Agricultural Fund
From our Common Market Correspondent
NExr week, for the first time, an entire three- day Ministerial meeting of the Common Market negotiations is due to take place without the presence of the British delegation. The absence of Mr. Heath, the Prince of Denmark in the Brussels Hamlet, will be relieved only by the presence of a posse of the hero's knights eavesdropping in the wings.
Mr. Heath is absent because the subject of the meeting--the financing of the EEC budget— is strictly a matter for the Six. The knights will presumably be present in Brussels, though not in the conference room, because they cannot bear to be far from the scene of a decision which is vitally important to the progress of the talks. The French have announced that they cannot consent to an agreement with the British until the financial question has been settled to their satisfaction. Furthermore, whatever is decided by the Six will probably have to be accepted by the British even if the argument has been won by the French.
The rules on the budget contributions of mem- bers of the Corninuaity are contained in Article 200 of .the Rome Treaty which sets out in a table the percentage of the total to be put into the general kitty by each country. Article 201, however, says that these contributions may be replaced by other resources of the Com- munity 'in particular by revenue accruing from the common customs tariff when it has been definitely introduced.' The conditions under Which this replacement would be made will, says the Article, be worked out later. The Com- mission is to make proposals, the Council of Ministers is to take a decision after consulting the Assembly and the result is to be ratified by the national parliaments. Matters are taken slightly farther by Regulation 25 of the Com- mon Agricultural Policy which was drawn up with so much trauma last January. This regulation lays it down firmly that from January 1, 1970, all revenues from the levies en imports from third countries belong to the Community and shall be used for Community expenditure under the budget. An agricultural fund designed to subsidise exports of food to third countries and for improving the structure c: farming in the EEC is set up as part of the Ildget. No one disputes any of .this—so far as it goes.
. Unfortunately (but not perhaps by accident) it leaves many important question's unanswered. It is obvious at once that the biggest importers of foreign food will pay most levies and that Germany (together with Britain. if she joins) is marked dow n as the mitch cow under this head. It is also clear that the biggest exporter of food will benefit most from the agricultural fund. France_ fills this position. What is not clear is vvhetttr the agricultural fund is a self-
contained section of the budget and whether countries which pay most in levies are required in addition to pay their full share of contribu- tions on the- ordinary percentage scale.
It did not escape anyone last January that this would have to be solved sometime. Mean- time each side drew its own decisions. The French maintained the budget is indivisible and that therefore if there was any money left over from the levies after the agricultural expenditures had been met it would be available for any- thing else the Community wanted to do with it. The Germans realised that if this happened, as they were sure it would, they would be paying an unreasonable amount to the budget as well as subsidising French farms. For if the running expenses of the Community were to be met by surplus levies, the French would have less to contribute on the ordinary percentage scale.
Matters might have been left in this un- settled state until 1969 if the French had not decided during this summer that the advent of the British, whose interests on this point clearly coincide with those of the Germans, meant that the chances of getting the French interpretation accepted in 1969 were consider- ably reduced. They therefore forced the issue into the open again and have made its solution a condition of British entry. The Germans have therefore, with a good deal of British prompt- ing, raised a tactical default-. They claim that the agricultural regulation of last January leaves the matter almost entirely open since the pro- cedure laid down in Article 201 of the Treaty —proposals by the Commission, reference to the Assembly and ratification by parliaments and the unanimous vote of the Council—have still to be gone through. The French reply that the decision taken by the Council in agreeing to the regulation is in fact the decision enjoined on them by Article 201. All that is now required according to the French is ratification by national parliaments—and this they maintain must be done before British entry to the Market.
otat The incredible legal comple.x't of the issue should not obscure the fact t this is im- portant for us. Britain, if she `is to maintain her pledges to the Commonwealth and avoid balance of payments troubles, is bound to try to keep up a reasonable flow of Common- wealth imports as opposed to European ones. The French assure us that the world price of food will shortly rise to that of the Community and that therefore there will be almost no levies to pay (in which case the entire budget could be fairly apportioned on the percentage scale)—but- this is not at all certain. Again, no doubt if there were common European reserves or even a Common Market currency the balance of payments problem would not arise, but this may still be a long way off in spite of M. Marjolin's 'action' programme.
There are now three main lines of action open to the negotiators. One is to place an agreed ceiling on the amounts any one country contributes to the Community budget. This solution the French are quite determined to re- ject. Another is to 'isolate' the agricultural fund from the rest of the budget, thus using the levies for agricultural purposes only and sharing out the other expenses of the Community on an equitable basis. This appears to be what the French now have in mind, but it still leaves the Germans (and potentially the British) paying large sums which will primarily benefit the French farmer.
Lastly, the whole question could be shelved again under some convenient formula. This is a pseudo-solution favoured strongly by the British and now, it seems, supported by the Italians. One wonders whether the French will be prepared to call off their 'blackmail' on the British negotiations for as little as this. It would hardly be in character.
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