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222 Agreement On Commerce Between The Commonwealth Of Australia And Japan: Published Letters And Agreed Minutes

6th July, 1957


The Rt. Hon. J. McEwen,
Minister for Trade
Your Excellency,
With reference to the Agreement on Commerce between Japan and the
Commonwealth of Australia signed today, I have the honour to
inform your Excellency that the most-favoured-nation provisions of
the said Agreement shall not apply to advantages which are
accorded or which may be accorded hereafter by Japan to such areas
as are set forth in Article 3 of the Treaty of Peace with Japan
signed at the city of San Francisco on September 8, 1951, so long
as the situation set forth in the second sentence of the said
Article continues with respect to the administration, legislation
and jurisdiction over those areas.
I have further the honour to request your Excellency to be good
enough to confirm the foregoing understanding on behalf of your
Government.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Foreign Affairs
6th July, 1957

Minister for Foreign Affairs,
Tokyo
Your Excellency,
I have the honour to acknowledge receipt of your Excellency's Note
dated 6th July, 1957, which reads as follows:
'With reference to the Agreement on Commerce between Japan and the
Commonwealth of Australia signed today, I have the honour to
inform your Excellency that the most-favoured-nation provisions of
the said Agreement shall not apply to advantages which are
accorded or which may be accorded hereafter by Japan to such areas
as are set forth in Article 3 of the Treaty of Peace with Japan
signed at the city of San Francisco on September 8, 1951, so long
as the situation set forth in the second sentence of the said
Article continues with respect to the administration, legislation
and jurisdiction over those areas.
I have further the honour to request your Excellency to be good
enough to confirm the foregoing understanding on behalf of your
Government.'
On behalf of the Government of the Commonwealth of Australia, I
have the honour to confirm the understanding stated in your
Excellency's Note with respect to the application of the Agreement
on Commerce between the Commonwealth of Australia and Japan signed
today to the areas specified in Article 3 of the Treaty of Peace
with Japan.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Trade
6th July, 1957

Minister for Foreign Affairs,
Tokyo
Your Excellency,
With reference to the Agreement on Commerce between the
Commonwealth of Australia and Japan signed today, I have the
honour to inform your Excellency that the provisions of this
Agreement shall not apply to any of the external territories
administered by the Government of the Commonwealth of Australia
nor to any advantages which are accorded or which may be accorded
hereafter between the external territories and the metropolitan
territory of Australia.
I have the honour to request your Excellency to be good enough to
confirm the foregoing understanding on behalf of your Government.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Trade
6th July, 1957

The Rt. Hon. J. McEwen,
Minister for Trade
Your Excellency,
I have the honour to acknowledge receipt of your Excellency's Note
dated 6th July, 1957, which reads as follows:
'With reference to the Agreement on Commerce between the
Commonwealth of Australia and Japan signed today, I have the
honour to inform your Excellency that the provisions of this
Agreement shall not apply to any of the external territories
administered by the Government of the Commonwealth of Australia
nor to any advantages which are accorded or which may be accorded
hereafter between the external territories and the metropolitan
territory of Australia.
I have the honour to request your Excellency to be good enough to
confirm the foregoing understanding on behalf of your Government.'
On behalf of the Government of Japan I have the honour to confirm
the understanding stated in your Excellency's Note with respect to
the application of the Agreement on Commerce between Japan and the
Commonwealth of Australia signed today to the external territories
administered by the Government of the Commonwealth of Australia.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Foreign Affairs
6th July, 1957

The Rt. Hon. J. McEwen,
Minister for Trade
Your Excellency,
With reference to the Agreement on Commerce between Japan and the
Commonwealth of Australia signed today, I have the honour to
confirm on behalf of my Government the understandings concerning
the implementation of the Agreement which have been reached during
the negotiations leading to the signing of the Agreement, and
which are embodied in the Minutes attached hereto.
I have further the honour to request your Excellency to be good
enough to confirm the foregoing understanding on behalf of your
Government.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Foreign Affairs
6th July, 1957

