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Wednesday, 27 February 1952


Mr CREAN (MELBOURNE PORTS, VICTORIA) . - This bill, under which we are asked to take the important step of ratifying the treaty of peace with Japan, is a very short measure, but the schedule that is annexed to it contains the full textual matter of the treaty. The bill has already had an expansive airing in this House, and I do not intend to traverse at length the matters that have been encompassed in the debate to date. However, one or two articles of the treaty require further examination. They include what may be described as the economic or trade provisions of the treaty. I refer particularly to Article 12 and Article 14.

The treaty has been received with mixed feelings in various parts of the world, and even in Australia there is considerable division of opinion in relation to it. Government supporters declare that all those who oppose it are actuated by very short-sighted motives and have no* the full interests of the Australian community at heart. The Opposition contends that inherent in the treaty are certain weaknesses that could cause violent repercussions to the future disadvantage of Australia's internal and external security. The treaty has been accorded a mixed reception even in the United States of America. Some American newspapers, whose editorial policies are a little more honest than those of their competitors, have criticized it. The Washington News, which belongs to the ScrippsHoward newspaper chain, published this comment on the 20th August last -

This treaty is essentially a war settlement between the United States and Japan. It does not require a majority approval. As it is being submitted, any nation can take it or leave it as it sees fit. Any nation is free to negotiate a separate agreement with Japan if it elects to do so.

That newspaper regards the treaty simply as an instrument to advance the interests of the United States of America. The Opposition takes the attitude that this Parliament is entitled to scrutinize the treaty with care and to indicate any dangers inherent in it to the future welfare of Australia. The fact that the document is primarily of American inspiration is borne out by a close study of its text. I refer honorable members to these words in Article 14 -

Nevertheless it is also recognized that the resources of Japan are not presently sufficient, if it is to maintain a viable economy .

I suggest that there are honorable members of this House who, if they were asked to define the term "viable economy", would have some difficulty in explaining its meaning. It is a part of the jargon of American economic text-books that has been thrust holus-bolus into the treaty.

Very little has been said about Articles 12 and 14 during the course of this debate. There has been some talk about reparations, and reparations are provided for in Article 14, but the main emphasis up to date has been placed on the payment of monetary reparations to injured prisoners of war. Honorable members should read Articles 12 and 14 very carefully. They contain important hidden powers. Very little attempt has been made to elucidate some of the phraseology in them. The Minister for External Affairs (Mr. Casey), when introducing this bill, said -

Japan has also agreed in principle to pay reparations in the form of services to be provided by Japanese labour in the processing of raw materials, the salvages of ships and similar forms of production and restoration. II is expected that Asian allied countries will make use of this opportunity to benefit from Japan's industrial resources and technique.

Sow what is behind the so-called reparations article? It envisages the payment of reparations in services to be provided by Japanese industry. The conservative but reputable journal, the British Economist, published extensive articles in its issues of the 20th October, 1951, and of the 27th October, 1951, about the dangers of this reparations article to the future of the British textile industry. What applies to the British textile industry might also apply to the Australian textile industry. Lately the Australian textile industry has been in the news, and the present disemployment in that industry could be accentuated if some of the factors latent in Article 14 (a) ever came into effect. It is envisaged that America might send raw cotton to Japan for processing in Japanese mills, and the labour costs of the processing would then become part of Japanese reparations. For the mere cost of the raw materials America or Asian countries could get fully manufactured goods which would be produced to them so cheaply that no other country could coin pete with them. The declaration mentions Japan's " viable economy ". Japan, because of its war difficulties, is not in a position to have a viable economy and that factor is to be taken into account in negotiating reparations. We have suggested that if the economy is not in a viable state there is little validity in the suggestion that Japan might be able to engage in an armament race. If a large part of Japan's resources were to he devoted to the manufacture of armaments, that would still further lessen the viability of this economy. That seems to be a contradictory attitude on the par-t of the Government, but the Government suggests that the Opposition is the shortsighted party. To overcome this difficulty this strange new method of paying reparations has been devised. According to Article 14 (a) the scheme is as f follows : -

1.   Japan will promptly enter into negotiations with Allied Powers so desiring, whose present territories were occupied by Japanese forces and damaged by Japan, with a view to assisting to compensate those countries for the cost of repairing' the damage done, by making available the services of the Japanese people in production, salvaging and other work for the Allied Powers in question. Such arrangement shall avoid the imposition of additional hostilities on other Allied Powers, and, where the manufacturing of raw materials is called for, they shall be supplied by the Allied Powers in question, so as not to throw any foreign exchange burden upon Japan.

Because of that, the future of the British textile industry in particular, and the Australian economy in general, have been called into question. Because of that concern, an article appeared in the British Economist, which is a journal usually devoted to the economic interests of capitalism in Great Britain and not to the espousing of radical causes. In the issue of the 20th October, 1951, of the Economist, an article appeared which reads -

Broadly, under Article 14a, countries receiving reparation arc to provide Japan with raw materials to be processed ami returned to them free of cost. This will not only affect the textile industry, but in theory any other industry with which Japan is equipped. Then* is nothing, however, in the present clauseswhich have yet to be clinched in separate agree ments - to prevent nations receiving reparations from buying raw cotton in large quantities on the world's markets, shipping it to Japan for processing, receiving it back at costofrawmaterial price, and soiling it both al home and in neighbouring territories at prices far below those ruling to-day.

