Convention for the Association with the E.E.C. of certain Overseas Countries and Territories with whom members of that Community previously had special relations. Some Commonwealth countries have expressed the opinion that the present arrangements for Association are not appropriate for independent states. But this view may not apply to the new arrangements when it is known what they will be. In any case we should like to see the less developed members of the Commonwealth, and our Dependent Territories, given the opportunity, if they so wish, to enter into Association with the Community on the same terms as those which will in future be available to the present Associated Overseas Countries and Territories. This is something we shall need to discuss, and we know that you are already at work on a review of the present arrangements for Association. Some Commonwealth countries may feel that some other arrangements might suit them better. We would not wish to prejudge any solutions they may decide to propose.

Association may, therefore, be a solution for the problems of many Commonwealth countries and territories. But for others it may not be possible. One way of dealing with the problems of those who are not associated would be to arrange for them to maintain unimpaired their rights of access to the United Kingdom market, in the same way as was done for Morocco's trade with France, or for Surinam's trade with Benelux, under the relevant Protocol to the Rome Treaty. But we recognise that this solution would not be applicable in all cases. Another method of proceeding would be to consider the problems on a commodityby-commodity basis.

55

The problem therefore is to reconcile our obligations to the Commonwealth with the common agricultural policy as it evolves. We believe that solutions can be found which will prove satisfactory. The Commission's proposals emphasise that trade policy in agricultural products should take into account, not only internal agricultural considerations, but also the need to maintain trade with third countries. This is a liberal approach and one with which we fully agree.

I therefore hope that we can reach agreement in principle that full regard should be paid to the interests of the Commonwealth producers concerned, and that they should be given in the future the opportunity of outlets for their produce comparable to those they now enjoy.

The precise form of the special arrangements needed to protect vital interests of Commonwealth countries in this field will need careful consideration. To a large extent it must depend on the way in which the common agricultural policy is developed. We want to work jointly with you in examining these problems and their relation to the common agricultural policy. We shall no doubt have to consider a whole range of possibilities. I have already mentioned the possibility of continued free entry when I referred to the Morocco-type protocol earlier on. Other possibilities include duty-free, levy-free, or preferential quotas, market sharing agreements and long-term contracts: but we are satisfied that, if you are prepared to accept the basic principle of comparable outlets which I have put forward, then agreement on the detailed arrangements required should be possible.

I now turn to the question of United Kingdom agriculture. Here, let me say at once, we start from common ground. The agricultural objectives of the Treaty of Rome are in line with the objectives of our own agricultural policy. We, like you, are fully committed to the maintenance of a stable, efficient and prosperous agriculture. The Treaty of Rome aims at increasing agricultural productivity, a fair standard of living for the agricultural population, stable markets, regular supplies, and reasonable prices and supplies to consumers.

Reference to the Protocol Relating to Goods Originating in and Coming From Certain Countries and Enjoying Special Treatment on Importation Into One of the Member States, signed at Rome, Mar. 25, 1957; text in Treaty Establishing the European Economic Community and Connected Documents (Secretariat of the Interim Committee for the Common Market and EURATOM, Brussels), pp. 279–282.

These objectives command our wholehearted support. Moreover, we are now prepared to take the major step of participating with you in a common agricultural policy and in developing a common organisation of agricultural markets. We fully accept that the Common Market must extend to agriculture and trade in agricultural products.

This, however, poses big problems for us. Our system of support, except for horticultural produce, relies mainly on Exchequer payments to ensure the maintenance of a satisfactory standard of living for our farmers. Our tariffs on foodstuffs are low and a large proportion of our supplies, particularly those from the Commonwealth, enter our market free of duty. We make very little use of import restrictions. Broadly speaking, we buy our food at world free market prices. Our people are therefore accustomed to low prices for food. Their tastes are related to a traditional pattern of food supplies.

At the same time our farmers have guaranteed prices for all their principal products. These guarantees are provided by means of Exchequer payments which make up the difference between the average price realised by farmers on the market and the guaranteed price determined by the Government. In addition we make direct farming grants designed to encourage improved farming methods and to raise the general efficiency of the industry. The level of the guaranteed prices, and of the direct farming grants, is settled annually by the Government after consultation with the producers' representatives. We have legislation which sets definite limits to the amount of the reductions which may be made from one year to the next, both in the general level of support and in the guaranteed prices for individual commodities. The United Kingdom Government have pledged themselves to make no change in these statutory limits during the lifetime of the present Parliament which can continue until October 1964.

The method of support which characterises our present system is very different from the methods to which you are accustomed. It has been developed to meet our particular situation, and it is one in which our farmers have come to place great faith. They value especially the stability it secures, the sound basis it provides for planning ahead, and the fact that the system of annual reviews ensures that changes are made gradually and with due regard to their effects on the level of farming incomes. I need not emphasise the advantage which the consumer enjoys under our system and which in turn helps the producer, since low food prices encourage demand. In moving towards your methods of support we should have to introduce great changes affecting both producers and consumers. But provided we can see that in future-with the new methods decided uponwe are able to maintain the stability and living standards that we have established for our farmers, I believe that the problems raised by the differences in our present methods are in no way insuperable.

