On 26th May, 1947, Cabinet approved of recommendations contained
in Agendum Number 1343 regarding the resumption of private trade
with Japan but directed that the question was to be re-submitted
to Cabinet before actual trading commenced.

2. In accordance with Cabinet approval action has been taken-
(a) to issue a licence under the Trading with the Enemy Act
permitting private commercial transactions with residents in the
territories controlled by Japan on the entry of that country into
the war;

(b) to select a party of businessmen representative of importing,
exporting and banking interests to visit Japan;

(c) to lay down the licensing policy which will be followed in
connection with imports of Japanese goods;

(d) to make representations regarding the establishment of a yen
exchange rate.

3. The first Australian party of businessmen to visit Japan will
leave Australia on 23rd August by H.M.A.S. Kanimbla and will
arrive in Japan about 12th September. The occupation authorities
in Japan will permit the signing of contracts for the supply of
goods from 1st September and although the Australian party will
arrive subsequent to this date, it is not considered that the
members will be placed at a serious disadvantage, in view of the
fact that the range of goods which are available for export from
Japan and which will be permitted importation into Australia is
limited. The majority of the party is anxious to make the visit to
Japan to renew pre-war commercial contacts and to arrange for
purchases from future production rather than to make immediate
purchases.

4. Initially, dollars will be required in payment for all goods
exported from Japan and it is therefore proposed that imports of
Japanese goods into Australia be accorded the same treatment as
imports from hard currency areas. In the early stages of the
resumption of private trade, raw silk, cotton yarn and textiles
and tea will not be available for purchase by private traders.

Rayon yarn which Australia is anxious to purchase might be
available later and importation will be permitted but licences
will not be granted for fancy goods, toys, crockery and other non-
essential commodities which featured in pre-war trade with Japan.

Import licences are not at present being issued for rayon and silk
textiles from any non-sterling country and in the event of any
relaxation at a later date it is thought that only limited
quantities could be permitted importation from Japan.

5. Under existing circumstances exports to Japan will be chiefly
confined to wool and a few minor commodities such as hoofs, horns,
trochus shell, etc. A small party of officials from the Australian
Wool Realisation Commission has already gone to Japan to explain
the Australian requirements in the wool trade to S.C.A.P. and the
Japanese interests concerned. It is proposed that a limited
percentage, namely 25 per cent, of the total purchases will
comprise higher counts of wool than were previously offered to
Japan but this will not include the top grades of Australian wool.

The Japanese importing interests will arrange their purchases
through reputable Australian firms who will be obliged to observe
the restrictions on types and qualities.

6. Despite representations by the Commonwealth and the United
Kingdom Governments, no action has yet been taken to establish a
yen exchange rate. The information concerning the basis on which
payment for goods will be made is still indefinite but it is
anticipated that the occupation authorities in Japan will fix the
price of goods to be exported on an arbitrary basis. Payment will
be made in dollars until such time as a sterling payments
agreement can be negotiated by the United Kingdom Government.

Latest confidential advice is that a partial sterling arrangement
which excludes Japanese sales of cotton textiles is likely to be
concluded in the near future.

7. It is recommended that the Commonwealth Government-
(a) permit merchant-to-merchant trading in goods of an essential
character which the occupation authorities are permitting private
traders to purchase and that import licences be granted only for
essential goods which are not available in adequate quantities
from local, sterling or easy currency sources of supply;

(b) continue to procure by Government cash purchase raw silk and
cotton textiles of the utility type until those goods are made
available for purchase by private traders;

(c) authorise within the limits of the quota allocated to
Australia visits of Australian businessmen to Japan;

(d) make further representations for the establishment of a
satisfactory basis of payment for goods in which trade with Japan
is permitted;

(e) permit commercial exports of wool, subject to a moderate
restriction on types and qualities, and other commodities which
may be readily available for sale to Japan.

H.V. EVATT
Minister for External Affairs

R. T. POLLARD
Minister for Commerce and Agriculture

BEN COURTICE
Minister for Trade and Customs