Your S.15 [1] and S.16. [2] Extraterritoriality.

1. Minister considers that attitude of Chinese as evidenced by
their counter-draft demonstrates need for utmost caution in this
matter and feels now that even on basis of your draft the Treaty
would be liable to misinterpretation in Australia.

2. Commonwealth Government will definitely not agree to inclusion
of Articles 5, 6 or 7. While there is not the same objection to 6
and
7 as to 5, your view is agreed with that we cannot go on with 6
and 7 (even if modified) and reject 5. In circumstances, to avoid
embarrassments which seem certain to arise if negotiations
continue on present basis, Minister desires simple exchange of
Notes setting out in simplest declaration that Commonwealth
Government regards the Treaty concluded on 11th January, 1943,
between His Majesty the King and President [3] in so far as it
refers to question of abrogation of extraterritorial rights, as
governing the mutual relations of the Commonwealth of Australia
and China.