214 Cablegram From Patterson To Crawford

19th June, 1957

1430. IMMEDIATE CONFIDENTIAL

LONDON

The substance of your 1517 [1] on Japanese negotiations conveyed to the Board of Trade today. Yesterday before 1517 received I wrote you airmail saying that Percival [2] had hoped it might be possible for the announcement of the terms of the agreement to be deferred until after the Prime Ministers' Conference, as depending on the text on the agreement he anticipated a storm to break from United Kingdom industry after the agreement had been announced.

If this became too strong it could become an important issue at the Prime Ministers' Conference. He had anticipated that, in addition to protection of our own trade interests we would look to the interest of United Kingdom industries and that there would be guarantees that the Japanese would not flood the market.

I had gathered from him that they had been receiving numerous enquiries as to what was happening on the Australian-Japanese Agreement but the United Kingdom had decided not to make any statement until the agreement completed and they know whether the United Kingdom would be hurt.

I now discover by more searching questionng that it is only the cotton people who have been at them and Percival tells me that the cotton people already 'know' of the proposal to give Japan m.f.n.

and to lift the ceiling on quantitative restrictions. He mentioned that there had been 'leaks' and comments in the Australian press.

I have conveyed to him the substance of your 1538 [3] and whilst he sees this as being of some help I judge that he is anxious to get into a position where his Ministers can issue a reassuring statement to cope with the noise he expects from British industry.

He recognises that they might be unable to say to the industry here any more than that the agreement marks a major change in Australian trade policy and British industry must realise that for several years they have enjoyed many benefits from the way in which Australia had treated the Japanese.

On the other hand, if the substance of the last sentence of paragraph 2(d) of your 1517 is contained in the draft agreement it would be possible for the United Kingdom Government to say that the Australian Government had reserved this right. But as stated in your 1517 the last sentence reads more as a commentary than as part of the agreement. If that is so, the United Kingdom would not be able to comment in this way and I can see that Percival's thinking is that it might help them if between now and 5th July there could be an exchange between Australia and the United Kingdom as a result of which United Kingdom Ministers would be able to say that the Australian Government had informed the United Kingdom that it had been at pains to retain freedom of action to prevent disruption to the pattern of trade from preferential suppliers.

I understand that Percival is cabling Gray asking whether the United Kingdom could comment publicly on the agreement when signed. It would help us if you could let us know what Gray puts to you and your answer. Perhaps you could advise whether the last sentence of paragraph 2(d) of 1517 is substantially in the text of the draft agreement. Also whether, in the light of the timetable agreed with the Japanese it is likely to be possible to defer the announcement until after the Prime Ministers' meeting concludes.

1 Dispatched on 18 June, it instructed the High Commission to inform UK authorities, confidentially, of the principal features of the Agreement. The final sentence of paragraph 2(d) commented that the provisions for emergency action (Article V)'do not debar our imposing special duties on Japanese goods if necessary to prevent a sudden and serious disruption of the pattern of import trade from preferential suppliers'.

2. A.E. Percival, Under-Secretary, UK Board of Trade.

3 Dispatched on 19 June, it authorised Patterson to explain that the Japanese Government had agreed that emergency action' was important to the successful operation of the agreement and had also agreed that exports from Japan should be conducted in an orderly fashion in order to avoid 'serious damage'

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