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

694.0031/6–2146

Statement of Proposed Policy on “Destinations of Japanese Exports”³⁴

undated

1. Except for commodities subject to formal international allocation a primary objective in selection of the destination of an export is to maximize the proceeds. Factors to be taken into account in assessing the value or proceeds of sale are price, the purchasing power of the currency for which the commodity is sold, and the availability of necessary imports which can be procured with the proceeds of the export.

2. Commercial exports as distinct from commodity movements on reparations account or restitutions shall be made only to those recipients who agree to provide imports necessary for Japan in exchange or agree to pay for Japanese exports in foreign exchange usable for procuring necessary imports. Foreign exchange is considered usable under any of the following circumstances:

a. Freely convertible into dollars or other so-called “hard” currencies.

b. Inconvertible, but usable to pay for imports already purchased (whether or not shipped), but not paid for.

c. Inconvertible, but stable in value and subject to a specific agreement with the area within which the currency is valid—subject to the condition that excess balances of the currency in question arising from sale of Japanese exports, not usable for purchase of imports, within a reasonable time period, will be made convertible into dollars.

3. Commodities which are in short world supply and which are subject to allocation by the Combined Boards or similar committees and their successors (hereinafter referred to as the “Allocating Authorities”), should be allocated for sale in cooperation with such Allocating Authority, and after consultation with members of the Far Eastern Commission through the Inter-Allied Trade Board. The Allocating Authority should be fully apprised of the interests of Far Eastern Commission member of countries who are not on the Allocating Authority.

4. In the case of commodities which on the advice of the Inter-Allied Trade Board are determined to be of substantial importance and in short world supply, but not subject to allocation by an Allocating Authority, an allocation may be made by the United States Government after proper consultation with the Inter-Allied Trade Board. In determining such allocations, the primary objective should be to maximize the proceeds of the export. If alternative purchasers of the commodity offer similar terms, allocations should be arrived at on the basis of

a. requirements of countries for industrial raw materials,

b. the pre-war pattern of trade,

c. and the necessity to obtain exchange usable in paying adverse net import balances.

5. In the case of commodities not in short world supply, competitive bids and the highest net offer will in general govern the destination of an export. Other factors to be given due consideration when the net returns from alternative purchasers are similar are:

a. pre-war pattern of trade, except where such trade would promote dependence of other countries on Japan for strategic products,

b. and the necessity to obtain exchange usable in paying adverse net import balances.

34. Copy transmitted by the Department on June 25, 1946, to the U. S. representative on the Far Eastern Commission, in accordance with instructions of June 21 from SWNCC, for presentation to the Commission.