611B.9417/55
Memorandum by Mr. Eugene H. Dooman of the Division of Far Eastern Affairs of a Conversation With the Third Secretary of the Japanese Embassy (Hayama)
After an exchange of greetings, Mr. Hayama stated that he was sorry that the instructions which the Embassy had received in regard to the proposed arrangement covering imports of cotton textiles into the Philippines was not of a favorable character.
He recalled a conversation which Mr. Sayre had in July with the Counselor of the Japanese Embassy73 and said that he would now present the reply of the Japanese Government, as follows:
- 1.
- It had been noted that the allotment of 43,000,000 square meters which had been offered to Japan was based on figures of imports into the Philippine Islands since January 1, 1935. It was the belief of the Japanese Government that figures of such a brief period of time as three or six months did not afford a satisfactory basis for determining the respective shares of various countries in a given market; any arrangement of this character should be arrived at on a basis of the trade for at least one year. The imports into the Philippine Islands of cotton textiles during the three years 1932–1934 showed total annual imports of about 110,000,000 square meters; deducting an average of 10,000,000 square meters originating from countries other than the United States and Japan, there was left an average annual importation of 100,000,000 square meters from the United States and Japan; and applying the 50–50 principle, it was obvious that Japan was entitled to at least 50,000,000 square meters. In any [Page 992] event, the Japanese Government found it impossible to accept the proposed allotment of 43,000,000 square meters.
- 2.
- The Japanese Government wishes to point out three
considerations which would be advantageous to the United States
if the Japanese counter proposal of July 19 were accepted, as
follows:
- (a)
- Imports of Japanese textiles tend to exceed imports of textiles from the United States. The Japanese counter proposal would fix Japanese imports at approximately present figures and would thus operate to safeguard present American participation in the Philippine market;
- (b)
- Even if there should be next year any improvement in conditions in the Philippines, Japan would not be in any position to increase its exports, and, therefore, the United States would benefit by the anticipated improvement in economic conditions in the Philippines; and
- (c)
- If happily an agreement should be reached on the basis of the Japanese counter proposal, the restriction on exports from Japan would become operative as of July 1, 1935.
- 3.
- The Japanese Government could not see its way to recede from the position taken in the second item of its memorandum of July 19, to the effect that the American Government should obtain an undertaking from the Philippine Government that the tariff on cotton textiles would not be increased during the life of the agreement.
I said to Mr. Hayama that I had not acquainted myself fully with what developed during the month of July, when I was absent on leave, and that, therefore, I was not in any position to discuss the Japanese reply, above. I asked Mr. Hayama, however, how the figure of 50,000,000 square meters arrived at by the method of calculation which he had explained to me could be made compatible with the American proposal that the present trade of the Philippine Islands should be shared on a basis of substantial equality. I showed Mr. Hayama the figures of imports into the Philippine Islands during the three years mentioned, and pointed out that Japan’s share of the total cotton textile exports of the United States and Japan to the Philippines represented an average of 34%, as against 66% for the United States. I said that statistics of trade over a long period of time were customarily used to arrive at some figure which would equitably represent the share of any one country in a certain market; that, however, we had in this case believed that the 50–50 principle was an equitable principle; and that we proposed that that principle be applied to the present trade and not to a non-existent trade. I further stated that if Japan preferred to resort to figures over a period of time to determine what should be its share of the Philippine market, I felt certain that it would be satisfactory to us.
[Page 993]Mr. Hayama said that apparently there had not been a clear understanding of what our proposal contemplated; that he felt certain that he understood what the United States is desiring to accomplish and that he thought that today’s conversation had performed a useful purpose in clarifying this point.
I said that I would report to the Inter-Departmental Committee in regard to today’s conversation, and communicate with him again in due course.