Canberra, 4 December 1972

Secret

Normalization of Relations with China

Herewith is a copy of a Departmental paper on this subject which has been given to the Prime Minister–designate.¹ We don't know yet whether he will accept our recommendation that negotiations with the Chinese be taken up in Paris–as you know, he has spoken in the past about sending a mission to Peking to negotiate there–but if he does accept it you should find a good deal of useful background in the paper.

In a covering submission which otherwise summarizes the paper itself, and which we are not sending because we have only a few copies and the bag closes shortly, the Secretary has raised the question whether we should try to coordinate with New Zealand the nature and timing of normalization of Australian relations with the PRC. If Australia and New Zealand make markedly different arrangements with the Chinese, comparisons critical of one or the other Government might be drawn. On the other hand, coordination with New Zealand could both complicate and slow down our own approach to China and the Prime Minister–designate may feel that we should not go further than keeping each other informed.

[NAA: A3107/38/18/6, i]

Attachment

NORMALISATION OF RELATIONS WITH CHINA

INDEX–

A. PRELIMINARIES TO NEGOTIATIONS

1. ' Normalising' relations

2. Alternative bases of negotiations

3. The site of the negotiations

4. Timing

5. Approach to the PRC

6. Informing selected governments

B. THE COMMUNIQUE

1. Bank of China branch

2. Other ROC property

3. Unofficial relations with the ROC

4. Relations with the United States, VietNam

5. ASPAC

6. Future bilateral matters

D. ACTION REQUIRED SUBSEQUENT TO NEGOTIATIONS

1. Agreement with ROC on unofficial representation

2. Informing selected governments

Annexes:

A. PRC's conditions for diplomatic relations

B. Motives behind the Canadian formula

C. Principles of the UN charter

D. Texts of Joint Communiques issued by PRC with Canada, Mexico, Argentina, the Federal Republic of Germany, and Zaire

E. Australia's Continuing Interests in Taiwan

F. Draft PRC/Australia Joint Communique

Department of Foreign Affairs,

CANBERRA, A.C.T.

December 1972.

A. PRELIMINARIES TO NEGOTIATIONS

Before negotiations can be begun with Peking for normalising relations, Australian decisions will be needed on important matters of principle and procedure. What do we mean by 'normalising relations' . On which of the two principal alternative bases should negotiations be conducted? What should be our position concerning the PRC's claims to sovereignty over Taiwan, and to be the sole legal government of China or of the entire Chinese people? Where should the negotiations be held? What time–frames should we work to? How should we get the negotiations going? Which other countries should we inform? These matters, the choices which seem to be open to us, and the advantages and disadvantages of those choices, are canvassed in the following sections.

1. 'Normalising' Relations

2. A change in China policy is commonly thought of as involving recognition of the State and the Government of the PRC (both unilateral acts), establishment of diplomatic relations with the PRC (a bilateral act), and severance of diplomatic relations with the ROC.

3. On one view, however, this approach does not accord with the legalities. The argument runs that there is and for many years has been only one State of 'China' . whether designated PRC or ROC, and whatever its exact territorial extent. The question of State recognition, on this view, therefore does not arise. Further, as diplomatic relations obtain between States, not Governments, the question of establishing diplomatic relations does not arise either (assuming the second country was in diplomatic relations with the State of 'China' . in the form of the ROC, at the time that country changed its China policy). All that would be involved on this view, therefore, would be recognition of the Government of the PRC, the withdrawal of the accreditation of the Ambassador to Chiang Kai–shek and the accreditation of a new Ambassador to Acting Chairman Tung Pi–wu, and the removal of the Embassy from Taipei to Peking.

4. It was for reasons of this kind, as we understand it, that Argentina in its joint communique did not use the Canadian formula 'have decided to establish diplomatic relations' but instead used the formula 'have decided to normalise diplomatic relations' . arguing that Canadian–type wording had 'two–China' implications if used by countries which had previously had diplomatic relations with the ROC. Similar wording was used in the Zaire joint communique of 24 November 1972, though for what reason we do not know.

5. Our own legal view accords only partly with the foregoing. We agree that the question of State recognition does not arise, for the reasons stated, but that the question of Government recognition does. We agree too that diplomatic relations obtain between States, not Governments. But we do not agree that that leads to the conclusion that the question of establishing diplomatic relations does not arise. For the fact is that diplomatic relations are established by governments acting as 'agents' of their States; and if recognition is switched from one government to another, it is for the recognising government and the 'new' government to decide whether or not diplomatic relations should be established.

6. It is perhaps significant that the communiques of only Argentina and Zaire have been consistent with the first view, the great majority of communiques having been consistent with our own view in that (to take the Canadian case as an example) the two Governments in their joint communique said they had 'decided upon mutual recognition and the establishment of diplomatic relations' .

7. The Argentine approach seems to have little to commend it, either in point of law or public presentation. The Canadian approach, on the other hand, has several advantages. It is consistent with our legal view; it has been widely followed by other countries; it would be readily understood publicly; and it would be much less likely than the Argentine approach to lead to public questioning or to require technical explanation.

2. Alternative Bases of Negotiations

8. Diplomatic relations with the PRC could be negotiated either after severing diplomatic relations with the ROC, as Mexico did, or while maintaining diplomatic relations with the ROC, as Canada, Japan and most others have done–severance with the ROC corning only after the negotiations with the PRC had been successfully concluded and a joint communique issued.

