447 Commonwealth Government to Mr R. G. Menzies, Prime Minister (in Washington)

Cablegram 296 9 May 1941,

We understand it is likely that question of trade agreement will be raised by United States Government. Without finality in our discussions with United Kingdom on food supplies and in absence knowledge of nature of discussions between United Kingdom and United States on trade agreement affecting Australia it is difficult to advise you further at present. Macgregor [1] can inform you regarding position on our various commodities including the quantities being supplied by U.S.A. to United Kingdom under lend-lease programme. That information, together with data you have regarding prospective reductions in purchases from us, will enable you to judge the opportunities for us to fill the gaps caused in United States supplies.

Our capacity to contribute towards filling the gaps in United States supplies depends on available shipping and on readiness of United States to remove duties and other impediments on commodities of the classes which are going from U.S.A. to United Kingdom.

While a formal trade agreement now would present practical difficulties in view of- (a) the supply of United States goods to Australia under lend- lease programme, and (b) the difficulty of reducing duties and licensing restrictions here, or surrendering preferences on export commodities already experiencing adversity, we recognize that there may be considerable political advantages in closer commercial contacts, and we would examine any proposal.

We think however in view of war-time conditions that it would be more appropriate and would afford greater immediate compensations if there were an arrangement for Australia and New Zealand to supply United States with dairy products, meats and other goods made surplus owing to United Kingdom's reduced purchases. If refrigerated shipping not available even for Pacific transport we would have to process the foodstuffs to enable them to be carried as ordinary cargo.

Upon advice from you after your first discussions we can further expound our views in the light of what you tell us.

You will remember that, in our cable 185 of the 2nd April [2], we referred to the desirability of a plan for shipment of Australian goods to North America in ships which would not go into fighting zone, and shipping them, or equivalent quantities, to United Kingdom in Empire ships. In your cable 82 of 22nd April [3] you stated you had stressed fullest examination possibilities of shipments from Australia to West Coast of America and complementary shipment from East Coast to United Kingdom. This is the objective we wish now to pursue.

1 Government Trade Commissioner in the United States.

2 Document 377.

3 Document 423.

[AA: A3196, 1941, 0.5971]