402 Cabinet Sub-Committee on Trade and Employment Conference to Australian Delegation, Havana

Cablegram p0, CANBERRA, 4 March 1948, 12 noon

Your W.119, 122.

Ministers take a serious view of the progressive deterioration of our position in regard to the connection between the employment provisions of the Charter (Chapter II) and Article 89. Until recently it was clear (subject to the footnote to Chapter VIII of the Geneva text) that in the event of a serious depression and falling employment overseas we should be in a position to seek relief from our commercial policy obligations under the procedure of Chapter VIII. This has throughout the I.T.O. discussions been our cardinal point of policy which was in effect won at the First Session of the Preparatory Committee in London.[1] We have always insisted that the positive and negative aspects of Article VII of the Mutual Aid Agreement were interdependent. Chapter II owes its origin to you. Its effective force in I.T.O. depends on its relationship to Chapter VIII.

2. After our initial victory in London we have been forced back because of objections raised, particularly by South Africa in order to keep that country within the fold. Steady pressure has been brought to bear which has successfully relegated what we considered a vital right to a mere note in the Conference minutes to guarantee its existence. This makes it essential for Australia, irrespective of any alleged American political difficulties, to obtain satisfaction in regard to the new Articles 90 and 90A,[2] and the text and status of the interpretative note to Article 89.

[matter omitted]

4. We are uncertain from your W122 of exact status of the reference to be made to Article 3. A note in the sub-Committee's report might be of doubtful force. There ought also to be a note in the minutes of at least the Full Committee recording the opinion of the meeting, to place the matter beyond doubt. If others plead political difficulties our own must be considered more important.

5. We are not satisfied with the text of proposed minute given in your W122. Instead of the original text given in your W83 we would accept the following:-

'The Committee was of the opinion that a member might properly have recourse to Article 89 if serious unemployment or collapse of demand exists in another country even though action designed to achieve full employment and growing demand had been taken by such country under the obligation imposed by Article 3'.

6. If the United States will not agree publicly to minutes of this kind it is important to ventilate the matter now because otherwise the chances of obtaining a favourable interpretation a few years hence when we may need to take advantage of the provision would be negligible.

[1] See Volume 10, Document 177.

[2] Articles 90 and 90A concerned reference of disputes to the ITO.

[AA : A1068, ER47/1/34]