1. Transhipment consists in the re-export of goods imported by a neutral State to a belligerent State. One may distinguish between transhipment via searoutes and overland transportation.

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3. The question naturally arises, therefore, whether, in view of the common fate which appears to await all classes of neutral export trade, a neutral State should not freely indulge in transhipment.

4. If that question were to be answered without reference to any particular state of facts, it could clearly be replied to affirmatively.

As far as Ireland is concerned, however, the problem is not so simple. We, in this country, have to bear in mind the history of our export trade since this war began and to take note of the following points:-

1. Our export trade since the war began has been, as always, mainly directed to one of the belligerents only;
2. It has been a 'contraband' trade, according to the German list of the 12th September 1939, and, as such, liable to penal measures, according to the German Prize Law of the 3rd September 1939;
3. Our export trade was, however, recognised by the German Government, through the German Minister at Dublin, early in the war, as vital to this country whose neutrality Germany desired to see maintained;
4. Irish export trade to Britain has been, notwithstanding the lack of any supporting principle of international or German national law, regarded by Germany as falling into a special class which it has been found convenient to describe as 'normal trade;'
5. Germany has so far made no deliberate attack on Irish 'normal trade';
6. Transhipment and the export to Britain of contraband articles and materials manufactured, or capable of being manufactured here, but not normally exported have not been so far indulged in;
7. Since the 17th August 1940, Germany has declared a total blockade of Britain, and has accordingly withdrawn her promise to respect our normal export trade. The German Government have, however, as an exceptional measure offered to respect our import trade on certain conditions, one of which is that we do not tranship imported goods to Britain.

5. The foregoing historical summary would not be complete without reference to the fact that, so far, no advantage has been taken of the recent German offer to negotiate in regard to our future import trade. On the contrary, we have instructed the Chargé d'Affaires at Berlin to impress on the German Government this country's strong desire for the uninterrupted continuance of her normal export trade with Britain.¹

Incidentally, however, Mr. Warnock is instructed to emphasise to the German Government that the Irish Government has not hitherto permitted and does not, in the future, intend to permit the transhipment of foreign-produced goods to England.

6. The position is, therefore, that, at this moment, the fate of our whole normal export trade with Britain is in the balance. Likewise, of course, that of our import trade in feeding-stuffs and raw materials.

During recent weeks shipments of cattle to England have not been attacked by German forces but of this immunity there is, as yet, no guarantee.

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8. On the assumption that a transhipment policy were to be adopted at this stage we may, however, anticipate the following reactions on the part of Germany:

1. during this transition-period, when nothing has been finally decided about our export trade, which is, however, carrying on as usual to date, the Germans might be expected to deliberately attack that trade on the grounds that the boats were transhipping. The 'normal trade' theory would vanish overnight;
2. one of the important conditions attached to the German offer to respect our vital import trade would disappear and the offer would doubtless be withdrawn.

Our own reactions to the foregoing would necessarily take the form of endeavouring to protect our vital trade in every way possible.

Thus, we should probably have to arm our ships and accept British convoys. These steps would entail:

(1) the treatment of armed Irish registered ships (where owned in Britain) as part of the British fighting forces;

(2) the treatment of all incoming and outgoing ships in British convoy as enemy vessels to be sunk at sight;

(3) the loss of our neutrality in the event of British convoys or merchant vessels of any nationality being attacked in our waters. (Even the 'hovering' of British destroyers outside our waters would be a breach of Ireland's neutrality.)

9. In view of the appalling chaos which transhipment activities would bring about in our normally peaceful trade with other countries, there would seem to be grave reasons for not allowing such activities on any account.

Add to that the incalculable disasters which might result on Irish lives and property by drawing the belligerents towards our side of the Irish Sea and Channel, and we are compelled to recognise that the arguments are altogether in favour of maintaining the status quo as far as lies in our power. The fact that we are prepared to risk Irish-registered ships, Irish seamen and Irish f.[ree] o.[n] b.[oard] cargoes in order to maintain our normal trade with Britain ought to sufficiently prove our readiness to oblige our best customer, without his requiring us to give free rein to activities likely to culminate in the destruction of all trade between these islands.