147 Chifley to Makin

Cablegram 1455 CANBERRA, 16 December 1947, 5.40 a.m.

ARTICLE 24 I.T.O. CHARTER

1 Your 1615. You may give Clayton the strongest assurances that the position of the Australian Government on Article 24, paragraph 2 of Draft Trade Charter is not influenced in the slightest by the failure of United States to support our eligibility to participate in the election of a thirteenth director of the Fund, and that the Government fully appreciates the attitude taken up by the United States in relation to the fourteenth directorship.

2. The objection of the Commonwealth Government has been confined to last sentence of paragraph 2 [1] which was inserted on the initiative of the United States at a comparatively late stage in the Geneva discussions.

3. For your own information, acceptance of this clause by the United Kingdom was gained in the course of bargaining on relaxation of non-discrimination clauses. A French delegate intimated confidentially to our delegation that, while they were unable to oppose the provisions openly themselves, they would be glad to see us keep up our opposition at Havana.

4. The clause as it stands places the administration of one of the vital provisions of the Charter under the ultimate control of the Fund, on which the United States has a predominating influence. We have maintained that while the Fund should be fully consulted by the Organisation on matters such as exchange restrictions which affect its special responsibilities, it would be wrong in principle for the final decision on issues arising under the Trade Charter to rest with another Organisation parallel but not superior in status.

5. We have had in mind that the still active opposition in Australia to the Bretton Woods agreements might easily extend to the trade Charter if it were found that a key clause in the latter document was to be administered in the last resort by the Monetary Fund.

6. Since under our proposed amendment it is provided not merely that the Fund would have a right to be consulted but that special weight would be given to its opinions we think that the Fund would have all the protection it could reasonably ask for its own interests and status.

7. Again, if the Fund were given the responsibilities prescribed in paragraph 2 amended as we propose [2], we cannot see how a need would arise for the Trade Organisation to create any additional machinery or Organisation for handling matters arising in this connection.

8. We think that besides giving Clayton the assurance referred to in first paragraph above you might put it to him that as members of the Fund we are anxious to promote its success; but we feel that more harm than good might be done by attempting to expand its authority at the expense of other organisations.

9. You could emphasize that while we recognise Clayton's own difficulties with Congress, we also have a Parliament and a people which have been induced to accept the Bretton Woods agreements only with great difficulty. We are most anxious that the prospects of Australian adherence to the Trade Charter should not be prejudiced by an unnecessarily close tying up of the Charter with the Bretton Woods agreements. At the same time we feel that in our proposed amendment we have gone a long way towards meeting the United States point of view.

10. It also seems necessary to make clear that in proposing our amendment we have no idea of requiring machinery to be set up within the Trade Organisation which would duplicate machinery available to the Fund.

11. A statement of our attitude on this issue is contained in United Nations document E/PC/W/T/279 which was circulated by our delegation at Geneva.

12. Would you please arrange for your cablegram 1615 and this reply to be repeated to High Commissioner, London and Trade Delegation at Havana.

1 The sentence read: 'The Organization ... shall accept the determination of the International Monetary Fund as to what constitutes a serious decline in the Member's monetary reserves, a very low level of its monetary reserves or a reasonable rate of increase in its monetary reserves, and as to the financial aspects of other matters covered in consultation in such cases.' 2 The Australian proposed amendment read: 'The Organization ...

shall give special weight to the opinions of the International Monetary Fund as to what constitutes ... in consultation in such cases.'

[AA : A3196, 1947, O.20876]