222 Agreement On Commerce Between The Commonwealth Of Australia And Japan: Published Letters And Agreed Minutes

6th July, 1957

The Rt. Hon. J. McEwen, Minister for Trade Your Excellency, With reference to the Agreement on Commerce between Japan and the Commonwealth of Australia signed today, I have the honour to inform your Excellency that the most-favoured-nation provisions of the said Agreement shall not apply to advantages which are accorded or which may be accorded hereafter by Japan to such areas as are set forth in Article 3 of the Treaty of Peace with Japan signed at the city of San Francisco on September 8, 1951, so long as the situation set forth in the second sentence of the said Article continues with respect to the administration, legislation and jurisdiction over those areas.

I have further the honour to request your Excellency to be good enough to confirm the foregoing understanding on behalf of your Government.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Foreign Affairs 6th July, 1957

Minister for Foreign Affairs, Tokyo Your Excellency, I have the honour to acknowledge receipt of your Excellency's Note dated 6th July, 1957, which reads as follows:

'With reference to the Agreement on Commerce between Japan and the Commonwealth of Australia signed today, I have the honour to inform your Excellency that the most-favoured-nation provisions of the said Agreement shall not apply to advantages which are accorded or which may be accorded hereafter by Japan to such areas as are set forth in Article 3 of the Treaty of Peace with Japan signed at the city of San Francisco on September 8, 1951, so long as the situation set forth in the second sentence of the said Article continues with respect to the administration, legislation and jurisdiction over those areas.

I have further the honour to request your Excellency to be good enough to confirm the foregoing understanding on behalf of your Government.' On behalf of the Government of the Commonwealth of Australia, I have the honour to confirm the understanding stated in your Excellency's Note with respect to the application of the Agreement on Commerce between the Commonwealth of Australia and Japan signed today to the areas specified in Article 3 of the Treaty of Peace with Japan.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Trade 6th July, 1957

Minister for Foreign Affairs, Tokyo Your Excellency, With reference to the Agreement on Commerce between the Commonwealth of Australia and Japan signed today, I have the honour to inform your Excellency that the provisions of this Agreement shall not apply to any of the external territories administered by the Government of the Commonwealth of Australia nor to any advantages which are accorded or which may be accorded hereafter between the external territories and the metropolitan territory of Australia.

I have the honour to request your Excellency to be good enough to confirm the foregoing understanding on behalf of your Government.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Trade 6th July, 1957

The Rt. Hon. J. McEwen, Minister for Trade Your Excellency, I have the honour to acknowledge receipt of your Excellency's Note dated 6th July, 1957, which reads as follows:

'With reference to the Agreement on Commerce between the Commonwealth of Australia and Japan signed today, I have the honour to inform your Excellency that the provisions of this Agreement shall not apply to any of the external territories administered by the Government of the Commonwealth of Australia nor to any advantages which are accorded or which may be accorded hereafter between the external territories and the metropolitan territory of Australia.

I have the honour to request your Excellency to be good enough to confirm the foregoing understanding on behalf of your Government.' On behalf of the Government of Japan I have the honour to confirm the understanding stated in your Excellency's Note with respect to the application of the Agreement on Commerce between Japan and the Commonwealth of Australia signed today to the external territories administered by the Government of the Commonwealth of Australia.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Foreign Affairs 6th July, 1957

The Rt. Hon. J. McEwen, Minister for Trade Your Excellency, With reference to the Agreement on Commerce between Japan and the Commonwealth of Australia signed today, I have the honour to confirm on behalf of my Government the understandings concerning the implementation of the Agreement which have been reached during the negotiations leading to the signing of the Agreement, and which are embodied in the Minutes attached hereto.

I have further the honour to request your Excellency to be good enough to confirm the foregoing understanding on behalf of your Government.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Foreign Affairs 6th July, 1957

The Minister for Foreign Affairs, Tokyo Your Excellency, I have the honour to acknowledge receipt of your Excellency's Note dated 6th July, 1957, which reads as follows:

'With reference to the Agreement on Commerce between Japan and the Commonwealth of Australia signed today, I have the honour to confirm on behalf of my Government the understandings concerning the implementation of the Agreement which have been reached during the negotiations leading to the signing of the Agreement, and which are embodied in the Minutes attached hereto.

