188 Memorandum From Stuart To Phillips

31st January, 1957

TOKYO

Trade Talks As I mentioned in my memorandum of 29th January, Mr Yoshino had asked for a discussion with me. This took place this afternoon. It extended over a couple of hours and the points which he made may be summarised as follows-

(1) The policy decision made by the Government in respect of U.S.

surplus commodities and the Australian talks was confined to a decision not to enter into a third agreement (in respect of the period up to June, 1958) on wheat or any other commodities.

Despite the views of many Ministries it was not a decision not to enter into any future deals with the U.S. except in the case of some financial or agricultural crises. This arose from the attitude of the Ministry of Agriculture & Forestry which has 'kept the door open' for future years.

(2) Despite the departure of Mr Kono, there are still elements within the Ministry of Agriculture (notably Mr Watanabe, the Chief of the Economic Bureau-competent, influential and a 'Kono' man) which wish to resume surplus deals at a later date. In addition, the Ministry and the Food Agency are under fairly strong pressure from the U.S. Embassy to keep the door open. In particular, there is very strong pressure to avoid giving Australia any kind of quality [1] for wheat. The Foreign Office does not believe that this pressure strictly represents the views of the U.S. Government but that it arises primarily from the enthusiasm of the local representatives. The Foreign Office has put this view strongly to the Ministry and has pointed out that it is responsible for interpreting U.S. policy and maintaining good relations with the U.S. The Ministry officials remain unconvinced.

(3) There was a meeting yesterday of senior representatives of the Foreign Office, Economic Planning Board, MITI, the Ministry of Finance and the Ministry of Agriculture & Forestry to discuss the resumption of the Australian talks. The conclusions reached at this meeting represent 'some progress' but were not completely satisfactory because the Ministry of Agriculture maintains its stand that there should be no attempt to seek a variation of the Government's formal decision that the surplus deals should be suspended for one year only. Some points arising out of this meeting are- (a) Mr Ushiba was temporarily out of Tokyo and was therefore not present.

(b) It was agreed that two, and possibly three, representatives of the Food Agency should return to Australia with Ambassador Suzuki next week in order to have detailed discussions with the Wheat Board and satisfy themselves about 'a number of technicalities'.

(c) Wheat remains the only problem. It was confirmed that Australia's other requests could be granted.

(d) The meeting agreed that whilst the surplus deals were suspended, Japan would purchase Australian f.a.q. on a 'global non-discriminatory competitive basis' and that if the surplus deals were ever resumed, Japan would undertake to ensure that Australia retained its 'fair share' of the market. For this purpose, the fair share would be assessed in the terms of past performance during the period when surplus deals were suspended.

This undertaking would be committed to writing, would form part of the agreement with Australia, and would be ratified by the Diet.

(4) Yoshino is uncertain whether the undertaking referred to in (3)(d) above would be satisfactory to Australia because Australia might feel that she was making permanent concessions in return for temporary advantages. Ushiba shares his fears but at the moment that is the best which they can persuade the various Japanese interests to accept.

(5) Ushiba is reluctant to return to Australia because he does not want to take the risk of being associated with negotiations which fail. His position in the Foreign Office is such that no-one is prepared to instruct him to go to Australia if he doesn't want to.

For this reason, Yoshino would prefer that the Japanese Embassy in Canberra should complete the negotiations. However, Ambassador Suzuki has not got the necessary economic and commercial background and is 'too nice' to be a good negotiator ... they do not feel inclined to trust the negotiations to [Uyama]. For these reasons Yoshino would prefer the negotiations to be resumed in Tokyo. This would enable Ushiba to take part without accepting the full responsibility for a failure if that should occur. In addition, Ushiba's talents and persuasive personality would be useful in influencing other Ministries. However, Yoshino, thinks that it is probably impossible for Australia to agree to resume in Tokyo.

(6) Yoshino hopes that Ushiba can be persuaded to go to Australia and he would be glad of a lead from Australia as to whether the Japanese undertaking referred to above would be satisfactory to us. (I said that I did not think that it was reasonable to expect this and that I would not ask for it).

(7) He concluded by saying that the main purpose of the discussion was to let Australia know in an unofficial and informal way the reasons for Japan's delay in resuming the negotiations. [2]

1 A handwritten correction changes 'quality' to 'a quota'.

2 In a further memorandum on 6 February, Stuart commented that after further thought he believed Yoshino's 'object was to soften us up a little ... my personal inclination would be to accept Yoshino's statement of the maximum Japanese offer as probably correct but to realise that he was anxious to convince us that we should accept it because nothing more would be available'. Yoshino had also told him that departments other than Agriculture, including MITI, were losing interest in the Australian negotiations. Since then, however, MITI officials had assured Stuart of their keen interest in concluding an agreement.

[AA : A2051/4, S0013, i]