51 Chifley to Williams

Letter [CANBERRA], 1 September 1949

TOP SECRET

I refer to your memorandum of 22nd August on proposals relating to the liberalisation of intra-European trade and the relaxation of Section 9 of the Anglo-American Financial and Economic Agreement.

2. I very much appreciate your Government's action in approaching us on this subject in advance of the Washington negotiations.

However, I am not able to convey to you any change in the Australian Government's attitude towards proposals for the liberalisation of trade as explained to the Chancellor of the Exchequer by Mr. Dedman during the recent Financial Conference in London.

3. As Mr. Dedman then pointed out, we do not feel able to acquiesce in any arrangement which would result in the United Kingdom discriminating or appearing to discriminate in favour of the trade of the war shattered economies of Europe as against our own trade. The compromise scheme contemplated in paragraphs 8-10 of your memorandum would therefore not be acceptable to us. It would be most embarrassing for us if open general licences were to be issued for goods from European countries while similar goods of Australian origin were still being dealt with on an individual licence basis, even if, in practice individual licences were freely issued.

4. We feel strongly that any arrangement which introduces discrimination against goods from other Sterling Area countries, however nominal, is retrogressive and undesirable. Even though the extent of the discrimination may not be material, it inevitably prejudices the freedom of trade and financial relationships within the Sterling Area upon which so many of our mutually beneficial existing practices are founded.

5. As Mr. Dedman also explained in London we strongly support as an objective the creation of a multilateral trading system over as wide an area as possible, and therefore fully approve the intra- European liberalisation scheme [1] provided it extends, at least so far as action by the United Kingdom Government is concerned, to the Sterling Area Commonwealth countries.

6. We were glad to note that the United Kingdom Government have explained to O.E.E.C. countries that they can only liberalise United Kingdom import licensing provided that they were free to extend any relaxations to the whole Sterling Area, and that these assurances were repeated in the House of Commons.

7. We hope that your Government will be able to maintain this position both in O.E.E.C. and in Washington, without amending their stand in regard to both sterling area participation, and the relaxation of Section 9.

8. If your Government should proceed on the basis of paragraph 6 above, the selection of the actual commodities for which Open General Licences are to be granted is of considerable importance to us. We assume that in the preparation of any lists of commodities which are to be freed from restrictions your Government would consult with us.

1 A scheme under consideration by the member countries of the OEEC to remove or relax import restrictions on each others' goods.

[AA: A1838, 703/5/5]