Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 2

611.94/2–2752

No. 533
Memorandum Prepared in the Department of State¹

secret

[Washington?, undated.]

Record of Japanese Government’s Position During Course of Negotiation of Administrative Agreement

The following summarizes, by Articles, the disposition of proposals made by the Japanese Government for changes in the draft administrative agreement which was submitted to them in behalf of the U.S. Delegation about January 23, 1952,² a few days before the U.S. Delegation arrived in Tokyo for the negotiations.

Numbers of Articles are those of text of final agreement. Where the numbers of Washington draft differ, they are shown in parentheses.

Article I

The Japanese Government took the position that the “civilian component” should be defined as in NATO, and consequently should not include:

(a) nationals of third states or stateless persons

(b) persons serving with or accompanying the US armed forces

(c) contractors with the US armed forces

(d) employees of contractors with the US armed forces

(e) persons under contract with contractors with the US armed forces.

The Japanese ultimately conceded that the civilian component should be defined to include category (b), and that categories (c) and (d) should be given substantially the same privileges as other members of the civilian component, although these privileges were to be conferred upon them in a separate article, rather than by including them within the term “civilian component”. We agreed to exclude categories (a) and (e) from the definition of “civilian component”.

Article II

The Japanese insisted at the start of the negotiations that the third sentence of paragraph 1, which authorized the US to continue to use facilities presently in use until arrangements for other facilities could be made through the Joint Committee, should be deleted. They contended that such an authorization amounted to a continuation of procurement demand after the occupation had ended. They were willing, however, to include the substance of the third sentence in an exchange of notes to be signed simultaneously with the Agreement.

Both sides prepared drafts of the exchange of notes in which Japan would authorize our forces to continue to use facilities and areas now in use, in cases where agreement on the use of facilities and areas had not been reached within 90 days after the effective date of the peace treaty. Difficulty arose over the effort of the Japanese to include in the notes a statement by us either that we had no doubt agreement on facilities and areas could be reached within the 90-day period, or that every effort would be made to complete agreement within that period. We, on the other hand, sought to include a statement by the Japanese recognizing that delays might arise in reaching and giving effect to agreement.

The outcome was an exchange of notes in which we agreed to begin consultation on facilities and areas immediately, and on an urgent basis, in order to complete such arrangements at the earliest possible date. The Japanese, on the other hand recognized that “unavoidable delays [”?] may arise in the determination and preparation of facilities and areas and agreed to grant to the US the continual use of particular facilities and areas on which agreements had not been reached within 90 days after the effective date of the peace treaty.

Article III

The Japanese proposed, and we agreed, to provide for consultation between the two governments concerning the exercise outside the facilities and areas of the rights, power, and authority granted in this article. The Japanese asked that paragraph two, the itemization of rights of the US, be deleted from the Agreement, but later agreed to include the text of the paragraph in the official Minutes of the negotiations.

Article IV

The Japanese proposed, and we agreed, to revise the language of paragraph one to provide that the offsetting of US and Japanese claims arising out of changes in condition of facilities and areas would apply to all facilities and areas at the time of their becoming available to the US forces instead of at the time of the coming into force of the Agreement. We proposed, and the Japanese agreed, to add to paragraph one a phrase making clear that the US had no obligation to compensate for changes in facilities and areas.

Article V

In compliance with a Japanese request we agreed to put into the Minutes concerning this article a statement specifying (1) that commercial vessels should not be treated in the same way as US public vessels under this Article unless they were on bareboat, voyage or time charter to the US; and (2) that commercial cargo and private passengers were carried by such vessels only in exceptional cases. We agreed to insert in the text of the article an undertaking to notify the appropriate Japanese authorities in the event any commercial cargo or passengers were carried on such vessels or aircraft. Upon Japanese agreement to grant freedom of access and movement to US forces between facilities and areas and between such facilities and areas and ports, we did not insist upon freedom of movement by land between ports of Japan.

Article VI

No Japanese proposal was made on this article.

