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

14. Telegram From the Embassy in Japan to the Department of State⁰

Tokyo, June 4, 1958, 7 p.m.

3189. Passed COMUS/Japan via other means. Re Deptel 1545.¹ After much discussion with Finance Ministry, FonOff have now told us that in order to avoid possible future criticism for having made “secret agreement”, they preferred have understanding that 3 billion yen reduction was special reduction for this year only written into unclassified notes instead of being contained confidential letters. However, because of intense political pressures which issue has generated in past, and probably will generate in future, they do not wish to call undue attention to matter and accordingly, strongly prefer following language to that in Deptel 1645. It seems to us to contain ample assurances along lines requested reftel. It would take place of last sentence in penultimate paragraph Embtel 1886.²

“It is understood that for the Japanese Fiscal Year 1958 only the reduction from the previous year includes $8,333,333.33 in addition to the progressive reduction calculated in accordance with the provisions of the exchange of notes of April 25, 1956.³ It is understood further that this additional sum does not create a lower base for calculating the yen contribution in Japanese fiscal year 1959 than would have obtained without the additional reduction.”

FonOff also wishes insert words “which can be carried over under relevant provisions of Japanese laws and regulations” after words “prior fiscal years” in numbered para 2 in draft note. This is their view, which seems reasonable, of what language was intended to mean. This clarification prompted by informal discussion of fact that, while greater part of unexpended funds have in fact been carried over at end of each fiscal year, in accordance with agreements and with normal Japanese budgeting practice, there are each year certain lapsed funds from prior years which cannot legally be carried over again. There have been such lapses (in other ministries besides Defense agency) at the end of each Japanese Fiscal Year, for many years long antedating yen contribution formula agreement. They have ranged in magnitude from 3 to 6 billion yen. These lapses are of minor nature in relation to over-all Japanese defense performances and of even less importance in relation to our over-all objectives in Japan. Embassy view is that we must consider that there has been “mutually satisfactory execution” of agreements for previous years within meaning of April 25, 1956, exchange of notes and that proposed language change should be accepted.

Urgently request approval both foregoing changes in order that final clearance within GOJ may be obtained and exchange of notes concluded.⁴ They would be accompanied only by exchange of letters similar to those last year.

MacArthur

0. Source: Department of State, Central Files, 794.5/6–458. Confidential.
1. The telegram number was corrected by hand on the source text to telegram 1645. Dated February 5, it suggested some changes in wording and proposed that the agreement be effected through confidential exchange of letters. (Ibid., 794.5/1–2258)
2. The last phrase in telegram 1886 from Tokyo, January 22, reads: “concerning amount to be made available to us under Article XXV 2 (B) of Administrative Agreement for JFY 1958.” (Ibid.)
3. See footnote 3, Document 1.
4. Department approval was given in telegram 2749 to Tokyo, June 20. (Department of State, Central Files, 794.5/6–458) An exchange of unclassified notes took place in Tokyo, August 12, 1958, and entered into force the same day. For text, see 9 UST 1238.