611.4731/380
The British Embassy to the Department of State
His Majesty’s Government in the Commonwealth of Australia have carefully considered the proposals of the United States Government as presented by the United States Consul-General at Sydney on November 17th, 1938 for a resumption of conversations regarding the possibility of a trade agreement between the two countries and in particular the question of the most effective method of finding a basis of agreement. Australia’s major export commodities are few in number. The level of production of these commodities determines to a large extent the general level of prosperity in Australia and their export value sets a limit to the import capacity of Australia.
The Australian Government desire to continue to rely on the liberal principles of multilateral trading to maintain the necessary equilibrium in their external commercial and financial transactions. The capacity of Australia to adhere to that policy depends almost entirely upon the readiness of highly industrialized countries which enjoy a large share of the Australian import trade to afford reasonable facilities for the importation of Australian raw materials and foodstuffs in exchange.
In consideration of her trade with the United States Australia is faced with a great and growing disparity between her purchases from and sale to that country. Over a period of eight years from 1930 onward the balance of merchandise trade between the respective countries was adverse to Australia to the extent of eighty million pounds. Moreover it is emphasized that since the recent removal of restrictions on imports from the United States the active annual balance in favour of the United States is increasing. The latest figures for the year 1937–1938 show a balance in favour of the United States of America of 18,900,000 pounds Australian. Whilst under most conditions it might be anticipated that the balance would to a degree be in the United States’ favour, it is clear that the extraordinary height of the tariff duties of the United States which affect a few main items of Australian exports and other impediments to import have much to do with the limited volume of Australian shipments to the United States.
In view of these considerations and because Australian concessions to the United States will of necessity be measured in terms of the facilities which the United States are prepared to provide for an increased market for wool, butter, mutton and lamb, beef and fresh apples, the Australian Government is of the opinion that conversations and negotiations could best be facilitated if the United States Government were to intimate the maximum import duty concessions [Page 160] it is possible to contemplate on wool, mutton and lamb, beef and butter. It would also be helpful to know whether the United States Government would give favourable consideration to the question of amelioration of certain quarantine restrictions on fruit and meat which prejudicially affect Australian products.
In making this proposal the Australian Government also have in mind the fact that a number of United States requests will involve consultation between the Australian Government and Governments of other members of the British Commonwealth before it will be possible for Australia to give a comprehensive reply to them. The Australian Government are reluctant to undertake such consultations until it has been established that the concessions which the United States can offer are such as to make it clear that Australia could anticipate an increased demand from the United States for Australian products.
To this end and for the purpose of endeavouring to find a basis for negotiations between the two countries the Australian Government agree that conversations should be placed on a formal basis and that they should proceed without delay. Mr. L. R. Macgregor, the Australian Government Trade Commissioner at New York City, in general consultation with Mr. F. Keith Officer, Australian Counsellor at His Majesty’s Embassy at Washington, is being instructed to carry on conversations in detail, and should it appear to the Australian Government as a result thereof that there is a prospect of making a trade agreement, officials would be sent from Australia to Washington.
The Australian Government further agree that no public announcement of “intention to negotiate” should be made until it is found that a basis for agreement exists.