388 Addison to Commonwealth Government

Cablegram 459 LONDON, 12 November 1945, 9.02 p.m.

MOST IMMEDIATE SECRET

Your telegram 394 [1] repeated Wellington 228.

COMMERCIAL POLICY

We have studied your message with care and are, of course, most anxious that in supporting the United States proposals as now revised as a basis for discussion at the March Conference we should not cause you embarrassment. The following is a broad appreciation of the position as we see it.

2. It is, we think, common ground between all members of the Commonwealth that if we are to secure the conditions of expanding trade and full employment which we all desire we must endeavour to obtain the broadest measure of International co-operation for the orderly conduct of trade and the freeing of trade channels throughout the world. For this purpose the co-operation of the United States is essential. Unless we can reach agreement with the United States on terms which would enable her to play her full part in a broad programme for liberalising trading conditions, the countries of the world will inevitably be driven back to those very practices of economic selfsufficiency and restrictionism which did so much damage before the war, and the political or economic consequences would alike be incalculable.

3. For our part, therefore, and bearing in mind that in the conditions in which we have emerged from the war the rapid expansion of our export trade is essential to our economic recovery (and, therefore, to those countries whose sales to us must be largely conditioned by the purchasing power of our people) we have felt greatly encouraged by the growing realisation in the United States that their prosperity is dependent on world prosperity and by their eagerness to take the lead in a campaign to assist the development of international trade under conditions which would recognise the interdependence of countries and would make for rising standards everywhere. We have, therefore, welcomed the conversations which have been taking place in Washington in pursuance of Article VII of the Mutual Aid Agreement and feel that the United States proposals as now revised in the discussions mark an important advance towards the goal of International co- operation in the economic field and should serve very well as a basis for discussion in the projected International Conferences.

4. In these discussions we have avoided the danger that we might have to concede because of our need for financial aid measures which we should not have been willing to concede in the context of Commercial Policy alone. Indeed to do them justice the American negotiators have not, in fact, sought at any time to use our financial necessities as an argument in the discussions. The whole Commercial Policy problem has been approached on its merits and the document which has now resulted is the fruits of a genuine attempt to hammer out the most hopeful lines of approach on which there would be a genuine chance of arriving at a subsequent agreement acceptable to all parties.

5. It is natural and indeed inevitable that after the prolonged discussions which have taken place with [our] negotiators, the United States Government should now wish to know before publishing their document and issuing the proposed invitations to other countries that they can count on our general support of the proposals. It would be impossible in the circumstances for us not to give the Americans an indication of our attitude and having regard to the extent to which our negotiators have succeeded in securing the recasting of the document on lines acceptable to us, we feel that we can hardly do otherwise than return a favourable reply. Indeed, to seek further amendments at this stage when the Americans regard themselves as having done all they can to meet our views (as indeed they have done) would, we are advised, lead to a break which would deprive us all of the opportunity of bringing America into an agreement which would open up world markets and so assist in obtaining the full employment which is our objective.

6. We fully understand your desire that Australia should approach the March Conference free of any commitment even implied. The New Zealand Government have expressed a similar desire. We feel, however, that you would not wish this to preclude us from looking to you for encouragement in supporting the United States proposals as a basis of discussion. So far as tariffs and preferences are concerned, what has been under discussion with the Americans is the line on which negotiations regarding tariffs and preferences would be conducted and as has been made fully clear in our commentary there is no commitment on any country to reduce any particular tariff or any particular preference any agreement being dependent on there being satisfactory reciprocal concessions. The position expressed in Paragraph 1 of your telegram is thus fully safeguarded. As regards non-tariff matters it must be expected that each country attending the March Conference will have its own points to raise and its own contribution to make to a general agreement. This is well understood and the present proposals are a basis for discussion only but what matters, it seems to us, is whether the general approach in these proposals is on lines calculated to advance matters towards a satisfactory agreement. We ourselves regard the proposals as they now stand as most promising from this standpoint and we have every hope that subject as it is to each participating country being assured of full freedom to pursue further at the March Conference any topics of special interest and importance to it the Commonwealth and New Zealand Governments will agree with this broad conclusion.

7. A separate telegram [2] follows on the specific points raised in your telegram. Of this clearly the most important is the question of the formula dealing with tariffs and preferences and on this we feel that the points you make are, in fact, met when the formula is read with the commentary which has now been agreed.

We are particularly anxious that there should be a broad understanding between us that whatever views may be put forward at the March Conference on the various proposals in the United States Document, the line set out in the formula for dealing with tariffs and preferences will not be called in question.

We earnestly hope, therefore, that having regard to the extreme difficulty which has been experienced in securing United States agreement to a formula and commentary which we suggest fully safeguards our common desiderata, the Commonwealth and New Zealand Governments will feel able to acquiesce in this position.

1 Document 374.

2 Cablegram 460, dispatched 12 November. On file AA : A1066, A45/2/5/4.

[AA : A1066, ER45/1/5]