401 Australian Delegation, Havana, to Cabinet Sub-Committee on Trade and Employment Conference

Cablegram W122, HAVANA, 25 February 1948, 6.58 p.m.

SECRET

Interpretative note to Article 89.[1] See your No. H45 of 1[3]th February and earlier cables.

It has been difficult to secure United States agreement to interpretative note in the form we had suggested and they have refused to agree to exchange of letters on lines you requested earlier. They point out that this is a delicate subject for them and they are unwilling to stress too clearly in public the relation between Article 89 and possible unemployment in the United States and by such an exchange of letters to admit that the Article i[s] directed specifically against them ... They have however eventually agreed that there should be a note in the sub-Committee's report in the following terms - 'The sub-Committee was of the opinion that a Member might properly have recourse to Article 89 if the measures adopted by another Member under the Provisions of Article 3 did not produce the effects which they were designed to achieve and this did not result in such benefits as might reasonably be anticipated', and have actively supported its inclusion during the discussion.

Although not going as far as we had originally hoped we think this note is reasonably satisfactory and in particular would draw attention to the force of the word 'designed'. Article 3 requires a Member to 'take action designed to achieve and maintain full and productive employment etc.' thus wording of this note will give opportunity to act under Article 89 firstly if full employment measures taken by a country were not successful and secondly for breach of undertaking if a Member did not take action designed to produce full employment.

[1] Article 89 (Consultation between Members) provided for a member to seek redress if it believed that benefits accruing to it under the charter were being nullified or impaired by the failure of another member to observe obligations under the charter. Australia argued that 'the maintenance of full employment and effective demand are benefits which accrue to each nation impliedly under the charter and which would found a complaint under Article 89' (cablegram H14, dispatched 13 January 1948).

[AA : A1068, ER47/1/33]