Page 156

FOREIGN RELATIONS, 1937, VOLUME II
  After studying the text of the official statement and the list of un-
restricted products 29 the following is submitted for your guidance in
conversations:
  (1) The present Australian move appears to be a step in the right
direction but we are unable at this stage to say whether it constitutes
removal of discriminations. It does not now appear, as it did after
Lindsay's and Officer's first visits, that the Australian Government
expects us to take any action before we shall have obtained ample evi-
dence that the granting of licenses on the so-called competitive prod-
ucts is on a non-discriminatory basis. In this connection you are re-
quested to collaborate with Squire in obtaining the kind of evidence
which would help us in defining the present treatment of American
goods. We realize that this may require some time, and since the
Australians are not pressing we would expect your report to be made
only after a thorough investigation.
  (2) The proposal now appears to be that the Australians desire
us to satisfy ourselves in due course that Australia should be restored
to the most-favored-nation list of countries. Within a reasonable time
after that they would come forward with overtures for the negotiation
of a trade agreement, and would expect us to hold informal conversa-
tions and perhaps informally exchange lists of desiderata.
  (3) Officer stated that it was his belief that the unrestricted list
bears in amount of trade a ratio of about 3 to 1 over the competitive
list. We have told him that this does not agree with Department of
Commerce preliminary analysis which indicates that they are at a
ratio of about 1 to 1, each representing about 5 million dollars of trade
in the year ended April 30, 1936. Can you and Squire give us a more
accurate estimate?
  (4) I made no comment to Lindsay when he delivered the official
statement. Department officials, however, have recited our position
again to Officer about as follows:
  (a) The Australian Government has communicated nothing con-
crete to us and we must therefore await evidence which will enable
us to say to the President that there is no longer discrimination.
  (b) It would be impossible for us to certify as a fact to the Presi-
dent that there was no discrimination so long as any form of dis-
crimination was practiced. We cited Australia's failure to extend
to our products its trade agreements rates and we queried whether
Australia was now asking that we extend to them our trade agreements
rates when they do not seem prepared to reciprocate.
   (c) When Casey inquired last summer whether it would be satis-
factory if Australia substituted a system of higher tariffs for the li-
censing system, Mr. Welles explained to him and Officer that we would
  ' On December 15, 21, 22, and 27, 1937, the Counselor of the British Embassy
transmitted to the Department detailed lists of unrestricted products.
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