The Minister for Foreign Affairs,
Tokyo
Your Excellency,
I have the honour to acknowledge receipt of your Excellency's Note
dated 6th July, 1957, which reads as follows:
'With reference to the Agreement on Commerce between Japan and the
Commonwealth of Australia signed today, I have the honour to
confirm on behalf of my Government the understandings concerning
the implementation of the Agreement which have been reached during
the negotiations leading to the signing of the Agreement, and
which are embodied in the Minutes attached hereto.
I have further the honour to request your Excellency to be good
enough to confirm the foregoing understanding on behalf of your
Government.'
On behalf of the Government of the Commonwealth of Australia, I
have the honour to confirm the understanding stated in your
Excellency's Note under reference.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Trade
6th July, 1957

Agreed Minutes

PART A
1. The Agreement provides under Articles I and II that Japan will
extend most-favoured-nation and non-discriminatory treatment to
imports from Australia. However, in view of the Japanese import
system, in order to translate these general provisions into
specific undertakings or understandings, the Japanese delegation
indicated the treatment that the Japanese Government intended to
accord to certain of the more important imports from Australia.
2. Accordingly, the Japanese delegation stated that it was the
intention of the Japanese Government:-
(a) to accord to Australian wool the opportunity of competing in
the global quota for wool for not less than 90 % of the total
foreign exchange allocation for wool each year and, subject to the
provisions of Article II of the Agreement, not to restrict the
total foreign exchange allocation for wool beyond the extent
necessary to safeguard its external financial position and balance
of payments;
(b) to admit Australian wheat and barley on a competitive and non-
discriminatory basis in accordance with the provisions of
paragraphs 3 and 4 below;
(c) to accord to Australian sugar the opportunity of competing in
the dollar and pound sterling common quota or the pound sterling
quota for not less than 40% of the total foreign exchange
allocation for sugar;
(d) to include Australia as a permitted source of supply for beef
tallow and cattle hides on the Automatic Approval list;
(e) to admit Australian dried skim milk on a competitive and non-
discriminatory basis in the global quota except for imports for
use in the Japanese school lunch welfare programme;
(f) to make reasonable provision for the import of Australian
dried vine fruits (raisins, currants and sultanas) in each year of
the three year period.
3. With respect to paragraph 2(b) in so far as Australian barley
was concerned, it was noted that in the past three years
Australian barley had accounted for about 30% of the total barley
imports of Japan. This had represented reasonable treatment. It
was agreed that this treatment could be expected to be maintained
in the Japanese market.
4. With respect to paragraph 2(b)in so far as Australian soft
wheat was concerned, it was agreed that:
(a) Australian soft wheat could be expected to secure a
substantial share of the Japanese market in the absence of non-
commercial purchase arrangements and unfair trade practices by
third countries, but it was difficult to define a fair share in
precise terms for the following reasons:
(i) the character and capacity of the Japanese wheat market has
changed since before World War II when Australia was the major
supplier;
(ii) Japanese millers and consumers have had no recent experience
of Australian soft wheat due initially to the world-wide post-war
wheat shortage and subsequently to imports of wheat under non-
commercial arrangements regarding surpluses or to related inter-
Governmental arrangements affecting Japan's wheat imports.
(b) (i) If in any year of the Agreement the opportunity for
Australian soft wheat to compete freely in the Japanese market
should be impaired due to transactions not conforming with normal
fair trade or commercial practice, the Japanese Government would
take steps within its power to ensure that imports of Australian
soft wheat which would be purchased through commercial channels
and on a competitive basis, represented an equitable share of the
Japanese market. The existence of such circumstances and the share
of the market to be regarded as equitable would be established
through consultation between the two Governments. However, it is
expected that at least in the early stages of the Agreement, under
normal commercial considerations, Japanese imports of Australian
soft wheat would be over 200,000 tons with yearly increasing
trend. When the Japanese Government takes steps in accordance with
the result of such consultation, offers of wheat by the Australian
Wheat Board will be in accordance with its normal commercial
considerations.
(ii) In the context of the present Minutes, the terms 'Australian
soft wheat' is understood to mean Australian wheat of f.a.q. or
lower grades. Grades of Australian wheat of high protein content
superior to f.a.q. and sold at a premium shall be regarded as
being outside the scope of sub-paragraph (i) above, and Japanese
imports of Australian wheat of this type shall be on a competitive
and non-discriminatory basis.

