TOKYO

1. MR KISHI welcomed MR MENZIES to Japan, and began the interview
by saying that Australia and Japan were both countries in the
Pacific region. Japan wanted close relations with the British
Commonwealth, especially Australia. He then referred to the way in
which the two countries had solved outstanding problems between
them and referred particularly to war criminals (their return from
Manus [Island] and the release of most of them); the agreement on
a war cemetery in Yokohama; the agreement on civil aviation; the
agreement on BCOF [2] surplus stores; and the admission of
Japanese war brides to Australia. He said there were still two
outstanding problems: pearling and trade.

2. KISHI then said that Japan would continue to work for peace. He
said Japan had become a member of international organizations, and
he referred particularly to the Colombo Plan and to the United
Nations. He said that Australia had played 'a big part' in getting
Japan admitted to the United Nations, and Japan appreciated this.

3. KISHI then returned to the question of war criminals, and said
that the Japanese Government had been given to understand that the
last of the war criminals sentenced by Australian Courts would be
released within the next three months. He wished to express 'the
great thanks' of the Japanese Government for this (KISHI appeared
to be speaking with some emotion on this point).

4. KISHI then referred to the question of pearling, and said that
it was important that a quick solution be brought forward to pave
the way to better relations. We should 'stand on a higher
standpoint'. Leaving aside for the time being past negotiations
and standpoints, but with each side reserving its legal rights and
without prejudice to its position, we should seek a quick solution
in a practical way. KISHI said that he understood that MR MENZIES
had told MR SUZUKI last year it would be unfortunate if this
matter was put before the International Court; and that, if we
could arrange some long-term treaty, this unfortunate situation
could be averted. KISHI said that the way to resolve this was:

a) both our countries should reserve their legal rights and try to
solve the question in a practical way; and
b) they should forma joint committee, with equal membership from
Australia and Japan, to regulate in a concrete way anything
affecting the pearling industry.

KISHI said that he would like these two points to be examined. If
they could not be realized, Japan would like to know as soon as
possible so that, in that event, the case could go to the
International Court and our two countries could await its
adjudication. KISHI then handed Mr Menzies a Note Verbale on
pearling.

5. KISHI then referred to the negotiations now going on in
Canberra on trade between Australia and Japan. He said the
principal problem had seemed to be wheat. There was a lot of
opposition in Japan regarding wheat, but Japan had thought they
should aim at an economic agreement with Australia, and 'I have
personally intervened in this problem and tried to have the pros
and cons settled inside the Government. Frankly speaking, I should
like to express surprise that the Australian representative at the
talks has referred to the matter of wool.' KISHI said that
Australia had asked for commitments that, during the period of the
agreement, Japan should not impose a tax on wool. Matters
affecting barley and sugar had also been raised. KISHI said it
seemed appropriate to have this question of wool negotiated after
the trade agreement, as a matter of tariff negotiations. If the
trade negotiations drag on too long, it might have an adverse
effect on our trade relations and possibly our general relations
too. KISHI said he would appreciate it if MR MENZIES could look at
the matter and try to simplify the negotiations.

6. KISHI then went on: 'I believe that in Australia there are some
arguments that the tariff on wool could be considered in relation
to the withdrawal of the Australian reservation in Article 35 of
GATT. If that is so, we would like to have it studied.'

7. KISHI continued: 'I have heard that you are apprehensive that
perhaps after the agreement Japanese goods might flood the
Australian market. But I do not think this is so. Our motto in
export policy is ordinary marketing. If there is any case of
Japanese goods flooding your market, we shall at once caution the
exporter and, as a Government, we will do all we can.'

8. KISHI said that hitherto Japanese industry had mainly centred
on light industry, but it was now ready to export capital goods.

Japan considered that there was plenty of room to expand exports
of capital goods to Australia. 'I would appreciate it if you could
consider importing our capital goods.'

9. KISHI said that Japan wished the negotiations on trade to take
place in Canberra, but for the signature to take place in Tokyo.

They would appreciate it if Mr McEwen could come to Tokyo to sign
the agreement.

10. KISHI then referred to cultural exchanges between Japan and
Australia. Within the past two years Japan and Australian cultural
exchanges had developed, and he was quite satisfied with it. But
even if no cultural agreement could be reached, he felt that we
could further expand cultural relations between our two countries.

For its part, Japan should like to have an exhibition in Australia
of ancient Japanese (which they had hoped to arrange last year but
had been unable to accomplish). We could think of exchanging
students and perhaps professors and establish a Japanese-
Australian Cultural Society. KISHI said he would appreciate it if
Australia could co-operate in that way.

11. KISHI also referred to an exchange of visits of Parliamentary
delegations. He understood that MR MENZIES had already given some
thought to this. KISHI said he thought that this would be very
significant in promoting friendship. KISHI said that the Japanese
Government would have to consult the Diet, but would like to take
concrete steps to instigate this exchange of visits.

12. KISHI also extended an invitation for an Australian industrial
mission to visit Japan. He linked this to the expansion of
Japanese capital exports. He invited a mission of five or six
people to visit Japan this year.

13. KISHI lastly referred to the establishment of a direct
wireless circuit between Australia and Japan. Telegraphic and
telephone traffic between the two countries had increased so much
that we could have a direct circuit established. He appreciated
that there might be complications inside the Commonwealth, but he
felt the direct circuit would be helpful in our relationships,
including economic relationships.

