TRADE CRISIS.

Auckland Star, Volume LXXI, Issue 13, 16 January 1940, Page 7

TRADE CRISIS.

DEADLOCK REACHED.

May Not Be Even Stop-> Gap

Agreement.

U.S. GOVERNMENT ANXIOUS

WASHINGTON, January 13.

The United States-J apanose trade crisis appears to have reached a deadlock, and prospects are increasing that there will not be even a stop-gap agreement when the treaty expires ou January 20. The United States Government is believed to be prepared to enter a nontreaty period without substantial changes in the trade status until it lias ascertained whether the incoming Japanese Cabinet will meet the American demands. If there is no satisfaction in a reasonable time it is believed that Congress will l>e given a free hand to act on numerous anti-Japanese embargo measures. Also, it is thought, the Secretary of State, Mr. Cordell Hull, will expand his moral embargo. Appeasement Gesture. Tlio indications are that the United States Government is anxious to avoid anti-Japanese retaliatory measures. At present the greatest threat to Japan is that Congress might decide overnight to pass one of six pending bills placing an embargo on the sale of war materials to the Japanese, It is understood that only Mr, Hull's influence has prevented action. It is emphasised that the defeat of the measures would embarrass the United States, and Japan would fee} at liberty to intensify her commercial hegemony in China. The choice of Admiral Yonai as Prime Minister of Japan and of Mr. Arita as Foreign Minister is regarded as a gesture of appeasement to the United States. Temporary Arrangement. Japan's draft of a proposed stop-gap agreement with the United States has been sent to the State Department, Washington, according to the spokesman for the Japanese Foreign • Office, says the Tokyo correspondent of the United Press. A reply is expected before the present treaty expires, Japan is agreeable to a temporary arrangement, to be operative pending the conclusion of a formal long-term pact. It is not believed in Tokyo that the change of Cabinet in Japan will affect the negotiations.