46 Note Verbale From Japanese Foreign Ministry To Embassy In Tokyo

5th November, 1953

No. 270/E4 The Ministry of Foreign Affairs presents its compliments to the Australian Embassy in Japan, and with reference to the Ministry's Note Verbale No. 124/E4 dated 12th May, 1953 [1], has the honour to refer to the recent trend of trade between Japan and Australia and particularly to the current import policy of the Australian Government for the Japanese goods.

1. As indicated clearly in the above-mentioned Note Verbale, Japan's exports to Australia have contracted remarkably since the imposition of import restrictions on Japanese goods by the Australian Government in March last year, and during the second half of 1952 they amounted in value to only one tenth of her imports from Australia. Thenceforth, Japan's balance of trade with Australia has further deteriorated and during the eight months from January to August this year her exports to Australia merely ran at 1.5 million, while her imports from the same source amounted to 48.4 million. The Ministry understands that this marked imbalance accounts for in a large measure the drastic deterioration of Japan's sterling holdings from 70.6 million at the end of last year to 24.8 million at the end of August this year even taking into account of 30 million of the swapped amount. [2]

As the Australian authorities are well aware of, it was in the high hope of making the trade flow between the two countries on an expanding basis that Japan entered into the long-term purchasing contract of Australian barley. In the face of the acute shortage of the sterling holdings as above, however, the Japanese Government fear that unless measures be expeditiously taken on the part of the Australian Government of arresting the deteriorating tendency, the Japanese Government might find itself unable to continue imports from Australia on the pace and scale as in the past periods.

2. Meanwhile, whereas the Australian Government have relaxed to a considerable extent the restrictions on imports of goods from all sources other than the dollar area, the treatment for imports of Japanese goods, in spite of certain liberalizations in April, July and September this year, remains restrictive as follows:

(1) Under the current import licensing system in Australia, every description of Japanese goods is placed under the Administrative Control, and individual traders concerned on both sides are entirely uninformed as to whether their applications for imports of Japanese goods be accepted and also of the extent to which import licences be issued. It is to be noted that because of this uncertainty they are confronted with considerable difficulties in entering into business contracts, and accordingly, are often compelled to lose good business opportunities. In the case of other soft currency goods, on the contrary, Australian importers are given certain 'percentage quotas' for imports of these goods which are computed on the basis of their past performance. Upon these quotas they are not only able to initiate negotiations of import transactions with exporters abroad even prior to obtaining import licences, but also they may set their purchasing plans on the long range view.

In this connection, it is to be added that since imports from Japan are governed by the Administrative Control System which has nothing to do with the past import records from Japan, abnormally large number of import applications tend to be filled, causing detrimental effect to the development of stable and healthy trade relations between the two countries.

(2) While uninformed of exact figure, the Ministry understands that the ceiling set for imports of Japanese goods, which are importable only under the Administrative Control System is very much limited. Accordingly, unless it were lifted substantially, the ceiling would turn out to be far short of covering the current trade imbalance even if Japan's exports reach the full value of the ceiling.

(3) Finally, the Ministry has been informed of a number of past cases of considerable delay in issuing import licences against applications. This fact, coupled with the points raised in the preceding paragraphs, tends to place Japanese goods commercially on an apparently disadvantageous footing.

3. As for the custom tariff, the Ministry has learned that in the past months the Australian Government raised tariff rates for imports of some Japanese goods. It is cited that tariff rates for tin plate and plywood have been lifted from duty free to 12.5% and 57% respectively ad valorem. Under the present circumstances where, in accordance with the agreement reached in April this year between the Governments of Japan and the United Kingdom, the sterling area countries are relaxing their import restrictions on Japanese goods, and Japan has been making every effort to retrieve the acute shortage of her sterling holdings, the Japanese Government cannot help feel frustrated to learn the apparently contradictory step on the part of the Australian Government in respect of custom tariff.

4. The Ministry recalls in this regard that the Embassy set forth in its Note No. 121 dated 22nd July this year [3] that the import licensing controls on Japanese goods will be reviewed from time to time by the Australian authorities in the light of future development.

In the light of the above, the Ministry has the honour to request the Embassy to transmit to the Australian Government the Japanese Government's desire that the Australian Government would be good enough to look into the prevailing trade situations and give a favourable consideration to the matter.

In concluding, the Ministry would like to repeat its belief that an informal trade talk with representatives of the Australian Government as set forth in the Ministry's Note Verbale No. 124/E4 dated 12th May would prove highly valuable for both parties at this moment and should appreciate any indication of the Australian position in this respect.

1 Document 24.

2 Presumably a reference to Japan's use of dollars to buy sterling. See Document 42, paragraph 7.

3 Document 37.

[AA : A1838/278, 3103/10/2, iii]