I should next like to consider the position of the countries associated with the United Kingdom in the European Free Trade Association. It has long been our view that the present division of Western Europe into two economic groupsa division which in our opinion has political as well as economic dangers-should be brought to an end. We believe that the other members of E.F.T.A., including the neutral countries, have a significant part to play, and that it would be wrong from the political as well as the economic point of view, if they were excluded. In recent months we and our E.F.T.A. partners have considered this problem very carefully. As you will know from the statement issued by the E.F.T.A. Council on the 31st of July, we concluded that each member of E.F.T.A. should examine the possibility of entering into a direct relationship with the Community.

The United Kingdom and Denmark have already applied for full membership." We were delighted to hear of your decision to open negotiations with the Danish

Reference to a pledge made by the Minister of Agriculture, Fisheries and Food (Soames) in the House of Commons, June 12, 1961; text in Parliamentary Debates (Hansard), Fifth Series, vol. 642, House of Commons, col. 57.

57 Ante, doc. 187.

58 See footnote 34 to doc. 187, ante.

50

Government later this month. Some members of E.F.T.A. consider that for political reasons they cannot apply for full membership. We believe that this should not be allowed to prevent them finding an appropriate relationship with the Community. At the E.F.T.A. Council Meeting in London last June we agreed with our E.F.T.A. partners to maintain the Association-and here I quote from the Communiqué -“until satisfactory arrangements have been worked out... to meet the various legitimate interests of all members of E.F.T.A., and thus enable them all to participate from the same date in an integrated European market". Her Majesty's Government earnestly trust that, when the other E.F.T.A. countries have explained where they stand, it will be possible to agree on ways and means of meeting their legitimate interests. I am sure you will appreciate that, given our obligations to our E.F.T.A. partners, we should not ourselves be able to join the Community until this had been done.

There may in the past have been some misunderstanding of our views about arrangements for the E.F.T.A. countries. At the risk of some repetition I would like to make them perfectly clear. We hope to see an enlarged Community including ourselves and as many of our E.F.T.A. partners as may wish to become full Members. As to the remainder of the E.F.T.A. countries, we should like to see an association between each of them and the enlarged Community. If satisfactory arrangements could be made on these lines the wider trading area thus created would include, not only the Members of the enlarged Community, but also the remaining Members of E.F.T.A., and, of course, Greece." E.F.T.A. itself would disappear. Contrary to what some people seem to have thought, therefore, there is no question of the United Kingdom seeking to maintain for itself a trading relationship with its present partners in E.F.T.A. in any way different from that which would be enjoyed by all other members of the enlarged Community. I should like to say a special word about Finland, whose case does not present the same problems as that of the Members of E.F.T.A. Finland, although associated with E.F.T.A., is not, of course, a full member." Given her difficult political position, it may not be possible for her to establish a formal relationship with the E.E.C. But I am sure we should all wish that something should be done, in due course, to enable her to preserve her commercial links with Western Europe. There is one other European country I should like to mention, namely the Irish Republic. We have special trading arrangements with the Irish, deriving from the days when they were part of the United Kingdom. I do not think it necessary to describe these in detail. I will limit myself to saying that we in the United Kingdom were pleased to see that the Republic had applied for membership of the Community." If their application succeeds as we hope it willour trading arrangements with them will be subsumed in the wider arrangements of the enlarged Community, and no special problems need arise.

When the time for our next meeting comes I hope that we shall be able to discuss the principles on which the negotiations should proceed and give our officials instructions which will enable them to get down to work at once.

63

00

Ante, doc. 183.

An Agreement Creating an Association Between the European Economic Community and Greece was signed at Athens by representatives of the member states of the EEC and Greece, July 9, 1961; instruments of ratification were exchanged by Greece and the Commission of EEC in Brussels, Aug. 4, 1962, and the agreement entered into force, Nov. 1, 1962; text in Accord créant une association entre la Communauté économique européenne et la Grèce et documents annexes (Brussels, EEC, 1962).

See the unnumbered title, ante, p. 512.

The Prime Minister of the Republic of Ireland (Lemass) conferred with the Prime Minister of the United Kingdom (Macmillan), July 18, and the Republic

of Ireland subsequently applied for membership in the EEC, Aug. 1.

63

Negotiations at the ministerial level were resumed Nov. 8, 1961.

