711.94/1633
Oral Statement by the American Ambassador in Japan (Grew) to the Japanese Minister for Foreign Affairs (Arita), July 11, 1940
My Government has been giving careful thought to the views concerning Japanese-American relations conveyed informally to me by Your Excellency on June 1285 and June 28, respectively, and is gratified at the genuinely careful consideration which you have given to my Government’s views expressed by me orally on June 19 last.
As I have observed in the course of our recent informal conversations, my Government deems that the situation offered by the present war in Europe, whatever its outcome may be, is a subject for serious concern. Particularly is this so with regard to those countries the prosperity of which depends to a great extent upon foreign commerce. From what you have said to me during our informal conversations, it has become clear that the views of your Government as well as of my own Government are that our foreign trade is of great importance. An examination of the official trade statistics of Japan discloses that during the year 1939, 64.9 percent by value of the total exports of Japan were sent to Asiatic countries, and that 21.5 percent went to countries on the American continent, which leaves for the [Page 96] remainder of the world a balance of 13.6 percent. Of the total imports taken by Japan, 40.5 percent by value were derived from countries in Asia, 42.8 percent from countries on the American continent, there remaining from the rest of the world a balance of 16.7 percent. From these figures it is plainly evident that it is in Japan’s interest that there should be averted, in so far as is possible, any extension of developments occasioned by the European hostilities which would bring disturbed conditions from Europe to Asiatic and American countries and diminish the movement of trade between the countries on the continents mentioned and Japan.
During the year 1939, of the total exports sent abroad by the United States, Asiatic countries took 17.6 percent by value, and countries on the American continent 35.8 percent. 30.2 percent by value of the total imports into the United States came from Asiatic countries, and 38.7 percent from countries on the American continent. It is clear from the foregoing figures that the United States also has a deep interest in the free flow of commerce between it and the nations in both America and Asia. The similarity of Japanese and American interests in commerce may be enlarged still further. A considerable amount of the commerce between countries in Asia and American countries is constituted by the trade between the United States and Japan. To a large extent this commerce is of a complementary nature. Such a healthy and advantageous commercial relationship as the one which has been in effect between Japan and the United States could not thrive under an autarchical system of economy. Moreover, it is a matter of significance that respect for the rights of private property constitutes both in Japan and in the United States the basis of their social and economic pattern.
A condition having additional bearing upon the commercial and economic relationships between my country, on the one hand, and, on the other hand, nations on the American continent and Asiatic nations, is the fact that certain of the countries referred to are in need of capital funds for their progressive development, and that in the United States there are funds available for investment in foreign countries. It need hardly be mentioned, nevertheless, that capital is by its nature not readily disposed to take risks and seeks its outlet solely in those areas where circumstances of stability, order, progress, and security prevail.
Your Excellency observed in your oral statement of June 28 that, because of Japan’s need for markets and sources of supply overseas, it is essential that it should endeavor “to preserve certain special trade relationships with neighboring countries and regions, although she upholds as a fundamental basis for trade the principle of non-discrimination”. It would appear to my Government that it would best serve [Page 97] the interests of a country in Japan’s position, whose economy has its foundation in foreign commerce, to apply as broadly as possible the principle of equality of trade opportunity and the fullest liberalization of the principle of non-discrimination with relation to trade. An endeavor by one nation to remove particular regions from the applicability of the principles mentioned would unavoidably induce other countries in turn to claim exemption for other areas, resulting in the creation of a number of regional economic blocs having at their foundation discriminations and preferences which could not help being harmful to the interests of the major trading nations. On the contrary, under a system of mutual non-discrimination Japan would not find its commerce restricted to one regional bloc, but would obtain both the profitable results of furnishing to a wide range of markets the wares which Japan is able most efficiently to produce and the corresponding advantage of deriving materials needed by it from the cheapest sources. Under a system of non-discrimination Japan would be better able than under any other international commercial plan to obtain the benefit, in areas in which it has expressed a special interest, arising from the competitive advantage which redounds to it by reason of its geographic propinquity to those areas.
