NOTE. The following proposals are put forward upon the assumption that the essential unity of Ireland is maintained.
1. Legislative and Executive authority in Ireland shall be derived exclusively from the Elected Representatives of the Irish People.
2. Ireland agrees to be associated with the British Commonwealth for purposes of common concern and, in respect of those purposes, to recognise the Crown as the symbol and accepted head of the Association.
3. In matters of common concern, which are declared to include Peace and War and Defence, the rights and status of Ireland shall be in no respect less than those enjoyed by any of the component States of the British Commonwealth represented in the League of Nations. There shall be between Ireland and these States such concerted action, founded on consultation, as the several Governments may determine.
4. As an associated State, Ireland recognises the obligation of providing, as far as her resources permit, for her own defence by sea, land, and air, and of repelling by force any attempt to violate the integrity of her shores and territorial waters, and in the common interest of Ireland and the British Commonwealth undertakes that she will not by treaty or compact with any foreign nation impair her independence nor authorise nor permit any foreign nation to obtain any naval or military powers over her territory which may be inimical to the security of Great Britain.
5. Varying proposals have been put forward by the British Government on the subject of Naval Defence. The Irish Delegation now ask that the facilities required by the British Government should be precisely defined.
Any such proposals should provide for the assumption by Ireland of responsibility for her own coastal defence at the end of a period not exceeding five years.
6. We are agreed, in order to facilitate the general world movement towards the limitation of armaments, that the Defence Force to be maintained by the Irish Government shall bear the same proportion to the military establishments maintained in Great Britain as the population of Ireland bears to the population of Great Britain.
7. An Arbitration Tribunal consisting of one or more persons shall be set up to effect a final financial adjustment between Great Britain and Ireland. It shall be the duty of the Tribunal to determine Ireland's liability, if any, for a proportion of the Public Debt and War Pensions of these islands as at the date of the signing of this Treaty, and to determine the total sum of this liability, if any, and to determine what total sum, if any, is due by Great Britain to Ireland in respect of all such pecuniary claims, whether liquidated or unliquidated, as shall be submitted to the Tribunal on behalf of Ireland. The Tribunal shall set off the respective total sums so determined one against the other, strike a final balance between them and issue their award accordingly. That award shall be final and binding upon both nations.
8. It is pointed out that the Memorandum submitted by the Irish Delegation on the 29th October contained the following:²
'We are prepared to execute a Trade Convention which, while recognising the advantage to both countries of the fullest freedom of trade, transport and commerce, will not derogate from Ireland's complete fiscal autonomy.'
Paragraphs 8 and 9 of the Memorandum handed to us on the 16th November do not, in our opinion, constitute a reply to this proposition, but, on the contrary, do imply a derogation from Ireland's complete fiscal autonomy, and do in their implication mean that Ireland must inevitably fall into a position of economic subservience which cannot be accepted by Ireland. It is therefore requested that our previous statement should be met and it is suggested that:
(a) An Agreement be reached as to the commodities that shall be dealt with on the basis of free trade, and
(b) An understanding be reached that each Government is free to deal with all other commodities as seems suitable to its own requirements.
9. We are prepared to recommend that the Irish Government shall :
(1) Conclude suitable trade conventions with the other States of the British Commonwealth.
(2) Arrange all necessary facilities for Commercial air communications.
(3) Make mutual agreements in regard to all such matters of common concern as domicile, income tax, death duties and stamp duties, posts, cables and wireless telegraphy, currency and coinage, trade-marks, copyright and patents, immigration and emigration, merchant shipping, sea fisheries and quarantine.
10. In the event of the existing legislature of the North East of Ireland accepting its position under the National Parliament, Ireland will confirm the legislature in its existing powers and will undertake to provide the safeguards designed to secure any special interests of the area over which it functions.

Having stated our willingness to provide such safeguards as will allay the fears of any section of the population of North East Ulster, we now suggest that it is necessary at this stage to indicate precisely to us what safeguards are required so that every eventuality may be met and any conceivable misunderstanding avoided.