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Historical documents

498 Legation in Washington to Department of External Affairs

Cablegram 780 WASHINGTON, 27 May 1942, 12.31 a.m.


From McCarthy. [1]

Your cable 614 May 21st. [2] The substance of the cable was
conveyed by me to Hawkins [3] when we discussed arrangements for
the re-opening of our trade agreement discussions. He said that
subject to detailed scrutiny of views stated in the cable,
speaking for himself, he considered that there was nothing in
principle that he could question from the American standpoint,
including the idea of America's responsibility as a creditor
country. Regarding Article 7 he said that the action of the
Australian Government in deciding to go on with the treaty and in
raising at the same time the question of Article 7 was quite sound
and in fact opportune. It had just been decided that the
'Interdepartmental Committee for Commercial Policy and Trade
Agreements' (he is chairman), with certain other individuals,
engage in studies relative to Article 7. He could say it was the
view of the State Department that the carrying on of trade
agreement negotiations side by side with Article 7 discussions was
the best way to meet the objective set out in Article 7 though
trade agreements should not wait upon decisions under Article 7.

He visualised concrete decisions being made under Article 7 from
time to time which might in themselves broaden trade opportunities
or might make treaties more effective. For example some time ago
we discussed a clause (an escape clause) which would safeguard
Australia's position in the immediate post-war period if she had
exchange difficulties. Action under Article 7 might obviate
recourse to this clause or shorten the period over which it would
be required. He also accepted without reserve the example that
under Article 7 America might agree to review trade agreement
legislation to empower them to grant more than 50% reductions in
duty. This would influence agreements under negotiation at the
time and where agreements already made facilitate supplementary

Brigden [4] and I saw the British Embassy Representative (Opie
[5]) who dealt with the Mutual Aid Agreement when under
negotiation and it was learnt that very recently the United
Kingdom people both here and in London had been giving some
thought to the question of opening conversations and how they
could best be handled. Procedure has not been decided upon but an
impression has arisen in England that discussions (opening
discussions at any rate) will be held in London.

Our sub-section learnt confidentially that strong pressure will be
brought to have them here. Opie said that the association of
current trade agreement negotiations with Article 7 discussions
was in keeping with their considered views. He also mentioned the
example of American Trade Agreements Legislation being broadened
as a result of conversations under Article 7. He and Phillips [6]
are going to England on a brief visit shortly and on their return
will be able to tell us more.

We gather there has as yet been very little actual discussion
between the U.K. and American officials as to the procedure for
conversations or date of commencement. Our impression is however
that both are considering making a start.

1 Commonwealth Shipping Representative in the United States.

2 Document 493.

3 Chief of Division of Commercial Policy and Agreements, U.S.

State Department.

4 Financial Counsellor at the Legation in Washington.

5 Counsellor and Economic Adviser at the U.K. Embassy in

6 U.K. Treasury representative in the United States.

[AA:A981, USA 203, ii]
Last Updated: 11 September 2013
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