14. When KISHI finished, MR MENZIES, after expressing thanks for
the welcome he had received, said: 'I was very touched to be
greeted at the aerodrome by so many distinguished men. I am
looking forward to talks here. I think perhaps I should say just a
little about the attitude of Australia to Australian-Japanese
relations since the war. My own Government came into office at the
end of 1949, and, at that time, it is necessary to recall, there
was a very strong and frequently bitter feeling in Australia
against your country. My own attitude on that, and the attitude of
my colleagues, I can put quite shortly: it was a bad thing to
perpetuate attitudes of that sort, and a good thing to promote
better relationships. In particular, we felt that Japan must
politically be brought back into the full community of nations,
and for that reason we have been one of the great advocates of
Japan's admission to the United Nations. We felt that, because we
regard this as a very great country and a proud country which
should be existing in terms of friendship with countries that have
the same feelings. Anyhow, it is part of the tradition in British
countries that when you have had a fight you shake hands and have
friendly relations. And that was part of our general approach.

15. 'Our other point of view was on the economic side. We
believed, and still believe, that the Japanese economy should be
strong. You have a big population and have been a great trading
nation and will undoubtedly be one again. It is of great
importance that you should not be hindered by unnecessary policies
on the part of the rest of us. We had ideas of that kind in our
mind when we actively sponsored Japan's admission to the Colombo
Plan, because we felt it was related to Japan's economic
development.

16. 'We believe that particular causes of irritation should be
removed gradually-not all at once, because public opinion has
always to be considered by politicians, but steadily. The matters
you have referred to as cleared up have been in our minds too.

When you consider these past seven years, what has been achieved
in those seven years has been remarkably good.

17. 'I would like to add personally that the development of these
relations has been remarkably developed by our diplomats at each
end. In Canberra we have had MR SUZUKI. No one could have done
more and few could have done as much.

18. 'One thing I would like to repeat and emphasize: you have your
political problems, we have ours. We have ours complicated by a
Federal Government and six State Governments who possess extensive
powers. That means there are some problems we can deal with for
ourselves, subject to public opinion and elections, but there are
others we can handle only with substantial agreement from the
State Governments and Parliaments. I will come back to that
because it has a bearing on one or two problems mentioned by you.

19. 'But before doing that, I should like to refer to one or two
remarks at the end of what you had to say, while they are still
fresh in my mind. I am very much struck by Your Excellency's ideas
on cultural contact in the broadest sense. I firmly believe that
more things are settled by human contact than people sometimes
realize. When I return to Australia I shall immediately look into
the suggestions you have made about an exhibition of art, and I
will talk to our educational authorities about the exchanges you
have mentioned of teachers and professors.

20. 'I can also say I will be prepared to send a delegation of
Members of Parliament to Tokyo, with the thought that you may wish
to send a delegation to us. The delegation need not be large-
enough to give a fair representation to the different interests,
such as Government and Opposition. The details of that could be
taken up immediately through diplomatic channels and the
appropriate Parliamentary officers.'

21. In referring to the trade discussions, MR MENZIES said: 'It is
very difficult and perhaps undesirable for me to go into any
detail, because I am not personally taking part. The negotiations
are going on in Canberra just now, and I do not want to say
anything to interfere with the success of those talks. We have
gone into these negotiations because we recognize the problems you
face in trade with Australia-you being big importers from us, and
we being smaller importers from you. But you will no doubt
appreciate that there are a lot of difficulties that will take a
lot of discussion to solve. I hope they will be solved. Let me
give an example. Our greatest export to you is wool. But coming
into Japan, wool does not compete with something here-it is a raw
material for industry-whereas, in the past, Japanese exports to
Australia are mostly finished goods which compete with Australian
industry. But these are commonplaces, well understood on both
sides. Our negotiators are looking at this. We have a system of
import control to protect our balance of payments. We cannot
discriminate between one country and another-at least non-dollar
countries-without falling foul of GATT. In relaxing our import
controls we have to do it evenly.

22. 'But I think it is quite true to say that we do understand
your problem. We know perfectly well that if you take the world
picture as a whole, you will not be able to buy if you cannot
sell.

23. 'The point you have made about a possible extension of exports
of machinery and mechanical equipment is one I would be glad to
look at, though I would like to make a comment right away. We, as
a Government, are not importers. We do not buy any considerable
amount. State Governments buy more, contractors and private
individuals buy a lot more, but the Commonwealth Government buys
little. Therefore, private industry has to be brought into the
picture. That is why I am attracted by your suggestion of an
industrial mission, and I suggest that might be reciprocated in
the industrial field, if that is where you see possibilities of
expansion. Let me give you an example. The French Government used
to be worried about the lack of balance of its trade with
Australia. I used to say to the French Ambassador "We can't buy
more perfumes and things like that. What else do you have that
Australia needs?" He would say "plant and industrial equipment". I
told him that the big French industrial firms should send out
representatives to Australia to see what we needed that France
could supply. They did so, and secured a big contract in the Snowy
Mountains.

24. 'Otherwise I have noted what you have said. I will be home in
a couple of weeks and I will discuss it all with Mr McEwen.'

[matter omitted]