9. One possible advantage of the Mexican approach is that it would give the PRC an earnest of where Australia now stands, thus clearing away the difficulties and misunderstandings of the recent past and perhaps easing the subsequent negotiations. Further if might give us a better chance of avoiding, as did Mexico, reference in the joint communique either to recognition of the Peking government as 'the sole legal government of China' or to Taiwan. (Whether these omissions really would have advantages, and whether they would in any case be attainable, is discussed further in Sections Bl and 2 hereafter.)

10. On the other hand, to follow the Mexican precedent by breaking with the ROC before entering negotiations with the PRC would have several disadvantages. First, it could complicate efforts to maintain trade and perhaps some form of unofficial relationship with the ROC, since it would be likely to cause more resentment in the ROC than the Canadian approach and since there would almost certainly be no Australian officials left in Taipei to work out a new unofficial relationship with the ROC after agreement was reached with the PRC. Secondly, recourse to the Mexican precedent would detract from the presentationally useful point that Australia has no wish to be gratuitously unfriendly to Taiwan but is forced, by the policies followed by both Peking and Taipei, to choose between them. Thirdly, critics could present our prior breaking with the ROC as indicating an unnecessarily cap–in–hand approach to the negotiations with the PRC. More substantively, the PRC itself might be less inclined in the negotiations to take account of Australian positions, since it would already have secured without effort on its part what it most wants–the severance of our relations with the ROC. Fourthly, if Australia were to break with the ROC first, we would be joining the small and not very relevant company of only Mexico and Jamaica. Finally, we could not be certain that, even if we had broken with the ROC in advance, the PRC would agree to a Mexican type of communique.

11. Until very recently it looked as if Mexico's prior break with the ROC had been the principal factor in its attaining the very 'soft' communique it did. Recently, however, there have been the contrary examples of Jamaica and Zaire. Jamaica broke with the ROC some weeks before issuing a communique with the PRC (21 November), but this communique nevertheless referred to Jamaica's recognition of the Peking Government as the sole legal government of China, although the Taiwan issue was not mentioned. Zaire did not effect a prior break with the ROC, and for the moment at least the diplomatic link has not been formally broken by either side, yet the Zaire communique (24 November) was as 'soft' as Mexico's, containing no reference either to Peking as the sole legal government or to Taiwan. Zaire's is the first case in which a country in diplomatic relations with the ROC at the time a joint communique with the PRC was issued has obtained such 'soft' terms.

12. It seems to us that the decision whether to follow the Mexican or the Canadian precedent will depend mainly on whether it is decided that there are advantages in avoiding any reference in our communique to either the sole legal government formula or the Taiwan issue or both; on whether it is assessed (or known by prior enquiry) that such omissions–the Zaire precedent notwithstanding–would be acceptable to the PRC only if we first broke with the ROC; and on whether we were prepared to accept that condition. These matters are examined hereafter in Sections B 1 and 2.

3. The Site of the Negotiations

13. Since Canada negotiated diplomatic relations with the PRC in Stockholm, many other countries have conducted similar negotiations in a wide variety of locales. Most such negotiations have taken place in third countries, though a number of communiques have been negotiated in Peking or on the territory of the second country.

14. If we wished to negotiate in Peking, the Chinese would probably be happy to accede. There would, however, be disadvantages in sending people to Peking to negotiate normalisation in a one–shot operation, particularly given that we cannot know with any certainty beforehand what line the PRC will take on the various issues, or even what issues it will wish to raise. In Peking our people would have no secure communications with Canberra (unless the Government were prepared, as we assume it would not be, to use the facilities of the British or Canadian Embassies and thereby make them privy to the negotiations). If difficulties arose requiring reference home, the negotiations could well turn out to be more time–consuming than if conducted elsewhere. Even if no real difficulties arose, we assume Ministers in Canberra would prefer to be in a position where they could monitor the negotiations as they proceeded and have the opportunity to influence their course, rather than to be in a position of having either to endorse the agreement reached in Peking or to reopen the negotiations.

15. The PRC might perhaps accept an invitation from us to send a delegation to Canberra to negotiate normalisation. The fact that this would have the same drawbacks for the Chinese as negotiating in Peking would have for us, may incline them to prefer negotiations in a third country. On the other hand, the PRC might see advantages in embarrassing the ROC by negotiating normalisation under the nose of the ROC Embassy in Canberra (assuming it was still here). The PRC has been prepared in the past to send delegations to the second country to negotiate normalisation even when there was a ROC mission in that country. (The PRC's present unwillingness to send delegations to Washington to deal with the United States presumably derives from the fact that the United States has made it clear that it intends to preserve the diplomatic link with the ROC for the foreseeable future.) There would, however, be some disadvantages for us if the negotiations were held in Australia. Delegations would be the object of intense press attention and speculation, a factor which would probably not assist the negotiating process and which could be unwelcome to the Chinese visitors. Again the ROC would probably take the view that the decision to hold negotiations in Canberra was an additional affront to them and their protests could thus be more acrimonious than if the negotiations were held elsewhere. This could affect the atmosphere of any parallel or subsequent talks with the ROC on unofficial representation.

16. Most countries which have negotiated normalisation of relations with the PRC since 1970 have done so in third countries, the most popular site being Paris. (Other cities where negotiations have taken place are Stockholm, Bucharest, Islamabad, Ottawa, Copenhagen, Rome, Tirana and London.) Given the disadvantages of Peking and Canberra as sites for negotiations, we think a third country the most suitable. Paris appeals as the most appropriate site. The PRC Ambassador in Paris, Huang Chen, is a senior man, the only full member of the Party Central Committee accredited as an Ambassador abroad, and he has in the last couple of years negotiated communiques on diplomatic relations with at least six countries. Our Ambassador there, Mr Renouf, has already had exchanges with him on Sino–Australian relations.