I have further the honour to request your Excellency to be good enough to confirm the foregoing understanding on behalf of your Government.' On behalf of the Government of the Commonwealth of Australia, I have the honour to confirm the understanding stated in your Excellency's Note under reference.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Trade 6th July, 1957

Agreed Minutes

PART A 1. The Agreement provides under Articles I and II that Japan will extend most-favoured-nation and non-discriminatory treatment to imports from Australia. However, in view of the Japanese import system, in order to translate these general provisions into specific undertakings or understandings, the Japanese delegation indicated the treatment that the Japanese Government intended to accord to certain of the more important imports from Australia.

2. Accordingly, the Japanese delegation stated that it was the intention of the Japanese Government:-

(a) to accord to Australian wool the opportunity of competing in the global quota for wool for not less than 90 % of the total foreign exchange allocation for wool each year and, subject to the provisions of Article II of the Agreement, not to restrict the total foreign exchange allocation for wool beyond the extent necessary to safeguard its external financial position and balance of payments;

(b) to admit Australian wheat and barley on a competitive and non- discriminatory basis in accordance with the provisions of paragraphs 3 and 4 below;

(c) to accord to Australian sugar the opportunity of competing in the dollar and pound sterling common quota or the pound sterling quota for not less than 40% of the total foreign exchange allocation for sugar;

(d) to include Australia as a permitted source of supply for beef tallow and cattle hides on the Automatic Approval list;

(e) to admit Australian dried skim milk on a competitive and non- discriminatory basis in the global quota except for imports for use in the Japanese school lunch welfare programme;

(f) to make reasonable provision for the import of Australian dried vine fruits (raisins, currants and sultanas) in each year of the three year period.

3. With respect to paragraph 2(b) in so far as Australian barley was concerned, it was noted that in the past three years Australian barley had accounted for about 30% of the total barley imports of Japan. This had represented reasonable treatment. It was agreed that this treatment could be expected to be maintained in the Japanese market.

4. With respect to paragraph 2(b)in so far as Australian soft wheat was concerned, it was agreed that:

(a) Australian soft wheat could be expected to secure a substantial share of the Japanese market in the absence of non- commercial purchase arrangements and unfair trade practices by third countries, but it was difficult to define a fair share in precise terms for the following reasons:

(i) the character and capacity of the Japanese wheat market has changed since before World War II when Australia was the major supplier;

(ii) Japanese millers and consumers have had no recent experience of Australian soft wheat due initially to the world-wide post-war wheat shortage and subsequently to imports of wheat under non- commercial arrangements regarding surpluses or to related inter- Governmental arrangements affecting Japan's wheat imports.

(b) (i) If in any year of the Agreement the opportunity for Australian soft wheat to compete freely in the Japanese market should be impaired due to transactions not conforming with normal fair trade or commercial practice, the Japanese Government would take steps within its power to ensure that imports of Australian soft wheat which would be purchased through commercial channels and on a competitive basis, represented an equitable share of the Japanese market. The existence of such circumstances and the share of the market to be regarded as equitable would be established through consultation between the two Governments. However, it is expected that at least in the early stages of the Agreement, under normal commercial considerations, Japanese imports of Australian soft wheat would be over 200,000 tons with yearly increasing trend. When the Japanese Government takes steps in accordance with the result of such consultation, offers of wheat by the Australian Wheat Board will be in accordance with its normal commercial considerations.

(ii) In the context of the present Minutes, the terms 'Australian soft wheat' is understood to mean Australian wheat of f.a.q. or lower grades. Grades of Australian wheat of high protein content superior to f.a.q. and sold at a premium shall be regarded as being outside the scope of sub-paragraph (i) above, and Japanese imports of Australian wheat of this type shall be on a competitive and non-discriminatory basis.

