CANBERRA

MR UYAMA indicated that he wished some clarification on the
amendment to the Customs Tariff (Industries Preservation) Act. [2]
He asked what procedure the Minister would follow in determining
whether goods are causing or threatening serious injury.

MR ROBERTSON explained that action would be dependent on a sound
complaint being received. If we were satisfied that the case was
reasonable then in normal cases we would consult with the
Japanese, and the action finally taken would depend on the results
of the consultation. Only in rare circumstances, where delay might
cause irreparable damage would we act immediately.

In considering whether action was necessary we would take account
of the national interest, international obligations and commercial
policies. We would expect a greater flow of imports from Japan as
a result of any agreement giving m.f.n. and non-dollar licensing
and this increase must be at the expense of other countries under
present conditions of import licensing.

The legislation is intended to provide an emergency power and we
would avoid its use as far as possible.

In answer to a question from Mr Uyama, Mr Robertson indicated that
what constituted irreparable damage would depend on the individual
case. To suggest figures might prove misleading and might unduly
restrict Japan. We did not think it was reasonable for Australia
to attempt to impose specific export quotas on Japan.

MR UYAMA expressed their appreciation at the absence of any
suggestion for export quotas. This removed a difficulty which
Japan had been anticipating.

The Japanese Government cannot establish export quotas, all it can
do is persuade Export Associations to exercise caution. However,
it is necessary to put a plausible case before the Association and
if possible, some specific criteria which exporters could use as a
yardstick. It would be appreciated if some indication of what
would be regarded as safe levels of imports from Japan could be
given when individual sensitive items were being examined.

MR ROBERTSON gave some hypothetical examples of instances when the
legislation might be used.

MR UYAMA asked whether action under the legislation would be
limited to the goods concerned or whether action would be taken
against all goods from the country concerned.

MR ROBERTSON explained that action would be limited. Under the Act
the goods must be described.

MR UYAMA enquired whether action would be taken against only the
one country or against all suppliers.

MR ROBERTSON indicated that the Act gives power to take action
against goods from any country or group of countries.

MR UYAMA pointed out that Article XIX of G.A.T.T. required action
to be taken uniformly.

MR ROBERTSON explained that it was necessary to be in a position
to cover all contingencies. The actual operation of the Act
against Japan would be subject to any understanding between the
two countries. He instanced the Japan-Canada Agreement and the
understanding between those two countries that the Agreement was
consistent with G.A.T.T.

MR UYAMA asked whether the Australian legislation was in the same
context as the Canadian emergency powers.

MR ROBERTSON said that we had certainly examined the Canadian
position. It was not intended that the Australian legislation
should operate solely against Japan.

MR KAWANAMI pointed out that the Canadian Legislation was pre-
existing legislation as far as G.A.T.T. was concerned. Australia's
relations with G.A.T.T. contracting parties must be governed by
the non-discriminatory aspects of the legislation. The legislation
as a whole would appear to be contrary to G.A.T.T.

MR ROBERTSON said that there was probably little doubt that the
legislation is in some respects contrary to G.A.T.T. We could in
most cases get around this but by and large we would rest on the
understanding reached between the two countries.

MR UYAMA admitted that as G.A.T.T. did not yet apply between
Australia and Japan the above questions were somewhat theoretical
but were the sort of questions that the Japanese Government would
be asked.

He next enquired whether country of origin would be the sole
criterion for applying emergency duties. The Japanese Government
could hardly take action against goods destined on paper for Hong
Kong or Singapore but subsequently exported to Australia. In the
case of trans-shipment through Canada to U.S.A. it had proved
possible to take action but it would be much more difficult in the
case of goods going through Hong Kong or Singapore. He suggested
that in these cases the Hong Kong or Singapore Governments might
help.

MR ROBERTSON confirmed that country of origin was the criterion to
be used. It seemed unlikely that the Singapore or Hong Kong
Governments would be able or prepared to take conclusive action.

MR UYAMA asked what were the Australian commitments to protect
export industries of preference partners.

MR ROBERTSON pointed out that one commitment existed under Article
XIX (1)(b) of G.A.T.T.

MR KAWANAMI mentioned that the G.A.T.T. says action may be taken
'on request' but he understood that Australia did not intend to
take action automatically. He enquired whether Australia had any
commitment with any individual country in this regard.

MR ROBERTSON confirmed that action would depend on the
circumstances of the individual case. Australia has no written
contractual commitment with any country but preference agreements
have always been interpreted that if a preference is threatened we
will listen carefully to any case raised by the preference partner
concerned.

MR UYAMA asked whether we had any other agreements beside G.A.T.T.

which would constitute international commitments which would
qualify application of the legislation.

MR ROBERTSON pointed out that any arrangement with Japan would be
an example of such commitments. Other agreements would also be
taken into account, e.g. Australia-Canada Agreement.

MR UYAMA asked whether special duties were the only emergency
steps contemplated.

MR ROBERTSON pointed out that we could resort to Q.R.'s [3] but
would prefer the special duty which also had the advantage of
being applicable to individual consignments. This latter point
would have value in relation to the entrepot trade problem.

MR UYAMA pointed out that duty would be put on after the
consignment had arrived. He enquired whether there was any
machinery to prevent this.

MR ROBERTSON acknowledged that this could happen but said that we
would then be on guard. We could arrange for the Department of
Customs to advise us immediately of any unusually large imports of
sensitive items.

MR UYAMA asked how the Minister would determine reasonable duty
paid cost.

MR ROBERTSON said that factors taken into account would
include:

(i) are the goods very cheap;

(ii) are they likely to cause serious damage;

(iii)what are prices of similar goods from other countries.

Unless Japan were the lowest price supplier, it is unlikely we
would take any action. The landed cost of goods from third
countries which were significant suppliers would be a very
important factor.

MR UYAMA suggested there would be room for arbitrary assessment.

MR ROBERTSON assured him that the provision would not be used in
an unreasonable way.

MR UYAMA pointed out that the legislation could enable Japanese
exporters to ask artificially high prices.

MR ROBERTSON pointed out that it must be remembered that the
question of relative costs only came into prominence if there were
serious disruptive effects. Australia was faced with reconciling
the need to protect her industry with the need to import at lowest
cost.

MR UYAMA mentioned the improved labour conditions [in] Japan and
the higher labour cost of Japanese goods compared with pre-war.

He asked how factors affecting costs overseas would be determined.

MR ROBERTSON referred to current practices in regard to anti-
dumping duties.

MR UYAMA asked how comparative costs could be determined for an
export industry peculiar to Japan.

MR ROBERTSON said that we would have to rely on such information
as was made available to us.

MR UYAMA pointed out that it could be embarrassing to the Japanese
Government if emergency action was taken without consultation.

MR PHILLIPS said that even in cases of urgency we would let the
Embassy know our intentions but may not be in a position to await
full consultation.

MR UYAMA requested clarification on the machinery for
consultation.

MR PHILLIPS explained that no details had yet been worked out.

Probably consultation would be mainly with the Embassy in Canberra
with the T.C. [4] in Tokyo handling that end. The nature of the
machinery could be worked out as the need became clearer.

Meeting closed at 12 noon.