180 Minute From Warwick Smith To Crawford

6th December, 1956

CANBERRA

The point raised by Mr Propps is real enough. [1]

I have discussed it with Mr Phillips. I agree with Mr Phillips we should not take any action with U.S.A. at this time. However, I think we should look at the question from week to week, to assess whether at any given time it is likely to pay us better to lay the cards on the table with U.S.A. or to continue to take no action there. In any case we may find our hand is forced by the way things develop. If we decided to speak to the U.S., or felt we had to do so, we could say we are asking an import quota of about one- third of Japanese soft wheat requirements; this is a fair share for reasons so and so, particularly as the U.S. has taken up or is likely to take up a little more than one-third of the market with its P.L.480 deal. The purpose of saying this to the Americans would be to allay suspicion on their part that we want to tie up the whole of the market apart from the P.L.480 and to make clearly our arguments that we are not in fact being at all greedy about our share of the market-pre-war we had about 60% of the then small market; we now recognise that U.S. has done a good deal to develop the market of grain in Japan so we come down from two-thirds to about one-third.

However, we could say, in the event that the U.S. would refrain from P.L.480 transactions with Japan, we would join with the U.S.

in seeking to have the Japanese institute a genuinely free commercial import system for all wheat. To the Japanese we could say their commitment to us was only until both Governments agreed that a truly commercial and non-discriminatory system of importing wheat was in operation. 'Commercial' in both cases would mean unsubsidised or countervailed imports.

1 See Document 177.

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