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

842. Reference: Embtel 823 repeated 58 Hong Kong.1 With achievement cotton textile agreement I wish express appreciation for work USDel, members of which conducted difficult negotiation with extraordinary skill and patience, particularly deserving commendation is USDel Head Warren Christopher who devoted himself unsparingly to obtaining agreement acceptable US. In my view public service indeed fortunate at being able recruit for cotton textile assignment man of such outstanding intelligence and ability. Embassy of course gave all possible support to obtaining agreement meeting US needs on requirements and I believe our efforts, particular those treaties, usefully supplemented USDel.

Now that negotiations successfully concluded, however I would be remiss if I did not call attention costs we incurred in getting this agreement. I do not refer to strains placed on our relationships with senior Japanese civil servants or to heavy expenditure our Embassy influence, including my representations to Prime Minister. These are more or less normal aspects difficult negotiation. I am ready also discount decline in our moral position in respect trade liberalization (although I am compelled say we can expect future representations this subject be received with little grace by GOJ) since Japan obviously intends proceed according its own liberalization schedule anyway.

What is of concern is extent to which agreement was at expense Ikeda’s political position and general cordial atmosphere US Japanese relations. For Ikeda, whose prestige enormously enhanced by reception given him in Washington, new agreement was obviously unpalatable and unhelpful. It was taken by many Japanese as a slap in face after warm handshake. Moreover his government has grave balance payments problem on its hands which makes anything bearing on exports especially sensitive subject. Although Sato his chief political rival, eventually went along with Ikeda’s decision that an agreement necessary in Japan’s own interests, it would be beyond ordinary self restraint if he did not seize on this “unfavorable” and “imposed” accord to present himself to textile interests and business community generally as leader more capable than Ikeda standing up to “unreasonable” US demands. This is first opportunity since Washington visit make factional gains against Ikeda and Sato, as well as other ambitious politicians, is not likely overlook it.

[Page 708]

Of considerably more importance for long run is fact US has been portrayed ever since Geneva as single mindedly committed impose on GOJ and Japanese industry unfair terms. Emotion generated around this issue by no means confined Osaka textile merchants. There is widespread belief in Japan that US, through superior economic power, forced Japan “surrender” on matter basic importance to Japanese economy. Strong feelings on this broke out in negotiations themselves, with so senior official as Foreign Office Economic Affairs Chief Seki evidently convinced Japan should on principle refuse sign “another unfavorable” textile quota agreement no matter what reprisals might follow.

It is true that background textile problem was unusually conducive to emotional Japanese response. For example on numerous occasions GOJ delegate harked back to 1956 discussions2 when at last moment by White House fiat, already agreed velveteen quota was slashed by one million units. Moreover Japanese apparently believe US intended provide much more generous recompense for period vol[untary] restraint. There was and is real and deep rooted unhappiness among textile people at what is considered failure do so.

Moreover we should not consider textiles isolated and unique problem. Over recent years we have badgered GOJ and Japanese industries to impose quotas and set minimum export prices on numerous commodities as condition continued access our market. In most cases we (or our industries) asked Japanese establish export restraints on items which presumably could not be shown as causing our producers damage under procedures Trade Agreements Act. Implicit and sometimes explicit in this has been assumption Japan must be treated as special and somewhat disreputable kind of trading partner, to be trusted in US market only under differential arrangement. This is all the more galling since US usually has favorable balance trade with Japan which this year will reach massive proportions. There little doubt that these small and large humiliations have now accumulated to point where many Japanese, in out of government, have come hold real bitterness toward US.

I do not wish exaggerate matters (our position here is not so fragile that it will be shaken seriously by aftermath textile agreement). At same time I fear that if we continue along path charted over past few years, our relationship may eventually be damaged irreparably. Trade is so close to problem Japanese survival that we cannot hope enjoy full Japanese friendship and partnership if we continue treat Japan as not fully suitable for polite trading society. In my opinion we urgently need trade policy that will give USG sufficient authority and flexibility in domestic [Page 709] handling difficult import problems to enable us deal with country like Japan on some more acceptable and thereby more durable basis.

Reischauer
  1. Source: Department of State, Central Files, 611.9441/9-1261. Confidential.
  2. Document 343.
  3. For information on these discussions, see Foreign Relations, 1955–1957, vol. XXIII, Part 1, pp. 247-249.