Discussion today  indicated that absence of provision for negotiation between Commonwealth countries may be the subject of question and comment and furthermore that this may be attributed to Australian attitude. This possibility should be taken into account by Cabinet sub-Committee in considering nature of reply to United Kingdom.  There are two issues confused in United Kingdom request to us- (A) Scope and magnitude of concessions Australia is prepared to make to the United Kingdom. That there will be some cessions is clear even if these are confined to reductions in B.P.T. rates made incidentally to our examination of foreign requests. Real issue between us and United Kingdom is whether we are prepared to go beyond these incidental reductions and consider more widespread reductions in B.P.T. protective items.
(B) Way in which concessions are exchanged.
Possibilities are- (i) simple exchange of letters which would be taken as modifying existing Ottawa Agreement, (ii) an amendment of Ottawa Agreement or a new agreement replacing it, (iii) an agreement which would be one of a series being negotiated here in Geneva. This presumably is what United Kingdom wishes and may necessitate some modification of existing Ottawa Agreement.
The second question, i.e. form of agreement appears to me to be unimportant but as I was anxious that it should not be possible for Australia to be embarrassed by being held responsible for the absence of provision for inter-Commonwealth negotiations I informed United Kingdom Delegation today that I was sure Australian Government would be willing to agree now that negotiations should formally take place here provided that it was quite clear that this did not imply any undertaking as to the nature or extent of concession we were prepared to grant. However, United Kingdom and Canadian Delegates urged that it would be preferable to leave position as it stands at present for the time being at least. I agreed but I think purpose of protecting Australia from charge of responsibility for Commonwealth attitude has been achieved.
It would, I think, be wise to amend draft reply  [to] United Kingdom to make it clear that we would be prepared to list Australia/United Kingdom negotiations along with those between other countries at Geneva, if this seems advisable while reserving wholly our position as to the nature and extent of our concessions and as to whether supplementary agreement on non-tariff matters might be necessary.