CANADIAN MUTUAL AID
PROPOSED AGREEMENT ON GENERAL PRINCIPLES

The Problem
1. Canada desires to conclude with Australia, and other
prospective participants in Mutual Aid, an agreement on the
general principles relating to the supply of goods by Canada under
the Mutual Aid plan. A tentative draft of the agreement was
submitted to us on 4th September, 1943. [1]

2. The third recital in the preamble of this draft read as
follows:-

'Where it is expedient that conditions upon which such supplies
are made available by one United Nation to another should not be
such as to burden post war commerce, or lead to the imposition of
trade restrictions, or otherwise prejudice a just and enduring
peace and-'

3. This recital refers to post war economic policy and, because it
might lead to misunderstanding, we informed Canada that we would
prefer its deletion. [2] In view of Canada's insistence [3],
however, and the fact that it was not an operative clause, we
decided not to press our objection. [4] At the same time it was
made clear that we would take the strongest exception to the
inclusion of an operative clause on the lines of Article VII of
the U.K.-U.S. Mutual Aid agreement.

4. On 6th November, 1943, the Australian High Commissioner advised
that, in spite of his representations, the Canadian Government had
decided to abandon the third recital and to insert instead in the
main body of the agreement an article along the lines of Article
VII of the U.S.-U.K. agreement. [5] This was a complete departure
from the first proposal. The article now proposed by the Canadian
Government reads as follows:-

'. . . The Governments of Canada and . . . reaffirm their desire
to promote mutually advantageous economic relations between their
countries and throughout the world. They declare that their
guiding purposes include the adoption of measures designed to
promote employment, the production and consumption of goods and
the expansion of International commerce by the reduction of
tariffs and other trade barriers with the object of contributing
to the attainment of all the economic objectives set forth in the
Declaration of 14th August, 1941, known as the Atlantic Charter.'

A major difference between this article and the earlier preamble
is the specific reference to the reduction of tariffs and other
trade barriers.

5. Accordingly the High Commissioner was instructed to inform the
Canadian Prime Minister that the proposed article which suggests
tariff commitments would receive wide publicity here and provoke
controversy which would be most embarrassing, and to express our
hope that the agreement with Canada would be confined solely to
the actual provisions for implementing Mutual Aid. [6]

6. The Prime Minister replied, however, that it was considered
essential to include in all the agreements a general declaration
of liberal economic purposes, particularly as strong criticism of
the Mutual Aid plan was anticipated at the next session of
Parliament. The Prime Minister stated that the omission of the
reference to the reduction of tariffs would weaken greatly the
utility of the proposed article as part of the reply to the
domestic critics and expressed the hope that Australia would agree
to the article. Full text of the telegram from High Commissioner
is attached (Appendix A). [7]

7. The following courses of action are now open to the
Commonwealth:-

(a) Accept the proposed article entirely.

(b) Reject the proposed article entirely.

(c) Inform Canada-
(i) that we cannot accept inclusion within the body of the
agreement of clause referring specifically to the reduction of
tariffs and other trade barriers,
(ii) that we would be prepared to accept a suitable statement in
the preamble stating that Australia and Canada have accepted in
principle the general objectives set forth in the Atlantic Charter
and the U.S.-U.K. Mutual Aid agreement.

8. Text of Article VII is given as Appendix B. [8]

9. There are advantages in agreeing to Canada's suggestion,
rejection of which may lead to breakdown of negotiations. The
dangers of
Australia's being used for the local political purposes of the
Canadian Government are equally obvious.

10. The question is which of the courses in paragraph 7 above
should be adopted. [9]

J. B. CHIFLEY

H. V. EVATT