TNAG-0298-FCO40-334-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 151

THE EEC

5. THE REPORT STATES THAT CONSTANT REVIEW IS NEEDED OF THE GATT

RULES GOVERNING SPECIAL TRADING ARRANGEMENTS AMONG GROUPS OF

COUNTRIES. THE PROSPECTIVE ENLARGEMENT OF THE EEC, AS THE MOST IMPORTANT SUCH TRADING GROUP, WILL AFFECT WORLD TRADING RELATION-

SHIPS SUBSTANTIALLY.

11 THE UNITED STATES HAS LONG SUPPORTED THE

INTEGRATION OF WESTERN EUROPE BECAUSE THE BROAD POLITICAL GAINS

EXPECTED FROM A STRONG, UNITED, AND OUTWARD-LOOKING EUROPE SHOULD

EXCEED WHATEVER ECONOMIC COSTS MIGHT BE INCURRED. IN SUPPORTING

THE ENLARGEMENT OF THE EEC FOR THE SAME REASONS, HOWEVER, THE

UNITED STATES HAS THE RIGHT TO EXPECT THAT THE INTERESTS OF NON-

MEMBER COUNTRIES WILL BE TAKEN FULLY INTO ACCOUNT IN THE PROCESS

OF ENLARGEMENT AND THAT THE POLICIES OF THE ENLARGED COMMUNITY

WILL BE RESPONSIVE TO THE NEEDS OF THE WORLD COMMUNITY, WITH THIS

GOAL IN VIEW, THE UNITED STATES HAS INTENSIFIED ITS CONSULTATIVE

ARRANGEMENTS WITH THE EEC. ENLARGEMENT COULD CREATE SIGNIFICANT

CHANGES FOR ALL US ECONOMIC RELATIONS WITH WESTERN EUROPE.

ALTHOUGH ON BALANCE THE EFFECTS OF THE FORMATION OF THE CEC ON INDUSTRIAL TRADE HAVE SO FAR BEEN FAVOURABLE, SEVERAL STUDIES HAVE SHOWN THAT THE EEC'S AGRICULTURAL POLICIES HAVE DAMAGED

SOME MAJOR US AGRICULTURAL EXPORTS. THE UNITED STATES IS CONCERNED

THAT BRITISH ENTRY INTO THE COMMUNITY AT ITS CURRENT HIGH LEVELS OF AGRICULTURAL PRICE SUPORTS MIGHT LEAD TO FURTHER DETERIORATION

OF US AGRICULTURAL EXPORTS. THE SOLUTION LIES IN MAKING THE COMMON

AGRICULTURAL POLICY OF AN ENLARGED COMMUNITY RESPOND BETTER TO

THE NEEDS OF BOTH CONSUMERS AND FARMERS. SUCH A CHANGE WOULD BE

TO THE BENEFIT NOT ONLY OF THE MEMBER COUNTRIES BUT ALSO OF EFFICIENT OUTSIDE SUPPLIERS. THE UNITED STATES HAS FOUND OVER THE YEARS THAT IT IS BETTER TO MAINTAIN FARM INCOME THROUGH DIRECT PAYMENTS RATHER THAN THROUGH HIGH PRICE SUPPORTS.

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/PREFERENCES