Memorandum of Conversation, by the Chief of the Division of Trade Agreements (Hawkins)

Participants: The Honorable Sir Ronald Lindsay, British Ambassador;
Mr. Frank Keith Officer, Australian Counselor of Embassy;
Mr. Francis B. Sayre;
Mr. Harry C. Hawkins.

Mr. Sayre stated that we had been studying the question of trade-agreement negotiations with Australia and that he desired to explain the situation as it now stands. First, he said he would like to make it perfectly clear that we are anxious to proceed with these negotiations and that the matter had been given the most active and thorough consideration during recent weeks. The conclusion reached is that the political risks in making a public announcement of contemplated negotiations at this time would be too great; that the Secretary had decided that it is best to mark time for the present and see how the situation develops. For example, the hearings on the United Kingdom agreement which begin next week will furnish one indication of the strength of the opposition which we will have to face, and we would like to gauge the risks in the light of the situation growing out of these hearings.

Mr. Sayre emphasized the fact that the risk involved is one which is shared by Australia and the United Kingdom as well as by ourselves; [Page 140] that if the added burden of negotiations with Australia should result in adding sufficiently to the already great opposition so as to stop progress on the whole trade-agreements program, this would be as greatly to the disadvantage of other countries as to ourselves. In pointing out that the addition of Australia to the countries with which we are negotiating would seriously increase the risk, he referred to the fact that it would mean adding the Western States to the opposition which we are now encountering in the Eastern States in connection with the British agreement. In other words, the addition of wool might be all that is necessary to defeat us and it seems unwise to take this risk in view of the existing situation just at this time.

The Ambassador replied that he understood our position, but that he must point out that Australia also has a serious political problem which will be made more difficult if we refuse to go forward with the negotiations at this time. He thought that it might appease the Australian Government to some extent if we could reply to its recent memorandum concerning the basis for negotiations and say that we regard that memorandum as furnishing an adequate basis for negotiations, pointing out, however, that the question still remains to be decided as to the exact timing of our public announcement. Mr. Sayre said that he had thought the matter might best be dealt with orally, but if it would help the situation any, we would be glad to prepare a written reply to the memorandum in question, and add a statement on the question of timing, along the lines indicated.

The Ambassador said that it might be useful in appeasing the Australian Government if we instructed Wilson to explain our position at Canberra.

Mr. Officer then referred to the plans for two Australian officials to leave Australia on March fifteenth and to stop by the United States en route to the United Kingdom. He inquired as to our attitude in regard to this visit. Mr. Sayre informed him that we would of course be glad to see the Australian officials and to discuss the trade agreement in an informal and exploratory manner, although we might not be in a position to go into details as to rates of duty. He said that he saw no objection to the Australian Government announcing, if necessary, that these officials are coming by way of the United States for the purpose of carrying on exploratory discussions as to the possibility of a trade agreement; but he cautioned against letting the Australians believe that we were prepared as yet for actual negotiations as distinct from exploratory conversations.

Mr. Officer later phoned Mr. Hawkins to say that perhaps he and the Ambassador had stressed too much the desirability of a written reply to their memorandum. He said what they really had in mind was a definite reply on the question of basis and that it might even be preferable if this were given orally.