Foreign Relations of the United States, 1946, The Far East, Volume VIII

694.0031/5–1046

Statement of Proposed Policy on Sources of Japanese Imports⁹⁵

undated

confidential

1. Except for commodities subject to formal international allocation, the primary objective in selection of the source of an import will be to minimize the cost and difficulty of procurement. Factors to be taken into account are price, terms of purchase other than price, and assurance of meeting scheduled requirements.

2. In determining the sources of imports to Japan of commodities in world short supply due consideration should be given by the proper authorities to the needs of countries other than Japan. Commodities currently subject to allocation by the Combined Boards or similar committees and their successors (hereinafter referred to as the Allocating Authorities) will be procured by the appropriate governments in cooperation with such Allocating Authority. The Allocating Authority will be fully apprized by the appropriate governments not only of the needs of Japan, but also those of other countries which are members of the Far Eastern Commission, but not members of the Allocating Authority. In the case of commodities not subject to allocation, the Inter-Allied Trade Committee will provide opportunity for consultation as to proper source of the commodity with any interested member of the Far Eastern Commission.

3. In procurement of commodities in world surplus or in procurement of any commodity whose export to Japan is of substantial commercial importance to a member of the Far Eastern Commission, due consideration should be given to the pre-war trade patterns and to current distribution and price of available supplies.

a. When current excess stocks suitable for Japanese use are available in more than one market and the terms offered by alternative sources are similar, quotas should be fairly allocated among the sources of supply on the basis of imports during a previous representative period, account being taken in so far as practicable of any special factors which may have affected or which currently may be affecting the trade in the commodity concerned.

b. Procurement of Japanese imports shall be in accordance when necessary with the terms of applicable international commodity agreements covering commodities in question.

4. This statement of proposed policy will in no way be permitted to jeopardize the fulfillment of United States responsibilities for the prevention of such widespread disease or civil unrest as would endanger the occupying forces or interfere with military operations.

Discussion

In determining the source of Japanese imports two major issues arise; fair allocation to Japan of commodities in world short supply, and the establishment of equitable sharing of Japanese market opportunities for commodities in world surplus.

The first objective can best be obtained through the mechanism of an “Allocating Authority” where one exists. Special circumstances governing procurement for Japan or the peculiar needs of any member of the FEC can be brought to the attention of the “Allocating Authority”. Where no “Allocating Authority” exists, the same type of determination must be made. It is not possible to establish precise standards for all commodities since the circumstances cannot be foreseen fully, but the requirement for consultation protects the interest of all members of the Far Eastern Commission.

Procurement of commodities in world surplus must take due account of the long-run commercial interests of all the nations represented on the Far Eastern Commission while, at the same time, utilizing those supplies which are readily available at low prices. Where all customary suppliers have surplus stocks and offer similar terms, it would be expected that pre-war proportion of imports would be an important factor in determining distribution. Normally the base period used in establishing quotas will be sufficiently long to be representative of trade movements and should exclude years in which special barter arrangements distorted normal trade patterns. However, in some instances, wartime changes in trade pattern or shifts in Japanese requirements might make reconstitution of pre-war trade sources impossible or inappropriate. It is anticipated that future international commodity agreements will cover commodities also important as Japanese imports. Japanese requirements may, in some cases, be taken into account in developing such agreements.

95. Copy of statement transmitted by the Department on May 10 to the U. S. representative on the Far Eastern Commission (General McCoy), in accordance with instructions of May 10 from SWNCC, for presentation to the Commission.