No. 270/E4
The Ministry of Foreign Affairs presents its compliments to the
Australian Embassy in Japan, and with reference to the Ministry's
Note Verbale No. 124/E4 dated 12th May, 1953 [1], has the honour
to refer to the recent trend of trade between Japan and Australia
and particularly to the current import policy of the Australian
Government for the Japanese goods.

1. As indicated clearly in the above-mentioned Note Verbale,
Japan's exports to Australia have contracted remarkably since the
imposition of import restrictions on Japanese goods by the
Australian Government in March last year, and during the second
half of 1952 they amounted in value to only one tenth of her
imports from Australia. Thenceforth, Japan's balance of trade with
Australia has further deteriorated and during the eight months
from January to August this year her exports to Australia merely
ran at 1.5 million, while her imports from the same source
amounted to 48.4 million. The Ministry understands that this
marked imbalance accounts for in a large measure the drastic
deterioration of Japan's sterling holdings from 70.6 million at
the end of last year to 24.8 million at the end of August this
year even taking into account of 30 million of the swapped
amount. [2]

As the Australian authorities are well aware of, it was in the
high hope of making the trade flow between the two countries on an
expanding basis that Japan entered into the long-term purchasing
contract of Australian barley. In the face of the acute shortage
of the sterling holdings as above, however, the Japanese
Government fear that unless measures be expeditiously taken on the
part of the Australian Government of arresting the deteriorating
tendency, the Japanese Government might find itself unable to
continue imports from Australia on the pace and scale as in the
past periods.

2. Meanwhile, whereas the Australian Government have relaxed to a
considerable extent the restrictions on imports of goods from all
sources other than the dollar area, the treatment for imports of
Japanese goods, in spite of certain liberalizations in April, July
and September this year, remains restrictive as follows:

(1) Under the current import licensing system in Australia, every
description of Japanese goods is placed under the Administrative
Control, and individual traders concerned on both sides are
entirely uninformed as to whether their applications for imports
of Japanese goods be accepted and also of the extent to which
import licences be issued. It is to be noted that because of this
uncertainty they are confronted with considerable difficulties in
entering into business contracts, and accordingly, are often
compelled to lose good business opportunities. In the case of
other soft currency goods, on the contrary, Australian importers
are given certain 'percentage quotas' for imports of these goods
which are computed on the basis of their past performance. Upon
these quotas they are not only able to initiate negotiations of
import transactions with exporters abroad even prior to obtaining
import licences, but also they may set their purchasing plans on
the long range view.

In this connection, it is to be added that since imports from
Japan are governed by the Administrative Control System which has
nothing to do with the past import records from Japan, abnormally
large number of import applications tend to be filled, causing
detrimental effect to the development of stable and healthy trade
relations between the two countries.

(2) While uninformed of exact figure, the Ministry understands
that the ceiling set for imports of Japanese goods, which are
importable only under the Administrative Control System is very
much limited. Accordingly, unless it were lifted substantially,
the ceiling would turn out to be far short of covering the current
trade imbalance even if Japan's exports reach the full value of
the ceiling.

(3) Finally, the Ministry has been informed of a number of past
cases of considerable delay in issuing import licences against
applications. This fact, coupled with the points raised in the
preceding paragraphs, tends to place Japanese goods commercially
on an apparently disadvantageous footing.

3. As for the custom tariff, the Ministry has learned that in the
past months the Australian Government raised tariff rates for
imports of some Japanese goods. It is cited that tariff rates for
tin plate and plywood have been lifted from duty free to 12.5% and
57% respectively ad valorem. Under the present circumstances
where, in accordance with the agreement reached in April this year
between the Governments of Japan and the United Kingdom, the
sterling area countries are relaxing their import restrictions on
Japanese goods, and Japan has been making every effort to retrieve
the acute shortage of her sterling holdings, the Japanese
Government cannot help feel frustrated to learn the apparently
contradictory step on the part of the Australian Government in
respect of custom tariff.

4. The Ministry recalls in this regard that the Embassy set forth
in its Note No. 121 dated 22nd July this year [3] that the import
licensing controls on Japanese goods will be reviewed from time to
time by the Australian authorities in the light of future
development.

In the light of the above, the Ministry has the honour to request
the Embassy to transmit to the Australian Government the Japanese
Government's desire that the Australian Government would be good
enough to look into the prevailing trade situations and give a
favourable consideration to the matter.

In concluding, the Ministry would like to repeat its belief that
an informal trade talk with representatives of the Australian
Government as set forth in the Ministry's Note Verbale No. 124/E4
dated 12th May would prove highly valuable for both parties at
this moment and should appreciate any indication of the Australian
position in this respect.