PART B 1. The Australian Delegation pointed out that Australia had already bound against increase the rates of duty on a relatively large number of items to other countries which were of export interest to Japan and consequently by extending most-favoured- nation treatment to Japanese goods in the Australian Tariff, Australia did in fact assure a stability of tariff treatment of Japanese goods that was of considerable importance. On the other hand, the principal items of export interest to Australia in the Japanese market were not subject in the Japanese Tariff to binding against increased duties and consequently there was not a comparable assurance of stable tariff treatment being accorded to Australia by Japan. Moreover, the fact that many of the duties in the Australian Tariff of export interest to Japan were already bound against increase meant that they could only be raised after considerable negotiation and compensatory payment in terms of the tariff to other countries. By contrast, Japan, as emphasised by recent reports from Tokyo, was in a position to vary materially the tariff conditions applying to major Australian exports to Japan. In order to meet these circumstances, an assurance was requested that Japan would maintain the present duty free entry for wool. In this connection, the Australian Delegation emphasised that since wool accounted for such a high proportion of Australia's total exports to Japan, Australia attached considerable importance to continued duty free entry for wool into Japan.

2. The Japanese Delegation noted the benefits which Japan would receive in the Australian Tariff. It also noted that under the Agreement, Japanese goods were entitled to those reductions in most-favoured-nation rates of duty in the Australian Tariff which were made effective in May, 1957, and that Japanese goods would similarly be accorded the benefits of any further reduction in most-favoured-nation rates of duty in the Australian Tariff whether arising from trade negotiations with other countries or otherwise. The Japanese Delegation stated that in view of the great importance attached to the question by the Australian Government, the Japanese Government would take no action to vary the present level of duty on wool imports from Australia for a period of three years after the date of signing of the Agreement.

3. The Japanese Delegation added that in making the statement in paragraph 2, they had in mind that during the above-mentioned three years of the Agreement, the Australian Government would endeavour to move towards the application of the General Agreement on Tariffs and Trade between the two countries.

4. The Australian Delegation in response said that the Australian Government had in mind entering into discussion with the Japanese Government at an appropriate time before the end of the above- mentioned three year period of the Agreement (and in the light of experience gained under the Agreement) with a view to exploring the possibility and examining the basis of applying the General Agreement on Tariffs and Trade between the two countries.

5. The Australian Delegation referred again to the importance attached to continued duty free entry for wool into Japan and said that the Australian Government would need to be free to review the operation of the Agreement should there be an increase in the wool duty. It was agreed that in relation to the discussions referred to in paragraph 4, the present understanding on duty free entry for wool into Japan would not be regarded by either country as a prior commitment by Japan affecting those discussions. Both Governments would be free to consider the tariff conditions under which the General Agreement on Tariffs and Trade might apply between the two countries.

PART C 1. During the course of discussions in connection with Article V, the Australian delegation pointed out that the basis of Article V was the mutual expectation that as a result of the Agreement there would be increased opportunity for expansion of Japanese exports to Australia without serious damage to Australian industry or sudden and serious disruption of the pattern of Australia's imports. This expectation was based on the premise that exports from Japan in particular lines, especially in the products of Australian industries historically or potentially particularly liable to disruption in the event of an undue increase in the volume of imports from Japan, would not be allowed to reach such volume, or to be shipped under such conditions as would cause or threaten serious damage of this kind. Since, in its view, the accord of most-favoured-nation treatment to Japanese goods could result in such a situation, it would welcome the co-operation of the Japanese authorities in dealing with these situations and considered that early and effective arrangements, if undertaken in Japan, could make a substantial contribution to their solution.

2. The Japanese Delegation pointed out in reply that under Japanese legislation export was free in principle and that the Japanese Government could take only limited measures to deal with these problems. However, the Japanese Delegation indicated that the Japanese Government would use its best endeavours within its constitutional authority to see that exports from Japan to Australia were conducted in such a way as to avoid or remedy the damage or prospect of damage to which the Australian Delegation had referred.

3. The Australian Delegation stated that, in its view, the development of the maximum practical degree of consultation between the two Governments would be essential to the satisfactory solution of any particular problem which might arise. The Japanese Delegation agreed with this suggestion. In this connection it was agreed that:

(a) effective liaison would immediately be established in Canberra between the Japanese Embassy and the Australian Government and in Tokyo between the Australian Embassy and the Japanese Government;

(b) statistical information would be provided by the two Governments on a continuing basis;

(c) if either the Australian Government or the Japanese Government was of the opinion that any product was being imported under such conditions that serious injury were threatened, consultations would be held immediately to endeavour to remedy the situation without resort to special emergency action;

(d) in the event of a situation requiring the application of Article V, the procedure provided for in that Article would be adopted.

