I am in receipt of your confidential minute of 13 May 1936, referring a decode of a cablegram from the Minister of Commerce (Mr. Earle Page) in which he asks for the observations of this Department as to the effect of international treaty obligations on the power of the Commonwealth with respect to the proposed reservation of the Tasman Shipping Service.

In connexion with this matter it is necessary to consider whether Australia has any treaty obligations with which any proposal to reserve trade on the Tasman sea to British ships would be at variance.

In this connexion consideration is being given to the Anglo-Italian Treaty of 15 June 1883. Article I of the Treaty is as follows:

Art. I. There shall be between the dominions and possessions of the two High Contracting Parties reciprocal freedom of commerce and navigation. The subjects of each of the two parties shall have liberty freely to come, with their ships and cargoes, to all places, ports, and rivers in the dominions and possessions of the other to which native subjects generally are or may be permitted to come, and shall enjoy respectively the same rights, privileges, liberties, favours, immunities, and exemptions in matters of commerce and navigation which are or may be enjoyed by native subjects, without having to pay any tax or impost greater than those paid by the same, and they shall be subject to the laws and regulations in force.

The first sentence in Article I relates, so far as Australia is concerned, to freedom of commerce and navigation as between Italy on the one hand and Australia on the other. The latter portion of Article I preserves to the subjects of each of the High Contracting Parties the liberty freely to come with their ships and cargoes to all places, ports and rivers in the dominions and possessions of the other. While this might prevent the Commonwealth taking action to prohibit the importation of New Zealand goods into Australia by Italian vessels, it would be possible to prohibit the export of Australian goods to New Zealand in other than British vessels.

Article 5, however, of the Treaty provides for an equality of treatment as regards both importation into and exportation from British dominions and possessions as between British vessels on the one hand and Italian vessels on the other.

Furthermore, article 7 provides that ‘In all that regards the stationing, loading and unloading of vessels in the ports … of the dominions and possessions of the two countries, no privilege shall be granted to national vessels which shall not be equally granted to vessels of the other country; the intention of the Contracting Parties being that in this respect also the respective vessels shall be treated on the footing of perfect equality’.

By article 8 the coasting trade is expressly excepted from the provisions of the Treaty. The regulation of the coasting trade is declared to remain subject to the laws which are or shall be in force in the dominions and possessions of the Contracting Party.

The existence of this exception emphasises the intention that, apart from trade on the coast of any particular dominion or possession to which the treaty applies, the reciprocal provisions of the treaty shall have full operation.

From the foregoing it appears that any proposal to reserve the New Zealand Australian trade exclusively to British ships would be contrary to the provisions of the Anglo-Italian Treaty.

This treaty has been taken as an example but the terms of the Anglo-Peruvian Treaty of 10 April 1850 are very similar and possibly there may be other treaties which would operate to prevent the adoption of the proposal now under consideration.

With respect to any country with which treaty arrangements have been concluded on the lines of those quoted above, the Commonwealth could, in the event of the Navigation Act being amended to give effect to the proposed reservation, suspend so much of the Act as is inconsistent with the treaties. This could be done by proclamation under section 422 of the Navigation Act.

[Vol. 29, p. 220]