(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000504740001-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: January 12, 2017
• Document Release Date: February 23, 2011
• Sequence Number: 1
• Publication Date: November 26, 1986
• Content Type: MEMO

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26 November 1986
Background Memorandum! British Presidency of the EC
The British are generally pleased with their EC presidency.
London believes the EC has made significant progress on such
issues as trade relations with the US, internal market
liberalization, deregulation, the budget, and agricultural
reform. London is also satisfied with its success on the
employment and small business initiatives, and on the EC unity
displayed in launching the new GATT round. British officials
believe their low key, pragmatic approach has contributed to
progress in key areas. London's ability to work with the West
Germans and the French has been important, because there is a
consensus among the three countries on most issues which is
helping to settle many EC issues. In a pre-election period, the
British are probably especially relieved that during their
presidency no issues arose that forced Prime Minister Thatcher to
choose supporting the US-UK relationship versus lining up with
her European partners.
Internal Market Liberalization
The British have long made internal market liberalization a top
priority and have used their presidency to give the issue a high
profile. They believe that a genuine common market is necessary
to allow British industry to maximize its trade and investment
opportunities.
--British officials believe their efforts have forced the
Community to focus more sharply on market liberalization
but recognize movement is necessarily slow because of the
number of difficult decisions that member states must make
in opening domestic markets.
--Among the steps taken to liberalize markets are common
broadcast standards for direct broadcasting of TV by
satellite, reaching a deadline for the introduction of an
EC trademark, free trade-related capital movements, and
common contracts for commercial agents.
--London has failed to bring about an agreement on
streamlined testing for pharmaceuticals, mutual
recognition of testing lab approvals of product standards,
easier frontier controls for travellers, and safety
standards for toys.
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--London intends to use the remainder of its presidency to
push for a community standard public procurement policy
and the adoption of common standards for the
pharmaceutical industry, an area in which the UK is
strongly competitive.
Agricultural Reform
London continues to press for agricultural reform within the EC
and is not satisfied with the progress made thus far. London is
disappointed in the results of the November Agricultural Council
meeting but will continue to work hard on reforming the Common
Agricultural Policy (CAP). The British may raise agriculture at
the European Council meeting in December but an agreement on how
to reduce surpluses or subsidies is unlikely.
--British officials believe their recent proposal to set
aside excess cereal land will lead to useful discussions
on how to reduce both cereal surpluses and the high cost
of the EC's cereals program in general.
--London has failed to get an EC agreement on how to deal
with what British spokesmen see as the top agricultural
issues, including paying older farmers to retire, cutting
dairy quotas, establishing a new beef regime to cut the
Community's surplus, and setting aside cereal land.
--The British take a more optimistic view of CAP reform over
the longer term. They apparently believe that the
Community will run out of funds in 1987, and that this
will force the EC to undertake substantial reform.
Aviation Liberalization
London remains determined to secure airline liberalization before
the end of its presidency, despite a setback when this month's
Transport Council meeting adjourned without reaching agreement.
The British proposals include:
--outlawing current bilateral deals under which airlines of
different countries share routes and split revenues on a
50/50 basis without regard to the number of passengers
carried,
--allowing more than two airlines to compete on established
routes and open up more regional routes to competition to
feed European hubs, and
--the relaxation of what the British view as excessively
restrictive conditions -- such as Saturday night stayovers
-- on discount and deep discount fares which tend to
reduce their availability.
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British officials are hoping they can away those EC members
opposed to the plan during a series of bilateral meetings over
the next several weeks.
--France, Italy, Greece, Spain, Portugal, and Denmark all
have reservations about the British proposals. Athens and
Copenhagen are the major opponents.
--London is not likely to make further concessions to win EC
agreement because it believes that the political risk of
such a move is greater than that of taking a strong stance
and not achieving any agreement.
if acceptable progress is not made, Lo
25X1
ndon 25X1
might take "unilateral action" to increase airline
competition. The British are threatening to not agree to
any arrangements exempting airlines for the Treaty of Rome
competition rules.
Science and Technology
London has eagerly pushed for European cooperation on high-
technology development as a way to compete with the United States
and Japan.
--British officials are disappointed with the results to
date of most European cooperative science and technology
projects, but they believe British cooperation within the
EC has been dynamic. London has pushed the EC to more
closely focus its research and development programs on
those projects with direct industrial applications.
--After initial skepticism, London is eager to participate
in the EUREKA project and believes it has great potential.
British firms have won a large share of contracts to
participate in EUREKA projects. In addition, British
companies are actively involved in the other EC
initiatives, RACE, BRITE, and ESPIRIT. Despite its new
found enthusiasm, London is unlikely to significantly
increase government contributions to European-wide
projects, preferring to fund domestic projects instead.
British Attitudes Towards US-EC Trade Disputes
London believes that one of the major successes of its EC
presidency has been the improvement of US-EC trade relations. As
evidence, the British cite:
--The interim agreement on the dispute concerning loss of US
access to the Spanish grain market, a referendum agreement
of the citrus-pasta dispute, implementation of the agreement
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on semi-finished steel, and the successful extension of the
multifiber textile agreement.
--British officials also point to their role at the GATT
meetings in Punta del Este where they helped achieve a
European consensus -- largely in line with US views -- on
such issues as agriculture, services, and intellectual
property.
London intends to continue working towards an improvement in US-
EC relations during the remainder of its presidency and
afterwards.
--London places a high priority on obtaining a final
settlement on the discussions regarding US access to
Spanish grain markets by the 31 December deadline.
Despite British efforts, an agreement is not likely by the
deadline and the EC probably will ask for an extension.
The British believe discussions should focus on US corn
and sorghum access. UK officials claim that discussions
of principle -- the industrial credits issue -- should be
avoided because it is impossible to reach an agreement.
There are several trade issues that are of particular concern to
London. British officials have complained, in particular, about
the protectionist legislation passed at the end of the last
Congressional session.
--Officials are appreciative of the Administration's efforts
to ward off protectionism in the Congress and realize that
more protectionist legislation is likely during the next
session.
--The British are especially concerned about the superfund
tax on oil imports, customs users fee, and discrimination
against foreign small aircraft -- which the British say
will lead to a $150 million trade loss for British
manufacturers.
--In addition, London is concerned about the United States'
entering into bilateral trade deals such as the patent and
copyright law in Korea and the semiconductor agreement
with Japan. The British are concerned about the
differences in the way the US and EC deal with Japan and
believe the US must take a stronger approach, fearing in
the end the US will "back" Japan.
While the British are usually supportive of the US on most
political and security issues, London probably will continue to
side with the European Community in US-EC trade disputes.
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SUBJECT: Background Memorandum: British Presidency of the
EC
Distribution:
Original - DDI
1 - D/EURA
1 - DD/EURA
1 - C/EURA/WE
1 - DC/EURA/WE
2 - EURA Production
3 - IMC/CB
1 - Author
DDI/EURA/WE) I(26 Nov 1986)
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