CANBERRA

The following notes will provide you with the background to and
the current position on our trade talks with Poland, Roumania and
Japan. In addition, I am enclosing for your information a
statement comparing the new Australia - United Kingdom Trade
Agreement with the terms of the Ottawa Agreement.

[matter omitted)

Japan:

1. The first meeting with the Japanese delegation from Tokyo was
held on 1st November. At this meeting each side explained its
requests in some detail. The general nature of the requests had
previously been discussed with members of the Japanese Embassy.

2. The Japanese are requesting non-discriminatory treatment in the
form of.-
(i) Application of G.A.T.T. between Australia and Japan.

(ii) The removal of discrimination against Japan in Australian
import licensing.

(iii)The application of m.f.n. tariff to Japan.

3. Similarly Australia has asked for non-discriminatory treatment
for its goods in Japan. However, in view of the special factors
such as State Trading, U.S. surpluses and country quotas affecting
imports into Japan we have felt it necessary to give our request
practical meaning by asking for specific treatment on individual
items, such as unrestricted entry, exchange allocations etc.

4. Our major request is for a commitment by Japan to purchase 15
million bushels of f.a.q. and 8 million bushels of higher protein
wheat from Australia each year but it has been made clear that
this would not involve any obligation on Australia to supply these
quantities.

5. In subsequent meetings with the Japanese we have restricted
discussion to clarifying our requests and our position on the need
for protection of Australian industry should the Japanese be
granted m.f.n. treatment.

6. In accordance with Cabinet's decision [1], we have indicated
that we are not prepared to discuss the application of G.A.T.T.

between Australia and Japan.

7. We have explained that the purpose of the amendment to the
Customs Tariff (Industries Preservation) Act [2] is to enable the
Australian Government to take emergency action to protect
Australian industry and the export interests of our preference
partners against low-priced imports from any source. We have
indicated those items which we would consider as sensitive to
Japanese competition under present conditions. [3] We have also
advised the Japanese that we would expect that it would not be
necessary to invoke the legislation if the Japanese exercise
caution at their end to ensure that exports to Australia do not
disrupt Australian industry.

8. We have told the Japanese that we place considerable weight on
the assurance that they will take Australian wheat. They are
apparently having considerable difficulty in determining how far
they can go on this. To give Australia an assurance on wheat
involves some reduction in surplus and conditional purchases from
U.S. and Japanese political interests are sharply divided on this
point.

9. When we have a firm response from the Japanese to our requests
it is intended to report to the Committee of Ministers set up by
Cabinet in its decision of 21st May. [4] If the Japanese reply on
wheat is such as to offer prospects of negotiating a firm
commitment to purchase a specified quantity, we would at that
stage wish to obtain the Wheat Board's views on the type and
adequacy of the undertaking.