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95 Statement by Coombs to United States Officials [1]

(extract) SYDNEY, 30 August 1946

We feel to some extent that this document fails to give sufficient
emphasis to the measures which can be taken by individual nations
and by nations in concert aimed at the expansion of international
demand upon which, basically, international trade depends. We
have, as you know, placed considerable emphasis in previous
discussions upon responsibility of individual countries to
maintain domestic conditions of employment and production, which
will enable them to contribute fully to international trade. In
our opinion, the most important factors determining the level of
international trade are the levels of employment, and therefore of
incomes, which determine the demand for goods in the major
industrial countries of the world. When I say the major industrial
countries I am not suggesting that the responsibility lies with
them alone, but because of their size they have a determining
influence on world economic conditions. Therefore what happens
within their borders is of vital importance to the rest of the
world. Consequently it is essential to the expansion of world
trade that all countries, and particularly the major industrial
countries, should recognise and accept a responsibility to the
rest of the world in relation to their own domestic policy so far
as it is capable of influencing the level of employment and
therefore the level of incomes of their own people. With that in
mind we have in previous discussions emphasised the need for some
sort of undertaking by the participating countries in relation to
employment. Those are met to some extent by the content of the
present draft where certain undertakings in relation to employment
are embodied. We have certain detailed suggestions to make about
those later. We agree that, to some extent, our point has been
met, but we feel they do not by any means go far enough towards
the general idea which we have, that is, that any approach to the
problem of international trade should include in it positive
measures designed to raise the volume of world trade by raising
the capacity of countries participating in it to buy other
people's goods.

In our opinion there are three main responsibilities which devolve
on countries in this way. The first is to maintain a level of
employment in its own country by which it ensures that its people
have incomes with which to buy goods produced in their own country
and goods produced in others.

Secondly, we think they have a responsibility steadily to increase
their own levels of productivity, to develop their own resources
so that their capacity to spend at home and abroad increases
progressively. Thirdly, we think that a country has a
responsibility to use to the full all the resources which it
possesses in the international field currently. It seems to us
that if a country does that-if it sees that its people have
incomes to spend and if they are permitted, in fact, encouraged,
to spend those incomes abroad, if required up to the limit of the
international resources which the country has, and if they are
developing their own resources in a way which raises their
standards of productivity, and therefore of income, they will be
contributing practically, to the greatest extent possible to the
development of international trade and to employment of other
countries. The modifications upon that which may be imposed by
trade restrictions are, in our opinion, of secondary importance,
assuming that we exclude the more extreme forms of economic
nationalism which are aggressive in their origin.

So that is the general point of view without discussing the
details of the document. We would say that while it has employment
provisions in it they are not entirely satisfactory, that, on the
other hand, it makes no provision for participating countries
accepting the obligation to see that their domestic policy is such
that they use to the full their current international resources,
and finally that there is no provision for enabling or assisting
countries whose development lags behind that of the rest of the
world, or which have potentialities of further development, to
undertake that development. In fact, in our opinion the net effect
of some of the provisions of the document as it at present stands,
would be to 'fossilise' if I can use that word-production and
trade substantially in patterns which exist in the world at the
present time. It would make it more difficult for changes to be
made which would involve a radical shift in production of certain
classes of goods between countries now producing them and other
countries which perhaps have equally satisfactory basic resources
for their production but which have not yet progressed far, if at
all, in the use of these resources for such production. In that
respect we feel there is an underlying assumption that the present
distribution of production and therefore of trade is in some way
natural, and therefore based on the most efficient use of
resources. Whereas it would appear to us largely an historical
matter that we have the present distribution of production, and
there is no reason to believe, in fact there is every reason to
doubt, that a more effective allocation of resources is not
possible if resources, particularly in the undeveloped countries
of the world, can be rapidly developed.

We believe that such development, so far from reducing world
trade, will very greatly expand it. In fact, the industrialisation
for instance first of Europe and then of U.S.A. at what appeared
to be in the first instance at the expense of the United Kingdom,
certainly in our opinion has resulted in a considerable expansion
of the level of world trade. So that for that reason, we feel that
this document should be strengthened on the employment side, and
should include some undertaking by the participating countries in
relation to the expenditure of their current international income,
and furthermore should provide some positive measures for
assisting countries with industrial and other productive potential
to realise that potential. And we would like later to make
suggestions as to how that might be achieved.

[matter omitted]

1 U.S. Department of State officials Winthrop G. Brown, Chief of
the Division of Commercial Policy, and William T. Phillips,
Special Assistant in the Commercial Policy Division on
International Resources, visited Australia from 29 August to 4
September to discuss the U.S. Draft Charter for an International
Trade Organization (to be released for publication on 20
September). Other U.S. representatives, at these informal
discussions were Lacey C. Zapf, Commercial Attache and Alfred
Whitney, Economic Analyst, of the U.S. Embassy in Canberra, and
Martin B. Dale and Roger F. Stiles, U.S. Vice-Consuls in Sydney.

The seventeen Australians present, led by Dr H. C. Coombs,
included representatives of the Departments of Post-war
Reconstruction, Treasury, Trade and Customs, Commerce and
Agriculture and of the Commonwealth Bank. L. H. E. Bury
represented the External Affairs Dept. This extract is taken from
Coombs' opening address to the meeting.

[AA:CP434/1, BUNDLE 13/9391/18]
Last Updated: 11 September 2013
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