CANBERRA

You have asked for my comment on the draft Cabinet Submission
entitled 'Trade Talks with Japan'. [1]

As I understand the position, the Japanese do not enjoy m.f.n.

tariff treatment in Australia nor non-dollar import licensing
treatment, and because Australia does not exchange G.A.T.T.

privileges with Japan the Japanese are anxious to have some formal
understanding with Australia which will remove the existing
discrimination against her.

I fully agree with the intentions of the Submission; in fact the
removal of discrimination against Japan would be warranted even
without obtaining new concessions in return, because of Japan's
status as a customer for Australian primary produce.

I am not sure what can be done to translate into practical terms
the intentions mentioned in the opening part of the Cabinet
Submission. At the present time Australian exports to Japan,
including wheat from Queensland, are running at a fairly
satisfactory figure. No doubt the Japanese rate of purchasing is
governed by her overseas exchange position, and I believe that she
is fairly strong in sterling at the present time.

The situation as regards our principal primary products is as follows-

WOOL: Australia already supplies about 80 per cent of Japan's
imports of wool. However, wool manufactures do not enter very
prominently into Japan's export trade. The announced purchasing
programme of 900,000 bales between April 1956 and March 1957, has
not yet been confirmed by our Trade Commissioner in Tokyo, but it
will mean that Australia will expand her wool sales to Japan this
year. In the first half-year it was estimated that Australia would
supply about ninety per cent of the wool purchased in the sterling
area.

WHEAT: I have mentioned that the Japanese are purchasing high
protein wheat from Queensland. I note that it is proposed to
arrange for consultations with the United States in respect of
disposal items, including wheat.

BARLEY: Australian barley is preferred in Japan and we are
supplying large quantities each season. This year Australia is
supplying Japan with all the barley she can spare-approximately
300,000 tons or 13 million bushels.

SUGAR: The Japanese have arranged for the purchase of an
additional 25,000 tons of sugar, and the C.S.R. Co. are
manufacturing the sugar to Japanese specifications.

The export sugar position is of course protected at the moment by
the British Commonwealth Sugar Agreement.