191. THE POLITICAL ADVANTAGES AND ECONOMIC DISADVANTAGES ACCRUING TO NONMEMBERS FROM THE CREATION OF THE EUROPEAN ECONOMIC COMMUNITY: Reply Made by the Under Secretary of State (Bowles) to a Question Asked Following an Address Before the National Press Club, August 15, 1961 (Excerpt) 43

. . . India really looks at British interest in the Common Market very much as we do. They understand the enormous importance of the Common Market politically in Europe to make Germany an integrated part of Europe, thereby keeping Germany from being a floating factor. They also recognize the enormous contribution that the United Kingdom can make to the Common Market. This contribution is not only in the production of steel and goods and all the rest, including skills, but a factor I think we often overlook, which is the extraordinary capacity of the British to govern, to reach a consensus, to follow the path of developing compromises that leads to rational governmental approaches.

The British are past masters at this. Their presence in Europe in this role would, I think, mean a great deal. However, the Indians are nervous about the implications that they face economically. Will this become a high-tariff area, shutting out their goods? Will it affect them economically? We are worried about the same kind of thing. What we would all like to see is a Common Market develop with the British in it, if they wish to be, but without the high tariffs which would cause trouble to everybody else. This is a question for European statesmanship, and I hope it really meets the challenge because it is terribly important. I think that we have shown great maturity in favoring the Common Market on political grounds and in playing down the economic disadvantages that grow out of it. I only hope that the Common Market does not let us down.

192. EUROPEAN ECONOMIC COMMUNITY REQUEST FOR CLARIFICATION OF THE SPECIAL PROBLEMS CONNECTED WITH UNITED KINGDOM ADHERENCE TO THE TREATY OF ROME: Letter From the President of the Council of Ministers of the EEC (Erhard) to the Prime Minister of the United Kingdom (Macmillan), September 27, 1961 44

MR. PRIME MINISTER,

I have the honour to refer to your letter of 9 August 1961 15 and to inform Your Excellency that the Council of Ministers of the European Economic Community

The reply printed here is taken from pp. 488-489 of the Department of State Bulletin, Sept. 18, 1961 (reprint of Department of State press release No. 570A, Aug. 21, 1961).

"Text as printed in the Bulletin of the European Economic Community, Sept.Oct. 1961, pp. 7-8.

45 Ante, doc. 189.

has at its session of 25 and 26 September 1961 given its opinion on the application made by Her Majesty's Government in the United Kingdom of Great Britain and Northern Ireland for the opening of negotiations with a view to acceding to the Treaty of Rome under the terms of Article 237 of that Treaty.

I am glad to be able to inform Your Excellency that the Council has unanimously approved this application.

In the letter referred to, Your Excellency has drawn the attention of the Governments of the Member States of the European Economic Community to the British Government's need to take account of the special Commonwealth relationship as well as of the essential interests of British agriculture and of the other Members of the European Free Trade Association.

The Governments of the six signatory States of the Treaty of Rome have taken note of this and have instructed me to inform Your Excellency that, in order that the negotiations may be begun under the most favourable conditions, they consider it necessary to be fully informed of the problems arising for the British Government, especially in the three spheres referred to in Your Excellency's letter of 9 August 1961, and of the solutions which your Government proposes.

To this end the six Governments have instructed me to invite the British Government to attend a meeting which could be held in Paris on 10 and, if necessary, 11 October 1961. The point of view of the British Government could be put before them at this meeting.

As soon as the Governments of the Member States of the European Economic Community have completed the study of the points thus submitted to them they will, whilst reserving the right to ask for supplementary information, decide by agreement with the British Government on the date when the negotiations proper shall begin. In the view of the six Governments these could take place in Brussels, starting in the first half of November.

193. UNITED KINGDOM EXPOSITION OF PROBLEMS CONNECTED WITH ADHERENCE TO THE TREATY OF ROME: Statement Made by the Lord Privy Seal of the United Kingdom (Heath) at a Meeting With Ministers of the Members of the EEC, Paris, October 10, 1961 (Excerpts) 46

The British Government and the British people have been through a searching debate during the last few years on the subject of their relations with Europe. The result of the debate has been our present application." It was a decision arrived at, not on any narrow or short-term grounds, but as a result of a thorough assessment over a considerable period of the needs of our own country, of Europe and of the Free World as a whole. We recognise it as a great decision, a turning point in our history, and we take it in all seriousness. In saying that we wish to join the E.E.C., we mean that we desire to become full, wholehearted and active members of the European Community in its widest sense and to go forward with you in the building of a new Europe.

Our application has been made in a positive spirit. I hope that what I now have to say will amply demonstrate our determination to bring these negotiations to a successful conclusion.

Her Majesty's Government are ready to subscribe fully to the aims which you have set yourselves. In particular, we accept without qualification the objectives laid down in Articles 2 and 3 of the Treaty of Rome," including the elimination of internal tariffs, a common customs tariff, a common commercial policy, and a common agricultural policy.

