415 Embassy in Washington to Department of External Affairs

Cablegram 669 WASHINGTON, 24 May 1947, 5.46 p.m.

SECRET

Quotas for businessmen to re-enter Japan.

1. At I.A.T.B., 23rd May, U.S.A. proposed the following national percentage distribution of quotas for businessmen to re-enter Japan.

U.S.A. 30 China 10 India 8 France (and Indo-China) 3 Philippines 1 Netherlands (and N.E.I.) 6 Australia 4 Canada 2 New Zealand 1 Other Countries 15 Colonies (and United Kingdom) 20 2. Percentages are based on the statistics for years 1935/36.

Equal weight is given to each nation's percentage of Japanese imports, exports and identifiable foreign firms, excluding firms of helpless [1] services (such as, insurance, banking, and transport). U.S.A. envisages additional quota for firms of helpless services, which would be admitted as need arises.

3. On basis of pre-war trade with Japan, Germany would have had quota of approximately five percent. In the above percentages this is distributed as follows:

U.S.A. 2 United Kingdom 2 China 1 4. It is believed that total number of traders admitted will be initially 300.

5. Statistics for Australia's percentage in the above table arc unfavourable because the U.S. officials did not have Australian statistics of exports to Japan for 1935/36 and used statistics for 1937/39. [2] We have since learnt that, taking into account the figures for the earlier year, U.S.A. would raise Australian percentage to 5. Your attitude on this point appears to depend in part on whether you wish Australian traders to return to Japan if private trading is generally resumed (as now seems probable) or whether you wish to continue restriction of Australian trading to ensure Government to Government basis.

6. On a purely statistical approach 15 percent may be reasonable for countries other than the F.E.C., but it seems inequitable to allot so much to countries which took no active part in the war against Japan.

7. No quota was allowed by U.S.A. to the Soviet on the grounds that no private traders would come from Russia. However, a Soviet member said his Government might not agree to this, but should wish representatives from the Soviet Trading Corporations to be regarded as separate from the Soviet Government Departments.

8. Percentages will be discussed at I.A.T.B. 2nd June. Request instructions by then or earlier.

1 Presumably the word 'helpless' should read 'invisible'.

2 From June 1936 Australian exports to Japan virtually ceased as a result of Australia's 'trade diversion' policy restricting imports of Japanese textiles. Despite an exchange of notes in December 1936 setting out steps for resumption of trade, exports to Japan did not regain the 1935 level before the outbreak of war.

[AA : A1068, ER47/31/14, i]