CANBERRA

MR. UYAMA explained the Japanese Automatic Approval system of
import licensing making the following points:

1. There is in effect no ceiling on Automatic Approval imports:-a
rough estimate is made every six months for budget purposes but
should it prove insufficient, additional allocations are made.

2. Licences under A.A. are issued on the basis of first come first
served and an importer may import any amount he wishes of any one
or more commodities.

3. There are no set amounts for individual commodities nor any
restriction as to country of origin.

4. Application for licences are only a means of checking amount
expended etc.

5. No exchange is committed until actual payment is being
effected.

6. Whether or not a prospective importer is allowed to go ahead
with his transaction depends entirely on whether the bank handling
the transaction considers him a good risk.

7. The Japanese Government's policy is to expand A.A. At present
it covers about 20% of imports and has doubled in value since last
year.

Wool
MR. PHILLIPS explained the nature of our demand for Automatic
Approval for wool in terms of what Dr. Westerman had said in the
plenary session. [2]

MR. UYAMA requested information on our alternatives. MR. PHILLIPS
mentioned global quota as a possibility.

MR. UYAMA stated that there would be problems in granting A.A. for
wool and requested information on what we regarded as a fair share
of the market.

MR. PHILLIPS explained that in seeking a figure which might be
considered as expressing Australia's fair share of the Japanese
market we had to go back to 1933-35 as the most recent period free
from abnormal factors. On the basis of these years we reached a
figure of 90% of Japan's total imports.

MR. UYAMA suggested that the Japanese delegation would like time
to study the position. In response to a question by Mr. Phillips
Mr. Uyama pointed out that wool was not considered as a high
priority material in Japan and that imports depended largely on
exchange availability.

While Japan had various commitments under trade agreements etc.

and particularly with countries with whom she had large credits
such as Argentine, the policy was to eliminate open account
agreements wherever possible. It was true that in relation to
Argentine the Government tried to encourage imports of wool to
balance trade.

MR. UYAMA pointed out that 1933-35 appeared to be abnormally high
years to select as a basis for Australia's share of Japan's wool
imports.

MR. PHILLIPS pointed out that to our mind their abnormality sprang
from the fact that they were the only years between then and now
when there were no abnormal factors affecting Japanese buying.

MR. UYAMA suggested wool could be taken up again in committee
after the Japanese had explored the position further.

Wheat
MR. PHILLIPS explained Australia's request in terms of Dr.

Westerman's statement in plenary. [3] Australia's specific
requests were for opportunity to compete for eight million bushels
of higher protein wheat and opportunity to supply fifteen million
bushels or one-sixth of Japan's total imports, whichever is
higher, of F.A.Q. or lower grade wheat.

MR. UYAMA explained that the Japanese Food Agency was concerned
with the domestic situation and especially price and that it was
difficult for it to give any consideration to trade policy factors
on wheat imports.

One of the problems was that the Japanese were not clear on the
exact meaning of F.A.Q. Japan's standard was 12% protein content
and the 11 1/2% imported from N.S.W. was on a trial basis. Half of
the 11 1/2% imported had been found not up to standard.

In reply to a question from Mr. Campbell Mr. Uyama said that the
lower protein wheats imported by Japan from U.S.A. were for use in
making noodles. Even in this case there were certain
specifications to be fulfilled. The Food Agency liked to be able
to offer wheat to the mills under definite specifications and this
was not possible with F.A.Q. where the standard was not
predictable.

MR. PHILLIPS suggested that Australia should be able to supply
F.A.Q. wheat to meet particular specifications and requested
details of the specifications.

MR. UYAMA agreed to request Tokyo for the specifications.

MR. UYAMA pointed out that he understood that there would be
little higher protein wheat available for export in the coming
season and if this was so he enquired what figures should go in as
our request.

MR. McPHERSON confirmed that it was unlikely that any higher
protein wheat would be available for export this season.

MR. PHILLIPS explained that although the question of duration of
the arrangement was not one for discussion in this committee, we
envisaged an agreement lasting over a period of years. Eight
million bushels was a figure for higher protein wheats which we
expected to be able to supply in normal seasons.

MR. UYAMA pointed out that Japan's ability to accept on
arrangement would depend greatly on the duration.

MR. CAMPBELL outlined again the basis of the quotas pointing out
the difficulty of arriving at any sound historical basis for a
fair share of the Japanese market.

MR. UYAMA explained that in regard to both barley and wheat the
Food Agency called tenders on a global basis. He asked if
Australia would be satisfied if Australia had the opportunity to
tender for 35% of this.

MR. PHILLIPS pointed out that we understood that global tenders
were called after certain reservations were made e.g. for U.S.

wheat.

MR. UYAMA said that even imports of U.S. wheat were not committed
in all cases. The offer of non-commercial terms is a matter for
the supplier and if U.S. wheat were offered at a cheaper rate than
others then the Food Agency purchased it.

There were certain exceptions made to this rule of best tender on
global basis to cover outstanding credits. (e.g. in the case of
Argentine in the past but this policy had been discontinued in
relation to Argentine.) However, it was difficult for the Food
Agency to make exceptions as the Board of Auditors insisted on
purchases on best tender basis.

In many instances Japanese importers had not offered Australian
F.A.Q. wheat in response to calls for tenders, because of the
different specification.

It was agreed that wheat should be discussed again when the Food
Agency specifications had been received.

Barley
MR. PHILLIPS outlined our views on barley along the lines of Dr.

Westerman's statement in plenary. [4]

He advised that Australia requested specifically opportunity to
supply a minimum 350,000 tons or 35% of total imports, whichever
is larger.

It was agreed that Barley could be referred back to plenary.