TOKYO

The Japanese Government will issue a statement about consultations
which will be within the terms of summary of conclusions agreed
with the Embassy. The statement will use Japanese trade figures.

It will be cleared with us. No release at either end before early
next week.

2. Suggest that the Minister is not obliged to make a press
statement but if he does he can draw on the same summary of
conclusions. If a release is proposed I suggest it be a not too
elaborate version of the following which commences paragraph 3 and
that you advise me for mention here of tiny additional points to
be made. Should the Minister decide to issue a statement suggest
an appropriate time might be 7 p.m. next Monday evening. Would you
cable decision on this?

3. The statement could indicate that the first of the annual
consultations provided for in the Trade Agreement between
Australia and Japan was recently concluded in Tokyo.

4. Consultations took the form of reviewing all items of the
Agreement and the confirming and strengthening procedures which
had now been developed on both sides for giving effect to the
agreement. Both Governments are satisfied that the procedures are
operating fairly and effectively and with mutual advantage to the
trade of both countries.

5. Japanese exports to Australia are increasing at a reasonable
rate and would probably reach 25 million for 1957/58 compared
with 18 million average for three years ended June, 1957 and
12.9 million for 1956/57. This progress had been achieved within
the safeguards of the Treaty which had operated to prevent serious
damage to Australian industry.

6. Despite the serious decline in world prices for commodities
exported by Australia, especially wool, Australian exports to
Japan for 1957/58 are likely to exceed the average for the three
preceding years although there would be fall in the total value
compared with 1956/57. Japan has been a major support in the wool
market and has under the Treaty provided very important new
markets for wheat and sugar together with smaller but useful
openings for dried vine fruits and dried milk.

7. All other commodity undertakings by Japan (e.g. barley) are
being met and a substantial development of exports of Australian
coal was occurring under the assurance of most-favoured-nation
treatment now given by Japan. This assurance means that Australian
suppliers have equal rights with other suppliers to seek markets
for raw materials (e.g. coal and minerals) needed by Japan.

8. I have not spoken to the press here at all and the short and
rather innocuous statement about the discussions which appeared
Saturday press Tokyo must have come from Japanese sources.