611B.9417/120: Telegram

The Secretary of State to the Ambassador in Japan (Grew)

15. Your 20, January 31. It will be appreciated if you will impress upon Kurusu the following points:

This Government would like to have whatever proposal the Japanese Government is able to make in definite form as soon as possible. If a definite offer is made following the lines of Kurusu’s tentative proposal, we would suggest that it include the following details:
Philippine customs statistics of arrivals in the Philippine Islands of Japanese cotton piece goods rather than liquidation figures will be used as the basis for determining the volume of imports of such goods.
The total amount of Japanese cotton piece goods to be imported into the Philippines between February 15 and August 1, 1936 will not exceed 15 million square meters.
So far as possible, the total amount of Japanese cotton piece goods to be imported into the Philippines during this period will be distributed proportionately over the entire period.
Japanese exporters will limit importations (measured as arrivals) into the Philippines of Japanese cotton piece goods for the 12 months following August 1, 1936, to a maximum of 45 million square meters, the total amount imported to be distributed so far as possible proportionately over the 12 months of the year. (It may be necessary to reach agreement upon a definite arrangement of this distribution throughout the year.)
To make the position of this Government tenable in accepting such an adjustment of the original agreement, it is essential that the Japanese offer should include an agreement upon the regulation of Philippine importations of Japanese rayon goods or, at the very least, a statement of the intention of the Japanese Government to join with this Government immediately in establishing a mutually satisfactory method of regulating such importations.
The Department recognizes the difficulties in restricting shipments to the Philippines during February, in fulfillment of contracts already concluded, but it considers it most important that the Japanese Government should urge the Japanese exporters very strongly to find a way of surmounting these difficulties so as to hold February shipments to moderate levels. Heavy shipments in February would militate against the acceptance of an adjustment of the agreement along the lines suggested by Kurusu and it is believed that aside from this, a concentration of Philippine imports of Japanese goods at this time would weaken the prices to be obtained for Japanese textiles as well as for American textiles.
In view of the period of time during which the future of the cotton textile agreement has been uncertain and in view of the possibility that heavy Japanese shipments may be made in the early part of February, it is extremely desirable that an announcement be made at the earliest possible time of agreement between the two Governments upon this entire question and that, as indicated above, this announcement should include at least a statement that the two Governments will negotiate a mutually satisfactory agreement on rayon. Continuation of present abnormally heavy rayon shipments would reinforce the general feeling of the textile trade and of the public here that the spirit of the original agreement has been violated by Japanese exporters and that that agreement is a failure.

If the question again arises as to the amount of Japanese cotton piece goods in the Philippines on August 1, you may wish to refer to the Japanese statistics of exports of such goods to the Philippines, indicating that such exports from March to July were decidedly higher than at any time during 1934.