181 Minute From Warwick Smith To Phillips

10th December, 1956

CANBERRA

Japan As I said, I am concerned that before it is too late in the piece in our negotiations with the Japanese, that we should satisfy ourselves 100% that the reserve power under the tariff heading only is sufficient to give the Government the 'full safeguard' that was promised in the Cabinet Decision. [1]

As I have explained, it was my conception throughout that we would negotiate this treaty with the Japanese on the basis of unfettered power to take emergency action under the heading of import licensing as well as similar freedom to take emergency action under the tariff heading.

I now understand that in discussions to date we have talked only of an emergency power under the tariff heading.

I appreciate that it might be difficult at this stage in the negotiations to inject the idea that we also want a clear understanding with the Japanese that we should have unfettered emergency power under the import licensing heading. However, even if this is difficult and awkward at this stage, it would be considerably more difficult and awkward at a later stage for us to find that in fact the tariff power did not cover us adequately or enable us to take the most appropriate action for any particular situation that might arise and for which with any hindsight we would then see that a reserve power under import licensing would in fact enable us to cope with that situation.

I, therefore, feel rather strongly that it is essential that the Department satisfy itself that in any conceivable situation that should arise the tariff emergency power alone gives the Government the right to 'full safeguards' as promised in the Cabinet Submission. [2] To my mind, this requires a fairly close probe of the likely situations, e.g. I do not see how the tariff power enables you to control the flow of imports in our emergency position at a certain level which of course the import licensing power would enable you to do. If under the tariff power we could institute tariff quotas that might meet my point, but you say this cannot be done under the tariff power.

The other types of situations that I see are:

(a) the single shipload case;

(b) the possibility of a case where there may be technical difficulties in the tariff field which would not arise in the import licensing field (I cannot be more definite than this because I just don't know-the tariff experts might show that there is something or nothing in this notion);

(c) is it going to be easy in practice to impose an emergency tariff duty-even though there is unquestioned right under the agreement to do so-on an article which though cheap in price is also very cheap in quality;

(d) the normal case where I think the tariff power is adequate would be a simple inflow of Japanese goods at a high volume where the threat of the imposition of a special duty would control the situation.

I suggest you ask Carmody [3] to give you a considered view on the adequacy of the tariff emergency power but I do feel you will need to examine the position pretty closely yourself with different tariff and licensing people.

1 Document 135.

2 Document 130.

3 A.T. Carmody, Assistant Secretary, Policy Secretariat, Department of Trade.

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