Canberra, 12 December 1972

Secret

China Policy

Telegram 5730¹ from Paris (attached) raises three principal matters for decision: the central paragraph on the Taiwan issue; the remainder of the communique; and the question of unofficial offices in Taiwan and Australia.

Taiwan

2. We suggested in our original submission to you of 3 December, 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. This is in fact what has happened. Nevertheless, China has come back only to the British formula, probably the most extreme of the variations on the Canadian formula, not only because the Chinese characters used for 'acknowledging' are the same as those used elsewhere in the communique for 'recognising' but because it links the removal of official representation from Taiwan with the territorial issue of Taiwan rather than with the separate (and more appropriate) issue of switching recognition from one government to another.

3. We find it difficult to understand why China is proving so reluctant to agree to the Canadian formula in our case, especially as that formula has been used three times this year alone–the most recent instance being Greece, on 5 June. We cannot tell whether, if we were to stick out for the Canadian formula, the Chinese would in the end agree, though Mr Renouf (who had earlier expressed the belief that China was not in a tough negotiating mood) has the impression that the Chinese will not move any further.

4. If you were to decide that, having mentioned publicly that we were seeking the Canadian formula, we should test out the Chinese further on that formula, we could of course go back to Huang.

5. If you were to decide that there would be little point in testing out the Chinese further on the Canadian formula, or that there was not enough time to do so, we shall need to take up the British formula. That is of course an improvement on the original Chinese formula, but we think it would be well worthwhile attempting to modify it somewhat to bring it as close as possible to the Canadian formula. Ways of doing this, and justifying arguments, are set out in the attached draft telegram to Mr Renouf.

Remainder of Communique

6. The Chinese have accepted very little of our other communique paragraphs, and in particular object to our final paragraph looking towards developing with China a broadly–based relationship covering a variety of fields. That point, however, is covered satisfactorily by Chou's message² to you, provided the Chinese agree to the exchange of messages being made public. As for the rest, it does not matter too much that China is not willing to accept our suggestions, and we think it is unnecessary to stick out for them except for the three points in paragraph 6 of the attached draft telegram to Paris.

Unofficial Offices

7. The Chinese reaction to this matter is surprising, especially in view of Huang's silence on the point at the first meeting and the Japanese experience. It is also disturbing and should, we think, not be allowed to pass without an attempt on our part to retrieve the situation.

8. China may be trying simply to ensure that we could not say publicly or to other governments that China had tacitly accepted the establishment of unofficial offices. If that is their only purpose, we could go ahead with the unofficial offices without fearing that their establishment would lead to recriminations and worse. On the other hand, it may be that China really does wish to prevent the establishment of unofficial offices, to make that a condition of diplomatic relations, and perhaps even to see a steady decline on our trade with Taiwan (see para. 3 of telegram 5730 from Paris). If that is the case, and if we nevertheless established unofficial offices after the communique was issued, China could make life very embarrassing for us. At the (unlikely) extreme, China could even threaten to break off relations with us unless the offices were withdrawn. Less dramatic, but still embarrassing, courses China could follow include having only a Charge here, declining to give our Embassy easy access to Chinese officials, and refusing to go ahead with discussions on trade and civil aviation etc.

9. It follows that, unless we were to abandon now all thought of establishing unofficial offices–a course we do not recommend–we shall need to proceed with circumspection and to choose with care the words in which we return to the matter with Huang.

One possible course would be to say:

(a) That we will not establish an office of Australian Government in Taipeinor allow the Taiwan authorities to establish an office in Australia; and

(b) That we have a substantial volume of trade and that some arrangements–though entirely unofficial–must clearly be made to facilitate trade. (If we were to say this, we could go no further than arranging for some Australian company or agency to undertake certain trade information and travel functions and to be reimbursed directly or indirectly by the Commonwealth.)

10. A more forthright course, though perhaps for that very reason less easy to put into effect if China were to object, would be to speak as in (b)³ of the preceding paragraph but to add that the arrangements we have in mind would not be described even as an unofficial office, that the name would not include the word 'Australia' (or 'China' or 'Taiwan' ., that the people involved in the arrangements would not be Government representatives as such, would not be accredited to the other government, would not enjoy privileges or immunities, and would be subject to local tax. We could also say that we would not publicise these arrangements in detail and if asked publicly would say that these arrangements had not been agreed with China. Finally, we could say that it would not be understood in Australia, and would reflect badly on Australia internationally, if Australia were to be accorded fundamentally different treatment from other countries which have either sent or received unofficial offices. (If we were to take this line, and if the Chinese did not demur, we think we would be able to meet the Department of Trade's preference for an agency manned by two career members of the Trade Commissioner service previously recruited from industry and not Commonwealth public servants. They could be granted leave without pay from the Trade Commissioner service on the understanding that their rights under the Trade Commissioner's Act and other Acts, such as the Furlough Act, would be protected.)

[NAA: AI838, 3107/38/18/6, i]

1 Document 359.

2 See footnote 2, Document 347.

3 The words 'the first sentence of' are struck out on the cited copy.