416 Cabinet Submission by Evatt, Courtice and Pollard

Agendum 1343 26 May 1947,

SECRET

RESUMPTION OF PRIVATE TRADE WITH JAPAN 1. The declared policy of the Australian Government on the resumption of private trade with Japan is:

(a) Opposition to a decision on resumption being taken outside the Peace Conference.

(b) Agreement that preparations for the resumption of trade may be undertaken provided equal facilities are granted to all Allied nationals.

(Telegram No. 459 to the Australian Embassy, Washington, which contains a statement of this policy is attached as Appendix A).

2. The Prime Minister, in a statement made on 13th May, 1947, re- emphasised that Australia would not follow the United States in resuming private trade with Japan on the date of 15th July, which has been proposed by the United States, and expressed the need for a prior decision on reparations and the completion of the Peace Treaty with Japan.

3. Australia has not received support from other countries represented on F.E.C. for the policy of Peace Conference decision on resumption of trade. However, it is considered that the policy should be adhered to by the Australian Government, precautions being taken to ensure that no disadvantages accrue to Australian commercial interests as a result of opposition by other countries.

4. Other nations, especially the United States and the United Kingdom (see Telegrams 1.9586, 9[0]25, 9[0]22/3 and 9691 attached [1]), have already begun preparations for the resumption of private trade. The United States has sent a Trade Mission comprising representatives of the Departments of State, War, Commerce and Treasury, and the United States Credit Corporation and Reconstruction Finance Commission to Japan to discuss with the Supreme Commander, Allied Powers, problems associated with the resumption of private trade. For twelve months the United States has had banking and insurance representatives in Japan and a United States airline has already commenced a service between the United States and Japan. The United Kingdom has a Shipping Mission in Tokyo, is sending an insurance representative and is considering the advisability of sending a representative of British banks. Further preparations, including compilation of lists of businessmen interested in trade in Japan and preliminary arrangements for the rescinding of the Trade with the Enemy Act, are also receiving the attention of the United Kingdom Government.

New Zealand is also making preparations and has made relaxations in its Trading with the Enemy Regulations which will facilitate preparations by private businessmen.

5. The Australian representative on F.E.C., acting under instructions, has presented a paper to F.E.C. on the question of admission of private Allied traders to Japan to engage in preparations for the resumption of private trade. The paper stresses that only preparations are envisaged and that the question of resumption, including date and conditions, is a matter for decision by the Peace Conference. Discussions of this paper in F.E.C. will probably take place in late May or early June. A decision on resumption of trade and preparations for resumption may, therefore, not be long delayed and Australia's policy needs complete arid immediate formulation.

6. At the present time commercial relations with Japan are restricted solely to trading between the Australian Government and S.C.A.P. and Australian transactions have been confined to sale of wool and purchase of raw silk, textiles and yarns.

7. Notwithstanding the Australian policy that the resumption of private trade with Japan is a matter for decision by the Peace Conference it seems that, particularly in view of the action already taken by other countries, Australia should make detailed preparations for the resumption of trade at the earliest possible moment so as to ensure that Australian businessmen will be placed on an equal footing with those of other nations at whatever date trade is actually resumed. It is suggested that preparations might be made in the following fields:

(a) General export and import trade;

(b) Finance (including banking and insurance);

(c) Shipping;

(d) Civil Aviation.

8. These preparations might include, inter alia:

(i) Compilation, by the Departments of Commerce and Agriculture and Trade and Customs, of lists of businessmen interested in trade with Japan.

(ii) Preparations by the Department of Trade and Customs for the rescinding of the relevant sections of the Trading with the Enemy Act and for the extension of import and export licensing to include Japan, at the appropriate time.

(iii) Increasing trade representation in Japan and permitting private trade representatives to proceed to Japan as soon as possible.

(If any private traders go to Japan under Government sponsorship, they will be required to defray their own expenses and their visit will not, therefore, involve any cost to the Australian Government.) (iv) Engaging in discussions with the United States Trade Mission which has recently gone to Japan.

9. It is also necessary to consider the desirability of Commonwealth Departments making contact with private Australian traders and trade associations regarding the general preparations for the opening of private trade.

10. A specific question which arises also is the rate of exchange to be fixed between the Australian 1 and the Japanese Yen. This question has already been taken up in a preliminary manner with the Department of Treasury and is receiving consideration.

11. IT IS THEREFORE RECOMMENDED THAT-notwithstanding the Australian policy that the resumption of private trade with Japan is a matter for decision by the Peace Conference, Australia should:

(a) Make the most detailed preparations so that immediate advantage may be taken of any relaxation of the ban on private trade which may occur. These preparations should include those mentioned in paragraphs 8, 9 and 10, and particularly should include establishing contact with private Australian traders who may be interested in post-war trade with Japan.

(b) Take immediate advantage, with other nations, of any decision to resume private trade with Japan if, in spite of our opposition, trade is in fact resumed prior to the Peace Conference. [2]

H.V. EVATT Minister for External Affairs

D. COURTICE Minister for Trade and Customs

R. T. POLLARD Minister for Commerce and Agriculture

1 Not published here.

2 Cabinet approved these recommendations on 26 May. The matter was to be referred back to Cabinet before trading commenced.

[AA : A2700, VOL. 34]