Tet that article has been written into the peace treaty and has been accepted hy this Government without demur. I suggest that that is a provision about which exception can certainly be taken. Various interpretations of history from the time of the Bom an Empire and the time of Napoleon have been put forward by honorable members on the Government side. I suggest that modern economic history indicates that economic forces are more potent than political forces in deciding the peace of nations, and the Australian people are entitled to consider their own immediate economic interests in this matter.

It has been said that we must save Japan from falling into the arms of another nation. That appears to be a shortsighted policy, because Japan is a country of 85,000,000 people who live in an area of about 140,000 square miles. Such a nation will have great difficulty in providing sufficient raw materials for its purposes. Trade is essential for

Japan's survival, and there are certain natural trade relationships that have existed in the past and which are still essential for Japan, whatever the short-term political advantages of the treaty may be. In 1938 72.3 per cent, of Japanese exports and 56.2 of its imports were to and from Far Eastern countries. China, including Manchuria, Formosa and Kwantung accounted for 38.7 and 25.8 per cent, of exports and imports respectively. Japan's major trade channels have always been with Eastern countries, including China and Russia. Countries like Australia are insignificant for the Japanese as far as trade is concerned. If Japan is to feed its population it must import raw materials from those countries and pay for them by the export of manufactured goods. In the past Japan's important industries were shipping, silk, rayon and mechanical equipment. They were the basic elements of the Japanese economy and in the long run they will be assisted to grow by the vast amount of capital that has been poured into Japan since the war by the United States of America. If they are honest, the Americans will admit that this treaty has been inspired primarily by American interests and not by the Allies in the Pacific.

One article of the treaty which will have some effect on the Australian economy is Article 12, which gives to Japan what is known as the mostfavourednation treatment. Under that article, all parties who ratify the. treaty contract that they will negotiate most-favoured-nations treaties with Japan. That treatment will have more advantage for the J Japanese economy than it will have for the Australian economy. Along with the treaty must be considered the tariff agreement which is known as the General Agreement on Tariffs and Trade which was negotiated some years ago when circumstances were very different from those of to-day. The Government has been very silent about that agreement. If this treaty is ratified, Japan will automatically come under the provisions of the General Agreement on Tariffs and Trade. From time to time, the Government has promised to allow full scope for debate in this Parliament on that subject, but so far little debate has occurred. Producing interests in Australia have called upon the Government to indicate its attitude on that matter. The Government has said that there are various escape provisions and, that this treaty need not be fully operative unless we wish it to be. A similar suggestion was made by the Minister for Defence Production (Mr. Eric J. Harrison) when the honorable member for Parkes (Mr. Haylen) mentioned that one of the articles of the treaty referred to the most-favoured-nation treatment. The Minister said that Australia would not need to observe that provision. If certain parts of the treaty are to be observed or not observed according to whether it suits the Government, the document would seem to have very little value. Unfortunately, it seems that the word of the Government in relation to the interests of the Australian producer cannot be accepted. Although the Government has stated that it is looking after the interests of the. Australian producer, the producer often finds over-night that under by-law provisions and the revoking of tariff protection, all sorts of goods have been allowed to flood into our market. That is one of the reasons for the current recession in the Australian textile industry. Many textile manufacturers did not know that the market was being flooded by textile goods from overseas. If that sort of experience is to follow the application of this treaty, a new competitor for Australia will be brought into the field. That will be Japan. Apparently the Australian community will wake up one day to find that the Australian market has been flooded with goods which were allowed in under the economic provisions of this treaty.

Whatever the other arguments against the treaty may be, at least there is need for closer scrutiny of it. More detailed explanation by the Government is also required on the ostensible meaning of Article 14 (a). The Economist in Great Britain drew attention to this provision and this interpretation of it brought from the authorities an explanation that they did not believe that the reparations scheme would operate in the way that had been suggested. No reservation has been made so far as Australia is concerned and nobody knows whether certain interests have already been promised by this Government that they can send raw materials to Japan to be manufactured freely under the reparations provision and brought back to Australia to compete with Australian goods at uneconomic prices.

If the Government had the interests of Australia at heart in relation to this treaty and if the United States of America had the elevation of the nations of the East at heart, they should have acted accordingly hut there is nothing in this treaty to suggest that the Japanese ought to adopt the International Labour Organization's convention regarding conditions of employment such as the 40-hour week and an adequate reimbursement for those who work in Japanese industries. This treaty would have provided a good opportunity to improve the conditions of the workers in the Eastern countries. Instead it is apparently to be used as an opportunity to import low standard goods into this country. Figures to the end of June, 1951, indicate that in Japan the average working week is 51.6 hours and the average wage is equivalent to £16 12s. a month in Australian currency. No wonder goods that are produced in Japan can compete successfully with goods that are produced by the Western countries. Honorable members on this side of the House have consistently suggested that the best way to fight communism is to provide decent conditions for those who are faced with the challenge of communism. An attempt could have been made in this treaty to improve the conditions of workers in J Japan ,by providing in it for the ratification by Japan of the Geneva Convention. No such attempt has been made. Honorable members on this side of the House urge the rejection of this treaty because they believe that it will be prejudicial to the future welfare of the Australian community and to the conditions' that have been gained by the struggles of the Australian people in the past.







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