to await the actual passage of the legislation. I shall shortly make
the desired representations.
  3. Local newspapers report that the Japanese Government is con-
sidering negotiations with the Netherlands Government for the pur-
pose of regulating the trade between Japan and the Netherlands Indies
on the barter system. From reports which the Embassy has special
reason to believe are true it appears that the Japanese Government is
considering the purchase by local and Manchurian refineries of a much
larger proportion of crude oil from the Netherlands Indies than has
been purchased in the past in order to offset the present heavy excess
of exports to the Netherlands Indies. If some such arrangement is
made the crude oil exports from the United States to Japan will be
adversely affected.'*
                                                             GREw

693.113 (Manchuria) Petroleum/44: Telegram
    The Secretary of State to the Mini8ter in China (Johmon)

                              WASHINGTON, March 30, 1934-6 p. m.
  85. Your 126, March 17,3 p. m.
  1. The Department under date March 22 was informed by our Em-
bassy at London that, according to the British Foreign Office, the
British Minister in China has suggested to the British Ambassador
at Tokyo the desirability of concerting action with his American col-
league in the matter of making representations to the Japanese Gov-
ernment, and that the Foreign Office is seeking the views of the appro-
priate department of the Board of Trade on technical aspects of the
case.
  2. The Department is instructing the Embassy at London as fol-
lows:
  "You may inform the Foreign Office that we consider it both un-
necessary and inadvisable to rest any representations which this
Government may decide to make to the Japanese Government on argu-
ments or considerations of a technical nature. The action of the
Manchukuo customs in classifying as kerosene illuminating oil im-
ported by an American firm which was of substantially similar quali-
ty to oil imported by Japanese firms and classified under a lower rate
of duty evidences beyond any reasonable doubt that the test used by
the Manchukuo customs lends itself to discrimination against non-
Japanese oils. Additional evidence of discrimination would appear
to be found in the fact that, following the establishment of the dis-

m The Ambassador in Japan, in his despatch No. 734, April 5, reported his
call
on April 2 at the Japanese Foreign Office, stating "The Vice Minister
for Foreign
Affairs said that he fully appreciated the position of the American oil companies;
that he would look into the matter, and if at any time he should be in a
position
to give me information concerning the points that I had raised, he would
be
very glad to do so." (894.6363/61)



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JAPAN