611B.9417/81
Press Release Issued by the Department of State on October 12, 1935
The Japanese Ambassador called on Mr. Francis B. Sayre, Assistant Secretary of State, on October 11, 1935, and stated that the recently formed Association of Japanese Exporters of Cotton Piece Goods to the Philippine Islands will, for a period of two years beginning as of August 1, 1935, and provided there is no increase in the Philippine tariff on cotton piece goods, voluntarily limit imports of [Page 1009] Japanese cotton piece goods into the Philippine Islands to a figure not to exceed 45,000,000 square meters annually.
This voluntary action on the part of the Japanese textile exporters should materially improve the position of American cotton textiles in the Philippines since it will reduce substantially the quantity of Japanese textiles supplied to that market. The maximum established for Japanese shipments to the Philippines during each of the next two years, 45,000,000 square meters, can be compared with 59,790,000 square meters shipped during the twelve months preceding September of this year, and with a total of 56,356,000 square meters during the calendar year 1934.
The Islands are now importing cotton goods at the rate of more than 95,000,000 square meters annually, not more than 5 percent of this total coming from countries other than the United States and Japan. On a value basis, the United States will undoubtedly supply a much larger proportion than Japan during the next two years. It is anticipated, on the basis of available figures, that the value of imports from the United States under the new arrangement will be approximately twice the value of imports from Japan.
The Japanese cotton textile interests, taking cognizance of the recent agitation, both in the United States and in the Philippine Islands, for increases in the cotton textile schedule of the Philippine tariff, are voluntarily taking action regulating their shipments to the Philippine Islands in an effort to stabilize that market. It is believed that a careful consideration of all the factors involved will indicate that this action should prove beneficial to the cotton textile industries of both the United States and Japan without prejudicing the interests of the people of the Philippine Islands or in any way obligating the Philippine Government.
The Governments of Japan and the United States have found themselves in entire agreement upon this method of handling a situation which might otherwise lead to increasing conflict between their competing commercial interests. By their joint efforts to secure mutually satisfactory adjustments the United States and Japan demonstrate their ability to solve the various economic problems which are of concern to the two peoples in a way that will conserve and safeguard the legitimate interests of each.
Textile markets in the Philippines, as elsewhere, are subject to seasonal variations and to various unpredictable influences. It is provided, therefore, that 10 percent of the maximum annual figure shall be flexible, that is to say, if importations into the Philippines of Japanese cotton textile goods during the first year exceed or are less than the amount of 45,000,000 square meters such excess or balance [Page 1010] (in no case to exceed 4,500,000 square meters) shall be subtracted from or added to the allotment for the second year, and further that the semi-annual volume of imports will not exceed 26,000,000 square meters in any one semester.
Imports into the Philippines of cotton goods from Japan, as well as from other sources, may vary to some extent month by month, but the voluntary annual limitation established by the Japanese exporters will permit average monthly shipments during the next two years of only 3,750,000 square meters in contrast to an average of 5,000,000 square meters per month shipped during the year ending September 1, 1935.
In the calendar year 1934, Japan supplied, on a quantity basis, 52.7 percent of the Philippine market for cotton textiles, while American exporters supplied 40.5 percent. Consumption in the Philippines in the present year (1935) has fallen off to some extent, the decrease being due particularly to the restriction of sugar production. Importations of Japanese cotton textiles increased, however, in the first eight months of this year, at the expense of American and European textiles, supplying in quantity 57.7 percent of the market as against 37.7 percent for American exports.
American textiles are sold free of duty in the Philippines, whereas imports from other sources pay a substantial duty. As a result of this protection and of consumer preference and other market factors, the value of American cotton cloth sold in the Philippines has been considerably greater than that sold by Japan, even when the quantity sold has been less. During the first eight months of 1935, the value per square meter of American goods imported into the Philippines was twice as great as that of Japanese cloth, the total value of these imports from the United States during that period being $3,277,000 as compared with a total value of $2,456,000 for imports from Japan, while the quantity imported from the United States was 24,790,000 square meters as compared with 37,973,000 square meters from Japan.
Prior to 1934, Japan supplied a much smaller share of the Philippine market for these products than did the United States, the Japanese furnishing 27 percent in the four years 1930–1933, as compared with 57 percent from the United States. The arrangement announced today represents, therefore, an adjustment between the position of Japan in the Philippine textile market in the last two years and that held by her in preceding years.