The Commonwealth discussions commenced in London on the 11th March
at Spencer House, St. James's Place. Representatives from the
following countries are attending:

United Kingdom
Canada
Australia
New Zealand
South Africa
Eire
India
Newfoundland
Southern Rhodesia
Burma
Ceylon
Colonies.

The work of the Conference has been sub-divided into two main
groups. The first consists of a number of general topics which are
being dealt with by one Committee-a copy of the Agenda is
enclosed. The other section of the work relates to an examination
of the responses which each Commonwealth country proposes to make
to the United States requests for tariff reductions. The procedure
has been to establish a Committee for each of the Commonwealth
countries, and representatives of all other Commonwealth countries
that are interested attend these meetings and state their
reactions to the proposed narrowing in the margin of preference.

There is a number of particular matters which have been discussed
and upon which I think some brief notes may be useful.

British Preferential Rate of Duty:

The form of the United States requests provide for a narrowing in
the margin of preference either by a reduction in the most
favoured nation rate of duty, by an increase in the British
preferential rate or by a combination of these two methods.

The Canadian Delegation expressed considerable concern at the
possibility of duties being imposed or increased on goods coming
from Commonwealth sources. In general, this was supported by other
countries who recognised, however, that there were particular
cases in which an increase in a Commonwealth duty might be the
only satisfactory way of narrowing a margin of preference. In
several instances the United Kingdom has proposed this course,
particularly in instances in which a further reduction in the most
favoured nation rate of duty would seriously affect the protection
afforded to local producers.

We have made it clear that, while in general, we would wish to
avoid raising B.P. rates as means of reducing margins, it may in
some cases be necessary if we are to give effective protection to
Australian industries.

Tabling of Responses:

Following a discussion in which we made it clear
(a) that we would not make offers to all countries present because
requests had not been received from many
(b) that we were unwilling to make offers unless the country to
whom they were made simultaneously presented offers to us
the United Kingdom despatched a message to the United Nations
Secretariat stating that they would be prepared to present
responses to requests received from other countries who were
members of the Preparatory Committee, subject to these being
received in sufficient time for examination prior to the
commencement of the Geneva meeting. They also stated that these
responses would be available for circulation to other countries
who had exchanged requests with the United Kingdom and were
prepared also to respond. This procedure was supported by other
Commonwealth countries as the most practical method of commencing
the negotiations in Geneva.

Method of Negotiation:

The current discussions are an attempt to discover the reaction of
Commonwealth countries at present enjoying a margin of preference
to a request involving reduction in this margin. On the basis of
these exchanges of views, it is suggested that each country should
prepare its first responses to the foreign request. Thereafter, at
Geneva, pressure from the United States or other countries for
further reductions in margins of preference would result in the
negotiations being extended to include the countries affected by
the request.

[matter omitted]