95 Statement by Coombs to United States Officials [1]

(extract) SYDNEY, 30 August 1946

We feel to some extent that this document fails to give sufficient emphasis to the measures which can be taken by individual nations and by nations in concert aimed at the expansion of international demand upon which, basically, international trade depends. We have, as you know, placed considerable emphasis in previous discussions upon responsibility of individual countries to maintain domestic conditions of employment and production, which will enable them to contribute fully to international trade. In our opinion, the most important factors determining the level of international trade are the levels of employment, and therefore of incomes, which determine the demand for goods in the major industrial countries of the world. When I say the major industrial countries I am not suggesting that the responsibility lies with them alone, but because of their size they have a determining influence on world economic conditions. Therefore what happens within their borders is of vital importance to the rest of the world. Consequently it is essential to the expansion of world trade that all countries, and particularly the major industrial countries, should recognise and accept a responsibility to the rest of the world in relation to their own domestic policy so far as it is capable of influencing the level of employment and therefore the level of incomes of their own people. With that in mind we have in previous discussions emphasised the need for some sort of undertaking by the participating countries in relation to employment. Those are met to some extent by the content of the present draft where certain undertakings in relation to employment are embodied. We have certain detailed suggestions to make about those later. We agree that, to some extent, our point has been met, but we feel they do not by any means go far enough towards the general idea which we have, that is, that any approach to the problem of international trade should include in it positive measures designed to raise the volume of world trade by raising the capacity of countries participating in it to buy other people's goods.

In our opinion there are three main responsibilities which devolve on countries in this way. The first is to maintain a level of employment in its own country by which it ensures that its people have incomes with which to buy goods produced in their own country and goods produced in others.

Secondly, we think they have a responsibility steadily to increase their own levels of productivity, to develop their own resources so that their capacity to spend at home and abroad increases progressively. Thirdly, we think that a country has a responsibility to use to the full all the resources which it possesses in the international field currently. It seems to us that if a country does that-if it sees that its people have incomes to spend and if they are permitted, in fact, encouraged, to spend those incomes abroad, if required up to the limit of the international resources which the country has, and if they are developing their own resources in a way which raises their standards of productivity, and therefore of income, they will be contributing practically, to the greatest extent possible to the development of international trade and to employment of other countries. The modifications upon that which may be imposed by trade restrictions are, in our opinion, of secondary importance, assuming that we exclude the more extreme forms of economic nationalism which are aggressive in their origin.

So that is the general point of view without discussing the details of the document. We would say that while it has employment provisions in it they are not entirely satisfactory, that, on the other hand, it makes no provision for participating countries accepting the obligation to see that their domestic policy is such that they use to the full their current international resources, and finally that there is no provision for enabling or assisting countries whose development lags behind that of the rest of the world, or which have potentialities of further development, to undertake that development. In fact, in our opinion the net effect of some of the provisions of the document as it at present stands, would be to 'fossilise' if I can use that word-production and trade substantially in patterns which exist in the world at the present time. It would make it more difficult for changes to be made which would involve a radical shift in production of certain classes of goods between countries now producing them and other countries which perhaps have equally satisfactory basic resources for their production but which have not yet progressed far, if at all, in the use of these resources for such production. In that respect we feel there is an underlying assumption that the present distribution of production and therefore of trade is in some way natural, and therefore based on the most efficient use of resources. Whereas it would appear to us largely an historical matter that we have the present distribution of production, and there is no reason to believe, in fact there is every reason to doubt, that a more effective allocation of resources is not possible if resources, particularly in the undeveloped countries of the world, can be rapidly developed.

We believe that such development, so far from reducing world trade, will very greatly expand it. In fact, the industrialisation for instance first of Europe and then of U.S.A. at what appeared to be in the first instance at the expense of the United Kingdom, certainly in our opinion has resulted in a considerable expansion of the level of world trade. So that for that reason, we feel that this document should be strengthened on the employment side, and should include some undertaking by the participating countries in relation to the expenditure of their current international income, and furthermore should provide some positive measures for assisting countries with industrial and other productive potential to realise that potential. And we would like later to make suggestions as to how that might be achieved.

[matter omitted]

1 U.S. Department of State officials Winthrop G. Brown, Chief of the Division of Commercial Policy, and William T. Phillips, Special Assistant in the Commercial Policy Division on International Resources, visited Australia from 29 August to 4 September to discuss the U.S. Draft Charter for an International Trade Organization (to be released for publication on 20 September). Other U.S. representatives, at these informal discussions were Lacey C. Zapf, Commercial Attache and Alfred Whitney, Economic Analyst, of the U.S. Embassy in Canberra, and Martin B. Dale and Roger F. Stiles, U.S. Vice-Consuls in Sydney.

The seventeen Australians present, led by Dr H. C. Coombs, included representatives of the Departments of Post-war Reconstruction, Treasury, Trade and Customs, Commerce and Agriculture and of the Commonwealth Bank. L. H. E. Bury represented the External Affairs Dept. This extract is taken from Coombs' opening address to the meeting.

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