811.20 (D) Regulations/4012½
Memorandum by Mr. George F. Luthringer of the Office of the Adviser on International Economic Affairs14
Suggested Policy With Respect to the Control or United States-Japanese and Philippine-Japanese Trade Under Executive Order No. 8389, as Amended15
I
the immediate future (approximately the next two weeks)
A. United States-Japanese Trade
During this period it is suggested that pending future developments in Japanese foreign policy no indication should be made of this Government’s general policy in the administration of the freezing control with respect to Japan. During this period no license applications will be granted for exports to or imports from Japan. Inquirers will be told to file applications, but such applications will be held without action during this period. Such a policy will doubtless lead to the conclusion that the control is to be applied strictly to Japan. This period, however, will afford an opportunity to coordinate [Page 845] the policies of the various friendly governments which have also applied freezing control to Japan.
During this period Japanese ships should be allowed to refuel, reprovision and clear from American ports but no indication will be given as to the treatment of applications relating to the disposition of their cargoes.
B. Philippine-Japanese Trade
Because of General License No. 64 the Philippines can continue to import from Japan without the necessity for applying for specific licenses for each transaction. To the extent that merchants in the Philippines wish to import from Japan, and the Japanese wish to export, this trade will presumably continue. Philippine exports to Japan, however, are subject not only to freezing control but also to export control. It is proposed during this period to deny or keep pending applications for export licenses for commodities requiring such licenses. Presumably the Philippines will continue to export commodities which do not require a license and for which the Japanese will provide shipping facilities. Shipping difficulties may, however, reduce such trade to a minimum.
II
intermediate period (the following two months)
A. United States-Japanese Trade
This will be a trial period during which a cautious attitude will be taken with respect to trade with Japan but during which no general policy will be announced with regard to the control. The duration of this period is of course uncertain and will depend upon general political developments in the Far East. It is contemplated that during this period there will be a limited export and import trade with Japan on the basis of specific license applications. Presumably the chief import from Japan which will be licensed will be silk. Specific license applications will also be granted for limited quantities of exports to Japan roughly equivalent in value to imports from that country.
During this period a limited amount of petroleum exports to Japan will be permitted. Applications for licenses for such exports would require a full description of the product proposed to be shipped. Applications for exports of gasoline above any specified octane rating and high-grade lubricating oils would be denied. Applications would be approved, however, for other petroleum products in quantities based on 1935–36 average shipments. Presumably, applications would be freely approved for export of cotton or other products of which there is a surplus.
[Page 846]B. Philippine-Japanese Trade
Presumably, Philippine imports from Japan will continue to be carried out in large part under the General License although a few specific license applications might be approved. During this period there would be some relaxation with regard to the issuance of licenses permitting the export of commodities subject to export control (e. g., iron ore and cocoanut oil). Exports of such controlled commodities would be limited in quantity, however, presumably on a pro rata basis of 1935–36 average shipments.
III
final period assuming that political conditions make desirable an expanded but controlled trade with japan
Under this general assumption trade with Japan could probably best be handled under some sort of a clearing arrangement under which proceeds of imports from Japan would be credited to special accounts which would be available for purchasing American exports. A similar arrangement could be put into effect between Japan and the Philippines. The quantities and composition of American and Philippine exports to Japan would presumably be based on some relation to Japanese peace-time needs. These arrangements might also be conditioned in part on an agreement of the Japanese to devote a certain amount of shipping to trade between the United States and the Philippines.
IV
Some mechanism should be established at once for coordinating the various freezing and other controls of the British, Canadian, Australian and Netherlands Governments with the policies of the United States Government. To a large degree it would appear that effective United States policy is dependent upon close coordination with the policies of the Governments mentioned. This is particularly the case with respect to shipments of such commodities as petroleum products and iron ore.