CANBERRA

Trade Talks with Japan
On 17th November, 1954, a note was delivered to the Japanese
Embassy stating that the Australian Government had been giving
careful consideration to the question of Australia's trading
relations with Japan and was willing to enter into talks with the
Japanese Government to examine mutual trade problems. [1] The note
suggested that the talks should commence at a time and place to be
mutually agreed upon. No reference was made in the note to the
scope of the proposed talks, although in discussions among
Departments and in the Cabinet Sub-Committee, it has been
envisaged that they would be concerned mainly with tariff
concessions to Japan subject to safeguards for Australian
industry.

A note verbale was received from the Japanese Embassy on 30th
December, 1954 [2], stating that the lack of any concrete
references in the Australian note to the subject matter of the
proposed talks made it difficult for the Japanese Government to
determine its attitude towards the note. The Embassy therefore
requested that the Australian Government should elaborate further
upon its ideas for the talks. The Embassy's note then emphasised
again that the Japanese Government hoped that Australia would
fully support Japan's accession to GATT. (The application of the
GATT to Australia's trade with Japan would require general non-
discriminatory treatment including the mutual accord of M.F.N.

treatment.)

Departments concerned have been consulted about the terms of a
reply and the Department of Trade and Customs have now suggested
that we should inform the Japanese Embassy that the Australian
Government is not in a position to determine its attitude towards
proposals involving formal trade or tariff negotiations until the
discussions in Geneva on the Review of GATT are completed and the
changes in the GATT resulting from the review have been considered
by Governments. It is then suggested that, in the meantime, there
would be mutual advantages in arranging informal and purely
exploratory talks between the Embassy and Australian officials
representing the Departments primarily concerned.

Treasury and Prime Minister's Department are agreeable to the
draft and are submitting a recommendation to that effect to the
Treasurer and Acting Prime Minister. The Department of Commerce
and Agriculture agree that the draft reply is rather negative but
favour informal and exploratory talks. In order to avoid further
delay they are recommending to the Minister of Commerce and
Agriculture that he agree to its transmission to the Japanese
Embassy.

The Department of National Development wish to go a stage further.

They consider that, in addition to suggesting informal and
exploratory talks, our reply to the Japanese note should define
more fully the possible subjects for formal talks.

The question of a reply was discussed with Mr Casey before he
departed on his visit to South East Asia. [3] He approved the
offer of informal and exploratory talks and favoured the more
detailed approach suggested by National Development. We have
endeavoured to secure acceptance by the trade Departments of this
approach but it is unacceptable to them partly on the ground that
Cabinet discussions have not advanced far enough to permit
definition in a formal note of Australian views on the scope of
formal talks and partly on the grounds that the proposed informal
and exploratory talks would permit an exchange of views without
commitment on either side and thereby facilitate further
consideration by Ministers. By not defining items for discussion
we obtain the incidental advantage that we and the Japanese will
be free to discuss any aspect of Australian-Japanese economic
relations which either side might decide to raise.

Departmentally we have some reservations about the Department of
Trade and Customs' draft reply. In particular it gives a slightly
misleading emphasis to the relation of the GATT review to trade
talks with Japan. It was intended, when the offer of talks was
conveyed to Japan last November, that these talks should be held
before the conclusion of the GATT review. The draft note says in
effect that we now do not consider that formal trade talks could
take place until the results of the review have been considered by
Governments. However the main interest of the Japanese Embassy has
been to obtain our agreement to their admission to GATT. They have
shown no active desire for trade talks outside that context.

There are advantages in sending a reply to the Japanese Embassy in
the near future. Mr Nishi may be visiting Japan in March which
would give him an opportunity to consult with his Government. The
GATT Review Conference is likely to conclude shortly and the
contention that the Australian Government is unable to determine
its position ... to formal trade or tariff negotiations until the
results of the GATT Review have been considered will appear
increasingly thin as time goes by.

Moreover, it is hoped that informal and exploratory talks will
provide an opportunity for a fruitful exchange of views and we
consider that they should be held as soon as possible, provided
the proposal is acceptable to Japan.

In all the circumstances we consider that the best course is to
send a note along the lines of the Trade and Customs draft.

Recommendation
It is recommended for your approval that subject to the agreement
of other Departments concerned (who are clearing with their
Ministers), a note be sent to the Japanese Embassy along the lines
of the draft proposed by the Department of Trade and Customs. [4]