Foreign Relations of the United States, 1961–1963, Volume XXII, Northeast Asia

348. Telegram From the Department of State to the Embassy in Japan⁰

Washington, December 7, 1961, 8:50 p.m.

1465. Embtel 1625.¹ Department concerned at adverse Japanese Government and public reaction to request for Tariff Commission investigation regarding equalization fee on cotton textiles.²

Suggest following points be used in response protest by Takeuchi:

(1) This Government considers Japanese participation in international textile discussions most useful and looks forward to its continued cooperation in attempts work out solution to problems international trade in cotton textiles which will accord with basic interests both countries.

(2) President’s November 21 request for Tariff Commission investigation was in accordance Section 22 Agricultural Adjustment Act which provides for full investigation and opportunity all interested parties present their views. We note from Takeuchi statements that Japanese business interests will actively oppose fee at hearings and we would anticipate such opposition. Assume arguments regarding Japanese purchases raw cotton and others outlined reftel would be used as appropriate by Japanese interests in their appearance before Tariff Commission. Tariff Commission recommendation, after full study all facts, will be based on its conclusion as to whether case has in fact been made under provision Section 22.

(3) President’s May 2 program of assistance to US textile industry directed Department of Agriculture to explore and make recommendations to eliminate or offset cost to US mills of adverse differential in raw cotton costs between domestic and foreign textile producers. Since that date, Department of Agriculture has been working in consultation with interested groups in effort develop recommendations for changes in cotton production adjustment and price support system that would better meet various objectives deemed desirable. These consultations are continuing. If program developed to eliminate present two price system for cotton, need for equalization fee would of course also be eliminated.

(4) Regarding confidential letter exchanged connection 1962 US-Japan bilateral,³ we agree that this letter does not mean GOJ has abandoned right to object to imposition equalization fee. However, we are concerned at statement⁴ that if fee imposed, bilateral textile agreement would be dead. Letter provides that application of non-discriminatory fee to compensate for US two price cotton system should not cause arrangement to become inoperative. We believe Takeuchi statement inconsistent this provision.

(5) Re query concerning US plans for consultation with GOJ in case imposition equalization fee approved, suggest Takeuchi be informed that USG would be prepared consult with GOJ and give prompt and sympathetic consideration to appropriate remedies any adverse effect resulting from equalization fee, if such fee were to be imposed. However, Tariff Commission recommendation impossible forecast, and we believe it premature to enter into consultation at this time.

Department has not received formal protest from Japanese Embassy in Washington this regard although Asakai made representations shortly after November 21 announcement. If such protest received we plan reply above lines.⁵

Rusk

0. Source: Department of State, Central Files, 411.006/12-561. Confidential. Drafted by Edelen M. Fogarty of E/OR, cleared by E/OT and Avery Peterson, and approved by Philip H. Trezise, Deputy Assistant Secretary of State for Economic Affairs.
1. Telegram 1625, December 5, reported a protest by Ryuji Takeuchi, Japanese Vice Minister of Foreign Affairs, against the U.S. action described in footnote 2 below. (Ibid.)
2. Reference is to President Kennedy’s letter to Ben B. Dorfman, chairman of the U.S. Tariff Commission, requesting the Commission to make an immediate investigation under Section 22 of the Agricultural Adjustment Act to determine whether a fee equivalent to the per pound U.S. cotton export subsidy (the difference between the U.S. and world price) on the cotton content of imported fabric should be levied to prevent such imports from interfering with the cotton support program or from reducing substantially the processing of U.S. cotton products. Text is in Public Papers of the Presidents of the United States: John F. Kennedy, 1961, p. 736.
3. See footnote 4, Document 343.
4. By Takeuchi, as reported in telegram 1625.
5. Reischauer reported carrying out this instruction in telegram 1681 from Tokyo, December 12. Takeuchi responded by asking for U.S.-Japan consultations on the matter even though the Tariff Commission’s recommendation would not be known for several months. (Department of State, Central Files, 411.006/12-1261)