AUSTRALIA AND THE COMMON MARKET
STATEMENT BY THE PRIME MINISTER
THE RIGHT HONOURABLE R. G. MENZIES,
in the
HOUSE OF REPRESENTATIVES
WEDNESDAY, 16th AUGUST, 1961
STATEMENT* BY THE PRIME MINISTER ( RT. HON. R. G. MENZIES)
IN THE HOUSE OF REPRESENTATIVES
WEDNESDAY, 16th AUGUST, 1961
AUSTRALIA AND THE COMMON MARKET
The decision of the Government of Great Britain to negotiate
for admission to the European Economic Community is one of enormous political,
economic and historic importance for Great Britain herself, for Europe, for
the Commonwealth in general and Australia in particular, and for the world.
It is therefore essential that, at this first opportunity after the
visit of the Secretary of State for Commonwealth Relations ( Mr. Duncan Sandys)
and after Mr. Macmillan's announcement in the House of Commons. I should, on
behalf of the Australian Government, set out in this Parliament the nature of
the action proposed or taken, and of the issues involved.
But before I do that, there are some matters of history to be
recorded. Not long after the War, movements began for strengthening
Western Europe, economically and politically, against new threats to freedom
and progress. These took a particular practical form when, in 1950, the
European Coal and Steel community was promoted by M. Schumann of France.
This was a marked success, and paved the way for the later development of the
Common Market. In 1957 the Atomic Energy Community, known as " EURATOM", was set
up. Concurrently, on March 25th 1957 the Treaty of Rome was signed,
establishing the European Economic Community, sometimes known as " the Common
Market" or " The Six". The parties to the Treaty were France, Germany, Italy,
Belgium, the Netherlands and Luxembourg. While this Treaty was being negotiated,
Great Britain made her first decision, which was not to participate. At that
time, she felt that, although she approved of the idea of European unity, she
could not go in as a party because of her Commonwealth commitments, her own
system of protecting British agriculture and ( as I have always supposed)
because she did not choose to accept any abatement of her own sovereignty.
But she still took active steps. Her second decision was to
propose an Industrial Free Trade Area for the whole of Western Europe,
including The Six. This proposal would have met the agricultural and ( for
the greater part) the Commonwealth considerations which had previously
deterred her. But " The Six" did not favour the proposals, and they failed.
A third decision was then taken. Great Britain formed the
European Free Trade Association with Sweden, Norway, Denmark, Austria,
Portugal and Switzerland. This group became known, and I shall refer to it,
as The Seven. Subsequently, attempts were made to bring about an association
between The Seven and The Six but without success.
I mention these matters of history because they will remind us that
the decision now taken is the fourth, and that as it involves detailed negotiations
with The Six on items some of which concern Australia very greatly, we
have now reached a period in which we must all clarify our attitudes on
identifiable matters of great practical moment.
It is now necessary to turn to the Treaty of Rome itself, to
discover the broad structure and mutual obligations of the economic community
which Great Britain will now negotiate to enter.
The preamble to the Treaty stated that the signatories were
" determined to establish the foundations of an ever-closer union among
European peoples." Under the Treaty, the " Common Market" will be progressively
established during a transitional period of somewhere between ten and fifteen
years. This involves the progressive elimination of Customs duties
and quantitative restrictions on trade between member States, and the establishment
of a common external tariff.
There is to be a common agricultural policy, providing for such
matters as increased production and organised marketing. Subject to the
negotiations, which will be put in hand, probably by about October, 1961,
The Six were due to meet before the end of this year to work out the agric-
Sultural policy. This is clearly one reason for the decision by Great Britain
at this time. She will, having regard to the Commonwealth position, need
to negotiate on agricultural matters before the final policy of The Six
has been settled. There is to be free movement of workers between the Member States.
Nationals may freely ( whether individuals or companies) establish themselves
in the territory of another Member State.
