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

Conversation: Mr. Otoshiro Kuroda, Attaché, Japanese Embassy;
Dr. Frank A. Waring, United States Tariff Commission;
Mr. Dooman.

Mr. Dooman stated that on the occasion of the conversation which he had with Mr. Inouye, Commercial Secretary of the Japanese Embassy, and Mr. Kuroda on May 25, he had presented certain proposals in regard to the limitation of exports of cotton textiles from Japan to the Philippine Islands; that Mr. Inouye had observed that the American proposals would not in any respect meet the proposals put forward by the Japanese57 on May 7; and that Mr. Inouye had with great eloquence urged that there should be some modification of the terms [Page 969] proposed by the American side with a view to approaching the Japanese proposal. Mr. Dooman added that he had reported the Japanese viewpoint to his Committee, and that the Committee had now authorized him and Mr. Waring to put forward a revised proposal, as follows:

1. That any arrangement would be for a period of two years, subject to modification at the end of one year.

Mr. Dooman stated that this would not be the same thing as an arrangement for one year, for the reason that any modification proposed would naturally observe the principle and spirit of the arrangement. Mr. Waring added that revision at the end of one year might work out equally to the benefit of the Japanese as to their disadvantage; that if there were any improvement in business conditions the Japanese would be given an increased share of the market, but that correspondingly if there were no improvement it would not be practicable to grant any increase.

2. Exports of cotton textiles from Japan should be limited to a figure fixed at 40,000,000 square meters.

Mr. Waring explained that a survey of business conditions had been made and there were indications that imports to the Philippine Islands of cotton textiles would show a decrease as compared with last year. This was primarily due to a reduction in the arrangement for the purchase by the United States of Philippine sugar. However, the quota for purchases of Philippine sugar next year would be substantially increased, and it is, therefore, expected that the purchasing power of the Philippines would be correspondingly increased, and that there would, therefore, be next year an improvement in the cotton textile market.

3. No restrictions would be requested in regard to categories of cotton textiles.

Mr. Dooman said that this represented the elimination of one of the points of the original American proposal, and would operate to liberalize the arrangement.

4. There should be a semi-annual maximum exportation of 25,000,000 square meters. The suggestion in the original proposal that there should be a quarterly limitation had been withdrawn.

Mr. Dooman explained that the elimination of this restrictive measure, together with elimination of the restriction on categories of cloth, were intended to meet the desire of the Japanese for a more elastic arrangement. We took the view that the Japanese regarded the Philippine Islands as a permanent market for their products, and we felt confident, therefore, that the Japanese would not disrupt the [Page 970] market by methods which might give temporary profits but which would be dangerous to the Japanese from the long term point of view. We did not ask the Japanese to commit themselves specifically to regulating exports in accordance with the categories originally put forward, but we would welcome an assurance from them that they would cooperate in fostering the Philippine market.

5. The United States has no authority to supervise and regulate the tariff policy of the Philippine Islands, and, therefore, there would be no warrant in giving assurance that the Philippine Islands will not increase its duties on Japanese cotton textiles. It would be understood, however, that if the Philippine Islands substantially raised its duties on Japanese cotton textiles, the Japanese Government would be at liberty to terminate the arrangement.

Mr. Kuroda stated that he understood our proposal and that he would hasten to report to the Ambassador with a view to sending forward a report to the Japanese Government.

  1. See memoranda of April 30 and May 7, p. 960.