CANBERRA

Japan and the General Agreement on Tariffs and Trade
Attached for the consideration of Ministers is a report by the
Inter-departmental Committee on Japan and G.A.T.T.

Attachment

JAPAN AND G.A.T.T.

REPORT BY INTER-DEPARTMENTAL COMMITTEE

Introduction:

The process of Japan's accession to the General Agreement has
spread out over a number of years. In July, 1952, Japan made a
formal request to accede to the Agreement but for various reasons
the Contracting Parties did not schedule tariff negotiations which
is the traditional opening move for countries wishing to accede.

In October, 1953, a date had still not been set for tariff
negotiations and the Contracting Parties took a Decision agreeing
to the provisional participation of Japan in the work of the
Contracting Parties and drew up a Declaration which would allow
those countries who so wished to grant Japan G.A.T.T. treatment in
their commercial dealings with Japan. Australia refrained from
signing the Declaration and abstained from voting on the Decision.

2. Tariff negotiations were finally scheduled to commence early
this year. The tariff negotiations have now been concluded and
instruments of accession have been opened for signature.

Contracting Parties have until 11th August to indicate whether
they support Japan's accession to the G.A.T.T. The relative
instrument requires signature by two-thirds of the Contracting
Parties. Abstention from signing is equivalent to a negative vote.

Upon Japan's accession to the Agreement, the present Contracting
Parties must apply the rules of the G.A.T.T. to Japan (including
the grant of M.F.N. tariff treatment) unless they invoke Article
XXXV which allows a country which has not participated in tariff
negotiations with a new country to withhold the application of the
G.A.T.T. between itself and the new country.

The Issues for Decision:

3. There are therefore two questions for Ministers to decide-
(a) whether to invoke Article XXXV;

(b) whether to support Japan's accession to the G.A.T.T.

Article XXXV:

4. There are no new circumstances relating to our trade with Japan
since Ministers last looked at the question and the
Interdepartmental Committee assumes therefore that it is still the
Government's intention to invoke Article XXXV at the appropriate
time.

A Vote in Favour of Japan's Accession:

5. This question is of lesser importance than the invocation of
Article XXXV but the issues are less clear cut. It is possible for
a country like Australia (i.e. a country which did not participate
in the tariff negotiations) to support Japan's accession without
prejudicing its rights under Article XXXV.

6. If Japan joined the G.A.T.T. we would obtain indirect benefits
from the tariff concessions that other Contracting Parties have
negotiated with Japan as a preliminary to her accession. These do
not amount to very much as far as Australia's exports are
concerned, however, and we would get them irrespective of our
application of Article XXXV.

7. There is no doubt that the United States and other countries of
the Western world would like to see Japan in the G.A.T.T. Japan is
anxious to obtain membership in the belief that this would promote
its export trade. It is in Australia's interest that Japan should
have increased opportunities for trade with countries of the
Western world. It would be of general advantage to have Japan
accept the discipline of G.A.T.T. even if the G.A.T.T. did not
apply as between Japan and particular countries. Australia's
support could be taken as a gesture of goodwill towards Japan and
would indicate that although Australia could not apply the
provisions of G.A.T.T. to Japan we did not wish to hinder those
countries who wished to do so.

8. In November last year we proposed to the Japanese that we
should have bilateral trade talks. The Japanese indicated that
before they could form a definite attitude to this proposal they
would like to know more details as to the nature and scope that we
had in mind for such talks and we then suggested informal talks
between officials. It is now up to the Japanese to tell us when
they are ready for the informal talks.

9. If Australia supported Japanese accession to the G.A.T.T. it is
possible that Japan might claim in the bilateral talks that as we
were prepared to see other countries apply the G.A.T.T. rules
without qualification to them we should be prepared to do so
ourselves. However we could claim that our signature indicated
that we looked at the question of our relations with them in a
spirit of goodwill. We were prepared to assist them in their
objective of joining the G.A.T.T. but were not able to apply the
G.A.T.T. to them ourselves.

10. The Inter-departmental Committee feels that insofar as
international trade issues are concerned, including the general
question of our relations with Japan, there would be advantages in
Australia supporting Japanese membership to the G.A.T.T. by
signing the decision on accession.

11. Attitude of Other Countries:-Japan's accession requires a two-
thirds majority vote (this means 23 countries). If we presume that
those countries which participated in the tariff negotiations plus
the other countries which are already provisionally applying the
G.A.T.T. to Japan will vote in favour, it seems fairly likely that
Japan will get votes from 26 countries (see attached table).

However, it is not completely certain that Japan will get the
necessary majority without Australia's vote. The Japanese Charge
d'Affaires, Canberra, has expressed doubts whether the necessary
votes will be forthcoming and has indicated that Japan would
welcome Australia's support. [1]

12. We have been advised that New Zealand will invoke Article XXXV
but will support Japan's accession to the G.A.T.T.

13. The United Kingdom will invoke Article XXXV but we do not know
their attitude towards voting for accession. A telegram from
London on this is expected in the near future.

Summary of Conclusions:

14. The Interdepartmental Committee considers that:

(a) Australia should invoke Article XXXV at the appropriate time
(paragraph 4);

(b) Australia should support Japanese accession to the G.A.T.T. by
signing the Decision on Accession (paragraph 10).

Addendum to Cabinet Submission
Canberra, 30 July 1955
Since the above report was prepared the following additional
developments have occurred in relation to Japanese accession:

(a) United Kingdom attitude: The United Kingdom have already
announced publicly that they will invoke Article XXXV. They have
advised us in confidence that they intend to vote in favour of
Japanese accession. (Copy of letter from United Kingdom Senior
Trade Commissioner is attached). [2]

(b) Publicity: We have had requests from the Japanese and also
from the G.A.T.T. Secretariat to refrain from making public the
position regarding our vote on the decision on accession and on
Article XXXV until 10th September-this is the earliest day on
which Japan can accede and is 30 days later than the day on which
the Decision is to be taken (11th August).

The Interdepartmental Committee feels that as it will be public on
the 11th August whether the decision was taken or not it would be
difficult for the Government to refrain from making its attitude
public if questioned.

It is suggested then that the Japanese and the G.A.T.T.

Secretariat should be informed that there would be serious
difficulties for the Government to undertake not to make its
attitude to the Decision and Article XXXV known until the 10th
September. [3]