Foreign Relations of the United States, 1955–1957, Japan, Volume XXIII, Part 1

47. Memorandum of a Conversation, Department of State, Washington, August 31, 1955¹

Washington, August 31, 1955

SUBJECT

• Third Meeting with Shigemitsu

PARTICIPANTS

• Japan:
  • Foreign Minister Shigemitsu
  • Minister of Agriculture and Forestry Kono
  • Secretary General of Japan Democratic Party Kishi
  • Ambassador Iguchi, Embassy of Japan
  • Ambassador Kase, Japanese Observer UN Delegation
  • Deputy Chief Cabinet Secretary Matsumoto
  • Minister Shima, Embassy of Japan
  • Mr. Yukawa, Director, Economic Affairs Bureau, Foreign Office
  • Mr. Chiba, Director, European and American Affairs Bureau, Foreign Office
  • Mr. Yasukawa, European and American Affairs Bureau, Foreign Office
  • Mr. Ando, Counselor, Foreign Office
  • Mr. Shimanouchi, Press Officer, Embassy of Japan
• United States:
  • The Secretary
  • U—Mr. Hoover
  • ICA—Mr. Hollister
  • G—Mr. Murphy
  • P—Mr. McCardle
  • Ambassador Allison
  • FE—Mr. Sebald
  • NA—Mr. McClurkin
  • NA—Mr. Hemmendinger
  • NA—Mr. Finn
  • S/S–RO—Mr. Selby

The Secretary invited the Foreign Minister to continue his presentation.

Mr. Shigemitsu said he had a number of observations on economic subjects. He presented and read a paper (attached)² entitled “Self-Sustaining Economy—Some Factors Relating to its Establishment”, broken down into Trade Promotion to the United States Market, Economic Cooperation with Southeast Asia, and China Trade. He then presented and read a paper (attached)³ entitled “Resumption of Japanese Enterprises in the South Sea Islands Formerly Under Japanese Mandate”.

Mr. Dulles said that he would comment briefly on these two papers and Mr. Hollister would comment at length if he desired. He appreciated the difficult economic position of Japan with its growing population and its small natural resources. As he had said at dinner with the Foreign Minister, Japan had to make its living from its human resources rather than its natural resources. The United States has not only recognized this problem but has tried to do something about it, which is more than some can say. The United States has tried to avoid the imposition of restrictions upon Japan’s exports to the United States and is glad to recognize that the Japanese Government has exerted its influence on Japanese industrialists and exporters to avoid flooding the American market. Speaking to representatives of another country, the Secretary had recently had occasion to point out that if they had been content with a reasonable share of the American market the restrictive measures on the United States side would not have happened. No country can be expected to allow a complete monopoly of the market by a foreign country in a given line. The foreign country must be content with a reasonable access to the American market, and he was glad to note that Japan appeared to recognize this fact. The anti-trust laws had also to be considered but voluntary self-restraint is not illegal and can be very helpful.

The Secretary welcomed Japan’s admission as a full member of the General Agreement on Tariffs and Trade. The United States had taken the lead in the recent tariff negotiations leading to Japan’s full accession,⁴ he said, and hoped that the efforts which this country is prepared to make to develop capital improvements in Asia can be conducted in a way which will afford opportunity for Japan, as the only industrialized country in the area. United States expenditures for economic development in Asia can thus accomplish several purposes if they are handled in the right way. The arrangements with respect to sale of agricultural commodities have to some extent been handled in this way. The United States has Japan’s economic position very much in mind in examining the problems of economic development in Asia. The gap in Japan’s direct trade with the U.S. is considerable and has been met by U.S. military expenditures in Japan. Offshore procurement connected with the hostilities in Korea has naturally declined with the termination of hostilities. The U.S. of course does not want to see resumption of the war, and that particular kind of expenditure therefore cannot be expected to recur. The Secretary recognized that Japan has taken austerity measures to limit its consumption and improve its foreign trade—belatedly, to be sure, but the measures have been taken. He recalled that when he was in Tokyo some years ago Japan was a luxury market in which almost anything could be bought. Now Japan has taken certain austerity measures to control luxury imports and this has helped to balance its foreign trade position. The Secretary suggested that there will always be an imbalance in Japan’s direct trade with the U.S. which would be made up by invisible earnings and earnings from three-cornered transactions. This is also the case with the U.K. and is not abnormal.

