Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

272. Telegram From the Embassy in Japan to the Department of State¹

Tokyo, June 8, 1965, 1127Z.

4111. Wool Textiles. From Christopher. Ref: Embtel 4083.² Wool textiles discussions concluded Tuesday.³ Following are highlights:

1. Japanese made presentation indicating its wool textile industry in not too healthy position with substantial excess productive capacity despite decline of spindles in 1964 imports wool textiles from European countries increased 35 percent in 1964. Also recognize that exports have increased but insisted this not at cost to producers elsewhere.

2. GOJ reps pointed to difficult balance of payment situation now faced by Japan and unfavorable trade balance especially with US. In light of this situation, Japan not in position to go along with any move to set up barrier to Japanese export trade. Such barrier would nullify efforts of Kennedy Round negotiations.

3. Arai then gave official reply of GOJ to USG request of yesterday. He said Japan’s position on participation in wool conference and wool textile agreement not altered since August, 1964, when GOJ replied to similar proposal made by AmEmbassy Tokyo on behalf USG. Several developments since last August have hardened Japan’s position. These include Japan’s disappointment over outcome of request to modify US-Japanese cotton textile bilateral, which has led to mounting resentment in Japan against LTA; difficulties faced by Japanese wool textile industry; and general slackening economic activities in Japan. Arai emphasized growing concern with LTA and quoted Article I which in Japanese view clearly limited LTA approach to cotton textile problem. Most important reason for Japan’s opposition to international action on wool textiles is that it would represent new trade barrier which would run counter to US trade policy. If Japan agreed to wool textile agreement, exception which LTA represented, would make this kind of agreement rule not an exception.

4. Japanese also insisted facts available in Japan do not corroborate US position that US wool textile industry in bad shape. Profit and sales picture of major US textile companies cited to support this view.

5. Izaki speaking on behalf Japanese industry said he was shocked at US presentation on economic matters. If US had made objective analysis of US situation, US would agree that Japanese exports have not impaired US industry. This included worsted situation. He suggested position of US industry be studied by impartial 3rd party and challenged us to put facts to US Tariff Commission or impartial committee of GATT. Should US refuse such investigation Japan would be bound to conclude that US case inadequate. Izaki also expressed shock at US political presentation and said frankly surprised and disappointed to hear political threats. Japan not easily frightened and did not like political threats. “We are not North Vietnam.” He said he hoped make distinction between friend and enemy, especially in these days of trial and tribulation.

After recess during which Christopher consulted with Ambassador and US Government and industry dels, Christopher stated that speaking more in sorrow than in anger, we feel we have received answer to our request in such terms and in such way as to rule out usefulness of any further discussion. Although there were many factual matters which might have been clarified or corrected, it would not be useful to do so in atmosphere established at session. He thanked Arai for time and attention given to US problem and for Arai’s personal consideration of situation. Arai then adjourned meeting after apologizing for tone of remarks made by Izaki, and after specifically withdrawing North Vietnam reference.

Christopher, Economic Minister and Nehmer called on Nakayama who had not been present at morning session but who had been briefed on what transpired prior to meeting with Christopher, et al. Nakayama also apologized for emotional comments regarding political problem and expressed regret over Izaki’s remarks. He said he would call this to MITI’s attention as well as to attention of Japanese industries concerned. Christopher expressed appreciation at Nakayama’s remarks and assured Nakayama that US side realized Nakayama would not have wanted meeting to go as it did. Nakayama insisted that neither Foreign Office or MITI were aware in advance as to what Izaki would say.

Nakayama expressed opinion US would not view unsatisfactory meeting as last word in matter and indicated there might be reconsideration of problem on Japanese side. To this end he would convene meeting with MITI and industry as soon as “dust settled.” He apparently convinced that GOJ must take some action to ameliorate problem and that GOJ could not accept position of Japanese industry which refused to recognize existence of any problem. He intimated solution might be along bilateral lines in view of great opposition to international approach by Japanese industry stemming primarily from experience of LTA. Naka-yama said Japanese feel if they agree to action on wool textiles, Japan will then be forced to agree to control trade on other items after that. Christopher commented that Japan had to recognize that when it took over a large part of the foreign market in any item whose production is widely dispersed there would be pressures to take action to avoid disruption. Nakayama assured Christopher that he would give problem serious attention in near future.

In speaking with press (Fairchild), Christopher stated US still hopes that a remedy to wool textile problem will be found, that although Japan particularly adverse to international arrangement, it may be that some other approach might be found to solve problem. US industry and labor reps releasing statement to press indicating great disappointment over refusal of Japanese to agree to attend international conference on wool textile problem. US industry and labor reps feel that US has now made every effort to seek international agreement and other solution must now be found. US industry and labor may have in mind pushing for unilateral action now that Japan has declined US proposal for multilateral conference, and in absence concrete evidence as yet of Japanese willingness to negotiate solution bilaterally.

Reischauer

1. Source: Department of State, Central Files, INCO–WOOL 17 US–JAPAN. Limited Official Use. Repeated to London, Rome, and Geneva.
2. Telegram 4083 from Tokyo, June 7, summarized the meeting of heads of delegations prior to the opening of the wool textile talks and the morning session, which was largely devoted to opening statements by members of the U.S. delegation. Christopher’s statement urged the Japanese Government to attend a multilateral conference without preconditions. (Ibid.) For another record of the meeting prior to the opening session, see Document 271.
3. June 8.