PART I

Our telegram No. 25 of 6th January Trade Negotiations. [1] In our
summing up of the position reached in these discussions we are
concerned at the Stiffening attitude shown by American officials
in their efforts to remove as many as possible of the so-called
discriminatory preferences operating in favour of Empire trade. We
have already stated that we are prepared, in association with
other British countries and the United States, to adjust our
external trade policies in conformity with a more liberal plan of
international trade, but the extent of our progress towards this
objective at the present time must be limited by the degree to
which the United States are willing and able to move in the same
direction.

We fully appreciate the fact that the United States are bound by
the provisions of the Trade Agreements Act both as regards the
purpose of the Act in promoting American exports and also the
limitation which it imposes on the reduction of existing import
duties. It is equally desirable and more necessary for Australia
to expand her export trade and the proposed agreement must be such
as will assist both countries in this respect. At the same time,
so far as Australia is concerned, the proposed agreement would
fail in its purpose if it accentuated in any marked degree the
balance of merchandise trade between the two countries of the pre-
war period.

In your Trams 12, Section 5, of 7th July last [2] you state that
in the American view the only benefit we can expect is from
products such as wool and foodstuffs upon which duties will still
be high after 50 per cent reduction. We agree with this view.

Although we have not yet received the American responses to our
requests on a number of items it is obvious that, even if these
requests were met in full, the resultant benefits would be
moderate and the market prospects for these primary products would
remain uncertain.

On the other hand our proposed concessions to the United States
offer wide and certain benefits to American trade. Imports into
Australia from the United States consist largely of manufactured
commodities, in which supply can readily be related to demand and
in which full advantage can accordingly be taken of any tariff
concessions received.

Although it is obviously impossible to assess the relative values
of the concessions proposed with any degree of accuracy, it is
considered that, in terms of increased trading opportunities, the
advantage lies with the United States.

American insistence at this stage in pressing for concessions
which we find extremely difficult to meet indicates possible
dangers to Australia in these negotiations if that attitude is
maintained. In the post-war period Australia will have a major
problem not only in placing her demobilised forces in suitable
employment in industry, but also in transferring the majority of
employees now engaged in purely war work to civilian production.

As regards some specific items no basis exists at the present time
on which we can safely offer any worthwhile concession and it is
desirable that these items be reserved for consideration in
subsequent negotiations for a second agreement at a later date. It
is expected that the question of what the United States officials
regard as excessive preferences will come under consideration in
the projected discussions on Article VII of the Mutual Aid
Agreement and an appropriate policy may then be devised in
association with steps to be taken by the United States for
reductions in excessive tariff levels.

[Parts II and III have been omitted. They set out details of
tariff concessions the Commonwealth Govt was prepared to make on
individual items.]