Trade with Japan
In a Note dated 12th May 1953, the Japanese Government drew
attention to its rapidly diminishing sterling holdings and said
that further deterioration might force Japan to taper off her
purchases of sterling area goods (including, of course, Australian
wool).

The Minister for External Affairs has drawn attention to the fact
that Australia's trade policy in relation to Japan should take
account of the broad political objective of keeping Japan in the
non-Communist bloc as well as purely economic considerations.

During the first eleven months of 1952/53 our sales to Japan were
valued at 76m, whilst our purchases from Japan were worth only
5m.

The question of our future policy in licensing Japanese imports
was referred to a Committee of Ministers which met in Melbourne on
23rd June.

The Committee decided:

(a) that the Department[s] directly concerned should prepare for
consideration by Cabinet on 2nd July a further paper on imports
from Japan; and
(b) that the paper should contain a series of concrete proposals
for relaxation, each showing the additional value of imports
involved and as far as possible an appreciation of the classes of
goods involved.

Attached hereto is a report prepared by the Prime Minister's
Department, Treasury and the Departments of Trade and Customs,
Commerce and Agriculture and External Affairs. [1]

Attached to the Departmental Report is an Appendix which sets out
a list of commodities which are at present being licensed from
Japan, together with a list of additional items which, it is
suggested, might be licensed and gives ceilings up to which
licences might be issued for each item. The total of the ceilings,
plus the reserve for unforeseen contingencies, represents an
annual rate of licensing of 12 million (c.i.f. & e.). However,
because it is not clear how the pattern of imports from Japan
would develop, the Comptroller-General of Customs wishes to retain
some element of flexibility and to have authority to vary the
items and the ceilings within the total of 12 million (c.i.f. & e.).

It would be the aim to extend the list of goods and the
ceilings above 12 million (c.i.f. & e.) if and when Cabinet
decides on further relaxations of non-dollar, non-Japanese
imports. This progressive relaxation would cushion any adverse
effects resulting from an increased inflow of Japanese goods.

This report points out that Japan has become the second best
customer for Australian exports. She is the second largest buyer
of our wool and the largest buyer of our barley. Australia's trade
policy towards Japan should take account of the political
objective of keeping Japan in the non-Communist world.

The Treasury has no objection on balance of payments grounds to
some further relaxation of restrictions on Japanese imports.

The report also draws attention to the fact that for further
relaxations on Japan to be worthwhile they must include some types
of goods which are likely to be competitive with Australian
production and that the UK is concerned that any substantial
relaxations should not seriously prejudice the level of her export
trade to Australia.

During recent years Japanese costs have risen more than costs in
many other parts of the world, so that imports from Japan will not
have the same attractiveness on price grounds that they enjoyed
pre-war. Moreover, Japanese imports in general attract the highest
rates of import duty. If we are not to force Japan to restrict her
purchases from us, we must show some willingness to permit the
entry into Australia of additional Japanese imports.

For these reasons I support the recommendations contained in the
attached report, namely:

(a) The present level of licensing on Japan be extended to provide
for an additional import value of 6 million (c.i.f. & e.) per
annum only, as from 1st July, 1953.

(b) Approval be given, in principle, to the idea of continuity in
the relaxations in step with relaxations approved by the
Government from time to time in regard to the non-Japanese, non-
Dollar Budget.

(c) The items included in the list of authorized imports from
Japan and the budgetary ceilings therefore be subject to variation
by the Import Budget Committee if, in the opinion of that
Committee, circumstances justify any variations within the limits
of the total licensing value of 12 million (c.i.f. & e.) per
annum. (This is necessary to provide reasonable flexibility in the
administration of the controls). [2]