Please communicate following to British Government. Begins.

Commonwealth Government has followed with the closest attention
and interest the question of Anglo-Japanese relations as indicated
in various Foreign Office Memoranda and especially those
conversations on the Japanese Ambassador's memorandum of last
November. [1]
The Commonwealth Government feels the promotion of better
relations and a closer understanding between Great Britain and
Japan would be highly desirable from the point of view of
Australia. The recent agreement against Communism between Germany
and Japan, the attitude of Japan towards Naval disarmament and
other international agreements, and the campaign for the Southward
advance policy have created a feeling of perturbation in this
country which a definite understanding with Japan, perhaps in
general terms on the idea of the recent Anglo-Italian pact, would
go a long way to dispel.

The fact that the overtures were initiated by Japan and
conversations continued after the German agreement was concluded
seem to indicate that Japan is anxious to arrive at some definite
understanding.

Should the present political situation in Japan not jeopardise
this favourable atmosphere, the Commonwealth Government hopes that
His Majesty's Government in the United Kingdom will lose no
opportunity of pursuing the matter to a mutually satisfactory
conclusion. Ends.

LYONS

1 In July 1936 the new Japanese Ambassador to Britain, Shigeru
Yoshida, raised the question of improving Anglo-Japanese
relations, and later formalised proposals in a memorandum handed
by him to the Chancellor of the Exchequer, Neville Chamberlain, on
6 November 1936. Japan proposed mutual recognition of all existing
treaties on China, an 'open door' policy, and a program of
reconstruction. The other major suggestion was that trade
questions be settled 'on a basis of good will and mutual
understanding of each other's difficulties'.

Notwithstanding the signing of the Anti-Comintern Pact by Japan
and Germany on 25 November 1936, Anglo-Japanese discussions
proceeded on the basis of the Japanese proposals, to which Britain
replied in an aide-memoire on 18 January 1937.

[AA : A981, JAPAN 148]