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119 Informal Trade Talks: Initial Statement By Uyama [1]

31st October, 1955


It is gratifying to note that trade between Japan and Australia
improved to a certain degree during the last fiscal year. There
are various reasons to believe that this tendency of improvement
can be further strengthened, and, indeed, there is a common desire
on both sides to see trade between our two countries expanded to
the greatest possible extent.

We are, therefore, very much pleased to be able to enter into
talks with you, Gentlemen, representing the Departments primarily
concerned, to examine mutual trade problems.

It has been agreed upon to conduct the present talks on an
informal and purely exploratory basis. There are a great number of
problems involved in this field of trade. Unfortunately, however,
many of them have not been fully discussed between our two
Governments so far. Therefore it is appropriate to explore the
possibility of expanding trade by means of informal discussions on
these problems.

Probably, some of them will be satisfactorily done away with in
the course of informal talks, but there may be such problems that
require more formal negotiation. At any rate, we wish to cover all
the relevant fields so that both Governments will henceforth be
able to take effective and constructive steps with a clearer

I am confident that, through a full and frank exchange of views,
we shall be able to achieve a wider range of agreement on measures
to be taken for the promotion of our mutual trade. Accordingly, we
shall be quite frank in presenting our views and also try to give
you as much information as possible as you may wish to have with
regard to our trade policies and administrative measures. We hope
your side will also be prepared to do the same.

Now, allow me to touch upon, briefly, the items proposed from our
side for discussion.

(1) Application of GATT provisions to trade relations between
Japan and Australia
We are grateful for the support the Australian Government extended
to Japan's application for the accession to the General Agreement
on Tariffs and Trade. At the same time, however, we have to
express our deep disappointment about the fact that the Government
of Australia chose to invoke Article XXXV of the Agreement.

I trust the position of the Japanese Government is clearly
presented in the statement transmitted to the other member
countries, through the GATT Secretariat, on the 7th of this month.

We are not unaware of the apprehensions on the part of the
Australian Government with regard to possible undesirable effects
to be inflicted on the Australian industries in case of an
abnormal influx of Japanese goods in domestic markets.

In this connection there are already the provisions of Article XIX
of the General Agreement for protective measures applicable in
emergency cases, and in order to supplement these provisions
efforts are being made to introduce a new interpretation with
regard to Article XXIII, paragraph 1(c) to be established as an
'interpretative note'.

We earnestly hope that the Australian Government will find these
as sufficient safeguards to eliminate the above-mentioned
apprehensions and cease to invoke Article XXXV in regard to the
trading relations with Japan at an early date.

If there are other reasons for further apprehensions, we should
like to request that the Australian representatives will be good
enough to give us an explanation about them.

(2) Matters to be dealt with usually in a Treaty of Friendship,
Commerce and Navigation
It has been customary for the Japanese Government to conclude
Treaties of Friendship, Commerce and Navigation with other
countries, in order to place its international trading relations
on a stable basis. This practice has been regarded as very
suitable not only by the Japanese Government but also by our
business people. It is therefore requested that the policy of the
Australian Government will be indicated on this matter in the
course of the present talks.

Under a Treaty of Friendship, Commerce and Navigation, the
following problems are usually stipulated:

Entry, stay, travelling and residence; Establishment of companies;

Protection of persons and property; Judicial rights; Business
activities; Property rights; Internal taxation; Prevention of
double taxation; Social security; Foreign exchange control;

Customs tariff; Entry of goods; Customs administration; Internal
treatment of goods; Commercial travellers; Freedom of commerce and
navigation; Treatment of ships; Consular convention matters;

Transit of persons and goods; Industrial property rights.

At present, there are provisions of Article XII in the Treaty of
Peace between Japan and the Allied Powers signed at San Francisco
in 1951. However, these provisions will cease to be effective next
April. [2] Therefore, it is deemed necessary to enter into a
treaty on these matters.

In case the Australian Government is not yet prepared to enter
into such a treaty or agreement with Japan, we wish to take up the
individual problems mentioned above.

For instance, under the present circumstances, Australian
businessmen are allowed to enter, stay, travel and reside,
together with their families, in Japan on an equal basis with
other foreign nationals. These Australian nationals are being
treated without any discrimination. On the other hand, Japanese
businessmen are not accorded the same treatment in this country at
present. These people are allowed to come to this country to
engage in a very limited field of commercial activities for a
limited period. Their families are not allowed to accompany them.

Therefore, their status while in this country is uncertain and not
suitable for the carrying on of their business in the field of
trade between this country and Japan. Accordingly, I should like
to request that prompt action be taken to remedy this situation.

