894.655/1–2249: Airgram
The Secretary of State to the Acting Political Adviser in Japan (Sebald)
A–28. Reference your airgram A–15, January 22, 1949.1
(1) British Minister and aides meeting with Department representatives requested U.S. approval of joint U.K.–U.S. textile mission January 24, and indicated interest in reaching understanding with Japanese industry representatives and SCAP concerning long-range role of Japanese [Page 668] textiles in world trade. It was suggested that unless such understanding could be reached, discrimination against Japnese textiles might become necessary, and further, that without such understanding British industry hesitates to go forward with their own rehabilitation plans.
In reply, it was stated that the request for a joint U.S.–U.K. textile industry mission would be discussed with the Department of the Army and with SCAP before determining the attitude of this government. It was also stated that Japan is expected to compete in the world markets in accordance with the rules of trade followed by other nations and in accordance with the principles of the ITO Charter2 when adopted, and that further it was not anticipated an industry such as textiles would be restricted as to its role in international trade either through the treaty of peace or government understanding.
(2) Dr. Claudius Murchison of the Cotton Textile Institute requested a conference with government officials on behalf of five cotton textile associations. A meeting was arranged for February 3 with representatives of State, Commerce and Army. Representatives of the textile associations expressed concern over the softening of the export market in textiles and attributed price decline to the selling and pricing policies followed in disposing of Japanese textiles. They expressed sympathetic interest in the proposal of Sir Raymond Streat for a U.S.–U.K. textile mission to Japan but indicated that final decision of the industry’s views was being withheld pending discussion of possible representation by the United States Government concerning discrimination against American textiles in the sterling area. However, the U.S. textile industry representatives did not mention an agreement as to the future role of Japanese textiles in world trade as an objective of the mission. They stressed the importance of the general review with SCAP and with Japanese textile representatives of world textile trade prospects taking a long-run view. Furthermore, they showed no interest in an early departure of such a mission.
It was suggested to them that if the industry representatives decided to join with the U.K. in requesting that a mission be sent, a letter should be written to the Department setting forth the purposes of the mission and the results which they contemplated. In answer to a direct question from the industry group it was stated that the cotton textile industry of Japan has never been regarded as subject to control for security reasons and that no limitation to the rehabilitation of the industry in a peace treaty or otherwise had received consideration. The U.S. interest in encouraging the development of a well rounded and self-supporting Japanese economy in order to relieve the burden of American taxpayers was explained. That the U.S. Government [Page 669] would insist that Japan avoid resort to unfair trade practices such as may have characterized some of its deals in the 1930s was also emphasized. With respect to the question of lack of available dollar exchange in the sterling area for the purchase of U.S. textiles, it was suggested the Department be furnished with the facts of the situation including specific instances of limitations on U.S. textile exports whereupon the Department would consider taking the matter up with the U.K. Government.
(3) On the afternoon of February 3, Sir Raymond Streat discussed the question of a textile mission with Department representatives. Sir Raymond followed the same approach as Dr. Murchison, stressing the desirability of a thorough review with SCAP and the Japanese textile industry representatives of the world cotton situation including the prospects for Japanese textiles in world trade. He made no mention of reaching an understanding concerning Japan’s role in textile export trade. He considered it most important from the point of view of avoiding a further softening in the textile export trade and of giving reasonable encouragement to the rehabilitation of the British textile industry that the U.S. and the U.K. give the appearance of having the situation under control by sending a joint mission to Japan, Sir Raymond was anxious to have an early announcement made that a mission had been approved but he thought that September of this year would be an appropriate time for the mission’s departure.
In reply, it was stated that U.S. textile industry representatives had not yet requested approval of the proposed mission but as soon as such a request was made the Department would consider the matter in consultation with other departments of the Government and SCAP and would inform the British Embassy of this Government’s position.
(4) The Department recognizes that the U.K. will continue to relate its interest in Japanese textile production to the question of granting M–F–N treatment to Japan and that taking an hostile attitude toward the proposed mission would militate against success in this regard at the next GATT conference. The Department is concerned however that before a mission is undertaken its terms of reference be agreed to by both governments.
In Department’s view, textile surplus alone cannot be made subject of intergovenmental commodity control agreement under Chapter VI of Charter. Inclusion of textiles in a commodity control agreement would only be possible in an agreement directed to a burdensome surplus in cotton, and then only in the contingency that inclusion of textiles significantly helped to alleviate the cotton problem.
It is believed that such a mission should operate strictly within an information giving, fact-finding framework. The mission should not be given authority to attempt arrangements which would be inconsistent [Page 670] with, the Charter, e.g. arrangements for the fixing of prices, allocation of markets or limitation of production.
(5) It is suggested that the substance of the Department’s position may appropriately be brought to SCAP’s attention. The airgram under reference was very timely and helpful to the Department.
- Not printed.↩
- Signed at Havana, March 24, 1948; for text, see United Nations Conference on Trade and Employment, Final act and related documents (Havana, March 1948); UN document ICITO/1/4. For documentation on the conference, see Foreign Relations, 1948, vol. i, Part 2, pp. 802 ff.↩