There are to be set up common provisions for conditions of trade
within the Common Market, co-ordination of economic policies, and the
harmonisation of social policies. One of the express purposes of Article 118
is to promote close collaboration between Member States in the Social field,
particularly in employment, labour legislation and working conditions,
training, and social security.
The Treaty further provides for the establishment of a European
Investment Bank. Institutions are provided for; an Assembly of 142, a Council of
six, an Executive Commission of nine, and a Court of Justice to deal with the
interpretation and enforcement of the Treaty.
Under Article 237, any European nation may apply for full membership
in which case the agreement must be made by the unanimous act of the
existing members at present The Six.
Under Article 238 a nation may become an Associate Member, as
Greece recently has; but it is understood that such a course is not favoured in
the case of a substantially developed manufacturing nation.
The Treaty is, by Article 240, concluded " for an unlimited period".
There is no provision for withdrawal, at the option of the member concerned.
It would therefore appear that a Member can withdraw only with the consent of
all the others; the decision being in effect an amendment to the Treaty.
Any amendments to the Treaty will require ratification by all
Member States. Clearly, this is a formidable and far-reaching organism, of
profound economic significance, and with political objectives to which I
shall refer later. I will first endeavour, with as much brevity as possible, to
explain the nature of the economic interests involved in a negotiation by
Great Britain for membership.
Great Britain herself has, of course, enormous interests at stake.
Her decision to negotiate could not have been easy, and we may be sure that it
has been arrived at in the light of her immense experience and ripe judgment.
It would not be for us to substitute some opinion of our own, even if we had
formed one. For we are in no position to assess the elements in the British
economy, or the economic arguments this way and that concerning the effect
upon her of an achieved membership. We have, of course, a lively interest in
the accuracy of her final decision, for we want to see a powerful and
prosperous Great Britain, for the good of Australia in all aspects of our national
and international life and for the good of the whole free world.
She herself, as Mr. Sandys was careful to explain to us in the
course of our frank and helpful exchanges, is impressed by the competitive
advantages for her own exports and necessary trade balances which she
believes would derive from free access to a " Home Market" of over 250,000,000
people. This is a larger population than that of the whose own large
internal free trade home market with free access to enormous supplies of power
and materials, has given her great strength in the markets of the world.
On the other hand, of course, Great Britain's entry into a
European free trade area will mean that her own industries will meet the full
blast of European competition, including that from countries like Germany
which has a longer working week, a less extensive system of social services,
and a high proportion of modern plant erected since the War-time destruction.
It is said that such competition will lead to greater efficiency, and no doubt,
given sufficient time, it will. In any case this aspect of the matter has
beyond question been fully weighed and considered. We ourselves see great
scope for an increase, by increased efficiency, in the Commonwealth Market.
Commonwealth countries to-day take 42/ of British exports, while The Six
take 14.5%. While Great Britain clearly hopes that, as a member of the
Common Market, she will increase her exports to Europe which would be a
great thing for her economy we simply direct attention to the undoubted fact
that her Commonwealth market must continue and grow if her overall strength
is to increase. But the Commonwealth market cannot grow if any conditions of
European membership inflict material damage upon the export earnings of
Commonwealth countries. That, of course, is the great matter to which we
will direct a close and studied attention before and during the negotiations,
until the final decision is taken.
There is another aspect of this great matter. We have throughout
felt that the Common Market, as it now stands, whatever effect it might
have on any individual country, would tend to increase the total prosperity
and purchasing power of The Six, and that Australia, among others, might hope to
find a growing market in Europe. As I will show later, we have for some time
been actively seeking to develop that market. Undoubtedly, the European
Economic Community has been succeeding. The economic recovery of France in
recent years has contributed to this. Trade exchanges between them have
increased 5/ o since the Treaty of Rome. They have accumulated massive
international reserves.
