611.943 Gloves/27

Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser

Conversation: The Japanese Ambassador,
Mr. Seijiro Yoshizawa, Counselor of the Japanese Embassy,
Mr. Sayre,
Mr. Turner,
Mr. Veatch.

Mr. Sayre explained that he had asked the Ambassador and the Counselor to call in order to place before them the problem of imports into the United States of wool-knit gloves manufactured in Japan, and also to inquire further regarding the subject of cotton velveteens imported into the United States from Japan.

The Ambassador said that he welcomed the opportunity to talk with Mr. Sayre since for a day or two he had intended to request an opportunity to present to Mr. Sayre the reply which his Government had made to the Ambassador’s last cable respecting the Philippine cotton textile agreement. He had received a cable from his Government earlier in the week but had been cogitating the best way of presenting the situation to Mr. Sayre.

Mr. Sayre explained that in accordance with the Ambassador’s earlier request he was now able to bring to the attention of the Ambassador a case in which rather severe restriction of United States imports from Japan was impending. An investigation of the differences in costs of production of wool-knit gloves in Japan and in the United States, under Section 336 of the Tariff Act of 1930,6 which had been called for by a Senate resolution,7 was practically complete and Mr. Sayre had found it possible to ascertain what the findings of this investigation probably would be and, therefore, the nature of the report which must soon be made to the President. In order to place the case before the Ambassador clearly, Mr. Sayre handed him a typed statement,8 which was then read and discussed in detail.

The Ambassador remarked that he supposed the Commercial Attaché of the Embassy, Mr. Inouye, would be better informed upon this problem than anyone else in the Embassy and that he would get in touch with him, perhaps asking him to come to Washington tomorrow. [Page 816] Mr. Yoshizawa called attention to Mr. Sayre’s statement that it probably would be impossible to hold up the Commission’s report past the 1st of February unless action were taken by the Japanese, and he and the Ambassador then agreed that it would be necessary for them to get a cablegram off to Tokyo tonight.

Mr. Yoshizawa said that this further request for voluntary restriction by the Japanese of their shipments to the United States appeared to justify further the prediction which he had made when the case of cotton rugs had been brought up, i. e., that any action by Japanese exporters to limit shipments of one commodity would encourage American competitors in other lines to demand similar restrictions upon other commodities.

Mr. Sayre said that it was true, of course, that we had found it necessary to bring more than one commodity to the attention of the Japanese Government, but he called attention to the fact that the American Government had by no means requested restriction of Japanese exports of all commodities against which complaint had been made in the United States. This Government has acted as a sieve and has strained out practically all of the complaints that have been made against Japanese goods. This Government had brought the situation to the attention of the Japanese only in the few cases where competition had become alarming and where it was likely that more extreme restrictions would be set up as a result of the pressure of the affected economic interests in the United States. He reminded the Ambassador that there was one other situation which he had called to the attention of the Ambassador—the case of cotton velveteens. Although in view of the Supreme Court decision on certain aspects of the Agricultural Adjustment Act, action to limit imports of velveteens probably would not proceed under Section 22 of the AAA,9 if the duty on imports of wool-knit gloves should be increased radically as a result of the investigation under Section 336 of the Tariff Act, then it was quite possible that action on velveteens would be urged by the American industry under Section 336. From the standpoint of the Japanese industries themselves, it was important that voluntary control of exports of these two commodities should be exercised in time to prevent action here under Section 336.

Philippine Textile Agreement

The Ambassador said that he would like to take this occasion to report instructions which he had received from his Government a day or two previously with respect to the proposed adjustment of the Philippine cotton textile agreement. He had not asked to see Mr. [Page 817] Sayre immediately upon receipt of this cable because he had been at a loss to know just how to present the situation. His Government apparently had paid no attention to his arguments in favor of a compromise and held rigidly to its original position, insisting that the Japanese exporters should proceed to ship a maximum of 19,000,000 square meters up to August 1, 1936. His Government still maintained that it held strictly to the wording of the original agreement and it referred again to the definitions of “importations” contained in documents of the Philippine Customs Service.

Mr. Sayre said that the textile people in this country were already convinced that Japan has broken the agreement. It was Mr. Sayre’s desire to clear up this matter and to remove all blame from the Japanese. Unfortunately the attitude of the Japanese Government and exporters cut the ground from under his feet, however, and made it impossible for him to make a good case to the American textile people.

The Ambassador said that he understood the difficulties and that he had been trying to persuade his Government to reach a compromise agreement in order to help the American Government to meet these difficulties. He felt the present difficulties had arisen out of a misunderstanding when the agreement was first put into operation, however. And he was bound to say that in spite of the fact that he could well understand the position of the American Government, he felt that his Government had assumed a position which could be justified on more or less “legal” grounds. He wondered if Mr. Sayre would agree that there is involved no question of bad faith on the part of the Japanese Government or Japanese exporters. If it could be made clear to his Government that there was no accusation of bad faith involved but merely a desire to reach a compromise between the positions of the two Governments in order to make the agreement work, then he felt that it might be possible to get something done. He had a feeling that his Government was particularly concerned about this question of bad faith.

Mr. Sayre said that he had, of course, maintained this position from the first and had no intention whatever of creating the impression that this Government charged the Japanese Government with bad faith. He then said that he had had in mind the possibility of sending a cable to the American Embassy in Tokyo and asking that the question be presented to the Japanese Foreign Office there. He wanted to have the Ambassador’s advice as to the advisability of proceeding in this way.

In reply the Ambassador said that he thought such an approach to his Government would be helpful, particularly if the case as presented emphasized the fact that there was no charge of bad faith and only a desire to secure a practical adjustment of the problem.

[Page 818]

It was agreed, therefore, that this Government should request the American Embassy in Tokyo to take the matter up with the Foreign Office and to explain in some detail the position of this Government and the reason for desiring an adjustment of the original agreement or a clear understanding as to the way in which that agreement should work. Mr. Sayre made it clear that he appreciated fully what the Ambassador had done in seeking an understanding between the two Governments and he certainly would not approach the Japanese Government through the American Embassy in Tokyo unless the Ambassador felt that this move might assist in securing the desired understanding. The Ambassador in turn assured Mr. Sayre that he was in complete agreement with this procedure. It was understood, however, that it was not the intention of this Government to transfer to Tokyo detailed negotiations on this or on similar problems.

  1. Approved June 17, 1930; 46 Stat. 590, 701.
  2. Senate Resolution 178, 74th Cong., 1st sess., agreed to August 19. 1935; Congressional Record, vol. 79, pt. 13, p. 13616.
  3. Infra.
  4. The Agricultural Adjustment Act was approved May 12, 1933; 48 Stat. 31, 42.