CANBERRA

MR PHILLIPS stressed the need for placing before Ministers some
reaction from the Japanese on Australian requests. He suggested
that a resume of the requests in full might be worthwhile at this
stage and briefly summarized the requests already made.

[This was done with the object of ensuring that the Japanese had
not lost sight of any of the requests, and to prevent any
'innocent surprise' on any subsequent mention of our specific
requests on individual items.]

MR USHIBA gave his views on the possible reaction to Australia's
requests as follows:

Wool. A.A. does not appear possible but probable solution will be
global quota for all imports of wool into Japan with the exception
of 10% reserved for bilateral deals.

Wheat: If US surpluses are taken then Japan will have to consider
Australia's request and would probably agree to some commitment.

However, the agreement with Canada covered hard wheat and this
would include Australian higher protein wheats making it difficult
to give Australia any commitment on this.

MR PHILLIPS said that possibly the Ministers would be prepared to
negotiate some less firm position on hard wheat.

MR USHIBA:

Barley: presented a similar difficulty in relation to the
agreement with Canada. Although purchase of 35% of imports from
Australia would not be difficult in fact, it would be difficult,
in principle and in presentation, to give any commitment.

Sugar About 60% of allocation must go to Indonesia and Formosa
because of trade imbalance. The rest is allocated on a global
basis. The reservation for open a/c agreements is recognised
internationally by bodies such as G.A.T.T. and I.M.F. and although
it does in fact mean only qualified m.f.n. treatment, it is
unlikely Japan can meet Australia on sugar.

Tallow & Cattle Hides: may be able to give Australia A.A. although
the Australian estimates of possible exports to Japan in these
lines seem a little unrealistic.

Dried Skim Milk. Apart from School Lunch Programmes only 4,000
tons are imported by Food Agency under a global tender for which
the C.C.C. would be eligible to compete.

Dried Grapes: This presents a similar problem to the request on
sugar but is on a smaller scale. Japan has a sterling allocation
for dried grapes and Australia could probably be included in this.

MR PHILLIPS introduced two additional instances where Japan's
treatment of Australian goods appeared to be discriminatory.

(i) Confectionery: we understood that whereas UK confectionery
entered Japan, Australian confectionery could not obtain a
licence.

(ii) Films: the basis for licensing films into Japan had the
effect of excluding Australian films.

MR USHIBA indicated that confectionery was on an exchange of quota
basis with the UK. On both confectionery and films he would report
to Tokyo. He explained the difficulty faced in reporting
Australia's requests to Tokyo. Japan understood that Australia
wished m.f.n. treatment and yet specific requests for special
treatment were made on some items. Tokyo is under the impression
that wheat is the only item where special treatment is required to
give m.f.n. meaning. With the exception of sugar, the requests on
other items should not give much practical difficulty but the
principle involved is important. Mr Ushiba said that the
delegation understood that Australia has two difficulties with
m.f.n.:-

(i) open a/c agreements
(ii) surpluses,
and will try to make this view clear to Tokyo.

MR PHILLIPS introduced the draft article on M.F.N. (Annex A) [2]
prepared in the Department and explained that the paper was
intended purely as an indication of the way in which the idea
might be included in any agreement. The paper had no official
status and it would be extremely embarrassing if any reference to
it should appear in the press. For this reason we would like the
paper restricted to the respective delegations.

MR USHIBA mentioned the reservations to m.f.n. application by
Japan made in the agreement with Canada in relation to territories
named in Article 3 of the peace treaty with Japan. [3] He also
enquired where the treatment to be afforded individual commodities
would come in.

MR ROBERTSON suggested under Restrictions or State Trading.

MR PHILLIPS introduced the draft on the application of special
duties to Japanese goods (Annex B) with the same provisos as had
been mentioned in relation to the draft on m.f.n. He confirmed
that the duties could be applied only to Japan or to individual
shipments.

MR ROBERTSON said that we could not apply the duty to all
countries where Japan was the sole threat since G.A.T.T. countries
could complain that the emergency had not arisen out of the action
of a G.A.T.T. country.

MR USHIBA asked what would happen if consultations were not
effective.

MR ROBERTSON explained that we would then make up our mind on the
action to be taken, keeping the Japanese views in mind. We would
hope that the situation would not arise but must reserve the right
to take action.

MR PHILLIPS introduced the draft on Prohibitions and Restrictions
(Annex C). Australia would want anything on wheat to be in a form
that could be published. Perhaps the Japanese might like to
suggest drafts on the various points.

MR ROBERTSON mentioned that from a point of presentation he
assumed the Japanese would have no objection to treating the
Australian Territories such as New Guinea, as part of Australia.

They do not in fact discriminate against Japan in import licensing
and have a single column tariff.

MR USHIBA thought that the wheat undertaking could be put in a
published form. He did not think there would be any objection to
including N[ew] G[uinea] etc. as Australia and would check this
point with Tokyo.