For Melville from Minister for External Affairs.

1. Cabinet Sub-Committee met to discuss in provisional way work of
delegation. [2]

2. They were fully in accord with the great concern and with the
detailed points expressed by me in my telegrams [3] in relation to
adherence to the Australian point of view on commercial policy
discussions. They pointed out that your instructions were
contained in the written Australian - New Zealand arrangement in
relation to economic collaboration. [4] The Sub-Committee desire
discussions to proceed in an exploratory way and on no account
should they be broken off. But in view of Committee it is not
practicable to favour removal of Commonwealth preferences or
reductions of tariffs as immediate measure. It might be
advantageous to indicate this to all concerned. All your messages
are now being closely analysed by Departments of Customs and
Commerce.

3. Of course you will make it absolutely clear that there is no
commitment whatever on the Australian Government. In addition we
are anxious lest appearance of commitment on the official level
should embarrass the Government's ultimate decisions on these
matters. For that reason it seems to me that at present you should
avoid any commitment even on the official level, especially any
written expression of views.

4. It is important for you to emphasise that in the subsequent
proposed conversations between the United Kingdom and U.S.A. no
proposals can be advanced as having obtained the approval of the
Australian Government.

5. Cabinet Sub-Committee was anxious to know whether New Zealand
representatives had consistently supported the agreement between
the two Governments at Canberra, which agreement constitutes
instructions of yourself and your co-delegates.

6. With regard to the monetary question you should know that there
was substantial opposition in the Cabinet Sub-Committee to the
whole notion of a gold standard with sanctions. it was thought
this might be disastrous to Australia. It is agreed that the
detailed approach on this question has resulted in improvements.

At the same time you must not ignore the possibility or
probability of Australia refusing to come in.