611.4731/252: Telegram
The Consul General at Sydney ( Wilson ) to the Secretary of State
[Received December 23—8:30 a.m.]
Referring to Department’s telegram of December 17, 7 p.m. I spent Monday in Canberra and had an interview lasting about an hour with the Prime Minister, spending the rest of the day with Moore.
The Department’s telegram of December 17, 7 p.m. presents an interpretation of the present situation vis-à-vis Australia which is at variance with my own and with that given me in Canberra on the occasions of both of my visits (refer to my telegram of December 9, 9 p.m.). The following comments are grouped under the five points of the Department’s telegram of December 17, 7 p.m. and should be considered in conjunction therewith.
1. Despite impressions gained by the Department from Lindsay and Officer the Australian Government does ask and expect the Government of the United States: (firstly) to accept what Australia has done and is doing to remove discrimination as sufficient evidence of good faith without further proof; (secondly) to differentiate between “substantial” discrimination and what they contend is now only “technical or actual” discrimination, and to agree to their contention that substantial discrimination no longer exists; and (thirdly) to enter into informal discussions simultaneously with any discussions [Page 158] taken up by the United States and Great Britain (see last paragraph of my telegram December 9, 9 p.m.).
2. (Refer to your 4 (b) and (c). According to Moore, Australia is not asking most favored nation tariff treatment from the United States and would not in the absence of a trade agreement accord most favored nation tariff treatment to us (in this connection please refer to Doyle’s report dated December 16, 1935 entitled Australian tariff amendments November 29, 193530).
3. Moore submitted to me a new list of unrestricted items in addition to the 34 items published December 8 and has since added to this list. Situation now is that licenses are being granted freely for all 85 original items except 21 of which number licenses are being granted for 4 on a quota basis. I am working with Squire on an estimate based on the changed situation and will telegraph you further when I am in a position to do so. Moore estimates the percentage of total American trade affected by the restricted items as low as 1.56% which I feel certain will not be corroborated by Squire.
Nevertheless what Moore has done in removing 64 items from the restricted list of 85 together with assurances I have received of intentions to continue along these lines has convinced me that grounds for holding that substantial discrimination exists are in great measure disappearing; furthermore, that the Australian Government is making a determined effort to move the whole licensing system as quickly as possible in accordance with the statement made by Colonel White on December 7.
4. (a) and (b). See the foregoing and, with reference to your phrase “any form of discrimination”, note Australia’s insistence upon a distinction between “substantial” and “technical or actual” discrimination.
4. (c). Moore gave me his definite assurance that no tariff revision would be undertaken for negotiating purposes, that absolutely no tariff padding was intended or would be done and that the only tariff revision contemplated would be in protection of Australian industry.
5. Lyons’ talk was earnest and convincing. He expressed feelings of great friendship towards the President and yourself and assured me definitely that the licensing system was to be abolished as soon as possible but added that commitments made some time ago to Australian industries together with political risks do not allow him at the present time to do more than has been done. He added that if the United States demands more and requires that Australia “toe the line” he must refuse; that although the licensing system will go positively in time irrespective of our action he would then have to rely on “other [Page 159] means” allowable by tariff revision in order to protect the Australian position.
During my conversation with the Prime Minister and with Moore I found occasion to voice my belief that my Government had at all times stood ready to conclude a modus vivendi with mutual guarantees of most favored nation treatment. In my talk with the Prime Minister he made the same differentiation that Moore had made to me between most favored nation treatment and most favored nation tariff treatment.
If the Department is not inclined to enter into preliminary discussions with Australia there are certainly technical grounds upon which we could delay doing so. On the other hand if the Government of the United States is inclined to accept in good faith what Australia has already done to abolish discrimination in part and not question her future intentions as expressed to me by the Prime Minister and Moore and allow the Australian Government to send representatives to Washington to engage in informal discussions, we have unquestionably an opportunity to create and perhaps maintain considerable good will between the two countries. The Department’s decision will be made of course in the fuller light of facts unknown to me but I cannot help feeling that if we now stand upon strict observance of the letter rather than the principle of our policy of refusing to negotiate as long as any form of discrimination exists, both the Government and the public will be convinced that their good faith has been questioned resulting in a sense of humiliation and hurt and the swing of the pendulum away from the United States will be far and very slow in returning.
On Tuesday the Sydney Morning Herald gave inspired and inaccurate publicity to my trip by seeing in it “the first direct step towards the negotiation of a trade agreement between the United States of America and Australia”. This I regard as mere face saving on the part of those responsible for a policy which is now generally understood to be discredited.
- Not printed.↩