86 Coombs to Chifley

Letter (extract) [LONDON], 13 March 1947

The visit to the United States was somewhat hurried, but I think quite useful.

I found very varying expectations of the outcome of the I.T.O.

talks. Generally, the United Nations Secretariat appears somewhat pessimistic. This pessimism is due partly to the fact that the Soviet has again decided not to be represented, and they fear this indicates an intention to abstain from membership. There is a real danger that if this is so, the I.T.O. may become a sort of Western trading bloc with many European countries abstaining because of their need to maintain good trade and political relations with the Soviet. It is partly due also to their judgment of the United States' position where they think the increasing influence of the Republicans will make it more difficult for the United States to take the action necessary to make collaboration in international trade and employment effective.

I must confess that I feel some sympathy with their point of view on the membership problem. There is no doubt that this is the most critical hurdle which the I.T.O. will have to surmount. The United States' position is, however, rather better than I expected. Press comment is much more favourable to a continuance of the Administration's international trade policy than I had anticipated. The State Department officers responsible were very optimistic indeed. Their public enquiries of which I told you proved very useful in bringing out a considerable body of opinion in favour of the programme as well as providing some useful information for the negotiators. Furthermore, they are convinced that the Republicans are politically unwilling to do anything to endanger the programme. This may merely be of course based on the theory that if they opposed the programme, then any subsequent adverse economic developments can be blamed on their opposition.

On the other hand, if they sit back and let the programme go ahead, they can blame any subsequent adverse developments on the Administration and its trade programme. But at any rate it is clear that the Administration feels strong enough to go ahead.

This was confirmed by the recent speech of the President in which he made it quite clear that he proposed that tariff cuts would be made.

It happens of course that wool, butter and meat are perhaps the most difficult of all the items because of the strength of the pressure groups concerned. I did not ask for any details of the United States' plans in relation to these items, but they assured me that they would be in a position to submit proposals to us.

The real danger, I think, is not on the tariff side, but in relation to employment. The change in the political position will mean inevitably a greater unwillingness to take governmental measures necessary for the maintenance of employment. While I think any Administration, whatever its political composition, will be forced to take anti-depression measures, initial unwillingness may mean that these are unduly delayed and halfheartedly implemented. The full employment provisions, therefore, and, in particular, the link between the achievement of full employment and the right of other countries to secure a review of obligations undertaken in relation to commercial policy, becomes even more important to Australia.

The Industrial Development proposals [1] have apparently occasioned widespread interest, and there has been considerable discussion as to the best method by which they should be implemented. There are three possibilities:-

Firstly, that a Sub-Commission of the Economic and Employment Commission which was set up last year to advise on [Economic] Development should be responsible for the provision of technical and other aid as well as for investigation. This, in effect, would mean of course that the United Nations' Economic Secretariat would have to do the administrative and executive work.

Secondly, the work might be divided between the Secretariat and the I.T.O., giving to the I.T.O. technical and executive functions appropriate to a specialised agency, leaving to the Secretariat the more general economic matters which would be the appropriate subject of investigation and report to the Economic and Social Council and the governments concerned.

Thirdly, some countries, I believe, are pressing for the establishment of a completely separate specialised agency to deal with the whole function of industrial development.

Whichever of these alternatives is selected, there would be the problem of working out the relationships of the responsible organisations of [2] the Bank for Reconstruction and Development, which in some cases at any rate might be a source of finance for development of projects sponsored internationally. The view we put forward at [London] was that there would be definite advantages if the I.T.O. as the body responsible for commercial policy also had functions on the technical side in relation to Industrial Development. This would prevent their developing an unduly narrow point of view, and would, furthermore, tend to make their advice on commercial policy matters somewhat more acceptable. I discussed this matter fully with the Secretariat who were in general agreement provided that this did not delay the commencement of any work on development which it was found possible to commence immediately within the Secretariat under the auspices of the Development Sub-Commi[ssion]. I saw no reason why it should, and suggested that they might go as far ahead as their staff and budget would permit on the understanding that if and when the I.T.O. were established, there should be consultation as to the appropriate division of functions, and, on the basis of such a division, there could be a transfer of staff, etc. if some re- arrangement were involved. I was not able to wait in New York long enough to put our views before the Economic and Social Council, but left Tange to do this on the basis outlined to you in our telegram. I understand that the outcome was satisfactory in that the relevant clauses in the draft Charter authorising the I.T.O.

to provide technical assistance and advice were approved by the Council. It was interesting to notice that the United States' representatives strongly supported the continued inclusion of these clauses since they had been the major opponents of them in the London talks where they had been strong advocates of the work being done entirely by the Development Sub-Commission. It would be interesting to know the reason for the change in their attitude.

1 Under Article 11 of the draft: charter members were to undertake individually and in co-operation promotion of industrial and general economic development. For the text of paragraph 3 of Article 11, setting out the proposed role of the ITO, see Document 66, note 4.

2 Presumably 'of should read 'to'.

[AA : A1068, ER47/70/7]