Article VII

The Japanese objected to the provision that rates paid by the US armed forces for public utilities and services should be no less favorable than those applicable “to any department or agency of the Government of Japan” because, for historic reasons, the Japanese police are granted a very substantial discount on telecommunications rates. We agreed to change the ending of the article in order to prescribe that rates should be no less favorable than those applicable to “the ministries and agencies of the Government of Japan”. A statement was put into the Minutes that for the time being we would not ask for the special police discount, but we did not consider that the US should pay for any significant period rates higher than those paid by the JNPR.

Article VIII

The Japanese objected to the provision that all of the meteorological services which they were obliged to furnish should be furnished without expense to the US. They insisted that the expense for such services should be handled in the same way as the expense for all other services under the provisions of Article XIII. We agreed to delete from the article the phrase “without expense to the US” upon the Japanese agreeing to insert in the Minutes a statement that the charges for these services would be limited to such expense as was incurred by the Japanese solely for purposes of furnishing information to the US armed forces, and excluding any expense which the Japanese incurred in order to furnish services to the Japanese public or to the international community. We agreed to itemize in the Article the services to be furnished, since the itemization merely expressed in detail what was already included in the general language of our original draft.

Article IX

No proposals were made on this article.

Article X

This is a new article proposed by the Japanese. We agreed to it with slight modifications.

Article XI (Washington Article X)

The Japanese first wanted to deny any exemptions from import duties to contractors. They then offered to grant exemptions only to contractors who were brought to Japan from the United States, and who were not ordinarily resident in Japan. They also made several proposals about certifications to be furnished in cases of imports by contractors. They finally agreed, in effect, to permit contractors to import duty free materials, supplies and equipment to be used exclusively by the US armed forces or ultimately to be incorporated into articles or facilities used by such forces, provided that the US take delivery and certify that such goods were to be used for the purposes specified.

The Japanese were unwilling to give an exemption to members of the US armed forces, the civilian component, and their dependents in the terms of our draft which exempted from import duty all property consigned to or for the personal use of such persons. We accepted their statement of the exemption to be accorded to such persons which is much more detailed than ours, but which still permits exemption from duty of all goods imported in reasonable quantities for personal use, provided that such goods are brought in by such persons at the time of their entry into Japan or are mailed into Japan through US military post offices. We agreed that such persons are not permitted to import goods free of duty other than at time of entrance or through the mails, except “vehicles and parts” which may be imported for private use free of duty at any time.

We agreed to insert in the Article the provision that the granting of exemptions from import duties did not oblige the Japanese to grant refunds of customs duties and domestic excises which had already been collected. The Japanese offered to exempt from customs examination units and members of the US armed forces under orders entering or leaving Japan. We accepted about two-thirds of the Japanese proposals aimed at providing safeguards against abuse of the privileges granted in the Article.

Article XII (Washington Article XI)

Both sides worked toward expanding this Article to specify the taxes on goods procured by the US armed forces from which they would be entitled to claim exemption. Provision was made for exemptions from or refunds of any present or future Japanese taxes which might be found to constitute a significant and readily identifiable part of the gross purchase price.

The Japanese were at first unwilling to grant any tax exemption to contractors procuring goods for ultimate use by our forces. They later offered to insert in the Minutes a statement prescribing procedures for such exemptions. They finally agreed to include in the article a provision recognizing that procurement for ultimate use by our forces should be exempt from tax, and to insert in the Minutes a statement prescribing procedures for obtaining such exemptions.

At Japanese request the provision concerning conditions of employment of Japanese labor was expanded to specify that rights of such workers should be those prescribed by Japanese law. There was also included in the article a prohibition against disposal to unauthorized persons of goods purchased tax-free.

Article XIII (Washington Article XII)

Both sides agreed that exemption from income tax should not be granted to persons who, for US income tax purposes, claimed to be residents of Japan. At first, the Japanese were unwilling to grant an exemption from income taxation to contractors ordinarily resident in the United States or to employees of such contractors. They later stated they were willing to reduce their income taxes on such income to amounts which did not exceed the taxes such persons would have to pay under US income tax laws. In the end they agreed to grant income tax exemption to such persons, but the provision conferring such exemption was inserted in a new Article XIV.

