Skip to main content

Historical documents

120 Informal Trade Talks: Australia-Japan: Record Of Discussion

4th November, 1955


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.

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 : A1838/283,759/1/7, iii]
Last Updated: 11 September 2013
Back to top