611.9417/193: Telegram

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

27. Embassy’s 11, January 22, 11 a.m.87

The following is a synopsis of the Japanese-American unofficial cotton textile agreement signed on January 22. [Page 784]
A quota is established for cotton piece goods or piece goods of which the principal material is cotton for 1937 of 155,000,000 square yards or of the volume of contracts on hand on January 21, 1937, for shipment of such piece goods to the United States whichever amount is smaller. Quota for 1938 is 100,000,000 square yards but 25% of this amount may be added to the 1937 quota and deducted from the 1938 quota. (The figure for 1937 was reached by compromise after calculating the approximate amount of unfilled orders for shipments to the United States in the hands of Japanese mills on January 21. The figure for 1938 is an arbitrary one reached after negotiation and compromise.)
Japanese customs statistics of exports are to be used in calculating shipments under the quotas but similar assistance to that given in the administration of the cotton rug quota will be requested of the American Government.
Existing agreements on cotton goods between the two Governments or industries are not included in the present arrangement.
Japanese goods transshipped into the United States from third countries will be deducted from the quota but the American side agrees to strive to reduce the volume of such transshipments. Reexported goods will not be included in the quota.
A joint committee will be established to deal with difficulties arising under the quota agreement and to assist in negotiating future arrangements.
The Japanese side accepts the principle of the quota limits in regard to cotton specialties and will institute negotiations for such quota agreements.
The American side states that it regards the arrangements made as rendering unnecessary further American governmental restriction of Japanese cotton textile imports and also that the arrangements may serve as ground work for a reciprocal trade treaty between the two countries.
The agreement may be repudiated by the Japanese side on or before February 15, 1937. (This clause was included to enable the Japanese side to refer the agreement to the individual members of the industry. Murchison88 regards this provision as a mere formality),89
Murchison will confer with the Department upon his arrival in Washington on or about February 16 in regard to the American governmental assistance referred to in 1 (b) above. He also desires that one American member of the joint committee in Japan be an American official, preferably the American Consul General at Osaka or the Commercial Attaché of the Embassy. He will discuss this question with the Department. He will also supply the Department with copies of the minutes of the negotiations and copies of the [Page 785]agreement and consequently this Embassy will not copy and forward these items.90
Murchison states that the members of the mission are greatly pleased to have succeeded in reaching this agreement which they regard as satisfactory. The Embassy believes it likely that Foreign Office pressure was brought to bear upon the Japanese cotton men to induce them to agree to the arrangement.
  1. Not printed.
  2. Claudius T. Murchison, chairman of the American Textile Mission to Japan.
  3. The Japanese cotton textile associations ratified the agreement, which was to be effective as of February 15. Rules governing exports from Japan of cotton textiles were published June 26 in ordinance No. 68 in the Official Gazette. (611.9417/195, 220)
  4. These were printed by the Cotton-Textile Institute, Inc., of New York, in its Current Information pamphlet of March 10 (vol. 3, no. 3, supplement).