1950/51 Sterling Area Trade Arrangement with Occupied Japan
Negotiations which have been in progress for some time in Tokyo with the Supreme Commander for the Allied Powers for a Sterling Area Trade Arrangement with Occupied Japan for 1950/51 recently came to an end and the Arrangement was signed by the participating parties, including Australia, on 29th November.
Trade Arrangements for 1950/51 2. The 1950/51 Trade Arrangement differs very little from the earlier Arrangements which have covered trade between Japan and the main sterling area countries since 1948/49. The chief object of these Trade Arrangements is to facilitate a high level of trade between the sterling area and Japan without incurring the risk of a loss of dollars.
3. This danger of dollar loss arises from the payments arrangements which govern trade between the sterling area and Japan. In brief these arrangements provide that trade shall be conducted in sterling and that SCAP may periodically convert into dollars any sterling that he accumulates in excess of his working balances.
4. The Trade Arrangements minimise this danger by preventing trade between the sterling area and Japan from getting too far out of balance. Estimates are made of the value of commodities Japan is likely to buy from the sterling area participants during the year and this value, adjusted for other sterling payments Japan is likely to make such as for 'invisible' services, is divided up amongst the sterling area participants to cover their purchases from Japan. These estimates are incorporated in the Trade Arrangements as Trade Plans. They are reviewed during the year and adjustments are made if trade seems to be getting out of balance.
5. The Trade Plan estimates are not binding commitments on Australia and the other participants that trade shall in fact be the same in composition and amount as the estimates. They are merely estimates made in the light of best available information and the parties to the Arrangement agree to facilitate trade and to issue the necessary import licences.
Australia's Share of the Trade 8. Japan is important to Australia both as a source of essential supplies which might otherwise have to be paid for in dollars and as an expanding market for Australia's exports. Under the Trade Arrangements the total value of trade both ways between Japan and Australia has increased from A4m. in 1948 to about A30m. in 1949/50 and the Trade Plan for 1950/51 provides for a further increase to A46m.
9. Australia's sales to Japan in 1950/51 are estimated in the Trade Plan at A24.35m. made up of wool A16.6m., wheat A6.3m., other grains A1.2m. and miscellaneous A0.25m. These estimates were put forward by Australia early in the trade negotiations at Tokyo and later reports of Japanese requirements indicate that they will be very considerably exceeded by actual sales.
10. Australia's allocation of purchasing power under the Trade Plan amounts to A22m. as compared with last year's initial allocation of A6.2m. The main commodities which Australia expects to import from Japan in 1950/51 and for which licences have been issued are steel (mainly galvanised iron), copper, textiles including raw silk, plywood, tinplate and chemicals.