190 Minute From Munro To Casey

13th February, 1957

CANBERRA

Australian-Japan Trade Negotiations The major problem which has been delaying the progress of the negotiations is the Australian request that Japan should purchase 400,000 tons annually of Australian wheat. Japan has, until now, been obtaining her soft wheat requirements from the United States under a P.L.480 deal but no P.L.480 deal will be made this year and the way is now clear for a resumption of the talks. The Japanese have suggested that 400,000 tons is too high a figure and have said that Australia appears to be offering most-favoured- nation treatment in return for concessions on wheat. They have been told that this is not the case and that Australia is genuinely seeking the mutual accord of most-favoured-nation treatment.

2. The stage reached before the adjournment of the discussions in December was as follows:

3. In formal discussions the Japanese were given details of the Australian requests on individual commodities, the goods considered to be particularly sensitive to Japanese competition, the way the new anti-dumping legislation will operate, and the steps Australia expects the Japanese Government to take to prevent disruption of Australian industries and the material which could be made available to facilitate their task. The Japanese indicated the problems they would encounter in meeting individual requests and in enforcing control on Japanese goods exported to Australia.

4. In informal discussions the Leader of the Japanese delegation indicated that, in his view, Japan would be able to grant licences freely for imports of Australian tallow and hides, the sterling area allocation for dried vine fruit could be defined to cover Australia, licences could not be freely granted for wool but Japan might give an assurance that apart from 10% set aside for bilateral transactions all her wool imports would be made under global quota, Japan was unlikely to permit Australian raw sugar to enter at the same rate of duty as raw sugar of a slightly lower degree of purity, and the position on wheat, barley and milk powder was complicated by the Canadian/Japanese agreement under which Japan is bound not to give any country special treatment on these commodities.

5. The Japanese delegation undertook to examine the position on films and confectionery, for which licences for imports from Australia are not available.

6. At the request of the Queensland Butter Marketing Board, the possibility was mentioned of establishing a recombined milk plant in Japan. The Board is anxious to supply plant and subsequently raw materials for the reconstituted milk.

7. Working drafts on particular points which might be covered in an agreement were prepared and discussed with the Japanese on the understanding that the drafts had no official status.

8. It is not anticipated that the Japanese delegation will return to Australia. The negotiations, when resumed, will probably be carried on through the Embassy staff in Canberra. It is now up to the Japanese to renew negotiations after they have considered the Australian requests.

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