The proposed group for the study of the question of forming a Customs Union or Customs Unions in Europe is to be set up at a meeting on the morning of Saturday, the 6th September, and it will be necessary for us to make it known before Friday evening whether or nor we propose to take part in the Study Group. On the basis of the instruction I have already received on this matter, I would propose, unless instructed to the contrary in the meantime, to inform the meeting that we will take part in the proposed Study Group.

There has been a good deal of discussion as to the wording of the text to be used in setting up the Study Group. Finally, the attached form of declaration was arrived at.¹ The principal considerations which determined the wording of this text were the following:-

1. The Swiss and Danish delegations were anxious that the Study Group should not be an organ of the present Conference but should be set up separately by the participating countries;
2. The Irish, British, Swiss, Danish and other delegations were anxious that it should be made clear that participation in the Study Group should not imply any commitment of any kind. The French and Italian delegations were anxious that the declaration should indicate a definite intention to promote the formation of Customs Unions;
3. The Portuguese and Irish delegates urged that Spain should be invited to join, and the Portuguese delegate questioned whether countries like his which were not in diplomatic relations with Russia and other eastern European countries, should be directly associated with the issue of invitations to those States to take part in the Study Group;
4. The British delegation were anxious that invitations to join the Study Group should be issued to Canada, Australia and the other States forming part of the Commonwealth Preferential Tariff group;
5. The Danish and other delegations were anxious that the Group should work in association with the International Trade Organisation and its associated organs.

These few points will be sufficient to give you an idea of how difficult a task the drafting of the proposed declaration proved to be. What is clear and expressly agreed among all the countries concerned is that the proposed Group is purely and simply for studying the possibilities and methods of forming Customs Unions and that participation in the Study Group involves no commitment of any kind for any Government taking part.

So far as I can ascertain at the moment, Britain, France, Italy, Holland, Belgium, Luxembourg, Denmark, Iceland and Portugal, are certain to take part in the Study Group. Portugal, in my view, will take part in spite of the obvious difficulty that the only country with which she has a land frontier is Spain, a country which will not be invited to take part. Mr. Westbirk, the Danish delegate, tells me that Sweden will definitely not take part but he believes that Norway will come in, if not when the Study Group is first formed, at least shortly afterwards. When the Rapporteur of the Special Committee on European Trade and Customs Unions and myself met the Scandinavian group yesterday morning, they told us that the Scandinavian countries proposed to study the question of a Customs Union among themselves and that Denmark would act as the liaison between the Scandinavian Study Group and the general Study Group to be set up by the other Western European Governments. Switzerland has reached no decision. The Swiss delegate, Mr. Troendle, told me that the matter has to be considered by the Swiss Federal Council at once and he expects to have a decision on Friday. The Austrian delegate told me he thought his Government's decision would depend largely on that of Switzerland. It will be clear from the foregoing that if we stay out of the Study Group, we will find ourselves associated with Switzerland and Sweden - the two western European countries which, however much we may admire them otherwise, are least enthusiastic about anything suggesting common action by the States of western Europe on account of the possible reactions in Moscow.

An important consideration is one which I mentioned in my report of the 31st August. As Mr. Westbirk, the Danish delegate, said to me, a Study Group of this kind, even though it is very unlikely to result in Customs Unions, is apt to become a kind of central organ for the discussion of all sorts of questions affecting the trade relations of the countries of Western Europe. To stay out of the Group, therefore, would be to lose opportunities not only of keeping in touch with current economic developments, but of 'pushing' proposals likely to further one's own interests. Mr. Westbirk thought that this consideration had had a lot to do with his Government's decision to join the Group. As we are not members of UNO or the ECE the same consideration would apply with even greater force in our case. Incidentally, Mr. Westbirk added that the only country with which Denmark would be willing in principle to consider a Customs Union was Great Britain, and he was afraid that Great Britain was the least likely of the participating countries to have anything to do with any kind of Customs Union whatever.

In the foregoing circumstances, I would interpret my existing instructions as authorising me to state that the Irish Government would be prepared to make the proposed declaration and to take part in the Study Group. I should be glad, however, to have definite confirmation that this interpretation is correct. The procedure likely to be adopted is that the delegates here will simply state that their Governments will be prepared to make the declaration and the declaration will then be made by each Government separately by means of a statement to the press in its own capital on Monday or Tuesday of next week.

I should perhaps add that it is proposed to ask the three States of Benelux to act as the sponsoring powers referred to in the second paragraph of the draft declaration. I am dining with the Portuguese delegate tonight, and I propose to discuss with him whether we should not again, at the meeting on Saturday, urge that Spain should be included in the invitations. I feel that we should do so for the record but that we should bow to the decision of the majority of the other participating Governments on the matter.