611.47H31/66
The Consul General at Wellington (Bucklin) to the Secretary of State
[Received April 24.]
Sir: I have the honor to refer to the Department’s instruction of January 28, 1935, (File No. 611.47H31/57) concerning a proposal of the New Zealand Government to negotiate a reciprocal trade agreement with the United States, and giving the text of a note for the New Zealand Government. This instruction was received on February 23, 1935, but the “Enclosure” sent separately, (copy of the Report of the Delegates of the United States of America to the Seventh International Conference of American States)—of which Appendix 29 was to be quoted with the note to the New Zealand Government,—was not received until the following mail a week or two later.
In answer to my note, as suggested by the Department, addressed to the New Zealand Government on March 15, 1935, the following official reply dated March 28, 1935, has just been received:
“I have the honour to acknowledge receipt of your letter of 15th March regarding the proposal made in my communication of 15th November that a trade agreement should be entered into between the United States of America and this Dominion.
“In reply I have to inform you that I am gratified to know that my proposal will have the continued interest of the United States Government, which, as soon as domestic agricultural conditions permit, will be glad to re-examine it in the [light of the]9a new conditions and I shall look forward to the result of such re-examination.
“Yours faithfully,
J. G. Coates,
“Minister of Customs.”
There was also received a personal note from Mr. Coates intimating that he desired to confer further in a few days. I have hence awaited making a report,—there being no departing mails until April 5,—so as to include the result of any further conference.
This morning—April 3, 1935,—Minister Coates requested an interview at 11:30 A.M. During the half hour’s time that he gave to the conference, he explained first of all, at some length, the pressure that was being brought upon him by the press, the delegation of seamen and by the members of Parliament who had proposed legislation, to provide relief from what was generally felt to be the inequitable competition of subsidized ships of the Matson Line; that he had declined to accept the proposed bill pending consideration of the whole matter with the British Government; that this would unquestionably be gone into during his forthcoming visit to London. He was fair enough to state that he recognized that the Matson Line had provided luxurious ships that had brought a class of tourists that would not have been attracted by otherwise available steamship accommodations; that this competition had put local lines on their mettle and had brought up their standards. And he emphasized that he was anxious to avoid any bad feeling with the United States in the matter; that he knew our policies of assisting shipping had grown out of the feeling of national need of shipping—shipping that had been lacking and so badly needed at the outbreak of the World War. I suggested that, as he doubtless knew from reports appearing in the press, our President had announced a desire to revise our present subsidy measures, substituting therefor a fair arid equitable aid sufficient to offset the greater expense required to keep our shipping on the ocean; that, as he knew, American shipbuilding was more costly and American seamen’s wages were higher than those of Europe and of the Orient; that as the injustice felt in New Zealand was due to still higher wages being paid to seamen here, would it not be practicable to equalize this, once the new subsidies were fixed upon in the United States, by extending a New Zealand subsidy equal to the differential? Mr. Coates seemed willing to give consideration to this point. It must be considered, however, that New Zealand has shown itself very adverse to matching subsidy with subsidy, stating that as New Zealand is a small country, it could not afford to enter into competitive subsidizing. Mr. Coates did not mention proposals that have appeared in the press of imposing additional harbor dues on Matson Line vessels, taxes on tonnage carried by such vessels, etc., and it is not believed that he would favor any such measures.
A further subject touched upon during the interview, was the prospect of further consideration of the hoped for reciprocal trade agreement. [Page 76] Mr. Coates expressed the hope that trade negotiations now being carried on by the United States with Canada would clear up certain matters and make negotiations with this country easier.
Following the theme of Department’s instruction under acknowledgment, and as most helpfully further clarified by the address of Honorable Francis B. Sayre at Pittsburgh on December 31, 1934, I am endeavoring on all appropriate occasions to further the views of our Government in the matter of greater freedom of international trade. It has seemed to appeal to Minister Coates that there is the possibility of benefitting from the trade treaties concluded by the United States with other countries. However, since he did not mention it, I do not know if it was clear in his mind whether the British preferential rates would be considered by the United States as discrimination against it. As inter-Empire trade might admittedly be considered, in the larger sense, as British domestic trade, I am myself in doubt as to Department’s application, as regards New Zealand, of the statement in lines 17, 18 and 19, of page 2 of Department’s instruction under acknowledgment that—
“the tariff reductions made by the United States will be extended to all countries which do not discriminate against it.”
The Department’s further instruction on this point would be appreciated.
A subject finally touched upon by Minister Coates and myself, was the growing menace of Japanese commercial competition, which obviously will force our countries either to adopt competing standards of living, or to undertake mutual protective trade barriers to conserve our markets for our own products. Mr. Coates clearly favors close co-operation between the British Empire and the United States and expressed his conviction that the period for the next two or three years is one of grave dangers in which every effort should be made not to exasperate Japan or to give her excuse for war until due protective precautions have been taken.
Further data having a bearing on the subject matter of this despatch is given in the March Political Report of this office.10
Respectfully yours,