International Labour Office Report 17.

1. Even though we succeed eventually with employment agreements
our position in regard to other schemes will not necessarily be
secure. We shall be pressed strongly to accept commercial policy
proposals on the grounds that we have secured the employment
agreement. By implication we would be accepting an approach to
international economic collaboration quite inconsistent with, and
perhaps on political and technical grounds fatal to, the success
of our employment approach.

2. A logical application of full employment to commercial policy
is:-

(a) Extension of the Australia - New Zealand idea of exchanging
information on industrial development and dovetailing developments
[2]; and
(b) Examination of requirements of and arrangements for export on
credit terms to less developed countries. We do not want, after
the war, all countries to turn war production over to the same
kind of peace-time goods, as this would lead to relative over-
production in particular industries and resultant depressed
conditions which would spread. But we do want to have the
opportunity to employ usefully our increased industrial
potentialities. We do want to claim for small countries the right
to develop industries producing light manufactures and obligations
on the part of larger economies not to prevent this orderly
development. This approach is positive and emphasises the
employment of available resources and no restrictions on
production which is an implication of tariff reduction approach to
commercial policy.

3. The logical organisation to secure increased potentialities and
possible markets, is the International Labour Office, as sources
of information are the Governments and Chambers of Manufactures.

Workers are also concerned.

4. The advantages of using the I.L.O. are great. Matters of the
industrial development would be placed in the hands of
representatives of the Governments, Workers and industries of all
countries and not in the hands of commercial interests of the few
bigger economics who are interested only in finding markets.

5. If such proposals were adopted by the I.L.O. the ground would
be cut from under the feet of those who are pressing for
commercial organisation for purposes of tariff supervision. Once
the I.L.O. had commenced exchange of information on industrial
developments and by implication admitted the validity of the
claims of small countries it would exercise influence on the field
of tariff reform. We would then have a useful platform and a most
receptive audience on questions of commercial politics.

6. Please advise me as soon as possible if I may put this proposal
to the Committee, on item 1 [3] which is now set up. I believe it
may lead to a practical solution to our difficulties and one which
would be supported by Labour and Manufactures in Australia and by
the large majority here thinking along our lines. Tariff reduction
approach to commercial policy would be placed in perspective as
being negative. At least we could suggest that tariff discussions
be deferred until exchange of information on industrial programmes
had taken place and the basic facts on markets known.

7. In any case we should keep in mind the possibility of
Australian exports of industrial products on a fairly large scale
on terms of credit to under-developed countries. We have not
adopted such a policy in the past but we should keep ourselves
free to do so in future as part of assurance against the falling
off of demand and unemployment in our industries.

8. I have sent these ideas after discussions with several people
here and with some appreciation of the thoughts and solutions
which we may have to guard against and I hope that they are
helpful.