196 Minute From Durie To Menzies

2nd April, 1957

SECRET

CANBERRA

Japanese Trading Negotiations Negotiations with the Japanese Trade Delegation were resumed last week. There is every indication of an agreement emerging shortly subject to a final clearance by Ministers on some outstanding points.

It is contemplated that Australia will give Japan most-favoured- nation terms both on tariffs and import licensing, subject to our right to impose emergency duties to protect Australian industries, or industries of countries receiving preferences, from serious injury caused by excessive Japanese imports.

Japan will bind itself to continue to give us most-favoured-nation tariff treatment. To make this effective against the background of Japanese trade practices, we are seeking specific assurance on imports of particular commodities-wool, wheat, barley, sugar, dried milk etc.

The general effect of the agreement will be that each party will accord GATT treatment to the other, but of course the obligation to do so will lie in this agreement and not in GATT.

The main negotiating problems for us are on wool and wheat. As we suggested to you recently, Trade and Primary Industry are now placing more emphasis on wool than on wheat. Japan is willing to give us a satisfactory quota on wool, but we are also seeking the binding of the present duty-free entry of wool into Japan. We are also seeking a special duty on sugar. The Japanese delegation is arguing that pure tariff concessions ought to be negotiated separately after the m.f.n. agreement has been signed. Although this is, from the Japanese point of view, a sound negotiating approach, I would not be surprised if we can persuade them to make an exception on wool and sugar, since they attach so much importance to the m.f.n. principle.

It would be useful if a Ministerial meeting could be fitted in before you left for Japan. [1] It would assist in informing you in detail of the negotiations, but also it would give the negotiating team a clearance on the lines on which they are pursing the negotiations, since they are rapidly reaching the stage where final decisions will be needed.

1 Menzies was to leave Australia on 10 April to visit Japan, Thailand and the Philippines.

[AA : A1209/23, 57/5475]