4. Timing

17. The Government having decided to normalise relations with China, the job should clearly be carried through as speedily as may be. But we see several disadvantages in announcing publicly a rigid time–table for negotiating a joint communique and for installing an Ambassador in Peking.

18. First, the experience of other countries suggests that the process can take a considerable time. The three months it took Japan, after the formation of the new Japanese Cabinet, to sign a joint statement with China was not unusual; and the five countries which specified in their joint communique that Ambassadors would be exchanged within a stated period (three months in three cases, six months in the other two) failed to meet their deadlines. (It is extremely difficult to get suitable office and residential accommodation in Peking.)

19. Secondly, should the negotiation of the joint communique tum out not to be a straightforward task, the Chinese could be tempted to exploit our publicly–announced time–table by refusing to budge on some contentious issue, counting on us to give in as our self–imposed deadline drew nearer. (We think here in particular of what is to be said in the communique about the territorial question of Taiwan. If you are prepared to give explicit endorsement in the communique to Peking's claim to sovereignty over Taiwan, negotiating the communique should be relatively easy. But if you were to wish for a Canadian–type formula, we must be prepared for the Chinese to stick out against it on the ground that you have yourself made public statements in effect endorsing the PRC's claim to Taiwan–e.g. NCNA reported that on 24 July at a luncheon in honour of the PRC table tennis team you said 'There is only one China. Peking is the capital of one China. Taiwan is a province of one China' .)

20. Finally, and perhaps most importantly, the announcement of a tight time–table could be represented in Australia and abroad as displaying an unnecessary and precipitate eagerness to gain favour with Peking, and as a bad start to a more independent and dignified foreign policy.

21. None of the foregoing is to say that we should not press every effort to normalise relations with Peking as soon as possible, or that we should not have our own privately-set time-table to adhere to if at all possible. It is simply the public announcement of a tight time-table which seems to us to have disadvantages, and to be unnecessary given that the Government would no doubt take an early opportunity to announce that negotiations were about to begin, or had already begun, to normalise relations.

5. Approach to the PRC

22. A decision having been taken to enter into negotiations with the PRC with a view to normalising relations, it will be necessary to apprise the PRC of this intention and reach agreement with it on the site for negotiations, designated representatives, etc. Any of our heads of mission accredited to countries where the PRC is also represented could convey an initial message to his PRC colleague with a request that it be passed to Peking. For the reasons outlined above, Paris appeals as the most appropriate place for this message to be passed and for subsequent passages in this initial exchange, on the question of the site and other arrangements, to take place.

23. The initial message to the PRC could take various forms. We think it preferable that it be in the form of a message from the Prime Minister to Premier Chou En–lai. The introduction of a personal favour into this initial, and historic, message would we think be well received in Peking. It would have the effect of setting behind us past difficulties and misunderstandings and be helpful in establishing the atmosphere of the negotiations. Apart from conveying the wish to enter into negotiations to normalise relations, this message might also propose the site for negotiations. (Alternatively, the question of the site could be raised orally when conveying the message.) The message could be phrased in such a way that, after a personal acknowledgement from the Chinese Premier, subsequent exchanges on the details of setting up negotiations could take place at a lower level.

24. A further matter for decision is whether the initial message should immediately be made public, whether it would be more appropriate to wait for the initial Chinese response, which we would expect within a matter of days, or whether it would be best to wait until the arrangements for the negotiations had been agreed in detail. Our own view is that the first course would be premature and the third unnecessarily delayed, and that the second course–a public announcement that we had proposed and China had agreed to negotiate the normalisation of relations in, say, Paris–would be best.

6. Informing Selected Governments

25. We believe it would serve a useful purpose if selected governments were informed confidentially of impending changes in Australia's China policy at least a day or two in advance of any public announcement, and perhaps before we approached the PRC. We have in the past been scrupulous in keeping a number of governments abreast of developments in our China polity (e.g. the exchanges in Paris). This gesture has been appreciated by the governments concerned and has been a useful means of building up our relationships with them. South East Asian governments in particular, for all of whom relations with China is a complex and sensitive issue, have appreciated our keeping them informed. Were we to act without giving these governments any warning, resentments could be aroused which could adversely affect our wider relationships with them.

26. Asian governments which might appropriately be informed by our heads of mission at a suitably senior level are those of Indonesia, Japan, South Korea, Malaysia, Philippines, Singapore and Thailand. You may consider it appropriate to inform Mr Somare² at the same time. Other governments which should similarly be informed are those of New Zealand, the United States and the United Kingdom. It would also be a courtesy to apprise the government of the country in which negotiations were to take place of this fact in advance of the news becoming public knowledge.

27. There also arises the question of informing the ROC of impending changes. Our view is that the ROC, as the entity most affected, should be informed at least a day or two in advance of these other countries. If we intended to remain in relations with the ROC while negotiating with the PRC, we would envisage informing the ROC of our approach to the PRC before passing this on to others, and perhaps keeping it broadly informed on the likely timing of agreement. Finally there would be the occasion when we informed the ROC of the form of agreement and of its imminent public release, again ahead of other governments. It may be possible to use these meetings to discuss the form of residual unofficial relations, though the ROC may refuse to respond until we had actually reached agreement with the PRC.