(3) Other measures to be taken for the promotion of trade between
Japan and Australia

As I mentioned before, the trade between Japan and Australia,
since its resumption after the end of the war, has undergone a
steady and remarkable expansion, and now Japan is the third best
customer for Australian products, her purchase in the past fiscal
year being 58.5 million pounds, while Australia's purchases from
Japan last year reached 18.4 million pounds.

Nobody can entertain any doubt on the fact that the trade between
the two countries is largely complementary, and this trade
pattern, we believe, will remain unchanged in the foreseeable

International trade, which is essentially a two-way undertaking
between the two countries concerned, can be developed more
satisfactorily if the trade is carried out on a balanced basis.

Our past experiences clearly indicate that the more balanced it is
on a fair and equitable basis, the better the results we can
expect from it. Therefore, it is earnestly desired that Australian
purchases of Japanese goods be increased so as to make the trade
imbalance between the two countries at least much smaller than it
is today.

Accordingly, we wish to take up in the present trade talks the
discriminatory restrictions on the importation of a certain number
of Japanese goods specified in the Reserved List. From the
viewpoint of protecting Australian industries, not only Japanese
products but also any imports from any country can be equally
harmful in case of an abnormal influx in domestic markets. We
cannot see the reason, therefore, why such discrimination is being
imposed only on Japanese products.

There may be some other problems the Australian representatives
wish to take up. We shall be quite ready to discuss those matters

And thus, we sincerely hope, the present talks, though informal
and purely exploratory, will prove to be most constructive and
profitable for the promotion of our mutual trade.

1 See Document 118.

2 See Paragraph 3 of Document 125.

Canberra, 4 November 1955 [1]

DR WESTERMAN said that Australia had a long-term interest in the
Japanese sugar market. We understood that as distinct from the
policy in regard to grains MITI did not buy sugar or enter into
ownership of it at any stage. We should like to know, however,
whether and on what basis MITI formulated a policy on sugar-did
MITI formulate a budget, allocate currency or establish quotas?
Were licences issued mostly to traders or refiners? In the case of
refining, we should be interested to know whether Australian sugar
was refined in bond for re-export or whether it entered into
consumption in Japan. Another question was whether there was any
control on prices of sugar in Japan or any other types of internal
controls. One aspect of the import duty on import of raw sugar was
of interest to us. We accepted the fact that the duty had
protective aspects but we noted that the rate of duty for sugar
below 98 polarisation was 20% while on sugar 98 polarisation and
above it rose to 35%. For Australia this had a particular
significance because Australian raw sugar was about 98.5
polarisation. We quite understood the difficulties for Japan; it
was possible to produce 'mill whites' with a fair degree of
polarisation which, although not fully refined, could compete with
refined sugar. It happened that Australian milling machinery was
geared to produce raw sugar at a higher degree of polarisation
than was usual in Japan. The sugar produced, however, was not a
mill white and was not really competitive with refined sugars.

There would seem to be no threat in relation to the protective
aspect if the Japanese raised the degree of polarisation to 'under
99' to allow Australian sugar to be imported at the 20% rate of
duty. Australia could produce sugar at a lower polarisation than
98.5 but this would create production difficulties which could be
avoided if the Japanese limits were raised.

MR HEYES said that Australian sugar was a true raw sugar. Some had
been sold locally during the war and in the early postwar period
but it was not normally consumed in this form. It was below mill
white standard and did not compete with refined sugar. The 98
limit fixed by Japan was a bit hard for Australia to meet since
our machinery was geared to produce at a higher degree of
polarisation. He wondered whether Japan had an excise duty on
sugar and whether the duty was not so much a protective as a
revenue duty. It was usual to have in the case of revenue duties
an excise duty for the locally produced product and customs duty
on the imported product. The difference between the excise duty
and the customs duty represented the protective element in the
duty. He wondered whether the Japanese delegates could give any
information on the incidence of the two duties.

DR WESTERMAN said that the question of the excise duty could be
added to the list of questions to be given to the Japanese and
this was agreed.

DR WESTERMAN said that we should like to know how Japan arranged
the breakdown of foreign exchange for sugar into currency areas
and thence to particular countries. In earlier foreign exchange
budgets the allocations had been made for Australia and in a later
one, allocations had been made for the sterling area and in the
latest budget, an allocation for sugar from any source provided
payment was made in sterling. Was Japan going to continue this
practice of making allocations for sugar from any sources provided
payment was made in sterling? We understood that the last
allocation in fact went to Cuba. We should like to know whether
Cuba was paid in sterling and whether in the future we might
assume that Australia would be included in allocations for any
source provided payment was made in sterling. In another case, it
was understood that sugar could only be imported provided payment
was made from an Argentine account. This had implications for the
sterling area payments agreement with Japan which, it was
understood, was designed to ensure that Japan spent as much
sterling as possible within the sterling area.