PART B
1. The Australian Delegation pointed out that Australia had
already bound against increase the rates of duty on a relatively
large number of items to other countries which were of export
interest to Japan and consequently by extending most-favoured-
nation treatment to Japanese goods in the Australian Tariff,
Australia did in fact assure a stability of tariff treatment of
Japanese goods that was of considerable importance. On the other
hand, the principal items of export interest to Australia in the
Japanese market were not subject in the Japanese Tariff to binding
against increased duties and consequently there was not a
comparable assurance of stable tariff treatment being accorded to
Australia by Japan. Moreover, the fact that many of the duties in
the Australian Tariff of export interest to Japan were already
bound against increase meant that they could only be raised after
considerable negotiation and compensatory payment in terms of the
tariff to other countries. By contrast, Japan, as emphasised by
recent reports from Tokyo, was in a position to vary materially
the tariff conditions applying to major Australian exports to
Japan. In order to meet these circumstances, an assurance was
requested that Japan would maintain the present duty free entry
for wool. In this connection, the Australian Delegation emphasised
that since wool accounted for such a high proportion of
Australia's total exports to Japan, Australia attached
considerable importance to continued duty free entry for wool into
Japan.
2. The Japanese Delegation noted the benefits which Japan would
receive in the Australian Tariff. It also noted that under the
Agreement, Japanese goods were entitled to those reductions in
most-favoured-nation rates of duty in the Australian Tariff which
were made effective in May, 1957, and that Japanese goods would
similarly be accorded the benefits of any further reduction in
most-favoured-nation rates of duty in the Australian Tariff
whether arising from trade negotiations with other countries or
otherwise. The Japanese Delegation stated that in view of the
great importance attached to the question by the Australian
Government, the Japanese Government would take no action to vary
the present level of duty on wool imports from Australia for a
period of three years after the date of signing of the Agreement.
3. The Japanese Delegation added that in making the statement in
paragraph 2, they had in mind that during the above-mentioned
three years of the Agreement, the Australian Government would
endeavour to move towards the application of the General Agreement
on Tariffs and Trade between the two countries.
4. The Australian Delegation in response said that the Australian
Government had in mind entering into discussion with the Japanese
Government at an appropriate time before the end of the above-
mentioned three year period of the Agreement (and in the light of
experience gained under the Agreement) with a view to exploring
the possibility and examining the basis of applying the General
Agreement on Tariffs and Trade between the two countries.
5. The Australian Delegation referred again to the importance
attached to continued duty free entry for wool into Japan and said
that the Australian Government would need to be free to review the
operation of the Agreement should there be an increase in the wool
duty. It was agreed that in relation to the discussions referred
to in paragraph 4, the present understanding on duty free entry
for wool into Japan would not be regarded by either country as a
prior commitment by Japan affecting those discussions. Both
Governments would be free to consider the tariff conditions under
which the General Agreement on Tariffs and Trade might apply
between the two countries.

PART C
1. During the course of discussions in connection with Article V,
the Australian delegation pointed out that the basis of Article V
was the mutual expectation that as a result of the Agreement there
would be increased opportunity for expansion of Japanese exports
to Australia without serious damage to Australian industry or
sudden and serious disruption of the pattern of Australia's
imports. This expectation was based on the premise that exports
from Japan in particular lines, especially in the products of
Australian industries historically or potentially particularly
liable to disruption in the event of an undue increase in the
volume of imports from Japan, would not be allowed to reach such
volume, or to be shipped under such conditions as would cause or
threaten serious damage of this kind. Since, in its view, the
accord of most-favoured-nation treatment to Japanese goods could
result in such a situation, it would welcome the co-operation of
the Japanese authorities in dealing with these situations and
considered that early and effective arrangements, if undertaken in
Japan, could make a substantial contribution to their solution.
2. The Japanese Delegation pointed out in reply that under
Japanese legislation export was free in principle and that the
Japanese Government could take only limited measures to deal with
these problems. However, the Japanese Delegation indicated that
the Japanese Government would use its best endeavours within its
constitutional authority to see that exports from Japan to
Australia were conducted in such a way as to avoid or remedy the
damage or prospect of damage to which the Australian Delegation
had referred.
3. The Australian Delegation stated that, in its view, the
development of the maximum practical degree of consultation
between the two Governments would be essential to the satisfactory
solution of any particular problem which might arise. The Japanese
Delegation agreed with this suggestion. In this connection it was
agreed that:
(a) effective liaison would immediately be established in Canberra
between the Japanese Embassy and the Australian Government and in
Tokyo between the Australian Embassy and the Japanese Government;
(b) statistical information would be provided by the two
Governments on a continuing basis;
(c) if either the Australian Government or the Japanese Government
was of the opinion that any product was being imported under such
conditions that serious injury were threatened, consultations
would be held immediately to endeavour to remedy the situation
without resort to special emergency action;
(d) in the event of a situation requiring the application of
Article V, the procedure provided for in that Article would be
adopted.
4. The Japanese Delegation asked for assurances that the
Australian authorities would not unreasonably take special action
of the kind envisaged in the Article, stating that the Japanese
Government agreed that it was important to the successful
operation of the Agreement and was also important in enabling
recourse to Article V to be avoided, that export from Japan be
conducted in an orderly manner so as to avoid serious damage in
the sense referred to by the Australian Delegation.
5. The Australian Delegation said that in the light of this
statement by the Japanese Delegation and in view of the mutual
expectation referred to in paragraph 1 it could say that the
following considerations would apply in respect of any action by
the Australian Government under Article V:
(i) Such action would not be taken except after consultation. In
every case, consultation would be as far in advance as
practicable;
(ii) Such action would not be taken lightly; and would be taken
only where the consultation process failed to provide a mutually
acceptable alternative solution to the problem. In cases where
urgency might require action to be taken before the consultation
process was completed, consultation would be continued in an
endeavour to find a mutually acceptable solution;
(iii) So far as administratively practicable such action would
apply only to those specific goods in respect of which the action
was necessary to correct the particular situation;
(iv) Such action would apply only for such time as was necessary
to correct the particular situation and would be discontinued
immediately this was achieved;
(v) Such action would be limited to cases where serious damage was
caused or threatened.

