CANBERRA, 14 July 1955

Trade with Japan
When talking to Mr Millwood about the draft submission on Japan
and GATT [1], he sought my reactions to a suggestion that, at the
time of invoking Article XXXV, we unilaterally and without
commitment should give Japan M.F.N. treatment.

I said that, although this idea appealed to me very much, I could
see two difficulties, Firstly, I thought we were giving Ministers
enough to think about in the submission as at present drafted and
secondly, if we follow his suggestion now we would have little
left to discuss with the Japanese in our bilateral trade talks.

I liked his suggestion because I think that the only way we will
get anywhere in our trade relations with Japan would be in a
gradual approach. This step would not entail any risks,
particularly as we would maintain the present system of licensing,
but it would give us some idea of the strength of Japanese
competition, particularly vis a vis third countries. On balance I
thought that the advantages of the suggestion outweigh its
disadvantages.

The suggestion has been tried out on the Customs Department who
treated it with caution but did not reject it altogether. I do not
think there is any chance of making a move on M.F.N. to Japan at
the time of invoking Article XXXV, but there would be a chance
during bilateral trade talks.