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Tuesday, 14 September 1937

Mr MENZIES (Kooyong) (AttorneyGeneral) . - by leave - On the 10th September I informed the honorable member for Griffith (Mr. Baker) that I would, if possible, make a statement on the international situation before the House rose. I propose briefly to deal with the SinoJapanese dispute, the situation in the Mediterranean and to conclude with a reference to the report of the Mandates Commission on Palestine. On the 25th August the Japanese naval authorities closed the Chinese coast from Shanghai to Swatow to Chinese vessels, but at the same time announced that they would respect the peaceful commerce of other powers. On the 5th September, the Japanese authorities closed the remainder of the Chinese coast to Chinese vessels, excluding Tsingtao, and those territories leased to third powers, and reiterated that they would pay due respect to the commerce of third powers with which they did not intend to interfere.

During the last few days the British Government has been considering the measures to be taken in the event of Japanese naval vessels attempting to interfere with foreign merchant vessels, the Japanese Government having intimated that, if the Chinese resorted to action such as the misuse of the flag, the Japanese might have to examine foreign ships. In order to prevent, as far as possible, the misuse of the British flag, the British Government has decided to raise no objection to the Japanese examining British ships on the high seas for the purpose of verifying the flag.' His Majesty's ships have accordingly been instructed that, if a ship is flying the British flag in their presence, they should, if requested to do so by a Japanese warship, verify the right of that ship to fly the British flag. Masters of British ships in the Ear East have been advised, if they are required to stop by a Japanese warship and none of His Majesty's ships is present, to allow the Japanese to board the ship to examine the certificate of registry on the. understanding that an immediate report will be made by the Japanese warship to the British naval authorities.

The Japanese Government has been informed that, while the British Government does not admit the rights of the Japanese Government to verify the nationality of foreign merchantmen, verification will in practice be allowed. The British Government could not, however, acquiesce in any interference with merchantmen other than for verification of nationality. The British Government has also reserved the (right to claim compensation for damage sustained by the owners of British ships delayed or stopped under this procedure.

The British Government has kept the Commonwealth Government fully informed as to this aspect of the situation. Australia is not, however, directly concerned, as no ships on the Australian register are engaged in passenger or cargo traffic with Japanese and Chinese ports, although, as honorable members are aware, three ships owned by the Eastern and Australian Steamship Company Limited, and one owned by Burns, Philp and Company Limited, which are not on the Australian register, follow the route Sydney-Rabaul-Manila-Hong Kong.

There has been little change in the situation at Shanghai during the last few days, although the extension of the Japanese offensive, and the prolonged Chinese resistance, have caused increasing danger to the International Settlement. The British Government has continued to impress on combatants their obligations to avoid damage to life cr property in this area.

It seemed at one stage that it might be necessary to evacuate all British subjects from Shanghai. In fact, about 3,700 British subjects, nearly all of them women and children, have been evacuated, but no arrangements are at present being made for further evacuation. Members of the British 'business community are definitely unwilling to contemplate any general evacuation or abandonment of their interests.- Foreign banks resumed normal business on the 23rd August. There is at present no shortage of food, and fresh supplies are entering Shanghai daily. The lives of inhabitants of the International Settlement are still endangered by stray shells and aircraft bombs, but both Japanese and Chinese aircraft appear to be avoiding any attack on the International Settlement.

In North 'China, the Japanese have started an offensive on a large scale south of Tientsin.

As regards the shooting of the British Minister in China, the British Government is still awaiting a full reply from Tokyo.

Reports have appeared in the press to the effect that the Japanese have occupied Pratas and Ling Ting Islands. The Commonwealth Government has now received official 90nfi.rma.tion of the report that the Japanese have occupied Pratas Island, which lies about. 180 miles southpast of Hong Kong. Since the occupation, meteorological reports from the station on the island have been suspended, but the authorities at Hong Kong have been informed that it is proposed to resume reports as soon as possible. There is, so far, no indication as to how long the Japanese intend to remain in occupation. The report of the Japanese occupation of Ling Ting Island, which lies about 15 miles west-north-west of Hong Kong, is so far unconfirmed.

