611.4731/206: Telegram
The Consul General at Sydney (Moffat) to the Secretary of State
[Received 1:55 p.m.]
Department’s telegram of February 12, 7 p.m. I seriously question whether an approach along the lines indicated would help matters at the present time.
First, as to subsistence [substance?]. While the feeling is definitely growing in Government circles that Australia will at some point have to abandon her anti-American trade diversion measures I am convinced that they would not consider granting us intermediate tariff rates except as part of a trade agreement. Far from regarding the suggested proposal as a “first move” on our part I fear that the probable reaction in Canberra would be one of suspicion that we were trying to get everything we wanted (namely abandonment of the licensing system and the benefit of all concessions Australia might [Page 138] make to other countries) after which we would promptly lose interest in the conclusion of a trade agreement. Incidentally concessions on the entry and residence of businessmen would not be an inducement as there is no longer the slightest apparent interest in this question anticipated.
Second, as to timing. As now I see little or no chance of an immediate reconsideration. Australia’s negotiations with Canada which are now in progress are going badly; the Cabinet, except for Gullett, are busy campaigning for the constitutional amendment on marketing which comes to a vote early next month; less than 10 days later Lyons and the Australian delegation leave for London and the Imperial Conference. Any approach by us in the near future would probably be referred by Cabinet without adequate consideration to Gullett and Moore5 whose anti-American bias remains unmodified.
Third, as to tactics. My personal feeling is that Australia will eventually retreat as a domestic decision on the ground that with the recent investment of American capital in Australian industry and the improvement in the trade balance, the trade diversion measures had served their purpose. Time is on our side; the trend of opinion is at last moving slowly in the right direction; but it is not yet ripe for forcing a change. I feel that our best tactics are to let matters develop without further moves by us until after the Imperial Conference. Casey6 and perhaps other Ministers are planning to return from London via the United States and frank talks with them would probably help more than anything we could do at this juncture.
I have shown this text to Squire7 who concurs.