289 External Affairs Department to Dixon

We have been considering the position of our proposed Trade Agreement with the United States of America, and the possible developments arising out of the present Washington conversations between United Kingdom and United States of America.

The advices in your telegram 1094 of 25th September [1] indicate reluctance on the part of the United Kingdom to proceed with bilateral trade talks at the present time. We feel that Australia's position has not been given full weight nor do we agree as to the tactical merit of shelving the bilateral negotiations at this stage.

It has to be remembered:

(a) That United Kingdom and Canada already have agreement with United States of America.

(b) That Australia assisted in facilitating agreement between United States of America and U.K.

(c) That the conclusion of a bilateral agreement between United States of America and Australia will not prejudice a subsequent broader or a multilateral agreement and may actually assist in such objective.

(d) That unless agreement can be completed shortly bargaining power of Australia will be materially impaired.

In the circumstances, every endeavour should be made by McCarthy and Fletcher [2] to reach an agreement as soon as possible. You will, of course, actively assist them.

It is expected by us that, in view of our past co-operative attitude, United Kingdom and Canada will be prepared to make concessions necessary to our agreement with United States of America.

New Zealand is being advised of our views regarding existing preferences granted to Australia by New Zealand. [3]

On Raisins, we would probably be prepared to concede a reduction to 1/2d. per lb. provided United States of America makes a satisfactory response on butter in her agreement with New Zealand and the proposed United States agreement with Australia is acceptable to us. However, you will do your utmost to obtain the most favourable terms and before agreement is finalised, Cabinet here will be asked to approve of all details.

Customs Department have forwarded schedule to Fletcher by air mail, September 17th, under cover of Trans Note No. 2 [4] and we take it that he and McCarthy can proceed immediately towards completion of negotiations.

Please inform Law of decision to continue with negotiations which have already been very protracted. [5]