740.00119 FEAC/2–2449: Telegram
The Secretary of State to the Acting Political Adviser in Japan (Sebald)
66. Steering Comite mtg on Feb 16 1949 cancelled. Fol summary FEC mtg Feb 18, 1949:
Economic Stabilization in Japan ( FEC–329/3).
US reply1 Soviet statement Feb 3 1949 transmitted to SCAP by Dept Army Feb 17 1949. USSR member made lengthy statement in which he reiterated charge US directive Dec 10 1948 changed regime of control in Japan and that its issuance in evasion of FEC constituted violation terms reference FEC. He referred to US refusal accept Soviet proposals that no limitation be imposed on development peaceful Japanese industry on grounds it served no useful purpose since Soviet proposals in substance rptd FEC policy decisions. He alleged that US attempt unilaterally and in evasion of FEC to force upon Japan its own econ program was inconsistent with earlier position and in contradiction FEC policy decisions. He stated such actions could be explained by intention of US to subject Jap economy to interests Amer monopolistic groups.
He further alleged that contrary stated US intent create econ environment “in which democratization can take place” creation of Governmental Omite on Revision of Labor Laws which is preparing for forthcoming session Diet bills for revision of Labor Union Law and Labor Relations Adjustment Law aimed at introducing compulsory arbitration for “peaceful” settlement labor disputes and carrying out other measures, was clearly directed toward limitation democratic rights of Jap working people. He added that Labor Dept and Econ Stabilization Board were preparing establish strict control over wages workers and employees and maximum wage level which would clearly lead to further deterioration already very low standard living of Jap working people. He also pointed out that it was reported in Jap press that “rationalisation” Jap enterprises by US occupation authorities and Jap Govt would be accompanied by mass discharges of workers and would lead to great increase in unemployment. It was also his view US is pursuing in Japan policy of its own, directed towards preservation and strengthening large Jap concerns which played great part in aggression carried out by Jap militarists, in support of which he cited measures to revise anti-trust law and refusal US to discuss FEC–230.
He further noted that attempts Jap Govt stimulate development export industry by means Govt subsidies had met with opposition on [Page 667] part US occupation authorities and cited this as evidence intention US to close outlet Jap goods to export market in order create privileged conditions for Amer monopolies and that as result Japan’s foreign trade indebtedness by June 1948 amounted to huge sum Seven Hundred Ninety Million dollars. SCAP’s circular Jan 14, 1949 is also cited as attempt US encroach on econ independence Japan. Soviet member concluded by (1) asking Comm to discuss problems set forth in directive, (2) pressing US provide FEC with comprehensive info concerning fulfillment by Gen MacArthur of policies FEC on econ questions—particularly regarding reduction Jap industrial war potential, (3) supporting proposals other members in respect necessity accelerating adoption by Comm of decisions on level of econ life. Text of statement almost immed released to press.
Level of Economic Life in Japan ( FEC—242/32 and FEC 297/10). USSR member urged US present position in near future Policy Towards Patents, Utility Models and Designs (FEC 284/14). Vote on Chi amendment postponed as USSR did not have instrs.
Other Business.
UK member called to attn Comm that problem review Jap constitution still before Comite III and that it was still duty Comm to see if constitution fulfilled terms Potsdam Declaration and FEC policy decisions. He suggested that attempt be made to point out defects but not to prescribe detailed remedies. He therefore proposed Comite III be reconvened and that summary its discussions be sent to SCAP for comment. Austral member associated himself with these views. He added that Japanese should be encouraged take interest in their constitution and that views Comite might afford possible guidance for them. It was agreed Comite III would meet early fol week.