748-787-65- -39

194. "WE HAVE TO BEGIN TO REALIZE HOW IMPORTANT

THE [EUROPEAN] COMMON MARKET IS GOING TO BE
TO THE ECONOMY OF THE UNITED STATES": Reply
Made by the President (Kennedy) to a Question Asked at a
News Conference, November 8, 1961 (Excerpts) 64

We have had several meetings in the administration about the matter [of a major liberalization in trade policy], and we'll be having others and will make recommendations to the Congress at the first of the year. I think that, quite obviously, we have to begin to realize how important the Common Market is going to be to the economy of the United States. One-third of our trade generally is in Western Europe, and if the United States should be denied that market, we will either find a flight of capital from this country to construct factories within that wall, or we will find ourselves in serious economic trouble. On the other hand, we have obligations, for example, to Japan, and we have concern about our relations with Latin America and what will happen to them, dependent as they are upon raw materials and on western European markets-where will they be left? These are all matters which we are now considering.

But I think that the people of this country must realize that the Common Market is going to present us with major economic challenges and, I hope, opportunities, and that this country must be ready to negotiate with the Common Market on a position of equality, as far as our ability to negotiate to protect our interests and the interests of those that are associated with us.

I think that one of our problems in the United States. . . [is] illuminated by the statistics on Japan. We've read a good deal about the threat of Japanese goods coming into the United States, and I can understand where it is a concern. But here is a country where in the last 6 months a half billion dollars has been on our side, a balance of payments contributing to our dollar surplus and our gold balance. We cannot just sell and never buy, and if all those who recognize the benefit to the United States-workers, industry-in an almost $5 billion to $6 billion surplus which we have every year, recognize how essential that is to our security, will speak as loudly as those who are hurt, we can get an adjustment, I think, of the public interest.

But the matter is by no means complete. The details of the Common Market, for example, and its effect upon us will not be obvious probably until '63 or '64, and we have to attempt to go to the Congress at a time when we can be most successful. My judgment is that the time to begin is now, but, as a matter of final decision, I think we'll have to wait about 2 or 3 more weeks.

64

The reply printed here is taken from pp. 707-708 of Public Papers of the Presidents of the United States: John F. Kennedy, 1961.

195. EUROPEAN FREE TRADE ASSOCIATION ADDITIONAL ADVANCEMENT OF THE TIMETABLE FOR REDUCING AND ELIMINATING TARIFFS: Communiqué Issued at Geneva by the Ministerial Meeting of the Council of the EFTA, November 21, 1961 65

The EFTA Council met at Ministerial level in Geneva on the 20th and 21st November under the chairmanship of its Vice-Chairman, Mr. J. O. Krag, Danish Minister for Foreign Affairs. The Ministerial meeting was the first since the joint declaration of intention to take part in a single European market, issued at Geneva on 31st July."

Ministers took note of statements by Mr. Heath and Mr. Krag about the United Kingdom and Danish negotiations with the European Economic Community, and of the intention of the Austrian, Swiss and Swedish Governments to seek an appropriate form of Association with the Community. They also received reports on the positions of the Norwegian and Portuguese Governments."

Ministers expressed satisfaction with the steps taken or contemplated in this field and with the manner in which Member Governments were keeping each other informed. They will continue to consult on the action each Member State takes to implement the decision that each Member should seek an appropriate relationship with the European Economic Community.

Ministers decided that the next reduction in tariffs of 10% within EFTA, due according to the Stockholm Convention to take place on the 1st July 1963, should be advanced to 1962. This decision will be implemented by Denmark, Portugal, Sweden, Switzerland and the United Kingdom on the 1st March 1962, and by Austria and Norway not later than the 1st September 1962. The decision is subject to confirmation by the Danish Government.

The next meeting of the Council at Ministerial level is expected to take place in Geneva in the second half of February 1962.

196. THE NEED FOR THE UNITED STATES TO BE IN A POSITION TO "NEGOTIATE" RATHER THAN "ASSOCIATE" WITH OR "JOIN" THE EUROPEAN ECONOMIC COMMUNITY: Reply Made by the President (Kennedy) to a Question Asked at a News Conference, November 29, 1961 (Excerpts) 69

I have not heard it proposed that the United States should become a member of the [European] Common Market or associated with the Common Market in the sense that the word is ordinarily used.

Text as printed in the EFTA Bulletin, vol. II, No. 12, Dec. 1961, p. 5.

"Ante, doc. 187.

67

The proceedings of the meeting are summarized in the source text, pp. 5-6. This confirmation was notified to the Secretariat on 27th November. [Note in source text.] In connection with this paragraph of the communiqué the Secretary-General of the EFTA issued the following statement: "The fourth paragraph of the Communiqué records an important decision the Ministers took this morning. Acceleration has been a matter of discussion within EFTA for some months, and it has been decided on today for two main reasons. The first is that the Ministerial Council decided that there should be no slowing down in the impetus of the work in EFTA in creating its own integrated market. The second is that, in a situation when all members of EFTA are seeking, or [are] about to seek, arrangements with the E.E.C., with a view to taking part in a single European market, it behooves all members of EFTA to show that they are able to support all the tariff reductions to which the Community is committed." [Note in source text.]

The reply printed here is taken from p. 763 of Public Papers of the Presidents of the United States: John F. Kennedy, 1961.