297 Lord Caldecote, U.K. Secretary of State for Dominion Affairs, to Commonwealth Government

Cablegram 170 LONDON, 28 May 1940, 2.31 a.m.

SECRET

My telegram 19th May, 157. [1]

Further discussions took place on 14th May and 23rd May at the Ministry of Economic Warfare with the Counsellor of the Japanese Embassy. [2] Following is summary of the general position reached:-

(a) Japanese Government appear to be ready to meet our wishes as regards preventing re-export to Germany of Japan's imports from the British Empire provided that they are assured of their imports which they require. The Japanese Embassy are doubtful whether the Japanese Government would give immediate guarantee regarding their imports from other sources but they have been asked to emphasise that a prohibition of re-export to Germany is required in respect of all overseas imports. The Japanese Embassy urge that Japan's own products should be dropped from negotiations on contraband to Germany, and it has been suggested to them that they should at least limit the export of indigenous products to normal quantities.

(b) Japanese Embassy communicated a semi-official list showing commodities which they wished to obtain from British Empire territories. They have been informed that certain of the commodities on this list are of military importance, and greatly needed by the Allies. This applied particularly to nickel, tungsten ore, mica and zinc ore, and possibly some other items. In the case of products of the Dominions, the decision would not rest with the U.K. Government; the quantities to be fixed would be a matter for consultation between the U.K. and Dominion Governments or the Governments concerned and Allied war requirements would of course have to be taken into account.

(c) Japanese Embassy have urged that the scope of the discussions might be broad such as to cover the supply of Japanese commodities to the United Kingdom and the Empire and have supplied a list of commodities available. They have been informed that several items on this list, e.g. whale oil (if none is sent to Germany), plywood, raw silk and eggs, are of interest to the United Kingdom Government but it has been pointed out that shipping may be difficult to arrange.

1. The Japanese Embassy have been informed that the United Kingdom Government consider a payments agreement essential and a lifting of the restrictions on British imports into Japan.

2. The principal items in the list of commodities which the Japanese Government require from Empire (see the above) sources are as follows:-asbestos, cobalt ore, copper ore, lead, lead ore, nickel, nickel sulphate, pulp for artificial silk, wool, zinc, zinc ore.

3. The list is being examined from the standpoints of economic warfare and supply and a further telegram will be sent to you in the light of this examination with suggestions for the consideration of the Governments concerned. Meantime, the Japanese Embassy are referring back to Tokyo on certain points but are anxious to have another meeting with us as soon as possible.

1 See Document 180, note 5.

2 Suemasa Okamoto.

[FA: A3195, 1.3628]