Your telegram D. 182. [1] Possible economic reprisals against some
future action by Japan.

Commonwealth Government is not clear what precise contingency you
have in mind by phrase 'further southward moves by Japan.' If this
means continuation of present gradual process it will obviously be
difficult to decide at what point proposed reprisals are to be
applied. If it means sudden acceleration of advance, suggested
counter-action would seem inadequate to what in present
circumstances could only be a serious direct threat to British
interests.

Clearly, as British Ambassador Tokyo [2] suggests (your telegram
D. 237) nature of anticipated Japanese action to which proposed
measures would be reply would be important determining element in
their efficacy.

Apart from this, we offer the following observations:

(a) Japan will no doubt have weighed and discounted in advance
possible British economic counter-measures as retort to further
action detrimental to British interests.

(b) Course of events makes it fairly evident that Anglo-Japanese
treaty occupies minor place in shaping of Japanese policy.

(c) Proposed measures appear to involve reversion to policy of
irritants and pinpricks to which we have always been opposed in
dealing with Japan.

(d) Proposals apparently envisage unilateral action by British
Empire. At the close of last year we were encouraged in the
assumption that whatever economic action was taken against Japan
would be taken on a considerable scale and with the co-operation
of the United States of America and possibly the Dutch. If there
is any possibility of obtaining United States co-operation it
appears to us retrograde step now to contemplate measures which
throw us back to the period when British and American policies in
the Far East were unrelated.

If justification exists for expecting beneficial results from
measures directed against Japanese trade, we suggest that action
along the following lines would be more calculated to bring home
sharply to Japanese industrialists the disadvantages of anti-
British moves on the part of the Japanese Government:

(1) As reprisal for further Japanese moves southward all British
countries to take immediate and simultaneous action to submit all
imports from Japan to a severe form of import licensing.

(2) Grant of import licences to be confined to essential goods
that each British country is more or less under the necessity of
importing from Japan.

(3) No licences to be granted for importation from Okura (Japan)
or Okura's branch houses in the British country applying the
restrictions.

(4) Licensing to be controlled in such a way as to ensure
substantial reduction in total imports of each British country
from Japan.

(5) We attach great importance to simultaneous action of an
equally drastic kind by U.S.A. We realise difficulty of securing
United States agreement to take concurrent retaliatory measures,
but suggest that such agreement might be more readily obtainable
if we were in a position to inform United States administration
that all British Empire countries were prepared to take common
action on lines indicated. [3]