Trade with Japan
Cabinet decided on Tuesday not to accept the conclusions of the
Interdepartmental GATT Committee that Japan might be informed
immediately that Australia was prepared to commence talks with a
view to negotiating a bilateral trade agreement and that Ministers
should give further consideration to the merits of a possible
agreement based on either (a) the quota principle, or (b) the
Canadian example. [1]

2. Instead Cabinet accepted a submission [2] by the Acting
Minister for Trade and Customs which concluded:

'The most practical course appears to be one of informing Japan
that the Government proposes to examine, with goodwill, ways and
means of affording Japan greater opportunities to expand her
export trade to Australia, and to follow a policy of progressively
easing import restrictions on Japanese goods (especially
discriminatory import restrictions) whenever developments under
the proposed more liberal licensing arrangements reveal that
special protection against Japan is unnecessary on particular
products. In addition Japan could be accorded, on a non-
contractual basis, m.f.n. tariff rates on as wide a range of goods
as protective considerations (and possibly preference
considerations) permit. After Australia has had actual experience
in trading under the more liberal conditions, experience may show
that a basis exists for a formal Tariff Agreement with Japan.'

3. It was agreed that a small committee of Ministers would look
immediately into the individual items concerned. We understand
that the Committee, which is composed of [Sir Eric] Harrison,
Senator Spooner and Senator McLeay, will meet early next week.

4. In our view the course of action agreed on by Cabinet will be
unsatisfactory to Japan and is unlikely to contribute in any
substantial way to an increased trade with Japan. The agreed
course of action, especially since any easing of licensing or
tariff restrictions will be carried out unilaterally by Australia,
may be expected to result in undue weight being given to fears of
Japanese competition with Australian products and imports from
established overseas suppliers.

5. The Department of Commerce and Agriculture share our concern
and in addition consider that no scope is permitted under the
agreed course of action for increasing Australian exports to
Japan. They propose to recommend to the Acting Minister for
Commerce and Agriculture that he press in the Committee of
Ministers for further examination of the Canadian agreement with
Japan. Commerce still consider that an agreement of this type
could provide adequate safeguards for Australian industry and are
not convinced about the Department of Trade and Customs view that
it would be administratively unworkable. We share this opinion.

Until the views of Mr McEwen and Senator O'Sullivan have been
obtained and the Committee of Ministers has made some progress it
is considered that no initiative should be taken in discussing
trade matters with the Japanese. Should they themselves raise the
question they could be told little more than that we were not
unaware of their trade problems, that ways of assisting them were
still under review and were in fact under consideration by
Ministers.

It is, however, our view that the Japanese Embassy should be
informed as soon as possible of the course of action agreed to by
Cabinet to afford Japan greater opportunities to expand its
exports to Australia. The question of when and how much could be
conveyed to the Japanese will substantially depend on the comments
of Mr McEwen and Senator O'Sullivan and the work of the Committee
of Ministers. We consider, however, that no opportunity should be
overlooked by this Department to press for the earliest possible
advice to the Japanese on as forthcoming a basis as possible. We
should also continue to work for eventual conclusion of a
bilateral agreement on a mutually satisfactory basis.