THE signing of the Free Trade, Area Agreement between Britain and Ireland greatly improved the relationship between the two countries but the Taoiseach, Sean Lemass, and his government colleagues were "hard bargainers".

The pact brought that relationship to "the best level known since the Government of Ireland Act nearly half a century earlier", according to the Secretary of State for Commonwealth Relations, Arthur Bottomley.

This was agreed in a memo prepared for the British government during negotiations for the agreement, according to cabinet papers from 1965, released yesterday.

The initiative to sign the FTAA had come from the Republic, said Mr Bottomley. Their objective, he added, "is to join the EEC, but they realise it is impossible unless the United Kingdom also joined".

He believed the year long negotiations with the Republic which by December were "virtually complete," would culminate in a trade agreement which would be "fully consistent with the provisions of GATT" concerning the movement of all trade, agricultural and industrial goods between the two countries.

But there were "a dozen points of substance" on which agreement still had to be reached and it was clear that although Mr Lemass wished to sign the FTAA, "it was not certain all his colleagues did", according to an additional memo.

Mr Bottomley's memos recall the "considerable difficulty" which characterised the negotiations with the Irish government.

"It is clear that Mr Lemass will be very resistant to our proposals on cotton textiles and rules of origin . . . If we cannot go some way to meet the Irish on these issues, the negotiations may break down," he wrote.

Bottomley told his colleagues there was a "serious risk" that the FTAA would not be signed. He recommended, "that every effort should be made" to settle outstanding issues, by conceding some points which the Irish Government regarded as important.

The President of the Board of Trade, Mr Douglas Jay, did not agree because, he argued, "they [the Irish] already had free access" for industrial goods and would obtain substantial concessions on the entry of agricultural goods" into Britain.

The British, meanwhile, "would only obtain free entry of our industrial goods into Ireland gradually and we would lose our guaranteed preference long before we obtained free, entry."

The then Labour Prime Minister, Harold Wilson, summed up the cabinet meeting with the admission that the signing of a FTAA would signal "an economic advantage for the Irish".

He admitted also, that despite the fact negotiations were entering their final stage, his government should be ready to accept the possibility that an agreement would not be reached at the ministerial stage, and "a further round of negotiations might be needed in January.

Lemass, was expected in London to complete negotiations with the British government on December 13th-14th 1965. The British, keen to publish a white paper the next day, wanted to settle difficulties with the Irish with "some concessions," lest a breakdown should, represent them as "ungenerous".

The agreement's impact on the two countries was not lost on Bottomley. He assessed the economic advantage for the British would be "certainly some increases in our industrial imports from the Republic". In 1965, the Republic exported 70 per cent of its goods to the UK, while 50 per cent of its imports originated there.

The British also realised the political advantages of such a pact. It could place our political relationship on a better footing than ever in the past".