560.AL/7–1149: Telegram
The Ambassador in the United Kingdom (Douglas) to the Secretary of State
priority
2696. From Martin, Schockner and Campbell.
1. Accompanied by Bliss and Ringwalt of Embassy staff,1 met with representatives of Board of Trade and Foreign Office chairmanned by Stephen Holmes BOT.
Holmes had received aide-mémoire within last few days. British comments along following lines:
- a.
- Insufficient time had elapsed since establishment of exchange rate to determine whether or not rate is satisfactory.
- b.
- Untimeliness in view of unfavorable balance of Japan and sterling area trade plus economic crisis in Empire.
- c.
- Inference Japan was now reverting to unfair competition in conduct of trade (markings and export subsidies).
- d.
- MFN agreement as proposed will have little material effect in expanding Japanese trade with UK. They contend closer cooperation by SCAP with sterling area would prove more beneficial to Japan than MFN agreement.
2. US group stressed points as outlined in cables from Paris, Brussels, Hague and explained an immediate answer to aide-mémoire not expected; suggested response to aide-mémoire expected within [Page 704] two to three months provided that provisions of annex A2 be discussed in some detail in the interim. Further pointed out that appendix A2 should be reviewed in the light of working towards a solution and urged that any British proposals for escape clauses be presented for discussion. Pointed out importance not rejecting in principle on grounds which might be taken care of by such means. Agreed to clarify by factual presentation apparent UK misunderstanding on points raised in 1c above.
3. Believe very little accomplished today. British appeared to be stalling with little prospect of changing Cabinet decision as outlined Embtel 1472, April 12.
4. Solution seems to hinge upon formal UK acceptance principle MFN for Japan. After such acceptance, terms of agreement could be worked out and these terms would probably be satisfactory to France, Belgium and Netherlands. Conversations confirm previous conviction that this matter cannot be resolved on technical level with economic arguments. The acceptance of principle will undoubtedly be based primarily upon political rather than economic considerations.
Sent Department 2691; repeated Tokyo unnumbered; Annecy 15. [Martin, Schockner, and Campbell.]