328 Commonwealth Government to Lord Cranborne, U.K. Secretary of State for Dominion Affairs

Cablegram 113 CANBERRA, 11 February 1942

SECRET AND IMMEDIATE

Your telegram D.67 and earlier telegrams Lease-Lend Agreement. [1] Commonwealth Government has been giving close consideration to this question. [2] We think that an agreement with United States should be reached as soon as possible and that the difficulties raised by Article VII should not be allowed to impede early agreement.

A general relaxation of trade barriers would seem to be possible if the positive aims of collaboration referred to in Article VII are achieved, i.e. 'the expansion of production, employment and the exchange and consumption of goods which are the material foundation of liberty and welfare of all people'. Australia would be willing to share in agreed action to achieve these positive aims. Consequently British countries should be prepared to accept the general commitments involved in Article VII even if this involved some modification of existing preference schemes.

Achievement of the objectives would obviously be gradual. In order to make this clear we suggest that the United States should be asked to amend Article VII so as to insert the word 'Progressive' before 'elimination' to read 'and to the progressive elimination of all forms of discriminatory treatment in international commerce . . . '. We consider this meaning is already implicit in the present wording and it need not be pressed if it proves quite unacceptable to the United States. [3]

Our view in short is:

a. Article VII can provide general basis of post war economic order so long as it is regarded as an objective to be realised gradually. b. We are committed to such an objective by Atlantic Charter and recent multilateral declaration of Washington. c. It is of supreme importance for British countries to assure U.S.

Government and world that our declarations are intended to be carried out in spirit as well as the letter. d. We must place trust in the common sense as well as idealism of those who will carry out the objectives of the proposed agreement. [4]

1 See Document 324, notes 2, 5, 6 and 9.

2 See Document 324.

3 This cablegram was repeated to the Legation in Washington as no.

28 with the advice that there was no objection to the views contained in it becoming known informally to U.S. officials. On 18 February the Minister to the United States, R. G. Casey, advised that the cablegram had been read in full to State Department officials, who bad reacted to it with 'distinct satisfaction'.

They had agreed to consider inserting the word 'progressive', but subsequently advised that they considered the point had already been covered. See cablegram 307 on file AA:A981, USA 203.

4 On 13 February Cranborne advised that, following strong representations from the U.S. Govt, the U.K. Govt had decided that to insist on reservations in Article VII would discourage public opinion in the United States and the United Kingdom. It was therefore proposed to accept the U.S. Govt's draft agreement, a course in which Cranborne assumed the Commonwealth Govt would, in view of its cablegram, concur. The Commonwealth Govt confirmed on 14 February that it did not desire the amendment to be pressed if it were unacceptable to the U.S. Govt. See cablegrams D86 and 192 from and 121 to Cranborne on file AA:A981, USA 203. The agreement was signed in Washington on 23 February by Sumner Welles, U.S.

Under-Secretary of State, and Lord Halifax, U.K. Ambassador to the United States. Halifax signed on behalf of the U.K. Govt only.

[AA:A989, 43/735/50/1]