Foreign Relations of the United States, 1969-1976, Volume XIX, Part 2, Japan, 1969-1972

62. Memorandum From Secretary of Commerce Stans to the President’s Assistant for Economic, Commercial, and Financial Issues (Flanigan)¹

Washington, December 4, 1970.

SUBJECT

• Japanese Textile Negotiations

I have had a report² on your conversation yesterday with Ambassador Ushiba. I understand a question was raised about the possibility of a “private understanding” on an intra-group trigger mechanism.

I feel very strongly that it would be inappropriate to have any of the following types of understandings with the Japanese:

1. oral agreements;

2. any unilateral statement by us, not agreed to by the Japanese; or

3. any side agreements not released to the public.

Although unpublished understandings are used from time to time in international relations, I do not believe such understandings should be used in the type of business negotiations in which we are involved with the Japanese. My concerns are along the following lines:

1. Any statement in the published agreement that Japan reserves its rights under GATT, coupled with a private understanding whereby the Japanese say to us that they do not intend to use these rights, cannot be counted on as a binding commitment on the Japanese Government even during the tenure of Ambassador Ushiba in Washington or Prime Minister Sato in Tokyo.

2. If the Japanese are silent with regard to their GATT rights, both in the published agreement and in the private understanding, unless a written document says that the Japanese agree to our intra-group trigger mechanism, their GATT rights will be fully reserved even without any reference to these rights in the documents. We would have no protection in the agreement against Japanese invocation of the GATT.

3. A private understanding, either oral or written, must be made available to MITI because that is the Ministry which will administer Japan’s controls on exports to us. Once it is made available to MITI officials, it is a certainty that it will be made available to the Japanese textile industry. If it is not made available to MITI, the people who will administer the agreement will not know the parameters under which they will have to operate, and exports of individual categories can be expected to exceed the trigger levels.

4. If the agreement on the intra-group trigger mechanism is not made public, we will have difficulties in negotiating effective controls with other governments which inevitably will want to follow the same pattern as the Japanese agreement. We would then need to establish the fact of the intra-group trigger and of the understandings about GATT rights.

Thus I reach the inescapable conclusion that there is no effective agreement involving our right to control imports of any category exceeding the 3 percent limit unless it is written and in the form of acceptance by the Japanese of such rights. Whether or not this agreement is included in the basic agreement with the Japanese is immaterial. What is essential is that it be released to the public, both in the United States and in Japan.

Maury

1. Source: National Archives, Nixon Presidential Materials, White House Special Files, Staff Member and Office Files, Box 12, Peter Flanigan, Sub Files, Textile Memo, June 1969–Feb 1971, 3 of 4. Confidential.
2. Not found.