CANBERRA

DR WESTERMAN: Mr Ushiba, I have no doubt that you share my feeling
that this meeting is the happiest one of the series. I would like
to commence this final plenary meeting by expressing my
appreciation of your own personal leadership and of the co-
operation of your colleagues in the talks that we have had, and I
am sure the Australian Delegation-particularly Mr Phillips and Mr
Smith, who have had a great deal to do with you personally-endorse
my remarks.

In negotiation the easiest part is to know precisely what one
wants oneself. No doubt you had your mind firmly made up on that,
just as on my side I was firm in my mind. The more difficult thing
is to make up your mind what the other man wants and to bring him
to understand your own position. In talking to you, Mr Ushiba, I
always had the feeling that you knew the kind of problem that was
mine and that you could understand it. I hope you have always felt
that I was anxious to take full account of your particular
problems. Given that kind of approach, I think negotiations are a
much more pleasant occupation than they otherwise would be.

When the negotiations first commenced, the overriding general
instruction which the Australian Government gave this delegation
was, within certain limits, to attempt to work out an arrangement
with the Japanese Delegation which would stabilise-which would
normalise-our trade relations and which would open up prospects of
developing each other's markets in as happy a way as possible, I
would think, Mr Ushiba, that we have now reached the stage where
the documents which we have agreed upon represent what should be a
satisfactory working arrangement-satisfactory from your point of
view, and satisfactory from ours. The negotiations have taken
longer than we had originally intended, but that is not surprising
when you come to consider the kind of problems that arise on both
sides in doing what has not been done before-establishing in a
workable and comprehensive way an agreement which would condition
our future trade.

There are one or two matters connected with the substance of the
Agreement which I think we would like to set down here formally
for the record.

The Agreed Notes record the understanding between our two
Governments on the purchase of Australian soft wheat by Japan in
the event of a P.L.480 or other noncommercial arrangement by Japan
for the import of wheat from sources other than Australia, or in
the event of unfair trade practices on the part of competing
suppliers limiting the competitive opportunities for Australian
wheat. Our two delegations have discussed the wheat purchasing
policy of the Japanese Food Agency, and we have gained from you an
understanding of the commercial considerations influencing wheat
purchases by the Food Agency. Having regard to these discussions
and in the light of this understanding, the Australian Delegation
has advised the Australian Minister for Trade that subject to
normal commercial considerations and under normal conditions of
trade, the Japanese Food Agency will buy 200,000 tons and 300,000
tons of Australian soft wheat in the first and second years
respectively of the proposed Agreement on Commerce. This is an
aspect of the first two years' operation of the Agreement which I
must clearly state is important to the Australian Government. I
therefore wish to know whether the advice given to the Minister
for Trade is reasonably based. [2]

MR USHIBA: I should like to state that subject to the price and
quality of Australian wheat remaining competitive, the advice you
have given to your Minister for Trade is a reasonable assessment
of the position.

DR WESTERMAN: In the Agreed Notes Part A [3], reference is made
in paragraph 4(b)(i) to the Wheat Board offering wheat to Japan
'in accordance with its normal commercial consideration'. In order
to avoid possible misunderstandings we had wished to have included
in the record an explanation of a point concerning this phrase.

However, after discussion with the Japanese Delegation, we became
convinced that the point was clearly understood by the Japanese
Delegation and accordingly we have not pressed the matter.]

[In paragraph 5(iii) of the Agreed Notes Part C relating to action
taken under Article V, the phrase, 'so far as administratively
practicable', has been inserted to cover the contingency that in a
particular case administrative difficulties could arise under the
Australian Tariff or under the system of import controls in
confining the action to particular goods. Such difficulties should
in any event be limited, and best endeavours will be made to
confine the action to the specific goods or products concerned,
having due regard to Article V.)
It is our understanding, Mr Ushiba, that the text of the Agreement
and the attachments as agreed between the two Delegations will be
initialled next Tuesday [4] and that no further changes will be
made. The final signature, we both understand, will take place in
Tokyo early in July and my Minister has been very glad to accept
the cordial invitation of your Government to visit Tokyo for this
purpose. We suggest that when the Japanese texts have been
prepared, a copy should be forwarded to the Australian Embassy in
Tokyo and to Canberra for final checking.

MR USHIBA: Although you have said that after the initialling of
the texts no further change will be made, I should like to confirm
that we are still free to correct, after consultations with each
other, typographical errors or apparent grammatical mistakes, if
any, in the text before the final signature.

DR WESTERMAN: It is quite likely that there will be minor errors
in typing or grammar in the present text and I agree that we are
quite free to correct these after consultation. There could also
be minor changes necessary in the form of the Agreement before
final signature. Here again we could consult.

The Australian Government will take steps to implement the
Agreement immediately upon final signature, but the procedural
steps may involve some slight delay before the Agreement can be
fully translated into practice. We will do what we can to reduce
this time lag and will let the Embassy know immediately we are in
a position to indicate the date from which, after consultations
with each other, the Agreement will become effective.

