CANBERRA, 14 July 1955
Trade with Japan When talking to Mr Millwood about the draft submission on Japan and GATT , he sought my reactions to a suggestion that, at the time of invoking Article XXXV, we unilaterally and without commitment should give Japan M.F.N. treatment.
I said that, although this idea appealed to me very much, I could see two difficulties, Firstly, I thought we were giving Ministers enough to think about in the submission as at present drafted and secondly, if we follow his suggestion now we would have little left to discuss with the Japanese in our bilateral trade talks.
I liked his suggestion because I think that the only way we will get anywhere in our trade relations with Japan would be in a gradual approach. This step would not entail any risks, particularly as we would maintain the present system of licensing, but it would give us some idea of the strength of Japanese competition, particularly vis a vis third countries. On balance I thought that the advantages of the suggestion outweigh its disadvantages.
The suggestion has been tried out on the Customs Department who treated it with caution but did not reject it altogether. I do not think there is any chance of making a move on M.F.N. to Japan at the time of invoking Article XXXV, but there would be a chance during bilateral trade talks.