14th January, 1954
Interview with Japanese Ambassador The Japanese Ambassador, during a call on me this morning, presented an Aide Memoire on Japanese trade. [1] He said that Japan had been unable to buy its intended quantities of wheat from Australia because of lack of sterling. The Note drew attention to Sir Arthur Fadden’s statement of 3rd July announcing a relaxation of import restrictions [2], and expressed regret that this relaxation had not been followed by a substantial increase in exports from Japan.
I told Mr Nishi that Australia was very sympathetic to Japan’s economic difficulties and also assured him that his Aide Memoire would be examined as quickly as possible and given serious attention. I asked him where Japan was buying its wheat in view of the lack of sterling and he replied that it was being obtained in dollar countries, particularly Canada and the United States. I remarked that, though it was not easy to buy dollars with sterling, it was quite easy to buy sterling with dollars and that I hoped Japan would not try to balance its trade bilaterally as this would benefit neither Japan or other countries. Mr Nishi replied that Japan found that it was being forced increasingly to try to make bilateral settlements. For example, until recently it had sold much more to Pakistan than it had bought, but Pakistan had cut down its purchases in order to get a better balance. On the other hand Japan was being asked by Canada to increase its purchases from that country. He pointed out that Japan had already a trade agreement with Canada but had nothing with Australia and he referred to his Government’s proposal of 5 November-there should be new trade talks between Australia and Japan.
I told Mr Nishi that I was not personally familiar with the details of the matter and would, therefore, have to postpone discussion of his Aide Memoire until other Government Departments had had an opportunity to look at it. However, speaking without any close knowledge of the subject, I thought that one reason why Japan was having difficulty in expanding its exports, even to Australia, was that Japan’s costs were too high in some lines. Mr Nishi replied that might be true in some cases but that in some fields, such as toys, he thought there could be many more exports to Australia if we relaxed our import restrictions.
Mr Nishi indicated pretty clearly, without saying so directly, that if Australia took more imports from Japan, Japan would be prepared to buy some Australian wheat. It will be noted that the second last sentence of his Aide Memoire also refers to the likelihood of Japan reducing its imports of Australian wool unless the balance of trade improved in Japan’s favour.
Mr Nishi asked that the Aide Memoire be brought to the personal notice of the Prime Minister, the Treasurer and other relevant Ministers. He said we might also show it to Mr Butler (the UK Chancellor of the Exchequer) and that Japan would have no objection to our doing so.
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1 Document 48.
2 See note 2 to Document 35.
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[AA : A1838/278, 3103/10/2, iii]