To Each Member of the Government.
The British Government have suggested that the proposed trade negotiations should take place on the 17th and 18th June in London and I have intimated agreement with this proposal.

It will be recalled that the British Government have requested us on a number of occasions already for a statement of the various matters we propose to discuss and that I have asked some of the Departments concerned to prepare a preliminary indication of the matters which they want raised. The matter is now of some urgency, as I expect that the British Government will press us for a statement of the matters we intend to raise.

I would suggest that the Departments of Industry and Commerce, Agriculture and Finance should each prepare a memorandum embodying their views of the matters which, from Ireland's point of view, should be taken up with the British Government. As soon as these have been prepared and circulated I would suggest that the Economic Sub-Committee of the Cabinet and an inter-Departmental committee could examine these memoranda so that the broad issues can be finalised. I might add that this matter is becoming pressing.

The following extracts from recent correspondence (already circulated) which passed between Lord Rugby and myself indicate the preliminary views of both Governments on some of the issues.

Extract from letter from Lord Rugby to Minister for External Affairs dated 29th April 1948:
'My Government would be very glad to see Éire Ministers in London in June for a few days on mutually convenient dates as suggested by you. From their point of view it looks as though the second half of June would probably be more convenient. They feel it important that adequate preparations should be made for such meetings and they would therefore be glad to receive as soon as possible a document setting out the subjects which your Government have in mind to discuss.

The cattle trade will, no doubt, be one of these subjects. My Government recognise the Éire Government's difficulties in persuading their dealers, on the ground of advantages accruing to the general Éire community under the trade arrangement, to refuse higher prices offered by continental buyers and they much appreciate the Éire Government's desire to send the maximum possible number of cattle to the United Kingdom. On the other hand they feel that the cattle trade must be considered in relation to the general balance of trade between the two countries and the results which have been achieved in the matter of increased food exports from Éire to the United Kingdom under the November trade arrangement. Their general view is that since the November talks they have furnished to Éire substantial amounts of coal, hard currencies, consumer goods etc., primarily in the hope that these would lead to increased Éire agricultural exports to the United Kingdom. The figures so far available suggest that no corresponding increase in these exports has yet taken place, though it may be that later figures, plus any seasonal factor involved, may correct this disappointing first impression. The quantity of cattle shipped to the United Kingdom is clearly one of the main factors in the Éire side of the balance. The general level of United Kingdom exports to Éire for the first quarter of 1948 was equivalent to an annual value of £80 millions as compared with £56 millions in 1947 and £40 millions in 1946.

In general my Government are anxious to co-operate with the Éire Government in all possible measures to expand and balance trade between the two countries and to reduce the drain on the sterling area hard currency reserve, and they will be very glad to study sympathetically in advance of the June meeting any proposals which the Éire Government can make to this end.'

Extract from letter from Minister for External Affairs to Lord Rugby dated 30th April 1948:
'Our aim in foreign trade is, of course, to secure various materials we require to enable us to increase our productivity and to secure markets for some of the commodities which we produce and the import of which into Britain is precluded by your Government.

As already stated, we are only too anxious to make available the maximum quantity of cattle to Britain, but feel that the maintenance of the differential defeats this purpose. We are not in a position to sell below the market value while this differential is being maintained.

With regard to the proposed talks in June, I am arranging to draw up a memorandum, setting out the various matters which the Irish Government would like to discuss and I shall try to let you have this as soon as possible.

I can assure you that the Irish Government is very concerned with the adverse balance of payments which exists and it is just this position which it seeks to remedy. I should, however, point out that to a large extent this position is due to the low prices which we receive for our cattle from Britain, to the high prices charged in respect of British imports and to the fact that we are precluded from exporting many of the articles which we produce to Britain. In these circumstances bi-lateral trading with Britain is being severely handicapped and we are compelled to seek an outlet for our goods elsewhere. Any payments we secure will naturally inure to the sterling pool. However these are some of the matters which, I trust, we will be able to solve satisfactorily in June.'

Since my letter of the 30th April negotiations have been proceeding relating to the cattle differential and while these negotiations are not completed, it appears that the British Government are prepared to remove the differential in relation to top grade cattle, provided we are prepared to limit our exports to continental countries to 40,000. We have indicated our willingness to limit our exports to 60,000 head; negotiations are proceeding as to these figures.

It would appear that the main issues will resolve themselves under the following five main heads:

1. Removal of differential in regard to cattle insofar as this has not been achieved by the negotiations now in progress.
2. Removal of ban on exports of Irish goods to Britain.
3. Prices charged for goods exported from Britain to Ireland.
4. Reduction of adverse trade balance.
5. Economic co-operation with Britain and other E.R.P. countries on the basis of European Economic Co-operation plan.

I do not suggest that we should set forth the issues in the manner indicated above, I merely set them out as some of the principal issues that will have to be discussed.