Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

258. Memorandum of Conversation⁰

Washington, January 29, 1963, 3 p.m.

SUBJECT

• Wool Textiles

PARTICIPANTS

• Mr. Koichiro Asakai, Ambassador of Japan
• Mr. Akira Nakashima, First Secretary, Embassy of Japan
• Mr. George W. Ball, Under Secretary of State
• Mr. W. Michael Blumenthal, Deputy Assistant Secretary for Economic Affairs
• Mr. Robert W. Barnett, Deputy Assistant Secretary of Far Eastern Economic Affairs
• Miss Thelma E. Vettel, Special Assistant to the Director for East Asian Affairs

The Ambassador said that when the Japanese applied voluntary controls to cotton textiles, they were apprehensive about the possibility that these restrictions would be applied to woolen textiles. The U.S. gave assurances that this was not intended. He pointed out that Article 1 of the LTA¹ recognized that the cotton textile industry had “special problems.” At the London meeting of the International Wool Study Group assurances were received from the U.S. that it was not considering the extension of the LTA to wool textiles. On various occasions the Japanese Embassy has discussed this question with the Department and has always been assured that the U.S. was not thinking of the extension of restrictions to wool textiles.

Recently, however, the Ambassador said, the Japanese Government had received reports from Geneva that the U.S. was thinking of a formula for curtailing imports of woolen goods. This had caused embarrassment to the Japanese Embassy, which was under the impression that the U.S. assurances still stood. The Ambassador had received instructions to obtain the Under Secretary’s thinking on this matter.

The Under Secretary confirmed the Ambassador’s recollection that the U.S. had been very explicit regarding this matter. He pointed out, however, that the U.S. had a practical problem with respect to increased imports of wool textiles. He said that Mr. Blumenthal had been discuss-ing with Mr. Wyndham White (the Executive Secretary of the GATT) the possibility that something might be worked out which would provide some relief of the pressure from increased imports but which would also result in a reduction in U.S. duties on raw wool and the compensating duties on wool textiles. A meeting in Geneva is planned for early February for the purpose of working out the matter, but not necessarily to apply the LTA to wool textiles.

The Ambassador asked if the U.S. was thinking of a quota system. The Under Secretary replied that we are disturbed by the problem but are open minded. He pointed out that woolen tariffs are already high.

Mr. Blumenthal recalled that at the London meeting we had said we did not come to propose restrictions or to propose an extension of the LTA. Various countries, including Japan, had suggested that one of the problems was the cost of the fiber, which was related to the tariff on raw wool. We had laid out the problem to Mr. Wyndham White but made no suggestion as to how it might be handled. The consultation meeting of exporters in Geneva on February 4 is designed to explore various solutions, and if at a certain point in the discussions the U.S. should, upon invitation, send a representative, it would be with an open mind.

The Ambassador expressed some surprise. He said his Embassy had repeatedly told Tokyo that the U.S. did not have restrictions in mind; he said the Japanese did not want to see the U.S. enter into discussions of a formula similar to the LTA.

Mr. Blumenthal said that Mr. Wyndham White thought this problem sufficiently important in relation to the forthcoming tariff negotiations that it should be explored with the exporters. Such a meeting has been set at Geneva. What will happen after that meeting is not known. Perhaps the discussions will be expanded to include the U.S.

The Ambassador said the Japanese do not want questions of import restrictions to pile up, one by one. He asked that Japan be told as soon as possible the line of U.S. thinking.

The Under Secretary explained that we have a problem, but no solution at the moment. The problem is that imports have increased since 1955 from 10 to 20 percent of domestic production. We would be glad to keep the Ambassador advised after the Geneva meeting as to what our actions will be. There is a possibility for considerable reductions in raw wool tariffs and in compensatory duties on wool textiles.

The Ambassador said the Japanese were surprised to hear of these developments regarding possible U.S. wool textile import restrictions.

Mr. Blumenthal explained that from the U.S. point of view, the problem at the London meeting was to point out that we had a serious problem. A possibility mentioned there was a “standstill” on imports for a period of time plus a lowering of our raw wool duties. The U.S. has made no proposal but was desirous of exploring with the exporters some mutually agreeable formula and that the “standstill” idea was one possibility which, while we had not officially proposed it, we were interested to explore.

0. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 65 D 330. Confidential; Limited Distribution. Drafted by Vettel on January 29 and approved in U on February 18. The source text is labeled “Part III of III.”
1. The Long-Term Arrangement Regarding International Trade in Cotton Textiles (LTA) was signed in Geneva under GATT auspices by 19 countries in 1962. Its purpose was to ensure orderly development of the cotton textile trade to allow for growth of exports while not damaging markets of importing countries.