Canberra, 21 July 1966
Confidential
Without Memorandum—Export of Steel to Communist China
At a meeting in the Prime Minister’s room on 21st July—the Prime Minister, the Deputy Prime Minister and Minister for Trade and Industry, the Treasurer and the Minister for External Affairs2 being present—a discussion took place concerning applications received from John Lysaght (Aust.) Ltd. for authority to respond to two orders from Communist China for cold reduced steel sheet, in a quantity of 5,000 tons for one order and 12,000 tons for the other.
2. The Ministers began by recognizing that the steel in question, although being sought for a peaceful use could be diverted to certain military uses. It also recognized that the export approvals for steel under recent practice had been chiefly limited to tin plate and other non-military types, and further that if the current export applications were granted, the quantity of steel supplied this year to China would show a substantial increase over the figures for recent years—about 32,000 tons as against a previous level of 3,000 or 4,000 tons. The Ministers recognized that approval of the applications would be likely to involve the Government in answering comment arising out of these factors.
3. On the other hand, the Ministers noted that the quantities involved are negligible in terms of China’s total needs and that if Australia declines to export, the steel is readily purchasable by China from elsewhere. Further, they recognized that it is part of the Government’s policy, already public, that improvements in communication and relations with China are nationally and internationally important, and that trade is one of the more ready and more likely means of securing improvement. Thus there could be political embarrassment in refusing the applications no less than in approving them, all the more taking into account the steel company’s need for orders at the present time and the export worth of the orders to Australia.
4. In total, the Ministers felt that the balance of advantage suggested that the export of the steel should be allowed, and it therefore decided to authorize the Minister for External Affairs to go ahead on that basis.
[NAA: Al838, 3107/38, v]
1 Series description for decisions of the Ad Hoc Committee of Cabinet.
2 Respectively, Harold Holt, John McEwen, William McMahon and Paul Hasluck.