conversation with Mr Anthony, which has been read here with great interest. We all feel you are right that your conversation with him could only have been to the good, and this is borne out by Mr MacMahon’s [sic] recent message to the Prime Minister. It is perhaps also of interest that Makowski of Australia House, when he called on Statham the other day to talk about Papua and New Guinea commented that he was glad that an awkward period of our relations, during which we were corresponding with each other through the press in this country seemed to have finished.
2. In the meantime, since you wrote David Aiers will have arrived in Canberra and you will be aware of the general position regarding the extent of our consultation with the Australians and the way in which the situation developed in the last few weeks before we reached agreement on May 13 on the arrangements for the agricultural transition consequent upon our joining the Community.
3. We ourselves are convinced that the best way to meet Australian criticism without seeming to take the initiative in doing so is to stand firmly by the value of the arrangements made as they affect Australia.
4. The Australians have, in the first place, always clearly understood the reasons for our entry into the Community and have recognised that there was nothing we could do for them after the transitional period. Mr Anthony himself recognised this when he called on Ministers here in general. When Mr Rippon visited Australia last Autumn he said that we would do our best to ensure that the arrangements for a transitional period would protect the interests of the Commonwealth and Australia in particular. But he made it clear that no useful purpose would be served in pressing matters with the Community on which there was virtually no prospect of achieving satisfactory responses. Nevertheless within the bounds of what was possible in the negotiations we have secured a great deal that will help Australia. From the outset of the negotiations we stressed to the Community that third countries, and particularly Australia might have to make large changes in their traditional patterns of agricultural trade with Britain as a result of our adopting the Common Agricultural Policy and that it was important that they should have the opportunity to make these changes in an orderly way.
5. The transitional arrangements which have been agreed to our mind make up an entirely satisfactory package which consists basically of 3 major items.
6. First, we have secured special tariff quota arrangements with the EEC, admittedly in the interests of British industry but which will assist Australian exports of certain industrial raw materials, alumina, lead bullion and zinc. Some of these arrangements will indeed extend beyond the transitional period.
7. Secondly, it has been agreed that we shall introduce the Community’s Common External Tariff over a 5 year transitional period. There will be no move at all during the first year. The gradual programme of transition gives a good period for adjustment (not as long as the Australians might have hoped perhaps but as long as any reasonable person could have expected).
8. As regards products subject to levies—the products of greatest interest to Australia—it became clear in the negotiations that we should have to apply the principle of the Community system, including Community preference, from the start. Acceptance of Community preference from the outset was in fact the key to the success of the Prime Minister’s visit to Paris in May, the date of which had of course been announced before the Ministerial meeting in Brussels on 11/13 May.
9. The acceptance of Community preference in full from the beginning does not make the position of third countries significantly worse than it would be under an arrangement under which preference was gradually phased in. Thus, for products on which levies would be imposed, Community preference would be of importance only where the enlarged Community was in surplus, and in such a situation even a limited degree of Community preference would tend to exclude third country supplies. At the same time, in agreeing to the Community’s insistence on the principle of Community preference from the start we secured from the Community a comprehensive general undertaking that there would be machinery after enlargement to ensure that appropriate steps would be taken to forestall the danger of substantial dislocation in significant volumes of trade in agricultural commodities during the transitional period. In our view this is a perfectly adequate safeguard capable of being translated into fully effective action should the need arise.
10. We would contend that by pressing for and obtaining this general assurance we have secured for Australia and for other third country suppliers terms at least as good as those which we could have obtained by seeking to negotiate specific degressive guarantees. Even if the Community had agreed to this latter approach—which was virtually ruled out towards the end of the negotiations we should have been unlikely to achieve guarantees for more than low levels of imports.
11. In fact the only change in our position after 22 April when I told Commonwealth representatives in Brussels of the way in which we were thinking of adjusting to the Community’s approach was that we replaced one kind of safeguard (which it proved we were going to be unable to get) by another and fully adequate form of protection. We continue to regard this protection as the equivalent of an orderly phasing out. […] Indeed, the general undertaking by the Community applies to all goods covered by levies and goes wider than the areas for which we might otherwise have been seeking specific degressive guarantees.
You will have noticed that Mr Rippon has twice stated in the House of Commons recently, once in the Debate on the White Paper and one in answer to questions on 2 August, that we are willing to have discussions at the appropriate time and level with the Australians about individual commodities. We would not of course object to discussions at any time. But we must recognise that we should only be able to discuss effectively with the Community measures to counteract abrupt dislocation when there was evidence that such dislocation was likely to occur. Until we and the Community had been able to work out in 1972 what the market situation was likely to be in 1973 there would be no real practical meaning to such discussions.
12. We feel that it is important to stress with the Australians the importance we attach to our working together on a satisfactory renegotiation of the International Sugar Agreement in 1973 and the securing of an effective international agreement on dairy produce. The Community have already signified their intention of working towards the latter.
13. Mr Anthony’s view of events has clearly been unfavourably influenced by the fact that he seems to have been told by the representatives of the Six that we had made virtually no effort to secure arrangements for third countries suppliers. This is unjust; but it is not altogether uncharacteristic that the Six should have given Mr Anthony this impression to get themselves off the hook. It would have been fairer for them to have told Mr Anthony that the Community had made it absolutely clear that the acceptance of Community preferences from the start was a sine qua non for agreement on agricultural transitional arrangements—and indeed much else. They could have pointed out that the general undertaking on agricultural trade dislocation was another way of expressing the concern that we have always expressed for Australia and other third countries in the negotiations. In any case, as you will have seen from Codel telegram No 700 of 28 July, the Community claim to have explained to Mr Anthony the arrangements made; and to be rather miffed with Mr Anthony’s public statements afterwards which discounted what they (and we) consider to be an effective arrangement.
14. All in all, therefore, we do not feel that we have any apologies to make to the Australians […]
1 Document 297.
2 Document 300.
3 Document 298.
[UKNA: FCO 24/1056]