611.4731/380
Memorandum of Conversation, by Mr. John H. Fuqua of the Division of Trade Agreements
| Participants: | Mr. Keith Officer, Australian Counselor of British Embassy, |
| Mr. Harry C. Hawkins, | |
| Mr. John R. Minter, | |
| Mr. John H. Fuqua. |
Mr. Officer called to present the attached note.37 He commenced the conversation by briefly paraphrasing the second and third paragraphs of the Note and he then read the entire Note verbatim.
Mr. Hawkins said that it must be made clear at the start that we consider the whole question of bilateral trade balances irrelevant to trade agreements and that we will not negotiate with any country on the basis of attempting bilateral balancing. He pointed out that this was a dangerous policy in the long run for Australia to attempt to pursue with its necessity for an over-all favorable balance.
Mr. Officer agreed that Australia must depend on multilateral balancing and he said that his Government realized that Australia will probably always have an adverse balance with the United States; but that the extent of the current adverse balance is so great that it threatens the financial position of his country. In these circumstances it is felt in Australia that there is no advantage in attempting trade agreement negotiations if there is no prospect of increasing Australian exports. Mr. Hawkins said that if we negotiate with a country, we naturally expect the results to be an increase of exports of that country [Page 158] to us, but that an agreement must be mutually advantageous. He also noted that the present state of our trade balance with Australia is primarily due to fundamental economic conditions. He said that we are willing to start negotiations, as suggested in the note, by discussing possible concessions by the United States, as obviously the discussion must be started at some point and that this is probably as good a point of departure as any.
Mr. Hawkins emphasized the general difficulties of negotiating with Australia and stressed that any false step made at the present stage might kill the possibilities of negotiation. In this connection he said he had in mind the recent tariff increases in Australia and the action taken by certain Australian states against motion picture imports. As regards the recent tariff increases we did not as yet have complete information as to how they affected American trade but that we would have to postpone any steps in connection with trade agreement discussions until we have a clear picture of what Australia has done. He said that we take a very serious view of anything in the nature of padding of tariff rates for negotiating purposes especially since the danger of this is one of the objections raised to the trade-agreements program by its opponents. He pointed out that the difficulty of negotiating with Australia is serious enough without complications of this kind. As we have not yet received details of these tariff changes, he said we could not make detailed comment upon them now.
Mr. Officer said that he felt sure that the changes made were based upon Australian economic needs and were not intended as an attack upon our trade. He said, in explanation, that the Government’s declared policy was one of supporting local manufactures, and as its life is only three years, and one year has already passed, the Government is under pressure to show results.
Mr. Officer stated that he was pleased that we are willing to accept the procedure outlined in the Note and said that his opinion was that his Government was interested chiefly in knowing whether we can make a reduction in the wool duty which would offer an opportunity for increased trade and reductions on two or three other items. Mr. Hawkins explained that butter would have to be reserved for possible negotiations with New Zealand. Mr. Officer said that he believed his Government realized this and he did not believe that any specific item, other than wool, was considered as a sine qua non in Australia.
When asked about a convenient time for starting further conversations, Mr. Officer intimated that Mr. Macgregor appeared to believe that it might be inconvenient to start before the first of the year. It was agreed that the question of timing would be discussed with Mr. Macgregor when he comes to Washington on December 19.
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