Yet the prospect of Australian benefit from this improvement will
depend very importantly upon the internal policies adopted by the Common
Market Countries in relation to their own agriculture. If, and there have
been suggestions of it, agricultural protectionism prevails, the entry of
foodstuffs, from e. g. Australia, will become more difficult. The pricing
policy adopted by the E. E. C. for its agricultural products will largely
determine the size of the European market for imported agricultural products
and the extent to which surpluses in given European countries can be exported,
Price stabilisation at the high levels now current in some Member States will
tend to increase production in the Community area. Under the encouragement
of high domestic prices, France is already developing an export surplus in
wheat. These matters will be dealt with by my colleague, the Minister for
Trade. It is sufficient for me to say that the advantages or disadvantages
to Australia, economically speaking, from the success of the Common Market will
be largely determined by policies worked out in Europe.
It is difficult to assess the prospects:' For example, wool
is to enjoy free entry under the common external tariff. But it does not
automatically follow that European economic growth will correspondin gly
increase the demand for wool. We hope that it will, but the fact is that
although industrial production in The Six has been rising rapidly since 1957,
there has so far been no increase in thd volume of our exports of wool to
these countries. Our most definable interest arises in relation to our exports
to Great Britain; wheat, meat, dairy products, base metals, sugar, dried fruits,
fresh fruit and processed fruits. These constitute the great bulk of our
current exports to Great Britain of 1198m. Stg. They enjoy a preferred entry
into the British market, while meat and sugar are the subjects of special
long-term agreements. ' In exldhange. for-these preftences, Gi-eat'Britafin
enjoys preferential rates in our Customs Tariff and currenly ' exports goods to
the value of œ 259m. Stg. to Australia.
0 Clearly, this mutual preferential structure comes into the arena
of Great Britain's negotiations with The Six. Should the other members of the
European Free Trade Association decide also to apply for membership 6f the
Common Market ( which seems probable) there will be further important problems
to be decided. If, to take a good example, Denmark acceded, and Great Britain
acceded without securing a special position for Australian dairy products, the
preference now enjoyed by Australia inGreat. Britain would be reversed into
a preferentialt becauee duty free, entry for the Danish products.
I will not, In this general survey, go into the details of our
exports which are involved. But I think it most desirable that I should point
out to all the negotiators that if they want ( as I am sure they do) a strong and
growing Australia, they must recognise the peculiar Australian significance of
the relevant industries.
The development and populating of the North of Australia, from the
WKimberleys in Western Australia through the Northern Territory to North
Queensland depends primarily on beef cattle, minerals and sugar. The British
market has been of commanding importance in all three. Wheat stands next
to wool as our export staple; the welfare of at least two states is bound
up in its success. The intensive settlement in the irrigated areas of the
Murray and Murrumbidgee regions has been built up on dried vine fruits,
processed fruits, and the production of fat lambs. Not one of these industries
could exist on its present scale without large exports. In the case of dried
fruits and fat lambs, the British market is vital; for processed fruit it
is important. Our great mineral resources, in relation to which great expansion
is in sight, tend to be found in areas remote from the industrial cities
and the agricultural areas. They come, when developed, to sustain large
communities whose very existence depends upon a growing export for the products.
of the mines, refineries and smelters.
It follows from all this, and I take leave to emphasise this
point, that severe blows to our export primary industries would fall with
particular severity upon particular areas,. industries, and people. The
impact would not be more or less evenly distributed over the whole nation, but
would be concentrated and therefore more damaging.
We cannot as yet anticipAte the result of the negotiations.
We can, I think, reasonably assume that Great Britain will not accede
to the Treaty of Rome unconditionally. Such an accession would bring to an
end the Commonwealth Preferential System which has endured for many years.
It would be highly damaging to Australia, and could be disastrous to our
neighbour and friend, New Zealand. As the preferential system operates both
ways, it could mean the end of B. P. T. rates in our Tariff schedules.
