83 Melville to Evatt

Cablegram 44 [1] LONDON, 16 March 1944, 8.10 p.m.

IMMEDIATE PERSONAL FOR DR EVATT FROM MELVILLE SECRET

Your 52. [2]

1. Commitment under Article 7 was for ultimate elimination of preferences and all information heard indicates that U.S.A. is pressing and will continue to press very hard for honouring of this commitment by all British Commonwealth countries.

2. In addition industries affected are those of our primary industries which rely on preferences in the U.K. market (our secondary industries would not be affected) and in the last resort continuance of these preferences depends not on what we are prepared to do but on the U.K.'s own intentions. The United Kingdom can terminate the Ottawa Agreement [3] by giving 6 months' notice. This would of course leave us free to abolish preferences now given in the Australian market to imports from U.K.

3. Nevertheless we have argued our case as strongly as possible and position was I think fully safeguarded at the time by subsequent comments. See our telegram 40, paragraphs 4, 5 and 6.

[4] Final summary of our views as now recorded is also I think satisfactory. It reads as follows-

'The Canadian, South African, New Zealand and Indian Delegations, however, stated that, although a radical adjustment of preferences would involve serious problems of adjustment for their economies, they would be prepared to face substantial reduction of preferences extending to the abolition of some in return for sufficiently extensive counter-concessions.

The Australian officials, while recognising some reduction in preferences to be inevitable in accordance with the terms of the Mutual Aid Agreement, explain that the Commonwealth Government, before committing themselves to any substantial reductions, would need a clear idea of the effect such reductions are likely to have upon the Australian export trade.

The reduction of duties contemplated under the proposed tariff formulae might not be sufficient to ensure that Australia had a substantial market in the U.S. and, though Australia normally has a large trade in European countries, such countries would not be required to grant concessions which could contribute to the increased trade in important Australian production, including wool, though it might help in others such as beef and butter.

Commodity agreements, particularly in such products as wheat and sugar, might be of considerable assistance, but in view of all these uncertainties the Commonwealth Government may wish to retain a fair margin of preference for products in the U.K. market.'

4. With regard to further U.K.-U.S. discussions no arrangements have, so far as I have been able to find out, yet been made.

1 Sent through the Commonwealth Govt Accredited Representative in London.

2 Document 78.

3 The Imperial Economic Conference held in Ottawa in 1932 had resulted in a series of bilateral trade agreements between the United Kingdom and the Dominions for a limited amount of Imperial preference.

4 See Document 78, note 2, for the text of paragraph 4. Paragraphs 5 and 6 stressed the problems that would follow from an immediate and drastic reduction in preferences, particularly given that Australia, unlike the United Kingdom and Canada, did not have a trade agreement with the United States.

[AA:A989, 44/735/55/3/2]