Purpose of mtg.
Debate - aim for Monday week.  Spokesmen : R.M. and F.O. Minister.  Quiet and exploratory discussion.


Political act with economic consequences - not reverse.
Our pol. posn. and influence in years to come wd. be less effective.  Economic :  main pro is indecision in large home market.
Arguments can - with present set up.  Loss of economic freedom.  Comm. preferences and free entry - we shd. be requd. to discriminate v. them.  New policies for agric. & horticulture - lower subsidies but higher food prices (2% on c/l. index.  Loyalties to E.F.T.A. not all of whom cd. subscribe to Treaty of Rome - viz., the neutrals.  Finally, possibility tht. approach wd. be rebuffed.
Persuaded by arguments for getting as far in as we can w'out destroying Commonwealth link.
Alternatives : i) full membership of T. of Rome : not on, because wd.   involve discrimination v. Commonwealth.
ii) membership on special terms.  We wd. have to    reserve control over our non European policies : some   measure of free entry for C. products esp. for    foodstuffs.  Consequence : our preferences wd. be    whittled away - we now enjoy them on 20% of our    exports, & tho' dropping they are of substantial value.
iii) assocn. short of membership.  Easier to include    E.F.T.A.  But cdn't win gt. influence over Six.
(iv) Build up E.F.T.A.  Depressing outcome : never    more than 2nd best.
Of these therefore I prefer (ii) or (iii).  If that is our line, avoid hasty action.  Keep in line with E.F.T.A. and bring them along in association with us.  (ii) wd. mean end of E.F.T.A.  (iii) wd. not.  Cdn't decently pursue (ii) unless majority of E.F.T.A. wd. join it too.
Those prelimy. ques. - a) what wd. France think of ii) or iii).  If she wd. black-ball us for either, we shd. avoid approach.  How can we find out?
b) Consult Key Doms. on their likely attitude to the price we wd. have to pay for ii) or iii).  C. Finance Ministers in 3rd wk. of Sept. if we were ready.  Canada. A. &N.Z. especially.
c) How do we influence opinion here - to accept danger of quick decision to join Six - a holding statement.


Memo. brings out dilemma.  Six based on common policies, commonly determined & executed.  Membership therefore involves abandonment of national policy - & U.K. consultn. with Doms.  On other hand danger to us & market of size of U.S. with price/wage levels same as our own, with its threat to our world trade.
Memo. contains one big change in advice viz., no gt. diffies. in common tariff with Six if C. diffy. cd. be surmounted.
Two main diffies. - agriculture & C.  Agric. effect mainly on consumer, not farmer.  But C. diffy. remains.  Our aim shd. be to get best agreement we can consistent with C. interests.  Not impracticable, as E.F.T.A. shows, if Six were willing to find basis for agreement.  Must wait for that.
Obstacles now.  Monnet (likely to become more helpful) : Hallstein &Commn. (bldg. their posn. as v. Govts.) : France (concerned only with status of France as leaders of Six : they won't want us) : U.S.A. (unhelpful - may change after Election).  No early change likely in attitude of France & U.S.
Danger of Press pressure.  People in Europe will think we are on run.
Need for holding statement to steady opinion.  Must resist pressure to go cap in hand.


Long-term strategic and pol. needs - Atlantic & U.S. - strong reasons for going in.  Balance G. influence, after de G. goes.  Greater U.K. influence.  Surrender of pol. sovereignty : others won't do it - eg. France.
But in world context, more doubtful.  Our influence has depended on our world outlook.  We shd. now be looking inward to a European bloc.  C. spreads throughout world and keeps us on world stage.  If we look to Europe, Doms. will turn to U.S.
Present terms of Six wd. wreck N.Z. & damage A., Canada, Ghana.
On those terms we cdn't join.
Agree that real choice is betwn. ii) and iii).
Further study needed.  If we can increase earnings by £200 m. doesn't matter how we do it.  Why not thro' E.F.T.A. and C.? cf. recent increase of exports to Canada.  Suppose we cut imports from S. American and E. Europe, how much more wd. C. take from us.
If we tried iii) we shd. have to associate C. in negotiation.  They won't let us do this for them.  Consult CF Ministers in Sept.


Until ii) and iii) are more closely defined we  
can't choose between them.
We face prospective decline in econ. strength & pol. influence unless we associate with Europe or with C. more closely.  H'to always failed with C. - can we hope to succeed now.
We can't sit and watch Six evolve : too gt. a danger.
Pol. implicns. don't alarm me.  We made mistake in not going to Schuman conference : Monnet feared/thought then tht. if we had gone, outcome wd. have bn. looser assocn.  If we now joined alone, our influence wd. be great.  If we went in with E.F.T.A. members we mght make a majority in favour of looser assocn.
Need now is to create genuine wish to negotiate on the other side.
We shd. be active in preparing way for these.  Can't be idle.  Many interests to be educated.
I favour (ii) as ultimate objective.


See advantages of getting closer.  But b) on p.33 : can we get a basis which doesn't damage agric. and C.
Face also results.  C. Ques 16-18.  Stress p.22 para.4.  Politically (p.27 para.5) v. serious.  Apart from sentiment, remember value of C. as one instrument by wh. emergent countries can be influenced & steadied & one method of countering Communist pressures in Asia & Africa.
E.F.T.A. p.8.  Ques. 9.  Resentment.
Agriculture p.10.  Fundamental change of policy : accompanied by higher food prices (7½% increase).
Risks therefore are damage to C., 'perfidy' to E.F.T.A. members destroy confidence of farmers in Tory Party & raise food prices.  A pretty packet.
Even so, we've got to go on - seeking some solution : paras 12-16 of cover note.
Favour (ii) if we cd. get it.  (iii) might fall betwn. 2 stools.  Wd. lose us leadership of Europe.  Without that as prize, risks above wd. not be worth running.


