TNAG-0045-FCO40-81-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 137

CONFIDENTIAL

Notes for Supplementaries

Political Implications

We recognise that the Treaty of Rome has a basic political

objective and we believe the entry of Britain into the Community

if we can overcome the cutstanding problems will be at least as

important in its political context as in the economic context.

But, if we opened negotiations, our first aim would be to

join an economic Community not one concerned with either

political affairs or defence.

Membership of the Community has

not prevented France from following a different foreigh policy

from her partners. If there was a move in an enlarged Community

to some form of closer political co-operation, we should wish

to play our part in shaping the arrangements. We see nothing

inconsistent between membership of the Community and the

maintenance of cur close and special relationship with the

Commonwealth.

Sterling Balances

There can be no question of the sterling balances

becoming a drag on Europe. They are not instruments of prestige,

but bankers' obligations which have to be covered by assets;

and ours arc covered. If we entered the Community we would be

ready to share these obligations with other countries.

We are

ready to discuss these possibilities as one aspect of the

wider question of the extent to which the Community might

develop a distinctive monetary policy of its own.

Transitional arrangements

It is too soon to say anything about the transitional

periods we may require. It is possible that we may need

different transitional periods for different matters.

Carrying forward the results of the 1961-63 negotiations

It might be a useful device if we could carry forward into

any new negotiations the provisional agreements reached in

CONFIDENT IAL

/1962