The Secretary of State to the Embassy in Australia
140. Department realizes fully the importance to Australian Govt. of wool duty cut (re Embtel 164, May 16).1 Clayton here to review situation and advise best US offer. Strong pressure in Congress to impose flexible import fee on wool by making Section 22 of AAA Act applicable to proposed Wool Act of 1947 which continues 1946 price support to Dec. 31, 1948, and authorizes CCC to sell govt. stocks below parity. Opposition may succeed in eliminating fee provision since it faces possible veto.
Australian withdrawal from conference would multiply difficulties of opponents of pending legislation. Australia has more to gain from accepting present offer to bind than from holding out for duty cut and running risk of raised duties and consequent reduction in exports to US. If duty is bound CCC will liquidate stocks gradually but if tariff can be raised by import fees CCC stocks will be sold rapidly which would sharply curtail dollars available to Australia in next two years.
- Chargé Douglas Jenkins, Jr., had reported in telegram 164, not printed, that “from discussions with government officials I have gotten distinct impression that there exists a real possibility that Australia may withdraw entirely from Geneva meeting unless offered a reduction in present 34 cent US tariff on wool.” (560.AL/5–1647)↩