ABROGATION OF EXTRATERRITORIAL RIGHTS IN CHINA PROPOSED AUSTRALIAN-CHINESE TREATY
1. At a meeting of Full Cabinet held on 6th December 1944, approval was given for the discussion with the Chinese Minister  of proposals for an agreement on the above subject.
2. Attached hereto as Annex 'A'  is the text of a treaty and accompanying Exchange of Notes which it is now proposed should be submitted for the acceptance of the Chinese Government.
3. It will be recalled that the abrogation of the regime of extraterritoriality was urged on the representatives of the United Kingdom and United States by the Australian Minister to China in 1942  and that treaties effecting this were signed by those governments with China in 1943.
4. In pursuance of the United Kingdom Treaty a United Kingdom Order-in-Council was made on 22nd March, 1943, abolishing the British machinery in China by which the privileges flowing from extraterritoriality were made effective; this Order-in-Council recited that the Commonwealth of Australia had requested and consented to the making of the Order as regards those interests with which it was concerned.
5. On 14th April, 1944, the Government of Canada signed a Treaty and Exchange of Notes with China to the same effect, and since that date the Chinese Government has repeatedly urged on the Australian Government the conclusion of a similar Treaty.
6. The text now submitted for approval substantially follows the Canadian Treaty, and an analysis of the text follows:-
Article I is confined to definitions.
Article II operates to confirm the abolition of the exercise of Australian extraterritorial rights in China.
Article III is an undertaking on the part of the Australian Government to do everything necessary to secure a rendition of the extraterritorial concessions so far as Australia is concerned.
Article IV is designed to save the property rights in China held by Australians, and follows the Canadian and United Kingdom treaties.
Article V provides for the reciprocity of certain rights. It was inserted in the United Kingdom and United States treaties to secure equal treatment for their nationals in China, and has been carefully drafted in the present text to make it clear that no change in the present policy concerning immigration into Australia from China is granted or contemplated. The words 'lawfully resident' effect this.
Similarly, the reference to 'procedure for the imposition and enforcement of taxes' saves the liberty of the Australian Government to continue its taxation policy of discrimination between residents and non-residents. This formula is acceptable to the Commissioner of Taxation.
Article VI provides for the mutual appointment of consular officers and for the furnishing to them of advice of the detention or arrest of nationals of their country.
Chinese Consuls are now exercising their functions in Australia, and as the appointment of Australian Consuls is contemplated, this provision would be to the advantage of Australia.
Article VII is a mutual declaration that the parties contemplate, after the cessation of hostilities, negotiating a comprehensive treaty or treaties of friendship, commerce, navigation and consular rights.
A similar article appears in the Canadian Treaty, and actually engages the parties only to enter into negotiations. This is strictly an illusory undertaking, but as the Chinese attach importance to the inclusion of the subject matter in the treaty, its omission might make it appear that Australia was not prepared to enter into commercial relations and might be misunderstood in China and affect our future trade relations adversely. The present text is therefore proposed.
Article VIII provides for the application of the generally accepted principles of international law and practice to questions affecting the sovereignty of China which fall outside the matter dealt with in the treaty.
Article IX provides for the ratification of the treaty, which in the case of Australia is to be conditional on Parliamentary approval.
7. In the present circumstances it is clear that the conclusion of a treaty will be of substantial diplomatic value to Australia; the exercise of Australian extraterritorial rights in China has in fact ceased, and no departure from Australian policy respecting the treatment of Chinese in Australia follows from the text submitted. At the same time the Treaty is ardently desired by China and will assist that country. It is therefore recommended that this text be approved. 
H. V. EVATT