2nd July, 1951
Cabinet Submission No. 32-Trade with Japan
I. refer to Cabinet submission No. 32 containing recommendations by the Minister for Trade and Customs for a relaxation of the present restrictions on the licensing of imports from Japan to permit the importation of limited quantities of Japanese consumer goods.
2. On general financial and economic grounds it is desirable that Australia should be able to obtain from abroad as much as possible both of equipment and materials for production and of finished consumable goods, currency conditions permitting. Increased imports lead to an addition of goods available in the domestic market without adding to local incomes so that there is a net drawing off of excess purchasing power.
3. Japan is at present treated as a ‘hard’ currency country because of SCAP’s right under the existing payments agreement to convert his sterling balances into dollars when they exceed Japan’s requirements. So far SCAP has not had occasion to use this right and Japan is at present short of sterling to finance her trade with the sterling area. The United Kingdom Government is currently seeking a new sterling payments agreement with SCAP which would exclude the danger of dollar liability and although the new agreement has not yet been concluded, the sterling area currency position is strong enough to allow a more liberal scale of import licensing.
4. Australia’s bilateral balance of payments with Japan has been very favourable. Trade figures for the first ten months of 1950/51 show a favourable balance of over A36m. in our trade with Japan.
Recommendation 5. From an economic and financial point of view it is recommended that the proposals of the Minister for Trade and Customs be supported. The political implications of allowing a restricted importation of Japanese consumer goods into Australia are of course not matters on which the Treasury can offer comment.
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[AA : A571/158, 46/1431, xv]