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144 Letter From Kawai [1] To Menzies

22nd August, 1956


The news that your visit to Japan has been cancelled disappointed
the Japanese people not to a small extent, but we understand the
serious nature of circumstances that necessitated this. [2]

We only hope that the day will come not at a distant date when we
shall have the honour of welcoming you to this land.

The business circle in Japan closely related with Australia in
trade and commerce has submitted to this Society, in expectation
of your visit, various points of importance for the furtherance of
trade and other relations between Australia and Japan.

We took up some of these points of common interest to us and
prepared the attached draft so that you might go through it
beforehand, in order to save any preliminary talk at the interview
and carry on the discussion efficiently and effectively within the
limited time.

Although this privilege of the interview has been denied us this
time, we wish to submit to you the text for your sympathetic

Whilst Japan is closely related with Australia in economy,
commerce and many other aspects and enjoying friendly relations
with her, there are still some points left to be desired from our
standpoint to further improve the present situation, particularly
with respect to the trade between the two countries.

We venture to enumerate hereunder some of these points for your
sympathetic and favourable consideration.

(I) We most earnestly look forward to the conclusion of the Treaty
of Commerce and Navigation, with as little delay as possible, but
if early realisation of such a treaty between Australia and Japan
were impossible, we wish that as a tentative measure. some special
arrangement be made between the two Countries to attain the same
purpose as aimed at by the formal treaty. Various points of
importance, for which your consideration is solicited, are as

a. Entry to Australia of Japanese businessmen and their families,
and their permanent domiciliation, establishment of branch offices
in Australia of Japanese trading firms, and also freedom of lawful

b. During the 1955-1956 Wool Season, Japan's purchases of
Australian Wools ranked as high as the next to the U.K. This has
manifested the fact that Japanese economic activities have now
recovered the most important position in the international
commerce as in the pre-war years.

In view of this actual fact, we now wish that the Japanese Wool
buyers be allowed to operate in their own names in the procurement
of Wools in Australia, as if the formal treaty of Commerce and
Navigation were in force.

(II) As regards the Wool marketing policy of the Australian
Authorities concerned, we wish that the Japanese wool trading
firms' position be regarded as important as all other Wool buyers

As aforesaid, Japan is one of the most important buyers of
Australian Wools, and in view of this fact, Australia may well
give due consideration to the position of Japan, and it may be
very important for Australia to give weight to the voice of the
Japanese Wool operators. For instance, at the Newcastle Wool Sales
in June this year, if the Auction had not been held, giving due
consideration to what the Japanese buyers had advised, the sudden
fall of prices would not have taken place: the Japanese buyers'
position was such that at the Brisbane Sales just before the
Newcastle Sales, they had covered all their immediate
requirements, and were ready to wait until the New Season's
Opening Sales at the end of August, and there was no necessity for
them to take part in the purchase competition at the Newcastle

In consequence, the prices had fallen 5 to 7% and such a sudden
fall in price could not be beneficial at all either for the
suppliers, or the buyers.

(III) Strike troubles in Australia very frequently cause shipping
disturbances from which the Japanese traders as well as the
Japanese shipping lines cannot help suffering serious

The Harbour workers' strike at the end of January this year, and
Wool shearers' strike which had started in March had caused
serious damage to the Japanese firms as under:

a. Shipping Companies had to cancel their regular liners' schedule
altogether, and had to bear considerable demurrage charges.

b. Arrivals of Wool from Australia having been considerably
delayed, or held up for a long period, all the Japanese Wool
Consumers (Woollen Mills and Spinners) had to change their
seasonal production plan, whereby suffering enormous monetary

c. In the case of Australian Wheat and Barley charter party
contracts, it is quite usual that these contracts are based on the
'Austral Form' in which case, the shipping companies should bear
the risk of strike, and the Japanese Wool importers have had no
difficulty in chartering the Japanese vessels on the same Austral
Form, but the recent strike troubles in Australia have taught them
bitter experiences in meeting considerable difficulty in
chartering any vessel on this condition, unless chartering is done
at an excessive rate of chartering fees.

In Australia, in the case of strike troubles, emergency measures
of chartering vessels cannot be taken as in the U.S.A., or Canada,
and for this reason, the Japanese Shipping Companies will have to
resort to some safety measures.

At present, in our country, foodstuff procurement for the domestic
consumption is solely undertaken by the Government, and in
Australia export of wheat and barley is in the hand of
monopolistic Wheat or Barley Board. None of these will bear any
risk of strikes, with a result that all our importers must take
the responsibility, which means that purchase in Australia of
wheat or barley is subjected to this handicap compared with
purchases in other countries abroad.

In the sale for export of main agricultural products in Australia,
therefore, the Australian Authorities should exert their efforts
in giving due consideration to these problems.

(IV) The next question we would like to bring to your kind notice
for serious consideration is the striking unbalance of trade
between the two countries.

The history of trade between Australia and Japan shows almost
always remarkable unbalance of trade, Australia's export to Japan
showing by far the excess over her import from Japan.

