Overall Sterling Payments Arrangements for Trade with Japan

Following press release is being issued in Canberra to-day (3rd):-

As a result of negotiations between the United Kingdom Government
and the Supreme Commander for the Allied Powers, an overall
sterling payments arrangement, effective from 31st May, 1948, has
been concluded.

2. The overall payments arrangement, which replaced the interim
arrangement concluded with S.C.A.P. in November, 1947 [1],
provides that trade between Japan and all members of the sterling
area who wish to participate, shall be financed in sterling. The
interim arrangement covered private trading transactions only. The
new arrangement covers both government and private trade payments.

The United Kingdom authorities have been informed of the
Commonwealth Government's desire that trade payments between
Australia and Japan be brought within the scope of the new
arrangement.

3. For the present, cotton textiles will continue to be excepted
from the general rule that trade with Japan will be financed in
sterling. SCAP has reserved the right to require dollar payment
for cotton textiles at least in part because the raw cotton from
which the textiles are manufactured has been and to some extent
may continue to be supplied from the United States under credit
arrangements.

4. Although trade in other commodities is to be financed in
sterling, if SCAP acquires more sterling than he can reasonably
expect to be able to spend in the near future, he will have the
right to convert such surplus sterling into dollars. A similar
convertibility clause was contained in the interim payments
arrangement and for that reason it was found necessary to reach an
understanding with S.C.A.P. for trade between Australia and Japan
to be kept in balance, thus avoiding any accumulation of sterling
which might have to be converted into dollars. Trade between
Australia and Japan will continue to be conducted within the
framework of this understanding for the time being. It is hoped,
however, that it may prove possible before long to replace the
present bilateral understanding by a wider arrangement providing
for the development of balanced trade at a higher level between
Japan and the sterling area as a whole.