79 Minute From Brown To Menzies

14th October, 1954

CANBERRA

Trade Talks with Japan

SUBMISSION NO. 142 [1]

This submission has been prepared by the departmental committee so that Ministers can make a decision on the suggestion made by Mr McEwen and Senator O'Sullivan that the Japanese be told immediately that Australia is prepared to negotiate a trade treaty with them. There are tactical reasons for saying this now if we can.

The departments have tried to give Ministers information as to form and scope of an agreement that would be a practical proposition. Several points of difficulty came out in the departmental discussions:

1. We would like to ask the Japanese for a commitment that import licensing will be used only for balance of payments reasons.

Treasury and Customs feel that we could not take a similar commitment ourselves but Commerce argue that a satisfactory method could be found to protect our industries by means other than import licensing. I feel we should respect the Treasury and Customs view on this matter but a decision need not be taken on this now.

2. There are two types of agreements which could provide suitable safeguards for Australian industry-a quota type of agreement-a value for duty type of agreement (Canadian type). The quota type is the safer but may not really be a basis for agreement as it may not be acceptable to the Japanese. Theoretically the Canadian type would give us all the safeguards we need but Customs see great administrative difficulties. I think Customs exaggerate their difficulties but nevertheless they would have to administer the thing and therefore we must accept their points. The submission suggests that Ministers give further consideration to the merit of the two types of agreement.

The question is does the submission give sufficient information so that Ministers can say that we should take the first step now feeling fairly confident that an agreement can be reached with Japan which would allow the Government to look after Australian industry (and United Kingdom industry if so desired) as needed under the operation of the agreement? There are deficiencies in the submission: for instance industries vulnerable to Japanese competition are listed but nothing is said about their significance-the size of their labour force, their efficiency, etc.

This question could best be answered if the general discussion by Cabinet tomorrow is followed by a more detailed examination by the Prime Minister's Committee next week when departmental officers could be questioned on the points of difficulty.

1 Document 78.

[AA : A4906, VOLUME 5]