31 Statement by Evatt at Prime Ministers' Meeting

LONDON, 13 October 1948

STATEMENT ON ECONOMIC AFFAIRS BY AUSTRALIAN DELEGATION

1. In the preliminary remarks which I made on Monday I expressed my admiration for the clarity of the analysis which the Chancellor of the Exchequer had given us as well as for the achievement which it represented. I may say that subsequent more detailed consideration of the content of that statement has confirmed our first impressions of its quality.

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4. This being said I should like now to turn to one or two major issues with which the Paper deals. Firstly, we have studied, with great interest, the plans which the United Kingdom has for its purchases abroad by 1952/1953. Naturally we have looked to the United Kingdom market as certainly the most important market for Australian products, and we have viewed with concern the limitations which it is been found necessary to impose on United Kingdom purchases abroad and particularly in Australia. I am bound to say that we do not find very great comfort in the forecasts embodied in this Paper of those purchases in 1952/1953. I think I am right in saying that you do not anticipate any very substantial increase in your overall purchases, and I also believe that you expect your future purchases in Australia, to remain at about the present level. At the same time you have indicated that you wish us to increase our production for you of certain staple foodstuffs and raw materials. In these circumstances it is apparent that we would have to expand production of the classes of goods which you need at the expense of some of our smaller primary industries. The industries concerned, while not large in the total value of their production, are of very great importance in the structure of our agricultural and rural life, and, furthermore, they are industries whose market has been in the past almost exclusively in this country.

5. You will, I hope, forgive me for saying that in this respect the picture to be drawn from the forecasts which have been presented to us in a very unattractive one, and, indeed, one in which my Government, for economic as well as for political reasons, would be unwilling to concur.

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extraordinary United States' aid by 1952/1953. It does not, however, hope to establish normal trade and payment relations between dollar countries and the rest of the world. It assumes that after 1952/1953 continued restrictions against United States' products will be maintained. Despite this, the Chancellor emphasised in his statement to us on Monday the hope that the United Kingdom has of the full restoration of multilateral trade.

He apparently, therefore, anticipates that at some stage it would be possible to remove restrictions against dollar purchases. We would be glad to hear him amplify his views as to the steps by which this result would be achieved and any views he has as to the period over which progress towards their removal must be spread.

It would also be of interest to know what reaction is expected from the U.S.A. to prolonged continuation of discrimination against their exports, particularly in view of various undertakings to the contrary in international agreements.

14. The fact that discrimination against U.S. goods is expected still to be necessary after 1952 emphasises the fact that further measures including action by the U.S. within its own economy may still be necessary if multilateralism is to be restored. It would be interesting to know whether the Chancellor has views as to how the consideration of such measures is to proceed.

15. judgment as to the speed and certainty with which multilateralism is likely to be restored affects measures which our Governments may be called upon to take in the immediate future. The United Kingdom Government has suggested to Australia, as well as to other sterling area countries, that we should undertake developments designed to supply the United Kingdom with goods previously purchased from the Western Hemisphere. We ourselves have plans of the same kind to reduce our own dependence on supplies from dollar countries. Many of these developments are natural and economic. They fit into the normal developments which would in any case occur. In some cases it may mean lifting a project in the order of priority so as to give it attention at an earlier date than it would otherwise have been considered.

17. But in some cases projects which have been brought forward are economic only if we assume a long continuance of restrictions against dollar goods. There are products which at present the United Kingdom of necessity buys from dollar countries which we could produce although not at prices which would be fully competitive with the normal dollar sources. For some developments this might not be important. For others major diversions of productive effort, and major capital developments may be necessary. It would clearly be unwise for us to embark on developments of this character if in the long run after capital had been expended, and people's lives redirected in new channels we were to find the market on which we had relied disappear in favour of the original and possibly cheaper source.

18. My Government is anxious to expedite development in Australia to the maximum in ways which will assist the United Kingdom.

Insofar as this can be done for industries which are natural and economic to Australia, we will of course proceed with these as part of our programme of development, but in cases where production is of a kind which would compete with normally cheaper supplies from dollar countries, it must be clear that we could not embark upon major developments without very precise long-term assurances as to the security of our market here.

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[AA: M448, 1371]

[13.] The plan, as we have it outlined to us, aims to do without