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REPORT ON TRADE NEGOTIATIONS WITH JAPAN; 1960 QUOTAS

(Previous reference March 17)

Present:
The Minister of Finance and Acting Prime Minister (Mr. Fleming) in the Chair,
The Minister of Transport (Mr. Hees),
The Solicitor General and Acting Secretary of State (Mr. Balcer),
The Minister of National Defence (Mr. Pearkes),
The Minister of Trade and Commerce (Mr. Churchill),
The Minister of Justice (Mr. Fulton),
The Minister of National Revenue (Mr. Nowlan),
The Minister of Agriculture (Mr. Harkness),
The Minister of Fisheries (Mr. MacLean),
The Minister of Labour (Mr. Starr),
The Minister without Portfolio (Mr. Browne),
The Minister of Mines and Technical Surveys (Mr. Comtois),
The Minister of National Health and Welfare (Mr. Monteith),
The Minister of Northern Affairs and National Resources (Mr. Alvin Hamilton),
The Minister of Defence Production (Mr. O’Hurley),
The Minister of Public Works (Mr. Walker).
The Assistant Secretaries to the Cabinet (Mr. Fournier), (Dr. Hodgson).

REPORT ON TRADE NEGOTIATIONS WITH JAPAN; 1960 QUOTAS
(Previous reference March 17)

14. The Minister of Finance said that after six months of difficult negotiations he could report progress in reaching agreement with the Japanese on their export quotas to Canada for 1960. The Japanese negotiators had used every available artifice to prolong the discussions, apparently in the hope of obtaining better terms. They were obviously under heavy pressure from producers in Japan, and they had shown a greater degree of national aggressiveness than at any other recent time.

During 1959, Japanese exporters of spun rayon goods had flooded the Canadian market, and had forced some Canadian producers out of business and greatly weakened others. He recalled that last summer the government had imposed an embargo on these goods and that voluntary quotas had been instituted by Japan in the autumn. Thereupon, Japanese manufacturers of synthetic finished goods, particularly of shirts, blouses, trousers and slacks, had begun to flood the market.

Accordingly, in the recent negotiations, the Canadian representatives had sought overall quota control for all textile goods, involving the imposition of voluntary quotas for the first time on many items. Agreement had now been reached, subject to the approval of the two governments. On the following day Mr. Fleming hoped to receive a letter from the Japanese ambassador undertaking to restrict exports to Canada. The letter would include a schedule of quotas on individual items, but, in addition, the Japanese would declare their intention to effect only a moderate and orderly expansion of exports of other textile products, to avoid undue injury to Canadian manufacturers. In return the Japanese understood that Canada would not invoke Clause 19 of the G.A.T.T.

The Minister said that, although these 1960 textile quotas might not fully satisfy Canadian producers, they were as favourable as could reasonably be expected. The quotas for various spun rayon and cotton goods would generally be below the 1959 levels. On synthetic shirts, the quota was 50,000 dozen, and it was further stipulated that if this figure should be exceeded the amount of the excess would be subtracted from the cotton or spun rayon quotas. The Canadian negotiators had made it clear that quota violations would not be tolerated.

Agreement had also been reached on stainless steel cutlery. Canada had had no cause for complaint on this score until 1958 when imports from Japan had doubled, reaching a record level of 1.9 million pieces and threatening to engulf the two Canadian producers. In 1959, imports had amounted to 1.8 million pieces. Negotiations on this subject had proved particularly difficult, the Japanese negotiators indicating that they had little room for manoeuvre because their cutlery industry included large numbers of small producers. Negotiations had been highly successful, however, and on the following day Mr. Fleming expected to receive a letter from the Japanese ambassador stating that his government would try to make certain that not more than 1.15 million pieces would be exported to Canada during 1960 and that at least 0.15 million of this amount would be in the form of cutlery for use as premiums, e.g., in soap flake packages.

The great advantage of these voluntary quotas was that they made it unnecessary for the Canadian government to impose quantitative controls or to establish arbitrary values for customs purpose.

The Japanese goods coming to Canada were of the highest quality, and quite unlike the inferior goods dumped in Canada during the nineteen-thirties. He emphasized that imports from Japan represented the counterpart of Canada’s increasing sales of wheat to that country.

The Minister said the United Electrical Workers locals in the Niagara Falls and Stamford areas had been accusing the government of inaction and had been requesting an interview with him. Assuming that the letters were received as expected from the Japanese ambassador, Mr.Fleming intended to make a statement on the subject in the House of Commons on May 5th,²⁹and to meet the representatives of the union early next week.

Negotiations with the Japanese were continuing on other commodities including hardware, plywood, electronic items and leather and rubber shoes.

He had informed the Prime Minister of the progress made on this subject.

15. The Cabinet noted with approval the statement of the Minister of Finance on progress made in negotiations with the Japanese authorities on voluntary import quotas affecting textile goods and cutlery.

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²⁹Voir Canada, Chambre des Communes, Débats, 1960, vol. V, pp. 5231 à 5233.
See Canada, House of Commons, Debates, 1960, Vol. V, pp. 5043-45.