There are two other aspects of the Sino-Japanese conflict to which I desire to allude. Mr. Eden, the Foreign Secretary, said in the House of Commons on 25th June, 1937-

The Commonwealth Government greatly regrets that the existing situation in North China has led to the postponement of these conversations. In reply to a question in the House of Commons on the 21st July, Mi-. Eden said -

It will be recollected that, at the recent Imperial Conference, the Prime Minister (Mr. Lyons) outlined a proposal for a regional understanding and pact of nonaggression in. the Pacific. All the governments of the British Commonwealth agreed that a Pacific pact was a desirable objective. It was fully realized, however, that this was a matter which would have to be approached with some circumspection, and that it would be necessary to ascertain the views of other interested governments before attempting any detailed negotiations. It will be appreciated that the Sino-Japanese dispute has inevitably led to the suspension of conversations for the time being.

A state of grave insecurity has been created in the Mediterranean owing to recent illegal attacks on shipping by submarines and aeroplanes acting without warning, and without revealing their identity. The British and French Governments decided in the early part of this month that immediate consultation between, and action by, Mediterranean and certain other powers had become necessary in order to deal with an intolerable situation. The British and French Governments accordingly proposed that a conference should be convened on the 10th September, at Nyon, to consider what measures should be taken in order to pui a stop to the present state of insecurity in the Mediterranean, and to enforce the rules of international law regarding the treatment of shipping at sea.

The British and French Governments invited Germany, the following Medi- terranean powers - Italy, Yugoslavia, Albania, Greece, Turkey and Egypt - and the Black Sea powers, Soviet Russia, Roumania and Bulgaria, to attend the conference. Germany and Italy declined this invitation. Italy's absence from the conference appears to have been largely due to resentment caused by Notes sent to Italy by Soviet Russia alleging that Italian warships had torpedoed Russian merchantmen inthe Mediterranean.

The conference duly met on the 10th September, and reached an agreement the following day on proposals which are now being referred to the governments of the participating Powers. It is hoped that the agreement will be signed to-day. These proposals have been fully reported in the press. Broadly speaking, they provide for a patrol of the Mediterranean, mainly by British and French naval forces, with assistance from the other participating governments, in order to protect all merchant ships which do not belong to either of the parties in the Spanish conflict. It was suggested that Italy should be asked to take action on similar lines in the Tyrrhenian and Adriatic Seas. The proposed agreement does not accord belligerent rights to either party in Spain. It is hoped that the scheme for the patrol of the Mediterranean will be in force by to-morrow, and a formal invitation to participate has already been sent to Italy. Germany has been officially informed of the results of the conference. I might add that the British Government sincerely desires to place Anglo-Italian relations on a better footing. It feels that, if the existing tensionin the Mediterranean were reduced by the co-operation of all Powers concerned, much would be done to create a more favorable atmosphere.

The Minister for External Affairs (Senator Pearce) referred at some length to the partition of Palestine in his statement to honorable senators on the 25th August. It will be remembered that the Permanent Mandates Commission recently considered the report of the Royal Commission on Palestine at an extraordinary session. The full text of the preliminary report of the Mandates Commission to the Council of the League of Nations has now been received by the Commonwealth Government. The Man dates Commission favours in principle the examination of a solution involving the partition of Palestine, but it does not endorse the immediate creation of two new independent States. It considers that a lengthening of the period of political apprenticeship constituted by the mandate would be absolutely essential to both the new Arab and the new Jewish States. This apprenticeship might take one of two forms. One solution would be a provisional cantonization whereby the two States, while enjoying a wide measure of internal autonomy and full power to regulate immigration, would be united under the mandatory Power for matters of defence, foreign affairs and customs. The other solution would be a separate mandate for each State until such time as each had given proof of its ability to govern itself. The appropriate moment for the granting of selfgovernment would not necessarily be the same for both States. The Mandates Commission closed its report by paying the following tribute to the mandatory Power, Great Britain: -

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