412 Department of External Affairs to Embassy in Washington

Cablegram 459 CANBERRA, 17 April 1947

SECRET

Dominions office D.50 of 21st January, D.288 of 25th March, D.351 of 9th April: New Zealand's 164 to Washington, 56 to London of 19th March: our 362 to Washington, 81 to New Zealand, 77 to Dominions Office of 27th March.

1. The question of resumption of private trading with Japan involves the whole question of Japanese commercial relations which is obviously a major item in the settlement with Japan. It should not therefore be treated as a mere matter of occupation policy;

still less should it be a matter for unilateral decision by one power, even after consultation with F.E.C. We consider therefore that this important question should not be settled in F.E.C. at all, and that arrangements for Japanese Peace Conference should be pressed on with a view to this and other major matters being determined there by the Governments concerned.

2. We have been increasingly concerned at the tendency to piece- meal disposal of questions of major international importance in relation to Japan, for example:

Reparations-Advanced reparations allocations and allocation of industrial facilities.

Proposed Philippine Trade Agreement with Japan. American proposal to finance Japanese imports. (See F.E.C. Telegram No. 77). [1]

3. We have also been concerned to note tendency to unilateral decision on important matters affecting the settlement with Japan, for example:

Whaling.

Resumption of civil aviation from United States to Japan on May 1st by NorthWest Airlines.

The re-opening of postal services to Japan.

United States refusal of further Allied representation on the Holding Companies Liquidation Commission.

4. We therefore wish you to speak strongly in F.E.C. to the above effect, stressing our view that the resumption of foreign commercial contacts on a permanent basis is not a matter of occupation policy, and should not be decided in advance of Peace Settlement, especially now in view of the likelihood of an early peace conference.

5. As regards preparations by private firms, certain private traders (e.g. Americans, and neutrals who have been in Japan continuously since the outbreak of war) are enjoying the advantages in regard to establishing contacts, arranging accommodation, recruiting staff, and generally making preparations and laying foundations for trade with Japanese. We are anxious to secure that nationals of all members of F.E.C. should be given similar opportunities. We are, of course, especially concerned that Australian Traders should not be at a disadvantage in this respect. S.C.A.P. had indicated to the Head of the U.K.L.M. [2] that he would wish all traders to start with equal opportunity, but that the removal of the ban on entry into Japan of business men was a matter for directive from Washington. (See D351, para 2.) 6. We therefore wish you, in consultation with other British Commonwealth Representatives, to present a short paper in F.E.C.

on the admission to Japan of private traders for the sole purpose of making preparations necessary for the future conduct of their businesses, when private trading is resumed. In presenting paper it should be made absolutely clear that it is concerned only with preparations for resumption of private trade and that the question of resumption, including date and conditions, is one for the Peace Conference.

7. Provisions in paper should cover (a) Equal opportunity for all allied traders.

(b) Impartial allocation of accommodation.

(c) Opportunities for all branches of trade including banking, insurance, shipping, airlines, etc.

(d) Traders be authorised to deal direct with individual firms and not necessarily through Japanese Board of Trade (Boeki Cho).

(e) No encouragement to be given to reciprocity with Japanese business representatives.

1 On 19 March the Embassy in Washington reported a US proposal to finance Japanese imports required to achieve the objectives of the occupation by selling abroad Japanese stocks of gold, silver and other precious metals.

2 Sir Alvary Gascoigne, UK Political Representative and Head of the United Kingdom Liaison Mission in Japan.

[AA : A1068, P47/10/61, ii]