1. Your telegram of November 27, 1943, No. 287, Chinese
Extraterritoriality. [1] Please reply to Dr. Evatt along the
following lines.

2. When we communicated with Australia on this subject in February
1943 [2] we were not aware that the Chinese interpretation of the
simple act of abolishing extraterritorial rights would lead to the
placing of missionary and other Canadian property rights in China
in jeopardy. There is evidence now that this is the case and as
our property holdings are very extensive it is essential that they
be protected. You will remember that Dominions Office took this
view in Circular D489 of November 30, 1942. [3]

3. At that time also we were under the impression that the
inclusion of a 'travel, reside and carry on commerce' clause would
involve rights of entry which we were not prepared to accord. We
have since been informed, and the text of our present draft
assures, that this clause refers only to such rights as have been
'long accorded' to Chinese nationals by Canada.

4. Finally, public opinion in Canada has been modified by
considerations similar to those which in the United States have
resulted in Congress according an immigration quota to China.

5. Under these circumstances we are disposed to conclude an
agreement with China which will preserve our essential property
rights in that country and yet, without conceding any vital
principle, meet some parts of the Chinese case.

6. In the Treaty which we now propose to conclude the only changes
from our original intention are the inclusion of articles which:

(a) provide protection for Canadian property rights in China;

(b) provide for consular notification in the case of the arrest of
Canadian nationals in China or Chinese nationals in Canada;

(c) recognize, on a reciprocal basis, the right of Chinese to
travel, reside and carry on commerce' in Canada insofar as those
rights have already been 'long accorded';

(d) commit both countries to enter into negotiations, after the
conclusion of the war, for the conclusion of a 'comprehensive
modern treaty or treaties of friendship, commerce, navigation and
consular rights'.

Of these (a) and (b) are obviously in our favour; (c) is a gesture
as it merely confirms present practice, and (d) refers to a plan
which in any case we would be disposed to favour. (In connection
with (d) it will be noted that a reciprocal clause granting most
favoured nation treatment in regard to immigration is not a
necessary element in such a treaty and no such clause will be
included in any agreement we may make with China.) In other words,
it is our view that in agreeing to the conclusion of a treaty of
this kind we will be strengthening our own position in a very
material way, without conceding any rights which could be invoked
to our disadvantage. There are no 'vague general propositions' in
our text and while we may not be wholly cognizant of the
Australian point of view, we can see nothing in the principles
involved in the proposed Treaty that would in any way affect the
maintenance of, for example, the 'White Australia' policy.

7. It is hoped that these fuller explanations will remove Dr.

Evatt's fear that the early conclusion of a treaty along the lines
proposed between Canada and China would embarrass the Australian
Government.

8. In connection with this whole matter you should inform Dr.

Evatt that we propose shortly to discuss with the Chinese Minister
[4] the conclusion of an Immigration Agreement which, if accepted
by the Chinese, would enable us to rescind the Chinese Immigration
Act against which considerable hostility has been aroused in
Canada as well as in China. Our proposed agreement would prohibit
immigration entirely but would permit the reciprocal admission of
restricted numbers of persons of specified categories for limited
periods and defined purposes. A more detailed description of our
proposals will be given to the Australian High Commissioner in
Ottawa shortly for transmission to Canberra.