Cablegram 44  LONDON, 16 March 1944, 8.10 p.m.
Your 52. 
1. Commitment under Article 7 was for ultimate elimination of
preferences and all information heard indicates that U.S.A. is
pressing and will continue to press very hard for honouring of
this commitment by all British Commonwealth countries.
2. In addition industries affected are those of our primary
industries which rely on preferences in the U.K. market (our
secondary industries would not be affected) and in the last resort
continuance of these preferences depends not on what we are
prepared to do but on the U.K.'s own intentions. The United
Kingdom can terminate the Ottawa Agreement  by giving 6 months'
notice. This would of course leave us free to abolish preferences
now given in the Australian market to imports from U.K.
3. Nevertheless we have argued our case as strongly as possible
and position was I think fully safeguarded at the time by
subsequent comments. See our telegram 40, paragraphs 4, 5 and 6.
 Final summary of our views as now recorded is also I think
satisfactory. It reads as follows-
'The Canadian, South African, New Zealand and Indian Delegations,
however, stated that, although a radical adjustment of preferences
would involve serious problems of adjustment for their economies,
they would be prepared to face substantial reduction of
preferences extending to the abolition of some in return for
sufficiently extensive counter-concessions.
The Australian officials, while recognising some reduction in
preferences to be inevitable in accordance with the terms of the
Mutual Aid Agreement, explain that the Commonwealth Government,
before committing themselves to any substantial reductions, would
need a clear idea of the effect such reductions are likely to have
upon the Australian export trade.
The reduction of duties contemplated under the proposed tariff
formulae might not be sufficient to ensure that Australia had a
substantial market in the U.S. and, though Australia normally has
a large trade in European countries, such countries would not be
required to grant concessions which could contribute to the
increased trade in important Australian production, including
wool, though it might help in others such as beef and butter.
Commodity agreements, particularly in such products as wheat and
sugar, might be of considerable assistance, but in view of all
these uncertainties the Commonwealth Government may wish to retain
a fair margin of preference for products in the U.K. market.'
4. With regard to further U.K.-U.S. discussions no arrangements
have, so far as I have been able to find out, yet been made.