Canberra, 16 October 1956

Secret

Trade with Communist China

On the afternoon of 15th October, we had a meeting between the Departments of Trade and of External Affairs on the attached draft Cabinet Submission on 'Trade with Communist China' which was prepared by the Department of Trade.¹

2. Waller,² Loomes, Brennan³ and I attended for External Affairs, and McClintock,⁴ H.G. Menzies, Phillips,⁵ and Street⁶ attended for Trade.

3. I expressed some doubts at to whether External Affairs could support at this stage a proposal to appoint an Australian Government Trade Commissioner in Peking. The following points were put forward:–

(a) This would be strongly opposed by the United States and, in view of the need for close association in defence in particular, the Australian Government might not want to cut across the United States in such an important matter. I outlined some of the recent indications of strong American feeling.

(b) It might be difficult to appoint a Trade Commissioner, without according some degree of recognition to the Communist Government (a Trade Commissioner could be appointed without giving recognition if Peking was prepared to co–operate, but they might well refuse to accept a Trade Commissioner unless we accorded some recognition. Menzies on the other hand expressed confidence that Peking would accept a Trade Commissioner without insisting on diplomatic recognition).

(c) Privileges and [Immunities].⁷ It might be difficult to have adequate safeguards in the absence of recognition. Menzies has no doubts that an Australian would be properly treated. McClintock thought that if we had Chinese Communist trade representatives here, their presence would provide a safeguard against maltreatment of our representatives in Peking.

(d) Trade's belief that big trading possibilities are open, and that they would be furthered by the presence of a Trade Commissioner in Peking, may be too optimistic.

4. I said I did not think that our Minister would want to join Mr McEwen⁸ in submitting this paper with the present recommendations. We might want to submit a parallel paper setting out the 'pros' and 'cons', from a political point of view, in appointing an Australian Government Trade Commissioner in Peking. I said that the draft Cabinet agendum had not yet been shown to either the Secretary or the Minister, but I would discuss the matter with them and try to let Trade have a reaction by Wednesday. Crawford⁹ and McEwen have given general blessings to this paper.

5. The draft Cabinet Submission also refers to strategic controls of Australian exports to China. The re–write, or possibly the deletion of that section from the paper, is to be discussed by Brennan and Phillips.

[NAA: A1838, 3107/38/1, ii]

1 This paper argued that Australia needed to develop market opportunities in the PRC and recommended, among other proposals, that an Australian Government Trade Commissioner be appointed to the PRC and stationed in Peking.

2 J.K. Waller, Assistant Secretary, Division III (Administrative), Department of External Affairs.

3 K.G. Brennan, Acting Assistant Secretary, Economic Relations Branch, Department of External Affairs.

4 E.P. McClintock, Director of Trade Services, Department of Trade.

5 G.P. Phillips, Assistant Secretary, Trade Policy Branch, Department of Trade.

6 F.V. Street, Assistant Secretary, Department of Trade.

7 Text in parenthesis was a handwritten correction in the original.

8 John McEwen, Minister for Trade.

9 J.G. Crawford, Secretary, Department of Trade.