Mr. Dexter has asked me to write to you about Mr. Packer's scheme
for controlling the Japanese economy. [1]

Both Mr. Cumes and myself have considered this plan as outlined in
the attached extract from the A.C.J.S. [2] Minutes and Mr.

Packer's letter to Mr. Smyth, and we both feel the objections to
it are numerous.

Although the proposals are vague, they appear to involve
considerable detailed administration which would probably be
difficult if not impossible to carry out except with a large
staff. You will recall that at the Commonwealth Conference, it was
generally agreed that the controls on Japan's economy should be
limited to a few selected controls over a limited number of key
industries.

The fact that the Australian Government is committed in I.T.O.,
I,M.F. [3] and elsewhere to a policy of multilateralism and non-
discrimination and is reverting to the private conduct of
international trade, appears to me to strike at the very roots of
the Packer plan. Quite apart from the bargaining and haggling
which would be involved, it would mean that the allocation of
supplying quotas for the permitted imports into Japan would be
entirely contrary to this policy. It would appear to introduce an
element of great rigidity in international trade and, I should
think, would not be at all acceptable to the United States.

It is true that if Japan is free to buy wherever she wishes, there
will be a tendency for the yen bloc to re-emerge, but I think we
shall have to rely on the work of ECAFF [4], the International
Bank, I.M.F., I.T.O., reparations and the provisions regarding
nondiscrimination which we are able to write into the treaty to
offset this tendency by developing, diversifying and strengthening
other Asian economies. This would, of course supplement the
attempts which will obviously be made by newly-emerged Asian
States to avoid any economic domination by Japan or other would-be
imperialist powers.

Mr. Packer also mentions guarantees of imports for Japan. Under a
multilateral trading regime, it would appear impossible to
guarantee goods would be available at an and certainly impossible
to guarantee they could be had at any given price. Countries may
ration exports in short supply in the interests of home consumers
or allocate exports among importing countries by means other than
the price mechanism.

However, I shall not attempt to enumerate the objections to the
Packer Plan here, but would suggest that as it appears
irreconcilable with the policy of multilateralism, the
Commonwealth Conference attitude towards control over Japan's
industries, it is perhaps not worth while exploring it further.

I shall be looking forward to seeing you again it and when the
A.C.J.S. meets here.