Foreign Relations of the United States Diplomatic Papers, 1939, The Far East; The Near East and Africa, Volume IV

611B.943/6

Memorandum of Conversation, by the Assistant Chief of the Division of Far Eastern Affairs (Ballantine)

[Washington,] January 9, 1939.

Participants:	Mr. Suma of the Japanese Embassy
	Mr. Sayre19
	Mr. Ballantine

Mr. Suma stated that his Government had studied the report of the Joint Preparatory Committee on Philippine Affairs²⁰ and had noted the recommendations in regard to increases of duty on cotton textiles, evaporated milk and fish in cans. He said that according to the views of the Japanese trade these new duties on cotton textiles, if enacted, would result in a complete stoppage of Japanese cotton textile exports to the Philippine Islands, especially as a consequence of the rising cost of production in Japan, and he pointed to the fact that during the current quota year of the so-called “gentlemen’s agreement” providing for the limitation of Japanese cotton textile exports to the Philippines²¹ the Japanese were far short of their allotted quota. He spoke of the proposed duties as constituting discrimination against Japanese products and he asked what the prospects were that the recommendations of the Joint Preparatory Committee would be adopted by Congress. He said that he had been instructed by his Government to inquire whether there was not a possibility for a renewal of the gentlemen’s agreement in regard to the exportation of Japanese cotton textiles into the Philippine Islands which would obviate an increase in the import duties on cotton textiles.

Mr. Sayre replied that the recommendations of the Joint Preparatory Committee were now before Congress and he was unable to foretell whether they would be acted upon or not. He said that he himself was engaged in drafting legislative measures embodying the recommendations. He recalled to Mr. Suma the fact that the “gentlemen’s agreement” had been concluded with the object of preventing higher duties being enacted pending the determination of the future economic policy for the Islands, and he observed that the “gentlemen’s agreement” had served a useful purpose in that regard. Mr. Sayre explained that as the Philippines were to become independent in 1946 this Government of course would be unable to commit the Philippine Government beyond the date of its independence. He said that the recommendation of the Joint Preparatory Committee were designed to cover a transitional period during which the preferences in favor of American products would gradually be eliminated and to prevent a situation which would cause the Philippines to starve unless they had time to make gradual adjustments to the new economic situation which would follow their independence. The proposed new duties represent an attempt to translate into tariff protection the same degree of protection which the “gentlemen’s agreement” afforded American cotton textiles. Considering that the preferences in favor of American goods would be gradually diminished, Mr. Sayre thought that the rates of duty which were recommended were eminently fair and that in view of the fact that the Philippines were now under American sovereignty he thought that no question of discrimination was involved. He contrasted our attitude which he considered liberal with the discriminatory treatment accorded by Japan to the trade of third powers in China.

At this point Mr. Sayre was obliged to leave and Mr. Ballantine continued the conversation with Mr. Suma.

To a further question by Mr. Suma as to whether it was possible to do anything for the Japanese exporters, Mr Ballantine suggested that the Japanese exporters possibly did not realize the transitory character of the arrangements contemplated by the Joint Preparatory Committee or the fact that the preferences in favor of American products were gradually to disappear and he suggested that Mr. Suma might make those points clear to his Government.

19. Francis B. Sayre, Assistant Secretary of State.
20. Department of State Conference Series No. 36: Joint Preparatory Committee on Philippine Affairs, Report of May 20, 1938, vols, i–iii (Washington, Government Printing Office, 1938).
21. Agreement of October 11, 1935, Foreign Relations, 1935, vol. iii, p. 1007; extended by exchange of notes July 2 and July 27, 1937, ibid., 1937, vol. iv, pp. 798 and 803.