BRITAIN SEEMS SET FOR NEW CASH ROW WITH EC
Britain appeared set for a new cash row
with its European Community partners as evidence emerged that
it could be much worse off as a result of new proposals to
radically alter the way the EC is financed.
    Analysis by officials and diplomats of proposals released
yesterday by the EC's executive Commission showed their full
impact, were they in force this year, would have left Britain
worse off by 545 mln European Currency Units.
    The proposals have to be agreed unanimously by member
government after a debate expected to open next month.
    The Commission said they were necessary to prevent the EC
from sliding once again into bankruptcy, and has described the
current financing system as unfair and unacceptable.
    British dissatisfaction with the cost of EC membership has
long been a source of friction, and diplomats said the
proposals could well reopen the wound.
    This was despite a proposed correction of Britain's budget
contribution to reflect its inability to take full advantage of
the EC's farm subsidies system because of the relatively small
size of its agricultural sector.
    Diplomats said although other nations such as Italy,
Belgium and the Netherlands were certain to oppose elements in
the system which could also substantially increase their own EC
payments, the main opposition was expected from Britain.
    Prime Minister Margaret Thatcher has made clear in recent
statements that she is not prepared to abandon the present
system, under which Britain is refunded two-thirds of its net
payments to the EC, unless a fairer system is devised.
    The diplomats said Thatcher was unlikely to consider the
proposed system as fair.
    The Commission's proposals would base a state's
contribution on its gross national product, which the
commission says is a fairer measurement reflecting relative
wealth.
    The main element of the previous system was a share of
value added tax collected in member states.
    The mechanism to compensate Britain for its inability to
take up a higher proportion of EC farm expenditure will have to
be paid for by the other 11 states.
    The Commission has also proposed to end repayments to all
states of a service charge paid to them for collecting customs
duties on behalf of the EC.
 REUTER
