164 Australia-Japan Trade Negotiations: First Meeting Of The Import Committee

2nd November, 1956

CANBERRA

[matter omitted]

DR WESTERMAN then made a statement on the basis of the attached note (annexe A).

MR UYAMA queried whether the provisions of the Legislation [2] did not go beyond Article XIX of the GATT.

MR ROBERTSON confirmed that they did since Australia had to consider other emergencies which might arise apart from anything which might be pertinent to the present negotiations. However, assuming an agreement was reached, we would define the operation of the legislation as regards Japan, in that agreement.

Mr Robertson handed Mr Uyama a sample of the sort of figures we could make available to the Japanese Embassy every month. He explained that there would be six to eight weeks delay in these figures.

DR WESTERMAN pointed out that these figures would enable the Japanese to follow trends in imports and demand and would help the Japanese to control exports. This control would presumably be loose and we are not asking for strict control.

MR UYAMA said that at a time when exports generally were being encouraged it might be difficult to restrain export.

DR WESTERMAN pointed out the need to look to the long-term position and instanced the situation at present facing Australian exports in New Zealand.

It was agreed to continue with the discussion on Monday morning at 10 a.m.

Annex A

'Sensitive' Import Items

(AUSTRALIAN PAPER NO. 1) It is the view of the Australian Delegation that, in the absence of adequate safeguards and assurances, the accord of most- favoured-nation tariff and non-discriminatory import licensing treatment to Japan could result in damage to certain Australian industries and to a serious disruption of the pattern of Australia's imports of certain commodities.

2. In considering this problem the attention of the Australian Delegation has been concentrated on the Australian industries which could be exposed to injury and the following products are regarded as being in that category:

Printed, dyed or coloured cotton piecegoods Denims, drills, dungarees and jeans Cotton sheeting for the manufacture of bed sheets or pillow cases Canvas and duck Artificial silk piecegoods Woven and embroidered materials in the piece, including badges, galloons and ribbons Towels and towelling Buttons (of plastic) Artificial flowers, fruits, leaves and grains Flooring and wall tiles Chinaware and earthenware Household glassware Toys Sunglasses, goggles and plastic spectacle frames Elastic (up to 6" wide) Fountain pens, including ball points

3. In compiling the above list it has been necessary to take into consideration not only the present level of the Australian import licensing restrictions, but also the position which might be likely to develop when the restrictions are considerably relaxed and finally removed. Owing to the difficulties of making a thorough assessment in existing circumstances, it is possible that some goods have been included in the list when, in fact, no actual damage might result. On the other hand some goods may well have been omitted where difficulties may, in fact, arise. It may, therefore, be necessary to add further goods to the list and/or to delete some goods in the light of future experience and changing circumstances.

4. Tariff preferences are exchanged between Australia and several countries of the British Commonwealth and due consideration must be given to this question before taking any action which might destroy the value of those preferences.

5. The Australian delegation would welcome the co-operation of the Japanese Delegation in finding a solution to the two problems outlined and considers that effective arrangements, if undertaken in Japan, could make a substantial contribution to the solution of the problems.

6. In the event of the Japanese Government assuming responsibility to take such action with its exporters as may be necessary to prevent serious damage to Australian industries or severe disruption to the pattern of Australia's imports, it would not be the intention of the Australian Delegation to suggest to the Japanese Delegation that Japan's exports of any particular commodity be restricted to a fixed quantity or value over a given period. What is envisaged is voluntary action on the part of the Japanese Government and its export interests to ensure constant watchfulness on Japanese exports in such matters as quantity, quality and price to prevent serious damage to the Australian national interest.

7. To give some idea of the kind of statistical material which could be provided on a continuing basis as part of any consultative machinery and as a guide to the absorptive capacity of the Australian market, the Australian Delegation would be glad to supply the Japanese Delegation with statistics illustrative of the level and pattern of Australia's imports in recent periods and (where appropriate and available) of the level of Australian production. The statistics which could be provided would be in much greater detail, in many cases, than those normally available from published documents and, of course, would be much more up-to- date.

8. If the Japanese Delegation were contemplating the adoption of export arrangements by Japanese industries it is suggested that consideration might be given to the adoption by Japanese interests of the policy of expanding the export of high quality goods and of avoiding the development of substantial trade in low-priced goods.

9. It would be the view of the Australian Delegation that the development of the maximum practicable degree of consultation between the two Governments is essential to the satisfactory solution of any particular problems which might arise. If, for example, representations were received from a third country to the effect that that country's tariff preferences were being impaired by Japanese exports to Australia, the Australian Delegation envisages consultation with the Japanese authorities if, after examination it were established that the complaint merited further attention having regard to Australia's national interest and to her international obligations and commercial policies. It would not be the intention for action to be taken in this regard except in serious circumstances.

10. However, the Australian Delegation considers that it will be necessary for Australia to reserve the right to take emergency action to correct a serious situation where no other course would be practicable.

11. The Customs Tariff (Industries Preservation) Act has been amended to permit an emergency duty to be imposed if any goods are being imported into Australia under such conditions as to cause or threaten serious injury- (a) to producers in Australia of like or directly competitive goods; or (b) to producers in a third country of like or directly competitive goods which are dutiable at a rate applicable under the British Preferential Tariff or at a rate lower than the rate that would be applicable under that tariff.

Prior to the amendment of the Customs Tariff (Industries Preservation) Act there was no appropriate measure available to the Australian Government to take emergency action in the circumstances outlined in Article XIX of the General Agreement on Tariffs and Trade. The Act, as amended, confers that power on the Minister for Customs and Excise.

12. The Australian Delegation believes that a situation would not arise in which it proved necessary to impose an emergency duty on any imports from Japan if the kind of arrangements mentioned for consultation with the Japanese authorities and action by Japanese interests are adopted. The Australian Delegation would be glad if the Japanese Delegation is able to explore the possible arrangements which will remove any necessity for Australia to impose emergency duties.

13. The Australian Delegation has already spoken of the desirability of the development of a high degree of consultation between the two countries on all problems relating to tariffs and trade and contemplates that the Japanese authorities would be consulted with a view to the mutually satisfactory solution of any problem before emergency action were taken except in circumstances where delay would cause damage which it would be difficult to repair.

14. The use of the emergency power would, of course, be subject to the provisions of any agreement or arrangement which might be reached between Australia and Japan and would only be exercised after due consideration had been given to Australia's national interest and to her international obligations and commercial policies. [3]

1 Present were Uyama, Takashima, Kawanami, Nishimiya, Westerman, Phillips, Robertson, Farrell and Lind. This record is marked 'For use of Australian Delegation only'.

2 That is, the amendment to the Customs Tariff (Industries Preservation) Act. See Document 153.

3 Brennan noted, in a minute to Tange, that Annex A dealt with 'one of the ticklish problems of negotiation with the Japanese- preventing markets from being flooded with goods of Japanese origin. Although the statement does not say so, the amendment...is made subject to any international agreements to which Australia is a party. This means that the Minister's power to have recourse to the imposition of emergency duties would be subject to the Japanese Trade Agreement and not vice versa. It also means that the power would be subject to GATT.'

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