CANADIAN MUTUAL AID PROPOSED AGREEMENT ON GENERAL PRINCIPLES
The Problem 1. Canada desires to conclude with Australia, and other prospective participants in Mutual Aid, an agreement on the general principles relating to the supply of goods by Canada under the Mutual Aid plan. A tentative draft of the agreement was submitted to us on 4th September, 1943. 
2. The third recital in the preamble of this draft read as follows:-
'Where it is expedient that conditions upon which such supplies are made available by one United Nation to another should not be such as to burden post war commerce, or lead to the imposition of trade restrictions, or otherwise prejudice a just and enduring peace and-'
3. This recital refers to post war economic policy and, because it might lead to misunderstanding, we informed Canada that we would prefer its deletion.  In view of Canada's insistence , however, and the fact that it was not an operative clause, we decided not to press our objection.  At the same time it was made clear that we would take the strongest exception to the inclusion of an operative clause on the lines of Article VII of the U.K.-U.S. Mutual Aid agreement.
4. On 6th November, 1943, the Australian High Commissioner advised that, in spite of his representations, the Canadian Government had decided to abandon the third recital and to insert instead in the main body of the agreement an article along the lines of Article VII of the U.S.-U.K. agreement.  This was a complete departure from the first proposal. The article now proposed by the Canadian Government reads as follows:-
'. . . The Governments of Canada and . . . reaffirm their desire to promote mutually advantageous economic relations between their countries and throughout the world. They declare that their guiding purposes include the adoption of measures designed to promote employment, the production and consumption of goods and the expansion of International commerce by the reduction of tariffs and other trade barriers with the object of contributing to the attainment of all the economic objectives set forth in the Declaration of 14th August, 1941, known as the Atlantic Charter.'
A major difference between this article and the earlier preamble is the specific reference to the reduction of tariffs and other trade barriers.
5. Accordingly the High Commissioner was instructed to inform the Canadian Prime Minister that the proposed article which suggests tariff commitments would receive wide publicity here and provoke controversy which would be most embarrassing, and to express our hope that the agreement with Canada would be confined solely to the actual provisions for implementing Mutual Aid. 
6. The Prime Minister replied, however, that it was considered essential to include in all the agreements a general declaration of liberal economic purposes, particularly as strong criticism of the Mutual Aid plan was anticipated at the next session of Parliament. The Prime Minister stated that the omission of the reference to the reduction of tariffs would weaken greatly the utility of the proposed article as part of the reply to the domestic critics and expressed the hope that Australia would agree to the article. Full text of the telegram from High Commissioner is attached (Appendix A). 
7. The following courses of action are now open to the Commonwealth:-
(a) Accept the proposed article entirely.
(b) Reject the proposed article entirely.
(c) Inform Canada- (i) that we cannot accept inclusion within the body of the agreement of clause referring specifically to the reduction of tariffs and other trade barriers, (ii) that we would be prepared to accept a suitable statement in the preamble stating that Australia and Canada have accepted in principle the general objectives set forth in the Atlantic Charter and the U.S.-U.K. Mutual Aid agreement.
8. Text of Article VII is given as Appendix B. 
9. There are advantages in agreeing to Canada's suggestion, rejection of which may lead to breakdown of negotiations. The dangers of Australia's being used for the local political purposes of the Canadian Government are equally obvious.
10. The question is which of the courses in paragraph 7 above should be adopted. 
J. B. CHIFLEY
H. V. EVATT