28. If we were to take the Mexican approach and sever relations with the ROC as a first step, we should aim to give the ROC as much advance notice as possible, again before informing other governments, and again seeking to reach understanding beforehand on the shape of residual relations.

B. THE COMMUNIQUE

1. The Taiwan Issue

29. We do not know whether the PRC will insist upon a reference in the communique to the territorial issue of Taiwan (which is logically quite separate from the issue of which government is the legal government of China). Nor do we know, if it does so insist, what precise wording it will want.

30.What we do know on the question of a reference to the Taiwan issue is what China has agreed to with other countries, and what the Chinese Ambassador in Paris said on instructions to Mr Renouf in March this year. But neither provides certain guidance.

31. China does not seem to have followed a consistent pattern on including a reference to Taiwan in its joint communiques. Some communiques with countries in diplomatic relations with the ROC have included a reference, others have not. Most communiques with countries not in diplomatic relations with the ROC have omitted any reference, but Iceland's included one. Perhaps it depends in part on the other country's wishes and whether China regards that country as significant.

32. Nor is what the Chinese Ambassador told us in Paris very helpful. He did not explicitly say that Australia would have to recognise or at least take note of the PRC's claim to Taiwan; but he did say that 'Australia must ... promise neither to support nor to take part in the fallacies of the Two Chinas, One China–One Taiwan, an independent Taiwan, and the fallacy that the status of Taiwan remains to be determined' . (The full text is at Annex A.) This left the PRC's options pretty open. In any case, the PRC's attitude to the then Australian Government is not a conclusive guide to its attitude to the present Government.

33. We think that, especially in view of our place in the region and our tangible interests in Taiwan, together with the fact that China has become something of a public issue in Australia, it is quite possible that China would not be prepared to pass over the Taiwan issue in silence. But we can by no means rule out a 'lenient' Chinese attitude, especially if we had followed the Mexican precedent by first breaking with the ROC, or if you were to agree that the PRC could quote publicly in a unilateral statement your own statements, when Leader of the Opposition, to the effect that Taiwan is part of the PRC.

34. If, rather surprisingly, China were not to insist in our case on a reference to Taiwan, would we nevertheless ourselves wish to include a reference? There are probably presentational advantages in having a communique which did not refer to the Taiwan issue. On the other hand, given the widespread Parliamentary, press, and public interest in this matter, it is highly likely that the Australian Government would find it necessary to take a public position on the issue of sooner or later. If that is so, there could be advantage in getting the matter over and done with in the communique itself in words which we could be sure would not be challenged by China. Certainly, if there were no reference in the communique, it would be wise to reach agreement with the Chinese during the negotiations on the form of words the Australian Government would use publicly if forced to it.

35. To our mind, the advantages of omitting any reference in our communique to the Taiwan issue–especially given the probable need to make a public statement on that issue anyway–would not outweigh the disadvantages (see para 10 above) of our breaking first with the ROC if, notwithstanding the Zaire precedent, that were the only way of securing China's agreement to the omission.

36. Assuming that either the PRC or Australia or both would want a reference in the communique to Taiwan, the question arises as to the form of words to be used.

37. At the extreme is the formula used by the Maldives–and only by the Maldives–unreservedly endorsing the PRC's claim to Taiwan: 'The Government of the Republic of the Maldives recognises that ... Taiwan is an inalienable part of the territory of the People's Republic of China' (October 1972). We are not sure whether you would wish to go as far as this, despite your public statements which have been noted by the PRC.

38. In the first place there is your earlier statement, on your return from Peking, that you had secured Chinese agreement to the use of the Canadian formula.

39. Secondly, there could be disadvantages, both internationally and in Australia, in going so far as complete Governmental endorsement of Peking's claim in a formal communique. Endorsement of this kind would make it very difficult for Australia to protest against any future move by Peking–unlikely as this seems at present–to recover by force of arms an island we had recognised as being part of China's sovereign territory. Equally, such endorsement would make it very difficult to find a ground for not condemning any counteraction that might be taken by the United States under its Security Treaty with the ROC. For this reason, there could be an adverse United States reaction if Australia were to give specific endorsement to Peking's claim, going in the process further than any other country but the Maldives. There would almost certainly be a strong ROC reaction, with damage to our trade. There might also be some loss of confidence in Australia among our South East Asian neighbours, who would tend to see us as having gone closer to Peking than necessary. Unqualified endorsement of Peking's claim could also give substance to charges that Australia had 'abandoned' Taiwan, a country with a population a little larger than our own. (Canadian views on this general question, at Annex B, are interesting in this connexion.)

40. We are not sure, however, that China would insist on our going as far as the Maldives. Our best guess is that the Chinese might well begin by asking for the Maldives formula, but would in the end not insist if we maintained firm opposition to unqualified endorsement but came some way towards their position.

41. If that guess is right, there are several other formulas which various countries have used, all of them falling short of endorsing Peking's claim to Taiwan. The earliest, and the 'softest' version is the 'takes note' formula, used by Canada and explained by its Foreign Minister to mean that Canada 'neither challenges nor endorses' the PRC's position that Taiwan is an inalienable part of the territory of the PRC. The Canadian formula has been used in a substantial number of subsequent communiques, sometimes with very minor variations such as the Belgian 'takes notice' . Other countries have used formulas which appear to take them somewhat closer to the PRC position–for example, the Japanese formulation that it 'fully understands and respects' China's stand, and the (earlier) Netherlands formulation that it 'respects' China's stand. The most extreme formula, though still just short of outright endorsement, was that used by Britain–' .cknowledging the position of the Chinese Government that Taiwan is a province of the PRC' . the Chinese characters used for 'acknowledging' being the same as those used elsewhere in the communique for 'recognising' (in the sense of diplomatic recognition).

