NAA:Al209, 61/1203 PART 1

Washington, 1 March 1962

470. Secret

Preoccupied with so many complicated international problems requiring urgent and short range policy decisions, it is not easy for the leaders of this Administration to find time to engage in much long range thinking and planning on international economic-political matters. I have been trying to find out how much is really being done; mainly their ideas as to what will or should happen if Britain enters the Common Market and in this connection, how they think Australia's best interests can be served and what role she might play. Having talked to Ball, Dillon, McGeorge, Bundy, Harriman,¹ Hodges, Edward Martin, Fulbright² and others including some advisers outside the Administration, (but not to Rusk who is at present completely preoccupied with current urgent problems) I send you hereunder some of the conclusions I have drawn from these talks.

2. Everybody agrees that Britain must go into the Common Market. They think this is the sine qua non of Western solidarity and strength against Russia as well as being in Britain's own interest. They recognise that her entry will create real problems for the United States itself, but the need for a more united Europe is thought to over-ride all other considerations.

3. The President's tariff bill³ is partly designed to meet these American problems, but its major purpose is to give him power to make trade arrangements 'across the board', not, of course, in the form of one way concessions, for hard bargains will no doubt be driven, but so that United States will be in a position to participate in world-wide trading and economic arrangements which, as well as benefiting United States trade, will pull the economies of the nations of the free world closer together in the interest of all. This latter purpose is being played down because of Congressional fears that too much might be given away in negotiations. Harriman says that the only chance they have of getting the bill through Congress is to tie it up to Britain's pending entry and to United States vital interest therein. If Britain fails to get in–through objections on the part of the Six, and/or difficulties created by members of the Commonwealth–then, he says, the Trade Bill does not have a chance in Congress, and the opportunity for liberal tariff policies may be lost, and indeed more restrictive trade may be the result. For this reason he and others urge us to be careful not to seem publicly to be creating difficulties about Britain's entry which could be seized upon by Congress. He and Bundy both commented, by the way, that Australia had so far shown more restraint in this connection than Canada.

4. Everybody to whom I have spoken is firm in their opposition to the permanent retention of the Commonwealth preference system if Britain joins the Common Market. Some are more blunt than others, but all say that it is unrealistic and unreasonable for Australia or any other dominion to try to insist upon their perpetuation. Australia, they say, is prosperous, expanding, and has a reasonably stable economy, and therefore has no need for such perpetual props to her trade. (New Zealand is recognised as having a special problem, but even in her case it is not considered that her problem should be met in this way). All say that if Britain went into the EEC, it was highly unlikely that preferences would be abolished immediately, the dismantling process would be a gradual one, with a 'still stand' for some years. One or two thought this ought to be enough to enable countries like Australia to adjust to the new situation; men like Ball, Bundy, and Harriman, thought we might not only need transitional arrangements to give us time for readjustment, but also the opportunity to share in some of the Common Market trade and perhaps also help in obtaining markets elsewhere through tariff concessions, e.g. by this country.

[matter omitted]

6. There is a good deal of journalistic talk here about the United States 'joining the Common Market', but that, of course, is not an accurate description of United States Administration approach. In addition to being naturally anxious to make the best possible tariff arrangements to protect United States trade with the Common Market countries, the Administration wishes to use the occasion of the expanding European Economic Community to encourage the development of a much wider economic-political community of Western oriented nations. Fulbright (Foreign Affairs, October 1961) speaks of 'the grand alliance' and contemplates a grouping which would include the present EEC and EFTA countries and the United States and Canada. Joseph Kraft⁴ (in the February issue of Harper's under the title of 'The Grand Design Takes Shape') discusses what he calls a 'new kind of Atlantic partnership' arising as a result of the success of the EEC. These and other comments, including speeches by Ball, Bundy, and even the President, indicate an enlightened desire on the part of the Administration to assist and participate in the gradual building of an economic-political community of the Western world not only desirable in itself, but also essential as a powerful, and indeed decisive, answer to Communism. It is all rather tentative and nebulous as yet, but the trend is there.

7. When I asked these men what their thoughts were concerning Australia in this connection, and what role they expect, or would wish her to play, I was met with various answers. Some have never thought about it; some, like Harriman and Bundy, think that Australia ought to keep on drawing attention to herself as a European community in everything except geography, and therefore not to be left out of any 'Atlantic' Western community; others, like Ball might be rather inclined to think of us and our economic problems in some Pacific context in company of countries like Japan and the Philippines as well as Canada and United States; others again would think we had a role in both.

8. All agree and say that Australia has an importance to the United States and the free world far beyond the size of her population. (Harriman said two or three days ago that we were 'a real, if not the only, anchor in the South-West Pacific'). They would genuinely therefore, not wish us to be economically or politically injured as a result of Britain's entry into the Common Market, or left out in the cold in any Western economic-political developments. However, when it comes to giving special attention to Australia and her problems we tend to run a bad fourth to Europe, South America and Japan. We are stable, prosperous, friendly, and not usually troublesome, and it is, therefore, easy for the United States to overlook us unless we draw attention to ourselves.

9. In this matter I would recommend that we take this [sic] initiative by formulating some ideas of our own regarding our future role so that we may be in the best position to influence United States thinking more or less at the threshold before their ideas harden along lines which may not suit us. I would hope that McEwen would be in a position to talk about some of these matters during his stay here.⁵

1 Should read: McGeorge Bundy, Harriman.

2 George Ball, US Under Secretary of State; McGeorge Bundy, National Security Advisor; W. Averell Harriman, 'Ambassador at Large' under Kennedy; Luther H. Hodges, Secretary of Commerce; J. William Fulbright, Chairman of the Senate Foreign Relations Committee.

3 The Trade Expansion Act (enacted October 1962) was Kennedy's major trade policy initiative, granting the White House unprecedented authority to negotiate tariff reductions.

4 Columnist and former journalist for the Washington Post and New York Times; occasional speech writer for President Kennedy.

5 McEwen set out on 4 March 1962 on a six-week tour of the US, Britain and Europe, amid widespread press speculation about his chances of achieving greater international recognition of Australia's problems. His first port of call was the United States, where he was to engage in a series of important meetings with the leading American figures on the Common Market issue. Right from the beginning of Britain's bid for EEC membership, McEwen had been acutely aware of the need to gain United States support for Australia's case. He hoped that the political value of Australia and New Zealand as a source of strength to the free world in the South Pacific might have a persuasive impact on the Kennedy Administration in its approach to the EEC-Commonwealth problem. Thus he announced upon his departure for Washington: 'I believe that there are considerations going beyond our direct trade interests and touching the total strength and cohesion of the Western world which should lead to the exercise of the undoubtedly great influence of the United States in ways that can assist Australia to maintain her vital trade interests in the United Kingdom market' (NAA: A4940, C3368 part 3, press statement by McEwen at Sydney Airport prior to his departure for North America and Europe, 4 March 1962).