The Australian Embassy has the honour to refer to the Note Verbale
No. 124/E4 dated 12th May, 1953 [1], from the Ministry of Foreign
Affairs regarding the restrictions maintained by the Australian
Government on the importation of Japanese goods into Australia.

The Embassy wishes also to refer to the Memorandum dated 27th
March, 1953, from the Japanese Embassy in Canberra to the
Department of External Affairs concerning the same subject. [2]

It is appreciated that the balance of trade between Australia and
Japan is substantially in favour of Australia and that, on a
bilateral basis, Australia has no balance of payments problem with
Japan. As a member of the Sterling Area, however, Australia must
view her import licensing controls on Japanese goods in relation
to the balance of payments between the Sterling Area and Japan.

After the conclusion of the United Kingdom - Japan Sterling
Payments Agreement of 31st August, 1951, Australia, together with
other members of the Sterling Area, relaxed appreciably her
restrictions 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
the current holdings of sterling as excessive.

Early in 1952, Australia was faced with an acute overall balance
of payments crisis. In order to meet this crisis, action was taken
drastically to restrict imports from all sources, including Japan.

This action was also in line with Sterling Area policy which, as
was advised to Japanese representatives, was designed to reduce
Japan's excessive sterling balances.

Subsequent improvement in the overall balance of payments position
has enabled the Australian Government to announce, with effect
from 1st April and 1st July, 1953, limited relaxations in the
severity of the non-dollar import restrictions. In view of the
rapid decline in Japanese holdings of sterling and to the extent
which Australian reserves would permit, restrictions on the
importation of 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 were added to the list of Japanese goods for
which import licences would be available during the quarter ended
30th June, 1953:

Velvets, velveteens and pile fabrics
Flannelette
Mosquito netting
Cotton blanketing and molleton
Plain poplins or broadcloth (not printed or piece-dyed)
Soft furnishings and curtain net (not printed or piece-dyed)
Handkerchief cloth (not printed or piece-dyed)
Microscopes for scientific purposes
Scientific instruments.

Concurrently with the relaxation of the restrictions on the
importation of goods from other non-dollar sources effective 1st
July, 1953, the Australian Government was able to extend still
farther the list of Japanese goods which may be licensed during
the quarter ending 30th September, 1953. These additional items
are listed in the attachment to this Note.

The Embassy notes the interest of the Ministry of Foreign Affairs
in increased importations of Japanese goods into Australia. The
relaxation indicated above are the maximum concessions which it is
possible to accord to imports from Japan at this stage. The
Embassy would like to assure the Ministry, however, that the
trends of trade and payments between the Sterling Area and Japan
are under close and continuous study by the Australian
authorities, and that the import licensing controls on Japanese
goods will be reviewed from time to time in the light of future
developments.

With regard to the Ministry's proposal for informal talks between
representatives of the Governments of Australia and Japan, the
Embassy would suggest that, in view of the recent relaxations,
there would now appear to be no necessity for these discussions.

However, any particular problems could, in normal course, be taken
up with the Australian Government by the Japanese Embassy in
Canberra. [3]