Accession of Japan to GATT
1. General argument is that Japan must live i.e. must be allowed
access to markets and raw materials. On political grounds it is
most desirable that she should develop her trade with the Western
countries and with South and South East Asia rather than be forced
towards China and the Soviet bloc. Her accession to GATT would
serve this end-it would confer benefits on her but would also
impose responsibilities.

2. Our particular interest is to maintain best possible trading
relations with Japan in the interests of our exports.

Note attached to minute dated 3rd February airmailed to you
yesterday gives details of export interest. Main interest is wool
but grains not unimportant. Japan is increasing in importance as a
customer for wool-fourth best customer 1951/52, and will be second
or third best customer current season. Her bidding (which largely
is competitive with Bradford) strengthens the market generally.

3. We should therefore try to avoid appearance of giving Japan any
sharp rebuffs. So long as we are in GATT this means not getting
out on a limb in our treatment of Japanese trade compared with
other countries in GATT. At the same time we must preserve
sufficient freedom of action to protect fully our domestic
industries and if we think it necessary UK's market in Australia.

4. We can look after our domestic industries and UK exports to
Australia by invoking Article XXXV of GATT which would mean GATT
would not apply at all between Australia and Japan. But if most
other countries in GATT do not do that, we may possibly find when
the time comes that for Australia to invoke Article XXXV would be
equivalent to giving Japan a slap in the eye. If no other course
were open, that position might have to be accepted. There would,
however be the risk of hostile reactions from Japanese Government,
perhaps expressed in an anti-wool policy (Japan could switch her
wool machinery to using synthetic fibres like dacron without any
technical difficulties).

5. However, UK has made a proposal which is in the direction of
allowing Japan to accede while reserving some freedom to take
protective action against Japanese goods (e.g. quotas or special
tariff notes) without applying the same action to imports from
other countries i.e. to discriminate against Japan on a product-
by-product basis.

6. This Department feels the best course is actively to seek to
amend the UK proposal so that it would give more freedom to the
Australian Government to act against Japanese goods, at the same
time making it abundantly clear that the Government reserved full
freedom to invoke Article XXXV when Japan accedes to GATT.

7. Object of present Geneva meeting [1] is to frame proposals
likely to be acceptable to all or most of contracting parties.

Proposal would then be circulated for consideration by Governments
and discussion at a next session of GATT.

8. I would prefer to see our representative now in Geneva
instructed to take more active part in drafting of proposal,
seeking changes to meet Cabinet's views without prejudicing
Government's position. However, on assumption present meeting will
produce some sort of proposal for special treatment of Japan, our
position would be met if our man at the meeting were authorised to
say something like this: 'the Australian Government will consider
the proposal carefully, but might find it necessary at a later
date to propose amendments to it as an alternative to invoking
Article XXXV'. [2]

9. Position is complicated by US opposition to principle of UK
proposal. US would be more opposed still to changes in UK proposal
of the sort likely to meet with approval by Australian Ministers.

However, upshot cannot be predicted, because there could be a good
deal of negotiating before final position was arrived at, and I do
not consider we should be deterred at this stage by US opposition
from pursuing the line we think best.

10. Suggest if suitable opportunity occurs, matter might be
mentioned in Cabinet or in discussion with PM, Sen[ator]
O'Sullivan and Mr Casey (Mr Casey will no doubt support policy of
seeking compromise solution). However, as there are a number of
issues on both sides, do not suggest any decision be taken this
week, but perhaps matter could be looked at next week when all the
views, particularly views of Department of Trade and Customs (who
tend to take an opposite view to ours) could be weighed.