Foreign Relations of the United States, 1961–1963, Volume XXII, Northeast Asia

336. Memorandum of Conversation⁰

Washington, June 21, 1961.

SUBJECT

• International Economic Groupings and US-Japan Economic Relationships

PARTICIPANTS

• [Here follows the same list of persons as Document 335.]

The President introduced the subject of the OECD, pointing out that the United States consulted fully with Japan before becoming a member. In spite of Japan’s great desire to enter the OECD the President did not think this to be the best time to press for admission.¹ The President described the European nature of the institution and its attempt to involve the United States and Canada in its affairs, but pointed out that Japanese membership in the OECD would naturally lead to a demand by the British for admission of Commonwealth nations such as India, Pakistan and Australia, thus destroying its basic character. The President expressed a preference for leaving the matter in abeyance for awhile.

The President commented on the role of the OECD in promoting the flow of capital among its members and wondered if it might not be desirable to establish a similar organization to do the same in non-European areas. The President indicated that the United States would consider such a proposal carefully.

The President noted that an inquiry by Japan on the question of Japanese admission to the OECD had been received prior to the Prime Minister’s visit but pointed out again that the Atlantic nature of the organization would be basically altered by the admission of Japan, which would open the door for applications by other Commonwealth nations.

He explained that most European peoples view the OECD as a means to promote greater unity in the Atlantic Community. Therefore, he concluded that it might be better to leave the matter in abeyance and instead, during the summer and fall, consider the establishment of a similar organization for the other Free World nations.

The Prime Minister noted that Japan is asked to join organizations which finance projects in underdeveloped nations, for example the DAG, but is excluded from trading blocs. He considers this to be most unfair. Should Britain enter the Common Market he feels that Japan’s trade position will deteriorate since such membership will no doubt lead to greater restrictions against her.

The President noted that British membership would pose a problem for the United States as well as Japan, as would the development of a Latin American trading bloc, both of which would decrease America’s export market. Perhaps trade could be increased with the former French colonies of Africa in place of the Latin American market.

However, the President felt that the integration of West Germany into the economic life of Europe is sufficient reason to support the development of the Common Market, because the orientation of post-Adenauer Germany is as yet unknown. He admitted that the United States would have to make a sacrifice to achieve this purpose and recognized that Japan’s sacrifice might be greater. In any event, these matters could be discussed with Mr. Ball.

The Prime Minister expressed particular pleasure with the establishment of the Joint Economic Committee. He also expressed his own and his nation’s appreciation for the generous manner in which the United States had negotiated a settlement of the troublesome GARIOA problem. Referring to the importance of Japanese-American trade the Prime Minister emphasized his view that the United States offers the greatest possibility for expansion of Japan’s export market.

The President assured the Prime Minister that the United States values all trade, including that with Japan. He reaffirmed the free-trade position of his administration and his intention to encourage trade liberalization. The President noted that American reciprocal trade legislation will be up for renewal by Congress next year, and observed that American cotton exporters do not articulately support such legislation despite the fact that they export more cotton to Japan than this country’s total cotton textile imports. Since those American manufacturers who are affected by imports are most articulate and energetic in their public opposition to it, the President forecast difficulty in securing renewal of the legislation next year. He emphatically stated his endorsement of liberal trade and promised to do his utmost to secure passage of the extension.

(At this point the President himself drew a graph, charting the constant level of Japanese imports from 1957 to 1961 under voluntary export controls in contrast to the sharply ascending line of imports from Hong Kong, which have this year surpassed those from Japan.)

The President considered this to be a most serious situation because of its inherent inequity. He indicated that demands for relief by the depressed American textile industry are a source of concern to him, for these articulate demands are focused on Congress. He promised to do his best to maintain a liberal trade policy in both the national and the world interest.²

The Prime Minister explained that Japan has embarked on a ten year program to double the national income. As advances are made Japan will increase her imports from the United States from the present $1.5 billion level annually to $3 billion annually at the completion of the program. The Prime Minister doubted that Japan could increase her purchases in the United States without reciprocal sales.

The President promised that Under Secretary Ball would maintain a continuing interest in this matter. He regretted again that those who benefit from liberal trade policies remain silent in politics while only those who are adversely affected are articulate. He hoped to find a way to stimulate and articulate reaction by those who benefit from their exports to Japan.

0. Source: Department of State, Central Files, 611.94/6-2161. Secret. Drafted by Wickel and approved in S on August 8 and in the White House on August 11. See the source note, Document 335.
1. According to a memorandum of a telephone conversation between Heller and Ball on June 14, Dillon had assured the British that the United States would not regard admission of Japan into the Development Assistance Group as a first step toward getting Japan into the OECD. Ball commented: “We are in a bad situation. The President is strong to get the Japanese in.” Heller stated that the OECD was based “on an assumption that we recognize” a “community of dedicated people in this business” who “in an organization like the OECD” find “themselves plotting against their own government to force a change. Whether you could get Japan in that frame of mind he does not know—the Oriental mind.” (Memorandum of telephone conversation by VH; Kennedy Library, Ball Papers, Japan)
2. At a meeting held with the President and a larger group of officials later that afternoon, the Prime Minister “expressed fears that the importing countries would gang up on the exporting countries in the multilateral [textile]talks. The President commented that the best protection for the exporting countries would be an effort to provide a mechanism for the orderly expansion of their markets. Under these circumstances, individual countries would not be hurt such as Japan had been by its multilateral restrictions.” Ball then described U.S. efforts to bring this about. Ikeda stated that Japan considered these efforts favorably. (Memorandum of conversation by Sneider; Department of State, Central Files, 611.94/7-1861)