While we appreciate that it would not be practicable to realize
the balanced trade between our two countries under today's
conditions, perhaps it would not be too much to ask for your
special consideration so that this unbalanced trade position may
be rectified to a reasonable extent.

You will agree with us that the present trade balance between our
two countries is far too unnatural and unreasonable, and that no
one can expect such a state of things to last long.

It is, therefore, about time that something had to be done to
rectify it.

We only appeal to your sense of fairness and farsightedness to
invent such measures as to reasonably satisfy the Japanese
business community.

As one of the practical means to ensure for Japanese goods a fair
and reasonable share of Australia's import, the issuance of single
licence on Japan in economic unit may be suggested for the
important items such as Iron and Steel, Cotton Piece Goods, etc.

In this connection a few words may be added with reference to
Import Tariff of Australia.

Whilst Australian goods into Japan are enjoying the treatment of
the most-favoured-nations, Japanese goods into Australia are
subjected to the highest rate of import duty, viz. 'General
Tariff, despite Japan's membership to GATT. Perhaps you will
understand the reason why we have to ask you to consider the
application of at least 'Intermediate Tariff' on the Japanese
goods so that fair treatment may be accorded to them in view of
the fact that Japan is one of the best customers of Australia.

(V) Establishment of direct wireless communication system between
Australia and Japan.

In spite of the very important economic relation between Australia
and Japan, there is no direct wireless communication system being
established as yet. In the case of telegrams, it has to go via
Singapore, and for telephone we have to depend on connecting
services in Hong Kong.

For this reason, cable fees are more expensive, and service less
efficient with no time saving as in wireless communications.

This inefficient telegraphic service is quite disadvantageous for
both Australian and Japanese Traders. In fact, the present system
is obsolete.

Should a direct wireless system be established between the two
Countries, it will effect considerable saving in money and time,
which will help strengthen the Australia-Japan relation, not only
in economy, but also in political as well as cultural intercourse.

(VI) Establishment of branches of Japanese banks in Australia with
a view to promoting the mutual trading, and ensuring its smooth
operation between the two countries.

It is most earnestly desired that establishment of branch offices
of leading Japanese banks in Australia be permitted.

In pre-war years, the Yokohama Specie Bank Ltd., had a branch
office in Sydney and served well to help promote the mutual
trading and financial facilities.

The advantages of offices of Japanese banks established in
Australia would be as follows:-

a. Trade news and information service. This is quite essential in
all trading, especially in international trading, and quick and
efficient news or information exchange service is most
indispensable for all traders. For all the leading Australian
banks, Australian-Japan trading is only a small part of their
concern, and services in this direction cannot be expected to be
concentrated on the Australian-Japan trade interest, whereas
branch offices of the Japanese banks in Australia may be able to
concentrate their attention on the importance of rendering such
information services as desired by all the Japanese traders.

b. Australian banks have no intimate connections with the Japanese
traders, and lack of proper knowledge of their actual trading
activities would often fail them in grasping the most reliable
news of credit standing and/or general trading reputations-these
will naturally prevent the Australian banks from extending their
financial assistance to the Japanese traders.

On the other hand, the Japanese banks are fully conversant with
the actual financial status or position of the Japanese trading
firms, and are therefore ready to give their support or assistance
to them as fully as they can afford to do.

In the case of any Japanese trading firm who has had no actual
experience in Australian business, should they wish to operate in
Australian-Japan business, they can seek adequate assistance from
the Japanese banks who have full knowledge of the business
activities in Japan of such a firm.

c. When Japanese traders desire to seek financial assistance from
Australian banks, it is quite necessary that they have to deal
with the matter through a Japanese bank, in which event, it will
entail some extra expenses, whereas should they seek a loan from a
Japanese bank alone, such extra charges as in the former case will
not incur, whereby lessening burden on the Japanese trader's

d. In seeking financial assistance from the Australian banks by
the Japanese traders, some considerable time will have to be spent
until they can reach an agreement, whereas by dealing with the
Japanese banks, such a matter can be settled very quickly.

The foregoing are just the few points that have direct concern for
all the Japanese trading firms deeply interested in the trade
between Australia and Japan.

We sincerely hope that they will be given your serious
consideration so that both nations may come to better
understanding and see far happier economic and trade relations.

1 Tatsuo Kawai, President of the Japan-Australia Society. In
commenting upon arrangements for Menzies' visit following its
cancellation, Watt had noted 'the very strong influence which
business interests appear to have over the Government' and his
impression that these interests had 'decided to avail themselves
of the press Mr Menzies strongly on various
aspects of trade between Australia and Japan (Memorandum 668, 8
August 1956, on file AA : A1838/278, 3103/10/11/2/1, i).

2 Menzies was in North America, on the second leg of his overseas
itinerary, in the early days of the Suez Crisis. After talks in
Washington he decided to 'defer' his visit to Japan in order to
return to London to attend the international conference convened
to discuss the situation by the United Kingdom, the United States
and France. The decision was conveyed to the Japanese Government
on 6 August.

[AA : A463/17, 56/984]
Last Updated: 11 September 2013
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