CANBERRA

In accordance with the agreement reached at the conclusion of the
discussion with the Minister in Melbourne on 5.3.57, Mr Burgess
submitted a statement which had been prepared by the Association.

[2]

2. Mr Burgess said that the statement had been prepared on the
basis of the Minister's assurance that Dr Westerman would examine
the Association's proposals that 'quantitative restrictions should
be applied to imports of textiles and clothing from Japan of the
type produced in Australia'.

3. Mr Burgess said that his Association's request was that
quantitative restrictions should be applied to the following
Japanese goods, imports to be restricted to the quantity of each
individual item imported from Japan during the year ended 30th
June, 1956:

Denims, drills, dungarees and jeans, cotton tweeds and furnishing
fabrics covered by Tariff Item 105(A).

Artificial silk piecegoods and ribbons covered by Tariff Items
105(D), 106(B) and 107(A).

Apparel covered by Tariff Item 110.

Canvas, duck and towels covered by Tariff Items 120 and 130.

Cotton yarns covered by Tariff Item 392.

4. Mr Burgess said that his Association's request was made in
their belief 'that on its acceptance hinges the survival of the
Australian textile and clothing industry'. He then went on to say
that the emergency power set out in Section 11A of the Customs
Tariff (Industries Preservation) Act [3] would not prove effective
and that it was no satisfactory substitute for quantitative
limitation or adequate tariff protection.

5. After concluding his statement, Mr Burgess submitted a further
statement which purported to be a record of the discussions which
had taken place in Melbourne on 5.3.57.

6. Dr Westerman said that the Minister had not given any assurance
that a further request for discriminatory quantitative
restrictions would be examined. In fact, he had made it quite
clear that there could be no treaty with Japan which provided for
quantitative restrictions on Japanese textiles and textile
products. Mr McEwen had said that the further submission to be
prepared by the Association would be examined in the context of
the line which we had adopted in our discussions with the Japanese
(which had been outlined during the talks in Melbourne). Dr
Westerman, in continuing, said that if discriminatory quantitative
restrictions were under consideration-which they were not-it would
be impossible to select a base period during which Japanese
textiles had been denied reasonable access to our market.

7. It was quite clear that the Association had virtually ignored
the policy statements which had been made by the Minister in
Melbourne and, in some respects, they had been distorted to form
the basis for continuing with the request for quantitative
restrictions and for the purpose of keeping members of the
Association advised of 'progress' in the discussions.

8. The way in which the effectiveness of the emergency power is
discussed in the Association's statement is also a distortion of
the Minister's remarks. Mr McEwen had said that he regarded the
emergency power as a measure to hold the line only should its use
prove necessary. The long-term solution to any serious problem (if
it arose and was not corrected by the Japanese) lay in appropriate
action through the Tariff. This was not brought out in the
Association's statement, the whole implied tenor of which is that
we will be swamped with a damaging inflow of imports from Japan
and that we will have to rely straight away solely on the
emergency power. Dr Westerman pointed this out to Mr Burgess.

(matter omitted] [4]

11. It is understood that Mr Burgess and Mr Flanders lobbied
around the industry before the interview with Dr Westerman stating
that all hope was lost, the industry was ruined and that all that
remained was to kick the Department. The 'record' of discussions
in Melbourne was distributed to members of the Association and
(presumably) the statement submitted by Mr Burgess. Both of these
documents would lend colour to the claims of Messrs. Burgess and
Flanders.

12. After the discussion with Dr Westerman, Mr Burgess spent the
rest of the afternoon in my room dilating on the irreparable ruin
with which the industry was faced. Before leaving, he asked that
denims and drills, rayon piecegoods and cotton canvas and duck be
referred to the Tariff Board. (He has since confirmed this request
in writing). I explained that we were still considering the last
report on denims and drills and it would hardly be appropriate to
make a further reference to the Board until that report was
tabled. Prompt consideration would be given to the requests on
rayons and canvas and duck, In the light of the Minister's
statements during the interview in Melbourne it is recommended
that these items be referred to the Board. Draft references have
been prepared.

13. The claim by the Association that only quantitative
restrictions can protect the textile and clothing industry from
being ruined by Japanese competition rests on three assumptions-
that the Japanese are incapable of or unwilling to carry out any
assurances they may give us regarding the supervision of exports
at their end, the ineffectiveness of the emergency power and the
impossibility of devising any appropriate long-term form of tariff
protection. These assumptions are quite untenable.