CANBERRA

1. The Japanese Embassy has taken note of the statements made by
the Australian Delegation at the Conference held on 5th October
concerning the particular problem of finding adequate assurances
for protection of Australian industry and for her stable pattern
of trade, which might arise in case the Japanese goods were
accorded most-favoured-nation tariff treatment, and import
licensing treatment no less favourable than that accorded to other
non-dollar goods. [1] It has also considered the questions posed
in paragraph 13 of the Australian Delegation's paper on the
possible steps to be taken by the two Governments to ensure that
undue disruption to Australian production or Australia's pattern
of foreign trade will be avoided, even in exceptional
circumstances.

2. The views as expressed by the Australian Delegation seem to
differ from those entertained by the Japanese side with regard to
the possibility of imports from Japan causing such a serious
disruption in this country.

However, in order to meet the Australian requests as far as
practicable, the Japanese Government is studying the steps which
might be taken to avoid the occurrence of an unduly disturbing
situation in the Australian market.

In this connection, the Japanese side will be pleased to hear from
the Australian Delegation as to whether, in case the Japanese
authorities undertake to take those steps that are satisfactory to
the Australian Government, the latter would be prepared to give
all kinds of imports from Japan such treatment as stated paragraph
1 above, and also to cease to invoke Article XXXV of the G.A.T.T.

in regard to trade with Japan.

3. As a step to be taken by the Japanese side with a view to
attaining the objectives mentioned above, it might be possible to
have control measures taken by Japanese exporters at their own
initiative, such as adopted in respect of the exportation of
cotton textiles to the United states and Canada.

It is to be added, however, that the abovementioned steps are
being taken in consideration of the fact that no import
restrictions are imposed in these countries. Even if the Reserved
List is abolished, therefore, due account needs to be taken of the
different circumstances which exist in Australia where foreign
exchange and import restrictions would likely be continued because
of her balance of international payments position at least for the
time being.

In case the statements as expressed above were found
unsatisfactory, the Australian Delegation is requested to indicate
as to what kind of assurances, for example, the Australian
Delegation would desire to have from the Japanese Government, and
what kind of commodities with regard to which such assurances are
required.

4. Furthermore, it would be appreciated if the Australian
Delegation would be good enough to elucidate, with regard to each
particular commodity involved, on-
(a) For what reasons the Australian Government requires such
assurances;

(b) The effects to be anticipated as a result of its removal from
the Reserve List or of application of most-favoured-nation tariff
to it.

5. With regard to the second question raised in the aforesaid
paragraph 13 of the Australian paper, concerning the possible
measures open to Australia, within the commitments requested by
Japan on tariffs and import licensing, to ensure the attainment of
the necessary objectives, the Japanese side would like to enquire,
before it makes any comments, about the kind of situation under
which the Australian Delegation would decide that undue disruption
has arisen to Australian industry or Australia's pattern of
foreign trade.

Would it be possible for the Australian Delegation to express its
views on the above question by citing the percentage in the total
Australian imports, for example, which, if reached by imports from
Japan, the Australian authorities would regard as harmful?

6. Lastly, the Japanese side would be glad to be given detailed
accounts as to the measures, if any, which the Australian
Government is contemplating to take with a view to ensuring that
the abovementioned objectives can be achieved.