647.006/51: Telegram

The Consul General at Sydney (Moffat) to the Secretary of State

The Government this afternoon imposed a series of drastic measures designated to improve its trade situation. Not only were higher duties imposed on certain products but the importation of a long list of items from countries outside the British Empire was prohibited except under license issued by the Minister of Customs. The announced purpose was (1) to divert a certain amount of Australia’s imports from countries which were poor customers either to Australian secondary industries or alternately to Australia’s good customers; and (2) to curtail the importation of Japanese textiles upon which it had not been possible to reach a gentleman’s agreement covering the quantities to be imported.

The list of goods for which import licenses will be required includes inter alia the following: motor chassis bodies and parts, motorcycles and parts, plate glass, linoleum and floor coverings, cosmetics, stationery, iron and steel sheets and plates, radio valves, vacuum cleaners, typewriters and parts, sewing machines, electric clothes washing machines, electric heating and cooking appliances, metal working machinery, etc.

The most serious and entirely unexpected development was an announced purpose to create a local manufacture of motor engines and chassis. To this end various measures are to be taken concerning which I shall telegraph later.

Negotiations will be entered into with Canada designed to bring about an arrangement whereby unit supply of imports of goods subject to license would not be diverted from their present source of origin to Canada; if friendly arrangements cannot be made Gullett announced that the Australian Government will have to consider this phase of the matter further.

One effect of these measures upon our trade will be to encourage American firms to manufacture in Australia; other effects will depend upon the way in which the measures are to be administered. For the moment at least it looks as though the Government would make a determined attempt to divert our trade in the hope of blackmailing us into trade negotiations and concessions.

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I shall telegraph again as soon as we have had time more thoroughly to analyze the situation.