86 Submission 184 To Cabinet By Menzies

10th November, 1954

SECRET

CANBERRA

Trade and Tariff Negotiations with Japan
In previous consideration of the problems associated with Japan
and GATT it was proposed to ask Mr McEwen and Senator O'Sullivan
for their views on Submission No. 153. [1] Their views have now
been received and are attached for consideration together with an
introductory statement by the Departments concerned.

Attachment

TRADE AND TARIFF NEGOTIATIONS WITH JAPAN
After the problem of accommodating Japan in GATT had been
discussed at the Commonwealth talks in London, Mr McEwen and
Senator O'Sullivan cabled a recommendation that bilateral talks
with Japan be opened as a matter of urgency. (See GATT 2 [2]
attached).

2. Following receipt of this cable the Interdepartmental Committee
prepared a report for Cabinet (Submission No. 142). [3] This
report discussed the possible alternative types of bilateral
agreement with Japan (Canadian type and quota principle type) and
outlined the difficulties which would confront Australia in an
agreement.

3. The Acting Minister for Trade and Customs has circulated to
Cabinet a further Submission (No. 153) which contains proposals
for:

(a) Partial assimilation of Japan into the non-dollar licensing
system, subject to prior consultation with the Ministers abroad;

(b) Trade and tariff negotiations with Japan-the papers presented
the matters which it was considered had to be faced before the
decision could be taken to commence trade and tariff negotiations.

Some experience of more liberal trading conditions was considered
necessary before we could know whether a basis for tariff
negotiations existed.

4. Cabinet decided to seek the views of the Ministers abroad on
the proposals contained in Cabinet Submission No. 153. In the
meantime, a small Committee of Ministers examined the selected
tariff items under which Japan is a significant or potentially
significant supplier to Australia. This Committee decided that it
was not in a position to make a precise recommendation to Cabinet
until the comments were received from the Ministers abroad on
Submission No. 153.

5. Mr McEwen and Senator O'Sullivan have now given their comments
in some detail in Cable GATT 8 [4] (attached). In brief, they
recommend:

(a) The intention to commence tariff negotiations can and should
be announced immediately. The Ministers are of the view that it is
entirely unnecessary to have completed the detailed study of the
tariff items before this decision is taken.

(b) The adoption of the assimilation proposals, subject to
variation in the treatment of contentious items (see paragraph
3(b) of GATT 8).

6. Senator Spooner cabled the Ministers on Monday asking for
clarification of some aspects of the Ministers' recommendations on
import licensing (see Cable 256 attached [5]). An answer to this
Cable has been requested for tonight's meeting.

7. UK Proposals: The United Kingdom has advised us of the
proposals they have made to Japan. Cables giving the United
Kingdom proposal (B4) [6] and the preliminary Japanese reply (B5)
[7] are attached for information.

8. Points for Decision:

(a) announcement of willingness to commence trade and tariff
negotiations (paragraphs 1 and 2 of GATT 8).

(b) licensing treatment (paragraph 3(b) of GATT 8).

1 Document 81.

2 Document 75.

3 Document 78.

4 Document 85.

5 Not published.

6 Not published. See note 3 to Document 85.

7 Not published. The Japanese Minister in London had expressed
fears that if the proposed amendment were approved, which seemed
unlikely, all contracting parties would insist on bilateral
agreements, causing an unacceptable delay in Japan's accession to
GATT. Cablegram B5 of 3 November is on file AA : A1838/283,
759/1/7, i.

87 CABINET COMMITTEE DECISION 180(HOC)
Canberra, 10 November 1954

SECRET

GATT Committee

SUBMISSION NO. 184-TRADE AND TARIFF NEGOTIATIONS WITH JAPAN [1]

Licensing Treatment for Japanese Imports
Ministers considered the relative merits of the two proposals for
the partial assimilation of Japanese imports into the licensing
system for other non-dollar goods.

It was noted that Senator Spooner had cabled the Ministers abroad
seeking clarification of some aspects of their proposals but at
the time of the meeting no reply had been received.

The Committee reaffirmed the principle that adjustments of import
licensing should not be a matter for bargaining in tariff
negotiations but noted at the same time that more liberal
treatment on import licensing would provide a more favourable
atmosphere in tariff negotiations.

It was considered that owing to the present balance of payments
position, a scheme which would increase Australia's total
commitment for imports would be less acceptable than one which did
not.

The Committee deferred a decision on the matter until the reply
from the Ministers abroad to Senator Spooner's cable had been
received.

It was agreed that a public announcement of the government's
decision should be made when the decision is taken.

Trade and Tariff Negotiations with Japan
The Committee noted the cables from the Ministers overseas which
presented in strong terms arguments in favour of an immediate
announcement of the intention to commence tariff negotiations with
Japan and noted that the Ministers overseas would be in the better
position to assess the tactical advantages in making such an
announcement.

The Committee decided that the Japanese should be informed that
the Government is prepared to enter into talks with them and
examine the mutual problems involved in our trading relations with
them. When talking to the Japanese it should be pointed out to
them that the talks presented great difficulties to the government
but the government had proposed the talks in the hope that a
suitable basis for an agreement would be found.

It was agreed that the Ministers overseas should be informed of
the decision and asked for their views on timing of the
announcement to Japan and on any press statement here or at Geneva
from their tactical point of view.

[AA : A1838/283, 759/1/7, i]

1 Document 86.

[AA : A1838/283, 759/1/7, i]

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86 Submission 184 To Cabinet By Menzies