CANBERRA

Trade Talks with Japan

SUBMISSION NO. 142 [1]

This submission has been prepared by the departmental committee so
that Ministers can make a decision on the suggestion made by Mr
McEwen and Senator O'Sullivan that the Japanese be told
immediately that Australia is prepared to negotiate a trade treaty
with them. There are tactical reasons for saying this now if we
can.

The departments have tried to give Ministers information as to
form and scope of an agreement that would be a practical
proposition. Several points of difficulty came out in the
departmental discussions:

1. We would like to ask the Japanese for a commitment that import
licensing will be used only for balance of payments reasons.

Treasury and Customs feel that we could not take a similar
commitment ourselves but Commerce argue that a satisfactory method
could be found to protect our industries by means other than
import licensing. I feel we should respect the Treasury and
Customs view on this matter but a decision need not be taken on
this now.

2. There are two types of agreements which could provide suitable
safeguards for Australian industry-a quota type of agreement-a
value for duty type of agreement (Canadian type). The quota type
is the safer but may not really be a basis for agreement as it may
not be acceptable to the Japanese. Theoretically the Canadian type
would give us all the safeguards we need but Customs see great
administrative difficulties. I think Customs exaggerate their
difficulties but nevertheless they would have to administer the
thing and therefore we must accept their points. The submission
suggests that Ministers give further consideration to the merit of
the two types of agreement.

The question is does the submission give sufficient information so
that Ministers can say that we should take the first step now
feeling fairly confident that an agreement can be reached with
Japan which would allow the Government to look after Australian
industry (and United Kingdom industry if so desired) as needed
under the operation of the agreement? There are deficiencies in
the submission: for instance industries vulnerable to Japanese
competition are listed but nothing is said about their
significance-the size of their labour force, their efficiency,
etc.

This question could best be answered if the general discussion by
Cabinet tomorrow is followed by a more detailed examination by the
Prime Minister's Committee next week when departmental officers
could be questioned on the points of difficulty.