"Text in American Foreign Policy: Current Documents, 1957, pp. 426–518.

We are ready to accept, and to play our full part in, the institutions established under Article 4 and other Articles of the Treaty.

So far as we can judge at this stage, we see no need for any amendments to the text of the Treaty, except of course in those Articles where adaptations are plainly required consequent upon the admission of a new Member. We think it should be possible to deal with our special problems by means of protocols. This would be very much in line with the procedure adopted for dealing with the special problems of the original signatories when the Treaty was drafted."

In addition to the major problems mentioned in our application, about which I will speak later, there will, of course, be other subjects arising from various Articles of the Treaty which we should like to discuss with you. Since the Treaty came into force decisions, recommendations, directives, and regulations have been adopted. How far these measures can be applied to the United Kingdom as they stand should, I suggest, be a matter for joint examination. In some cases this could wait until after our accession to the Treaty. On other. more vital, matters either you or we would doubtless wish to have a measure of mutual understanding before our accession.

The sort of things I have particularly in mind mostly concern what one might call the ancillary provisions of the Treaty. I will give you a few examples. Our system of social security and social benefits is different from the systems in force in your own countries; this raises certain problems which we would like to discuss with you. Another example is the question of monopolies and restrictive practices: we have legislation which has the same objectives as those of the relevant Articles of the Treaty of Rome, but which provides for a procedure different in detail from that which the Treaty envisages. A third example lies in the field of establishment and services. Although we take pride in the fact that our legislation involves relatively little discrimination against foreign nationals, we may nevertheless need additional time to bring our law and practice into line with whatever programme there may be for the Community. Fourthly, we shall wish to discuss with you how our exchange control practice could be harmonised with the "First Directive" on capital movements.50

None of these matters for joint examination should be the cause of major difficulty. We are anxious that our accession to the Treaty should not tend to slow up the progress towards harmonisation. We should be happy, if that were your general wish, to arrange for technical discussions on these matters to take place with your experts simultaneously with the negotiations on the problems of Commonwealth trade and United Kingdom agriculture.

Now I turn to a central feature of the European Economic Community-the common external tariff. We see no need to ask you for a re-negotiation, item by item, of the existing common external tariff of the Community. We assume that some adjustments are a necessary consequence of the admission of a new Member. It seems to us that, if the common external tariff of the enlarged Community is to be broadly acceptable to G.A.T.T. and to third countries, it cannot remain at precisely the level of the existing one. At the same time we recognise that the negotiation of the present common external tariff was a long and difficult process, and that you might not wish to begin detailed negotiations all over again. We are, moreover, anxious that the process of adjustment should raise the minimum of practical problems. We think it important, in this and in other fields, to simplify the task before us.

We are therefore ready-and I hope that this simple solution may be agreeable to all of you-to accept the structure of the present E.E.C. tariff as the basis of the common tariff of the enlarged Community. In these circumstances we think that the necessary lowering of tariff levels might be achieved by making a linear cut in the common tariff as it stands today. We would suggest that this might be of the order of 20 per cent., a figure which the Community have considered in another context. No doubt both you and we would wish to single out

40 See ibid., p. 498, footnote 27.

50

Approved by the Council of Ministers of the EEC, May 11, 1960; unofficial English-language translation in Claudio Segré, Capital Movements in the European Economic Community (Rome, 1962), pp. 15–23.

some items for special treatment. I can assure you that our own list will not be long.

We are also ready, once we enter the Community, to make, in a single operation, the same cuts in tariffs on trade between Member States as you will have yourselves made by that date. In addition we are prepared to move our most favoured nation tariff towards the new common tariff by a step equivalent to that which you have already taken. This would be a considerable leap forward; but it is one which we are ready to make in the interests of the Community as a whole. So far I have spoken entirely about the European Economic Community. But we recognise that the unity of the Six goes beyond the E.E.C. I should like now to say something about our attitude towards the European Coal and Steel Community, Euratom and the Bonn Declaration of the 18th of July.51

As regards the E.C.S.C. and Euratom, we shall be prepared, as I told the House of Commons during the debate on the 3rd of August, to enter into negotiations with you, at the appropriate moment, with a view to joining these two Communities when we join the E.E.C.52

We have followed with close interest your progress towards greater unity in fields other than those covered by the three existing Communities. The latest public statement of your position in these matters was the Declaration issued by the Heads of State and of Government at their meeting in Bonn on the 18th of July. We fully share the aims and objectives, political and otherwise, of those who drew up this Declaration, and we shall be anxious, once we are members of the Community, to work with you in a positive spirit to reinforce the unity which you have already achieved. That indeed animates our whole approach. The more that we, the United Kingdom, can contribute to the unifying process of this great European Community, the more we shall feel that we are joining the historic enterprise which the genius of the European peoples has launched.

