FEC 101.

Saltzman today handed 17 page aide-memoire to Ambassador
concerning recent representations to State Department and in FEC
[1] concerning tendency on part of SCAP to resolve unilaterally
matters properly within jurisdiction of FEC. Full text sent air
mail. Following is summary of main points.

It is clear sense of function of FEC and of SCAP as set out in
terms of reference that FEC is to determine general policy
according to which Japan is to carry out its obligations under
terms of surrender but SCAP is to bear continuing direct
responsibility, guided by Directives of FEC, in all matters on
which such Directives have been issued for effectuation by Japan
of terms of surrender. Would be manifestly undesirable and
impracticable for an 11 nation body in Washington to attempt to no
more than set broad framework within which Japanese occupation
could proceed. Conversely necessary that SCAP should have a broad
discretionary power to take action regarding problems arising in
Japan which must be promptly and decisively dealt with if
occupation proposals are to be successfully accomplished. SCAP's
status as a sole executive authority for allied powers in Japan
empowers him, pending a policy decision of FEC, to take action in
any instances when administrative necessities of occupation
require it although he has received no controlling directive
expressing policy decision, SCAP is not only within his rights in
taking action in such circumstances but it is incumbent on him to
do so.

2. In the light of the above considerations the following
questions are commented on-

(a)Japanese Whaling. Views of United States Government have been
conveyed in a separate communication (see our telegram FEC 97).

[2]

(b) SCAP press release of March 31st. This has never been released
in Washington as a statement of United States policy. SCAP's
message was for use in presentation by Army Department of its
budgetary requirements. State Department confident that it not
view of SCAP, as it is not view of United States Government, that
FEC should be deprived of opportunity to exercise its proper
functions and responsibilities respecting occupation of Japan as
defined in terms of reference or that United States Government or
SCAP should take actions contrary to provision of Moscow
agreements. What SCAP doubtless had in mind was continued failure
of FEC to adopt policy decision governing travel of Japanese
Commercial Representatives abroad and possible necessity, if FEC
action to remove this restriction was not soon forthcoming of his
acting on his own authority to permit such travel, a possibility
of which FEC had already been formally advised.

(c) Japanese coastal patrol. United States Government cannot agree
that SCAP acted without due regard for authority of FEC and
reports position taken by United States representative in FEC.

(d) Travel of Japanese abroad. Reference is made at length to many
statements of United States representatives in FEC on this
question. Australian Government has therefore been fully apprised
of the United States position namely that SCAP has both right and
duty under previous broad policy decision of FEC in light of
administrative necessity, pending policy decision of FEC, to
permit Japanese to travel [to] the countries desirous of receiving
them for cultural or commercial purposes. Fact that United States
submitted three proposals to FEC is in no sense grounds for
assumption that United States consider that matter was one
requiring FEC approval before Japanese could be permitted to
travel abroad. Submission of proposals to FEC was not inconsistent
with the United States view that under previous broad policy
decision of FEC and in light of administrative necessity of
occupation SCAP had full authority to act pending adoption by FEC
of these or similar proposals. If travel of Japanese nationals
abroad should in each case require approval of FEC this would be
an invasion of administrative responsibility of SCAP and likely so
to obstruct and retard carrying out of the exchange programme as
greatly to reduce benefits which may otherwise be expected to
follow from it. In view of special interest of Australian and
other Governments, United States Government has already instituted
appropriate procedures for keeping Governments of nations
represented on FEC adequately informed regarding travel of
Japanese abroad.

(e) Japanese Fishing. Reference is made to long standing position
of United States Government in FEC on this question. United States
currently sh[oulde]ring full burden of expenditures from Japanese
food deficit which could be materially reduced by enlargement of
Japanese fishing catch. United States does not consider it
necessary or practicable to make question of extension of fishing
area in cases where such an extension accept[able] to SCAP, and to
country near whose shores the extension is to be made, a matter of
decision by FEC. As far as pearling fishing is concerned United
States Government not aware that Japanese pearl fishing operations
are being conducted outside Japanese waters. Yet United States
Government can conceive no adequate reason why Japanese should not
be permitted to pearl fish outside Japanese waters in the area
permitted for catching of food fish. Regarding reports that
Japanese may be permitted to fish in vicinity of former Japanese
mandat[ed] islands draft policy paper now before FEC specifically
includes trust territory of Pacific. United States Government
fully mindful of its own responsibilities regarding security of
Pacific areas but considers as administering authority for trust
territory, it is in a position to determine whether presence of
Japanese fishing vessels undesirable for security reasons.

(f) Importation of Bauxite. Although FEC policy decision of
interim reparations removals permits removal of all primary
aluminium production capacity this decision relates purely to
availability of capacity for reparations and it is wholly in
accord with existing directives that SCAP should now be allowing
certain of these facilities to be operated for purposes of
extraction. The broad purposes of occupation, dependent on revival
of Japanese productive activity. Interest of American taxpayers
and alleviation of present world acute shortage of aluminium
products, all dictate necessity of utilising idle aluminium
capacity pending final decision regarding removal for reparations.

Approximately half of aluminium produced from imported bauxite
will be exported in response to specific requests received from
several western nations thus helping to meet their requirement and
to provide needed foreign exchange for purchase of essential
imports for Japan.

3. United States Government hopes Australian Government will, in
light of all above considerations, be able to move with United
States towards solution of problems discussed here in manner which
United States Government has outlined which it firmly believes is
in accord with Moscow agreement and conducive to success of
occupation in which both Australia and United States so greatly
interested.