My telegram E.47. [1] Additional reason for the postponement of
the proposed London talks is that the opening of general
discussions concerning commercial policy arising out of Article 7
might interfere [with] or delay the conclusion of agreements now
being negotiated.

It is in our interests that these negotiations should proceed
independently of the general discussions of commercial policy. On
the Australian export side American offers of a reduction of
duties by 50% on wool, meat and butter are of great importance.

Progress in the discussions has been delayed largely but not
wholly by the attitude of the United Kingdom to her proposed
second treaty with the United States.

The United Kingdom has not responded to the request by the United
States for modifications of certain preferences enjoyed by Empire
countries under United Kingdom tariff for which concurrence
various Dominions is required. Also the United Kingdom has not
followed up offers made by the United States to the United Kingdom
late in 1941, and has not signified whether she intends to proceed
with negotiations.

Apart from purely Australian point of view, conclusion of
agreements by the four Empire countries might well place the
Empire countries in a strategic position for any multilateral
discussions. Canada with two agreements with the United States has
reached a position where, because of the limitation on the power
of the United States administration to reduce tariff rates, the
United States is not in a position to offer any return for further
concessions by Canada.

If the agreements now in contemplation were made with the United
States by Australia, New Zealand, South Africa and the United
Kingdom they too would be in a similar position.

We have not yet exhausted capacity of the United States
Administration to offer concessions against tariff reductions.

If the agreements as contemplated were completed the United States
would in any multilateral discussions have to provide new
machinery to meet the obligations she has assumed under Article 7
of the Mutual Aid Agreement and to offset any modifications of
tariffs or preference which she desired of Empire countries.

Briefly, argument may be summed up:-

(1) Opportunity to get a substantial reduction in duty on
commodities of major importance to Australia and other Dominions
may pass and leave us regretting [sic].

(2) We have not yet exhausted the possibilities of the bilateral
trade negotiation system [2] for modification of duties by both
parties to a trade agreement.

(3) It is only if the possibilities of this method are exhausted
that the United States will be obliged to bring into the field of
discussion more fundamental review of their commercial policies as
a counterpart to their demands on Empire countries.

It is recommended that you represent urgently to the United
Kingdom:

(I) that we do not wish to miss the present opportunity to obtain
tariff concessions from the United States on commodities of major
importance to Australia by allowing relevant discussions of a
general nature, the outcome of which is necessarily uncertain;

(II) that we wish to proceed with trade agreement discussions and
would like further progress before beginning discussions of a
general nature;

(III) that the United Kingdom should advise us whether:

(a) they contemplate proceeding with negotiations for a further
bilateral agreement with the United States on the lines
contemplated when several-sided discussions were opened in 1941 on
the initiative of the United Kingdom;

(b) if they decide not to go on with a treaty they agree to meet
the request for concessions in their tariff required by the United
States as an offset to the benefits offered by the United States
to the Dominions concerned.