86 Submission 184 To Cabinet By Menzies

10th November, 1954

SECRET

CANBERRA

Trade and Tariff Negotiations with Japan In previous consideration of the problems associated with Japan and GATT it was proposed to ask Mr McEwen and Senator O'Sullivan for their views on Submission No. 153. [1] Their views have now been received and are attached for consideration together with an introductory statement by the Departments concerned.

Attachment

TRADE AND TARIFF NEGOTIATIONS WITH JAPAN After the problem of accommodating Japan in GATT had been discussed at the Commonwealth talks in London, Mr McEwen and Senator O'Sullivan cabled a recommendation that bilateral talks with Japan be opened as a matter of urgency. (See GATT 2 [2] attached).

2. Following receipt of this cable the Interdepartmental Committee prepared a report for Cabinet (Submission No. 142). [3] This report discussed the possible alternative types of bilateral agreement with Japan (Canadian type and quota principle type) and outlined the difficulties which would confront Australia in an agreement.

3. The Acting Minister for Trade and Customs has circulated to Cabinet a further Submission (No. 153) which contains proposals for:

(a) Partial assimilation of Japan into the non-dollar licensing system, subject to prior consultation with the Ministers abroad;

(b) Trade and tariff negotiations with Japan-the papers presented the matters which it was considered had to be faced before the decision could be taken to commence trade and tariff negotiations.

Some experience of more liberal trading conditions was considered necessary before we could know whether a basis for tariff negotiations existed.

4. Cabinet decided to seek the views of the Ministers abroad on the proposals contained in Cabinet Submission No. 153. In the meantime, a small Committee of Ministers examined the selected tariff items under which Japan is a significant or potentially significant supplier to Australia. This Committee decided that it was not in a position to make a precise recommendation to Cabinet until the comments were received from the Ministers abroad on Submission No. 153.

5. Mr McEwen and Senator O'Sullivan have now given their comments in some detail in Cable GATT 8 [4] (attached). In brief, they recommend:

(a) The intention to commence tariff negotiations can and should be announced immediately. The Ministers are of the view that it is entirely unnecessary to have completed the detailed study of the tariff items before this decision is taken.

(b) The adoption of the assimilation proposals, subject to variation in the treatment of contentious items (see paragraph 3(b) of GATT 8).

6. Senator Spooner cabled the Ministers on Monday asking for clarification of some aspects of the Ministers' recommendations on import licensing (see Cable 256 attached [5]). An answer to this Cable has been requested for tonight's meeting.

7. UK Proposals: The United Kingdom has advised us of the proposals they have made to Japan. Cables giving the United Kingdom proposal (B4) [6] and the preliminary Japanese reply (B5) [7] are attached for information.

8. Points for Decision:

(a) announcement of willingness to commence trade and tariff negotiations (paragraphs 1 and 2 of GATT 8).

(b) licensing treatment (paragraph 3(b) of GATT 8).

1 Document 81.

2 Document 75.

3 Document 78.

4 Document 85.

5 Not published.

6 Not published. See note 3 to Document 85.

7 Not published. The Japanese Minister in London had expressed fears that if the proposed amendment were approved, which seemed unlikely, all contracting parties would insist on bilateral agreements, causing an unacceptable delay in Japan's accession to GATT. Cablegram B5 of 3 November is on file AA : A1838/283, 759/1/7, i.

87 CABINET COMMITTEE DECISION 180(HOC) Canberra, 10 November 1954

SECRET

GATT Committee

SUBMISSION NO. 184-TRADE AND TARIFF NEGOTIATIONS WITH JAPAN [1]

Licensing Treatment for Japanese Imports Ministers considered the relative merits of the two proposals for the partial assimilation of Japanese imports into the licensing system for other non-dollar goods.

It was noted that Senator Spooner had cabled the Ministers abroad seeking clarification of some aspects of their proposals but at the time of the meeting no reply had been received.

The Committee reaffirmed the principle that adjustments of import licensing should not be a matter for bargaining in tariff negotiations but noted at the same time that more liberal treatment on import licensing would provide a more favourable atmosphere in tariff negotiations.

It was considered that owing to the present balance of payments position, a scheme which would increase Australia's total commitment for imports would be less acceptable than one which did not.

The Committee deferred a decision on the matter until the reply from the Ministers abroad to Senator Spooner's cable had been received.

It was agreed that a public announcement of the government's decision should be made when the decision is taken.

Trade and Tariff Negotiations with Japan The Committee noted the cables from the Ministers overseas which presented in strong terms arguments in favour of an immediate announcement of the intention to commence tariff negotiations with Japan and noted that the Ministers overseas would be in the better position to assess the tactical advantages in making such an announcement.

The Committee decided that the Japanese should be informed that the Government is prepared to enter into talks with them and examine the mutual problems involved in our trading relations with them. When talking to the Japanese it should be pointed out to them that the talks presented great difficulties to the government but the government had proposed the talks in the hope that a suitable basis for an agreement would be found.

It was agreed that the Ministers overseas should be informed of the decision and asked for their views on timing of the announcement to Japan and on any press statement here or at Geneva from their tactical point of view.

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

1 Document 86.

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