Foreign Relations of the United States Diplomatic Papers, 1937, The Far East, Volume IV

611b.9417/248

The Department of State to the Japanese Embassy⁵

Reference is made to recent conversations between members of the Japanese Embassy staff and officers of the Department in regard to the existing arrangement as set forth in the conversation of October 11, 1935,⁶ relating to the importation of Japanese cotton piece goods into the Philippines which will expire on July 31, 1937. It will be remembered that, according to the terms of this arrangement, the Association of Japanese Exporters of Cotton Piece Goods into the Philippine Islands agreed to limit, for a two-year period, the annual importation of Japanese cotton piece goods into the Philippines to 45,000,000 square meters, and the United States Government agreed that it would take no action directed toward securing an increase in the Philippine tariff rates on cotton piece goods during this period.

On June 24, 1937, Mr. Hayama of the Japanese Embassy informally communicated to the Department a proposal looking toward the negotiation at Osaka of a private agreement between the textile industries of Japan and of the United States to take the place of the existing arrangement. This Government, after careful consideration of this proposal and after consultation with the American textile interests, believes that it would be preferable to continue the existing arrangement.

In reaching its conclusion, this Government was influenced by the consideration that, in connection with the independence program contemplated in the Philippine Independence Act of March 24, 1934,⁷ the Government of the United States and the Government of the Commonwealth of the Philippines have established a Joint Committee to study United States-Philippine trade relations. It is contemplated that this Committee will make recommendations which are designed to provide for the gradual adjustment of these trade relations to a position in harmony with the independent status of the Philippines provided for in that Act. Accordingly, it would seem to us not expedient to attempt to negotiate a new type of arrangement and not logical to offer to continue the existing arrangement for a period longer than six months or at the most twelve months. It therefore is suggested that, in accordance with the terms of the present arrangement, the maximum importation be fixed at 22,500,000 square meters, if a six-months’ period is selected, or at 45,000,000 square meters, if a one-year period is selected. Inasmuch as the suggested period of extension does not exceed one year, that provision of the existing arrangement which provides for a tolerance of ten percent in the first year will obviously be unnecessary.

This Government trusts that the Association of Japanese Exporters of Cotton Piece Goods into the Philippine Islands will agree to the continuance of the present arrangement either for six months or one year. It is hoped that the report of the Joint Committee, to which reference has been made, will afford a more permanent basis, mutually satisfactory to all parties concerned, for the continuance of this trade which has been profitable both to Japan and to the United States.

Washington , [July 2, 1937.]

5. Handed to the Counselor of the Japanese Embassy by Mr. Ballantine on August 3 in substitution for previous versions handed to the Counselor on July 2 and 27 (neither printed).
6. Foreign Relations, 1935, vol. iii, p. 1007.
7. 48 Stat. 456.