210 Minute From Durie To Brown

16th May, 1957

CANBERRA

Japanese Trade Agreement The Cabinet Committee this morning approved with enthusiasm the Trade Agreement proposals and authorised Mr McEwen to convey the Government's response to the Japanese immediately.

One or two points are still to be rounded off, but no difficulty is expected in reaching agreement on these within the limits approved by the Committee.

The main points cleared by the meeting this morning were:-

(a) Wool We will accept the Japanese offer of a three-year binding of duty free entry of wool associated with an undertaking on our part to discuss with them during the three year term, the problem of full G.A.T.T. application as between the two countries.

(b) wheat We accept the Japanese offer of wheat quantities of 200,000 tons in the first year; 300,000 tons in the second year; with third and subsequent years to be determined through consultations.

Some definition of 'unfair trade practices' in relation to wheat is to be worked out, and we will continue to press the Japanese to place on record at least as a confidential paper the understanding on quantities. The Japanese have been resisting a formal undertaking on quantities.

(c) Emergency Action We will have the right to apply emergency action, but there are some refinements yet to be worked out, for example, as to extent of Japanese reciprocal rights, and the extent to which consultation will precede such emergency action.

Mr McEwen emphasised to Ministers that the objective in the Agreement was not to make spectacular gains for Australia, but to hold our trade position in the face of continually increased balance in Australia's favour. This year trade is running at the rate of 140m. exports to Japan, and 12m. imports from Japan.

Accordingly the application of m.f.n. treatment on duties and import licensing was going to hurt some Australian interests. If we accept the Agreement we had to be prepared for this, and not have regrets afterwards. Ministers readily accepted this situation.

The purpose in putting on the meeting this morning in some haste was to enable Australia to make a substantial response to the Japanese which could be conveyed to Tokyo and to Prime Minister Kishi before the latter left for Washington on Monday next. The Americans have not been too happy about some aspects of the Agreement, particularly the wheat provisions and the undertaking by the Japanese to consult with us before entering into any surplus disposal deals with U.S.A.

Mr McEwen emphasised that we would have to rely a great deal on Kishi's support in putting the agreement over in Japan, and it was important for him to know before he went to Washington that agreement was now certain.

He suggested that if our Prime Minister had any special views about the proposal, or wanted to make any observations, we should endeavour to get them from him immediately.

My own judgment is that the Prime Minister would be quite content with the course of negotiations, but in view of his own discussions with Kishi, you might think it desirable to mention these matters to him at the first opportunity.

1 'Ad Hoc' Committee.

2 Document 206.

[NLA : MENZIES PAPERS MS4936/21/440, FOLDER 18]