128 Letter From Tange [1] To Watt

10th April, 1956

PERSONAL AND SECRET

In my letter of 4th April [2], forwarding some papers on Japan, I touched on certain major developments in Japan and how they appear to us in Canberra. It has occurred to me that a few notes on the attitudes in Australia to certain current issues in our relations with Japan may provide a useful supplement to this earlier letter.

Public opinion here on Japan generally is less vocal and excitable now than it was two years ago. The more sensational of the local newspapers have adopted a more moderate line in their handling of news items concerning Japan. The following extract of a recent leading article which appeared in the Sunday Telegraph provides a fair sample of recent Australian editorial opinion:

'In the last ten years there have been encouraging reports of a Japanese change of heart and general outlook. Australians who took part in the last war will try to sink their scepticism, and hope that the new relationship with Japan can be founded on a realistic decency and not on an assumption that might is right.

Today's realities of global co-existence make it inevitable that former enemies make their peace. We are at peace with Japan-let's hope we can become friends.' Various visits of Japanese to Australia over the past twelve months-e.g. of the Japanese training ship Taisei Maru, and of the two Cabinet Ministers, Kawasaki and Miki-evoked little comment in the press and passed off completely without incident.

It would be going too far to say that anti-Japanese feeling in Australia has evaporated. We must see that we do not get too far ahead of public opinion in our official dealings with Japan.

The RSL is, naturally enough, a factor to be reckoned with in our efforts to promote closer relations with Japan. In August 1955, the NSW State Congress of the RSL passed a resolution expressing 'the strongest possible opposition' to a 'soft' policy towards Japan. However, the Federal President, Sir George Holland, personally takes a more moderate attitude.

The major current issue in our relations with Japan is the pearl fisheries dispute. There are, as you know, two distinct problems to this issue-the Special Agreement for referring the dispute to the International Court, and the Provisional Regime Agreement which governs Japanese pearling operations pending a decision by the Court.

We have not got very far on the first of these problems-the Special Agreement. The Japanese produced their first draft in February 1954, we replied with our own draft in February 1955, the Japanese came back with a revised draft in August 1955, and Bailey [3] is still preparing his reply to this last Japanese draft.

Bailey has moved very slowly indeed on this matter and we have had no success in our efforts to hasten him along. I suspect that he is following a deliberate policy of delay on this matter. He can claim however that he has been kept busy with other matters, and that a good part of the delay has arisen in London with various international law experts whose views he feels he should have.

Recently Bailey has been considering whether it might perhaps be advisable, given the difficulty at reaching agreement with the Japanese on the terms of reference to the International Court, to let the Japanese take us to Court without a Special Agreement. He feels that if the Court's decision should go against us there would be less local criticism of the Government if it had been brought before the Court by the Japanese acting unilaterally, than if it had entered into an agreement with Japan for submission of the case to the Court. There may be something to this view but I am inclined to doubt whether public opinion will attach very much importance to the method of procedure by which the case is submitted to the Court. If Australia loses the case, the Government will be subjected to criticism, come what may.

Whilst the Special Agreement is exclusively in the hands of the Solicitor-General, the Provisional Regime is handled by five Departments. In addition to ourselves, there are the Departments of Primary Industry (which now administers the Pearl Fisheries Act), Trade (which contains the officers formerly of Commerce and Agriculture who have handled pearl fisheries questions since the beginning-Dr Westerman and Warwick-Smith), Territories, and the Attorney-General's Department. This multiplicity of interested Departments tends to bog down questions arising under the Provisional Regime Agreement and makes it difficult to give the Japanese a quick answer to their various requests. Attorney- General's and ourselves take the identical view that arrangements for the Japanese must be reasonable and based only on genuine conservation requirements. Attorney-General's view stems mainly from the desire to do nothing under the Provisional Regime which may prejudice our case when the fisheries dispute comes before the Court. We base our own view on general policy towards Japan and the possible effect on future negotiations with Japan, as well as the pending Court case. Trade and Primary Industry generally support our views on this question.

