a~ b~ r
SPEECH BY THE PRIME MINISTER, THE MAY 1967
RT. HON. HAROLD HOLT, IN THE HOUSE * 8A~,
OF REPRESENTATIVES ON THURSDAY, LBA~
4TH MAY, 1967
BRITISH APPLICATION TO JOIN THE EUROPEAN
COMMON MARKET
I promised the House yesterday that I would comment on the
announcement made by the Prime Minister of Britain ( Mr. Wilson in the
House of Commons on Tuesday to the effect that Britain proposed to make
an application to join the European Economic Community.
We know the British Government has given much thought to
the course it should follow. Honourable Members will recall the earlier
attempt to join the European Economic Community which failed in 1963.
That was during the Prime Ministership of Mr. Macmillan. Mr. Wilson has
now said " All of us realise that this is an historic decision which could well
determine the future of Britain, Europe and indeed of the world for decades
to come". Each nation is entitled to make decisions in what it conceives to
be in its own national interest. But equally, it is to be expected that when
major decisions are taken which will affect countries of such historic
relationship as Britain and Australia, then the interests of the countries
affected will be considered, and the decisions influenced. Now that the
British Government has decided that an application to join the Common Market
should go forward, we will be looking to the Government and people of
Britain to ensure that the terms of entry take full consideration of the interests
of Commonwealth countries, which include Australia. In the longer term,
it is in all our interests that Britain should remain strong, and indeed grow
stronger. Only a strong Britain can remain a power of significance in the
world, and we all wish this to be so.
During recent months, we have been aware that Britain has been
contemplating further approaches to the European Economic Community.
Throughout this period the British Government has kept us advised about the
essential nature of the discussions at Ministerial level with the individual
member governments of the European Economic Community.
More recently, the British Government has kept us informed of
the development of its own thinking and as recently as last week, my
colleague, the Deputy Prime Minister and Minister for Trade and Industry,
discussed the matter with British Ministers in London.
We have no doubt that as matters proceed, the British Government
will continue to keep us informed of essential developments. We would hope,
however, that we would also have the opportunity for meaningful consultations.
Both publicly and privately the British Government has continually
emphasised that entry into the European Economic Community would be
subject to adequate safeguards to protect " the essential interests of the
Commonwealth". I note that in making his announcement, Mr. Wilson
referred specifically to the special problems of New Zealand. We certainly
have a full appreciation of those problems. Mr. Wilson referred also to
Commonwealth sugar producers, and we welcome this reference. / 2
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But our important interests, of course, go very much wider, and
we would expect that Jin seeking measures to safeguard the essential interests
of the Commonwealth, Britain would take full account of her contractual
obligations to Australia and of -the heavy dependence of a number of our
export industries on the British Market.
Because there appears to be some conflict between the
essential interests of the Commonwealth and the present European Economic
Community regime, and because at this stage we do not know what safeguards
Britain will be able to negotiate, it is not pract;. cable for us to make any
firm judgment on the extent to which Australia's exports are likely to be
affected by Britain ' s eventual entry into the European Economic Community.
The impact of British membership of the European Economic
Community upon Australian trading interests would depend upon the extent
to which our preferential entry to the British market i~ s affected. We sell to
Britain under preferential conditions products to the value of approximately
four hundred million dollars. This four hundred million dollars of trade is
concentrated in a relatively few products, and in some cases represents a
substantial share of the total export market for the industries concerned.
There are also whole communities whose basic idustries have
geared themselves to the British market. We must recognise that their
future could be affected, perhaps seriously, . fthe British market is lost or
substantially reduced. The Government will, of course, be watching this
aspect of the problem with particular care.
In recent years there appears to have developed, both in Britain
and in Europe, a belief that there may be no great need to take special
measures to protect Australia's export position because we have been
diversifying our export trade and have been building up markets in other
areas. Over the past five years, the share of our total exports going to
Britain has declined from about twenty-four per cent. to about seventeen and
a half per cent. But the total value of exports preferential and other to
Britain has increased slightly,-Handlast year amounted to about four hundred
and seventy-five million dollars in total.
