611.003 Oils/79
Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser
Mr. Hayama called to inform the Department of State of a cable which the Japanese Embassy had just received from the Foreign Office in Tokyo. This cable pointed out the very high tax on perilla oil and rapeseed oil and stated that the cultivating industry and oil industry in Japan have been thrown into confusion because of the fear that the tax will prove to be prohibitive on imports of these oils from Japan.66 Because of the size of this tax and the extensive value of the exports of these oils from Japan (totaling 30,000,000 yen last year) it is the view of the Japanese Government that the effect of the tax upon Japanese exports to the United States will be much more adverse than the tariff increases on cotton cloth and slide fasteners—it is felt that in fact there is no comparison.
The Foreign Office states in the cable to the Japanese Embassy that in view of these circumstances the Japanese Government earnestly hopes that the United States Government will make some allowance for the carrying out of these taxes so as to mitigate the blow which will be given to Japanese exports to the United States, perhaps by means of the regulations which will be promulgated for the enforcement of the Act or by other measures.
Mr. Veatch stated that he was sure the Department would receive this request sympathetically and would immediately have an examination made of the possibility of making some arrangements in line with this request. He feared that there was no discretion left by the language of the Act with respect to the collection of the tax on these oils but there might be some other way in which this Government could assist the Japanese Government in reassuring the industry in Japan with respect to the probable effect of the tax upon the trade in rapeseed oil and perilla oil. He was quite sure that the tax would not prove to be prohibitive and that the industry in Japan might not be as hard hit as was anticipated, although he recognized that planters in Japan and Manchuria must be very uncertain as to the future demand in the United States and therefore as to the supply which will be required from Japan.
Mr. Veatch stated that he would see that information was sent to the Japanese Embassy as soon as possible with respect to whatever measures, if any, this Government would be able to take in order to mitigate the disruptive effects which the Japanese oil industry might feel as the result of the imposition of the new excise taxes or as a result of the fear which these taxes may have engendered.
- The Revenue Act of 1936 was approved June 22; 49 Stat. 1648.↩