141 Minute From Forsyth To Tange

8th June, 1956

CANBERRA

Trade Talks with the Japanese You asked for this Department's impression of Cabinet understanding that 'the Departmental talks with the Japanese had reflected the fact that the Japanese did not take exception to the safeguards proposed by Australia'. [1]

2. The Japanese are not yet aware that we propose according them most-favoured-nation tariff treatment and non-discrimination in import licensing, nor are they aware of the safeguards that we intend to invoke.

3. In the informal trade talks we explained the current Australian practices and for their part the Japanese showed understanding of our position. In the Initial Statement of 31st October 1955 [2], the Japanese stated that they were 'not unaware of the apprehension on the part of the Australian Government with regard to possible undesirable effects to be inflicted on the Australian industries in case of an abnormal influx of Japanese goods in domestic markets'.

4. In its commercial relations with other countries, Japan has recently shown a marked anxiety to establish herself as a reputable trader, and steps have been taken by the Government and trading organisations to restrict practices which could affect the prestige which Japan is now trying to build up. On several occasions, particularly in relation to G.A.T.T., the Japanese have referred to the danger to Japanese trading prestige which could arise out of flooding Western markets with cheap Japanese goods, and this awareness will probably inhibit, to a great extent, the tendencies of which Australia is apprehensive.

5. The position then at the moment is that the Japanese will be pleased to receive most-favoured-nation tariff treatment and non- discrimination in import licensing, that they understand the reasons behind our present practices, and that within justifiable limits they will accept the safeguards which we impose.

Nevertheless we should keep in mind that Japan will react strongly if, (in our attempts to prevent what we estimate to be serious damage to Australian industry, or to trade with established suppliers such as the United Kingdom) we propose safeguards which in their operation would cancel the benefits granted.

1 Casey wrote to Tange that in Cabinet discussion leading to Document 135: 'The general tone of the comment was that it was almost too good to be true when we were told that the Departmental talks...had reflected the fact that the Japanese did not take exception to the safeguards proposed by Australia.' 2 Document 119.

[AA : A1838/283, 759/1/7, iv]