49. Memorandum From the Under Secretary of State for Economic Affairs (Mann) to President Johnson 1

SUBJECT

  • U.S. Position in Japanese Aviation Negotiations

Recommendation:

That you approve the proposed position shown in the enclosure for forthcoming negotiations with Japan.2

Discussion:

We have agreed with the Japanese Government to enter again, after various failures since 1961, into negotiations on aviation. The critical issue is the Japanese desire for a route to New York and beyond to Europe. Secretary Rusk is anxious to begin at least informal talks, if not negotiations, before the U.S.-Japanese Cabinet meeting beginning July 12.

The Civil Aeronautics Board and State are in agreement on a negotiation package, which includes a route for Japan to New York and “beyond,” but disagree on one condition—namely that Japan must give up her existing service to either Los Angeles or San Francisco. State feels this is unrealistic: Japan has served both cities for several years; there never has been a case in which the United States has insisted on the discontinuance of actually functioning air service, nor is it in our interest to establish such a precedent. Furthermore, the Governor and other political figures in California strongly oppose such a discontinuation. Finally, the Department does not believe that the cancellation of Japan’s rights at one California point is necessary for preserving an economic balance in the Agreement.

There are other equally important considerations which we would like to bring to your attention.

1.

The United States has vital aviation interests in Japan. Tokyo is the keystone of the entire Pacific networks of both Northwest and Pan American and of Pan American’s round-the-world service. Not only is Tokyo the largest traffic point in the Far East but also the “beyond” rights through Tokyo to the rest of the area are vital to economical [Page 95]United States service to such places as Korea, Hong Kong and on into Southeast Asia.

Looking ahead a little, we cannot expect to preserve indefinitely our own world-wide network of air service based, as it is, on an elaborate structure of “beyond” rights, if we indefinitely frustrate the demands of friendly major foreign countries for corresponding rights through the United States.

2.
The aviation issue has become politically very important in Japan and we should consider in this connection the favorable posture of the Japanese Government in major policy areas.

Since taking office, Prime Minister Sato has given resolute support to United States policy towards Viet Nam. He understands and collaborates in pursuit of our policies towards recognition and United Nations membership for Communist China, respect of the rights of the Republic of China, accelerated economic development of Taiwan and South Korea, economic aid to South and Southeast Asia, and supports us in policy disputes in the UN, in GATT and in the OECD.

We rely upon his help in forestalling challenges by inflamed elements in the Japanese public to the vital United States rights in the Ryukyus and under the Mutual Security Treaty. Prime Minister Sato is now the target of an increasingly violent attack both by the Socialists and even by some members of his own party for his “subservience” to Washington. He is criticized for his acquiescence in United States bombing of North Viet Nam, and his failure to obtain from Washington improvement in such matters as the United States-Japanese agreements on fish and aviation. In the face of vociferous demands that Japan denounce both agreements the government has counselled patience. To continue to do so without demonstrable United States understanding of Japan’s interests could cost Prime Minister Sato his office. Upper House elections are scheduled for July.

Granting Japan a route to and beyond New York appears essential for an agreement. Failure to do that would probably result either in severe restrictions on our carriers now operating to Japan or in Japan’s denouncing the agreement. Our insistence on Japan’s giving up existing rights to a California point is not only unrealistic for the reasons mentioned previously but would be considered by Japan a political affront in view of their belief that the present aviation agreement is an inequitable vestige of the post-war “occupation mentality.”

The proposed U.S. position is shown in detail in the enclosure. The United States would receive certain new rights and reaffirmation and clarification of other rights in regard to a route to Osaka, designation of additional American carriers, “beyond” rights to the Asiatic Mainland and to the USSR which are not vital now but are potentially crucial, acceptance of United States liberal principles on [Page 96]capacity, freedom of charter operations and other concessions of less significance. In addition, we would demand that Japan give up its presently unused rights.

The United States airline industry has conflicting views on this matter but is generally opposed to the offer recommended here. Northwest would vehemently oppose a North Pacific (polar) route to New York but does not seriously oppose the suggested mid-Pacific route. Pan American does not oppose a route to New York per se for JAL but naturally opposes the competitive mid-Pacific route and rights beyond New York. The transcontinental airlines, particularly American Airlines, object to the grant of transcontinental rights to Japan or other countries on the ground that it will divert traffic.

Available data and experience do not support assertions that the grants here proposed would seriously affect U.S. domestic carriers. For example, Japan Air Lines states it will offer only three flights per week between Los Angeles/San Francisco and New York, compared with some 200 nonstop flights alone in each direction offered by the United States transcontinental airlines. Nor do we believe that the present route grant would, in itself, establish any precedent leading to similar grants to other countries.

Looking broadly at our international aviation problems, we are increasingly concerned by the need to examine the claims of U.S. international carriers for more extensive rights within the United States on the one hand and on the other the desires of some U.S. domestic carriers to have trans-Atlantic or trans-Pacific rights. Not only would this result in increasing United States air traffic and make for a more efficient United States air industry but this expansionist policy would make more acceptable to our airlines the need to grant transcontinental and “beyond” concessions to Japan and perhaps ultimately to other friendly major aviation countries.

Thomas C. Mann 3

Enclosure

Recommended United States Position

The United States Delegation may offer Japan a route “from Japan to Honolulu, Los Angeles or San Francisco (choice of one) and New York and beyond to Europe and beyond,” subject to a mandatory stop at the California point selected for any flight proceeding to New York.

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In return, the United States Delegation will require, as a minimum, that Japan:

1.
relinquish its presently unused rights at Seattle and beyond the California points;
2.
grant rights at Osaka on the United States routes to and through Tokyo;
3.
recognize the United States rights of multiple designation (that is, the right to designate Northwest Airlines for United States–Tokyo– Hong Kong service and eventually perhaps other airlines to serve Japan); and
4.
accept the continuing effectiveness of the 1959 Agreed Minute concerning capacity increases and, if possible, formalization of that Minute.

The United States Delegation will also seek such additional aviation concessions from Japan as it is able to secure, either as a part of the negotiations or as a by-product of their successful outcome, such as:

1.
Japanese recognition of the United States right to operate air services beyond Japan to mainland Asia and Europe (that is, Communist China and the USSR) for possible future use.
2.
Japanese recognition of the right to operate all-cargo services under the Civil Air Transport Agreement.
3.
Liberalization of Japanese treatment of United States supplemental airlines offering charter and non-scheduled services to and from Japan.
4.
Liberalized Japanese policies with regard to the licensing of air freight forwarder companies.

  1. Source: Johnson Library, National Security File, Country File, Japan, Vol. III. Confidential. The document was sent to the President through McGeorge Bundy under cover of a memorandum from Benjamin H. Read, signed by Herbert Gordon, May 29.
  2. The document does not indicate whether the President approved or disapproved the recommendation, but see Document 51.
  3. Printed from a copy that bears this typed signature.