With respect to trade with Communist China the Secretary said he had the feeling that this was more of a psychological than an economic factor. Japan never had a big trade with China proper, independent of its domination there. Korea and Manchuria were big markets after Japan’s political influence was established there, but in the main China is a poor area and does not have much to export. The general experience of countries that have tried to trade with China is that they get nothing worthwhile except in return for highly strategic goods for which the Communists are willing to make a sacrifice in exchange. The Secretary doubted that a change in the control list would have great economic results. You may say, he added, that if that is so, shouldn’t we modify the list to conform to the European list. The other side of the picture is that it is not easy to make a change unless it is occasioned by some act on the part of the Chinese which seems to call for some recognition on the part of the free nations. The Ambassadorial talks going on in Geneva have so far been unproductive. And at present the United States considers that there should be no relaxation of trade controls. He appreciated that the problem in Japan is partly political rather than economic but believed that Japan should cooperate with the United States because Japan also has a stake. Sooner or later some revision of the export list is inevitable but the time has not yet come.

Mr. Hollister said that there was little that he could add to the Secretary’s remarks. It was only a few weeks since the Congress had approved the legislation establishing the Presidential fund for regional economic development. The Congress had reduced the amount of the fund by one-half and had approved it as a three-year program. The authorities concerned will have to study carefully the proposals for use of the fund. Such studies are now going forward with particular reference to the regional aspect. He would be interested to have any Japanese suggestions with respect to the utilization of the fund.

The Secretary said that the resumption of Japanese enterprises in the South Sea Islands posed problems relating primarily to security. The Department of Defense has strong views on this subject. The Department of State would take it up again with the Department of Defense and see if there has been any change in their views.

Mr. Shigemitsu said that if there was any information which could be conveyed about U.S. thinking on economic cooperation in South and Southeast Asia, Japan would always appreciate receiving it.

The Secretary asked the Foreign Minister whether Japan is now selling more in Southeast Asia. He recalled that when the French were in authority in Indochina the U.S. gave considerable financial assistance to France which was reflected in the availability of francs locally in Indochina. Now United States assistance goes to this area directly and the Secretary wondered if this did not lead to some increase in Japan’s trade with Indochina.

Mr. Shigemitsu said that trade with the area had increased and that on the whole the U.S. economic assistance to Southeast Asia had helped Japan’s exports considerably. Mr. Yukawa said that in 1954 Japan had exported $480 million worth of goods to the area representing 32% of its exports and had imported $380 million worth representing 20% of its total imports.

The Secretary and Mr. Hollister suggested that the figures for 1955 should reflect an increase.

Mr. Shigemitsu said that they hoped for such an increase. As for China trade, he asked if the U.S. thought it was too early to consider a change. Mr. Dulles said yes.

The Secretary asked if any of the approximately 290 items referred to in the Japanese paper which are exportable to the European-Soviet Bloc but embargoed to Communist China were of particular importance to Japan. Mr. Yukawa referred to galvanized iron sheets. The Secretary suggested that Japan’s experts might discuss particular items with U.S. experts and let the U.S. Government know which ones if any were of particular importance. The Foreign Minister said that this would be done.

Mr. Shigemitsu then presented and read a paper on war criminals (attached).⁵

The Secretary referred to the announcement being made that day with respect to the parole of an additional 22 persons under U.S. jurisdiction.⁶ He handed the Foreign Minister a copy of the list of persons to be paroled. He suggested that this was at least a step in the direction desired by Japan.

Mr. Shigemitsu expressed thanks but said that he hoped for further steps.