42. Of these formulas, the Canadian is to our mind the one which Australia should seek. It reflects better than the others the basic position of 'neither challenges nor endorses' ; and it was the Canadian formula of which you spoke on your return from Peking.

43. This conclusion would of course be irrelevant if you were to decide, and the Chinese were to agree, that the Taiwan issue should not be referred to at all in the communique.

44. In that event, we should reach agreement with the PRC on what the Australian Government would, if forced to it, say in public on the Taiwan issue. Here again the alternatives range from outright endorsement to something less than that, such as Mr Mitchell Sharp's 'neither challenges nor endorses' Peking's claim, or President Nixon's 'does not challenge that position' (that 'all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China' ., or Mr Bowen's 'notes the claim made on either side of the Straits of Taiwan that there isonly one China and that it includes Taiwan'. Of these last formulations, we should ourselves prefer Mr Mitchell Sharp's, and in any case doubt that the PRC would accept either of the other two since they in effect equate the claims of the ROC and PRC to Taiwan.

2. Sole Legal Government

45. Since Canada's breakthrough, all countries except Zaire in diplomatic relations with the ROC when their joint communiques with the PRC were issued recognised in those communiques the PRC Government as the sole legal Government of China (or, in some cases, of 'the entire Chinese people' .. Six of the countries never in diplomatic relations with the ROC likewise recognised in their communiques the PRC Government as the sole legal Government of China; but two–Germany and Guyana–did not. Of the two countries which broke with the ROC before issuing a joint communique with the PRC, one–Mexico–did not recognise the PRC Government as the sole legal Government of China, but the other–Jamaica–did (on 21 November 1972).

46. This reveals no consistent pattern; and we are unable to explain why Zaire, Mexico, Germany and Guyana alone have not been required to recognise Peking as 'the sole legal Government' of China. Perhaps they gave assurances outside the communique, or there may have been considerations in each case which led the PRC to waive its usual requirement. Overall, however, the experience of the overwhelming majority of other countries which have recently negotiated with the PRC, our place in the region and our tangible interests in Taiwan, and the fact that China has become something of a public issue in Australia, suggest we could well be pressed by the PRC to go on record in the communique as recognising its Government as 'the sole legal Government' of China.

47. Even if in our case the PRC did not insist on a sole legal Government reference, would we nevertheless ourselves wish to include a reference? The arguments for and against parallel those set out in the preceding Section on the Taiwan issue: a possible presentational advantage in having no reference, as against the strong likelihood that that would not enable the Government to remain silent on the point in public for very long, and the advantage of getting it over and done with in the communique itself. Moreover, unlike the Taiwan issue, there is no need for hesitation about coming out with a forthright statement: clearly our position must be that the PRC Government is the sole legal Government of China.

48. Should you wish to avoid a 'sole legal Government' reference, the fact that three of the four countries which have managed to avoid it have not been in diplomatic relations with the ROC when their communique with the PRC was issued suggests that our chances might be improved by breaking with the ROC beforehand. As set out in Section A2, however, this step would have its own disadvantages. Even if the PRC agreed to the omission of the 'sole legal Government' passage, it would very likely require a private undertaking that we did in fact recognise the Government of the PRC in these terms.

49. As to the precise terms to be used, whether in the communique or in a unilateral Australian statement, the experience of other countries, and the advice conveyed to Mr Renouf in Paris (Annex A), suggests that China would probably like 'the sole legal Government of the entire Chinese people' . But we think the PRC would be prepared to settle for 'the sole legal Government of China' . the formula used in the majority of communiques. We suggest that Australia propose, and not depart from, this second formula, since the first could be construed not only as an implied recognition of Peking's claim to Taiwan (which may not be troublesome) but also as acknowledging some special Chinese position in relation to the Overseas Chinese in South East Asia (which the PRC does not in fact seek). Especially given the sensitivity of Asian countries on this issue, and the importance of our not upsetting our relations with them, we think it would be most undesirable to propose, or agree to, or use unilaterally, 'sole legal Government of the entire Chinese people' .

3. Other Matters

50. (a) The Five Principles. Most of the joint communiques on diplomatic relations issued over the last two years have contained preambular reference to the 'Five Principles of Peaceful Co–existence' as the basis of the two countries' future relations. The usual Chinese formulation of these principles is along the following lines:

'The principles of mutual respect for sovereignty and territorial integrity, mutual non–aggression, non–interference in each other's internal affairs, equality and mutual benefit, and peaceful co–existence.' (From the Sino–Japanese joint statement.)

We understand this reference to the Five Principles has usually been inserted at the initiative of the PRC, which takes the view that acceptance of the principles of 'mutual respect for sovereignty and territorial integrity' and 'non–interference in each other's internal affairs' reinforces its claim to sovereignty over Taiwan. Practice has varied widely but these two principles have often been mentioned in communiques without reference to the others; in other communiques there has only been generalised reference to the Five Principles without elaboration. While there is nothing in the above formulation of the Five Principles to which one could take exception (their bearing on Taiwan is a matter for interpretation by each side), we would prefer–if there is to be any reference at all in the communique to the 'Five Principles' .mdash;the rather more generalised formulation used in the Sino-US communique of 27 February 1972 (differences underlined):

' ... the principles of respect for the sovereignty and territorial integrity of all States, non–aggression against other States, non–interference in the internal affairs of other States, equality and mutual benefit and peaceful co–existence' .