The Japanese were unwilling to exempt from taxation in Japan holdings by members of the US armed forces, etc., of intangible property registered in Japan, or to grant exemption from automobile taxes. We agreed to the Japanese position but insisted that the exemption on automobile taxes be limited to “taxes payable in respect to the use of roads by private vehicles”.

Article XIV

This is a new Article, proposed by the Japanese to cover contractors and their employees. When they first proposed the Article, the Japanese attempted to deny such persons several of the privileges granted to the civilian component. As finally agreed, however, the Article provides that contractors shall be treated in the same way as members of the civilian component except with respect to criminal jurisdiction. It was agreed that the Japanese should have the primary right to exercise criminal jurisdiction over such persons. If they chose not to exercise this right, the US military authorities would then have the right to exercise jurisdiction.

Article XV (Washington No. XIII)

The Japanese proposed that US army newspapers which were circulated to the general public should not be exempted from Japanese regulations, etc. We agreed that such newspapers sold to the public should be subject to Japanese regulations, etc., to the extent of such circulation. We agreed to a Japanese request that PXs etc., should be required to comply with Japanese law with respect to the employment of Japanese labor. The provision on this subject is identical with a corresponding provision in Article XII concerning employment by the US armed forces.

Article XVI (Washington No. XIV)

No substantial changes were proposed by the Japanese in this Article.

Article XVII (Washington No. XV)

The Japanese requested that the Agreement authorize Japanese courts and authorities to exercise jurisdiction over offenses committed outside the facilities and areas by members of the US armed forces, etc., where the offending party is a Japanese national. We refused to agree, and the Japanese ultimately accepted a provision stating that the US would give sympathetic consideration to a request by Japan for waiver by the US of its right to exercise jurisdiction in such cases where Japan considered such waiver to be of particular importance.

The Japanese sought to deny US military authorities the right to exercise exclusive jurisdiction over (a) contractors, (b) employees of contractors, (c) persons of only Japanese nationality who were dependents of members of our forces or of the civilian component. It was agreed that Japan and the US should exercise concurrent jurisdiction with Japan over these categories (a) and (b) with Japan to have the primary right to exercise jurisdiction. We relinquished any claim to exercise jurisdiction over category (c).

The Japanese proposed, and with modifications we agreed to a number of additions to clarify the language of the Article and to prevent criminals from escaping the jurisdiction or enforcement procedures of either the Japanese or US Government.

Article XVIII (Washington No. XVI)

The Japanese first proposed that the cost of settling claims arising out of acts of members and employees of the United States armed forces in the performance of official duty be divided on a 75–25, rather than a 50–50 basis. They later agreed that the entire cost of settling claims should be lumped with other expenses of maintaining United States armed forces in Japan and, pursuant to Article XXIII, either paid out of the Japanese contribution of $155 million or borne by the United States. We refused to agree to lump costs of settling claims with other expenses incurred under the agreement since the Japanese contribution of $155 million had been determined on the assumption it would not include costs of settling claims, and since the United States would not be willing to bear the entire cost of settling claims the amount of which had been determined by the Japanese Government. The ultimate decision was to treat costs of settling claims separately from other expenses and to leave terms of sharing of costs to be determined by future agreement between the two Governments.

The Japanese also proposed that Article XVI be expanded to provide procedures for ex gratia payments of claims arising out of acts of members of the United States armed forces, the civilian component, and their dependents not in the performance of official duty. The procedures proposed were the same as those provided in the NATO agreement. We accepted the Japanese proposal with the modification that it apply only to claims arising out of the acts of members of, and employees of the United States armed forces.

The Japanese objected to the provision that the United States would have the exclusive right to determine whether members or employees had acted in the performance of official duty. They suggested that an arbitrator be appointed, or that the determination be referred to the Joint Committee. They ultimately accepted our proposal which recognized that the United States had the primary right to decide such a question, and that disputes could be referred to the Joint Committee for “consultation.”

Article XIX (Washington No. XVII)

The Japanese proposed a slight change in the phrasing of this Article which we accepted.

