173 Notes By Phillips For Mcmahon

23rd November, 1956

CANBERRA

The following notes will provide you with the background to and the current position on our trade talks with Poland, Roumania and Japan. In addition, I am enclosing for your information a statement comparing the new Australia - United Kingdom Trade Agreement with the terms of the Ottawa Agreement.

[matter omitted)

Japan:

1. The first meeting with the Japanese delegation from Tokyo was held on 1st November. At this meeting each side explained its requests in some detail. The general nature of the requests had previously been discussed with members of the Japanese Embassy.

2. The Japanese are requesting non-discriminatory treatment in the form of.- (i) Application of G.A.T.T. between Australia and Japan.

(ii) The removal of discrimination against Japan in Australian import licensing.

(iii)The application of m.f.n. tariff to Japan.

3. Similarly Australia has asked for non-discriminatory treatment for its goods in Japan. However, in view of the special factors such as State Trading, U.S. surpluses and country quotas affecting imports into Japan we have felt it necessary to give our request practical meaning by asking for specific treatment on individual items, such as unrestricted entry, exchange allocations etc.

4. Our major request is for a commitment by Japan to purchase 15 million bushels of f.a.q. and 8 million bushels of higher protein wheat from Australia each year but it has been made clear that this would not involve any obligation on Australia to supply these quantities.

5. In subsequent meetings with the Japanese we have restricted discussion to clarifying our requests and our position on the need for protection of Australian industry should the Japanese be granted m.f.n. treatment.

6. In accordance with Cabinet's decision [1], we have indicated that we are not prepared to discuss the application of G.A.T.T.

between Australia and Japan.

7. We have explained that the purpose of the amendment to the Customs Tariff (Industries Preservation) Act [2] is to enable the Australian Government to take emergency action to protect Australian industry and the export interests of our preference partners against low-priced imports from any source. We have indicated those items which we would consider as sensitive to Japanese competition under present conditions. [3] We have also advised the Japanese that we would expect that it would not be necessary to invoke the legislation if the Japanese exercise caution at their end to ensure that exports to Australia do not disrupt Australian industry.

8. We have told the Japanese that we place considerable weight on the assurance that they will take Australian wheat. They are apparently having considerable difficulty in determining how far they can go on this. To give Australia an assurance on wheat involves some reduction in surplus and conditional purchases from U.S. and Japanese political interests are sharply divided on this point.

9. When we have a firm response from the Japanese to our requests it is intended to report to the Committee of Ministers set up by Cabinet in its decision of 21st May. [4] If the Japanese reply on wheat is such as to offer prospects of negotiating a firm commitment to purchase a specified quantity, we would at that stage wish to obtain the Wheat Board's views on the type and adequacy of the undertaking.

1 Document 135. See also paragraph 23 of Document 130.

2 See Document 153.

3 See Annex A to Document 164.

4 Document 135.

[AA : A1310/1, 810/1/39]