560.AL/4–2847: Telegram

The Consul in Geneva ( Troutman ) to the Secretary of State

us urgent

176. For Acheson and Anderson1 from Clayton. After exchange offers Australia on 23rd, Coombs,2 McCarthy3 and Morton4 called on Clayton to ascertain what possibility improving offer to bind wool before cabling it home since Govt may call them home upon receiving it or face defeat. Their situation described as follows:

Home support depends on wool, meat, butter producers and on employment, industrialization and commodity ITO chapters. Wheat agreement difficulties and International Bank’s position tend reduce [Page 918] value those chapters.5 US being only large protected wool market offers only chance expand wool trade by tariff negotiation. No objection to subsidization. Benefits still would result from lower prices stimulating consumption and discouraging synthetic substitution.
Fifty percent reduction wool duty tentatively offered in 1941 (September 3 when opposition party in power).6 Therefore, they anticipated some offer and urged present Govt to participate ITO on basis such prospect. Binding only may cause McCarthy, as Minister, Country Party man, to quit present Govt.
Beef and butter offers inadequate too. Only in US can markets he expanded by tariff negotiation.

Clayton thought with subsidization duty reduction offered little benefit, but that large part of Australia’s recent gain in US market far exceeding possible gain from duty reduction would be retained by binding, and described legislative wool situation at home and possibility of increased duty.

Coombs suggested US consider not only political factors regarding wool, but also political consequences of failure here. Clayton pointed out great trade expansion offered by US total offers, indirectly benefiting Australian wool growers, and stated withdrawal of Australians would be calamity and serious responsibility would rest on them.

Clayton recounted administration efforts to obtain passage O’Mahoney bill7 making possible duty reduction pointing out in response to query, that passage not yet out of question that he would recommend administration’s efforts be continued and that, if passed, duty reduction might be offered, but he feared that owing to high priority of other pending legislation such passage would be extremely difficult now and pointed to need of bending every effort prevent duty increase.8

Comment: Situation here serious as result failure to offer duty cut. May result complete suspension tariff negotiations with southern dominions and perhaps UK, and might endanger whole ITO project. Foregoing emphasizes necessity of preventing passage of import fee provision of present House bill. May be necessary to go even farther to prevent failure of conference. Could save situation if passage O’Mahoney bill or Senate bill minus import fee made it possible to offer substantial duty reduction. Invite your reactions and suggestions. [Clayton.]

  1. Clinton P. Anderson, Secretary of Agriculture.
  2. Dr. H. C. Coombs, Director General, Australian Department of Post-War Reconstruction.
  3. E. McCarthy, Secretary, Australian Department of Commerce and Agriculture.
  4. C. E. Morton, Assistant Comptroller-General (Tariffs) Australian Department of Trade and Customs.
  5. For chapter texts of the London Draft of the ITO Charter, see Report of the First Session of the Preparatory Committee of the United Nations Conference on Trade and Employment (United Nations Doc. E/PC/T/33) (London, 1946).
  6. For documentation regarding trade discussions with Australia, although wool is not specifically mentioned, see Foreign Relations, 1941, Vol. iii, pp. 121127.
  7. Senate Bill S. 2033. 1946. Documentation relating to the Department’s position on this question may be found in file 811.62222.
  8. A memorandum of conversation covering this talk on April 24, is filed among the records of the U.S. Delegation in Lot 65A987 (Box 99).