Foreign Relations of the United States, 1950, East Asia and the Pacific, Volume VI

611.43/4–2150

Department of State Policy Statement ¹

secret

[ Washington ,] April 21, 1950.

Australia

a. objectives

The fundamental objectives of US policy toward Australia are: (1) to obtain support for the policies which we are pursuing in the furtherance of international cooperation, in the development of a democratic order in Japan and Germany and in the protection of our own liberties and those of the rest of the free world from Russian aggression; (2) to discourage Australia from taking positions which hinder us in achieving these objectives, particularly in the case of the Japanese occupation; (3) to encourage the economic development of Australia and the growth of its foreign trade in accordance with the principles of the ITO Charter, bearing in mind the contribution which this development can make to the economic recovery of Great Britain and also the role in military matters which Australia as a friendly power can play in the Pacific.

b. policies

Relations between the US and Australia, which had always been friendly, became even more so during World War II when the two countries cooperated to the fullest in the common war effort. In the immediate post war period these friendly relations were strained or impaired by differences of opinion rising from dissimiliar views of the Japanese occupation policy, by the initial efforts to Australia to lead a third force in the growing conflict between East and West, and by the difficult personality of the Australian Minister of External Affairs, Dr. Herbert Evatt.²

Since the advent in December 1949 of the Liberal-Country party coalition there has been a marked change in the orientation and direction of Australian foreign policy. The new Minister of External Affairs, Mr. Percy Spender, is desirious of establishing the closest and most cooperative relations with the United States and has in effect made this objective a cardinal point of his foreign policy. Apart from this Mr. Spender has indicated that Australian effort in the field of foreign relations will not, as was the case under Dr. Evatt, be exerted primarily through the United Nations nor will it be spread so thin throughout the world. The major Australian interest is now taken to be in the area of South and Southeast Asia, and it is there according to Mr. Spender that Australia’s efforts should be concentrated. One of the immediate manifestations of this altered emphasis in Australian thinking was the role played by Mr. Spender at Colombo in connection with the plan for economic assistance to South and Southeast Asia and Australian leadership in Commonwealth efforts to implement the recommendations adopted at Colombo.³

Political. Australia in the past has taken a very independent line in UN affairs and has attempted, with considerable success, to avoid giving any suggestion of subordination to UK or US policies. It is, however, strongly affected by its constitutional, racial and sentimental attachment to Great Britain and by its strategic dependence upon the US. Furthermore, in view of the importance which the present Australian Government attaches to relations with the US, the emphasis on independence in UN is likely to be subordinated to an effort to achieve a greater measure of agreement with the US and with the UK in the more important issues which arise. The lessened emphasis on the UN aspects of Australian foreign policy, the removal from the scene of Dr. Evatt and his personal ambitions and the more unqualified recognition of the nature of Soviet aims and techniques make possible a greater measure of agreement in UN matters between the US and Australia.

In the Indonesian conflict there was a pronounced Australian tendency to regard the US as the sponsor of the Dutch and Australia as the protector of the Indonesian Republic. This attitude was not helpful to our efforts to obtain a satisfactory solution of the Indonesian problem. The present government, however, will be faced with different problems in its relations with Indonesia which will require a modification of Australian policy. Indonesian aspirations with respect to Netherlands New Guinea run counter to what Australia considers to be her security interests in the area. While this may develop into a serious point of difference, Australia does apparently attach considerable importance to a continuance of her close and friendly relationship with the new state. As an illustration of this, Australia at the Colombo Conference indicated that its major contribution to economic assistance for Southeast Asia would be Indonesia.⁴

As a permanent member of the Trusteeship Council and as administering power for New Guinea and Nauru, Australia has taken an active and responsible part in the work of the Council. It would seem, however, that current public interest in the territories is not so strong as the interest displayed by military and governmental leaders. Although it is clear that Australia’s chief concern in both territories is rooted in national interest, Australian administration has been consistent with the obligations assumed under the Charter and the trusteeship agreements.

While displaying an interest in making the Trusteeship Council an effective organ of the United Nations, Australia has argued strenuously that there was no Australian obligation to consult the Council prior to the introduction of Australian legislation for the administrative union of Papua and New Guinea. Australia, however, did submit to the Council copies of the bill and subsequently modified it to meet most of the objections voiced by Council members.