Article XX (Washington No. XVIII)

The Japanese asked that there be inserted in the paragraph authorizing American banks to establish facilities for handling Military Payments a provision requiring such banks to maintain such facilities physically separate from their Japanese commercial banking business and subject to “over-all supervision” by the Japanese Ministry of Finance. They ultimately abandoned their proposal concerning supervision on our agreeing to insert in the Minutes that monthly reports of the total MPC–yen conversions be supplied to the Japanese Government. We agreed to certain additional language to state affirmatively that we would take steps to prevent unauthorized use of military payment certificates.

Article XXI (Washington No. XIX)

The Japanese were unwilling in this Agreement to grant to “other officers and employees of the US Government” the right to use US military post offices. We agreed to delete the quoted phrase with the understanding that the official Minutes would show the Japanese Government intended to grant such privileges to the designated persons.

Article XXII (Washington No. XX)

No proposal was made by the Japanese Government.

Article XXIII (Washington No. XXI)

The Japanese proposed a slight change in the language of the Article, which we accepted.

Article XXIV (Washington No. XXII)

The Japanese made their strongest argument against this article. They first asked that it be deleted entirely. They argued that there should be consultation between the two Governments before we took action even to defend our own forces in Japan. They believed the Diet would consider that the commitments in our Article XXII went beyond Article III of the Security Treaty since latter refers only to “disposition of US forces in and about Japan”. The Diet might, as a consequence, insist on legislative review of the entire agreement. The Article raised questions of highest political and security importance which could not be dealt with in the administrative agreement. In reply we argued that we must have assurance that our forces would be free to defend themselves in an emergency, and that arrangements for action in the event of hostilities or the threat of hostilities were “conditions which shall govern the disposition” of our forces within the meaning of Article III of the Security Treaty.

It was ultimately recognized that so many controversial issues were raised by the language of this Article that it would be preferable for the Article to state simply that the two Governments would consult on mutual defense measures.

Article XXV (Washington No. XXIII)

The Japanese raised a number of questions concerning the meaning of such phrases in our draft as “relative contributions”, “total resources”, and “any comparable arrangements for collective security”. They also questioned references in the article to dividing “local costs” on a basis of parity. We were unable to give a satisfactory definition of local costs. Since they had no objection to the substance of the article (the obligation to furnish real estate rent free and to turn over $155 million), it was agreed that non-essential language be eliminated from the Article.

The Japanese contended that their contribution of $155 million should be reduced because in computing that amount, the United States had assumed taxes would be paid on procurement in Japan and now the Japanese had agreed to exempt such procurement from taxation. They claimed that, in submitting their budget to SCAP for approval, and subsequently to the Diet, they had included in their estimates of revenue, a return of approximately 900 million yen in taxes out of their 65 billion expenditure for expenses of United States troops. We recognized that taxes had been included in fixing the Japanese share, and agreed to insert in the Minutes a statement that the tax element of the Japanese contribution for 1952–53 be deducted when payments were made by the Japanese. In subsequent years contributions were to be based on the assumption of tax-free purchasing by our forces.

The Japanese at first contemplated expenditure by themselves of their monetary contribution. They ultimately agreed to turn their contribution over to the US.

Article XXVI (Washington No. XXIV)

We agreed to the Japanese proposal to delete the word, “senior”. We refused to go along with the Japanese proposal that provision be made for the two Governments each to appoint two representatives, since the Security Treaty has two roles to play, military and political.

Article XXVII (Washington No. XXV)

The Japanese proposed an additional sentence concerning the effective date of the Agreement which would recognize the fact that some of the provisions could not be implemented by Japan until the Diet had enacted legislation. We changed the wording of the sentence to avoid any implication that the Diet could veto provisions of the Agreement. As amended, the sentence was inserted.

Article XXVIII

This is a new Article proposed by the Japanese to specify that if either party requested the revision of any Article of the Agreement, the two Governments would enter into negotiation. We accepted their language.

Article XXIX (Washington No. XXVI)

A slight change was made in this Article to make it conform with new Article XXVIII.

1. Although this document may have been drafted considerably later, it is printed under date of Feb. 28 in connection with conclusion of the negotiation of the Administrative Agreement. The file copy gives no indication of authorship.
2. See footnote 3, Document 481.