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

140. Memorandum of Conversation⁰

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

SUBJECT

• Security Problems; Military Assistance for Japan; the F–104 Program; and Pending Claims Under the Administrative Agreement

PARTICIPANTS

• [Here follows the same list as Document 139.]

1. Japan’s Defense Buildup and U.S. Military Assistance

The Prime Minister said that Japan’s initial defense plan ends this year. A second defense plan is now being developed and this new plan will be based upon the new treaty. He said that in the course of the defense buildup by Japan, the Japanese Government hopes that the U.S. will continue to assist Japan in every way possible. He said that the Japanese understand that there are differing American views on the continuation of military assistance to Japan and that it is also important for Japan to take the initiative in setting forth its defense plans. At the same time, while Japan must do its part, it is hoped that the U.S. will continue to assist the defense buildup.

At the invitation of Secretary Herter, Assistant Secretary Irwin commented. He said that the U.S. hopes to play a part in the Japanese defense buildup by continuing some form of military assistance. He stressed that the U.S. has two main problems in this respect. First, Congress has reduced the appropriations for military assistance and, second, there is the problem of Congressional attitudes toward assistance to countries who have improved their economic position in recent years, such as Japan. Nevertheless, Mr. Irwin said, the U.S. hopes to continue its assistance at approximately the 1960 level but as part of a cost-sharing program in which both countries play cooperating roles.

2. F–104 Program

Mr. Irwin next discussed the problems involved in the F–104 program.¹ He emphasized that U.S. assistance in this area is limited and that the U.S. will not be able to go above $75 million as its share of the cost of the program. The U.S. realizes that the costs of the program have increased but pressures in the U.S., particularly as a result of the reduction in Congressional appropriations, make it impossible to increase the U.S. share. Mr. Irwin concluded that the U.S. is generally pleased with the Japanese defense effort.

Prime Minister Kishi expressed the hope that U.S. assistance to the F–104 program would be in “kind” as well as through direct financial grants. Assistance in “kind”, such as was done in the P2V production program,² would be very helpful to Japan particularly at this time when the budget has already been formulated. The Prime Minister pointed out that he only wished to mention this problem briefly since he recognized that there was a U.S. mission in Japan now negotiating on the F–104 program and the problem is being handled through diplomatic channels. The Prime Minister said that he did, however, wish to note the desires of the Japanese Government on this matter. Mr. Irwin replied that he personally had just learned of the technical difficulties facing the Japanese Government as a result of the different handling of the P2V program and the F–104 program. He said that he was not sure why the Air Force is not providing assistance in kind to the F–104 program. However, the U.S. understands the difficulties faced by the Japanese Government in having the Japanese Government budget for the whole program and then having the U.S. reimburse the Japanese Government for the U.S. share. Mr. Irwin said that the U.S. would try to work out some form of mutually accommodating arrangement on this matter.

3. Pending Claims Under the Administrative Agreement

Assistant Secretary Parsons commented on the problem of the pending claims under the Administrative Agreement. He said that since this was a highly complicated question, he did not wish to get involved in the details. The problems involved go back some years and relate to claims arising under the old Administrative Agreement which in their total amount are a fairly sizeable sum. He mentioned that there are three main issues involved: 1) the status of the Japanese National Railway, the Nippon Telegraph and Telephone Public Corporation and the Japan Monopoly Corporation as governmental or non-governmental entities; 2) movable property claims; and 3) the rates charged the U.S. for use of leased long-distance telephone facilities. The U.S. has proposed a package deal which has balancing provisions. Mr. Parsons stressed that the key element to the U.S. in this package deal is the question of the rates charged us for use of leased long distance telephone lines. Over the years, we have paid rates which are quite high, in fact higher than those paid in other countries, while the telephone corporation has made considerable profits. At the same time, Japanese police agencies have paid very much lower rates. Mr. Parsons said that as part of the U.S. package it is proposed that the U.S. armed forces pay rates equal to those paid by the Japanese police. He said that he considered this a reasonable and equitable settlement particularly since the U.S. forces were in Japan for the purpose of providing Japanese security. Mr. Parsons pointed out that the major importance of this issue is that, if it became public during the Diet debate on the new treaty, opponents could exploit the issue of pointing to U.S. and Japanese failure to agree on this matter. He mentioned that it is also the type of issue which opponents in the U.S. could exploit by pointing out that, while Japan receives military assistance from us, it still charges us high telephone rates. He concluded that the U.S. hopes that the whole package proposed by Ambassador MacArthur will commend itself to the Japanese Government after study. He stressed that the package had been worked out with great care here in Washington.

Mr. Kishi commented that he was not familiar with the problem of pending claims under the Administrative Agreement. In his view, however, it was important to settle this issue as soon as possible. He said that, when he returned to Japan, he intended to study the question and urge a reasonable and early settlement. Secretary Herter expressed gratification since this was an issue that could make trouble for both Governments.

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. See also Documents 139 and 141–146.
1. Negotiations for a cost-sharing program for the production of F–104 series aircraft in Japan were going on in Tokyo. Documents relating to the subject are in Department of State, Central Files 794.5–MSP and 794.5622. An agreement was reached through an exchange of notes signed at Tokyo, April 15, which entered into force the same day. For text, see 11 UST (pt. 2) 1361.
2. Agreement relating to a cost-sharing program for the production and development in Japan of P2V anti-submarine and sea patrol aircraft was effected through an exchange of notes signed in Tokyo, January 25, 1958, which entered into force the same day. For text, see 9 UST 124.