It is a great disappointment to me that our two Governments have
not been able to work together at this Conference [1] towards an
international agreement on domestic policies. Your statement [2]
to the Full Conference recognising domestic policies were of
international concern, gave encouragement to all small nations;

but now it seems we are to be disappointed.

The facts as I see them are as follows:

1. You made your statement enunciating the general principle that
domestic policies were of international concern.

2. I made a statement and made reference to a draft agreement on
employment policies which would have implemented your general
principle, and then made the suggestion of a further conference to
consider this draft. [3]

3. Your Delegation then worked on an alternative draft employment
agreement, and after a few days made available a copy to us. [4]
This draft admitted the principle that domestic policies were of
international concern; but committed no government to any binding
obligation to maintain employment or consult if unemployment
became severe.

4. Dr. Burton of my Delegation suggested to Mr. Hinrichs [5] of
your Delegation that our two drafts might be brought closer
together before submission to the Conference, and my understanding
obtained informally from Mr. Goodrich was to that effect. It was
suggested further that agreement might be obtained between British
Empire and some European countries before submission to the
Conference.

5. Without prior warning you submitted your draft to the Committee
on Items One and Two [6], even though your Delegation was aware
that the draft was unsatisfactory to us.

6. You gave a press interview or press statement outlining this
draft, and implying that some government obligation was involved.

7. In these circumstances we found it necessary to circulate our
draft to the Committee on Items One and Two as an amendment to
yours.

I have been in close touch with my Government on this matter, and
in direct communication with the Foreign Minister, Dr. Evatt, who
some years ago was the first to put forward the principle you
enunciated and the idea of an international agreement. My
Government is quite emphatic that obligations such as we included
in our draft are an essential part of the obligation implied in
Article VII of the Mutual Aid Agreement. We regard an employment
agreement as vital in the context of the whole Article VII
discussions.

I am approaching you direct on this matter because I feel certain
that the facts of the case cannot be known to you. We had put
forward a draft. We are now presented with a much weaker draft,
and so far a refusal to consider our suggestions which were before
the Conference from the beginning. Our only conclusion is, if this
has been done with your full knowledge, that the United States
Government is not prepared to carry out the obligations which
appear to us to be absolutely essential to the implementation of
Article VII and which you admitted in your own statement as being
reasonable.

In these circumstances I feel forced to put quite definitely the
position of my Government, and I intend to do this at the first
opportunity along the lines of the statement which I now attach
for your information.[7] I am most eager to evolve some way in
which we may co-operate to further the aims of our two Governments
in relation to Article VII and post-war economic collaboration
generally, and to avoid any situation which might in any way
prejudice post-war economic collaboration amongst the United
Nations. I shall be happy to be free at any time you may wish to
discuss these matters with me, and to consider with you ways in
which the desires of our two Governments can be met.

In order that you may know how very serious the matter of an
employment agreement is to us, I am attaching also a document
which will show you at a glance how dependent the Australian
economy is on world trade. [8]

J. A. BEASLEY