The Secretary said that it was a very difficult situation because the persons who are still in custody have committed what the Japanese would recognize as grievous crimes. The Japanese might say that crimes were committed during the war on both sides. This may be true to some extent but the actual records in this case give rise to some very real concern. The U.S. is trying to work this problem out as best it can. Granting that it may tend to create anti-American feeling for the U.S. to continue to detain these persons, it is also important to bear in mind that if there were a spectacular blanket release there would be protests by various organizations and individuals in this country and this would tend to revive anti-Japanese feeling here. The way out of this dilemma is not easy to find but it has been solved so far without stimulating anti-Japanese sentiment. The U.S. Government is trying to continue to handle it in a way to accomplish Japanese desires without incurring liabilities here which are not in the U.S. or Japanese interest. Therefore, it is not possible to promise a general parole but the U.S. Government is working in this direction with due regard to what its own people consider to be just and to averting a public outcry which could revive feelings in the U.S. which have been beneath the surface—but not far beneath. The whole problem has been given careful thought, has been considered personally by both the President and the Secretary and has been reconsidered from time to time.

The Secretary added that with respect to the seven persons convicted by the International Tribunal, there is now agreement among the countries concerned that the sentences can be reduced within the near future.

Mr. Shigemitsu expressed appreciation for U.S. consideration of this subject. He then presented and read a paper on the Ryukyu and Bonin Islands (attached).⁷

The Secretary said that he thought it should be made clear in the interest of mutual understanding that the U.S. is not prepared at this time to give any consideration to a change in the status of the Ryukyu and Bonin Islands. The U.S. drew the line in the Treaty farther south than was originally intended and thereafter returned the Amami Islands to Japanese administration. That is all that the U.S. is prepared to do with respect to a change in the status of the islands. The U.S. is making large defense expenditures in these areas and it does not appear to be in the common interest for their status to be agitated. With respect to Japan’s residual sovereignty the Secretary said that he was prepared as Secretary of State to stand by his statement as Delegate of the U.S. to the Peace Conference at San Francisco. With respect to the nationality of the inhabitants he did not know that the U.S. had made any statement on this point. It was a complicated subject which it might be possible to clarify but it will have to be studied with our legal experts. He said that this would be done and the Japanese would be further advised. With respect to the return of inhabitants to the Bonins, he was not very familiar with this matter and preferred not to comment. The Defense Department had very much opposed their return and it was his recollection that they had valid security objections. It would be discussed with the Defense Department again.

Mr. Shigemitsu said that of the Bonin Islands, Iwo Jima was the only one that was fortified.

The Secretary then read the draft of a final joint statement which had been prepared by representatives of the two sides and it was agreed with minor drafting changes.

In the course of consideration of the final statement the Secretary commented, on reading the sentence on settlement for economic assistance, that he “was very glad to know that”.⁸ In connection with the words “in Tokyo” in this sentence, Mr. Kono made a remark in Japanese. Mr. Matsumoto explained that Mr. Kono wanted to be sure the negotiations were in Tokyo because he wants to be sure that he participates.⁹

1. Source: Department of State, Central Files, 003.9411/8–3155. Secret. Drafted by Hemmendinger on September 2.
2. Not printed. It asked that the United States not impose any new tariff or quantitative restrictions on Japanese goods, that Japanese capital goods be purchased in the course of utilizing the $100 million Presidential fund for Asian development, that U.S. assistance funds in Southeast Asia be used to stimulate “inter-[intra?] regional” trade in the area, and that trade controls on the People’s Republic of China be equalized with those applying to the “European Soviet bloc”.
3. Not printed.
4. For documentation, see Foreign Relations, 1952–1954, vol. I, Part 1, pp. 114 ff.
5. Not printed. It contained a request that the United States release all Japanese under its jurisdiction who were still in confinement.
6. The announcement contained the names of all those paroled. For text, see Department of State Bulletin, September 12, 1955, p. 421.
7. Not printed. It contained arguments for the restoration of both groups of islands to Japan.
8. In the joint statement as released on August 31, the sentence reads: “It was agreed that no major obstacles remain to settlement for economic assistance rendered to Japan during the occupation and that utmost efforts will be made to bring the negotiations in Tokyo on this subject to an early conclusion.” For text, see Department of State Bulletin, September 12, 1955, p. 419.
9. Part of a memorandum by Finn of a conversation held September 15 between Kono and Murphy reads as follows: “Mr. Kono commented that settlement of the GARIOA claim would be virtually impossible before a conservative merger, since the Liberals would attack a settlement at any figure on the grounds it was too high.” (Department of State, Central Files, 794.00/9–1555)