This formulation appeals because of the bearing it has (or could be interpreted to have) on the particular problems of our South East Asian neighbours vis–a–vis the PRC. It could also be useful to weave in a reference to the Principles of the United Nations Charter (see Annex C). Unlike the Bandung Principles, Australia had a hand in drafting the UN Principles. Moreover, the reference would emphasise our attachment to the Charter. The PRC would probably accept some reference; it subscribes to the Charter, and agreed to a reference in the Japanese communique (though in terms not very useful for our purpose).

51. (b) Ambassadorial Deadline. Several of the joint communiques on diplomatic relations have referred specifically to an agreed deadline for the exchange of Ambassadors. Thus the Canadian and Austrian communiques specified 'within six months' (a deadline which both failed to meet in the event) and the Italian, Belgian and Lebanese communiques specified 'within three months' (with each again failing to meet the deadline). When negotiating with countries currently having relations with the ROC, the PRC has an interest in obtaining specific agreement on an early exchange of Ambassadors with the recognising country as this in effect sets a deadline for the dissolution of political relations between that country and the ROC. We expect therefore that the PRC will press us to agree on a specific deadline for an exchange of Ambassadors. As we may be unable to meet a deadline, our preference would be to avoid agreeing on specific timing in the communique. There is considerable pressure on suitable residential accommodation and office space in Peking, and the experience of others indicates that the setting up of the mission there will be administratively difficult and time–consuming. We suggest wording along the lines of the less specific formulation employed by Turkey which read:

' the Chinese and Turkish Governments have decided to exchange Ambassadors as soon as the administrative formalities and practical arrangements have been completed ... '

Usages by other countries have included 'within the shortest possible period' . 'as soon as possible' . or 'as speedily as possible' (Japan).

52. (c) Establishment of Embassies. Another common feature of many joint communiques from the Canadian one onward has been their mention of agreement mutually to provide assistance with the establishment and the performance of functions of embassies. A suitable formulation, drawing on these earlier communiques, might run as follows:

' .he two governments have agreed to provide each other with all the necessary assistance for the establishment and the performance of the functions of diplomatic missions in their respective capitals, on the basis of equality and mutual benefit and in accordance with international law and practice' .

53. (d) Size of Embassies. There is no need to try in the communique to specify or to limit the size of our Embassies. We have the right to limit the size of other countries' Embassies; and in any case that is implied in the wording at the end of the formulation suggested in (c) above.

54. (e) Bilateral Matters. Some joint statements have contained specific references to agreements on bilateral matters. Thus the Argentine communique referred to agreement to develop trade and the Japanese statement referred to agreement to negotiate trade, navigation, aviation and fishery pacts. We see some presentational advantages in having a similar passage in our communique, to emphasise that there is more substance to normalising relations than simply exchanging Embassies. Time will probably preclude any very detailed exploration of these bilateral matters during the negotiations, but a general reference to future developments in these fields would make the point satisfactorily and provide us with a useful peg on which to hang our future approaches to the PRC. This passage in the communique might run as follows:

' .n the interests of developing a more substantial relationship between the two countries, the two Governments have agreed to consult further with a view to adopting active measures to facilitate exchanges in a wide range of fields including international developments generally, trade, civil aviation, the arts and sciences' .

55. It is also for consideration whether we should seek from the PRC an endorsement in the communique of one or another important policy of the Australian Government. This would seem a reasonable enough position if our communique were to include a reference, even if only the 'takes note' formula, to Taiwan. Several countries have in fact secured the PRC's endorsement of policies important to them. Thus the PRC endorsed the claims of Peru and Argentina to sovereignty over a 200 nautical mile maritime zone, Mexican advocacy of a nuclear weapon free zone in Latin America, and the policy of neutrality espoused by Austria. The difficulty is in our case to think of an appropriate matter on which Chinese endorsement would be useful to us. Our claims in Antarctica are perhaps a parallel to the Taiwan claim; but we see little advantage in raising that matter. Other matters of interest to us, such as nuclear testing, would not engage a useful Chinese response; and yet other matters, such as PNG, seem hardly appropriate. Our feeling is that it would not be worthwhile seeking some quid pro quo.

56. The text of a possible draft communique is set out in Annex F.

C. OTHER NEGOTIATING MATTERS

1. Bank of China Branch

57. he Bank of China, owned by the ROC Government, was allowed to establish a branch in Sydney during the war years–largely, it seems, as a political gesture to an ally. It has operated since 1945 under Terms of Authority issued under the 1945 Banking Act. Its business is small and confined to servicing the needs of the ROC Government and the Chinese community in Australia.

58. The PRC's People's Bank of China claims the ROC Bank of China. It is possible, therefore, that the PRC will seek during the negotiations, or after recognition, to take over the Sydney branch, either by agreement with the Australian Government or conceivably through legal action in the Australian courts.

59. If the Australian Government would not object to the PRC Bank's establishing a branch here, whether by taking over the ROC branch or by establishing a separate branch of its own, there is no particular problem. But if the Australian Government were to object–for example, on the grounds of general Treasury policy against foreign banks setting up here, or because it would add to pressures from other foreign banks to be allowed to open here, or on security grounds–it would be best if the ROC branch were withdrawn before or anyway immediately after recognition of the PRC.

