413 Embassy in Washington to Department of External Affairs

Cablegram 606 WASHINGTON, 9 May 1947, 6.58 p.m.

SECRET

F.E.C. 119. Resumption of private trade.

Reference your 459 and 549.

1. Your paragraphs 6 and 7 [1] were communicated on receipt to other British Commonwealth Members and informally to the United States. Submission of paper was deferred to enable other Commonwealth Members to get instructions enabling them to collaborate in submission of the paper. Though the United Kingdom instructions had not arrived by last weekend, we submitted the paper along the lines of your 459 on 5th May to forestall any possible announcement by the United States of definite date for resumption of private trade. Paper was discussed in I.A.T.B. on 6th May and briefly in F.E.C. Economic Committee on 8th May.

2. Provisions of your Para 7 seem acceptable to most countries but proposal to defer latter to peace conference has met with strongest opposition and is supported by nobody. With exception of Philippines and Soviet every country desires private trade to be reopened as quickly as possible, Philippines consider fixing of a date is premature until 'interim reparations removal program is under way'. Soviet member is without instructions and has contented himself with saying that fixing of date is matter for F.E.C. and not United States to decide. One practical reason advanced in opposition to your paragraph 6 is that private traders will not wish to enter Japan for preparatory work unless they can be assured that their actual participation in trade will not affect the indefinite future. United States Member has pointed out that until private trade is resumed, United States Treasury has to carry a heavier financial burden by providing interim funds.

Moreover many countries fear that the longer resumption of private trade is delayed, the greater the possibility of American business interests entrenching themselves in Japanese commerce. Present United States Government thought is that private trade should be resumed in middle July or beginning of August.

3. We have since seen Dominions Office cable to you 92 of 5th May.

[2]

1 Paragraph numbers refer to Document 412.

2 Cablegram 92, in fact dispatched 3 May, set out UK views favouring resumption of private trade with Japan subject to certain safeguards.

[AA : A1068, ER47/31/14, i]