167 Australia-Japan Trade Negotiations: Second Meeting Of The Import Committee

6th November, 1956

CANBERRA

MR UYAMA indicated that he wished some clarification on the amendment to the Customs Tariff (Industries Preservation) Act. [2] He asked what procedure the Minister would follow in determining whether goods are causing or threatening serious injury.

MR ROBERTSON explained that action would be dependent on a sound complaint being received. If we were satisfied that the case was reasonable then in normal cases we would consult with the Japanese, and the action finally taken would depend on the results of the consultation. Only in rare circumstances, where delay might cause irreparable damage would we act immediately.

In considering whether action was necessary we would take account of the national interest, international obligations and commercial policies. We would expect a greater flow of imports from Japan as a result of any agreement giving m.f.n. and non-dollar licensing and this increase must be at the expense of other countries under present conditions of import licensing.

The legislation is intended to provide an emergency power and we would avoid its use as far as possible.

In answer to a question from Mr Uyama, Mr Robertson indicated that what constituted irreparable damage would depend on the individual case. To suggest figures might prove misleading and might unduly restrict Japan. We did not think it was reasonable for Australia to attempt to impose specific export quotas on Japan.

MR UYAMA expressed their appreciation at the absence of any suggestion for export quotas. This removed a difficulty which Japan had been anticipating.

The Japanese Government cannot establish export quotas, all it can do is persuade Export Associations to exercise caution. However, it is necessary to put a plausible case before the Association and if possible, some specific criteria which exporters could use as a yardstick. It would be appreciated if some indication of what would be regarded as safe levels of imports from Japan could be given when individual sensitive items were being examined.

MR ROBERTSON gave some hypothetical examples of instances when the legislation might be used.

MR UYAMA asked whether action under the legislation would be limited to the goods concerned or whether action would be taken against all goods from the country concerned.

MR ROBERTSON explained that action would be limited. Under the Act the goods must be described.

MR UYAMA enquired whether action would be taken against only the one country or against all suppliers.

MR ROBERTSON indicated that the Act gives power to take action against goods from any country or group of countries.

MR UYAMA pointed out that Article XIX of G.A.T.T. required action to be taken uniformly.

MR ROBERTSON explained that it was necessary to be in a position to cover all contingencies. The actual operation of the Act against Japan would be subject to any understanding between the two countries. He instanced the Japan-Canada Agreement and the understanding between those two countries that the Agreement was consistent with G.A.T.T.

MR UYAMA asked whether the Australian legislation was in the same context as the Canadian emergency powers.

MR ROBERTSON said that we had certainly examined the Canadian position. It was not intended that the Australian legislation should operate solely against Japan.

MR KAWANAMI pointed out that the Canadian Legislation was pre- existing legislation as far as G.A.T.T. was concerned. Australia's relations with G.A.T.T. contracting parties must be governed by the non-discriminatory aspects of the legislation. The legislation as a whole would appear to be contrary to G.A.T.T.

MR ROBERTSON said that there was probably little doubt that the legislation is in some respects contrary to G.A.T.T. We could in most cases get around this but by and large we would rest on the understanding reached between the two countries.

MR UYAMA admitted that as G.A.T.T. did not yet apply between Australia and Japan the above questions were somewhat theoretical but were the sort of questions that the Japanese Government would be asked.

He next enquired whether country of origin would be the sole criterion for applying emergency duties. The Japanese Government could hardly take action against goods destined on paper for Hong Kong or Singapore but subsequently exported to Australia. In the case of trans-shipment through Canada to U.S.A. it had proved possible to take action but it would be much more difficult in the case of goods going through Hong Kong or Singapore. He suggested that in these cases the Hong Kong or Singapore Governments might help.

MR ROBERTSON confirmed that country of origin was the criterion to be used. It seemed unlikely that the Singapore or Hong Kong Governments would be able or prepared to take conclusive action.

MR UYAMA asked what were the Australian commitments to protect export industries of preference partners.

MR ROBERTSON pointed out that one commitment existed under Article XIX (1)(b) of G.A.T.T.

MR KAWANAMI mentioned that the G.A.T.T. says action may be taken 'on request' but he understood that Australia did not intend to take action automatically. He enquired whether Australia had any commitment with any individual country in this regard.

MR ROBERTSON confirmed that action would depend on the circumstances of the individual case. Australia has no written contractual commitment with any country but preference agreements have always been interpreted that if a preference is threatened we will listen carefully to any case raised by the preference partner concerned.

MR UYAMA asked whether we had any other agreements beside G.A.T.T.

which would constitute international commitments which would qualify application of the legislation.

MR ROBERTSON pointed out that any arrangement with Japan would be an example of such commitments. Other agreements would also be taken into account, e.g. Australia-Canada Agreement.

MR UYAMA asked whether special duties were the only emergency steps contemplated.

MR ROBERTSON pointed out that we could resort to Q.R.'s [3] but would prefer the special duty which also had the advantage of being applicable to individual consignments. This latter point would have value in relation to the entrepot trade problem.

MR UYAMA pointed out that duty would be put on after the consignment had arrived. He enquired whether there was any machinery to prevent this.

MR ROBERTSON acknowledged that this could happen but said that we would then be on guard. We could arrange for the Department of Customs to advise us immediately of any unusually large imports of sensitive items.

MR UYAMA asked how the Minister would determine reasonable duty paid cost.

MR ROBERTSON said that factors taken into account would include:

(i) are the goods very cheap;

(ii) are they likely to cause serious damage;

(iii)what are prices of similar goods from other countries.

Unless Japan were the lowest price supplier, it is unlikely we would take any action. The landed cost of goods from third countries which were significant suppliers would be a very important factor.

MR UYAMA suggested there would be room for arbitrary assessment.

MR ROBERTSON assured him that the provision would not be used in an unreasonable way.

MR UYAMA pointed out that the legislation could enable Japanese exporters to ask artificially high prices.

MR ROBERTSON pointed out that it must be remembered that the question of relative costs only came into prominence if there were serious disruptive effects. Australia was faced with reconciling the need to protect her industry with the need to import at lowest cost.

MR UYAMA mentioned the improved labour conditions [in] Japan and the higher labour cost of Japanese goods compared with pre-war.

He asked how factors affecting costs overseas would be determined.

MR ROBERTSON referred to current practices in regard to anti- dumping duties.

MR UYAMA asked how comparative costs could be determined for an export industry peculiar to Japan.

MR ROBERTSON said that we would have to rely on such information as was made available to us.

MR UYAMA pointed out that it could be embarrassing to the Japanese Government if emergency action was taken without consultation.

MR PHILLIPS said that even in cases of urgency we would let the Embassy know our intentions but may not be in a position to await full consultation.

MR UYAMA requested clarification on the machinery for consultation.

MR PHILLIPS explained that no details had yet been worked out.

Probably consultation would be mainly with the Embassy in Canberra with the T.C. [4] in Tokyo handling that end. The nature of the machinery could be worked out as the need became clearer.

Meeting closed at 12 noon.

1 Attendance was the same as at the first meeting (see note 1 to Document 164), except that Westerman was not present. This record is marked 'For use of Australian Delegation only'.

2 See Document 153.

3 Quota restrictions.

4 Trade Commissioner.

[AA : A1838/283, 759/1/7, iv]