60 Record Of Conversation In Department Of External Affairs

5th April, 1954

Australian Import Licensing Treatment of Japanese Goods The interview was arranged following approval by the Prime Minister, the Ministers for Trade and Customs, Commerce and Agriculture, National Development, External Affairs and the Treasurer that the gist of the draft note prepared by the Department of Trade and Customs on 4th March, 1954, [1] should be given verbally to the Japanese Embassy.

Mr Shaw referred to Mr Tange's conversation on 12th March with the Japanese Ambassador [2] in which Mr Tange had explained the reasons why it was not proposed at the present stage to reply formally to the Japanese representations about the licensing treatment accorded to Japanese goods. Mr Shaw said that we were now, however, in a position to offer some observations on certain points made in the Japanese note of 14th January [3] which would clear up apparent misunderstandings, and to give some figures on the extent of licences granted for Japanese goods, which would show that the situation was improving from Japan's point of view.

Mr Shaw said that Japan's trade with Australia should be looked at in the context of Japan's trade with the sterling area as a whole and not merely on the bilateral level. Mr Kakitsubo agreed and said that Japan did not expect that Australian imports from Japan could be brought up to the level of her exports to Japan.

Mr Shaw then gave figures showing that the licences authorized for Japanese imports had increased progressively from a value of 730,000 in the 1st quarter 1953 to 4,500,000 million in the 4th quarter. The level of licensing was sustained at the latter rate in the 1st quarter of 1954 and would be increased by approximately 15% in the 2nd quarter, bringing it to the equivalent of an annual rate of 21 million. Figures were also given showing the increase in licences authorized for specific categories of goods over the period 1st October, 1952, to 31st December, 1953. It was pointed out that the categories of goods for which applications were considered had been progressively extended.

Mr Shaw impressed upon Mr Kakitsubo the fact that the foregoing figures had not been published and the need for Japan to regard them as strictly confidential. Mr Kakitsubo undertook to observe this.

In answer to a question by Mr Kakitsubo whether licences were actually issued up to the ceilings laid down for each quarter, Mr Munro expressed his understanding that the Department of Trade and Customs reviewed the figures of licences authorized at frequent intervals during the quarter and made such adjustments between categories of goods as were necessary to ensure that the total would be reached. There was a possibility that, although licences were taken out, particular transactions might fall through.

In regard to the method of dealing on an 'administrative' basis with applications for licences to import Japanese goods, Mr Shaw said that only about one third of total Australian imports in the 6 months ended 31st March, 1954, were covered by quotas. Mr Kakitsubo observed that the abolition of 'A' category from 1st April, 1954, and the transfer of many items to the 'n.q.r.' and 'administrative' lists would apparently result in a further reduction of this figure.

As regards delays in the grant of licences Mr Shaw said that some time was inevitably consumed in examining applications for goods on the 'administrative' basis and said that this applied to imports from all sources, not only from Japan. Every effort was being made to minimise delays and make the system as efficient as possible.

In connection with the point made in the Japanese note about rates of duty on tinplate and plywood, Mr Shaw explained that the rates of 12 1/2% and 57 1/2%, respectively, had been laid down originally in 1937. The duties had been temporarily suspended for limited periods prior to 1953 when supplies were short, in order to encourage imports. When the shortage was over, the usual rates had been reverted to.

Mr Kakitsubo seemed appreciative of the position revealed by the licensing figures. Mr Kakitsubo referred to the presence in Canberra of Mr Kitahara, a Japanese Government trade official who had had talks in New Zealand. Mr Kitahara was in Australia in a personal capacity and there had been no comment on his presence. He had reported that New Zealand had a 'realistic' attitude to Japanese - New Zealand trade. New Zealand could not sell so much wool as their qualities were less fine than Australian but was interested in foodstuffs.

Mr Kakitsubo remarked on the increased consumption in Japan of foreign style foods such as butter, and also of flour, due to the relatively high purchasing power. He referred also to Japan's interest in Australian rice and Jersey dairy cattle.

Mr Kakitsubo raised on his own initiative the idea of three cornered deals such as Japan-Indonesia-Australia in which trade deficits would be made good. He was told Australian policy did not favour such deals. [4]

1 Document 53.

2 See Document 55.

3 Document 48.

4 The record was prepared by D.J. Munro.

[AA : A1838/278, 3103/10/2, iii]