Australian Policy Towards Japan 1. The following note on the progress made in the implementation of policy towards Japan has been compiled in accordance with your request of 8 August 1955.
2. The policy of allowing Japan to have reasonable facilities for taking part in her own defence, for meeting her economic difficulties by expanding her export trade, and for developing her political and economic life and institutions in a way that would strengthen her association with the West, which was decided by Cabinet on the 17th August, 195 , has progressed in the following manner:
A. MATTERS ON AGENDUM WHICH HAVE BEEN CARRIED OUT
Japanese War Dead in Australian Territories 3. The Australian Government agreed to the Japanese Government's suggestion that a vessel should be sent to recover Japanese war dead from Australian Territories. Accordingly the Taisei Maru visited Papua and New Guinea and other territories in February and March of this year and took back the remains of 5093 Japanese war dead to Japan.
Japan and the Colombo Plan 4. After opposing it for some years Australia supported Japan's admission to the Colombo Plan as a donor country, in September 1954. Japan's technical know-how, industrial capacity and training facilities are likely to be important factors in advancing the plan in South East Asia.
Inclusion of Japan in SEATO 5. This idea has received no substantial support from any quarter in Australia or Japan during the past twelve months. Some United States and Japanese quarters that originally made suggestion have not raised it lately. We are opposed to the idea as being neither necessary nor desirable and it may be regarded as dead for all practical purposes at the present time.
B. MATTERS WHICH STILL REMAIN TO BE COMPLETED 6. Considerable progress has been made in most of these matters since August last year and some of them are in a stage close to finality.
Trade with Japan 7. Trade between Australia and Japan has increased during the last twelve months with an increase in Australian purchases correcting slightly the hitherto very uneven balance of trade between the two countries. Australian imports from Japan rose from 6.5 million in 1953-54 to 14 million in 1954-55. Japanese purchases from Australia remained in the vicinity of 58.6 million for 1954-55.
and his successor, Mr Suzuki, have stressed the importance which the Japanese attach to trade with Australia. Mr Suzuki has requested that trade talks between Japan and Australia be opened on 23 August. On our side while there is agreement at the Government level on the desirability of increased trade with Japan, there is reluctance on the part of the Minister of Trade and Customs to agree to measures which may prejudice the interests of Australian and British Manufacturers. The Minister of Commerce and Agriculture is interested in any increase in the total volume of trade which might lead to a rise in Japanese purchases. The crux of the matter lies in whether the Japanese will be allowed to compete for a share of the expanding Australian market.
International and national considerations would seem to require that she should be allowed to compete on reasonable terms.
Japanese Defence Forces 9. Japan is continuing to develop armed forces adequate for her own defence. The present level and targets of the forces are as follows:
Present Strength Target (July 1955) (June 1956) Ground Self Defence Force 130,000 150,000 Civilians Attached 9,628 11,658 Maritime Self-Defence Force 15,808 19,391 Civilians Attached 577 997 Air Defence Force 6,287 10,346 Civilians Attached 451 1,159
Total 162,751 193,551
Up to date equipment for these forces is being supplied by the United States, while much of the naval construction is being carried out in Japan.
There appears to be no imminent danger of the invasion of Japan by Russian or Chinese forces. The United States, which had been pressing for greater Japanese efforts in building her defence power against any threat from this quarter, has recently decided to soft pedal rearmament and put greater emphasis upon economic recovery.
Pearl Fisheries Dispute 10. There has been little development in the Pearl Fisheries dispute. Pearling by the Japanese in Australian waters is still being carried out under the Provisional Regime, the Japanese being permitted to take 1,000 tons of pearl shell this year. They have recently requested an adjustment of the tonnage limits for the various areas of operation to enable them to take the 1,000 ton total catch permitted under the Provisional Regime. The terms of our understanding with the Japanese require that this request should receive proper consideration.
11. Each side has presented to the other a draft of the special Agreement submitting the Pearl Fisheries Dispute to the International Court, but agreement on this draft is still distant.
The Japanese are now preparing comments on the Australian draft, which was submitted to them in February of this year.
Compensation for Former Prisoners of War of the Japanese 12. The Japanese have met their obligations under Article 16 of the Peace Treaty and have paid 4 1/2 million. to the I.C.R.C.  The actual distribution of this money awaits a final determination by the I.C.R.C. of the numbers of former prisoners of war to receive compensation.
Japanese Violations of Australian Territorial Waters 13. Since the beginning of 1954 there have been a total of eight sightings of foreign vessels in or near the territorial waters of Australia and its Territories. Arrests followed in the case of two of these. The first was the case of the Japanese vessel Kuroshio Maru No. 6 which was wrecked off the coast of New Britain in December, 1954. (The violation of territorial waters may have been involuntary.) In the second case a fisherman who was left behind turned out to be an Okinawan from an Okinawan vessel which had been poaching shell. There are grounds for believing that some of the other vessels sighted were probably Okinawan. Generally speaking the violations have been less than previously and it seems that protests made in Tokyo against violations have been effective in checking these offences. The Maritime Safety Board in Tokyo has issued warnings to fishermen against infringing the territorial waters of other countries, and, though they have pointed out the difficulty of enforcing these instructions in every case, it seems that they have had some effect.