As soon as the Agreement is signed, we will contact the Japanese
Embassy on consultation procedures generally and in respect of
Article V in particular, in order to see what specific
arrangements might be practicable and desirable.

I have nothing more to say at this stage, Mr Ushiba, except once
again to repeat the very sincere thanks of the Australian
Delegation as a whole for the co-operative and friendly way the
discussions have proceeded, and to regret that we have taken
longer than anticipated at the cost of some personal hardship to
you and to your colleagues in being away from home so long.

MR USHIBA: Thank you very much. It is a very great pleasure to me
that we should have reached this stage, with the initialling of
the final Trade Agreement next Tuesday. I would like to express my
deep appreciation and gratitude to the members of the Australian
Delegation, particularly to you and Mr Warwick Smith, for your
understanding and the patience you have shown throughout the long
and sometimes very difficult negotiations. I think this is the
happiest conference we have had, but that does not mean that the
conference as a whole has not been friendly, or too difficult. You
have shown very great understanding for our point of view, and the
compliments you have given to me I would like to dispossess in the
fullest sense. As you see, our Delegation is very weak at present-
just three of us. Three other members who came from Tokyo have
returned already, but I can assure you we are very happy to be in
Canberra most of the time and are very much impressed by the way
in which you and other members of the Australian Delegation have
conducted the negotiations. I think we must not forget the great
encouragement and impetus our cause has received from the visit of
your Prime Minister, Mr Menzies, to Japan, and it is most timely
that Mr McEwen will visit Japan shortly to sign the Agreement with
our Prime Minister and Foreign Minister, Mr Kishi. It augurs well
for the future development of economic relations that this
Agreement will be signed by the most distinguished statesmen of
Japan and Australia.

Much as we shall be pleased by the concluding of the Agreement, it
is my conviction that this Agreement would mean only the first
step towards the improving and developing of our economic
relations. I need not dwell too long on the past history, which
was affected very often by mutual suspicion and anxiety. The
question appeared sometimes quite insoluble, because on one side
there was the very deep resentment felt in Japan as to
discrimination Japanese goods have been subjected to in this
country, and on the other side, the very great fear and suspicion
in Australia, especially in manufacturing and industry circles,
for the so-called invasion of 'cheap' Japanese goods. One of the
fundamental causes of these difficulties is undoubtedly the
difference of economic structure of the two countries. But I think
there is no reason why the two countries of fundamentally
different economic structures could not live together. I really
think that one of the more important reasons of our success in
arriving at agreement was that we have faced this question
squarely and [taken] a bold step forward to solve it. It was in
this spirit that the Japanese Government, in their most anxious
endeavour to find the way for redressing the extreme unbalance in
our trade with Australia, has agreed to a certain degree of self-
control of her exports, to avoid or prevent a situation which
might result in serious damage to Australian industries. Moreover,
the Japanese Government has accepted that in emergency cases the
Australian Government might take certain measures to curb imports
from Japan. I cannot say that they have taken these commitments
with great pleasure, but they have felt, in their very correct
assessment of the situation, that only by so doing can an orderly
expansion of Japanese exports to Australia be assured. On the
other hand, we have given under the Agreement, to the more
important products of Australia, treatment which is as favourable
as possible under the present balance of payments position of
Japan. You must think some of them fall short of 100 per cent
m.f.n., but you also understand there is a certain psychological
reluctance in some parts of the Japanese Government to commit to
buy more from you in view of the very substantial trade balance,
which is so adverse to us. It is my sincere desire that [by] these
measures taken by the Japanese Government, together with the
goodwill and sincerity, the ground will be prepared smoothly for
the expansion of our exports to Australia. The difference of
economic structure will not permit our trade to balance squarely,
but the present trend is too lop-sided and extreme to serve as a
basis for any steady economic relations and should be rectified as
far as possible.

All I have said should not, of course, detract from our
appreciation of the historic step you have taken in granting Japan
the m.f.n. treatment and non-discriminatory treatment in tariffs
and import licensing. We know what political risk you have taken
and we hope and are quite sure that through this co-operation we
can prove this is the only right step for the benefit of the two
countries. We are going now to turn a new leaf in the history of
our economic relations. The merits can only be judged by its
actual operation and here we shall depend very much on your
confidence and goodwill, as well as our confidence and goodwill.

If we recall that the anxiety in the past was mostly the product
of ignorance and misunderstanding on both sides, the value of
closer personal contacts will be obvious. I hope that through
understanding we shall be able to prevent the situation from
deteriorating to such an extent as to require intervention on the
Government level, which is not at all good in any economic
relations. In finishing, I would like again to express my deep
appreciation and gratitude to you and the members of the
Australian Delegation for the warm hospitality you have extended
to me personally and also to the other members of the Japanese
delegation.

DR WESTERMAN: Thank you: you have made a very much better speech
than I, and you have said the things I would like to reciprocate.

I think as far as the record is concerned we could adjourn the
meeting at this stage, and I understand we will meet again on
Tuesday. Thank you.