349 Cumes to Wade [1]

Letter CANBERRA, 25 March 1949

PERSONAL AND CONFIDENTIAL

As I mentioned to you over the telephone, the Australian Delegation at the Third Session of the G.A.T.T. Contracting Parties [2] Will continue to oppose extension of most-favoured- nation treatment to Japan. From your Department's Note of 26th February and memorandum of 3rd March, I gather that the New Zealand attitude win be much the same.

In broad terms we fail to see how the granting of M.F.N. by the G.A.T.T. countries would result in any appreciable increase in Japanese exports immediately, although it would probably facilitate such an increase in the somewhat indefinite future. Any alleviation of the financial burden on the United States through extension of M.F.N. would, it seems, be postponed accordingly. On the other hand there are important considerations which operate against extension of M.F.N. by Australia at the present time.

Included in these unfavourable factors are doubt about affording tariff treatment of this kind to Japan before the conclusion of the Peace Treaty and also the domestic political difficulty of affording Japan treatment better than she received from Australia in pre-war years at a time when the state of war between Australia and Japan has not yet been formally terminated. There are other rather subsidiary objections, for example, even if the political difficulties mentioned above were overcome it would obviously be impossible to consider any extension of M.F.N. until a single exchange rate for the yen has actually been fixed and thus an assessment of the competitive position of Japanese exports in the Australian market being made possible.

In the past, Australia has taken the lead in opposing the United States on this issue and at times has received perhaps inadequate support from other delegations. At the Third Session of the G.A.T.T. Contracting Parties it is not proposed that this feature of discussions should recur and in the event that Australia were forced into a position where she would have to take a somewhat lone stand, the delegation would be content to re-state Australia's case and there let the matter rest. [3]

1 R.H. Wade, Office of the High Commissioner for New Zealand.

2 Held from 8 April-13 August 1949.

3 At the third session a US proposal to accord most-favoured- nation treatment to Japan on a reciprocal basis was with drawn from the agenda prior to its consideration.

[AA:A1838/283, 731/9]