219 Memorandum From Embassy In Tokyo To Department Of External Affairs

27th June, 1957

TOKYO

Japan-Australia Relations Attached for your information is a copy of a translation of an editorial which appeared in the economic newspaper 'Nihon Keizai' on 20th June, 1957.

IMPROVING JAPAN/AUSTRALIA RELATIONS A series of bright and heart-warming news has appeared in the recent issues of local papers in connection with Japan/Australia relations. Last April, Australian Prime Minister Menzies visited this country as a State guest, exchanged frank opinions with our Premier, Kishi and naturally, both elites deepened mutual understanding. One of the outcomes of Menzies/Kishi conference is the scheduled release of all Japanese prisoners being held by the Australian side by the end of this month. Now, the latest report says that the protracted Japan/Australia trade conference has finally come to an agreement and to give it the finishing touches, Mr McEwen, Australian Trade Minister, is arriving here very soon.

Japan and Australia are located geographically near while Australian wool is woven into our wear. Considering these, relations between both parties should have been much more friendly. An indifferent attitude towards each other which has long existed between the two people is said to be connected with the so-called 'White Australia' principle and a suspicious attitude of Australians towards Japanese. After a lapse of 12 years since the termination of the war, however, Australia's viewpoint about Asia as well as its feeling towards the Japanese have changed. It is also undeniable that Mr Menzies' recent visit contributed not a little to the improvement of Japan/Australia relations.

Meanwhile, it should be particularly stressed that the Australian Government took a constructive attitude towards the conclusion of the Japan/Australia trade negotiations. The Australian side has been placing special restrictions on the 36 Japanese items including textiles and sundries which otherwise might have formed the main body of Japan's exports to that country. Furthermore, Australia has been imposing the highest import duties on other Japanese commodities. Naturally, trade between both parties was considerably lop-sided with the Japanese account running into the red every year. Sooner or later, Japanese imports from Australia would be doomed to a sharp cut unless the latter stops its discrimination against Japan. However, at the recent trade talks, Japan promised to apply the most-favoured-nation treatment for Australian soft wheat imports which had been restricted because of the Japanese obligation to accept American surplus under the US Farm Produce Disposal Act.

Now, on the whole, it is considered to be only reasonable that Australia stepped up to the Japanese requests at the trade talks.

As a matter of fact, however, some international problems are not necessarily soluble by only common sense. In lifting its discriminative steps against Japanese commodities which have been in force for these 50 years since the founding of the country, it is no doubt that the Australian Government faced a number of obstacles and oppositions. In spite of these difficulties, the Australian Government dared to extend the most-favoured-nation treatment to Japan and kept promise clarified in the Kishi/Menzies joint announcement. This very fact is certain to have a favourable effect upon future Japan/Australia relations.

In the meantime, it is recalled that Canada agreed to extend its most-favoured-nation treatment to Japan in 1954, and in two years, Japanese exports to Canada increased by more than three times.

This also brings an optimistic view to the Japanese about future exports to Australia. In preparing for such a possible 'export boom', however, it should be kept in mind that a deep-rooted cautious sentiment towards Japan is still lingering in Australian minds. Rush exports to Australia of the 'cheap and bad' will only give rise to moves in that country to oust Japanese commodities.

According to recent reports, some Australian manufacturers of textiles and radios are strongly opposing extending the most- favoured-nation treatment to Japan. Local trading circles should work out concrete steps for the establishment of orderly export systems so as not to be ousted from the promising export market.

Also important is that the Japanese people to correct their prejudice about Australia. Most Japanese consider that it is a 'country of sheep and wheat'. Actually, however, Australia is now pushing its industrialisation programme on a large scale and to meet strong demand for power and also to increase agricultural output, the Snowy Mountains and other gigantic exploitation plans are under way. Under these circumstances, Japanese exporters are requested to switch their trade policy towards Australia and to place stress on exports of such exploitation materials and machinery rather than on consumptive goods.

[AA : A1838/278, 3103/10/1, v]