Trade between Australia and Japan
I refer to your memorandum 53/H/4481 dated 25th May, 1953 , to Department of External Affairs, forwarding a draft reply to a note dated 27th March from the Japanese Embassy.
2. We would suggest that the following paragraphs might be used in place of paragraphs 2, 3 and 4 of your draft and should be glad of your comments:
'After the conclusion of the United Kingdom - Japanese Sterling Payments Agreement of 31st August, 1951, Australia, together with other members of the sterling area, relaxed appreciably her restriction on the importation of goods of Japanese origin. Partly as a result of this action by sterling area countries, Japanese holdings of sterling were built up to such a high level that representatives of the Japanese Government informed United Kingdom officials in March 1952, that their Government regarded her current holdings of sterling as excessive.
Early in 1952, Australia was faced with an acute over-all balance of payments crisis. In order to meet this, action was taken by us drastically to restrict imports from all sources, including Japan.
This latter action was also in line with sterling area policy which, as was advised to Japanese representatives, was designed to reduce Japan's excess sterling balances.
Subsequent improvement in our overall balance of payments position enabled us in February last to announce strictly limited relaxations of the severity of our own non-dollar import restrictions. In view of the rapid decline in Japanese holdings of sterling and to the extent to which our reserves would permit, restrictions on goods of Japanese origin were relaxed at the same time. The list of Japanese goods for which import licences were being issued was increased during the quarter ended 31st March, 1953 by the addition of a number of commodities and the further undermentioned items have since been added to the list of Japanese goods which may be licensed for importation during the quarter ended 30th June, 1953.'
3. Copies of this memorandum are being forwarded to Departments of External Affairs and Commerce and Agriculture.