Japanese Class 'A' War Criminals 14. On 27th July we were advised by the United Kingdom High Commissioner's Office that the United Kingdom agreed that the sentences of the 12 'A' class war criminals should be terminated after they would have spent ten years in custody-i.e. ten years from the date of their initial arrests on suspicion of committing war crimes. Though favouring outright termination of sentences, the United Kingdom Government is expected to fall in with a majority decision in favour of a system of parole. This means that the decision of Cabinet dated 14 April 1955  will shortly be implemented.
Japanese Class 'B' and 'C' War Criminals 15. We received confidential advice from the United Kingdom High Commissioner's office on 1st August that the United Kingdom had decided that the life sentence of 'B' and 'C' class war criminals within the jurisdiction of the United Kingdom should be treated as 15 years imprisonment qualifying a prisoner for release after ten years.
Discretion will be reserved to detain a prisoner for a longer period if, in the opinion of the United Kingdom, this is necessary. This decision by the United Kingdom will make it possible for us to apply the policy decided upon by Cabinet on the 14th April 1955.
Criminal Jurisdiction over UN Forces in Japan 16. Under the Protocol incorporated in the United Nations Status of Forces Agreement with Japan the U.N. authorities have primary jurisdiction over offences committed by U.N. Forces whilst on duty or against other members of the U.N. Forces. Japan has the primary right of jurisdiction in other cases but she can waive this right.
17. So far there has been no case where the Japanese have sentenced an Australian serviceman to a gaol sentence. If a case does arise an approach will be made to the Japanese Government to see whether any Australian serving sentence in a Japanese gaol could be transferred to Australia to serve his sentence.
BCOF Diverted Stocks Account 18. A sum of approximately 250,000 remains to be paid.
Japanese Activity in New Guinea 19. In conversation with the Prime Minister at The Hague in February, Mr Luns  said that the Japanese continued to show interest in New Guinea.
20. The Counsellor of the Netherlands Embassy recently showed some interest in the terms under which Japanese labour was indentured for the pearling industry in Australia, but his purpose was not disclosed.
C. IMPORTANT NEW MATTERS OF POLICY THAT REQUIRE CONSIDERATION 21. In January and March proposals were made for the operation of joint American-Japanese tuna-fishing enterprises to be established with bases in the New Hebrides and New Caledonia. Each enterprise involved the temporary entry on two-year permits of thirty to forty technicians and the granting of 12-monthly visas to 200 fishermen. The Government expressed itself as firmly opposed to the entry of Japanese to these territories and representations to this effect were made to the United Kingdom and French authorities.
22. Though the United Kingdom authorities have taken action to see that enterprise was not proceeded with, the attitude of the French is still uncertain.
The advisability of pressing this question further is a matter for a careful consideration in the context of our overall policy towards Japan.
The Entry of Japanese into Australia 23. The entry of Japanese into Australia is still on a very restricted basis drawn up before the Peace Treaty. Each applicant for entry has to be approved by the Commercial Counsellor of the Australian Embassy and a strict limit is imposed.
24. Recommendations that the entry of Japanese should be placed on the same basis as that of other Asians have been made to the Department of Immigration , and it is understood that a submission to this effect has been submitted to the Minister for Immigration as part of a general review of the immigration policy.
25. The relaxation of the conditions of entry suggested above would open the way for cultural and other exchanges, which would contribute to the improvement of relations between countries.
Civil Aviation Agreement 26. Under the terms of Article 13 of the Peace Treaty, Japan 'will enter into negotiations with any of the Allied Powers, promptly upon the request of such Power or Powers, for the conclusion of bilateral or multilateral agreements relating to international civil ai[r] transport'.
Under the treaty Japan was required to accord to Powers desiring to operate air services equality of opportunity in respect of the operation and development of air services for a period of four years from the coming into force of the Treaty. Any continuation of service after that time (April 1956) would be subject to negotiation between Japan and the power concerned.
An official of the Japanese Ministry of Foreign Affairs (Hori) is leaving Japan on 19th August to bring to Australia a Japanese draft of the proposed agreement between Japan and Australia.
27. It is a matter for consideration whether the Western nations in implementing policies designed to keep Japan viable economically should not also continue to extend aid to her in becoming a democratic nation. The reforms of the occupation are not strongly based and timely reminders of the desirability of seeing that any increase in wealth achieved in co-operation with the West should be evenly distributed would not go amiss. The tendency for wealth to be concentrated in a very few hands is as deeply entrenched in Japan as in many other parts of Asia. In such circumstances it is not unusual for the poverty of the masses to be attributed entirely to external causes. This could lead to a repetition of the policies of the thirties and forties. If we help the Japanese we are entitled to see that the help is directed into the right channels and that Japanese democracy becomes more and more broadly based both economically and politically.
[AA : A10299/2, J3 JAPAN-AUSTRALIAN POLICY]