Agree that (i) is out of ques.  Wd. disrupt Commonwealth.
Much to be said for making that clear in debate.  U.K. Press has given impn. in Commonwealth that U.K. Govt. have decided to join on present terms.
Then we must try to get as close as we can.  Problem then is political.
Some Colonies will suffer : but even so we must try to get as close as we can.  Avoid rebuff.  Play it slow therefore at official level.
But try informally to make it clear we cd. meet a response.


'Join on special condns. wd. be taken to imply radical change of policy.


Any chance of (ii) unless we break some pledges - eg. to agriculture : our scale of prodn. cd. not fail to be reduced.  Public wdn't stand that - & it wd. break Tory Party.
Suits Six that we shd. wait - for they are consolidating posn.  The vitality of the Six is common feeling in favour of a larger unit in Europe.  M'while N. and S. America will expand.  So will Australia - parts of E.F.T.A. etc.  Huge economic prizes to be won outside Europe : & if our industry is efficient we can win them.
Six have a bad pol. and moral posn.  Algeria, Congo, and economic policies which disregard under-developed.  Can we change that, even from w'in.
Can we touch this pitch?
While we flirt with this, we may break a spirit of C.  Why shd. they keep their balances here?  In our early days, we thought united Europe wd. keep with sterling : but now their currencies are strong.
A. and N.Z. and India might take their balances to N. York.
Six have a sense of purpose.  Have we, strongly enough?
Don't write off U.S.  Democrats will win & their views are closer to ours.
Suppose Six became 3rd Force, neutral - U.S. wd. quickly turn to us.
We are a world power.  We can't turn to Europe.  It must mean loss of C. for they can't be brought in.  Memo. proves that.


Share D.E.'s views.
(i) is impossible because wd. undermine all confidence in our past policies on agric., E.F.T.A. under-developed and C.
This being so, fear (ii) is wishful thinking.  Shan't get special terms wh. are tolerable & m'while shall have destroyed confidence of our friends in E.F.T.A. and in C.  Damage to new members eg. Ghana - who are our entry to uncommitted in E/W. struggle.
Will (ii) really avoid the obvious objns. to (i).
Getting committed to (vi) may destroy Tory Party.


Favour (ii).  But concerned about C. - and tactics of handling them.  Shd. consult them before we make up our minds.


Full membership is out because of C.  It wd. not be so bad for farmers.
Wd. suit us to join : but we shall be asked price we can't afford.
Damage to C., farmer, consumer, tax-payer.
Food prices 7½% doesn't sound bad : but bread, butter etc. wd. double.  Effect on wages and thro' them on our competitive power.
On (ii) I have considered eg. wheat.  We shd. have to accept target and we shd. have to repay levies to C. : re-negotiate agreement with U.S.
cereals marketing board to allocate acreage to farms etc.,
Pledges under 1947 Act cdn't be kept.  What new policy cd. be devised which wd. be fair to C.


Pol. unity of Six.  Do we want it?  - for stability in Europe.
If so, & if it's likely to succeed, our posn. in long-term might be seriously reduced.  Influence with U.S. & with C. might decline.
This means some accommn. like (ii).


Wd. mean abandonment of agric policy.  This wd. undermine our pol. position.  Avoid misunderstanding on that.
In future, there may be changes - agric. and C.  Position may be easier.
Opinion w'in Six countries - don't expect us to join.
Endorse line suggested by R.M.  No fwd. move at present.
We shd. have done more to explain problem to our farmers and to C.  We shd. begin to make them think.


Wd. like authority now to begin to warn N.F.U.'s.  Treat them as partners.


Problem insoluble in present context.  Much educational work to be done.  Situation will change : interests must be made to realise that.
Don't see what cards we have.  Cd. that also be studied.
Educatl. discussion, esp. with C.  Their problem as well as ours.
Hope Can. may continue to discuss from time to time.


If Six, supported by U.S. pursue minimal econ. policies can we continue to pay so much for their defence.  That is a card.


Dangers of standing out can be over-stated,. 86% of our trade is outside Six.
Our wisdom & experience is still valued abroad.
Thus, even tho' we cd. influence them from w'in, crucial point remains tht. we cdn't discriminate v. C.  We shd. bring out what our diffies. are.
C. shd. examine this in their separate Cabinets & we shd. know their views.
Is there any real prospect of a deal on ii) or iii)?
We can do no more than indicate readiness to discuss, if will on the other side to negotiate.


i) is out.  Chances of ii) or iii) are smaller than in early negotiations.
We must try to put ourselves in stronger posn.


Federation - don't think that will be obstacle.  Govts. will bear Hallstein on this.
France at present has no intention to let us in.  If we offered, France wd. have us at their mercy for long period of negotiation.
For the moment - work thro' E.F.T.A. : use G.A.T.T. to lower tariffs : consult with C. : build up view in Europe thr. fusion of 6 & 7 is inevitable.
What do we say?  Can't say our purpose is (ii).  We shdn't gain in negotiatns. and shd. undermine confidence of others.  Say rather we believe in union of 6 & 7.


If we don't move quickly, our posn. will be weaker.
Six will succeed.  Eg. M/Transport will build single vehicle & defeat our exports.  Ditto on ship. bldg.  We must join this or some larger group.  We shall be beaten on research, too.


Asked - nothing to say.


Variety of emphasis, but a good deal of agreement.
What do we say in debate?  To hold E.F.T.A. - indicate how Europe must be held together.  R.M. or H.A. and a junior F.O. Minister & rest of main speech.R.M. & H.A. to draft a main statement and circulate it next week to Cabinet.
After that, reflect during Recess.

Taken from C.C. 41(60) - Meeting held on 13 July 1960