711.415 Traders/40
The Secretary of State to the Consul General at Sydney (Caldwell)
Sir: Please refer to the telegram dated September 2, 1927, from the American Consulate General at Melbourne, and related correspondence,6 concerning the desire of the Australian Government to procure [Page 836] for Australian business men the privileges of entry and residence accorded to certain nationals under Section 3 (6) of the Immigration Act.7
For a considerable time the Department has been under pressure from British quarters to conclude an ad hoc treaty with Australia to permit the entry of Australian business men as “treaty traders.” Various obstacles were in the way of effecting such an agreement, the chief of which was the wording of Section 3(6) before it was amended by Congress on July 6, 1932.8 Another serious obstacle, which will be discussed later, was the inequitable treatment by the Australian Government of American goods in the computation of dutiable value. Shortly after the amendment above referred to, the Department proceeded with the preparation of a draft agreement which was finally submitted to the British Ambassador on October 12, 1932. The entry and residence aspects of this draft agreement presented little difficulties, though it will be seen from the enclosed copy of the Australian counter proposal,9 submitted with the British Ambassador’s note dated October 4, 1933, that a few minor points are yet to be reconciled.
With regard to the second obstacle, you will ascertain from a study of the Melbourne files, which you may borrow for the purpose, that for a considerable period since 1927, Australian customs authorities made an exception in favor of Canadian goods when computing dutiable values. This was and is obviously damaging to American interests. The exception was removed in 1929, probably chiefly on the ground of unconstitutionality, but it became operative again on the effective date of the Canadian-Australian Trade Agreement,10 Article IV of which gives legal effect to the old exception. Therefore, the Department, in submitting the draft agreement, included an article identic with Article IV of the Canadian-Australian Agreement, providing for a unilateral concession on the part of Australia. You will see from the enclosed copy of the British Ambassador’s note dated October 4, 1933,11 that the Australian Government desires to negotiate separately on this point, and from the Department’s reply, a copy of which is also enclosed,12 that this Government also is willing to negotiate separately. It may be said in this connection that officials of the Department, in conversation with the British Ambassador, have emphatically stated that it is our desire that the negotiations be conducted [Page 837] simultaneously, and the Ambassador has been informed that you would be instructed to institute negotiations there looking to an exchange of notes securing to American products privileges given to Canadian products under Article IV of the Canadian-Australian Agreement.
You are requested, therefore, at the earliest opportunity to confer with the Australian authorities in this matter. If necessary, you may proceed to Canberra for this purpose, charging expenditures against your regular contingent expense allotment.
In your conversations with the Australian authorities, you should not fail to state that it is our desire that your negotiations be considered simultaneous with those which are being held with the British Ambassador respecting the entry and residence of Australian business men. In your discretion you may convey our feeling that the discrimination against American goods referred to above is considerably more irksome and damaging to American interests than the present necessity of obtaining visitors’ visas can be irksome or damaging to Australian interests. It is not conceivable that Australian interests have suffered any monetary loss through that circumstance, whereas it is obvious that large sums have been and continue to be lost by American railroads, ports and steamships by the diversion of traffic through Canadian ports. To allay the feeling, conveyed to us by the British Ambassador, that Australia has been singled out for discrimination, you may say that we have no treaty arrangements applicable to other British dominions or to probably half of the countries of the world.
Should the Australian authorities appear to feel that such a concession should be bilateral, you may point out that there is no necessity for the United States to make such a concession since there is no condition which it is necessary to remove. American methods of duty computation are different, and the same geographical situation does not exist in Australia. For your private information, I enclose a copy of a letter dated June 11, 1932, from the Assistant Secretary of the Treasury,13 which is self-explanatory.
If the Australian Government agrees to the exchange of notes, you will inform the Department by telegraph and await instructions informing you of the date arranged for signature in Washington of the other agreement. There would, of course, be no objection to an immediate exchange of notes, if the Australian authorities desire to do so.
Your note should be worded as follows:
“I have the honor to communicate to you my understanding of the agreement reached with respect to the determination of the dutiable value of goods of American origin imported into Australia.
[Page 838]“In determining the value of goods for duty purposes, Australia agrees that no greater amount of inland freight charges shall be included in such value for duty than the actual amount of freight charges that would be incurred if the goods were forwarded from the point of origin of such goods to the nearest point of exit from the United States.
“I shall be glad to have your confirmation of the accord thus reached.”
To facilitate your negotiations, you may informally present an unsigned copy for study by the authorities. Upon the designated date you will present your signed copy and receive a note confirming the accord.
Very truly yours,