370 Australian Government to Noel-Baker

Cablegram 26 CANBERRA, 4 February 1948, 3.10 p.m.

SECRET

Your telegram 25. [1] Trade with Japan.

1. We are glad to learn that your thoughts are running on similar lines to our own.

2. We fully agree with your view that comprehensive sterling agreement would be preferable to sectional bilateral arrangements and if we had known of your intentions it might have been practicable for us to put forward our proposals as part of a wider sterling area approach.

3. However, although our proposals have been put forward on a bilateral basis they could readily be merged in any wider arrangement that may subsequently be negotiated with SCAP and in the circumstances we feel it best to leave our offer on its present basis. We are reinforced in this decision by the belief that it may be possible to conclude our limited arrangement with SCAP almost immediately, whereas overall sterling area negotiations would necessarily take some time.

4. We are instructing our representatives in Tokyo- (a) to advise SCAP that we contemplate and would welcome the merging of any bilateral arrangement covering trade between Australia and Japan with a wider sterling area arrangement as soon as practicable, and (b) to keep in close touch with the United Kingdom Liaison Mission with regard to any developments in the wider negotiations.

1 Document 369.

[AA:A1838/278, 479/2/8]