The Minister for Primary Industry, Mr McMahon, has shown himself more than ready to hear the External Affairs point of view, and I have had a couple of long conferences with him in which I (together with Bailey) warned him that decisions which enable the Japanese to show that we have been unreasonable and denied them access to pearl shell over and above the true requirements of conservation will work against us when the question eventually goes to the Court. Bailey warned him that, if the Court ruled against Australia, it may well quote in extenso the Australian Government's decisions which caused the Court to rule against Australia; and that this is a prospect of domestic political significance of no less long-term moment to the Government than some of its immediate worries about letting the Japanese into Western Australian and Queensland waters on the eve of elections in those States.

Please keep strictly to yourself this reference to the local political situation. I think Suzuki has deduced from remarks made by McMahon that pending State elections are causing difficulties for the Commonwealth in providing certain fishing areas. But we have never told them formally and I do not think that the Government would want any such attitude to appear on record, even if they thought that frankness with the Japanese would convince the Japanese that they ought to be patient and not press for something which would be politically embarrassing. As to this last point, I have been offering the opinion that the Japanese would be unlikely to be tolerant of domestic political difficulties if we did lean on that argument. I see no reason why the Japanese should not take a hard line in the belief that, if Australia gave them what they wanted, they would be so much better off and, if Australia refused to give them reasonable access, their long-term case before the Court would be so much strengthened.

Territories Department has consistently adhered to an unreasonably narrow attitude on the Provisional Regime, dictated it would seem solely by their desire to keep to a minimum the Japanese pearl shell catch from Northern Territory waters. They remain completely unmoved by the argument that unreasonableness at this stage may mean in the long run, through loss by Australia of the Court case, that Australia will have no future control over Japanese pearling activities. For example, this year Territories at the outset of discussions said that the total permissible catch for the Japanese in the Northern Territory Division would be 250 tons. The Commonwealth Fisheries Division figure for the Northern Territory was 850 tons. After considerable discussion this figure was reduced to some 700 tons in an effort to meet Territories' views.

Territories however are sticking to their original figure of 250 tons, without giving any convincing reasons in support of this figure, which we all know to be quite arbitrary.

I see little hope of bringing Territories around to our point of view on this matter. They will continue to exercise a delaying effect on all decisions and the most we can hope is that with the support of Primary Industry, Trade and Attorney-General's, we shall be able to surmount Territories' objections and give the Japanese something approaching a fair deal.

Another issue of some significance in our relations with Japan is the war criminal question. Whilst France, the Philippines, and Nationalist China have released all Japanese minor war criminals sentenced by their Courts, we still hold 120, the United States 130, the Netherlands 88 and the United Kingdom 15 in Sugamo Prison. The United Kingdom and Netherlands will probably release all their prisoners by the end of this year and it seems likely that the United States will also this year rid itself of the bulk of its prisoners. We have moved very carefully on the war criminal question. As you can appreciate it is a potentially explosive question in Australia. We commenced releasing minor criminals on parole last September, and so far have released over 30. The press has taken little or no notice of their release and we feel that the rate of release should be accelerated. However, it seems certain that short of granting amnesty, which I think would be quite unacceptable to public opinion here, we shall shortly be forced into the position of being the only former Allied Power still holding Japanese war criminals in Japan. This is unfortunate but will have to be faced. The difficulty is that Australia was sentencing Japanese war criminals as late as 1951. Some life prisoners therefore have only served five years of their sentence and will not be eligible for release, even under the present generous provisions, until 1961.

These war criminals are held under the War Crimes Act which is administered by the Department of Army. Army has not proved too difficult on this question, but generally favours a more cautious approach than ourselves. We have had to prod them along a little on occasions but have in the long run received their agreement to whatever we have sought. At the moment we are clearing with Army a submission to Cabinet recommending a speed up in the rate of release of these war criminals and the release on parole and repatriation of some 42 Korean and Formosan War criminals held in Sugamo. If the submission is approved we should be able to reduce the number of prisoners held by Australia to 20 or 30 by the end of this year. This should go a long way towards meeting Japanese demands that something be done on this matter, although this question will still remain an irritant in our relations.

