560.AL/4–2847: Telegram

The Secretary of State to the Consulate at Geneva

us urgent

271. For Clayton and Wilcox from Nitze. Re wool situation your judgement needed on following:

Ambassador Butler here from Canberra believes Labor party in power is under pressure from press and opposition parties. Present government could be overturned and opposition less friendly to US and Charter. Current high wool prices and strong demand give Australians strong bargaining position on duty cut but loss of dollar exchange if US imports of wool decline from higher US duties or rapid liquidation CCC stocks would be serious blow to Government. Australia more friendly to US in recent months because British withdrawal from India tends to isolate them, but opposition to Charter and reduction in Empire preference very strong. Butler believes [Page 920] Evatt1 is power behind the negotiations. Coombs position at home shaky.
Wool commodity agreement. What is your judgement minimum Australia would take? US could probably offer to limit rate of liquidation CCC stockpile and perhaps tie liquidation rate to price range above and below the support price. US might undertake auction selling and standard grading system which we understand Australians want. US could not offer to guarantee imports, in view sentiment in Dept. of Agriculture and probable requirement state trading.2 Pressure by wool interests would make guaranteed minimum import a maximum quota.
Would such agreement without import guarantee and without duty cut along with threat of rapid disposal CCC wool, induce Australia to cooperate? If proposal outlined does not go far enough, suggest we should no longer count on results of subcommittee meeting (re urtel 177, April 28) Butler ready to communicate to Evatt any suggestion Clayton thinks wise.
It may be desirable consider Clayton returning here to lead fight against unsatisfactory wool legislation. [Nitze.]

  1. Herbert V. Evatt, Deputy Prime Minister, and Minister for External Affairs.
  2. Presumably the reference here is to the article covering state trading in the ITO Charter.