N.Z. Urged To Buy More From Japan

Press, Volume XCVIII, Issue 29055, 18 November 1959, Page 24

N.Z. Urged To Buy More From Japan

[FrOm R. E. BLAZEY, Tokyo correspondent of “The Press.*’]

TOKYO, November 2,

The Japanese Government has made the fifteenth session of the contracting parties to the General Agreement on Tariffs and Trade, now being held in Tokyo, an occasion for loudly demanding that discrimination against Japanese goods be removed in the interests of world trade liberalisation.

In particular, the Japanese are demanding that 14 nations, including New Zealand, Australia, and the United Kingdom, cease invoking Article 35 (the “escape clause” which allows a nation to refuse full G.A.T.T. privileges to another of the parties) against Japan. .When Japan became a signatory to G.A.T.T. in 1955, 16 nations invoked Article 35 on the ground that Japan, as a lbw-wage producer, would flood their markets with cheap goods. The 16 were the United Kingdom, Australia, New Zealand, India, Rhodesia, South Africa, Austria, Belgium, Cuba, France, Haiti, Luxembourg, the Netherlands, Brazil and, then and subsequent to their attaining independence, Malaya and Ghana. Brazil and India have since rescinded and granted Japan full rights under G.A.T.T., or, as it is known, “most-favoured-nation-treatment.”

Of the remaining -14, half are British Commonwealth nations. As these nations also retain a system of preferential tariffs among themselves, they have been singled out here to bear the brunt of the Japanese criticism. This criticism has been taken outside ministerial and committee meetings in the form of extensive and frequent newspaper articles in English written especially for the occasion and for the delegates. ' Abuse of Position?

These articles have drawn protests in that they have sometimes gone beyond the Japanese Government policy to hinting that the foreign delegates should remember to be nice to the Japanese in view of the fine hospitality they are receiving in Tokyo. (This is the first time—except for the inaugural conference—that the G.A.T.T. parties have met outside Geneva.) Aside from this slight abuse of their position as hosts the Japanese have a case. It is that Japan in comparison with many other countries which are currently receiving full G.A.T.T. privileges, is not a low-wage “menace” to countries with high standards of living and that Japan, as a densely populated country poor in natural resources, must export to live. But, as the New Zealand Minister of Customs (Mr Boord) pointed out, the Japanese criticism of Australia and New Zealand, which they persist in lumping together with the Pacific Islands into a Japan-styled regional bloc termed “Oceania,” is somewhat beside the point in view of the fact that both Australia and New Zealand have granted Japan “de facto” most-favoured-nation treatment in their trade agreements of 1957 and 1958. The Japanese also resent the Imperial preference system and have recently had cause to criticise the European Common Market and the Free Trade Area. U.S. Warns Japan

In the midst of Japanese criticism of the Commonwealth and Europe the United States delegation has given a clear warning that unless Japan itself ceases discriminations against United States finished goods and raw materials “it will be difficult, if not impossible, for the United States Government to continue its policy of providing ready access to its markets if Japan and other countries continue discriminatory and restrictive trace practices beyond the time when they can be justified by real fiscal problems.” In addresses to the session and outside bodies, the United States Assistant Secretary of Commerce, Mr Henry Kearns, condemned the Japanese attitude of expecting a free hand in the United States while applying

special foreign exchange and licensing restrictions against United States and dollar area goods which do not apply to other areas.

It has been pointed out that Japan’s foreign exchange reserves actually exceed those of several European countries and that Japan’s economy is in fact stronger and more stable than many other more free-trading nations. Australia, which has become an exporter of manufactured goods as well as a primary producer, has also criticised Japan for its non-tariff restrictions. One case in dispute is that of motor-vehicles. Japan wants to export cars and trucks to Australia, but refuses to lift what amounts to a complete foreign exchange ban on Holdens coming into - Japan. N.Z. Criticism of U.S.

New Zealand has aimed its criticism more at United States agricultural surplus policies than at Japan’s own restrictions on the import of primary produce. Although the Japanese official line is unrelenting, except for a few token concessions which have aggravated criticism rather than mollified it, some Japanese economists and businessmen have begun to think seriously about what would happen if Japan did begin to liberalise its foreign trade.

One economist writing a newspaper column on the subject said that whereas Europe’s trade liberalisation was a consequence of domestic economic policies originated in the early post-war years, Japan’s trade liberalisation would actually be the origin of new domestic policies to that effect, very much a case of the cart-befare-the-horse so far as Japan was concerned. Contradictions

Another economist said there were two “contradictions” in any prospect for liberalisation of Japan’s trade. The first was that if Japan bought more from abroad, as would be the case if restrictions were eased, it would have to export more, which it could not do without serious inflation. That is, to produce more goods for export, Japan would have to shift five million of its farming population to industry and invest the equivalent of £1,000,000 million in new industrial plant. Development on this scale would be too much for the Japanese economy. Only a few years ago (1956) the Japanese economy experienced a sudden and dangerous inflation when only a mere (in comparison) £l5OO million was pumped into expanded production. Contradiction number two was, the economist said, that if Japan hoped to build up the competitive power of her industries by giving them full protection, the consequent quotas and high tariffs (already offensive to G.A.T.T.) would prevent in many cases the import of new equipment needed to modernise industry and make it competitive. Japan has also relied heavily on bilateral trading and has made most of her gains from bilateral or semi-bilateral trade agreements.

A Japan which is based on bilateral trading, protective tariffs, rigid quotas and foreign exchange control faces a dilemma. Either she must go through an economic revolution which would have severe repercussions on industry and living standards, or she must continue restriction and control and become an “orphan” in the world economy, shunned alike by free trading neighbours and the self-sufficient Communist bloc.