AUSTRALIA - NEW ZEALAND ECONOMIC AND WELFARE DISCUSSIONS
WELLINGTON-JANUARY, 1945

I have the honour to forward the Summary of Proceedings of the
Australian - New Zealand economic and welfare discussions held in
Wellington between 23rd and 29th January 1945. From this report
you will see that the discussions were grouped under the following
headings:-

Employment;

Commercial Policy;

Development of Trade, and
Miscellaneous Items.

2. EMPLOYMENT
Consideration of Australia's detailed proposals for an
international
employment agreement occupied a great deal of the time of the
discussions. As had emerged from the preceding exchange of
telegrams [1], there was no disagreement with the Australian
proposal that every effort should be made to push ahead with the
joint approach to the United States and later with arrangements
for an Agenda Conference between officials of the United States,
the United Kingdom, Australia and New Zealand to prepare the
ground for a full international conference.

3. On the other hand, the New Zealand representatives showed
considerable reluctance to accept the detailed Australian
statement [2] summarising the Commonwealth's attitude regarding
the importance of an Employment Agreement and outlining the points
deemed necessary for inclusion in any international agreement on
this subject. The New Zealanders were not willing to accept this
document in toto and in addition were not in a position to make
detailed and constructive criticism of the Australian draft.

4. The discussions on this question revealed that New Zealand
officials had not given the same thought and preparation to this
topic as had been given in Australia. They confirmed my previous
opinion that while the Prime Minister, Mr. Fraser, is fully
convinced of the importance of the employment approach, some other
members of his Government and senior officials are by no means so
enthusiastic nor are they so conversant with the essential details
as members of the Government and officials in Australia.

[matter omitted ]

6. In conclusion, however, as you will see from the summary of the
proceedings [3], the New Zealand representatives agreed to the
outline of the fundamental objectives of the employment approach
as set out in the Australian statement, and they undertook to
convey as soon as possible to Australia any suggestions or
comments as to re-drafting.

7. There was some opposition to the Australian contention that an
Employment Agreement should be administered by a separate
international organisation, as the New Zealand Department of
External Affairs' representative held strongly that this function
should come under the Economic and Welfare Council of the proposed
World Organisation. He was not convinced by the Australian
argument that already other activities in the economic and welfare
sphere such as Food and Agriculture and Relief were being
administered by separate international organisations; which might
in due time be brought under the control of the proposed World
Organisation, nor did he agree with the argument that to plan an
employment organisation on a different basis might subordinate its
importance to already existing bodies. In view of the New Zealand
Government's consistent policy of support for the League of
Nations and its interest in the new World Organisation, it may
well be that they will wish to continue their argument on this
point. You will see that in the summary of proceedings it was
agreed only that 'an appropriate international organisation should
be set up', leaving the way open for discussions later whether it
is to be a separate body or one coming within the Economic and
Social Council of the World Organisation.

[matter omitted ]

10. COMMERCIAL POLICY
In the discussion on commercial policy there was revealed I think,
a lack of clear understanding on the part of the New Zealand
delegates of the interdependence of international economic policy
and domestic employment. Apart from this fundamental consideration
few differences emerged in the viewpoints to be adopted in the
event of international talks on world trade later this year. It
should be remembered however that New Zealand has not been
concerned with a wide range of commodities like Australia and
apart from wool exports is interested only in meat and dairy
products.

11. In regard to tariffs, representatives of both countries
foresaw practical difficulties in accepting any formula cuts. The
New Zealand delegates expressed the definite view that the
granting of subsidies to industries could not be employed
successfully as a substitute for protective tariffs but on this
point the Australian representatives did not express any
conclusive view. Both parties agreed that the abandonment of
Imperial preferences could not be considered without drastic
reductions or compensating benefits elsewhere.

12. In the discussions on quantitative restrictions, the New
Zealand spokesman expressed the view that import control would be
retained for purposes of national security and exchange
considerations. It was clear, however, from remarks by other New
Zealand delegates that import control machinery was also regarded
as a means of selecting imports and protecting industry.

Australia, which has made use of the import control method for
exchange conservation mainly and not as a protective device, is
apparently not so concerned with overseas criticism of this method
of restricting trade.

13. There was some discussion on the question of export subsidies
and the United Kingdom proposals regarding the quantitative
regulation of imports of foodstuffs. It was felt that further
clarification of overseas criticism of assistance to exports
should be obtained, as for example, it was not clear to New
Zealand whether guaranteed minimum prices to dairy farmers were in
question. Agreement was reached to a New Zealand draft telegram to
the United Kingdom requesting further information concerning the
regulation of imports.

14. On the subject of State trading the New Zealand delegation was
most interested in retaining the right to continue with their
organised marketing arrangements which, as you are aware, were in
operation some years prior to the war. No definition of State
trading was given but both countries felt that they should be free
to enter into contracts for the bulk sale and purchase of goods in
certain circumstances.

15. The development of international commodity agreements was
recognised as providing a possible stabilising influence in world
trade, provided such arrangements were not restrictive in
character. Both delegations agreed to the establishment of a
commercial policy organisation designed generally to examine ways
and means of improving international commercial relations.

16. DEVELOPMENT OF TRADE
Perhaps the most important feature of the discussions on the
development of trade between Australia and New Zealand lay in the
acceptance by the New Zealand officials of the clear statement by
the Australian spokesman that by the nature of things there was no
reasonable hope of reaching any equilibrium in the balance of
trade between
the two countries.

17. As I have reported from time to time, there has been criticism
in the press and from organisations such as the United Kingdom
Importers Representatives Association concerning the adverse
balance of trade with Australia. While it is impracticable to
prevent such press or public statements, it is now reasonable to
assume that the New Zealand Government has carefully considered
the position and has decided to accept it. Ample opportunity was
afforded by the talks for New Zealand to bring forward any
specific trade difficulties but the only item mentioned was that
of the possible exports to Australia at a later date of soft-wood
timbers and other wood products. It is realised in New Zealand
that Australia is ready to take large quantities of timber, also
fish, vegetable seeds and fodder from New Zealand when these
commodities are available.

[matter omitted ]