Foreign Relations of the United States, 1977–1980, Volume XXII, Southeast Asia and the Pacific

256. Letter From Australian Prime Minister Fraser to President Carter¹

Canberra, May 24, 1978

My Dear Jimmy²

Thank you for your letter which Fritz Mondale handed to me during his recent visit to Canberra.³

My colleagues and I found our discussions with the Vice-President most useful and constructive. We attach genuine importance to consultations with you and senior members of your Administration, and in particular we welcomed the opportunity for talks with the Vice-President.

Those talks represented a valuable continuation of the discussions I had with you in Washington last year.⁴ On that occasion I believe we were able to gain a much clearer idea of each other’s views and interests in a wide range of areas—bilateral, regional and global.

We were reassured by the Vice-President’s clear statement of your Administration’s total commitment to the ANZUS Treaty and his reaffirmation of close United States interest in and commitment to the Asia/Pacific region.

I attach particular importance to our discussions of international economic issues. Perhaps more than anyone you will be aware of the very difficult problems of the world economy of the 1970s. In the last few years there has been only moderate growth in the major economies and the momentum of the present recovery is quite fragile. Confidence is lacking and there are increasing pressures on governments from sectional interests. The dangers of protectionism are increasing as countries compete for greater national shares of existing markets.

I know you will agree with me that this sort of destructive competition must be avoided. The real hope lies, I believe, in expanding markets and increasing trade overall. That is why I attach such importance to the current round of Multilateral Trade Negotiations and to discussions within the UNCTAD. I believe that a broadly-based liberalisation of trade can be the only basis for sustained and stable global economic growth. It must cover not only the immediate interests of the advanced industrialised economies but also those of agricultural producing nations and the rest of the world.

I would be less than frank with you if I did not express my grave doubts about the current proposal for a 40 percent average weighted tariff cut as a major initiative in the MTN. As I see it, the formula cut, if achieved, would not have a major early impact on trade among the industrialised nations and would do little to expand markets world-wide in the short term. With average tariffs around 10 percent and with the cuts spread over eight years from 1980, this amounts to an average of only half a percent reduction in tariffs each year. While I appreciate that a successful conclusion to the negotiations on industrial tariffs could have an important symbolic and practical bearing on the international trade outlook, the benefits of such small tariff reductions could tend to be negated by relatively minor movements in currency values.

Secondly, and of equal importance I feel, the proposed formula would be very unequal in its effect. While it covers about 40 percent of the exports of North America, Europe and Japan, it could cover as little as five percent of the exports of countries such as Australia and much of the developing world. In essence, if the MTN is to provide a significant early stimulus to world trade its final outcome must embrace a substantial liberalisation of trade in agriculture as well as manufactured products.

You will be aware I know of the importance Australia attaches to meaningful concessions on agriculture within the framework of the MTN, and I appreciate the efforts your government has made to have agriculture included in the MTN.

But Australia’s concern goes beyond our own national interests. Agriculture is of critical importance to most of the developing world. If the developing countries are to realise their vast potential for development and contribute as they might to sustained global economic growth, then their trading interests cannot be set aside as has happened so many times in the past. Failure to help meet their needs will only breed resentment and bitterness and could do grave damage to the interests of the West.

In many cases the developing countries’ interests will need special consideration. I believe we as developed nations should be prepared to make concessions to them in the MTN and the UNCTAD Negotiations on the Common Fund.

Merely holding the line against protectionism and preserving the status quo will not serve the purpose. I believe strongly that there must be positive and tangible advances to expand the trading opportunities of all nations if expectations of enhanced living standards are to be realised throughout the world.

I know that all Western leaders are very much concerned with the problems posed by the current international economic situation. Your own statements in South America and Africa and also those recently of Jim Callaghan hold out the hope that some real progress may be achieved. I was also encouraged by my discussions in Tokyo with Prime Minister Fukuda just before his departure for Washington last month. But while there appears to be some willingness to move ahead on the part of some individual European leaders, I am not confident that without some further outside pressure the European Communities as a whole will fulfil their obligation as a major and powerful world economic entity.

1978 is a year when important decisions will be taken whose effect could extend well beyond the present decade. I am sure that you and other major leaders will be very much aware of this when you meet in Bonn in July.⁵

The United States has an admirable record as a liberal trading nation and has provided a lead to others in promoting international economic growth. I believe that your government can and will provide the sort of leadership required to encourage greater commitment and co-operation in the present international effort.

I believe these matters are of great importance to the economic health of the world. I also believe that you as President of the United States hold the key to the successful reconciliation of the differing national interests which is needed to produce an enduring and equitable resolution of current difficulties, and that you are probably the only person who can motivate and achieve a proper outcome to the difficulties that are of so much concern to all of us. It is because of this that I have been anxious to meet with you again before firm decisions are made.

Yours sincerely,

Malcolm Fraser

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 4, Australia, 1978. No classification marking.
2. Fraser handwrote the salutation.
3. See Document 252.
4. See Documents 237 and 238.
5. The G–7 Economic Summit was held in Bonn July 16–17. For the minutes of the sessions, see Foreign Relations, 1977–1980, vol. III, Foreign Economic Policy, Documents 145–148.