Apparently the Australian delegation in the Trusteeship Council receives definite instructions on matters affecting the Australian trust territories but it is not instructed on numerous other matters considered by the Council. Although Australia can be classed as one of the more conservative Council members, the delegation has not in all instances joined with the UK to present a common front.⁵

Australia sees itself as spokesman for the British Commonwealth and senior member of the Anzac partnership in all matters relating to the Pacific area, and especially in the problems of non-self-governing peoples. It was largely through the initiative of the Australian Government that the South Seas Conference met in Canberra in 1946 to establish the South Pacific Commission. Australia has continued to take an active interest in the work of the Commission and its policy in this regard has been a source of satisfaction to us.⁶ Australia has displayed an active interest in the Point 4 program and in the contribution which this program can make to the improvement of the conditions of the native peoples of the islands of the South Pacific.

Australia represents the entire British Commonwealth on the Allied Council in Japan, and the British Commonwealth occupation force in Japan is manned by Australians. Australian policy with regard to Japan is directed toward strengthening the FEC as opposed to SCAP, and thereby gaining for Australia a greater voice in determination of policy toward Japan. Despite expanding Soviet influence in Asia and, in fact, on the direct approaches to Australia through Indochina, Australia has in the past adhered to the view that the principal threat to its security comes from Japan rather than from Russia. The present government is much more aware than its predecessor of the threat to Australian security inherent in the Communist advances in Asia and, without any fundamental change in its attitude toward Japan, can be expected to give greater weight in its calculations to the Soviet danger. Australia is anxious to see the US military position in the western Pacific strengthened and, in matters involving Australian security, cannot afford to oppose major US policy toward Japan.⁷

Since Australia fears commercial competition with Japan, it tends to pursue economic policies toward Japan which inhibit Japan’s economic revival, and it has opposed steps which we feel are necessary to make the Japanese economy self-supporting and thus to lighten the burdens of the Japanese occupation. Basically, Australia’s criticism of SCAP policy has been that Japan is being built up as a US bastion against the USSR and that no practical problem is allowed to be decided solely on its merits, but always in relation to Soviet-American relations.

As Australian support for our policy in Japan is highly desirable and can usually be counted upon to involve New Zealand and often UK support as well, every effort should be made to prepare the ground through diplomatic channels before new measures are adopted which might be misunderstood by the Australian Government. Since the Australian public fears a revival of Japanese power, and since the government’s actions must be justified to the public, an effort should be made to brief Australian correspondents both here and in Japan on reasons for SCAP policies.

Australia suggested that the UK take the lead in recognizing the Chinese Communist government. This suggestion was based on the idea that a Communist government controlling most of China is inevitable, but that the pattern of dependence on Moscow does not apply as in the case of the satellite countries. The anti-Communist attitude of the Liberal-County party coalition and the desire of Mr. Spender to achieve a closer cooperation with the United States in the Far East have together caused Australia to fail to follow through with a recognition of the Chinese Communist government despite the action of the UK. Mr. Spender has informed us that Australian recognition of the Communist regime will not take place until after consultation with the US.

Economic. An adverse balance of dollar payments, though greatly reduced by rigid import controls, remains the outstanding economic problem affecting our policy toward Australia. We recognize the necessity of present import restrictions, which are being maintained for balance-of-payment reasons, but we urge the elimination of these controls as soon as possible. Rather than see US exports to Australia curtailed further, it would be to the mutual benefit of the two countries that US imports from Australia be increased to aid in closing the sterling area dollar gap. Australia’s balances of over 300,000,000 Australian pounds held in London make more difficult the solution to Australia’s dollar problem, which must be considered in its relation to the dollar problem of the whole sterling area.

We also recognize that Australia’s commercial policy is characterized by its long-standing policy of Empire preference. In addition there is the desire for protection against imports in order to develop Australian industry. In recent years, however, Australia has given increasing evidence of its willingness to cooperate with other countries in bringing about freer world trading conditions. Australia is a contracting party to GATT and in December 1948 the Australian parliament ratified the ITO Charter, subject to prior acceptance by the US and the UK. We hope the Australia’s formal adherence to the principles of the elimination of trade barriers will gradually counteract the narrow trade concepts of the past. Australia has agreed to enter into further trade negotiations with the US and other countries at the third round of GATT negotiations beginning in September 1950.

While we fully understand Australia’s desire to assure a steady, favorable market for its large exportable surpluses of meat, grain, and dairy products, we understand that the UK will probably continue to be the largest purchaser of these products. We are concerned over Australia’s practice of entering into long-term bulk-purchase agreements, such as those concluded with the UK, India, and New Zealand on wheat, and we take exception to the meat purchase agreement between Australia and the UK. We feel that such agreements, by channelizing trade and fixing prices, tend to undermine the structure of international trade and to impede its revival. On suitable occasions we should continue to point out to Australian officials the economic objections to such arrangements.

