394.31/1–2053: Telegram

The Ambassador in Japan (Murphy) to the Department of State


2324. Embassy concerned lest GATT intersessional discussions overemphasize conditions Japanese entry designed minimize threat alleged competition and ignore basic fact Japanese foreign trade situation increasingly alarming. Trend Japanese exports downward since February 1952 as result foreign import barriers and waning demand in part because noncompetitive Japanese prices. Average monthly value merchandise exports 1952 was $104 million, compared with imports $167 million. Japanese Government projection merchandise trade current year, believed reasonably accurate, is $1,128 million exports against $1,994 imports. Trade deficit 1952 about $744 million, of which $434 million represents last six months. Exports continue dropping from 1951 levels, posing grave problem this economy.

US special procurement greatest contribution offsetting trade deficit, but this also below anticipated levels. Japanese earnings 1952 from special procurement both goods and services estimated $283 million, about two-thirds previous year. FY 1953 planned level procurement $350 million but total contracts placed first six months only $135 million.

Japanese Government and businessmen earnestly exploring every possible avenue expansion exports without apparent success. Continued fear Japanese competition by other countries and resistance to Japanese goods may force Japan again engage malpractices it presently eschews. Problem future viability this economy should in Embassy opinion receive earnest consideration GATT members although some now appear concentrate only on conditions Japanese entry. Continued opposition Japanese participation on basis equality treatment might conceivably weaken present Japanese Government advocacy fair trade principles, even affecting domestic political situation and forcing very development now feared. Example of possible harmful step is report to Foreign Office that UK [Page 132] will attempt at intersessional meeting again postpone decision Japanese entry. Procrastination this type and presentation new proposals clearly aimed at Japan may have serious effect, harmful both GATT and US relations, particularly if US overly identifies itself therewith. Would not strongest US position be unconditional advocacy Japanese accession leaving to others submission qualifying amendments which in any case should have general applicability.1

  1. The Department replied in telegram 1806, Jan. 26, 1953, that contrary to the Embassy’s impression the United States was urging that Japan be admitted to GATT on the basis of complete equality with present Contracting Parties. (394.31/1—2053)