611B.9417/214
Memorandum by Mr. Roy Veatch of the Office of the Economic Adviser
In connection with a visit to the Department upon another matter, Mr. Hayama took occasion to say that the Japanese Embassy had received from the Association of Cotton Textile Exporters to the Philippines copies of the Association’s regulations governing exports of cotton piece goods to the Philippines. These regulations contained a provision, added since the original regulations had been issued, providing that short lengths of cotton piece goods were not covered by the Association’s export control and that therefore certificates would not be required for the export of these short lengths to the Philippines.
Mr. Veatch made the comment that apparently this regulation would free exporters from any restriction upon shipments of such cloth to the Philippines and therefore would leave exporters free to ship any amount of cloth in this form outside of the quota to which the Exporters Association had agreed. In Mr. Hayama’s opinion this appeared to be a reasonable interpretation, although the Japanese Embassy had received no explanation of this provision. Mr. Hayama recalled the fact that the Department had called to the attention of the Japanese Embassy some two or three months ago arrivals of such cloths in the Philippines, with the suggestion that the exporters from Japan might wish to exercise some control over such shipments so that a new complication in the working of the voluntary agreement could be avoided. Mr. Hayama was unable to say whether the regulation excluding short-length cloths from restriction had been issued before or after the Department’s suggestion had been brought to the attention of the Japanese exporters, but he thought it quite possible that the regulation had been issued before that time, perhaps giving rise to the shipments of these cloths which had come to the attention of the Department. The Japanese Embassy had received no response to its communication setting forth the Department’s concern regarding these shipments, and it was possible that since that time the Exporters Association had made some change in the regulation to which Mr. Hayama had made reference.
Mr. Veatch pointed out that if ordinary cotton piece goods were to be shipped from Japan to the Philippines without restriction when cut in short lengths, such shipments most probably would increase rapidly and would either nullify the effects of the agreement or force this Government to consider means of dealing with this situation. [Page 927] It had been the hope of this Government that Japanese exporters voluntarily would refrain from making an issue of this point.
Mr. Hayama said that he thought it was important for the Embassy to bring again to the attention of the Japanese Government the potential difficulties involved in this question and he assured Mr. Veatch that he would see that this was done immediately.