Cablegram ITO171 GENEVA, 28 June 1947, 1.20 p.m.
SECRET
Your T.71. At the British Commonwealth Meeting it was agreed that there would not be embarrassment to the Commonwealth Countries from early scheduling through the Secretariat of the United Kingdom - Australia Tariff Negotiations. This would include negotiations on all items whether they were substantially of foreign requests or included only in United Kingdom list. Canada does not intend at this stage formally to list at Geneva her negotiations with United Kingdom.
We are considering the form of our requests upon United Kingdom and will be communicating with you about rates. Until our requests are completed and can be forwarded through Secretariat to other countries in conjunction with United Kingdom requests on Australia we will not formally list the negotiations.
We have had discussions with Tariff Negotiations Steering Committee on the subject of bound and unbound reductions and can comment further to our I.T.O. 86.
We discussed with the Committee the difficulties involved in Australia - United Kingdom negotiations and our need to provide unbound rates in an agreement with United Kingdom. Committee has not given any unofficial advice on this but Wilgress who is Chairman has privately informed me of Committee’s view.
There is strong opposition to inclusion of unbound rates in General Agreement on Tariffs and Trade. Objection is not based on degree of reduction that may be made but on the grounds that it would be most embarrassing to other countries. It is felt that if one country includes unbound rates of duty in agreement other Governments would face severe domestic criticism for not doing the same thing. The Committee therefore suggests that on items on which other countries had made requests we should endeavour to avoid unbound rates.
The Committee suggests that for United Kingdom - Australia negotiations on items not included in foreign requests we should conduct them in Geneva and complete bilateral agreement which would be published separately from the General Agreement with note explaining that rates were unbound for reasons peculiar to relationship between the two countries.
This course is in accordance with your T.71 which provides for- (A) Binding on a reduced level of both rates [1] on items which are subject to requests on both rates.
(B) Negotiations on other items with the United Kingdom to be on the basis of reduction without binding.
As regards the suggestion in your Paragraph 4 of an additional unbound reduction [2] we feel that this should not be pursued as objections stated above to unbound rates appear reasonable and in any case there is unlikely to be any substantial payment for such offers.
In connection with Paragraph 5 of your T.71 [3] we have assumed that you are contemplating applying that procedure in accordance with first alternative set out in Paragraph 2 your T.54. [4] One important consideration arises as a result of Committee’s suggestion that we should not include in general argument any unbound rates. As you arc aware our offers to foreign countries contain few such reductions and a number where elimination of primage is only offer. We are examining items to determine to what extent we could recommend either- (A) The binding of the item at same or varied rate of duty;
(B) Withdrawing the item from the negotiations;
and we will advise you within a few days.
We feel that on some items we can safely bind reduced rates on assumption that if it became necessary to use it Article 34 [5] would be possible to do this without there being any suggestion of breach of faith. [6] In this connection we consider that it would be preferable for you at this stage not to make a statement [7] as suggested in Paragraph 5 of your T.54 but this might be desirable later. [8]
[matter omitted]
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1 i.e. BPT and MFN rates.
2 i.e. ‘to bind a 5% reduction in conjunction with an additional reduction on an unbound basis’.
3 Paragraph 5 anticipated that items not covered by foreign requests would be treated as reductions without binding, subject to later review by Tariff Board.
4 Cablegram T54, dispatched 9 May. The alternative read ‘reductions to be unbound but subject to an undertaking by us that we would not subsequently increase the rates except to the extent that the Tariff Board might recommend increases from time to time’.
5 Article 34 provided for emergency action by members where imports of a particular product were causing injury to domestic producers.
6 A symbol in the text denotes ‘sentence as received’.
7 A statement to the effect that all requests for invocation of the escape clause would be referred to the Tariff Board for investigation and recommendation.
8 Cabinet Sub-Committee advised, in cablegram T165 dispatched 9 July, that all tariff concessions which Australia was prepared to bind should be included in the GATT schedule whether or not they were subject to foreign as well as UK requests. All unbound tariff concessions would be confined to a separate agreement with the United Kingdom. The Sub-Committee confirmed that the alternative set out in note 6 above would be applied to the latter agreement.
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[AA : A1068, ER47/1/28, i]