Accession of Japan to GATT 1. General argument is that Japan must live i.e. must be allowed access to markets and raw materials. On political grounds it is most desirable that she should develop her trade with the Western countries and with South and South East Asia rather than be forced towards China and the Soviet bloc. Her accession to GATT would serve this end-it would confer benefits on her but would also impose responsibilities.
2. Our particular interest is to maintain best possible trading relations with Japan in the interests of our exports.
Note attached to minute dated 3rd February airmailed to you yesterday gives details of export interest. Main interest is wool but grains not unimportant. Japan is increasing in importance as a customer for wool-fourth best customer 1951/52, and will be second or third best customer current season. Her bidding (which largely is competitive with Bradford) strengthens the market generally.
3. We should therefore try to avoid appearance of giving Japan any sharp rebuffs. So long as we are in GATT this means not getting out on a limb in our treatment of Japanese trade compared with other countries in GATT. At the same time we must preserve sufficient freedom of action to protect fully our domestic industries and if we think it necessary UK's market in Australia.
4. We can look after our domestic industries and UK exports to Australia by invoking Article XXXV of GATT which would mean GATT would not apply at all between Australia and Japan. But if most other countries in GATT do not do that, we may possibly find when the time comes that for Australia to invoke Article XXXV would be equivalent to giving Japan a slap in the eye. If no other course were open, that position might have to be accepted. There would, however be the risk of hostile reactions from Japanese Government, perhaps expressed in an anti-wool policy (Japan could switch her wool machinery to using synthetic fibres like dacron without any technical difficulties).
5. However, UK has made a proposal which is in the direction of allowing Japan to accede while reserving some freedom to take protective action against Japanese goods (e.g. quotas or special tariff notes) without applying the same action to imports from other countries i.e. to discriminate against Japan on a product- by-product basis.
6. This Department feels the best course is actively to seek to amend the UK proposal so that it would give more freedom to the Australian Government to act against Japanese goods, at the same time making it abundantly clear that the Government reserved full freedom to invoke Article XXXV when Japan accedes to GATT.
7. Object of present Geneva meeting  is to frame proposals likely to be acceptable to all or most of contracting parties.
Proposal would then be circulated for consideration by Governments and discussion at a next session of GATT.
8. I would prefer to see our representative now in Geneva instructed to take more active part in drafting of proposal, seeking changes to meet Cabinet's views without prejudicing Government's position. However, on assumption present meeting will produce some sort of proposal for special treatment of Japan, our position would be met if our man at the meeting were authorised to say something like this: 'the Australian Government will consider the proposal carefully, but might find it necessary at a later date to propose amendments to it as an alternative to invoking Article XXXV'. 
9. Position is complicated by US opposition to principle of UK proposal. US would be more opposed still to changes in UK proposal of the sort likely to meet with approval by Australian Ministers.
However, upshot cannot be predicted, because there could be a good deal of negotiating before final position was arrived at, and I do not consider we should be deterred at this stage by US opposition from pursuing the line we think best.
10. Suggest if suitable opportunity occurs, matter might be mentioned in Cabinet or in discussion with PM, Sen[ator] O'Sullivan and Mr Casey (Mr Casey will no doubt support policy of seeking compromise solution). However, as there are a number of issues on both sides, do not suggest any decision be taken this week, but perhaps matter could be looked at next week when all the views, particularly views of Department of Trade and Customs (who tend to take an opposite view to ours) could be weighed.