Foreign Relations of the United States, 1958–1960, Japan; Korea, Volume XVIII

139. Memorandum of Conversation⁰

Washington, January 19, 1960, 3:30–5:30 p.m.

SUBJECT

• U.S.-Japanese Economic Problems

PARTICIPANTS

• Prime Minister Minister Nobusuke Kishi
• Foreign Minister Aiichiro Fujiyama
• Ambassador Koichiro Asakai
• Mr. Haruki Mori, Director, American Affairs Bureau, Foreign Ministry
• Mr. Takeshi Yasukawa, Counselor, Japanese Embassy
• Mr. Toshiro Shimanouchi, Counselor, Japanese Embassy
• Secretary of State Christian A. Herter
• Assistant Secretary of State for Far Eastern Affairs, J. Graham Parsons
• Assistant Secretary of Defense John Irwin II
• Ambassador Douglas MacArthur II
• Mr. David M. Bane, Director, Office of Northeast Asian Affairs
• Mr. Richard L. Sneider, Officer-in-Charge, Japanese Affairs

1. U.S.-Japan Trade

Prime Minister Kishi opened the discussion of U.S.-Japan trade problems. He said that last year there had been a rapid improvement in Japan’s balance of payments with the United States. Japan was doing everything possible to assure orderly marketing and to exercise self-restraint and control in its exports to the United States, although it recognized that in some respects its efforts might not be sufficient. He hoped that the United States would appreciate the efforts made by Japan to contribute to a healthy growth of bilateral trade with the U.S. The Prime Minister said that Japan was also making every effort on trade liberalization at the IMF meeting in Washington and later at the GATT meeting in Tokyo. The Prime Minister then referred to the positive measures in January to remove discriminatory measures against imports from dollar sources. He stressed that Japan would continue to make as much haste as possible to remove such discriminatory measures. The Prime Minister said that, together with trade liberalization, the Government also intends to liberalize foreign exchange controls to permit more foreign capital, particularly from the United States, to enter Japan as equity investments and thereby to contribute to stronger economic ties with the United States.

Secretary Herter said that both countries viewed with the utmost seriousness the problem of trade between them. He wished to point out that several developments have made the position of the Executive Branch on trade problems more difficult. He mentioned that, first, there had been a meeting of the Governors of the Southern States recently which had supported trade restrictions–a reversal of the traditional Southern policy supporting free trade. Secondly, there had been a sudden shift in the attitude of trade unions indicating support for trade restrictionism where required to protect American labor. The Secretary said that the Executive Branch intends to fight for a continuation of a liberal trade policy. The Japanese could be of most assistance in this fight by their efforts to continue orderly marketing practices so that a given segment of American industry is not wiped out. He pointed out that diversification of Japanese imports is desirable so that the impact on one industry is not too great and there is not a consequent increase in restrictionist pressures. The Secretary said that the cooperation of the Japanese in this respect would be most helpful.

Prime Minister Kishi replied that the Japanese Government recognized the difficulties in the United States and appreciated the sympathetic understanding of the United States Government with regard to trade problems. He mentioned that, as a result of Japanese recognition of the problems faced by the United States, Japan is prepared to make certain sacrifices with respect to Japanese industries. He hoped, however, that the United States would also understand Japan has its own internal problems but that it desires not to permit the trade situation to get out of hand and hurt relations between the United States and Japan. Secretary Herter replied that the U.S. fully appreciated the problems faced by Japan and its efforts in the trade field.

Subsequently, Prime Minister Kishi referred to the importance attached by Japan to close consultation with the United States on economic matters not only on the diplomatic level but also through private channels. He said that it is important that the common economic problems of the United States and Japan be understood at the private level in order to avoid difficulties. He thought that it would be in the spirit of the Communiqué to be issued today¹ to stimulate opportunities for private business contacts between the United States and Japan. Secretary Herter commented that, since the United States has its domestic problems, he agreed that it would be helpful if trade issues could be isolated at an early stage rather than waiting until the problems develop to the point where legislative action is demanded. However, the stimulation of private activity is not always easy. He mentioned that there are organizations such as the Chamber of Commerce that provide channels for exchanges and the fruitful development of new ideas. In addition, the America-Japan Centennial this year and the forthcoming exchange of official visits should stimulate other private exchanges. He pointed out that the private exchanges proposed by Prime Minister Kishi were consistent with the United States view that the primary role in trade should be played by private groups and that the Government should intervene only when private efforts fail.

Ambassador MacArthur mentioned that Mr. Adachi² plans to discuss with private American businessmen the establishment of a non-governmental U.S.-Japan committee. He pointed out that such a committee could be productive only if it were clear that they would not discuss price fixing and if the committee would deal with both Japanese trade problems in the United States and American trade problems in Japan. Secretary Herter mentioned that American antitrust laws are difficult and give the Attorney General very little discretion, so that we cannot become involved in any committee appearing to regulate prices. However, he thought that, if a private U.S.-Japanese committee were to consider trade problems in both countries, real progress seemed possible in resolving these trade problems.

2. GARIOA

Prime Minister Kishi said now that the reparation agreements with Southeast Asia had been completed and the Japanese Government can foresee its requirements for these programs, it intends to move ahead rapidly with a GARIOA settlement. He proposed that on his return to Tokyo, working level talks commence between the Foreign Ministry and the American Embassy there. After treaty ratification is completed, he proposed that there be formal talks based on the working level talks. Secretary Herter said that this arrangement was agreeable since we did not wish to injure treaty ratification by the negotiations for a GARIOA settlement. He reiterated the President’s remarks on the need for a GARIOA settlement within the figures set forth by the President and expressed the hope that an agreement could be reached as soon as feasible since delay could make the issue more difficult. Ambassador MacArthur commented that the working level talks would, of course, be completely confidential.

0. Source: Department of State, Conference Files: Lot 64 D 559, CF 1584. Confidential. Drafted by Sneider on January 20 and approved in S on January 29. The meeting was held at the Department of State. See also Documents 140–146.
1. See footnote 1, Document 138.
2. Tadashi Adachi, Chairman of Japan Chamber of Commerce and Industry.