Import Licensing of Japanese Goods

[matter omitted]

This recommendation [1] visualises the licensing of at least token
quantities of Japanese goods at present not being admitted at all,
such as finished rayon piece goods, canvas and duck and cotton
drills. There would be no question of admitting quantities
sufficient to disrupt Australian production. (When these
recommendations were formulated it appeared probable that the
restrictions on imports from other non-dollar countries would be
substantially eased in the latter half of 1954.)

2. This minute aims to explain the procedures which would be
adopted if a proposal to assimilate the special licensing measures
now applicable to Japanese goods into the licensing measures
applicable to the goods of other countries is adopted, in full or
in part.

3. To provide background an outline of import licensing procedures
follows:-

(a) Wherever it is necessary to keep total imports, imports of
particular goods or imports from a particular country within a
target figure the result is achieved by placing quota limits on
individual importers, directed to limiting the value of the import
licences to be granted to each eligible importer during a
quarterly or half-yearly period.

(b) Today, imports into Australia are licensed under three
separate administrative procedures depending on the country from
which the particular goods are being imported. These separate
procedures apply to-
(i) imports from Dollar countries;

(ii) imports from Japan; and
(iii)imports from the Rest of the World.

(c) In the case of imports from the 'Rest of the World' there are
no complete prohibitions on the import of any goods, and importers
enjoy a considerable amount of freedom in determining the
particular goods to be imported within the limits of their
individual quotas. Licences for imports from the Dollar countries
and from Japan are, at present, granted only for the particular
goods listed in the respective import licensing budgets relating
to those areas.

(d) The import licensing budget for Japanese goods for the current
quarter lists 130 items for which import licences are granted. The
budget also applies a ceiling figure to each item, and licences
for each item are distributed pro rata amongst applicants
depending on the merits of their respective claims. With a few
exceptions the listings include all items of interest to Japan's
export trade.

4. A very high proportion of the goods listed in the present
Japanese import licensing budget comprise what are known as 'B'
Category goods under the import licensing procedures applicable to
imports from the 'Rest of the World'.

5. At present the holder of a quota for 'B' Category goods
relating to imports from 'the Rest of the World', may use that
quota to import any goods of the kind listed in 'B' Category, to
the extent of 60% by value of the importer's total imports in the
base year, of all the goods listed in Category B. However many
special quotas have been granted for textiles, particularly to
manufacturers of garments etc.

6. Under the procedures applicable to 'B' Category goods an
importer's quota which arises from his imports of (say) gloves,
ribbons and tapestries in the base year could be used today to
import (say) toys, as all of these goods are in 'B' Category. The
same elasticity has not applied to imports from Japan as it has
been the practice to allocate licences for each line of Japanese
goods separately.

[matter omitted]

10. Although textiles are the principal goods licensed for
importation from Japan, the current annual licensing rate for
those goods is only approximately A10 1/2million (c.i.f.). Other
'B' Category imports account for A2 1/2 million (c.i.f.) The
remaining A8 million (c.i.f.) of the current licensing rate of
A21 million (c.i.f.) per annum is mainly for essential goods for
which licences are granted up to the level of our requirements.

11. Approximately 90% of the total annual value of licences issued
for Japanese textiles is for textile materials for further
processing in Australia. These licences are issued mainly to
textile manufacturers who require the materials for factory
purposes.

12. If Japanese goods were assimilated, for licensing purposes,
with imports from all other non-dollar sources, the bulk of these
quotas would vest in manufacturers who might reasonably be
expected to use their quotas to import the same materials as they
are now importing.

13. From what is known of Japan's competitive position vis-a-vis
other countries and the fact that Japanese goods pay the highest
rates of duty (provided under the General Tariff), it appears
unlikely that:-

(a) Japanese textiles would displace to any appreciable extent,
imports of textiles from other sources;

(b) There would be any significant increase of our total imports
of finished textiles (including rayon piecegoods);

(c) There would be any important variation in the present pattern
of other 'B' Category imports;

if Japanese goods were accorded the same licensing treatment as
imports from other sources.

14. On the other hand, it is quite possible that there could be
some increase in our imports from Japan of some consumer-type
goods other than textiles. The most likely instances are toys,
artificial flowers, pencils and pen and pencil cases, where total
import trade is relatively small and Japan is a cheap source of
supply. It is in respect of goods of this type that the impact on
local industry could be most sharply felt.

[matter omitted]

16. Two courses are possible if the Government favours the
assimilating principle.

(a) Complete assimilation. This course would enable the real
strength of Japanese competition in all lines to be tested. On the
other hand it may have severe repercussions on a few Australian
industries. However as Australia is not bound by contractual
commitments to Japan, ad hoc measures could be taken to deal with
the imports of particular goods from Japan should they reach
embarrassing proportions and the Government considered special
action necessary in particular cases. The fact that duties on most
Japanese goods, including almost all textiles, are higher (and in
many cases much higher) than the duties on similar goods imported
from other countries makes it unlikely that competition from Japan
would call for special action on more than a very few items.

(b) Limited assimilation, reserving those items in which
competition from Japan is most feared. This course has the
disadvantage that if particular goods are initially excluded from
the assimilation scheme because of fears of larger imports, the
same fears (whether soundly based or not) are likely to persist
indefinitely and no opportunity occurs to establish whether the
fears are well-founded or not.