CANBERRA

[matter omitted]

DR WESTERMAN then made a statement on the basis of the attached
note (annexe A).

MR UYAMA queried whether the provisions of the Legislation [2] did
not go beyond Article XIX of the GATT.

MR ROBERTSON confirmed that they did since Australia had to
consider other emergencies which might arise apart from anything
which might be pertinent to the present negotiations. However,
assuming an agreement was reached, we would define the operation
of the legislation as regards Japan, in that agreement.

Mr Robertson handed Mr Uyama a sample of the sort of figures we
could make available to the Japanese Embassy every month. He
explained that there would be six to eight weeks delay in these
figures.

DR WESTERMAN pointed out that these figures would enable the
Japanese to follow trends in imports and demand and would help the
Japanese to control exports. This control would presumably be
loose and we are not asking for strict control.

MR UYAMA said that at a time when exports generally were being
encouraged it might be difficult to restrain export.

DR WESTERMAN pointed out the need to look to the long-term
position and instanced the situation at present facing Australian
exports in New Zealand.

It was agreed to continue with the discussion on Monday morning at
10 a.m.

Annex A

'Sensitive' Import Items

(AUSTRALIAN PAPER NO. 1)
It is the view of the Australian Delegation that, in the absence
of adequate safeguards and assurances, the accord of most-
favoured-nation tariff and non-discriminatory import licensing
treatment to Japan could result in damage to certain Australian
industries and to a serious disruption of the pattern of
Australia's imports of certain commodities.

2. In considering this problem the attention of the Australian
Delegation has been concentrated on the Australian industries
which could be exposed to injury and the following products are
regarded as being in that category:

Printed, dyed or coloured cotton piecegoods
Denims, drills, dungarees and jeans
Cotton sheeting for the manufacture of bed sheets or pillow cases
Canvas and duck
Artificial silk piecegoods
Woven and embroidered materials in the piece, including badges,
galloons and ribbons
Towels and towelling
Buttons (of plastic)
Artificial flowers, fruits, leaves and grains
Flooring and wall tiles
Chinaware and earthenware
Household glassware
Toys
Sunglasses, goggles and plastic spectacle frames
Elastic (up to 6" wide)
Fountain pens, including ball points

3. In compiling the above list it has been necessary to take into
consideration not only the present level of the Australian import
licensing restrictions, but also the position which might be
likely to develop when the restrictions are considerably relaxed
and finally removed. Owing to the difficulties of making a
thorough assessment in existing circumstances, it is possible that
some goods have been included in the list when, in fact, no actual
damage might result. On the other hand some goods may well have
been omitted where difficulties may, in fact, arise. It may,
therefore, be necessary to add further goods to the list and/or to
delete some goods in the light of future experience and changing
circumstances.

4. Tariff preferences are exchanged between Australia and several
countries of the British Commonwealth and due consideration must
be given to this question before taking any action which might
destroy the value of those preferences.

5. The Australian delegation would welcome the co-operation of the
Japanese Delegation in finding a solution to the two problems
outlined and considers that effective arrangements, if undertaken
in Japan, could make a substantial contribution to the solution of
the problems.

6. In the event of the Japanese Government assuming responsibility
to take such action with its exporters as may be necessary to
prevent serious damage to Australian industries or severe
disruption to the pattern of Australia's imports, it would not be
the intention of the Australian Delegation to suggest to the
Japanese Delegation that Japan's exports of any particular
commodity be restricted to a fixed quantity or value over a given
period. What is envisaged is voluntary action on the part of the
Japanese Government and its export interests to ensure constant
watchfulness on Japanese exports in such matters as quantity,
quality and price to prevent serious damage to the Australian
national interest.

7. To give some idea of the kind of statistical material which
could be provided on a continuing basis as part of any
consultative machinery and as a guide to the absorptive capacity
of the Australian market, the Australian Delegation would be glad
to supply the Japanese Delegation with statistics illustrative of
the level and pattern of Australia's imports in recent periods and
(where appropriate and available) of the level of Australian
production. The statistics which could be provided would be in
much greater detail, in many cases, than those normally available
from published documents and, of course, would be much more up-to-
date.

8. If the Japanese Delegation were contemplating the adoption of
export arrangements by Japanese industries it is suggested that
consideration might be given to the adoption by Japanese interests
of the policy of expanding the export of high quality goods and of
avoiding the development of substantial trade in low-priced goods.

9. It would be the view of the Australian Delegation that the
development of the maximum practicable degree of consultation
between the two Governments is essential to the satisfactory
solution of any particular problems which might arise. If, for
example, representations were received from a third country to the
effect that that country's tariff preferences were being impaired
by Japanese exports to Australia, the Australian Delegation
envisages consultation with the Japanese authorities if, after
examination it were established that the complaint merited further
attention having regard to Australia's national interest and to
her international obligations and commercial policies. It would
not be the intention for action to be taken in this regard except
in serious circumstances.

10. However, the Australian Delegation considers that it will be
necessary for Australia to reserve the right to take emergency
action to correct a serious situation where no other course would
be practicable.

11. The Customs Tariff (Industries Preservation) Act has been
amended to permit an emergency duty to be imposed if any goods are
being imported into Australia under such conditions as to cause or
threaten serious injury-
(a) to producers in Australia of like or directly competitive
goods; or
(b) to producers in a third country of like or directly
competitive goods which are dutiable at a rate applicable under
the British Preferential Tariff or at a rate lower than the rate
that would be applicable under that tariff.

Prior to the amendment of the Customs Tariff (Industries
Preservation) Act there was no appropriate measure available to
the Australian Government to take emergency action in the
circumstances outlined in Article XIX of the General Agreement on
Tariffs and Trade. The Act, as amended, confers that power on the
Minister for Customs and Excise.

12. The Australian Delegation believes that a situation would not
arise in which it proved necessary to impose an emergency duty on
any imports from Japan if the kind of arrangements mentioned for
consultation with the Japanese authorities and action by Japanese
interests are adopted. The Australian Delegation would be glad if
the Japanese Delegation is able to explore the possible
arrangements which will remove any necessity for Australia to
impose emergency duties.

13. The Australian Delegation has already spoken of the
desirability of the development of a high degree of consultation
between the two countries on all problems relating to tariffs and
trade and contemplates that the Japanese authorities would be
consulted with a view to the mutually satisfactory solution of any
problem before emergency action were taken except in circumstances
where delay would cause damage which it would be difficult to
repair.

14. The use of the emergency power would, of course, be subject to
the provisions of any agreement or arrangement which might be
reached between Australia and Japan and would only be exercised
after due consideration had been given to Australia's national
interest and to her international obligations and commercial
policies. [3]