160 Australia-Japan Trade Negotiations: The Initial Statement Of The Leader Of The Japanese Trade Delegation

1st November, 1956

CANBERRA

First of all, on behalf of the Japanese Trade Delegation, I have to thank you for your hospitality. When I landed at the Fairbairn Airport last Saturday, I found the air was much chillier than I expected. On the following morning, it became warmer towards noon, and I enjoyed my first game of golf that afternoon. Now, your hospitality is warming us up. We are grateful for this kind reception you are extending to us.

I am very glad indeed to meet you and other members of the Australian Trade Delegation and to have the opportunity of discussing the ways and means for developing trade between our two countries to our mutual satisfaction.

1. It is the established policy of the Japanese Government to have our trade relations with other countries developed on the basis of equality and nondiscrimination as set forth in the General Agreement on Tariffs and Trade. Therefore, it was a great disappointment to us that on the occasion of Japan's accession to the G.A.T.T. in September last year, certain countries including Australia chose to invoke Article 35 of the said agreement and did not enter into the G.A.T.T. relationship with Japan. Japan has since been engaged in successive negotiations with those countries in an effort to induce them to revise their trade policy towards our country. Needless to say, our final objective in starting the present trade talks with the Australian Delegation is to enter into the G.A.T.T. relationship with Australia, since only thus would it be possible to rectify the chronic imbalance of trade between Japan and Australia in the normal course and to place the commercial relations between the two countries on a lasting and stable basis.

Should there exist any difficulty on the part of the Australian Government in proceeding to the immediate application of the G.A.T.T. provisions to Japan, we would like to explore the possibility of overcoming the difficulty in the course of the present talks.

2. We deem it absolutely necessary that Japan's heavy deficit in the trade with Australia should be corrected by increased exports from Japan to Australia. We believe that, in order to rectify the present imbalance, opportunity should be given to Australian importers interested in the import of Japanese goods in the same manner as has been given to the importers from other countries.

More specifically, we would like to request that discriminatory treatment imposed on the licensing of imports from Japan be removed and the most-favoured-nation treatment with regard to tariff matters be accorded to imports from Japan.

3. Now, in order to justify our request, we wish to invite your attention to the recent trend of trade between our two countries.

In spite of the discrimination against Japan in Australia, our purchase of Australian goods has been maintained at a highest level, resulting in Japan's chronic heavy deficit. According to the statistics of the Bank of Japan, our exports were A4 million, A12.9 million and A26.8 million in 1953, 1954 and 1955 respectively, while imports from Australia were A78.1 million, A40.9 million and A62.6 million resulting in Japan's deficit of A74.1 million, A28 million and A35.8 million in the corresponding periods. As from November 1954, Japan was listed in the non-dollar countries in respect of import licensing in Australia with the exception of Reserved List items, and our exports to Australia increased to a certain extent in 1955.

However, our exports have considerably decreased since the last months of that year, due to the intensified import restrictions after April 1955. On the other hand, Japan's imports from Australia have been kept at a very high level. Our imports during the first nine months of this year amounted to A62.3 million against our exports of A13 million, resulting in our deficit of A49.3 million, which is projected to the vast annual rate of A65.7 million. This deficit is no doubt the main reason for the recent deterioration of Japan's sterling holdings. If such trend of trade continues unchanged between the two countries, we are afraid that we shall be compelled to reduce our imports from Australia. I have to add that this sort of opinion has recently gained strength in Japan.

4. Since our ideal is to expand our trade with foreign countries on a well-balanced basis, we wish to avoid such an undesirable situation by all means. It is for this reason that, in the Anglo- Japanese trade talks now going on in London, our delegation is requesting the United Kingdom delegation to accord more opportunities for Japan's export to the sterling area as a whole.

In this connection, our particular attention is bound to be drawn to Australia since our trade deficit against her is the heaviest and yet our exports are much handicapped by the discriminations in import quotas and tariffs. Much as we hope that the Australian Government will soon find the way to relax the severe import restrictions now in force, we think Japan must be given, in the first place, the equal opportunity as compared with other countries, in order to earn a fair share of whatever amount of imports Australia is going to make from non-dollar sources. Here we are only asking for non-discriminatory treatment, but not for any special favour of your government. I think this is not an unreasonable thing to ask, in view of the fact that Japan is one of the best customers of Australia.

We have heard often of the fear felt in Australia as to the so- called 'flooding' of the Australian market by Japanese goods once the gate is opened. We assume, however, that so long as the present import quota system remains in force, there cannot be any flooding by goods from any country to such an extent as to jeopardize Australian industries, even after discriminations have been removed. Therefore, what we wish to propose to the Australian Government at the opening of the present talks is this-Please give a fair and equal opportunity to Japan and see what will happen, in a spirit of mutual trust and confidence. We are quite sure that the situation of which you are, afraid will never become true.

We understand that the Australian Government has introduced to the Parliament on 24th October, an amendment to the Customs Tariff (Industries Preservation) Act, 1921-36. Since this proposed legislation will have important bearings on the imports from Japan, we are much concerned about its interpretation and modus operandi. We shall appreciate if the Australian Delegation could give us authentic explanation on it in the early part of our talks.

5. Prior to the opening of the present talks, the preliminary exchange of views was made between the two Governments, producing some useful results. We believe, therefore, that our basic position has already been known to the Australian Government and we are sure that favourable considerations are being given to it.

We, on our part, have carefully studied the points raised by your side and we shall be able to clarify our position thereto in the course of the present talks. It must be pointed out, however, that the Japanese Government has not taken discriminatory measures against imports from Australia in respect of licensing and tariffs, and has maintained the purchase of Australian goods at a very high level. Indeed, we have been treating Australian goods not at all badly and I am sure that you all know it. We believe that it is high time that some steps are taken by the Australian side to place our trade on a fair, equal and stable basis. Removal of discriminations is all the more urgently desired in the light of our heavy and increasing trade deficit against your country. On the other hand, it is needless to say that we shall give serious consideration to any requests to be presented by you, in addition to those already known to us, with the only proviso that it will be rather difficult for us to consider at this stage some of your requests which call for better treatment than those usually regarded as the most-favoured-nation and non-discriminatory treatments. Generally speaking, we shall be ready to enter into discussions about such matters after Japanese goods are placed on an equal footing with goods from other countries in respect of import licensing and tariff matters.

6. In conclusion, I would like to assure you, Dr Westerman, that my Delegation would do its best in trying to work out a trade arrangement which will serve useful purposes in developing and maintaining our trade relationship to the best interests of our two countries.

[AA : A1209/23, 57/5474]