On the other hand, it may be too much to hope at this stage that
Great Britain will be allowed ( by the necessary unanimous agreement of The
Six) to maintain the Commonwealth Preferential System completely unimpaired.
Some compromise will no doubt be sought. We shall, of course,
battle for the best possible arrangements for the protection of our traditional
and legitimate interests.
We cannot doubt that Great Britain will be on our side in that
battle. We also have good friends in Europe, and can be assured of their
understanding. I have already said something about some of the exports which
are our special concern and need not repeat it. But we are not unaware of
the suggestions, already being made in some quarters', that the emergence in
practical form of the Common Market issue has suddenly made the Australian
Government aware of the need to develop new and deversified markets.
The suggestions are quite unfounded, as I shall quite easily
Wshow. The matter has not arisen with the suddenness which recent
publicity may suggest. We have for some time known that~ attempts would be
made to bring The Seven and The Six together. I myself had some general
talk about this with both Chancellor Adenauer and President de Gaulle in
1959. But no detailed proposals were ever put to or considered by us because
first, it was the specified object of Great Britain to keep agriculture
out of any negotiations, thus preserving our own and British interests, and
second, it was made clear that before any negotiations were decided upon,
we would be effectively consulted.
In London, immediately after the last Prime Minister's Conference
I proposed ( and the proposal was accepted) that our officials should go into
preliminary conference in London, so that, " getting down to brass tacks"
we could identify the points of difficulty and try to find common methods of
approach.
This Conference preceded the visit of Mr. Sandys; a visit which
produced, for the first time on the political level, a specific exchange
of v. ews. Meanwhile much official study has been made in the relevant
departments. The matter has, therefore, not come suddenly out of a blue sky.
From Australia's point of view, neither time nor ground has been lost.
Indeed, we have been active for years in strengthening and diversifying
our exports to whatever markets we could find.
When, in January 1956, I announced the creation of the Department
of Trade, I pointed out that it would direct its major attention to the
stimulation of trade. It has, with the backing of the Cabinet, acted vigorously
in this field. It has continued to intensify the Trade drive through the efficient
and widely appreciated Trade Commissioner Service.
In 1949 there were 17 posts in 12 countries. In 1961-2 there will
be 37 posts in 28 countries. Since 1949 we have opened posts in Karachi,
Rome, Trinidad, Bonn, Montreal, Salisbury, Auckland, Manila, Christchurch,
New Delhi, Kuala Lumpur, Bangkok, Stockholm, Chicago, Ottawa, Nairobi, Accra
and Beirut with plans already announced for opening in Lima, Caracas and
Teheran. The Trade publicity vote has increased from œ E16,000 in 1949
to œ. 1,000,000.
0 InJul y 1956 we established the Export Payments Insurance
Corporation. On June 30th, 1961. current policies were valued at œ E26 m.
the export transactions covered being spread over 120 countries, mainly in
Asia and the Middle East.
Since 1954 we have organised 13 major trade or survey missions, and
have co-operated with industry associations in the organisation and despatch
of two trade ships. Another trade ship is planned for the Persian Gulf
in the new Year and trade missions to the Middle East, Pacific Islands, and
South America will be organised during 1961-1962.
There were three passages in the communique issued at the end of
our talks with Mr. Sandys which deserve special mention.
The first showed that the Australian government took a view of
the impact of Great Britain's membership of the Common Market upon Commonwealth
Relations different from that of Great Britain.
The second showed that we refrained from giving approval to the
opening of negotiations.
The third made it clear that we wished to take an active part in
the negotiations affecting our special interests.
These statements have been interpreted by some as indicating a
spirit of hostility in our discussions, or at least a lack of a co-operative
Commonwealth approach. I want to make it clear that our discussions were
conducted on a proper Commonwealth level; our common interests never forgotten,
but our particular interests zealously expounded and upheld.
I should perhaps repeat our general attitude, for the benefit of
the people of Great Britain as well as our own.
