333. Memorandum of Conversation0

SUBJECT

  • Textiles

PARTICIPANTS

Prime Minister Ikeda pointed out that Japan has a system of voluntary controls over exports to the U.S., including textiles. Forty per cent of the goods exported to the United States are now under the voluntary control system. In 1957, the Japanese undertook the textile control program in good faith. However, the Japanese share of textiles imported into the United States declined from 75 per cent in 1957 to 18 per cent at the present time. Meanwhile, as a result of the self-control exercised by [Page 688] Japan, other countries expanded their textile exports to the United States. The Prime Minister stressed that Japan was concerned not only by the textile problem per se, but by the fear that the same process could occur with respect to other items presently under voluntary control by Japan. Japan does not wish to create a situation whereby the application of self-control in good faith results in a loss of United States markets to other countries. It hopes this situation can be borne in mind during the multilateral textile discussions.

Mr. Ball replied that the United States fully appreciates the unfairness of the situation created by Japanese self restraint in the textile field which has permitted other producing areas, particularly Hong Kong, to increase their imports into the United States to the point where Hong Kong’s imports are now greater than Japan’s. This situation is the major factor underlying our recent proposal for a multilateral agreement.

Mr. Ball said that there were a number of elements and considerations involved in the United States initiative for a multilateral textile arrangement. First, we wish to use as much pressure as possible against the nations invoking GATT Article 35 against Japan’s textiles or placing severe quantitative restrictions against Japanese textiles. We desire to persuade these countries to accept Japanese textiles without restriction. Mr. Ball mentioned that the United States is meeting tomorrow for two or three days with representatives of the seven principal importing countries: the United Kingdom, Canada, France, Italy, West Germany, Belgium, and the Netherlands. In this meeting we will seek an agreement that all nations should accept textiles at an increasing rate on the basis of a certain, still not decided, percentage of domestic consumption.

Mr. Ball said that the second step in our multilateral approach is to bring together the major producing and consuming nations. The GATT Council has accepted in principle a meeting of these nations to be called by the Secretary General of GATT. At this meeting, we hope to reach an understanding calling for acceptance of textiles by the consuming nations under agreed limits.1 We hope the producing nations will agree on these limits as well. In fixing the limits for the United States, we intend to take into account the helpful self-restraints imposed by Japan during the last few years. The third element in the multilateral arrangement is a formula for annual increases of imports into consuming nations. The fourth element would be steps to prevent circumventing the agreement by the substitution of other fibers. The fifth element would be measures to limit imports from producing nations not parties to the agreement.

Mr. Ball concluded that we are seeking in the multilateral arrangement full protection for Japan against the situation created by the unilateral [Page 689] Japanese voluntary control system. We are seeking increased imports of textiles but in a manner designed to avoid market disruption. Basically, the United States wishes to bring rationality and order into the international cotton and textile market. The Secretary concluded that we believe the record demonstrates that Japan has earned real consideration. He recalled that President Kennedy had made this point to the Japanese Economic Mission and that Ambassador Asakai had made a very effective case in his conversations with the Department. Nevertheless, there are limits due to political factors as to what the United States can do. The Secretary said that we will do what we can and suggested that Mr. Ball and the Japanese discuss how best we can proceed. Mr. Ball expressed the hope that the Japanese Government could give us full support in the multilateral textile discussions.

The Prime Minister expressed his appreciation for our frank discussion of the textile problem. He said the textile industry is a central industry in Japan and also the industry most friendly to the United States. He felt that he had not, until the discussions with the Secretary, understood the deep consideration given to the Japanese problem by the United States in the formulation of its plans for a multilateral arrangement. He assured the Secretary that Japan, in the interest of free trade, would cooperate fully with the United States.

  1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Swayne and approved in S and B. See the source note, Document 331.
  2. See footnote 2, Document 371.