In certain agricultural products recent -increases in production
and availability have enabled us to expand our ex,, ports to the world and to
develop some new markets. As a consequence, the proportion of total
exports going to Britain has declined somewhat. Nevertheless, the absolute
volume of shipments to Britain has increased.
I refer particularly to beef, butter, fresh fruit, canned fruit and
sugar. In the case of these key products, our dependence on the British
market has, in fact, increased. There are some other products such as
wheat, flour, dried fruits and canned meat, where the British market 4s of
prime importance. During earlier British negotiations to join the European Economic
Community, it was suggested, both in Britain and in Europe, that the
problems of countries such as Australia could be met through the establishment
of effective world commodity agreements which would lead to improved access
and remunerative prices for agricultural products. From the early stages
of the Kennedy Round -1 was agreed by the more important participants that
effective commodity agreements were essert ial to the success of these
negotiations. / 3
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The concluding stages of the Kennedy Round are now being reached
in Geneva. The final result will not be known until the negotiations have
formally been completed, but the prospects of a successful outcome are
far from bright. It appears possible that there may be a Ministerial meeting
in Geneva next week. The success of this meeting, if held, in opening up
new prospects for world trade in agricultural products, will affect to a
significant degree the extent to which our export trade could still find
opportunities, following a successful British application to join the European
Economic Community. Turning now to the financial and economic implications of British
membership of the European Economic Commwity. Australia has had a long
history of close financial co-operation with Britain, and no doubt there will
be changes in some of these relationships if Britain joins the Common Market.
There is little point in speculation at this time as to all the possible financial
ramifications but we cannot ignore the possibility that there may be difficulties
for us. Much will depend on terms and conditions of British . membership.
However, I feel I should mention one issue which will be of considerable
interest to us namely, the future level of capital flows from Britain to
Australia. At the present time, Britain is imposing some restraints on the
outf low of investment to developed countries of the sterling area such as
Australia. Nevertheless our position is still better than that of developed
countries outside the sterling area.
If Britain were to join the European Economic Community in the
near future, it seems likely that it would have to alter its current policies on
the control of outward private capital flows. In that event, whatever
preferences we may have now in respect of British investments abroad could
be quickly abridged.
I do not need to emphasise here the extent to which the growth of
the Australian economy has been assisted recent years by the strong
inflow of capital from abroad. Most of this ' s private capital and almost
half has come from Britain. In 1965-66, private overseas investment in
Australian companies from Britain amounted to some two hundred and fifty
million dollars. V. e are thus talking about one of the more important elements
in our balance of payments and one of the more important factors contributing
to a higher rate of growth in the Australian economy.
Rather similar considerations apply in the case of official capital
transact i ons abroad. Australia, as a member of the sterling area, has had
greater access to the London capital market than non-sterling area countries.
If Britain joins the E-_ uropean Economic Community, we may be faced with a
reduction of borrowing opportunities in London. As we have about $ 25C million
of official debt maturing in London over the next five years and some $ SC. C
million maturing over the next ten years, the question of access to the London
capital market is of considerable importance to us.
It is, of course, difficult to make an informed judgment on these
matters now. Indeed, pending clarification of the terms and conditions of
membership, it is virtually impossible to make a precise assessment of the
financial and economic implications for Australia. Vie shall certainly be doing
our best to ensure that Australia's interests are taken into account.
In conclusion, it seems fitting to observe that the British approach
to the European Economic Community is still at a very early stage indeed the
application, although foreshadowed, has not yet been made. Substantial
discussions are ahead, and it will only be out of these that we can gauge the
likely consequences, and thus what action can be taken to safeguard the interests
which are important to us. As I have said, we look to a process of continuing
consultation and discussion. We shall, as we can, keep Honourable Members
informed of developments.