The Rt. Hon. J. McEwen,
Minister for Trade
Your Excellency,
I have the honour to refer to the following documents which have
been signed today by us:
(1) Agreement on Commerce between Japan and the Commonwealth of
Australia;
(2) Notes relating to territorial application;
(3) Notes relating to Agreed Minutes.
The agreements and undertakings between our two Governments
embodied in these documents will come into force on the date of
the entry into force of the Agreement mentioned in (1) above.
In view of the desirability of putting into operation, as soon as
possible, the agreements and undertakings embodied in these
documents, the Government of Japan proposes that, pending the
entry into force of the abovementioned documents, our two
Governments give provisional effect, within the limits of their
constitutional authority, to the documents as from today on the
understanding that such provisional effect may be terminated by
either Government subject to three months prior notice in writing.
If the above proposal is acceptable to your Government, I have the
honour to suggest that the present Note and your reply to that
effect shall be regarded as constituting an agreement between our
two Governments which shall enter into force on today's date.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Foreign Affairs
6th July, 1957

The Minister for Foreign Affairs,
Tokyo
Your Excellency,
I have the honour to acknowledge receipt of your Excellency's Note
dated 6th July, 1957, which reads as follows:
'I have the honour to refer to the following documents which have
been signed today by us:
(1) Agreement on Commerce between Japan and the Commonwealth of
Australia;
(2) Notes relating to territorial application;
(3) Notes relating to Agreed Minutes.
The agreements and undertakings between our two Governments
embodied in these documents will come into force on the date of
the entry into force of the Agreement mentioned in (1) above.
In view of the desirability of putting into operation, as soon as
possible, the agreements and undertakings embodied in these
documents, the Government of Japan proposes that, pending the
entry into force of the abovementioned documents, our two
Governments give provisional effect, within the limits of their
constitutional authority, to the documents as from today on the
understanding that such provisional effect may be terminated by
either Government subject to three months prior notice in writing.
If the above proposal is acceptable to the Australian Government,
I have the honour to suggest that the present Note and your
Excellency's reply to that effect shall be regarded as
constituting an agreement between our two Governments which shall
enter into force on today's date.'
On behalf of the Government of the Commonwealth of Australia I
have the honour to accept the proposal contained in your
Excellency's Note with respect to the provisional application of
the agreements and undertakings embodied in the documents listed,
signed today by us, and to accept the suggestion that your
Excellency's Note and my reply shall be regarded as constituting
an agreement between our two Governments entering into force on
today's date.
I avail myself, Excellency, of this opportunity to renew
assurances of my highest consideration.
Minister for Trade
6th July, 1957






[DFAT : AUSTRALIAN TREATY COLLECTION]

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