4. The Japanese Delegation asked for assurances that the Australian authorities would not unreasonably take special action of the kind envisaged in the Article, stating that the Japanese Government agreed that it was important to the successful operation of the Agreement and was also important in enabling recourse to Article V to be avoided, that export from Japan be conducted in an orderly manner so as to avoid serious damage in the sense referred to by the Australian Delegation.

5. The Australian Delegation said that in the light of this statement by the Japanese Delegation and in view of the mutual expectation referred to in paragraph 1 it could say that the following considerations would apply in respect of any action by the Australian Government under Article V:

(i) Such action would not be taken except after consultation. In every case, consultation would be as far in advance as practicable;

(ii) Such action would not be taken lightly; and would be taken only where the consultation process failed to provide a mutually acceptable alternative solution to the problem. In cases where urgency might require action to be taken before the consultation process was completed, consultation would be continued in an endeavour to find a mutually acceptable solution;

(iii) So far as administratively practicable such action would apply only to those specific goods in respect of which the action was necessary to correct the particular situation;

(iv) Such action would apply only for such time as was necessary to correct the particular situation and would be discontinued immediately this was achieved;

(v) Such action would be limited to cases where serious damage was caused or threatened.

The Rt. Hon. J. McEwen, Minister for Trade Your Excellency, I have the honour to refer to the following documents which have been signed today by us:

(1) Agreement on Commerce between Japan and the Commonwealth of Australia;

(2) Notes relating to territorial application;

(3) Notes relating to Agreed Minutes.

The agreements and undertakings between our two Governments embodied in these documents will come into force on the date of the entry into force of the Agreement mentioned in (1) above.

In view of the desirability of putting into operation, as soon as possible, the agreements and undertakings embodied in these documents, the Government of Japan proposes that, pending the entry into force of the abovementioned documents, our two Governments give provisional effect, within the limits of their constitutional authority, to the documents as from today on the understanding that such provisional effect may be terminated by either Government subject to three months prior notice in writing.

If the above proposal is acceptable to your Government, I have the honour to suggest that the present Note and your reply to that effect shall be regarded as constituting an agreement between our two Governments which shall enter into force on today's date.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Foreign Affairs 6th July, 1957

The Minister for Foreign Affairs, Tokyo Your Excellency, I have the honour to acknowledge receipt of your Excellency's Note dated 6th July, 1957, which reads as follows:

'I have the honour to refer to the following documents which have been signed today by us:

(1) Agreement on Commerce between Japan and the Commonwealth of Australia;

(2) Notes relating to territorial application;

(3) Notes relating to Agreed Minutes.

The agreements and undertakings between our two Governments embodied in these documents will come into force on the date of the entry into force of the Agreement mentioned in (1) above.

In view of the desirability of putting into operation, as soon as possible, the agreements and undertakings embodied in these documents, the Government of Japan proposes that, pending the entry into force of the abovementioned documents, our two Governments give provisional effect, within the limits of their constitutional authority, to the documents as from today on the understanding that such provisional effect may be terminated by either Government subject to three months prior notice in writing.

If the above proposal is acceptable to the Australian Government, I have the honour to suggest that the present Note and your Excellency's reply to that effect shall be regarded as constituting an agreement between our two Governments which shall enter into force on today's date.' On behalf of the Government of the Commonwealth of Australia I have the honour to accept the proposal contained in your Excellency's Note with respect to the provisional application of the agreements and undertakings embodied in the documents listed, signed today by us, and to accept the suggestion that your Excellency's Note and my reply shall be regarded as constituting an agreement between our two Governments entering into force on today's date.

I avail myself, Excellency, of this opportunity to renew assurances of my highest consideration.

Minister for Trade 6th July, 1957

[DFAT : AUSTRALIAN TREATY COLLECTION]