Discussion today [1] indicated that absence of provision for
negotiation between Commonwealth countries may be the subject of
question and comment and furthermore that this may be attributed
to Australian attitude. This possibility should be taken into
account by Cabinet sub-Committee in considering nature of reply to
United Kingdom. [2] There are two issues confused in United
Kingdom request to us-
(A) Scope and magnitude of concessions Australia is prepared to
make to the United Kingdom. That there will be some cessions is
clear even if these are confined to reductions in B.P.T. rates
made incidentally to our examination of foreign requests. Real
issue between us and United Kingdom is whether we are prepared to
go beyond these incidental reductions and consider more widespread
reductions in B.P.T. protective items.

(B) Way in which concessions are exchanged.

Possibilities are-
(i) simple exchange of letters which would be taken as modifying
existing Ottawa Agreement,
(ii) an amendment of Ottawa Agreement or a new agreement replacing
it,
(iii) an agreement which would be one of a series being negotiated
here in Geneva. This presumably is what United Kingdom wishes and
may necessitate some modification of existing Ottawa Agreement.

The second question, i.e. form of agreement appears to me to be
unimportant but as I was anxious that it should not be possible
for Australia to be embarrassed by being held responsible for the
absence of provision for inter-Commonwealth negotiations I
informed United Kingdom Delegation today that I was sure
Australian Government would be willing to agree now that
negotiations should formally take place here provided that it was
quite clear that this did not imply any undertaking as to the
nature or extent of concession we were prepared to grant. However,
United Kingdom and Canadian Delegates urged that it would be
preferable to leave position as it stands at present for the time
being at least. I agreed but I think purpose of protecting
Australia from charge of responsibility for Commonwealth attitude
has been achieved.

It would, I think, be wise to amend draft reply [3] [to] United
Kingdom to make it clear that we would be prepared to list
Australia/United Kingdom negotiations along with those between
other countries at Geneva, if this seems advisable while reserving
wholly our position as to the nature and extent of our concessions
and as to whether supplementary agreement on non-tariff matters
might be necessary.