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scheme involving such a prohibition, and if Ministers agree to it,
it is still not contemplated, as I understand the matter, that
effect should be given to the scheme until the Japanese show
signs of extending their blockade further than they have yet
done and until we have come to an understanding with them.
The firm raise the further question whether H.M.Government
are likely to propose an embargo on the export of arms. As to
this, it is as you know our settled policy not to put an embargo
on the export of arms to particular destinations save insofar as
the other arms-producing countries may do the same.
Consequently,
as there has so far been nothing mooted in the way of an
international non-intervention agreement or of League of Nations
'sanctions" we in the Board of Trade at any rate see no present
reason to expect an embargo on the export of arms from this
country to China. But clearly there may be further developments
at any time, and we do not see that any indication of our possible
future line of action can be given to Mathesons. We think they
must be left, for the present at least, to do what they think best
in their own discretion.