Dear Walshe,
I send you herewith a copy of a note of a telephone conversation I had today with Scott (Secretary to the Northern Ireland Ministry of Commerce). I enclose also a copy of a note I made of a conversation I had with Mr. G.C. Duggan on the 2nd November and copies of Scott's letter of yesterday's date and of a letter dated 10th October which I received from Jenkins¹.

[Enclosure]

Mr. G.C. Duggan, Ministry of Finance, Belfast, called to see me today. He said that Mr. Scott had asked him to explain to me the position in connection with my letter of the 17th October. The matter had been under consideration by Ministers in Northern Ireland and he had not yet got a decision as to whether he could arrange for discussions. He was disposed to think that the Items no. 6, 7, and 11 on the list attached to my letter of the 17th October² might be regarded as controversial in Northern Ireland and therefore unsuitable for discussion at this stage.

I told Mr. Duggan that if the Northern Ireland Authorities were not prepared to discuss certain of the Items we could at least usefully discuss the others. As regards No. 6, he said that it would probably be considered essential from their point of view to have representatives of the Ministry of Labour in London present at any detailed discussion; I said that I thought this would be a distinct advantage. As regards No. 11, he thought that difficulty would arise in connection with Lough Foyle because of controversy as to where the boundary should be drawn. I told him that I had not contemplated that any such difficulty would arise as I had been hoping that we could devise a scheme which would obviate any necessity for dividing the lights as between Northern and Southern Ireland.

[Enclosure]

After discussion with the Minister, following receipt of Mr. Scott's letter of yesterday's date, I telephoned Mr. Scott this morning. I said that it was not clear to me whether his intention was that we should discuss only the question of licences or whether he was in a position to discuss the other items (or some of them) if we agreed to the inclusion of the licensing system on the Agenda.

Mr. Scott said that the atmosphere is not at present favourable for discussion on any of the items on the list which accompanied my letter of the 17th October and that he did not think we could really make any progress at the present stage having regard to the revival in a somewhat acute form of the Partition controversy³. He hoped, however, that by some easement of the trade situation it might be possible to secure a somewhat better atmosphere.

I told Mr. Scott that I did not think it would be possible from our point of view to have discussions relating to trade alone because in matters of trade any concessions to be given would be entirely one-sided. I said that we are quite prepared to discus the licensing system in so far as it affects Northern Ireland provided that the other items which I mentioned to him can be discussed as well. I urged that there are only a few items on the list that could give rise to political issues. Mr. Scott said he could only repeat that he could see little prospect of any useful discussions at the present stage and that he thought it would be better to postpone any further steps for the moment. He expressed the hope that when the Prices Commission has issued a few reports it might be possible, in the light of the indications thereby given as to the working of the Trade Agreement, to reconsider the matter and possibly to open discussions; and he hopes that in the meantime the general atmosphere will have improved.