DR WESTERMAN said that the last section of the questions we wished
to ask the Japanese related rather to groups than to specific
commodities. We were interested to know in what circumstances, for
example, Automatic Approval category applied to particular
commodities or particular countries. There appeared to be an
opportunity of affording particular countries quotas on a non-
commercial basis. Treatment accorded cattle hides under Automatic
Approval category seemed to be an example of the non-commercial
considerations we had in mind. Automatic Approval, it seemed,
might be a commitment given by Japan under a trade agreement. As
well as Australia, the GATT was interested in arrangements in
which sources of supply were determined by non-commercial
considerations and it seemed that some questions on Automatic
Approval were necessary to determine the basis on which this was
extended to some countries. It would appear that in the case of
hoofs, bones, horns, some countries had Automatic Approval and
some did not. We would be interested to know what were the reasons
for different treatment. In the case of butter, we would be
interested to know how Japan determines the level of imports. On
these and other commodities we should also need to know whether
Japan followed State trading practices or other internal measures
which affected the level of imports.

In the case of milk powder, we would appreciate some information
on production and consumption trends. It was understood that some
milk powder was produced in Japan and we wondered whether the
spray or roller processes were in use.

MR UYAMA said that in his experience, these were the usual
questions asked and he would be quite happy to provide answers for
them. He had received instructions on the procedure for the trade
talks and he would rather give answers to the questions altogether
instead of one by one. So far we had restricted our questions to
commodities now being imported into Japan. He wondered whether we
had any questions to ask on commodities not now being imported
into Japan. He would be happy to look at the question of other
items which were not now being imported into Japan.

DR WESTERMAN said that we had confined ourselves to items in which
we had trade. There were a few items other than those mentioned
but these were rather sporadic. We felt we could gauge from the
replies we got to the present items what would be the reaction of
the Japanese Government to other commodities.

MR UYAMA then said that another difficulty concerned the procedure
for purchase of Australian barley by Japan. Mr Martin of the
Australian Barley Board had been to Japan and discussed
arrangements with the Food Agency but they could not reach
agreement. The Food Agency had, therefore, asked Mr Uyama to take
up the question at the trade talks. He wondered whether we could
do something to help matters. He had already raised it with the
Department of Commerce and Agriculture but the position did not
seem to be quite clear in some respects. He distributed a short
paper on the question of barley purchases by Japan.

DR WESTERMAN said he thought this position might have arisen
because the Food Agency had misunderstood the status of the
Australian Barley Board and concluded it to be similar in status
to the Wheat Board. This was not so. The Wheat Board was a
Government agency organised on a Commonwealth basis which bought
and sold wheat, arranged sales contracts and handled all other
matters relating to the overseas marketing of wheat. The
Australian Barley Board, however, was not a Commonwealth
Government instrumentality nor did it represent all the Australian
states. Other Boards exist in Queensland and Western Australia.

The Australian Barley Board was not subject to Commonwealth
Government direction but we should be happy to take the matter up
with the Australian Barley Board and also with the Western
Australian and Queensland Boards.

MR UYAMA said that the Food Agency's problem was that it did not
like to see Japan buying Australian barley only through John
Darling. [2] The present position was that John Darling's
representatives in Japan as agents for the Australian Barley Board
had secured all the business to date. The Minister in charge of
the Food Agency had made it quite clear that tenders should be
open to all firms. It was desirable that more firms should take
part in the tenders. Monopoly arrangements tended to keep prices
up. There were political implications to the problem.

DR WESTERMAN agreed to take the matter up straight away.

MR UYAMA then said that he had a number of questions to ask on
aspects of Australian Customs Policy and Administration and Import
Licensing. He presented the two attached papers entitled
'Questions on Customs', and 'Questions on Import Licensing' [3]
and requested that answers be given in writing.

MR HEYES explained that, because of the ramifications of the
Department of Trade and Customs, he could not answer all the
questions immediately. He undertook, however, to have the answers
prepared as soon as possible.

After preliminary discussions for the purpose of clarifying the
information required in some of the Japanese questions, the talks
were adjourned at 12.30 p.m. It was agreed to meet again on Monday
7th November 1955 at 11 a.m.

[AA : A1838/283,759/1/7, iii]

1 Attendance was the same as that recorded in note 1 to Document

2 John Darling & Son Pty Ltd, grain exporters.

3 Not published. Both papers are on file AA : A1838/283, 759/1/7,

[AA : A1838/278, 3103/10/2, iii]
Last Updated: 11 September 2013
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