212 Australia-Japan Trade Negotiations: Sixth Plenary Meeting [1]

14th June, 1957

CANBERRA

DR WESTERMAN: Mr Ushiba, I have no doubt that you share my feeling that this meeting is the happiest one of the series. I would like to commence this final plenary meeting by expressing my appreciation of your own personal leadership and of the co- operation of your colleagues in the talks that we have had, and I am sure the Australian Delegation-particularly Mr Phillips and Mr Smith, who have had a great deal to do with you personally-endorse my remarks.

In negotiation the easiest part is to know precisely what one wants oneself. No doubt you had your mind firmly made up on that, just as on my side I was firm in my mind. The more difficult thing is to make up your mind what the other man wants and to bring him to understand your own position. In talking to you, Mr Ushiba, I always had the feeling that you knew the kind of problem that was mine and that you could understand it. I hope you have always felt that I was anxious to take full account of your particular problems. Given that kind of approach, I think negotiations are a much more pleasant occupation than they otherwise would be.

When the negotiations first commenced, the overriding general instruction which the Australian Government gave this delegation was, within certain limits, to attempt to work out an arrangement with the Japanese Delegation which would stabilise-which would normalise-our trade relations and which would open up prospects of developing each other's markets in as happy a way as possible, I would think, Mr Ushiba, that we have now reached the stage where the documents which we have agreed upon represent what should be a satisfactory working arrangement-satisfactory from your point of view, and satisfactory from ours. The negotiations have taken longer than we had originally intended, but that is not surprising when you come to consider the kind of problems that arise on both sides in doing what has not been done before-establishing in a workable and comprehensive way an agreement which would condition our future trade.

There are one or two matters connected with the substance of the Agreement which I think we would like to set down here formally for the record.

The Agreed Notes record the understanding between our two Governments on the purchase of Australian soft wheat by Japan in the event of a P.L.480 or other noncommercial arrangement by Japan for the import of wheat from sources other than Australia, or in the event of unfair trade practices on the part of competing suppliers limiting the competitive opportunities for Australian wheat. Our two delegations have discussed the wheat purchasing policy of the Japanese Food Agency, and we have gained from you an understanding of the commercial considerations influencing wheat purchases by the Food Agency. Having regard to these discussions and in the light of this understanding, the Australian Delegation has advised the Australian Minister for Trade that subject to normal commercial considerations and under normal conditions of trade, the Japanese Food Agency will buy 200,000 tons and 300,000 tons of Australian soft wheat in the first and second years respectively of the proposed Agreement on Commerce. This is an aspect of the first two years' operation of the Agreement which I must clearly state is important to the Australian Government. I therefore wish to know whether the advice given to the Minister for Trade is reasonably based. [2]

MR USHIBA: I should like to state that subject to the price and quality of Australian wheat remaining competitive, the advice you have given to your Minister for Trade is a reasonable assessment of the position.

DR WESTERMAN: In the Agreed Notes Part A [3], reference is made in paragraph 4(b)(i) to the Wheat Board offering wheat to Japan 'in accordance with its normal commercial consideration'. In order to avoid possible misunderstandings we had wished to have included in the record an explanation of a point concerning this phrase.

However, after discussion with the Japanese Delegation, we became convinced that the point was clearly understood by the Japanese Delegation and accordingly we have not pressed the matter.]

[In paragraph 5(iii) of the Agreed Notes Part C relating to action taken under Article V, the phrase, 'so far as administratively practicable', has been inserted to cover the contingency that in a particular case administrative difficulties could arise under the Australian Tariff or under the system of import controls in confining the action to particular goods. Such difficulties should in any event be limited, and best endeavours will be made to confine the action to the specific goods or products concerned, having due regard to Article V.) It is our understanding, Mr Ushiba, that the text of the Agreement and the attachments as agreed between the two Delegations will be initialled next Tuesday [4] and that no further changes will be made. The final signature, we both understand, will take place in Tokyo early in July and my Minister has been very glad to accept the cordial invitation of your Government to visit Tokyo for this purpose. We suggest that when the Japanese texts have been prepared, a copy should be forwarded to the Australian Embassy in Tokyo and to Canberra for final checking.

MR USHIBA: Although you have said that after the initialling of the texts no further change will be made, I should like to confirm that we are still free to correct, after consultations with each other, typographical errors or apparent grammatical mistakes, if any, in the text before the final signature.

DR WESTERMAN: It is quite likely that there will be minor errors in typing or grammar in the present text and I agree that we are quite free to correct these after consultation. There could also be minor changes necessary in the form of the Agreement before final signature. Here again we could consult.

The Australian Government will take steps to implement the Agreement immediately upon final signature, but the procedural steps may involve some slight delay before the Agreement can be fully translated into practice. We will do what we can to reduce this time lag and will let the Embassy know immediately we are in a position to indicate the date from which, after consultations with each other, the Agreement will become effective.

As soon as the Agreement is signed, we will contact the Japanese Embassy on consultation procedures generally and in respect of Article V in particular, in order to see what specific arrangements might be practicable and desirable.

