161 Australia-Japan Trade Negotiations: First Meeting Of Commodity Committee [1]

1st November, 1956

CANBERRA

MR. UYAMA explained the Japanese Automatic Approval system of import licensing making the following points:

1. There is in effect no ceiling on Automatic Approval imports:-a rough estimate is made every six months for budget purposes but should it prove insufficient, additional allocations are made.

2. Licences under A.A. are issued on the basis of first come first served and an importer may import any amount he wishes of any one or more commodities.

3. There are no set amounts for individual commodities nor any restriction as to country of origin.

4. Application for licences are only a means of checking amount expended etc.

5. No exchange is committed until actual payment is being effected.

6. Whether or not a prospective importer is allowed to go ahead with his transaction depends entirely on whether the bank handling the transaction considers him a good risk.

7. The Japanese Government's policy is to expand A.A. At present it covers about 20% of imports and has doubled in value since last year.

Wool MR. PHILLIPS explained the nature of our demand for Automatic Approval for wool in terms of what Dr. Westerman had said in the plenary session. [2]

MR. UYAMA requested information on our alternatives. MR. PHILLIPS mentioned global quota as a possibility.

MR. UYAMA stated that there would be problems in granting A.A. for wool and requested information on what we regarded as a fair share of the market.

MR. PHILLIPS explained that in seeking a figure which might be considered as expressing Australia's fair share of the Japanese market we had to go back to 1933-35 as the most recent period free from abnormal factors. On the basis of these years we reached a figure of 90% of Japan's total imports.

MR. UYAMA suggested that the Japanese delegation would like time to study the position. In response to a question by Mr. Phillips Mr. Uyama pointed out that wool was not considered as a high priority material in Japan and that imports depended largely on exchange availability.

While Japan had various commitments under trade agreements etc.

and particularly with countries with whom she had large credits such as Argentine, the policy was to eliminate open account agreements wherever possible. It was true that in relation to Argentine the Government tried to encourage imports of wool to balance trade.

MR. UYAMA pointed out that 1933-35 appeared to be abnormally high years to select as a basis for Australia's share of Japan's wool imports.

MR. PHILLIPS pointed out that to our mind their abnormality sprang from the fact that they were the only years between then and now when there were no abnormal factors affecting Japanese buying.

MR. UYAMA suggested wool could be taken up again in committee after the Japanese had explored the position further.

Wheat MR. PHILLIPS explained Australia's request in terms of Dr.

Westerman's statement in plenary. [3] Australia's specific requests were for opportunity to compete for eight million bushels of higher protein wheat and opportunity to supply fifteen million bushels or one-sixth of Japan's total imports, whichever is higher, of F.A.Q. or lower grade wheat.

MR. UYAMA explained that the Japanese Food Agency was concerned with the domestic situation and especially price and that it was difficult for it to give any consideration to trade policy factors on wheat imports.

One of the problems was that the Japanese were not clear on the exact meaning of F.A.Q. Japan's standard was 12% protein content and the 11 1/2% imported from N.S.W. was on a trial basis. Half of the 11 1/2% imported had been found not up to standard.

In reply to a question from Mr. Campbell Mr. Uyama said that the lower protein wheats imported by Japan from U.S.A. were for use in making noodles. Even in this case there were certain specifications to be fulfilled. The Food Agency liked to be able to offer wheat to the mills under definite specifications and this was not possible with F.A.Q. where the standard was not predictable.

MR. PHILLIPS suggested that Australia should be able to supply F.A.Q. wheat to meet particular specifications and requested details of the specifications.

MR. UYAMA agreed to request Tokyo for the specifications.

MR. UYAMA pointed out that he understood that there would be little higher protein wheat available for export in the coming season and if this was so he enquired what figures should go in as our request.

MR. McPHERSON confirmed that it was unlikely that any higher protein wheat would be available for export this season.

MR. PHILLIPS explained that although the question of duration of the arrangement was not one for discussion in this committee, we envisaged an agreement lasting over a period of years. Eight million bushels was a figure for higher protein wheats which we expected to be able to supply in normal seasons.

MR. UYAMA pointed out that Japan's ability to accept on arrangement would depend greatly on the duration.

MR. CAMPBELL outlined again the basis of the quotas pointing out the difficulty of arriving at any sound historical basis for a fair share of the Japanese market.

MR. UYAMA explained that in regard to both barley and wheat the Food Agency called tenders on a global basis. He asked if Australia would be satisfied if Australia had the opportunity to tender for 35% of this.

MR. PHILLIPS pointed out that we understood that global tenders were called after certain reservations were made e.g. for U.S.

wheat.

MR. UYAMA said that even imports of U.S. wheat were not committed in all cases. The offer of non-commercial terms is a matter for the supplier and if U.S. wheat were offered at a cheaper rate than others then the Food Agency purchased it.

There were certain exceptions made to this rule of best tender on global basis to cover outstanding credits. (e.g. in the case of Argentine in the past but this policy had been discontinued in relation to Argentine.) However, it was difficult for the Food Agency to make exceptions as the Board of Auditors insisted on purchases on best tender basis.

In many instances Japanese importers had not offered Australian F.A.Q. wheat in response to calls for tenders, because of the different specification.

It was agreed that wheat should be discussed again when the Food Agency specifications had been received.

Barley MR. PHILLIPS outlined our views on barley along the lines of Dr.

Westerman's statement in plenary. [4]

He advised that Australia requested specifically opportunity to supply a minimum 350,000 tons or 35% of total imports, whichever is larger.

It was agreed that Barley could be referred back to plenary.

1 The meeting commenced at 3.p.m. Uyama, Takashima, Kawaname and Nishimiya represented Japan; Australia was represented by Phillips, Robertson, Campbell, McPherson and Lind. This record is marked 'Confidential: for use of Australian delegation only'.

2 See Document 159.

3 See Document 159.

4 See Document 159.

[AA : A1209/23, 57/5474]