New E.E.C. budget system ratified

Press, Volume CXI, Issue 32494, 2 January 1971, Page 16

New E.E.C. budget system ratified

.(N.Z.P.A.-Reuter—Copyright) BRUSSELS, January 2. The Common Market changed to a federal-style budget system today, after the completion of the necessary ratification procedures.

But the system, replacing one of national contributions to give the European Community fully automatic and independent resources by 1978, provides the main stumbling block in the negotiations for British entry.

Under the scheme, approved by the E.E.C. Council of Ministers on April 21 after a series of marathon sessions, member states will gradually turn over to the

(Community their levies on I farm imports, customs duties on industrial purchases abroad, and up to 1 per cent of their value-added tax. Britain, as a major food importer and trading nation, argues that she would have to pay a disproportionate sum under this scheme —£468 m a year in the fully automatic stage. This is because 95 per cent of the Common Market’s budget is spent on farm support in one form or another. Britain, as a predominantly industrial country, would get

i back little of what she put s in. France, on the other hand, 1 stands to gain the most from 1 the new arrangements, as the Community’s largest farm 1 producer. She had threat- , ened to hold up progress in : other Community activities i if the January 1 deadline was i not met. : But the E.E.C. Council of Ministers has announced that t the time limit has been met i with two days to Spare, all • member-States having rati- • fled the April 21 agreement. ' Britain has proposed in her ■ negotiations with the Six that her share of the budget, expected to run at £lBoom in 1977, should be gradually built up to between 13 and 15 per cent over the first five years of membership. After this time Britain wants a further three-year period of “correctives”— meaning that her payments could not in any one year rise or fall by more than 2 per cent of the previous year’s figure. Safeguard sought In addition, the British negotiators are seeking a safeguard clause, enabling the situation to be reviewed if the budget arrangements impose too great a strain on her balance of payments. France, on the other hand, believes that Britain should begin her membership with a 21.5 per cent payment, and that she should reach the fully automatic stage in only five years.

Thojigh her partners take a more flexible view, arguing in favour of eight years and a gradual scale of payments, bargaining between Britain and the Six on this point is sure to be extremely tough.