The rapid liquidation of large stocks of Dominion wool held by the joint UK–Dominion wool organization as a result of strong world demand and the reduction in our wool tariffs have eased the friction between the US and Australia which had developed as a result of the high protectionist policy of our wool industry. Although US consumption of wool has declined since the war-time high, it is still over twice as great as in the pre-war period and is likely to remain at a high level and necessitate continued high imports.

In general we look favorably on private dollar investments in Australia for the development of resources, basic industries, or other enterprises which would contribute to the economic well-being of that country. However, Australia for many years has been opposed to the investment of foreign equity capital and the recent Labor government took the position that in view of labor shortage, substantial new investments could not be absorbed. The present Australian government is not in accord with these views and has manifested an interest in encouraging American investment in Australia. We consider Australia a good risk and if the Australian Government applies to the International Bank or to the Export-Import Bank for assistance in financing sound projects we would support the request. As a part of its general policy of strengthening relations with the US, the present Australian Government has expressed renewed interest in both an FCN treaty and double taxation conventions. We have presented a revised draft FCN treaty which is now being studied by the Australian Government.⁸ Our Embassy has been instructed to suggest at an appropriate time that Australian tax experts be sent to Washington for exploratory talks to determine the basis and scope of tax conventions.

In addition to our readiness to support requests for financial assistance for worthwhile undertakings, we are prepared to make available technical assistance for basic economic developments under the Point Four program. We have agreed to undertake discussion on a technical level leading to providing technical assistance for the Snowy River project, which would divert the Snowy River for irrigation and power. The Australian Government is prepared to pay for any assistance it gets for this project.

Australia has followed a restrictive policy in international civil aviation. We will use all appropriate means to induce Australia to adopt a more liberal attitude.

c. relations with other states

Based on a common outlook, a common racial stock, and a similar geographic position, Australia’s relations with nearby New Zealand have always been close. This intimacy was formalized in the Australia–New Zealand Agreement of 1944, which provided for continuous consultation on policy and amounted to an Anzac “Monroe Doctrine” for the South Pacific. Both countries recognize their strategic dependence on the US as the dominant Pacific power and their economic dependence on the UK as the chief market for their agricultural produce and chief source of manufactured goods. The 1949 agreement to permit citizens of either country living in the other to share social insurance benefits is evidence of this identity of interest and attitude.

A strong British Commonwealth is a fundamental aim of Australian foreign policy. For this reason Australia welcomed the decision to keep India in the Commonwealth, even though Australians generally regretted the concomitant diminution of the Crown’s prerogatives. Australia is concerned about the weakened economic and strategic position of the UK, and has viewed the increasing economic and military links between the UK and continental Europe with some misgivings.

Australia has favored a Pacific counterpart of the North Atlantic Pact modified to meet the different circumstances of Pacific security. At the same time it maintains that no Pacific Pact will be of any value without US participation or support. Australia has not favored the efforts of the Philippines to form a regional association, excluding military commitments, and it in effect declined an invitation to attend the Baguio Conference. The present Australian position apparently is to await US initiative in this matter.⁹

Apart from heavy but sporadic Soviet purchases of Australian wool and an Australian order for Soviet manganese, commercial relations between Australia and the Soviet Union are slight. Prolonged negotiations during 1948 for the barter of Australian wheat for Soviet wood products and seafood were largely unsuccessful. Although in 1948 both countries raised their Legations to Embassies, at Australia’s suggestion, political relations have been almost wholly confined to the UN.

The Communist party in Australia closely follows the Cominform line, but evidence of any connection with the Soviet Embassy in Canberra is lacking. In case of war with the USSR, the Australian Communists, through their control of key labor unions in heavy industry and transport, could temporarily cripple the national economy. This ability now appears to be diminishing chiefly because moderate unionists have been aroused by a series of political strikes and by the crudity of Communist tactics in manipulating union affairs. Numerically the party is weak, and its political representation is limited to one member of a State parliament. The present government is considering outlawing the Communist party in accordance with its pre-election pledge.

The Australian public is sensitive to the possible danger in the proximity of heavily peopled Asia to the inviting vacuum of their own relatively unpopulated continent. While liberal opinion in Australia is embarrassed in any attempt to make a purely ethical justification of the “white immigration” policy, it is nevertheless a policy which on practical grounds commands the overwhelming support of the people. The Australians are eager to win the friendship of the native peoples of Southeast Asia for reasons of both security and commerce, but wish to do this without compromising their fixed policy of restrictive immigration.

