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36 Cabinet Decision 738

2nd July, 1953

Submission No. 470-Import Policy
The Acting Prime Minister referred to the exchange of cables
between himself and the Prime Minister on the matter of relaxation
of import restrictions. [1]

Cabinet expressed the strong opinion that the balance of advantage
lay greatly in favour of further relaxations of import licensing
control as from 1st July rather than as from 1st October, and
decided to cable its views in some detail to the Prime Minister
and Senator O'Sullivan.

Cabinet subsequently approved a cable in the following terms:-

'At Cabinet meeting today we had further discussion on import
licensing. I mentioned to the full Cabinet the discussion which
took place in the Committee last week and which led to my cable to
you. I also put fully to the Cabinet the message from you and
O'Sullivan in your cable No. 2339.

While we do not under-estimate the considerations mentioned in
your message we are faced with very considerable difficulties here
which are likely to grow more acute rather than less. On the other
hand, we have seen not the slightest indication that action of the
kind we had in view would be ascribed to pressure upon yourself
and O'Sullivan in the United Kingdom.

Cabinet was greatly impressed by the fact that our reserves at the
moment are up around the 550m. mark and that therefore we could
hardly deny that we are in a position to do what we have
undertaken to do, i.e. to dismantle our restrictions as and when
we can. This figure of 550m. will not, of course, be published
but figures will be published within the next few days which will
show that in 1952-53 we will have had a trade surplus of 350m.

Exports for the year will be shown as 865m. or thereabouts and
imports as 510m. The latter figure particularly will make it look
as though very little effective relaxation has so far been done.

This is sure to bring very great pressures upon us. Cabinet's
clear opinion is that it would be much better politically to act
now with the appearance of doing so on our own volition than to
appear later as being forced into action by local and overseas
pressures. Press comment on the subject is gathering strength.

Melville has reported by phone that feeling at the Monetary Fund
is almost universally against the Australian restrictions and
while he is doing his best to avert an adverse determination it is
by no means certain that he can succeed in this. While we do not
over-estimate the importance of the Fund in itself, it undoubtedly
appears to be a sounding board for opinion in many countries on
this subject. Furthermore, it is a consideration that if we delay
action until October and the Fund has in the meantime reported
unfavourably anything we do then will took like an attempt to
placate the Fund.

While this is the main problem another difficult aspect is our
trade balance with Japan. For the past eleven months our exports
to Japan have been 76m. and our imports from there 5m. As I
mentioned in my cable last week Japan is complaining and we think
is very likely to take some action against our exports. Japan is
at present our second largest customer and can seriously influence
our wool trade. Other not unimportant items such as barley stand
to lose.

We had in mind making relaxations which would have had the effect
of doubling the present rate of imports from Japan but we would
not of course take this action unless we were also relaxing our
general restrictions. On the other hand, by delaying our
relaxations and courting Japanese retaliation it will appear when
we do eventually relax that we do so on Japanese pressure.

The Cabinet's strongly held and unanimous view is, therefore, that
the best course is to proceed with the programme of relaxations,
beginning 1st July, which was set out in my cable of last week.

But we have made no firm decision pending the submission of these
points to you and O'Sullivan and the receipt of your reactions. We
agree with O'Sullivan that a decision to introduce six-monthly
licensing could be made most opportunely in October.

Would be glad of early reply as I think the best time to make an
announcement, if we are to make it, is within the next couple of
days.' [2]

1 On 24 June Fadden sought the opinion of Menzies and O'Sullivan
on Ministers' view that as international reserves were increasing
substantially and exports exceeded imports by some 200 million
per annum, Australia was certain to attract international
criticism if import controls were not relaxed. Menzies replied on
30 June (Cablegram 2339) that he and O'Sullivan agreed relaxation
was desirable and practicable, but any announcement during their
absence would suggest the decision was a response to overseas

2 This text was dispatched as Cablegram 2315. Menzies' reply,
received on the morning of 3 July, accepted the suggested course
'in view of strong Cabinet feeling'. All cables are on file AA :

A4905/1, VOLUME 19.

[AA : A4905/1, VOLUME 19]
Last Updated: 11 September 2013
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