455. Telegram 1470 to Tokyo, December 81

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Department and White House have noted heavy volume Japanese criticism President’s request for Tariff Commission Section 22 investigation on cotton textile equalization fee. Suggest Ambassador consider giving speech before suitable forum at early date on general subject US-JAPAN commercial relations in which equalization fee problem can be put in perspective. Following points can be made:

1. US not repeat not departing from traditional foreign trade and foreign economic policies which continue to be based on proposition that interests of US and free world are bound up with liberal multilateral trading system. You may say that Department and White House have informed you that Administration proposes to go before Congress with far-reaching trade policy legislation which will be based on fundamental proposition of unconditional most favored nation treatment. We intend seek broad authority negotiate with Common Market, which is major new factor in international trade, but we intend generalize tariff concessions as in past. New departures in trade policy legislation, if accepted by Congress, will not harm or isolate Japan but rather will strengthen and expand multilateral trading system to benefit of all participants, among whom Japan is so [Facsimile Page 2] important a member.

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2. President’s request of Tariff Commission for Section 22 investigation raw cotton export subsidy reflects continuing concern US Govt over obvious inequity that two price cotton system imposes on US textile industry. However, Tariff Commission has been asked to study and investigate. There will be a full examination this matter, including public hearings where all interested parties may make views known. There is no Tariff Commission recommendation impose equalization fee and cannot be until investigation completed. There is no way to anticipate its conclusions since procedure not yet under way. Its recommendation, when made, will represent judgment as to whether sufficient case has been made to warrant application equalization fee as means mitigate effect export subsidy on US cotton support price system.

3. While USG has identified cotton textiles as special problem case US approach is not intended be restrictive and narrow one. On contrary, we have undertaken to find answers through multilateral discussions and on the basis that the interests of the free world call for orderly expansion international trade in cotton textiles. We are actively seeking agreement [Facsimile Page 3] to cover a period of several years during which the traditional and the new exporting nations will have access increasing markets in the importing nations.

In addition public address, Ambassador should take early occasion discuss with Hara of Cotton Spinners’ Association and other textile industry leaders equalization fee question. Ambassador should stress that examination of equalization fee approach by Tariff Commission is one aspect of search for solution to genuine problem facing US industry (which Hara and others understand fully). It is not only possible solution but it is one we are committed to study and explore. Tariff Commission procedures will allow all interested parties to be heard and Ambassador should be free encourage Japanese put forward their case as they see it. He should express hope, however, that Japanese industry will show understanding that USG proceeding in orderly and careful way come to a decision on how best deal with inequity caused by two price cotton and that no unconsidered or hasty actions intended or even possible.

Believe both speech and discussions with textile leaders should be undertaken soonest in order clarify US position in Japan before view becomes fixed in Japanese public that equalization fee already has been imposed and Japanese interests ignored in process.

  1. Strategy to blunt Japanese criticism of cotton textile equalization fee. Confidential. 3 pp. Department of State, Central Files, 411.006/12–861.