60.But we doubt that the ROC would voluntarily withdraw the branch. For in December 1971 the ROC reorganised its Bank into a privately–owned bank and changed its name to the International Commercial Bank of China (ICBC), evidently as a device to protect the Bank's overseas assets from PRC claims should the country concerned enter into diplomatic relations with the PRC. Even after Australian recognition of the PRC, therefore, the ROC might decide to sit tight in Sydney, notwithstanding the PRC Bank's statement in March this year that its long–standing claim to the ROC Bank was unaffected by the ROC Bank's 'reorganisation' .

61. It therefore seems that, if the Australian Government were to wish the ROC branch to withdraw, either to tidy up the situation in light of the break with the ROC or to avoid possible political and legal complications with the PRC, it could well be necessary for the Government to put some pressure on the Sydney branch. It may be that an approach to the ROC Government would be sufficient, notwithstanding the nominally private character of the reorganised Bank. If that were not sufficient, it might be possible to find legal grounds for withdrawing, or regarding as lapsed, the Authority issued to the (now defunct) Bank of China. The feasibility of this course is problematical, however, especially in view of the decision by Ministers on 29 November 1972 to accede to the long–standing request from the Manager of the Sydney branch to amend its Terms of Authority to take account of the change in the name of the parent bank. (This action probably weakened the legal grounds for moving against the Sydney branch because, by implication at least, it accepted that all that was involved was a change of name and that this did not materially affect the continuing validity of the Sydney branch's Terms of Authority.)

62. We think it unlikely that the PRC will even raise this issue during our negotiations on diplomatic relations, let alone make acceptance of its claim to the Sydney branch a pre–condition for diplomatic relations. (The issue was not raised with the Japanese, although there are ROC Bank branches in Japan.) But it would be as well to be prepared to respond one way or the other if it is raised–if the branch has not already removed itself, either voluntarily or under pressure.

2. Other ROC Property

63. A claim could conceivably be lodged by the PRC to other ROC premises and property in Australia, but we assess that the chances of this issue coming up in the negotiations are even less likely that the Bank issue's being raised.

64.Our view is that, were the PRC to pursue with us any claim to ROC property in Australia, our basic attitude should be one of resistance to the PRC and assistance to the ROC in disposing of that property. Amongst other things, we will need to bear in mind that we have property of our own in Taiwan which we will wish to dispose of.

3. Unofficial Relations with the ROC

65. Section D 1 of this paper discusses means which might be adopted to protect our residual interests in Taiwan. Going on the experience of other countries, we would not expect the PRC to make an issue of such unofficial arrangements during the negotiations. We ourselves, however, would have an interest in gaining at least the PRC's tacit acceptance of these arrangements before we proceeded to put them into effect.

66. There are good grounds for believing that the PRC would not make an issue of residual unofficial contacts. We understand that during the Sino–Japanese negotiations last September, Chou En–lai made no objection to Tanaka's³ statement that, while Japan would sever diplomatic relations with the ROC, 'in every other respect relations would continue as before' . Chou is even reported to have suggested to the Japanese that the 'unofficial' Japanese Memorandum Trade office in Peking could serve as a model for Japanese representation in Taiwan. Since then Japan and the ROC have been working out detailed arrangements for an exchange of 'liaison offices' . We know also that, when so informed by the Austrians, the PRC did not reject the idea of the ROC's setting up a private trade office in Vienna; its main concern was that the name of this office should not reflect a connection with China.

67. Our residual interests in Taiwan will not be anywhere near the scale of Japan's and will be largely confined to maintaining our share of a rapidly growing market. We believe that during the negotiations we should inform the PRC in general terms of our determination to protect these residual interests and that this may lead to the setting up of small private offices in Taiwan and Australia. It could be pointed out at the same time that we did not regard this step as in any way affecting our position that the Government of the PRC was the sole legal Government of China.

4. Relations with the United States, VietNam

68. Should the PRC raise in the negotiations the matters of Australia's close relationship with the United States and our role in the war in Viet Nam, it is unlikely to present them as serious obstacles to diplomatic relations. At Mr Renouf's first meeting with Huang Chen in Paris on 27 May 1971, Huang did touch on these matters, asserting that Australia 'followed the United States' and had participated in 'the aggressive war' in VietNam. During that first meeting, however, Huang agreed that these questions should not be allowed to block the normalisation of relations and he did not raise them in the later meetings with Mr Renouf.

5. ASPAC

69. The question of Australia's future participation in ASPAC, of which the ROC is a member, is a further issue which the PRC might conceivably raise in negotiations. We think this unlikely, however, as the PRC has never raised the matter in bilateral contacts with us and the question of Japan's participation was not raised during the Sino–Japanese negotiations.

70. The question of our future participation will, however, arise for us once we have diplomatic relations with the PRC. Japan appears to have decided not to withdraw precipitately from ASPAC, at least for the time being. There is, however, a growing feeling among members that ASPAC's days are numbered, and some tentative thinking is going on in capitals about a new regional body from which the ROC would be excluded. We are watching developments closely and keeping in touch with the Japanese on these matters.

6. Future Bilateral Matters

71. We believe the negotiations will provide a useful opportunity to raise formally with the PRC for the first time a number of bilateral matters which we will be wishing to pursue with them. The matters themselves could not be taken far during the negotiations, but mentioning them would at least give Peking notice of our interest. There would also be presentational advantages when the time came to make a public statement on the results of the negotiations.

