The visit to the United States was somewhat hurried, but I think
quite useful.

I found very varying expectations of the outcome of the I.T.O.

talks. Generally, the United Nations Secretariat appears somewhat
pessimistic. This pessimism is due partly to the fact that the
Soviet has again decided not to be represented, and they fear this
indicates an intention to abstain from membership. There is a real
danger that if this is so, the I.T.O. may become a sort of Western
trading bloc with many European countries abstaining because of
their need to maintain good trade and political relations with the
Soviet. It is partly due also to their judgment of the United
States' position where they think the increasing influence of the
Republicans will make it more difficult for the United States to
take the action necessary to make collaboration in international
trade and employment effective.

I must confess that I feel some sympathy with their point of view
on the membership problem. There is no doubt that this is the most
critical hurdle which the I.T.O. will have to surmount. The United
States' position is, however, rather better than I expected. Press
comment is much more favourable to a continuance of the
Administration's international trade policy than I had
anticipated. The State Department officers responsible were very
optimistic indeed. Their public enquiries of which I told you
proved very useful in bringing out a considerable body of opinion
in favour of the programme as well as providing some useful
information for the negotiators. Furthermore, they are convinced
that the Republicans are politically unwilling to do anything to
endanger the programme. This may merely be of course based on the
theory that if they opposed the programme, then any subsequent
adverse economic developments can be blamed on their opposition.

On the other hand, if they sit back and let the programme go
ahead, they can blame any subsequent adverse developments on the
Administration and its trade programme. But at any rate it is
clear that the Administration feels strong enough to go ahead.

This was confirmed by the recent speech of the President in which
he made it quite clear that he proposed that tariff cuts would be
made.

It happens of course that wool, butter and meat are perhaps the
most difficult of all the items because of the strength of the
pressure groups concerned. I did not ask for any details of the
United States' plans in relation to these items, but they assured
me that they would be in a position to submit proposals to us.

The real danger, I think, is not on the tariff side, but in
relation to employment. The change in the political position will
mean inevitably a greater unwillingness to take governmental
measures necessary for the maintenance of employment. While I
think any Administration, whatever its political composition, will
be forced to take anti-depression measures, initial unwillingness
may mean that these are unduly delayed and halfheartedly
implemented. The full employment provisions, therefore, and, in
particular, the link between the achievement of full employment
and the right of other countries to secure a review of obligations
undertaken in relation to commercial policy, becomes even more
important to Australia.

The Industrial Development proposals [1] have apparently
occasioned widespread interest, and there has been considerable
discussion as to the best method by which they should be
implemented. There are three possibilities:-

Firstly, that a Sub-Commission of the Economic and Employment
Commission which was set up last year to advise on [Economic]
Development should be responsible for the provision of technical
and other aid as well as for investigation. This, in effect, would
mean of course that the United Nations' Economic Secretariat would
have to do the administrative and executive work.

Secondly, the work might be divided between the Secretariat and
the I.T.O., giving to the I.T.O. technical and executive functions
appropriate to a specialised agency, leaving to the Secretariat
the more general economic matters which would be the appropriate
subject of investigation and report to the Economic and Social
Council and the governments concerned.

Thirdly, some countries, I believe, are pressing for the
establishment of a completely separate specialised agency to deal
with the whole function of industrial development.

Whichever of these alternatives is selected, there would be the
problem of working out the relationships of the responsible
organisations of [2] the Bank for Reconstruction and Development,
which in some cases at any rate might be a source of finance for
development of projects sponsored internationally. The view we put
forward at [London] was that there would be definite advantages if
the I.T.O. as the body responsible for commercial policy also had
functions on the technical side in relation to Industrial
Development. This would prevent their developing an unduly narrow
point of view, and would, furthermore, tend to make their advice
on commercial policy matters somewhat more acceptable. I discussed
this matter fully with the Secretariat who were in general
agreement provided that this did not delay the commencement of any
work on development which it was found possible to commence
immediately within the Secretariat under the auspices of the
Development Sub-Commi[ssion]. I saw no reason why it should, and
suggested that they might go as far ahead as their staff and
budget would permit on the understanding that if and when the
I.T.O. were established, there should be consultation as to the
appropriate division of functions, and, on the basis of such a
division, there could be a transfer of staff, etc. if some re-
arrangement were involved. I was not able to wait in New York long
enough to put our views before the Economic and Social Council,
but left Tange to do this on the basis outlined to you in our
telegram. I understand that the outcome was satisfactory in that
the relevant clauses in the draft Charter authorising the I.T.O.

to provide technical assistance and advice were approved by the
Council. It was interesting to notice that the United States'
representatives strongly supported the continued inclusion of
these clauses since they had been the major opponents of them in
the London talks where they had been strong advocates of the work
being done entirely by the Development Sub-Commission. It would be
interesting to know the reason for the change in their attitude.