89 Coombs to Chifley

Letter (extract) LONDON, 24 March 1947

The Commonwealth discussions commenced in London on the 11th March at Spencer House, St. James's Place. Representatives from the following countries are attending:

United Kingdom Canada Australia New Zealand South Africa Eire India Newfoundland Southern Rhodesia Burma Ceylon Colonies.

The work of the Conference has been sub-divided into two main groups. The first consists of a number of general topics which are being dealt with by one Committee-a copy of the Agenda is enclosed. The other section of the work relates to an examination of the responses which each Commonwealth country proposes to make to the United States requests for tariff reductions. The procedure has been to establish a Committee for each of the Commonwealth countries, and representatives of all other Commonwealth countries that are interested attend these meetings and state their reactions to the proposed narrowing in the margin of preference.

There is a number of particular matters which have been discussed and upon which I think some brief notes may be useful.

British Preferential Rate of Duty:

The form of the United States requests provide for a narrowing in the margin of preference either by a reduction in the most favoured nation rate of duty, by an increase in the British preferential rate or by a combination of these two methods.

The Canadian Delegation expressed considerable concern at the possibility of duties being imposed or increased on goods coming from Commonwealth sources. In general, this was supported by other countries who recognised, however, that there were particular cases in which an increase in a Commonwealth duty might be the only satisfactory way of narrowing a margin of preference. In several instances the United Kingdom has proposed this course, particularly in instances in which a further reduction in the most favoured nation rate of duty would seriously affect the protection afforded to local producers.

We have made it clear that, while in general, we would wish to avoid raising B.P. rates as means of reducing margins, it may in some cases be necessary if we are to give effective protection to Australian industries.

Tabling of Responses:

Following a discussion in which we made it clear (a) that we would not make offers to all countries present because requests had not been received from many (b) that we were unwilling to make offers unless the country to whom they were made simultaneously presented offers to us the United Kingdom despatched a message to the United Nations Secretariat stating that they would be prepared to present responses to requests received from other countries who were members of the Preparatory Committee, subject to these being received in sufficient time for examination prior to the commencement of the Geneva meeting. They also stated that these responses would be available for circulation to other countries who had exchanged requests with the United Kingdom and were prepared also to respond. This procedure was supported by other Commonwealth countries as the most practical method of commencing the negotiations in Geneva.

Method of Negotiation:

The current discussions are an attempt to discover the reaction of Commonwealth countries at present enjoying a margin of preference to a request involving reduction in this margin. On the basis of these exchanges of views, it is suggested that each country should prepare its first responses to the foreign request. Thereafter, at Geneva, pressure from the United States or other countries for further reductions in margins of preference would result in the negotiations being extended to include the countries affected by the request.

[matter omitted]

[AA : A1068, ER47/1/13]