Memorandum of Conversation, by the Chief of the Division of European Affairs (Moffat)

Participants: The British Ambassador,
The Australian Counselor of the British Embassy,
Assistant Secretary of State Sayre,
Mr. Pasvolsky,13
Mr. Hawkins,14
Mr. Pierrepont Moffat.

Sir Ronald Lindsay said that he had brought Mr. Officer in order to discuss the present stalemate with regard to Australia. He felt we were on a false track in discussing discriminations, which might still exist in a technical sense but which amounted to nothing in a realistic sense. He wanted to emphasize further the proposal he had made to the Secretary that we proceed at once to preliminary and confidential discussions looking toward a trade agreement without prejudice to our position with regard to de-black-listing Australia.

Mr. Sayre pointed out that Sir Ronald was viewing the matter exclusively as an Australian-American problem, whereas he had to regard Sir Ronald’s request as it might affect our whole trade agreement program. To make his point clear he had to go back to the time when the Act15 was being passed and opposition Senators and Representatives charged that the only result of the Act would be that foreign nations would immediately raise their tariff rates against the United States or initiate discriminatory measures against the United States, in order to improve their bargaining position and obtain concessions for either reducing padded rates or removing discriminations. [Page 127] The Department had at the time taken the position that they would not negotiate under these circumstances, and that this raised a question of principle which could not be violated. More than that, he said that we were being pressed by other countries,—he even named Germany,—to start discussions while discriminations remained, and that if we should do for Australia what Sir Ronald now asked, our position vis-à-vis those other countries would become untenable. Therefore it seemed essential that before doing anything further we find a way to de-black-list Australia.

Mr. Sayre then read the essential parts of our recent telegram to Wilson and excerpts from his reply. He remarked that we were quite dumbfounded by the Australian attitude as we felt that we had gone a long way to meet them. However, it was perfectly clear that a misunderstanding existed, and we were anxious to try and iron it out. We really wanted to get down to discussions with Australia and we would go as far as we could in helping find a suitable formula. Did Sir Ronald or Mr. Officer have any suggestions to make?

Mr. Officer said that his mind had been running along the idea, as a possibility, that we might write a letter to the Australian Government based on an assumption of their attitude, which could then be acknowledged, and that we would take this acknowledgment as sufficient. However, he did not know whether or not this would meet with Canberra’s approval. Mr. Sayre then read him a formula which we had been working on, making it exceedingly clear that he had not yet shown it to the Secretary and if it should at a later date be rejected by the latter we could not be accused of bad faith. In other words, what we were suggesting was merely an effort on the part of the experts to find a way out, but was not an American proposition. He repeated this two or three times so that there could be no misunderstanding on this point. Sir Ronald said that he would telegraph it at once. He did not know what was the real trouble, but it was necessary to clean it up. Mr. Moffat asked that he also try and clear up what as evidently a false atmosphere. It appeared from the telegrams that the Australian Government felt that we were trying to obtain additional guaranties from them and were thereby trying to increase the difficulties, whereas in reality we were trying our best to find a formula which would ease the prevailing misunderstanding.

Mr. Officer then asked whether he could add in the telegrams that if Australia were de-black-listed we would then immediately proceed to informal confidential talks. Mr. Sayre agreed to this on the understanding that they were confidential, that no announcement was contemplated, and that if ever they had to be described they would be described as conversations to see whether a basis for agreement existed.

[Page 128]

Sir Ronald said he would at once telegraph to Canberra and would let us know as soon as a reply had been received. The difficulty was that January and February corresponded to Washington’s July and August, and that there was often a dearth of officials at their desks.

P[ierrepont] M[offat]

Formula Read to the Australian Counselor of the British Embassy (Officer) by the Assistant Secretary of State (Sayre)

The United States Government is desirous of applying trade-agreement tariff rates to products of Australia as soon as possible. It has been observed with gratification that the measures which compel the United States Government to withdraw the benefit of trade-agreement rate concessions to Australian products have for the most part been abandoned. The United States Government, however, still is not sure that it is entirely clear as to the position of the Australian Government.

In view of the intention of the Australian Government to abandon the licensing system in the form in which it has operated since May 22, 1936, under conditions specified by the Minister for Trade and Customs in the Commonwealth Parliament on December 7, 1937, and on the understanding that it is the policy of the Australian Government to issue licenses liberally on the items which are still subject to licensing restrictions during the present Parliamentary recess and prior to the complete abandonment of such restrictions, the Government of the United States is prepared to extend the benefits of trade-agreement tariff rates to Australian products as soon as the Government of Australia confirms this understanding.

  1. Leo Pasvolsky, Special Assistant to the Secretary of State.
  2. Harry C. Hawkins, Chief of the Division of Trade Agreements.
  3. Trade Agreements Act of June 12, 1934, 48 Stat. 943.