740.00119 FEAC/11–3048: Airgram
The Secretary of State to the Acting Political Adviser in Japan (Sebald)
A–164. Subject is Far Eastern Commission Meeting, November 18, 1948. Conduct of Trade with Japan (FEC–273/17) unanimously approved by Commission.1 Chinese member voted for paper with understanding that when time is considered mature for establishing exchange yen rate FEC will be informed and opportunity given to members of FEC to express views on subject. French member voted for paper on understanding that paragraph 9 referred only to establishment of an exchange rate for foreign trade transactions and on further understanding that FEC was authority for establishing such exchange rate. US member pointed out that Commission was, of course, not directly concerned with attempts to fix an exchange rate for the yen and [Page 912] that this complex and technical matter concerned the Commission only in its relations to broad policy and had therefore been discussed in the most general way with a wise avoidance of any attempt to establish a procedure for fixing an exchange rate.
In view of fact that substance of FEC–304/16, Port and Service Charges on Foreign Vessels in Japan, was contained in FEC 273/17, Conduct of Trade with Japan, it was removed from agenda.
Trial of Japanese War Criminals (FEC–314/4). Positions of USSR, UK and Philippines reserved. New Zealand member stated he favored paper. USSR member requested postponement of vote.
Level of Economic Life in Japan (FEC–242/32), (FEC–297/10) retained on agenda.
Soviet Proposal Regarding Level of Economic Life in Japan (FEC–320). Australian member stated that FEC–084/21 cannot be fully implemented by SCAP until a further decision has been made by FEC stating specifically the amount of capacity in certain war-supporting industries which is essential to satisfy Japan’s peaceful needs and may therefore remain in Japan. He noted that attempt to do this was now made in FEC–242/32. On the understanding that the Soviet definition of peaceful industries to mean all facilities and industries other than those defined in FEC–084/21 as primary war facilities, secondary war facilities or war-supporting industries is correct, his Government could fully endorse the principle that there should be no limitations imposed upon the development of peaceful industries. But it considered it superfluous to make the question of Japan’s peaceful industries the subject of a policy decision and to give priority to consideration of this question over attempts to reach agreement on FEC–242/32. With reference to the first part of the Soviet proposal in the second paragraph, his Government endorsed the principle that the revival and creation of Japanese war industry should be prohibited, but did not think it necessary to restate in vague terms existing precise policy decisions. He further noted that the part of the Soviet proposal relating to control machinery for Japan should properly be considered in the peace treaty.
The Canadian member pointed out that in principle he had no objection to Soviet proposals, but agreed with statement already made in Commission that proposals either were unnecessary or seemed outside competence of FEC. Therefore he would vote against Soviet proposal.
USSR insisted on hearing views of all members before agreeing to have vote taken on his proposal. To date Philippine and Indian members have made no statement.
Under Other Business USSR member pointed out that at last meeting on November 11, US member in reply to Soviet inquiry of October [Page 913] 28 concerning secret military conference held in Tokyo had merely read text of State Department press release.2 Soviet member stated he considered statement of State Department unsatisfactory and maintained opinion he had expressed on October 28.