We want whatever decisions are finally taken to bring added
strength to Great Britain, for her own sake, for our sake, and for the sake
of the world. For we are both British and Commonwealth.
But our first duty is to protect what we believe to be the proper
interests of Australia, whose future development will be a considerable factor
in Commonwealth strength, and will in particular produce economic advantages
for Great Britain herself. We do not doubt that this is understood and accepted
by Great Britain. There is therefore much common ground upon which to
stand. But the problems will not be solved by saying that we have common
objectives. The real issues will be those of method. Some long-accepted
ideas may need to be modified; there will be conflicts of opinion; the
advocacy of lawful interests may produce high and intense argument. But
such matters are in the British tradition. We need not fear them, nor
pretend that they do not exist.
The decision that will ultimately be taken by Great Britain, to
enter on the negotiated terms or to stay out, will be the most momentous peace
time decision in living memory. Upon its wisdom and success probably the
future of the free world and most certainly the future of our own family of
nations will turn.
It follows that Australia will bring to her own negotiations with
Great Britain and, as we venture to hope, with The Six, not only the most
powerfully presented exposition and defence of her own interests, for her own
future is our special care and responsibility, but also a strong and wide sense
of common responsibility. It will have been observed that Great Britain has put The Six
on notice of these complexities. She has informed them that Great Britain must
take account of the special Commonwealth relationship as well as the
essential interests of British agriculture and of the other members of the
European Free TradeAssociation.
THE BROAD POLI T ICAL I SSUES
We believe that the entry of Great Britain into the European
Economic Community would have far-reaching political implications. As we
see it at present, we believe that it would mean a substantial departure
from, or even an abandonment of, the traditional British policy of the
Balance of Power, a policy which basically represented a form of isolationism,
of freedom from what I 4nay call standing or permanent obligations. True, as
Mr. Macmillan pointed out in the House of Commons on August 2n4t " in every
period when the world has been in danger of tyrants or aggression, Britain
has abandoned isolationism". Nevertheless, I pointed out that a decision to
enter the European Economic Community expressed to be a permanent body, and
with political " overtones" of the clearest kind, would represent the
abandonment of the old position and the acceptance of permanent European
involvements. I ' thought' th'at Mr. Macmillan accepted this when he said, in the
same speech, that while European federation should be rejected, a confederation
of European nations was an acceptable concept with which Great Britain could
associate willingly and whole heartedly.
The distinction between the organic distribution of sovereignty
which exists in a Federation and the looser association of a Confederation is one
which I was at pains to make in our discussions with Mr. Sandys. But even a
confederation involves mutual political obligations of a continuing kind.
A few days after we had been pointing this out in the Canberra
talks, the Heads of State of The Six issued a communique, dated July 18th,
which gave special point to the argument. The Communique stated that the
Heads of State and Governments were convinced that only a United Europe is
in a position, allied with the United States and other free peoples, to meet
the common dangers of the free world; that they were determined to develop
their political co-operation with the aim of European unification; and that
for this purpose they proposed to have regular meetings in order to bring their
policy into line and reach agreed views.
Of course, we need not suppose that European unification is just
around the corner. National histories and prides and characteristics are not
so easily set aside. But it does seem clear that, as the Rome Treaty's
economic provisions become effective, there must be a closer co-ordination, if
not actual integration, of political policies. For where there is a common
economic system established and made enforceable by law, the journey to
confederation or even federation is half completed. Common domestic policies
will cry aloupI for common external policies to protect them.
If Great Britain joins, and other West European nations with her,
and Europe becomes, step by step, a great power ( or a cohesive agglomeration
of power) Great Britain will become, we would hope and expect a most important
integer in that power. But she will, ex hvpothesi, cease to be completely
independent in relation to European affairs.
This is why the decision which she must make after the proposed
negotiations, is so politically momentous.
