Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

394.31/3–1851: Telegram

The Acting Chairman of the United States Delegation to the Torquay Conference (Corse) to the Secretary of State

secret
niact

Torquay, March 18, 1951—2 p. m.

568. USTAC. No distribution outside State Dept.

1. Successful conclusion US bilateral negots at Torquay with UK, Canada and other Commonwealth countries jeopardized by intransigent position of Australian del under instrs Australian Govt.¹

2. Chance of other than limited agreement with UK on which there wld be grave doubt desirability concluding (other words, no agreement might easily be better than limited agreement) forestalled by refusal Austral del to give releases of bound margins of preferences in UK market so that UK cld give concessions to US on cheddar cheese, unsweetened condensed milk, unsweetened milk powder, raisins, preserved fruits. Such agri concessions essential among others for agreement with US in which the US cld grant concessions on substantial list of items of primary interest to the UK which hold best promise of contribution to sterling dollar gap problem.

3. Austral del under instrs refuses grant releases to Canada which wld enable Canada to grant concessions to US on raisins, dried currants and canned peaches. Canada committed to give US any concession on these products that Austral will agree to. As indicated Deltel 552 no Canadian concession these items jeopardizes package deal agreement with Canada which, as now constituted, wld contribute substantially to integration US-Canadian economies.

4. In realization US concession wool must be accompanied by sufficient reductions Austral duties and preferences in Austral market and by UK and Canadian concessions involving reductions in margins of preferences on certain agri products listed above as minimum, US has indicated to Austral del necessity consider whether offer on wool shld be withdrawn and consequently no agreement with Austral or whether offer on wool shld be modified. Austral del stated modification US wool concession also probably means no agreement.

5. Austral attitude key to successful conclusions negots with Commonwealth in sense that if maintain present approach practically assures nothing other than limited agreement UK and restricted agreement with Canada and even under some circumstances no agreements.

6. Austral del pleaded lack of cabinet² and impossibility any Austral polit group agree reduction in Canada and UK preferences on dried and preserved fruits. On other hand USDel pointed out difficulty any Austral polit party refusing accept wool concession no matter what present economic value such concession might have.³Furthermore USDel indicated results Torquay conference not made public until May 9, well after April 28 Austral elections, while possibility good that info re inability Austral and US to arrive at successful conclusion of ‘agreement might well become public knowledge prior April 28 because UK and Canada cld use this fact as excuse or explanation of why negots with US were not more successful.

7. In view period for bilateral negots expires March 31 suggest strongest high level approach soonest to Austral Govt at Canberra and Wash for purpose preventing partial or even complete collapse US negots with Austral, UK and Canada. For Austral negots US requires in addition recession specified preferences.

(1) Agreement reduce preference margin in revising automotive items tariff;

(2) Agreement negotiate with Southern Rhodesia for reduction tobacco preference within reasonable time.

Austral del stated present offers to US with some improvement adequate warrant US wool concession. Austral offers consist reductions generally primary with, resulting rate still remaining high and margin of preference continuing large. Trade coverage present Austral offers at best 21.5 million dols while trade coverage US wool offers 70 million. If US offers valued at only 50 percent still outbalance Austral offers.

8. Not contemplated that New Zealand and South Africa wld present insurmountable obstacles to conclusion successful negots with Commonwealth. Canada will not object to reductions in preferences on important items of interest US.

Sent Dept 568, rptd info niact Canberra unn.

Corse

1. The United States negotiation with Australia was plagued with grave difficulties from the beginning of the Torquay Conference, necessitating a postponement of the opening of the actual negotiations from October 25 to November 24, 1950. This was because of disagreement within the United States Executive Branch as to the offer of the wool concession to Australia. (See Foreign Relations, 1950, vol. i, pp. 791 ff.) When the negotiation finally did start, the United States team immediately adopted the position that because of the scope of the United States wool offer the Australian offers were completely inadequate quantitatively as well as qualitatively.

   The generality of the problems besetting the negotiation as viewed from the United States side included the following elements: (1) The “justifiable high price” that the United States put on making a substantial reduction in duty on wool (the only important United States offer) and the consequent desire of the United States to obtain a substantial list of reciprocal concessions from Australia—particularly the insistence of the United States Department of Agriculture in obtaining concessions in the form of reductions of Commonwealth preference for the United States agricultural exports to Australia and other Commonwealth markets; (2) “The protectionist philosophy prevailing in Australia with its resulting refusal to grant meaningful concessions on manufactured products (again principally reduction in margins of preference)”; (3) Continued and strong support by Australia for the Commonwealth preference system; “there appeared to have been an understanding among Commonwealth countries, even partially agreed to by Canada, that margins of preferences would not be reduced substantially during the Torquay Conference.” (Report to the Secretary of State, Torquay Conference, Lot 57 D 284, Box 139)

2. The Government of Australia was relatively new in office after a long period of years in opposition during which it had consistently criticized the Labor Government’s adherence to GATT and the concessions granted under it. It had an adverse majority in the upper house of the Australian Parliament, and during the life of the Torquay Conference, encountered serious labor troubles and a legislative crisis so serious that it had to resort to the dissolution of Parliament and an appeal to the electorate. During the crucial last weeks of the Conference the Australian Government was a caretaker government.
3. During the negotiating stages of the Conference the price of wool, already very high, steadily climbed to previously unknown levels, decreasing the ad valorem incidence of the United States specific duty on raw wools to a low level which constituted no significant barrier to trade.