Foreign Relations of the United States Diplomatic Papers, 1935, The Far East, Volume III

611.003 Lead Pencils/96

Memorandum by Mr. Eugene H. Dooman of the Division of Far Eastern Affairs

[Washington,] April 18, 1935.

Conversation:	Mr. Takemi Miura, First Secretary, Japanese Embassy;
	Mr. Toyoji Inouye, Commercial Secretary, Japanese Embassy;
	Mr. Otoshiro Kuroda, Attaché, Japanese Embassy;
	Mr. Dooman.

Mr. Inouye said that the arrangement made last year in regard to imports of wood-cased lead pencils into the United States from Japan was working satisfactorily; that Japanese manufacturers and exporters had been cooperating to make the arrangement a success; and that the Japanese Government would now like very much to obtain on their behalf some relaxation of the restrictions. He stated that when the arrangement was made last year the Japanese Government had been obliged to crack a whip over the manufacturers and explorers, who were intolerant of limitation of exports from Japan, but that as the pencil trade had faithfully observed the terms of the arrangement, it was desired “to give them something sweet”.

I agreed that the arrangement had worked effectively.

Mr. Inouye went on to say that, as the Japanese had exported less than they were permitted to export to the United States, he wondered whether it might not be well to abandon the arrangement. He felt confident that, even if there were no arrangement, pencil exports would not exceed the amount stipulated in the existing arrangement.

I replied that it was my function only to transmit to the Committee on Economic Policy anything which the Japanese Embassy might have to say, but that I would deplore termination at this time of the pencil arrangement. I pointed out that imports of pencils for the year would amount to about 95,000 gross, or 30,000 gross less than the amount permitted; that there was widespread discussion of “Japanese competition”; and that it would be most useful if both sides could point to the working of the pencil arrangement as an example of the manner in which trade problems could be worked out in a friendly and cooperative manner.

Mr. Inouye said that he, personally, agreed with me. He had put the suggestion forward because he had been directed to do so, but he did not feel disposed to press it.

He hoped, however, that if the arrangement is to be continued, we could next year (beginning May 1, 1935) make the following concession:

The present arrangement provides that not more than 25,000 gross shall be imported in any one month nor more than 45,000 gross in any one quarter, in order that the quota might be evenly distributed over the entire year. As the trade has now become stabilized, Mr. Inouye had no fear that excessive amounts would be imported over a short period, with consequent flooding of the market. He would, therefore, like to have the monthly and quarterly maxima removed, and the present quota divided into semi-annual allotments of 62,500 gross each.

I replied that I would put forward his proposal to the Committee.⁴⁹

49. This was done in a report with recommendations dated May 3, and the proposal to resume discussions on lead pencils was approved by the Executive Committee on Commercial Policy (611.003 Lead Pencils/137).