72. The PRC could be informed of our interest in having official discussions with it on trade and civil aviation and our willingness to send delegations, or receive them from the PRC, for exploratory talks. We could mention our willingness to exchange cultural, scientific and sporting groups and perhaps put forward some specific suggestions. A programme of Ministerial visits in both directions could be discussed. A further possibility would be for us to suggest that Australian and PRC Foreign Ministries hold talks at official level from time to time.

73. A further bilateral matter which we feel should be raised with the Chinese side, but preferably at the end of the negotiations after agreement has been reached on a communique, is the question of Francis James, who has now been detained in China for more than three years. It would be appropriate to request the PRC to inform us of the charges laid against James and the details of his sentence. We should also request consular access to James at the earliest opportunity.

D. ACTION REQUIRED SUBSEQUENT TO NEGOTIATIONS

1. Agreement with the ROC on Unofficial Representation

74. The Japanese and other precedents mentioned above suggest that the PRC would not object to the maintenance of an unofficial Australian office in Taiwan, nor an unofficial office from Taiwan in Australia, provided that suitable nomenclature and discretion in other regards were used.

75. An outline of Australia's continuing interests in Taiwan, even after a break with the ROC, is set out in Annex E. This indicates that we have sizeable trade and consular interests there at present, and that these could well persist and indeed grow despite the break in official relations. Of principal importance is the fact that Taiwan represents a rapidly expanding market for our exports, worth some $A56 million in 1971/472 and possibly worth some $A150 million by the end of the decade.

76. The Department of Trade and Industry's view, shared by us, is that Australia's interests in preserving its share of this rapidly expanding market warrants giving serious consideration to the establishment of an unofficial office in Taipei. The ROC will undoubtedly wish to open such an office in Australia. Any such unofficial offices should perform no political or official function. Their activities should be confined to trade promotion and facilitating movement of persons, particularly businessmen, between Taiwan and Australia.

77. If you agree that establishment of unofficial offices should be our objective, the Departments of Trade and Industry, Immigration and ourselves will need to agree on detailed recommendations concerning its nature and operation. Among the important questions which would need to be resolved are nomenclature and notional function (a 'Travel Service' on the lines of those operated by both the PRC and the ROC in Hong Kong has some appeal for us); new procedures for issuing visas to residents of Taiwan (we would be seeking to devise a procedure which would be speedy but would avoid vesting in the unofficial office the authority to issue visas formally); and staffing (a number of the present Embassy's locally–engaged staff could be retained but there may be a requirement to detach one or more Australia–based officers from the Public Service for the duration of postings).

78. Once we had a clear idea of what we were seeking, we would need to discuss the establishment of such offices with the ROC through one channel or another to ensure that the respective offices confined themselves to a similar range of functions. In particular the respective arrangements for the issuing of visas or other entry permits would have to be discussed, and it would be desirable to have some understandings with Taiwan on trade questions as our Trade Agreement with the ROC would lapse once diplomatic relations were severed. (It may be possible to arrive at a gentleman's agreement that trade would continue to be conducted on a basis consistent with the terms of the present Trade Agreement.) We should also seek with the ROC to define fields in which some other understandings or unofficial agreements would be necessary or desirable, e.g. on postal services or telecommunications.

79. The occasion for raising these matters formally with the ROC would be in the contacts we would have informing them of impending changes. An outline of the contacts we envisage is set out in Section A6 of this paper. Mr Dunn's final call on the ROC Foreign Minister would very likely be his last official contact and it would therefore be important that by that time he be in a position to give as complete a presentation as possible of what we would be willing to do and the matters we believed needed to be discussed with the ROC. The details could be worked out later in 'informal' contacts at a lower level, as the Japanese are doing at present.

2. Informing Selected Governments

80.The Americans after Nixon's visit to the PRC and the Japanese after Tanaka's visit both sent senior emissaries to a number of Asian countries to give briefings on what had occurred and to take soundings on reactions to their moves. At this stage our feeling is that it would probably be superfluous for us to follow suit, and that our heads of mission, appropriately briefed, could perform this function. You may, however, wish to consider this question closer to the time and after we have received from posts reports of reactions to our initial advice that we had decided to enter into serious negotiations with the PRC.

[matter omitted]

[NAA: A 1838, 3107/38118/6, ii]

1 E.G. Whitlam was appointed Prime Minister of the Commonwealth of Australia on 5 December. According to the first–hand account of John Burgess, the Department of Foreign Affairs prepared a detailed brief, before the elections, on all issues likely to come up in negotiating with the PRC on recognition. The document came to be known by its authors as the 'Blue Book' from the colour of its cover. Burgess has identified the principal author of the Blue Book as M.J. Cook, who at one point was asked by Waller to discontinue the study–apparently because Waller wanted to protect himself from the consequences of a public disclosure that the Department was preparing for a change of government. Similarly, Shann had instructed that if the Liberal–Country Party Government were returned, the book was to be 'flushed straight down the dunny' . Continuing, Burgess has written that on the morning after the election, Waller rang Cook with a request for the blue book, knowing that Cook would have disobeyed his earlier instruction. See John Burgess, 'Recognising China' . Quadrant, March, 1998, pp. 46–9.

2M.T. Somare, Leader of National Coalition Government, Papua New Guinea.

3Tanaka Kakuei, President of the Japanese Liberal Democratic Party and Prime Minister of Japan.