Tokyo, May 24, 1956

TO : Office of the President
FROM : Minister Yong Shik Kim
SUBJECT : Japan's Move for Exchange of Trade Mission with Communist China
Japan is likely to move for exchange of 'private' trade representatives between Japan and Communist China. The idea originally initiated by Minister of International Trade and Industry Tanzan Ishibashi is said to have been discussed at the Cabinet meeting on May 22, 1956, and have been agreed by Foreign Minister Shigemitsu.
The plan was disclosed soon after the third Japan-Red China Trade Agreement was renewed to be valid for another one year until May 3, 1957. It is to be noted, in this regard, that the Anglo-American nations recently moved differently on the problems of COCOM (Coordinating Committee for Export Control) restrictions. (British Minister of State Anthony Nutting announced in the House of Commons on May 17, 1956 that Britain was planning to sell to Red China some goods now classified as strategic: on the other hand, U. S. Foreign Affairs Committee of the House voted on the very same day to bar foreign aid to any country allowing shipments of strategic goods to the Communist bloc.)
According to the Japanese press, if the plan becomes effective, probably in July or August this year, around four or five members of the International Trade Promotion Association from the Chinese side and the same number of the Sino-Japanese Export-Import Association from the Japanese side would be represented, respectively, and their status would be as follows: 1) they would be treated as private persons without diplomatic status though they would be given preferential treatment with regard to entry and residence in Japan: 2) the role of the projected Communist Chinese representation would be restricted only to trade affairs: 3) inclusion of fishery experts would be allowed so long as their presence would profit the domestic fishing industry.
Japan's new positive cove to promote its trade with Communist China Was followed by its recent decision (May 18, 1956) to allow the exhibition of COCOM banned goods at Japanese trade fairs (￥330 million worth) to be held later this year (one in Peiping from October 2 to 23; the other in Shanghai from December 1 to 22). A series of attempts by the Japanese Government in the field of its trade with Red China might be interpreted as meaning that such attempts, if carried out, Would modify to a certain extent its basic policy in which it abode strictly by the COCOM restrictions.
Observers here point out that the above-mentioned new moves might be partly motivated by the recent treads of moves by two influential nations -- Britain and Franca. Some others point out that the intention of the Japanese Government hidden in the above-mentioned decision might be to give an impression to the Japanese public that the Liberal-Democratic Party is taking a positive measure to promote trade so that it may strengthen the party's campaigning position in the forthcoming election for the House of Councillors.
Commenting on the Government decision on this matter, Asahi Shimbun 'greeted' it as another step towards promotion of Japan-Red China trade, which would enable both parties concerned to get out of the so-called "blind trade" practice. Mainichi Shimbun urged the Government to get on with a consistent policy for expanding trade with Communist China. According to Yomiuri Shimbun, it is quite natural that the Government should be making a new departure on this matter. Nippon Times, alone, warned there would be a need for constant alertness on the part of the Japanese Government to see to it that its activities were strictly limited to trade matters, because the newspaper believed that political activities would be the Red objective rather than any large extension of trade exchanges.
Copy to: Foreign Minister