I have heard it suggested that, if we join the Community, it will be our aim to slow down the pace of its development. I beg you to believe that this is not so. The concrete proposals I have put forward in the field of tariffs show that, far from wishing to slow up the progress of the E.E.C., we are determined to take the necessary action in this sphere to enable us to move at the same pace as you yourselves and in step with you. I do not imagine that any of us would care to hazard a guess as to the form which the Community may take in 15 or 20 years' time. But I am convinced that we share the same essential interests and that the habit of working closely together, which you have learned over the past four years, and in which we should now like to join, will mean, not the slowing down of this process, but a continued advance and the development of closer unity.

I will now turn to the three major problems posed by the particular circumstances of the United Kingdom for which we have to seek solutions together. As you all know, these problems are those of Commonwealth trade, of United Kingdom agriculture, and of the arrangements which could be made for our partners in the European Free Trade Association.53

We believe that you share our view of the value of the Commonwealth, not only to the United Kingdom but also to yourselves and to the whole Free World. The Commonwealth is an association of peoples stretching into every continent and comprising many races. It is a great force in the world for the promotion of ideals and purposes which are widely shared in Europe. Its origins are based in history, in the fact that the members of the Commonwealth were parts of the British Empire, and much of its strength lies in the perpetuation of the links that were then formed. I should be misleading you if I failed to say how deeply the British people feel about this association. That. I am sure, is a sentiment which the Members of the Community will fully understand.

01 Ante, doc. 185.

Parliamentary Debates (Hansard), Fifth Series, vol. 645, House of Commons,

col. 1673.

653 For the text of the EFTA Convention, see American Foreign Policy: Current Documents, 1960, pp. 335–351.

Commonwealth trade is one of the strongest elements in maintaining the Commonwealth association. It would be a tragedy if our entry into the Community forced other members of the Commonwealth to change their whole pattern of trade and consequently perhaps their political orientation. I do not think that such a development would be in your interests any more than in ours. Nor, looking at it now from the point of view of a potential member of the Community, would any of us wish the Community to be met with the hostility which would flow from a large group of countries strung across the world if they were to feel that their interests had suffered at our hands.

The economies of most Commonwealth countries have been built up on the basis of supplying the British market, which has traditionally imported their produce duty free and often on preferential terms. In the last few decades the majority of them have sought to enlarge both the variety of their production and the range of their markets. But the British market is still of great importance to the economies of most Commonwealth countries.

I am sure that you will understand that Britain could not join the E.E.C. under conditions in which this trade connection was cut with grave loss and even ruin for some of the Commonwealth countries. For our remaining Dependent Territories we have a special and direct responsibility.

I would like to begin with the less developed members of the Commonwealth and those territories which are still dependent. May I start by trying to describe briefly the nature and needs of these countries and territories? Of the Dependent Territories some are moving towards independence and at least one, Tanganyika, will be an independent member of the Commonwealth by the time our negotiations are completed. For others we cannot foresee, at any rate for some time to come, a constitutional position more advanced than that of internal selfgovernment. Of the less developed countries which are already independent members of the Commonwealth, three-Ghana, Nigeria and Sierra Leone are in Africa; four-India, Pakistan, Ceylon and Malaya-are in Asia; and one, Cyprus, is in Europe. Apart from Cyprus, Malta, Gibraltar and the Falkland Islands, all these countries and territories have tropical or sub-tropical climates. They nearly all produce tropical products and raw materials many of which are also produced by the countries and territories at present associated with the Community under Part IV of the Treaty of Rome. Many of them are seeking to establish secondary industries in order to diversify their economies and reduce their very great dependence upon imports. India, Pakistan and Hong Kong are also exporters of certain manufactured goods; and some others, such as Malta and the West Indies, hope to follow their example, though on a much smaller scale.

54

All these countries and territories attach importance to the preferences and duty-free entry which they enjoy in the United Kingdom market. There are a few other special arrangements, which are vital to certain of them. For some territories it is also of importance-in some cases of great importance-to be able to compete in the markets of the rest of Europe on equal terms with other exporters of similar products. They would certainly not understand if, as a result of becoming a Member of the Community, the United Kingdom were obliged to discriminate against them in favour of other non-European countries. Another feature of many of these countries and territories is that their need to encourage industrial development and their unavoidable reliance on indirect taxation for revenue makes it necessary for them to put tariffs on imports of manufactured goods.

In considering the problems which our entry into the Common Market would create for these countries and territories we have studied with great interest the arrangements laid down in Part IV of the Treaty of Rome and in the related

Reference to those non-European countries having special relations with member states of the EEC, including Cameroon, the Central African Republic, Chad, Congo (Brazzaville), Congo (Léopoldville), Dahomey, Gabon, the Ivory Coast, the Malagasy Republic, Mali, Mauritania, Niger, Senegal, the Somali Republic, Togo, and Upper Volta, as well as certain nonindependent countries.