EXPORT OF WARLKE STORES
Arising out of the question of the sales of ammunition, equipment, etc. to the Netherlands East Indies authorities, the Minister for External Affairs wrote to the Acting Minister for Defence (letter dated 14th February 1946, copy to the Prime Minister) as follows:
'... I should appreciate it if the following undertaking could be reached. In the event of the surplus stocks of any munitions being placed for disposal in the hands of the Commonwealth Disposals Commission, and an offer of purchase being received from any foreign Government, the matter should again be referred to me, before [any]  sale is effected for consideration in the light of political events at the time the offer is received.'
The Acting Minister for Defence concurred with this suggestion, and subsequent (N.E.I.) offers of purchase of warlike stores were referred to the Department of External Affairs.
2. Towards the end of 1947, after the British transfer of power on 15th August, the question of warlike supplies to India and Pakistan arose. The matter was discussed between the Departments of Defence and External Affairs, and, in consonance with the existing policy as set out in the Ministerial correspondence referred to above, it was agreed that no arms or warlike stores should be permitted to leave Australia for any country until the circumstances in [each] case had been fully investigated beforehand by the Department of External Affairs, in the light of the political conditions then obtaining in the country concerned.
3. With regard to India and Pakistan, in view of the current dispute over Kashmir, an embargo was placed on the export of warlike stores to India and Pakistan. The embargo, however, was temporary, pending a settlement of the Kashmir dispute, and as such represented the short-term view only.
4. The Indian Government has now approached the Australian Government regarding the supply of mortar bombs to India during 1948-49.
5. It is felt that a modification of the existing ban on the export of warlike stores to India is not yet advisable, for the following reasons:-
(1) Politically conditions in India are still unstable, both internally (Hyderabad) and externally, i.e. vis-a-vis Pakistan (Kashmir). To send warlike stores to India therefore, at the present juncture, might aggravate the situation.
(2) Pakistan has already made three approaches regarding warlike supplies from Australia. In each case the reply has been as follows:-
'It is regretted that established Government policy does not permit the export of warlike stores to any country. Any similar requests from India would meet with the same reply.'
Under these circumstances, it is not considered feasible to supply to India what was denied to Pakistan.
(3) The normal warlike supplies for India and Pakistan come from the United Kingdom. Supplies from Australia would not be normal, and Pakistan would be almost certain ultimately to learn of such supplies to India.
(4) It is felt that India's present attitude to Hyderabad leaves not a little to be desired, and the same applies, although to a lesser extent, to Kashmir.
6. Under the circumstances, therefore, it is felt that the time is not yet ripe for any modification of the existing embargo on warlike stores to India-Pakistan, and therefore that the present tentative request for mortar bombs from the Indian Government should be refused.
7. The alternative would be to reconsider the requests formerly received from Pakistan and consider them along with the latest requests from India. It would be necessary, as the United Kingdom Government does, when supplying any items to one Dominion, to let the other Dominion have full particulars thereof 8. This raises a broader question of policy, i.e. whether Australia should adopt a firm policy of not exporting munitions of war to any country except in fulfilment of treaty obligations or commitments to the United Nations. If this were the case the next step should be taken of proposing an International Convention such as was put before the League of Nations in 1925. This convention carefully defined 'Munitions of war', provided authorities to approve [of] export for the policing of the Convention, and so on.
As a first step the Minister for External Affairs might be instructed to discuss the proposal with the British Commonwealth representatives at the forthcoming Imperial Conference. 
It is recommended:-
(a) that the request of the Indian Government be not met:
(b) that a public statement of policy on the broader question be made so that the position will be clear to all governments and none will feel discrimination in the event of an application being rejected:
(c) an instruction be given to the Minister for External Affairs to discuss the broader question with members of the British Commonwealth at the forthcoming Imperial Conference.