Informal Trade Talks with Japan Attached please find a paper which indicates in general terms the objectives which we would seek in the talks with Japan, both in regard to principles which would apply in respect of our export trade and to specific questions on individual commodities which we would seek to obtain from the Japanese.
Following our talks the other day  I see our approach to the Japanese as being along the following lines:
(1) We, on our part, to outline to the Japanese the kind of problems we see facing our exports to Japan in respect of both general principles and also in respect of particular treatment of specific commodities. We would speak in as general terms as possible and seek, in the first stage especially, to direct a series of questions at the Japanese in the course of the talks rather than clearly commit ourselves to any requests. For instance, in the case of wheat, there are a great many aspects of the actual operation of the Japanese Government Import Agency which cut across normal tariff or licensing arrangements and in themselves are probably much more important than such issues. For instance, what decides whether the Japanese require one type of wheat or another type of wheat, what dictates the timing of purchases, and whether the Japanese customer has any election in country of origin of wheat imports and whether normal commercial considerations apply.
We think we know the answer to most of these questions but we would want to get Japanese reaction to them.
In harmony with the above general and informational type of approach to the Japanese, we would expect to canvass through a whole range of our commodity interests and in support of this we have virtually completed our statistical and other preparatory work.
(2) We would understand-although this is entirely a matter of your concern-that the Japanese would approach us in very much the same way as we have indicated above we have planned to approach them.
In other words, we would rather dissuade the Japanese from putting to us any log of requests, but would steer them into expanding their difficulties as they see them in our market and being given an understanding of the kind of factors which present themselves as difficulties in our trade policy relating to imports from Japan.
If my understanding of the above is correct, then for our part we are ready for the Japanese to be notified that we are prepared to commence informal talks with them. I think that in order to preserve the informality of the talks, it might be as well for your officers to be present when the export aspects of the talks are going forward. I suggest this part of the talks be held in this Department.
Similarly, I think that our officers could come across to your Department and be present when import aspects are being discussed.
This procedure would avoid the formality of in any way regarding the Australian officials as a delegation or of having papers and minutes, etc. used as they would need to be in the case of more formal talks.
If the above is satisfactory to you, I would suggest that while, from our point of view it might be desirable to have the Japanese talk first about our import policy, it is probably unavoidable that we, as initiating the talks, would have to lead off with the export side of the talks.
If you could confirm with me then I would suggest that you and I jointly suggest that the Japanese Ambassador see us and at that time we could then explain the location and method which we envisage above and get the talks going.
I believe that there is some importance in our being amongst the first to initiate talks with the Japanese and also being able to say at G.A.T.T. that we are, in fact, both willing and currently undertaking talks with the Japanese, and I wonder if you could give me a call when you have a chance to look at this.
13 October 1955
TRADE WITH JAPAN
(a) In terms of general principles We would need to be assured of some fair and reasonable opportunity of entry into the Japanese market. This would involve our receiving most-favoured-nation treatment on the tariff and non-discriminatory treatment in relation to import licensing.
However, if our objection either in relation to the tariff or import licensing treatment cannot be parallelled by what we could offer the Japanese we should have to limit our request in the same way as our offer is limited, that is, if we can give Japan most- favoured-nation treatment on the tariff only in respect of 90% of her trade to Australia, we will need to sort out the items on which we seek most-favoured-nation treatment and limit them to something the same proportion of our exports to Japan.
From the point of view of the requests, we have to make on Japan, it would be preferable for most-favoured-nation treatment on the tariff to be limited rather than non-discriminatory treatment on import licensing.
On import licensing we would need either- (a) to make our requests on Japan subject to her having adequate sterling resources or (b) limit the terms of any agreement or understanding to a short period in which each country might feel able to give a guarantee of unconditional nondiscriminatory treatment.
(b) Specific objectives within the above principles
While we should be satisfied from our point of view to receive non-discriminatory treatment in import licensing, in view of the degree to which Japan's trading position vis-a-vis other countries and also other factors influence the direction of her trade we should need to seek specific commitments in relation to particular products.
(1) WHEAT, BARLEY AND DRIED MILK The Canadians in their agreement with Japan obtained a guarantee of unconditional non- discriminatory treatment except where otherwise agreed upon between the two Governments in relation to three products which are also of interest to Australia-wheat, barley and dried milk.
However, we understand that in order to protect the Canadian position on the market against American disposals of surpluses, the Canadians have a secret understanding with the Japanese that they will enjoy annual quotas of 550,000 tons of wheat and 300,000 tons of barley. If the Japanese have given some quota commitment to the Canadians on wheat, there are obviously some qualifications to nondiscriminatory treatment for Australia. Under these circumstances we should need to have some assurance of exactly what non-discriminatory treatment in this respect means and from our point of view the only way in which we can get a precise interpretation would be to receive a quota. The same considerations would apply in our seeking a quota on barley and possibly on milk powder.
(2) WOOL The Japanese, we understand, are now under some pressure to increase purchases of wool from Argentina which again means that we need to explore rather thoroughly with the Japanese exactly what treatment we will receive on wool if we get non- discriminatory treatment. It may be that we will finally be prepared to accept an assurance of non-discriminatory treatment but at least in the initial stages we would need to see what offers the Japanese would be prepared to make on maintaining our present share of the trade.
(3) SUGAR Mr Wolfensberger  advises that CSR  are interested in securing a market in Japan for sugar and that they will give us advice on what quota they would like to sell to Japan. They have been advised that we are looking at the question in terms of a quota in order to give some precision to our request but that we cannot hold out any hope that we will secure a quota.
(4) MISCELLANEOUS COMMODITIES Other items in which we would be interested in exploring what non-discriminatory treatment would mean in Japan are cattle and horse hides, meat, oats, butter and cheese and other foreign foodstuffs, horns and hoofs, casein, tallow, welding rods, asbestos. In the case of some of these items which were under the automatic approval system, some discrimination has applied against Australia and other sterling area countries in that the Japanese importer has had to make a deposit with his licence application, part of which is forfeited if he does not go through with the transaction. In the case of the sterling area, the deposit was 25% and as low as 3% on other countries. We are informed today that the Japanese Press has announced that in the half-yearly budget for October/March 1956, the deposit required of 25% had been reduced to 3% which would remove some of the discrimination against the sterling area.