I have nothing more to say at this stage, Mr Ushiba, except once again to repeat the very sincere thanks of the Australian Delegation as a whole for the co-operative and friendly way the discussions have proceeded, and to regret that we have taken longer than anticipated at the cost of some personal hardship to you and to your colleagues in being away from home so long.

MR USHIBA: Thank you very much. It is a very great pleasure to me that we should have reached this stage, with the initialling of the final Trade Agreement next Tuesday. I would like to express my deep appreciation and gratitude to the members of the Australian Delegation, particularly to you and Mr Warwick Smith, for your understanding and the patience you have shown throughout the long and sometimes very difficult negotiations. I think this is the happiest conference we have had, but that does not mean that the conference as a whole has not been friendly, or too difficult. You have shown very great understanding for our point of view, and the compliments you have given to me I would like to dispossess in the fullest sense. As you see, our Delegation is very weak at present- just three of us. Three other members who came from Tokyo have returned already, but I can assure you we are very happy to be in Canberra most of the time and are very much impressed by the way in which you and other members of the Australian Delegation have conducted the negotiations. I think we must not forget the great encouragement and impetus our cause has received from the visit of your Prime Minister, Mr Menzies, to Japan, and it is most timely that Mr McEwen will visit Japan shortly to sign the Agreement with our Prime Minister and Foreign Minister, Mr Kishi. It augurs well for the future development of economic relations that this Agreement will be signed by the most distinguished statesmen of Japan and Australia.

Much as we shall be pleased by the concluding of the Agreement, it is my conviction that this Agreement would mean only the first step towards the improving and developing of our economic relations. I need not dwell too long on the past history, which was affected very often by mutual suspicion and anxiety. The question appeared sometimes quite insoluble, because on one side there was the very deep resentment felt in Japan as to discrimination Japanese goods have been subjected to in this country, and on the other side, the very great fear and suspicion in Australia, especially in manufacturing and industry circles, for the so-called invasion of 'cheap' Japanese goods. One of the fundamental causes of these difficulties is undoubtedly the difference of economic structure of the two countries. But I think there is no reason why the two countries of fundamentally different economic structures could not live together. I really think that one of the more important reasons of our success in arriving at agreement was that we have faced this question squarely and [taken] a bold step forward to solve it. It was in this spirit that the Japanese Government, in their most anxious endeavour to find the way for redressing the extreme unbalance in our trade with Australia, has agreed to a certain degree of self- control of her exports, to avoid or prevent a situation which might result in serious damage to Australian industries. Moreover, the Japanese Government has accepted that in emergency cases the Australian Government might take certain measures to curb imports from Japan. I cannot say that they have taken these commitments with great pleasure, but they have felt, in their very correct assessment of the situation, that only by so doing can an orderly expansion of Japanese exports to Australia be assured. On the other hand, we have given under the Agreement, to the more important products of Australia, treatment which is as favourable as possible under the present balance of payments position of Japan. You must think some of them fall short of 100 per cent m.f.n., but you also understand there is a certain psychological reluctance in some parts of the Japanese Government to commit to buy more from you in view of the very substantial trade balance, which is so adverse to us. It is my sincere desire that [by] these measures taken by the Japanese Government, together with the goodwill and sincerity, the ground will be prepared smoothly for the expansion of our exports to Australia. The difference of economic structure will not permit our trade to balance squarely, but the present trend is too lop-sided and extreme to serve as a basis for any steady economic relations and should be rectified as far as possible.

All I have said should not, of course, detract from our appreciation of the historic step you have taken in granting Japan the m.f.n. treatment and non-discriminatory treatment in tariffs and import licensing. We know what political risk you have taken and we hope and are quite sure that through this co-operation we can prove this is the only right step for the benefit of the two countries. We are going now to turn a new leaf in the history of our economic relations. The merits can only be judged by its actual operation and here we shall depend very much on your confidence and goodwill, as well as our confidence and goodwill.

If we recall that the anxiety in the past was mostly the product of ignorance and misunderstanding on both sides, the value of closer personal contacts will be obvious. I hope that through understanding we shall be able to prevent the situation from deteriorating to such an extent as to require intervention on the Government level, which is not at all good in any economic relations. In finishing, I would like again to express my deep appreciation and gratitude to you and the members of the Australian Delegation for the warm hospitality you have extended to me personally and also to the other members of the Japanese delegation.

DR WESTERMAN: Thank you: you have made a very much better speech than I, and you have said the things I would like to reciprocate.

I think as far as the record is concerned we could adjourn the meeting at this stage, and I understand we will meet again on Tuesday. Thank you.

1 Where as all earlier meetings had been held in the Department of Trade, this one was held at Parliament House. Only three members of the Japanese delegation were present: Ushiba, Uyama and Kosugi.

Westerman, Warwick Smith, Farrell, Jones, Meere, Munro, Oakely, Corkery and Lind represented Australia.

2 It was agreed by both delegations that the paragraphs in square brackets should remain confidential. See section 4 of Document 213.

3 See Document 222, 'Agreed Minutes'.

4 That is, 18 June.

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