453 Commonwealth Government to Lord Cranborne, U.K. Secretary of State for Dominion Affairs
Cablegram 290 14 May 1941,
Your telegram D. 182.  Possible economic reprisals against some future action by Japan.
Commonwealth Government is not clear what precise contingency you have in mind by phrase 'further southward moves by Japan.' If this means continuation of present gradual process it will obviously be difficult to decide at what point proposed reprisals are to be applied. If it means sudden acceleration of advance, suggested counter-action would seem inadequate to what in present circumstances could only be a serious direct threat to British interests.
Clearly, as British Ambassador Tokyo  suggests (your telegram D. 237) nature of anticipated Japanese action to which proposed measures would be reply would be important determining element in their efficacy.
Apart from this, we offer the following observations:
(a) Japan will no doubt have weighed and discounted in advance possible British economic counter-measures as retort to further action detrimental to British interests.
(b) Course of events makes it fairly evident that Anglo-Japanese treaty occupies minor place in shaping of Japanese policy.
(c) Proposed measures appear to involve reversion to policy of irritants and pinpricks to which we have always been opposed in dealing with Japan.
(d) Proposals apparently envisage unilateral action by British Empire. At the close of last year we were encouraged in the assumption that whatever economic action was taken against Japan would be taken on a considerable scale and with the co-operation of the United States of America and possibly the Dutch. If there is any possibility of obtaining United States co-operation it appears to us retrograde step now to contemplate measures which throw us back to the period when British and American policies in the Far East were unrelated.
If justification exists for expecting beneficial results from measures directed against Japanese trade, we suggest that action along the following lines would be more calculated to bring home sharply to Japanese industrialists the disadvantages of anti- British moves on the part of the Japanese Government:
(1) As reprisal for further Japanese moves southward all British countries to take immediate and simultaneous action to submit all imports from Japan to a severe form of import licensing.
(2) Grant of import licences to be confined to essential goods that each British country is more or less under the necessity of importing from Japan.
(3) No licences to be granted for importation from Okura (Japan) or Okura's branch houses in the British country applying the restrictions.
(4) Licensing to be controlled in such a way as to ensure substantial reduction in total imports of each British country from Japan.
(5) We attach great importance to simultaneous action of an equally drastic kind by U.S.A. We realise difficulty of securing United States agreement to take concurrent retaliatory measures, but suggest that such agreement might be more readily obtainable if we were in a position to inform United States administration that all British Empire countries were prepared to take common action on lines indicated.