The Australian Embassy has the honour to refer to the Note Verbale
No. 270/134 dated 5th November, 1953, from the Japanese Ministry
of Foreign Affairs [1] and to the Aide-Memoire dated 14th January,
1954, from the Japanese Ambassador in Australia to the Department
of External Affairs [2] regarding Japan's trade with Australia.

Whilst the Embassy notes the observations by the Ministry and the
Ambassador on the state of trade between Australia and Japan, it
believes that the Japanese Government will appreciate that, as
Australia is a member of the sterling area, the bilateral balance
of trade between Japan and Australia is not as significant for the
financing of that trade as the balance of payments between Japan
and the sterling area. During 1953, action was taken by a number
of sterling area countries which should soon result in greater
imports from Japan into the sterling area. In order to sustain the
trade until such time as that action became effective, short-term
facilities were made available by the United Kingdom Government
for financing Japan's trade with the sterling area. The Embassy
understands that Japan's capacity to trade in sterling has been
further strengthened as a result of the understandings on trade
reached with the United Kingdom in January, 1954.

The observations contained in the Note Verbale and the Aide-
Memoire on imports into Australia from Japan suggest that the
extent of the import licensing relaxations which have been made by
the Australian Government has not been fully understood. During
the first quarter of 1953, the value of licences authorised for
imports of goods of Japanese origin amounted to A730,000. During
the second quarter of 1953, this value rose to A1.5 million. In
the third quarter, it increased to A3 million and in the fourth
quarter to A4.5 million. The level of licensing in the fourth
quarter of 1953 is being continued in the current quarter and a
relaxation representing a further increase in the level of
licensing by about 15% will be made in respect of the quarter
commencing 1st April, 1954. This last-mentioned relaxation will
permit Japanese goods to be licensed at a rate equivalent to an
annual figure of approximately A21 million. Substantial increases
therefore should soon become apparent in Australia's recorded
imports from Japan.

The extent of the relaxations is also reflected by the increased
values of licences authorised for the importation of particular
products from Japan. Thus, for the five successive quarters ended
31st December, 1952 and 31st March, 30th June, 30th September and
31st December, 1953, authorisations in terms of A thousands were
as follows:

Textiles 207 481 1229 2192 2932
Metals and Metal Manufactures 103 98 94 117 155
Sulphur Nil Nil Nil 105 386
Shell Buttons Nil 15 20 27 57
Canned Fish Nil Nil Nil 176 196
Toys and Fancy Goods Nil Nil Nil 43 89
Crockery and Glassware Nil Nil Nil 51 84

The Embassy also considers it desirable to explain the extent to
which licences are granted to importers on a quota basis and on
the basis of the case-by-case consideration of applications under
administrative control. The position is that, for the six months
ended March, 1953, only a quarter of Australia's total imports
were licensed on a quota basis. Although the proportion tends to
increase with any increase in the quotas, the proportion will
still be less than a third in respect of imports in the six months
ended March, 1954.

The Australian authorities are aware of delays and other
difficulties which sometimes occur unavoidably in determining
applications for import licences where the quota system cannot
appropriately be applied. The Ministry is assured that it is the
constant endeavour of the Australian authorities to minimise these
difficulties and, as far as possible, to remove them. It is hoped
that the Ministry appreciates that administrative control as
distinct from quota control is not applied solely in respect of
imports from Japan: it applies to all imports from the dollar area
and to many goods imported from all countries.

With regard to the Ministry's observations that the Australian
Government recently raised the import duties on Japanese tinplate
and plywood, the Embassy wishes to inform the Ministry that the
current duties of 12.5% and 57.5% ad valorem respectively now
applicable under both the Most-Favoured-Nation Tariff and the
General Tariff were enacted in the case of tinplate in June, 1937,
and in the case of plywood in December, 1929. The duties on these
products were temporarily suspended for limited periods prior to
1953, when world demand exceeded available supplies. These
concessions to importers were discontinued in 1953 as a result of
the improved supply position. [3]