Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

328. Telgram From the Mission to the European Office of the United Nations to the Department of State¹

Geneva, December 19, 1966, 1807Z.

1893. GATT—For Governor Herter from Blumenthal. Subject: Exoff—Assessment of US and Japanese KR offers. Ref: Geneva 1752.²

1. On December 19 we met with Ambassador Aoki who had just returned to Geneva from Tokyo following consultations on KR matters with Prime Minister Sato, members of new Cabinet and industrial leaders. Said he was without instructions but wished to provide impressions concerning GOJ views of assessment of bilateral offers:

A. Prime Minister expressed view KR is reaching “eleventh hour” and Japan should endeavor to arrive at fair agreement which takes full cognizance of problems and views of each participant.

B. Ministry of Agriculture is unable understand why US has not made an assessment of Japanese offer on cereals agreement; moreover, in light poor EEC agricultural offer it is difficult for Japan to maintain present agricultural offers. Aoki said he urged his Minister to keep offer on table until the end and latter agreed to study.

C. Ministry of International Trade is very much disturbed by fact “modification list” in US assessment paper to GATT Nov. 30³ affects Japanese industrial products to greater extent than products of interest to EEC; also, the large amount of trade affecting Japan can only mean “US is taking orthodox approach in assessing offers and is not buying Japanese view that zero binding offers are of value.” For textile Bureau of MITI, inclusion in modification list of large amount of commodities under jurisdiction this Bureau has given rise to difficulties, particularly since Japan has endeavored in past to cooperate on textile matters.

D. Aoki expressed view that if US is unable to move on NTB’s (Section 402A of Tariff Act) and should withdraw offers on steel (on which US has reserved its position), the Japanese Government would be forced to make modifications in its offers. Aoki reiterated several times that impact of US modification list against Japan was too great and asked the US delegation to study other approaches in assessing offers. In this connection, he thought Japanese offer was comparable to that tabled by US depending on assumptions used.

2. We made following comments:

A. US delegation did not use any one method of assessment, contrary to Aoki view we used only “orthodox method of assessment:” every measure shows Japanese offer does not match US offer. This is true even if credit were given to Japan’s zero binding offers which in many cases are of dubious trade value. We would welcome opportunity to discuss in greater detail our bilateral offers to establish fact there is an imbalance.

B. Concerning proposed grains agreement, the US would be prepared ascribe appropriate negotiating credit. This was left out of US assessment of Nov. 30 because of indefiniteness final outcome, particularly on questions such as price and food aid.

C. Concerning the impact of US modification list on Japan as against the EEC, consideration should be given to three points: 1) EEC industrial offer is relatively better than that tabled by Japan; 2) listed agricultural items affect the EEC more than Japan; and 3) US reservations on chemicals, aluminum and steel should be considered as part of our modification list.

D. We urged that Japan not use EEC’s poor offer on agricultural products as an excuse for not improving Japan’s agricultural offers.

E. In conclusion we agreed to study any assessment calculations the Japanese may have to support view there is not an imbalance in offers to degree suggested in US assessment paper.

Mace

1. Source: Department of State, Central Files, FT 7 GATT. Confidential. Repeated to Tokyo and passed to the White House for Herter.
2. Telegram 1752 from Geneva summarized Blumenthal’s negative assessment of Japan’s Kennedy Round offers, which “fall considerably short of matching US offers” at their November 29 meeting, and the response of the Japanese delegate. It also noted that Japan submitted its assessment of Kennedy Round offers to the GATT Secretariat on November 30, including specific requests of the United States. (Ibid.)
3. Not found.