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5. Klein said that there had as yet been no serious discussion these proposals but it was certainly not going to be easy to got mom agreed. Neither the French nor the Germans woro petng to agroo easily to the Commission negotiating on their behalf; the furthest they scemod likely to go was to agree to some face-saving device such as associating a Commission official with their own negotiators. The cuzr-- ent squabble over the Franco-Russian trade agreement (reported separ- atoly by Saving Telegram) was very relevent to developments in this
ecetor.
Rastern burope
6. Klein said that the Commission had now decided to pay no attention to the request of the Council to put forward proposals merely to harmon- ise existing national arrangements with Lastern Europe (U.K. Delegation Daving Telogram No. 122 of 10 Jucumber). They id concluded that it was pointless to waste time on an interim solution of this sort when the obligation to have a common policy would be operavive from the end of tho Veld. Instead they were now working on a draft Regulation which they would be sending to the Council fairly soon.
7. The regulation would apply only to state trading countries and would cover the same field as the thrce regulations adopted in Decembur. wonlá however differ from these three in some respects. The provision for carrying out existing contracts when a q.r, was imposed would not be included in the Eastern Europe regulation. There remained a number of outstanding points which the Commission still had to resolve. One of those was how to deal with the last European members of the GATT, Poland and Czechoslovakia. There was also the question of whether there should
be separato liberalisation lists for each Mastern European country or who ther there should be a uniform degree or liberalisation.
8. When I suggested to Klein that the Commission might have difficulty with this requlation, particularly from the Germans who had insisted last autumn on Eastern Europe being excluded from the three regulations, he scid that initial, informal soundings, showed a fair measure of support for the line the Commission was going to take. But here again the out- come of the disagreement over the Franco-Russian trade agreement would be important.
Trade Folicy on Exports
9. Klein confirmed what Ernst had said to the offect that the export side of trade policy was being given much lower priority. He said that the most to be hoped for by the end of the year would be a regulation covering export quotas and policies to dealing with situations of scarcity within the Community. The thorny problems of export side would certainly not be dealt with in a hurry.
co.
R. Abbott, Esq., UKMis Gonova.
P. Ridley, Beq., ashington
2
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(D.H.A.Hannay)
R.G. Biddons, Mog., Trado Policy Dept., F.0.0. M.R. Morland, Esq., European Integration Dept., 7.0.0.
I
Commercial Depts., Faris, Bonn, Rome, The Hague, Luxembourg usnol
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Tokyo.