Canberra, 30 September 1958
Confidential
Trade Policy Towards Mainland China
General Position:
Australia has no obligations or rights in respect of trade with Mainland China.
In general, Mainland China is treated the same as any other non–dollar country.
The principal distinction is that as with other Communist countries, strategic export controls are maintained and the ‘China differential’ is also maintained (see para. 6 below).
Certain restraints apply to imports or possible imports from Mainland China of tin, tea and rubber (para. 9 and 10 below).
Except for strategic goods the Australian Government in no way interferes with commercial transactions with Mainland China nor does it specifically promote them.
Obligations and Rights:
2. There are no formal commitments between Australia. and Mainland China which is not a party to the General Agreement on Tariffs and Trade.
3. With respect to imports from Mainland China, Australia gives most–favoured–nation tariff treatment and non–discrimination in import licensing, i.e. the same treatment as any non–dollar country; the only exception is with respect to tin (para. 9 below).
4. Chinese policy towards imports from Australia is not clearly defined. They prefer to trade on a barter or at least a bilateral basis. However, they do not publish trade statistics and precise information about their total imports or sources of supply is unobtainable. Under this system the extent to which Australia receives most–favoured–nation treatment is not easily assessed.
Strategic Export Controls:
5. Although Australia has not participated in drawing up the lists of commodities subject to strategic export controls when destined for Eastern European countries (the COCOM lists), or for Mainland China (the CHINCOM lists), the Minister for External Affairs administers export controls on these commodities in accordance with the principles agreed by the United States and the other Western powers co–operating with it. Australia has not been as free in employing the ‘exceptions’ procedure for goods on these lists as were some Western countries.
6. Since June 1957, all the Western countries applying restrictions except the United States, Canada, Turkey and Australia have applied to Mainland China only the COCOM list (i.e. the list of goods on which export is controlled to U.S.S.R. and Eastern European Communist countries), thus freeing the additional items which were on the CHINCOM list, from any special control.
7. Cabinet considered the question of the maintenance of the ‘China differential’ in June 1957, (when it decided to take no action but to keep the question under review) and in May 1958, when it decided that for this year at least no modification would be made.
8. As from 16th August last, the COCOM list has been further reduced and is now confined to goods of more direct warlike significance. However, Australia has retained controls on all exports to Mainland China included in the earlier CHINCOM and COCOM lists.1 Goods which are subject to control when destined for Mainland China, but which are not included on the embargo list, are considered on their merits, and approval has been granted by the Minister of External Affairs in a number of cases, e.g. steel products, zinc. U.S.A. has a complete embargo on trade with Mainland China.
Restraints on Imports from Mainland China:
9. The effect of Cabinet’s decision of 25th September last, in relation to imports of tin from Mainland China in connection with the International Tin Agreement, is that imports of Chinese tin may under certain circumstances be prohibited.
10. In trade negotiations with Malaya and Ceylon, Australia has undertaken to protect their exports to Australia of rubber and tin in the case of Malaya, and tea in the case of Ceylon, against unfair competition in the Australian market. Although the undertaking is quite general, Mainland China was mentioned specifically in the discussions in each case.
Trade Position:
11. Trade with Mainland China is at present running at an annual rate of £A.11 million exports and £A.3 million imports. Total exports and imports over the last three years are shown in the following table:
| Exports £A.m. | Imports £A.m. | |
|---|---|---|
| 1955—56 | 2.7 | 2.3 |
| 1956—57 | 6.4 | 2.1 |
| 1957—58 | 9.8 | 3.1 |
12. Exports are mainly wool tops (for which Mainland China is the main market) and wool. More recently substantial sales of steel (£5 m.) and zinc (1,500 tons) and a cargo of wheat have been made, but these are not yet reflected in the available trade statistics. The main items of import are bristles and tung oil and more recently cotton textiles.
Trade Contacts:
13. Australia has no Trade Commissioner or any other official representative stationed in Mainland China. Apart from a visit by the Trade Commissioner (Hong Kong) in 1956, commercial contact has been maintained through the China Resources Company of Hong Kong.
14. There has been an increased interest by Australian businessmen and bankers in visiting Mainland China to assess export possibilities. At least one Australian export/import house has arranged for its representative to be stationed in Mainland China. Further evidence of this interest is to be found in the decision of the Australian Exporters Federation to include Mainland China in the itinerary of the trade ship ‘Delos’. Although a Department of Trade publicity officer will precede this mission to assist in arrangements, he will not be associated with the Mission’s visit to Mainland China.
Visit by Chinese Trade Missions:
15. A visit by a Chinese Trade Mission was approved by Cabinet in April, 1957. The Mission was in Australia from l0th May to l0th August, 1958. Official contact with members of the Mission was avoided. The Department ofImmigration has been approached for visas for a further Mission which wishes to spend approximately six months in Australia. The main interest of the new group is in the wool auctions. It is understood that this question is being submitted to Cabinet separately.
Trade Problems:
16. The Mainland Chinese normally trade on a bi–lateral basis and Australian exporters are being pressed to increase their purchases from Mainland China before concluding additional export business. This in turn has led to increasing pressure on the Department of Trade to make special import licensing facilities available to enable exporters to secure new business.2
17. No special import licensing facilities have been made available specifically for goods from Mainland China. However, a limited number of additional licences have been granted to export/import houses to facilitate their general export trade. Some of these licences have in fact been used to stimulate exports to Mainland China.
18. Mainland China was not eligible (because of our non–recognition of the Government) to participate in the special import licensing facilities made available for the staging of nationally sponsored trade fairs and exhibitions. However, Australian agents for Mainland Chinese goods can secure very limited licences to test the market for goods not traditionally imported from Mainland China.
19. Submitted for information.3
Athol Townley4
[NAA: A4926, ]viii]
1 The Prime Minister’s Department commented on the submission that ‘we see no reason to depart from this position [ie maintenance of the CHINCOM controls] at this time; in fact recent political action by Communist China favours the continued use of control’.
2 In this connection, the Prime Minister’s Department remarked: ‘The statistics in paragraph 11 show that we have been increasing exports to Communist China and it is clear … that any bilateral deal with Communist China would have strings attached. It might very easily bring up the questions of recognition and a seat in the United Nations’.
3 Cabinet ‘noted’ the contents of the submission.
4 Minister for Supply and Acting Minister for Trade.