Mr. Mitchell W. Sharp and I accompanied Mr. Howe when he called upon Mr. Kono, Minister of Agriculture and Forestry and Fisheries, on Friday morning, November 7, 1956.

2. I attach herewith my memorandum of what transpired at this meeting, together with two copies thereof. The memorandum speaks for itself.

3. After the discussion on wheat and barley covered by the first memorandum enclosed herewith, a discussion took place with respect to iron ore and I enclose my memorandum on this discussion with two copies herewith. This memorandum is also self explanatory.

3. Copies of the memorandum have gone forward from the Commercial Counsellor's office direct to Mr. Howe.

T.C. DAVIS

[PIÈCE JOINTE 1/ENCLOSURE 1]

Note d'une réunion entre le ministre du Commerce
et le ministre de l'Agriculture, de la Foresterie
et des Pêcheries du Japon

Memorandum of Meeting between Minister of Trade and Commerce
and Minister of Agriculture, Forestry and Fisheries of Japan

Mr. Howe was accompanied by Mr. M.W. Sharp and myself - Mr. Kono was accompanied by Vice-Minister Kiyoi, Food Agency Administrative Chief Mr. Ogura, Mr. Saito, Chief of the Secretariat of the Agriculture and Forestry Department and Mr. H. Takeuchi, First Section, European and American Affairs Division, Ministry of Foreign Affairs.

Mr. Kono indicated that since his return he has had discussions with the Cabinet and with the Foreign Ministry and Ministry of International Trade and Industry, concerning the purchase of Canadian grain. He suggested a three-year secret agreement with respect to the purchase of Canadian grain. As this suggestion was discussed, it was understood that there could be no definitions of quantities as between wheat and barley and that would have to be determined as the occasion arose.

The price was to be the current price for Canadian grain at time of shipment. It was suggested that for the next three years, Japan would agree to buy 850 thousand tons each year as a minimum.

Mr. Howe suggested that he was thinking in terms of one million tons. Mr. Kono said that this was the figure they had in mind but from the standpoint of safety so far as they were concerned, he was making the suggestion of 850,000 tons as a minimum.

When Mr. Kono made his proposal, Mr. Howe said that it was contrary to Canadian policy to offer any price concessions to Japan in return for a long-term contract and that Canada always sold at the same price to all customers. He pointed out that both the United Kingdom and Germany were larger customers than Japan. Mr. Kono said in reply that he was not thinking in terms of any special prices, that he was quite content that Japan should pay the going international price for Canadian wheat.

Mr. Howe suggested that it would make it much more easy to meet the requirement of Japan if Canada knew the programme six months in advance, in order that the supplies could be in position in Vancouver for shipment.

Mr. Howe also suggested that if they cared to make a purchase for the next six months now, the price would be the current price at the time of purchase. Mr. Kono stated that he would discuss this proposal with his colleagues.

Mr. Kono said he put forward this suggestion of a long-term understanding in the interest of stabilizing trade between Canada and Japan and Mr. Howe assured him that such a contract would be most beneficial in the attainment of that objective.

Note: It was understood that the negotiations to carry this agreement into effect, would be conducted between the Foreign Office and the Canadian Embassy.¹¹⁹

T.C. DAVIS
Ambassador

[PIÈCE JOINTE 2/ENCLOSURE 2]

Note de l'ambassadeur au Japon

Memorandum by Ambassador in Japan

Following the discussion covering wheat and barley summarized in the attached memo, Mr. Kono raised the question of the purchase of iron ore from British Columbia for the use of Japanese steel mills. Mr. Howe suggested that it might be possible to organize a company to produce pig iron in British Columbia, and that the Japanese steel industry might be interested in contributing towards the financing of such an operation, and that the operation should be sufficiently large to take care not only of Japanese requirements but also of the requirements of the British Columbia market. Mr. Howe stated further that financing would be greatly facilitated if a twenty-year contract were arranged between Japanese consumers of pig iron and the proposed company. Mr. Kono then mentioned that there was a new company which has recently constructed a steel mill on the Chiba Peninsula (Kawasaki Steel Company), that this company does not produce pig iron but would be a heavy purchaser of it. Mr. Howe indicated that the proposed company would no doubt be very glad to cooperate with the Kawasaki Steel Company and with other steel producers in Japan. Mr. Howe told him that when he returned to Canada he would make appropriate investigations and would advise.

Mr. Kono then discussed the question of increased exports from Japan to Canada. Mr. Howe told him that Canada was capable of absorbing large quantities of imports. However, Japan should concentrate on supplying quality merchandise with the greatest emphasis being placed on steel pipe, machinery and other capital equipment.

T.C. DAVIS