Australia claims sovereignty over a third of the Antarctic continent. Its interest in Antarctica is based on considerations of prestige, weather forecasting, whaling and defense. We sought Australian cooperation in our project for the internationalization of the Antarctic continent, but without success. Australia, however, was not alone in rejecting our plan for internationalization. We are now considering other proposals which will serve to remove the immediate cause for rivalry in the Antarctic and which will perhaps increase the possibility of achieving internationalization at some later date.¹⁰

d. policy evaluation

Our relations with Australia traditionally have been friendly. Americans visiting or residing there find the atmosphere congenial and hospitable. Australians and Americans share a common western orientation and a common distaste for arbitrary power and violent change. Our national interests are fundamentally the same. Hence in any issue on which the Australians are fully acquainted with the facts and which involves a matter of principle, their reactions are apt to parallel our own.

At the same time there are points of disagreement between our two countries. The scope of “free enterprise” is more narrowly defined and the concept does not enjoy the same veneration in Australia as in the US. Suspicion of American financial and military power has deep roots in Australia and can result in unfavorable reactions to our policies.

Our approach both to the government and, in our information program, to public opinion should be designed to remove any suspicion that our policy in Europe and the Far East is dictated by class bias or that in endeavoring to contain Soviet expansion we subordinate principles to military requirements. With the government, such an approach should be on a basis of candor and informality, which the Australians appreciate and understand. In our information program, a more effective contribution to increased understanding of our policies might be rendered by a bolder approach and less reluctance to discuss controversial subjects.

The degree of our support from Australia frequently will be influenced by the intimacy of our relations with the UK. In those cases where differences arise between the US and the UK, care should be taken to explain our position fully, having in mind the Australian tendency in the past to suspect that we are taking unfair advantage of the UK’s postwar economic difficulties to advance our own interests within the British Commonwealth. We now have in the Australian Government, in contrast with recent years, a friendly spirit and a desire for cooperation in the field of foreign policy which should be preserved, in so far as it lies within our power. This new attitude is of value to us in our bilateral relations with Australia, in our relations with the Commonwealth, in our efforts to resist further Communist subversion in South and Southeast Asia, and in UN. It should not be undervalued nor taken for granted.

1. Department of State Policy Statements were concise documents summarizing the current United States policy toward a country or region, the relations of that country or region with the principal powers, and the issues and trends in that country or region. The Statements provided information and guidance for officers in missions abroad. The Statements were generally prepared by ad hoc working groups in the responsible geographic offices of the Department of State and were referred to appropriate diplomatic posts abroad for comment and criticism.
2. Herbert V. Evatt, Australian Attorney General and Minister for External Affairs, 1941–1949; Deputy Prime Minister 1946–1949; leader in the Australian Labour Party.
3. For documentation on the Commonwealth Foreign Ministers meeting at Colombo, Ceylon, January 9–14, 1950 and the Commonwealth Conference on economic aid for Southeast Asia held at Sydney, Austrialia, May 15–19, 1950, see pp. 1 ff.
4. For papers on the attitude of Australia toward Indonesia and the question of Netherlands New Guinea, see pp. 964 ff.
5. For documentation on matters arising under Chapters XI, XII, and XIII of the Charter of the United Nations (Trusteeship and Non-Self-Governing Territories), see vol. ii, pp. 434 ff.
6. Regarding the South Pacific Commission, see the editorial note, p. 84.
7. For documentation on United States efforts to secure a Japanese peace treaty, see pp. 1109 ff.
8. Following indications that the Australian Government would respond favorably, the United States submitted a new draft treaty of friendship, commerce, and navigation to Australia in February 1950. Detailed discussions regarding the draft began in June 1950 in Canberra between American Embassy representatives and Australian officials. Documentation on the negotiations regarding the proposed treaty is included under Department of State file number 611.434.
9. Representatives from Australia, Ceylon, India, Indonesia, Pakistan, the Philippines, and Thailand met at Baguio, the Philippines, May 26–30, 1950, to discuss possible organization of a Southeast Asian union. For documentation on the attitude of the United States toward this meeting and the general question of a “Pacific Pact”, see pp. 1 ff.
10. The United States proposal regarding the internationalization of Antarctica was advanced in 1948. Documentation on the policy of the United States during 1950 with regard to the Antarctic is scheduled for publication in volume i.