TOKYO

360. At a social function Saturday evening talked to Yoshino,
Chief of the Sterling Area Section, Economic Bureau, Foreign
Office, who is instructing trade talks Delegation.

2. No Trade bag arrived this week and I was embarrassed when
Yoshino gave me the first news of amendment to the Customs Act to
provide safeguards against Japanese 'dumping' and promised to send
me full text of Debate. [1]

3. Yoshino asked why the amendment
necessary while Australia continued 'quotas'-that is anti-Japanese
licensing restrictions. I said quotas followed Cabinet decision
only whilst tariff safeguards required Parliamentary approval
which could not be obtained at short notice. For this reason
Legislative safeguards had to precede executive elimination of
quotas. In addition Legislative safeguards essential internal
political prerequisite to concessions. I think he appreciated a
point on which he was previously confused.

4. Similarly Yoshino said Australia had asked for Japanese 'self-
restraint' export restrictions to prevent flooding Australian
market. This request created internal political differences in
Japan. In particular M.I.T.I. and exporters considered this
completely unreasonable while quotas continued. M.I.T.I. felt
Australia wanted three safeguards-tariff, quota and self-
restraint. I said that I did not think we wanted self-restraint on
quota items but we required acceptance of principle as
prerequisite to quota elimination. Again Yoshino appeared to
understand a point on which he was previously confused.

5. Yoshino said Australia was pressing on wheat but Japan could do
nothing during the present United States surplus program. When I
said I appreciated this and that programme ran until 30th June, he
seemed doubtful and gave the impression something could be done
earlier.

6. Yoshino agreed Australian barley Japan's best buy but suggested
350,000 tons excessive in the light of relations with North
America.

7. Yoshino went out of his way to say Japan appreciated Westerman
leading for Australia because it showed the importance we attached
to the negotiations.

8. My general impression Yoshino ready anything remotely
reasonable (including self-restraint and wheat) to get some quota
concessions from Australia.

9. Sir James MacGregor [2] left for Australia Friday. He confirms
my opinion already reported that present wool allocations quite
inadequate for the needs of the Japanese industry. Unless
increased he believes serious difficulties will appear first
quarter 1957.