CANBERRA

Australian-Japanese Trade Relations
On the evening of 10th November the Cabinet Sub-Committee on
International Commercial Policy decided that the Japanese
Government should be informed that Australia is agreeable to
examine with Japan mutual problems regarding trade relations. [1]
It was decided, also, that the Ministers for Commerce and Customs,
now in Geneva, should be given an opportunity to advise on the
timing of such an announcement as there may be some factor
relating to the GATT negotiations which we would need to consider.

It was agreed that the Minister for External Affairs should send a
Note to the Japanese Ambassador conveying the Australian
Government's decision as soon as confirmation had been received
from Geneva.

2. On the question of the partial assimilation of import licensing
of Japanese goods, there was a lengthy discussion on alternatives
put forward by the Department of Customs in Canberra and that
proposed in telegram GATT 8, paragraph 3, from the Ministers for
Customs and Commerce in London. [2] It is understood the
difference was on these lines: Customs Canberra suggested that on
those goods on which assimilation cannot be given, the Japanese
should be given a definite 25 per cent. quota of the total present
importations. The oversea suggestion apparently is that the
Japanese should be given a definite budget over and above the
present importations of these items.

3. The Cabinet Sub-Committee were strongly of the view that the
Canberra Customs proposals were the correct approach, mainly
because they would have the effect of stabilising the total of
imports and thus avoid aggravating the balance of payments
difficulties which the Treasury said were looming up. They claimed
also that the Japanese would have more flexibility within such a
system. Australian manufacturers would be told also that the total
imports would remain the same and the only people to suffer would
be those from whom the 25 per cent. of present imports was
diverted.

4. However, Ministers could not agree as to what was meant in 3(b)
of GATT 8 and resolved to wait for some explanation.

5. The Prime Minister insisted upon separating very distinctly
importing licensing treatment from tariff negotiations. (It is
doubtful whether this will in fact be desirable or possible, but
that will emerge when we work out the basis of discussions with
the Japanese). On the point whether we should announce to the
Japanese our willingness to commence trade talks, the Prime
Minister after listening to the Acting Minister for Customs, was
inclined to the view that we should not announce we would talk
until we were quite sure what we had to offer. He was dissuaded
from this view only be a reminder that Cabinet, on 14th September,
had already made a decision on this issue [3] and it was clearly
understood by the Ministers of Customs and Commerce that the
decision would be implemented when they so requested from
overseas. This they had done twice in most categoric and urgent
terms.

6. The Department of Customs put forward all the reasons why it
would be difficult to formulate a basis of tariff negotiations
which might be profitable. They refused a discussion on the
possibility of the Canadian type over-all M.F.N. Treaty with an
anti-dumping safeguard.

7. However, once the decision to notify the Japanese has been
conveyed we will have to again examine the basis of negotiations
including the possibility of a Canadian-type agreement, the
objections to which have not been clearly stated by Customs.

8. The points for immediate action are:

(1) Notification to the Japanese in the form of a simple Note from
the Minister on the lines of the telegram which we are drafting to
Geneva.

(2) Clearing up of the outstanding point of partial assimilation
of import licensing in the light of the exchange between Canberra
and Geneva.