694.113Lumber/107

The Secretary of State to the Chargé in Japan (Neville)

No. 588

Sir: Reference is made to your despatch No. 1139 of April 4, 1929, transmitting a translation of a memorandum addressed to you by the Foreign Office on March 30, 1929, in reply to a memorandum left by you with the Vice Minister for Foreign Affairs on March 23 in regard [Page 265] to the apparently discriminatory treatment to which American lumber is subjected in the new Japanese lumber tariff. The Department has also received your despatch No. 1203 of June 15, 1929,42 containing your own comments on this situation.

The Department has given careful consideration to the contents of the memorandum of the Japanese Government, but finds it difficult to reconcile a number of the statements contained therein with information which has been received through other sources, and which clearly indicate that the Japanese lumber tariff is discriminatory in fact against American products. While the Department does not wish at present to make a formal protest to the Japanese Government in regard to this matter, it is not without hope, especially in view of the possibility suggested in your despatch No. 1203 of June 15 that the discrimination may be fortuitous rather than intentional, that further informal representations to the Japanese Government may bring about the elimination of the discriminatory features of the Japanese lumber tariff, and it, therefore, desires that you take the matter up with the Japanese Foreign Office in the following sense:

It is stated in the second numbered paragraph of the note verbale of March 30, 1929, that one-half of the logs of kedar, or benimatsu, a wood largely produced in Continental Asia, actually imported into Japan are made into ordinary boards 3 bu 5 rin in thickness, and are used as floor boards, roof boards, for making doors and other fittings, et cetera, the remainder being used for making moulds, various kinds of woodwork, et cetera, and that, therefore, kedar is limited in the uses to which it is put, and unlike North American lumber, is not capable of being used for general purposes. According to investigations which have been made by American lumber importers in Japan, however, kedar logs imported into Japan are sawed into flitches, baby squares, boards and panels, in which forms the wood goes into general use and enters into direct competition with American woods, particularly Port Orford cedar. These findings coincide with statements contained in a pamphlet advertising kedar recently published by the Nichiro Mokuzai Kabushiki Kaisha, a Japanese firm which acts as the distributing agent in Japan of the Dallas lumber trust, to the effect that kedar has won distinction in the Japanese market and has been enjoying an increased demand since its introduction, owing to the fact that it can be used in the same way as American lumber and is of a better quality.

It is stated in the third numbered paragraph that the imports of kedar into Japan amount to no more than between 500,000 and 700,000 koku (60,000,000 to 84,000,000 feet B. M.), which is equivalent to only 6 per cent of the total imports of North American lumber, and that [Page 266] no further increase can be expected when consideration is given to the condition of the forests in the places where it is produced. The pamphlet of the Nichiro Mokuzai Kabushiki Kaisha, above referred to, however, asserts that imports of kedar into Japan in the year 1927 amounted to 970,000 koku (116,400,000 feet B. M.), with expectations of a much larger volume of imports in 1928, and that the amount of kedar which can be shipped is estimated at about 5,000,000 koku (600,000,000 feet B. M.) annually. On the basis of the present volume of consumption of lumber in Japan, imports of kedar in the amounts anticipated by the Nichiro Mokuzai Kabushiki Kaisha would render probable the displacement of a substantial percentage of the present volume of imports from the United States. In view of the practical certainty that the favorable tariff treatment accorded kedar will give an immediate impetus to the development of logging facilities in the regions where it is produced and further stimulate imports of this wood into Japan, this Government cannot but concur in the apprehensions of American shippers regarding the adverse effects which the less favorable tariff treatment accorded to American lumber in the Japanese tariff will have upon their trade with Japan.

It is true, as pointed out by the Japanese Government, that the tariff rates in question are differentiated according to the kinds of woods, that the differentiation is not concerned with the place of origin of the woods, and that woods of American origin corresponding to the genera Abies, Picea, Pinus and Larix are subjected to the tariff rates applicable to kedar, which belongs to the genus Pinus. This Government is of the opinion, however, that the foregoing considerations are by themselves inconclusive in showing the absence of discrimination in fact and that the question of competition between woods of different species must also be taken into account. That is to say, certain woods of the same genus vary materially from each other, while conversely certain woods of different genera have in common essential properties which render them interchangeable in their uses. For example, it would appear from this Government’s study of this subject that kedar is extensively used in the interior woodwork of Japanese houses, whereas most woods of the pine family produced in the United States contain rosin, which renders them unacceptable to Japanese consumers for such use. On the other hand, a kind of American wood widely used for this purpose is Port Orford cedar, which belongs to a different genus and which is subjected to a relatively high rate of duty. Similarly, it is understood that yolka, a species of fir (Abies) produced in Siberia and Manchuria, competes with American West Coast hemlock in the supply of material of a lower grade entering into the construction of Japanese houses, and yet the latter is subjected to a higher rate of duty.

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In view of the assurances of the Japanese Government that the tariff in question is not designed to constitute any discrimination against American lumber in favor of kedar, this Government would be reluctant to believe that it is the intention of the Japanese Government to favor the trade of particular countries at the expense of American trade, an inference which might readily be made from a study of the practical effects of the tariff, and it is confident that the Japanese Government upon having the above considerations brought to its attention will discontinue the application of duties which discriminate in fact against American lumber.

You will note that the figures given herein for the imports of kedar into Japan are from an unofficial source; if official figures are available, it would be preferable to substitute them for those given.

I am [etc.]

For the Secretary of State:
J. P. Cotton
  1. Not printed.