CANBERRA

Trade Negotiations with Japan

Mr Peterson [1] conveyed the substance of a formal note from the
U.S. State Department in the following terms-
'Tokyo's reports indicate that in return for de facto m.f.n. for
Japan, Australia would request Japanese make commitment by
specified tonnage Australian wheat annually for indefinite period.

Such arrangement would be open objection since it would require
Japanese to ignore commercial considerations for purchase
specified quantity, thus denying U.S. and other countries
opportunity competing on equal basis in Japanese market. We cannot
object if Japan awarded wheat contracts on competitive bids thus
giving U.S. equal opportunity with other suppliers. Canberra's
reports indicate Australian aim may be limited to assurance m.f.n.

treatment in Japanese wheat market rather than firm purchase
commitment.'

Mr Crawford replied to Mr Peterson's message in the following
terms:-

(i) We had asked the Japanese for m.f.n. treatment.

(ii) In view of the Japanese trading system we saw no way of Japan
giving us m.f.n. treatment other than by some quota arrangement.

(iii) We would of course consider any proposition along the lines
of the above note but he expressed two grounds for doubt-
(a) whether the U.S. would in fact stand aside and allow fair
competition in the Japanese wheat market; and
(b) whether we could yet trust the Japanese Government to operate
its wheat purchase programme on a fair basis.

(iv) He assured the U.S. that our wheat arrangement with the U.K.

was predicated on French and U.S. subsidies. In the absence of
subsidised wheat imports, the ground for any special treatment
would be removed.

Mr Crawford did not advise the U.S. authorities of the size of the
wheat quota that we are seeking in the Japanese market, but he did
make it plain that we were not attempting to reserve the Japanese
wheat market for ourselves in the way that they had done. He also
pointed out that Canada had found it necessary to have an
assurance on wheat from Japan to ensure that they had a reasonable
access to the Japanese market. He also reminded Mr Peterson that
the U.S.' own policies were not exactly consistent. It was not
really pleasing to have precepts handed to us by a nation so prone
to observe them in the breach-India, Indonesia, Brazil, Section 22
[2] and so on.

In conclusion there was a brief discussion on the scope for wool
tariff negotiations and the possibility of some direct approach to
the U.S. wool industry.