We do not doubt the strength of the ' broad political considerations
which lie behind the decision to negotiate. Some of them clearly are:-
the importance of the cohesion of free Europe
as an area of resistance to Communist threat and aggression;
the fear that the perpetuation of economic rivalries and
differences in Europe: will mean political rivalries and
differences, and so weaken the joint will and capacity to
resist the Communist threat;
the importance of influencing that area from within,
if it needs such influence, to maintain po$ itive and
outward looking policies which will be non-neutralist in
character; the belief that Great Britain, as an influential member of
the European Community, will bring added strength to
British Commonwealth consultations.
I have stated these matters so that it may not be said that we
have failed to see the arguments on the great issues, and have adopted a small
and unimaginative view.
We understand, and freely acknowledge, that if true European
unity can, in spite of the history of the past hundred years, be brought about,
the prospects of world peace will grow brighter. But, as a senior Commonwealth
country, we have felt bound to say that we do not think that the Commonwealth
as a political organism would be strengthened. Great Britain, as the
centre of the Commonwealth, has in the past spoken for herself at Commonwealth
Conferences. After entering the new Europe, with its common policies and
institutions and rules, she could no longer speak with detachment. The
Treaty of Rome cannot be approbated and reprobated at the same time.
Nor could a growing interest, and, more than interest, involvement in Europe,,
be calculated to leave completely untouched the present British position in and
around Asia and Africa.
It is for these reasons that we have publicly expressed our grave
doubts of the continuance unimpaired of the Commonwealth to which we are deeply
attached, with which we have stood in peace and war, and the existence of
which still means much to civilisation.
We may be wrong on this matter. We sincerely hope that events may
prove us wrong. But, as much is being said about the impact of any accession
to the Treaty of Rome on the Commonwealth in its present form, we think it proper
to express our own view.
In the long run, of course, the stern facts of contemporary history
may require some abatament of the special Commonwealth relation. in favour
of a powerful European unity: we do not as yet know. But it would be
a mistake to pretend that there was no change when in fact there had been a
great one. We have not based our opinion upon any narrow ground of the
importance of absolute sovereignty. All international pacts, from the
United Nations to N. A. T. O. and S. E. A. T. O. involve the exercise of sovereignty
to limit, by free choice, liberty of individual action. But neitl~ er U. N.
nor N. A. T. O. nor S. E. A. T. O. is a super-state. Parties to the agreement may
leave as they think fit, in the exercise of the very sovereignty by which they
joi'ned. The Treaty of Rome., as I have pointed out, is different.
There must be unanimous agreement for the joining and the leaving. Complete
independence of action no longer exists.
We pronounce no dogma. We do not seek to turn back the great
tides of international affairs. We do not say that the British view of the
effect upon the Commonwealth of a decision by Great Britain to go into
Europe is demonstrably wrong. In the present state of the world, with
bullying and bluster our daily diet, it may be that the Commonwealth must
once more change, for the common good.
Even a cursory examination of the Treaty of Rome and its
proposals will indicate, as I have briefly indicated before, the immense variety
and complexity of the matters to be negotiated. The decision as to whether
we should participate directly in those negotiations which affect our special
interests does not depend on Great Britain, but on the willingness of The Six
to permit it. We are, however, confident that Great Britain will do her
best to bring it about. So far as we can judge at present, the actual
negotiations, once begun in, say, October, will last for at least six months.
They will need to be proceded by close exchanges between Great Britain and the
other Commonwealth countries, some time next month. If these preliminary
talks are to prove valuable in a fairly short time, our representatives will
need the best possible briefing from this end. For this purpose, we have
established a special Committee of Cabinet, to sit-frequently and to be
available at short notice, working in conjunction with senior officials and
expert advisers. Important decisions will need to be made at this end, not
only before but during the course of the negotiations themselves. For the
problems confronting our export industries are so great that every last
detailed care must be taken to solve them in a way which protects, and indeed
enlarges, our national,. developmental, and trading future.