The remaining question of importance which I would like to mention is that of trade with Japan. There have been informal trade talks with Japan as a preliminary to more formal discussions and the records of these informal talks are in the Embassy. Although the results of the informal talks have not yet been considered by Ministers, the Department of Trade believes that there exists a basis for a useful arrangement with Japan under which we might relax our import licensing restrictions on a number of Japanese goods and our customs duties on a number of items in return for some commitments by the Japanese on grain and wool of the kind they have given to Canada.

In two respects we exercise discrimination in our trade relations with Japan. These are firstly our tariff treatment of Japan (i.e.

duties imposed on imports) and secondly our import licensing treatment.

Australia has what is called a three column tariff in ascending order of magnitude. The first column gives the British preferential tariff rate. The second column gives the 'most- favoured-nation' (m.f.n.) rate, and the third column, which applies to Japan, gives the 'general tariff rate'. There are very few countries trading with Australia which do not have the benefit either of the British preferential or the most-favoured-nation rates. Japan is certainly the only major trading country to which the general tariff rate applies.

A few months ago, Cabinet considered the possibility of extending m.f.n. tariff treatment to Japan when the question of Japanese accession to the General Agreement on Tariffs and Trade (G.A.T.T.) was under consideration. It was decided that because of the uncertainties regarding the strength of Japanese trading competition and the possible effects of such competition on Australian industry and employment, Australia could not at this stage agree to give Japan m.f.n. tariff treatment. A secondary, but in the domestic political scene quite important, consideration was the possible effect on British markets in Australia of sharpened Japanese competition in such commodities as cotton textiles.

The volume of our imports is controlled by our import licensing system. We have separate quotas for dollar and non-dollar imports.

However, the treatment accorded Japan is less advantageous than that accorded to other non-dollar countries. Generally speaking, an import licence does not specify the country from which the goods must be imported, beyond distinguishing between dollar and non-dollar sources. That means that the holder of an import licence may select his own source of supply. However, freedom to import from Japan is limited. A list of 36 items has been compiled (comprising Japan's major items of export to Australia) and an importer cannot import from Japan more of any commodity on that list than 16 and two-thirds per cent of the amount (by value) ...

imported from all non-dollar countries during the year ended 30th June, 1954. The restriction on import licences from Japan was fixed by the government partly to test the strength of Japanese trading competition, and partly to protect British (not Australian) industries from competition.

It is one of the requirements of the General Agreement on Tariffs and Trade that Contracting Parties must accord each other most- favoured-nation tariff treatment. (Imperial preferences are specifically protected). But one article in the Agreement (Article XXXV) provides that the Agreement shall not apply as between one contracting party and another if 'either of the contracting parties, at the time either becomes a contracting party' does not consent to such application. When Japan's accession to the G.A.T.T. was under consideration we decided not to vote against Japan's admission so as to avoid putting obstacles in the way of countries which wanted to regulate their trade with Japan under the G.A.T.T., but decided to invoke Article XXXV because we would not otherwise have been able to maintain the existing level of tariff protection against imports from Japan except by raising the m.f.n. tariff rate. Japan's admission to the G.A.T.T. was unanimous, but fourteen countries, including Australia, New Zealand, United Kingdom, France, India and South Africa invoked Article XXXV. Although the United Kingdom invoked Article XXXV, she does give Japan m.f.n. tariff treatment. The U.S.A. and Canada did not invoke Article XXXV.

The question of the conditions under which Japanese businessmen can enter and stay in Australia was covered in a note attached to my letter of 4th April. The point which gives me some concern is whether the Japanese will be content to be told that they have conditions no more onerous than those apply to other Asians. It seems to be the aim of the Department of Immigration to equate the treatment given to Japanese with that given to other Asians, particularly Chinese. This is commendable in itself but it is not quite the entire point. The Japanese may well ask to be treated no less favourably than any other alien, for example French or American. On this we have not been able to clarify the thinking of the Department or Minister of Immigration.

I hope that these general remarks will be of some help to you in interpreting the Australian attitude on the current issues now confronting Australia and Japan.

[Handwritten]

Needless to say, they are personal and for your guidance: and not for formal quotation back.

1 The letter was drafted in part by Shaw. Tange, in noting his thanks, wrote: 'This is what I wanted.

2 Document 127.

3 Professor K.H. Bailey, Solicitor-General.

[AA : A1838/278, 3103/10/1, iv]