19 D'Alton to Evatt

Dispatch 10 (extracts) WELLINGTON, 31 January 1945

AUSTRALIA - NEW ZEALAND ECONOMIC AND WELFARE DISCUSSIONS WELLINGTON-JANUARY, 1945

I have the honour to forward the Summary of Proceedings of the Australian - New Zealand economic and welfare discussions held in Wellington between 23rd and 29th January 1945. From this report you will see that the discussions were grouped under the following headings:-

Employment;

Commercial Policy;

Development of Trade, and Miscellaneous Items.

2. EMPLOYMENT Consideration of Australia's detailed proposals for an international employment agreement occupied a great deal of the time of the discussions. As had emerged from the preceding exchange of telegrams [1], there was no disagreement with the Australian proposal that every effort should be made to push ahead with the joint approach to the United States and later with arrangements for an Agenda Conference between officials of the United States, the United Kingdom, Australia and New Zealand to prepare the ground for a full international conference.

3. On the other hand, the New Zealand representatives showed considerable reluctance to accept the detailed Australian statement [2] summarising the Commonwealth's attitude regarding the importance of an Employment Agreement and outlining the points deemed necessary for inclusion in any international agreement on this subject. The New Zealanders were not willing to accept this document in toto and in addition were not in a position to make detailed and constructive criticism of the Australian draft.

4. The discussions on this question revealed that New Zealand officials had not given the same thought and preparation to this topic as had been given in Australia. They confirmed my previous opinion that while the Prime Minister, Mr. Fraser, is fully convinced of the importance of the employment approach, some other members of his Government and senior officials are by no means so enthusiastic nor are they so conversant with the essential details as members of the Government and officials in Australia.

[matter omitted ]

6. In conclusion, however, as you will see from the summary of the proceedings [3], the New Zealand representatives agreed to the outline of the fundamental objectives of the employment approach as set out in the Australian statement, and they undertook to convey as soon as possible to Australia any suggestions or comments as to re-drafting.

7. There was some opposition to the Australian contention that an Employment Agreement should be administered by a separate international organisation, as the New Zealand Department of External Affairs' representative held strongly that this function should come under the Economic and Welfare Council of the proposed World Organisation. He was not convinced by the Australian argument that already other activities in the economic and welfare sphere such as Food and Agriculture and Relief were being administered by separate international organisations; which might in due time be brought under the control of the proposed World Organisation, nor did he agree with the argument that to plan an employment organisation on a different basis might subordinate its importance to already existing bodies. In view of the New Zealand Government's consistent policy of support for the League of Nations and its interest in the new World Organisation, it may well be that they will wish to continue their argument on this point. You will see that in the summary of proceedings it was agreed only that 'an appropriate international organisation should be set up', leaving the way open for discussions later whether it is to be a separate body or one coming within the Economic and Social Council of the World Organisation.

[matter omitted ]

10. COMMERCIAL POLICY In the discussion on commercial policy there was revealed I think, a lack of clear understanding on the part of the New Zealand delegates of the interdependence of international economic policy and domestic employment. Apart from this fundamental consideration few differences emerged in the viewpoints to be adopted in the event of international talks on world trade later this year. It should be remembered however that New Zealand has not been concerned with a wide range of commodities like Australia and apart from wool exports is interested only in meat and dairy products.

11. In regard to tariffs, representatives of both countries foresaw practical difficulties in accepting any formula cuts. The New Zealand delegates expressed the definite view that the granting of subsidies to industries could not be employed successfully as a substitute for protective tariffs but on this point the Australian representatives did not express any conclusive view. Both parties agreed that the abandonment of Imperial preferences could not be considered without drastic reductions or compensating benefits elsewhere.

12. In the discussions on quantitative restrictions, the New Zealand spokesman expressed the view that import control would be retained for purposes of national security and exchange considerations. It was clear, however, from remarks by other New Zealand delegates that import control machinery was also regarded as a means of selecting imports and protecting industry.

Australia, which has made use of the import control method for exchange conservation mainly and not as a protective device, is apparently not so concerned with overseas criticism of this method of restricting trade.

13. There was some discussion on the question of export subsidies and the United Kingdom proposals regarding the quantitative regulation of imports of foodstuffs. It was felt that further clarification of overseas criticism of assistance to exports should be obtained, as for example, it was not clear to New Zealand whether guaranteed minimum prices to dairy farmers were in question. Agreement was reached to a New Zealand draft telegram to the United Kingdom requesting further information concerning the regulation of imports.

14. On the subject of State trading the New Zealand delegation was most interested in retaining the right to continue with their organised marketing arrangements which, as you are aware, were in operation some years prior to the war. No definition of State trading was given but both countries felt that they should be free to enter into contracts for the bulk sale and purchase of goods in certain circumstances.

15. The development of international commodity agreements was recognised as providing a possible stabilising influence in world trade, provided such arrangements were not restrictive in character. Both delegations agreed to the establishment of a commercial policy organisation designed generally to examine ways and means of improving international commercial relations.

16. DEVELOPMENT OF TRADE Perhaps the most important feature of the discussions on the development of trade between Australia and New Zealand lay in the acceptance by the New Zealand officials of the clear statement by the Australian spokesman that by the nature of things there was no reasonable hope of reaching any equilibrium in the balance of trade between the two countries.

17. As I have reported from time to time, there has been criticism in the press and from organisations such as the United Kingdom Importers Representatives Association concerning the adverse balance of trade with Australia. While it is impracticable to prevent such press or public statements, it is now reasonable to assume that the New Zealand Government has carefully considered the position and has decided to accept it. Ample opportunity was afforded by the talks for New Zealand to bring forward any specific trade difficulties but the only item mentioned was that of the possible exports to Australia at a later date of soft-wood timbers and other wood products. It is realised in New Zealand that Australia is ready to take large quantities of timber, also fish, vegetable seeds and fodder from New Zealand when these commodities are available.

[matter omitted ]

1 See in particular cablegrams 4 and 5 to Fraser, dispatched 5 January, Fraser's cablegram 2, dispatched 7 January, and the Commonwealth Govt's cablegram 13 in reply, dispatched 15 January. On file AA:A1066, ER45/2/3/2.

2 'Draft Proposal for an International Agreement concerning Employment Policies', dated 15 January: On file AA:A1067, ER46/1/12. 3 on the file cited in note 1.

[AA: A4231/2, WELLINGTON 1945-70]