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the Social Charter amounted to a bid for protectionism on a major scale. For example the intention was that if a Portuguese contractor tendered for work in Germany, his workers should be paid German rates, thus denying him any comparative advantage. The Portuguese authorities might acquiesce in these provisions on the basis that they would look for compensation for such provision through structural assistance. For their part Germany might feel able to go ong with the Commission proposal because of the major

efits they in practice enjoyed through access to East Germany for cheap components and intermediate processes. tan Germany on-costs related to social security and others benefits amounted to some 98 per cent. A number of proposals now being put forward by the Commission, such as paternity leave and treatment of part-time workers, had been canvassed in the past. In resisting such Commission proposals it had been found helpful in the past to seek to change the area of debate and give emphasis to the training and employment issues. It would also be helpful to engage representasy of employers' organisations, and to secure fuller undertanding of the issues involved through

bilateral contex More generally, however, a substantial public relations ise was required. This should encompass the washich the social benefits appropriate to a market economy were provided in the United Kingdom together with a crit of the Commission's approach and its implications for free trade, and the distinction between action that was appriately left to the Community and to national administrations. The Department of Employment had already be British practice in the area employee share ownership. This material should be extended cover a comprehensive account of the social benefits prided in the United Kingdom.

assemble examples of

Summing up the discussion, THE PRE MINISTER invited the Cabinet Office to arrange for the preparation by the Department of Employment and other Departments concerned of material for use at the Madrid European Council,

illustrating the full range of social benefits available in the United Kingdom, having regard in partula) to the areas covered in the draft Social Charter.

The Cabinet

1. Took note with approval of the Prime Minis summing up and invited the Secretary to the Cabine proceed accordingly.

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CONFIDENTIAL