In connection with the matter of Japanese policy toward the Netherlands East Indies referred to in paragraph 4, caption (c), of your oral statement of June 12, my Government has noted from a statement issued by the Japanese Ministry of Foreign Affairs that the Government of Japan is negotiating with the Netherlands and the Netherlands East Indies Government on the question of commerce, enterprise, and the entry into the Netherlands East Indies of Japanese subjects. My Government has noted particularly that, despite the reported declaration of the Netherlands and the Netherlands East Indies Government that it would take no steps which would result in preventing the exportation to Japan of commodities considered essential by Japan, the Government of Japan has requested that the Netherlands and the Netherlands East Indies Government take suitable measures in order to “definitely assure the export of the desired quantities of required goods”.85a As the Japanese Government knows, Netherlands East Indies products are important in the economy of many countries. The United States carries on important trade relations with the Netherlands East Indies and a substantial American enterprise exists there. As revealed by the statistics of my Government for the year 1937, which was the most recent year for which complete statistics are available, 15.8 percent by value of the total foreign trade of the Netherlands East Indies was with the United States, compared with [Page 98] 11.6 percent with Japan. Accordingly my Government has an important interest in the continuance in the Netherlands East Indies, as well as in other countries, of the principle and the observance of equality of trade opportunity, as well as of that of enterprise. My Government would consequently be appreciative if the Japanese Government would keep it informed as to the manner in which these principles are being applied in the negotiations of the Japanese Government with the authorities of the Netherlands East Indies.
Referring to your oral statement of June 28 in which you mentioned the proposal of my Government that an exchange of notes be concluded regarding the continuance of the status quo in the possessions and territories of the belligerent European powers lying in the Pacific region, you indicated your belief that for our two countries, which are not belligerents, to enter into any kind of an agreement on this subject would give rise to very delicate relationships for Japan which has taken a position of non-involvement. It would appear, nevertheless, to my Government that the suggested exchange of notes would contribute substantially to rendering secure Japan’s attitude of non-involvement toward the war in Europe, and moreover my Government’s proposal was occasioned by a wish to minimize in the Pacific area the harmful effects of the hostilities in progress in Europe. Indeed, it is my Government’s conviction that in periods of disturbed international relationships reassertion by Governments of such fundamental principles and policies as was intended in the suggested exchange of notes would operate in favor of stability. The fact of the importance of Japan’s commercial relations with the Pacific area, which is indicated by statistics of trade, would appear to my Government to be a cogent reason for the Japanese Government to give favorable consideration to my Government’s suggestion. You have stated that you cannot consider our proposal separately from the conversations which have taken place up to now, and have suggested that, with a view to making further progress in these conversations with respect to this proposal, you be acquainted with my Government’s views concerning the observations contained in your oral statement of June 12. Three problems are enumerated therein as deserving especial study in connection with bringing about an improvement in relations between our two countries. These problems have to do with the economic policy of Japan, present and future, as well as with recent manifestations of aspects of Japanese policy toward China, the Netherlands East Indies, and Thailand.
My Government also regards these problems as important and believes that a clarification of the questions posed concerning them is requisite to a consideration of the suggestion contained in caption (a) of the last paragraph of your oral statement referred to, viz., the matter [Page 99] of the conclusion, as a temporary measure, of a modus vivendi between our two Governments. It would therefore be of assistance to have indications as concrete as is possible, concerning the aims and intentions of the Government of Japan regarding points (a) and (b), that is, “Is Japan’s economic policy to be to adopt an entirely closed economy?” et cetera, and “Once the hostilities in China have been terminated., actually to what extent will there remain measures of an exclusive nature in the economic field?” It goes without saying that the earlier there develop manifestations of an implementation by the Japanese Government of its declarations that restrictions at present in existence are of a temporary nature, the more gratified my Government will be.
Referring to caption (b) of the last paragraph of the oral statement of June 12 which brings up the question of assistance to Chiang Kai-shek, my Government quite apart from the fact that the National Government now at Chungking is by it recognized as the Government of China, wishes with the utmost candor to express its opinion that there appears to be no prospect of solidarity of a united government for China other than through recognition of a leadership enjoying the real support of the vast majority of the people of China.
My Government has noted the expressed desire contained in your oral statement of June 12, caption (c), that our two Governments act together in order to contribute to world peace. It has also noted the ideal expressed by you in the course of your radio address on June 29 last86 that Japan constitute a stabilizing force in Eastern Asia. My Government, it goes without saying, would view with sympathy policies and methods which give order, justice, and stability in any area of the world, by peaceful means and having due regard for the interests and rights of all countries and peoples involved. Policies and methods of this nature leave every state in any region completely independent and free to seek normal trade and other healthy relations with other nations in any part of the world. Methods and policies of this nature are in antithesis to those aimed at obtaining by force economic or political domination for one country in any region.