Memorandum by Mr. Eugene H. Dooman of the Division of Far Eastern Affairs of a Conversation With the Attaché of the Japanese Embassy (Kuroda)

Subject: Japanese Exports of Cotton Textiles to the Philippine Islands.

Mr. Kuroda called to present Mr. Hayama, recently appointed Second [Third] Secretary of the Japanese Embassy, and profited by the occasion to bring up the proposal in regard to the above-mentioned subject which Mr. Waring, of the Tariff Commission, and I laid before him on June 5, 1935. He said that the Japanese were much gratified by the elimination of the suggestion that there should be limitation by categories of cotton textiles and that there should be quarterly maximum exports. The terms put forward were not, however, entirely satisfactory to the Japanese exporters and manufacturers, who, Mr. Kuroda said, had expressed to the Japanese Government the opinion that the American Government apparently wished to eliminate completely Japanese competition in the Philippine market and that upon the termination of the arrangement, if adopted, at the end of two years would place the Japanese entirely at the mercy of the United States. Mr. Kuroda said that he wished to read to me the statement made to the Japanese Government by the manufacturers, but I told Mr. Kuroda that I saw no reason why I should be made to listen to views which so egregiously distorted the desire of this Government to work cooperatively with the Japanese Government and to give full consideration to the question of preserving Japanese interests in the Philippine textile market; and I added that I could only suppose that the Japanese manufacturers had not fully understood our proposal.

Mr. Kuroda then proceeded to explain the Japanese position, which was as follows:

The proposed arrangement should be for two years;
The volume of trade of Japan should be regulated in the light of the volume for the nearest period prior to the arrangement coming into effect, and it should, therefore, be based on actual figures for the year 1934, or 56,356,982 square meters;
In regard to the suggestion that there should be a maximum limitation of 10,000,000 square meters for May and June, consideration [Page 972] should be given to the fact that such period will have practically come to an end before any arrangement can be put into effect;
The proposed arrangement should begin on July 1, 1935, and should continue until June 30, 1936, when it should be modified by the application of point 5 hereunder;
“Ten per cent of the maximum limitation should be flexible”, any excess over the maximum or unused balance thereof to be adjusted at the beginning of the second year;
The half year periodical maximum is agreeable to the Japanese, but the maximum in any half year should be 35,000,000 square meters; and
It is desired to obtain some guarantee or assurance “that the United States Government will do its utmost to prevent any increase in the tariff of the Philippine Islands”.

I said to Mr. Kuroda that I did not wish to discuss even informally the terms above outlined without Mr. Waring being present. I could not, however, allow the conversation to terminate without recalling the complaint of Mr. Inouye, the Commercial Secretary of the Japanese Embassy, that the original American proposals had not in any respect met the original Japanese proposals; and I hoped that the Japanese would give consideration to the fact that their new proposals not only did not meet our second proposals in any respect but that they contained one or two points which even went beyond the terms of their original proposals.

I said that I would report to Mr. Sayre as soon as possible and reply in due course.