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

611B.9417/72

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

[Washington,] September 30, 1935.

Conversation:	The Japanese Ambassador;
	Mr. Seijiro Yoshizawa, Counselor of the Japanese Embassy;
	Mr. Sayre;
	Mr. Dooman.

Mr. Sayre stated that throughout the extended negotiations which had been carried on between the Department and the Japanese Embassy, the American Government has been endeavoring to give effect to the principle that the United States and Japan should participate equally in the Philippine textile market. Careful consideration has been given to the proposal of the Japanese Government that the volume of Japanese exports to the Philippine Islands be limited to 45,000,000 square meters, and in the light of the most recent figures the American Government believed that that figure would operate to give both the United States and Japan a fair and equitable share of the Philippine market. Mr. Sayre stated that the American Government appreciates the cooperative spirit displayed by the Japanese Government throughout the negotiations, and that it is glad to receive this evidence of the Japanese Government’s intention to join with the United States in endeavoring to stabilize commercial relations between countries.

Mr. Sayre stated that it would be the desire of the American Government, in entering into a gentlemen’s agreement with Japan, to conclude the arrangement in the form of an unilateral declaration by each party.

Mr. Sayre then referred to the desire of the Japanese Government that the American Government refrain from taking any action calculated to persuade the Philippine Government to increase its duties on cotton piece goods so long as imports of Japanese cotton piece goods do not exceed annually 45,000,000 square meters. He stated that the American Government would be prepared to give such an undertaking, but that in doing so it desired that the Japanese Government bear in mind two points, as follows:

a. The present Administration confidently expects that it will be re-elected to office after January 1, 1937, but it is unable to give any undertaking which would be binding upon the next Administration;

b. A trade conference is to be held between the United States and the Philippine Islands next year, and it is possible that the question of an increase in the tariff on cotton piece goods may arise. In any event it is unlikely that any such increase would come into operation during the life of the present gentlemen’s agreement.

Mr. Sayre then continued to say that it was the opinion of the American Government that the proposed arrangement should begin as of July 1, 1935. The conversations were initiated in April of this year, it had been proposed by the American Government that the arrangement if made should come into effect as of May 1. Mr. Sayre pointed out that the Japanese desired that it begin as of July 1, and although the American Government had not accepted this proposal it was giving it favorable consideration. Mr. Sayre believed that in view of the large shipments which were made during the past summer from Japan in anticipation of the gentlemen’s agreement being concluded, the arrangement should come into effect as of July 1.

Mr. Yoshizawa stated that although the Japanese Government had some time ago indicated its preference for July 1, the association for controlling the trade to the Philippines had been organized on August 27, and it seemed appropriate that the arrangement should come into effect on the date that such association was formed.

The Japanese Ambassador asked Mr. Sayre what the attitude of the American Government was in regard to the Japanese proposal that transference of 10% of the semiannual and annual allotments might be made. Mr. Sayre stated that the American Government had no objection to such an arrangement, but that he did not feel disposed to concede this point if the Japanese insisted upon August 27 as the date on which the arrangement should begin. The Japanese Ambassador then suggested that he would urge his Government to agree to August 1 if the American Government were prepared to accept the Japanese proposal in regard to transference of 10% of the allotments. Mr. Sayre replied that such an arrangement would be acceptable.

In regard to exports from Japanese cotton mills in China, Mr. Sayre stated that that would not come within the four corners of this arrangement. On the other hand it is our understanding that Japanese piece goods transshipped at Hong Kong and other points would be included in the Japanese allotment. The Japanese Ambassador and Mr. Yoshizawa stated that they concurred in that understanding.

Mr. Sayre added as a final point that it would be our understanding that the figures of imports compiled by the Philippine Customs would be used in connection with the carrying out of this arrangement. Mr. Yoshizawa agreed.

After some review of the previous conversation, the Japanese Ambassador stated that there appeared to be complete agreement between the two Governments on all points except in regard to the question of the date on which the arrangement would begin. He undertook to report to his Government, and he hoped that he would be in position in a few days to make a reply.