Kennedy's proposal of the “interest equalisationtax", a new moasure for the preventing of the outflow of capital, immediately caused a big slump on the Japanese stock market, The Japanese govornment sent Foroign Minister Ohira to Yashington to solicit sympathetic considerations, After the tals the U.S. and Japanese sides agraed that should serious economic difficulties arise in Japan the United States would consult with Japan on the appropriate measures that might be taken to meet the problem, including consideration of some form of exemp-— tion from the proposed “interest equalisation tax," ut Dillon, U.S, Treasury Secretary, has now changed his tune, He testified to the Congress on August 20th © that there was no reason for "exempting" Japan from the proposed tax, The Japanesd stock exchange suffered from another wide-—front decline on hearing the news.
The tax will directly affect Japan's absornmtion of U,5, capital and its improvement on international payments, According to the Japanese pross, the hope of Japan to secure 6 to 7 hundred million dollars from lonmterm loans this year has been dashed by this U.8. measure, It is estimated that in this year alone Japan will suffer a loss of 2 to 3 hundred million dollars with regard to foreign cepital, The August 13 issue of the Japanese journal Economist pointed out that one of the propa of investments under the “high economic growth" policy of the Ikeda government was foreign capital, The imposition of “interest squalisation tax" by the United States would pose difficulties for Japan's distritmtion of new investments and would also affect the “high economic growth" policy,
The Japanese Ambassador to Washington has reported that the United States had decided to further reduce “off<shore procurement" in Japan, Under this décision, the United States would stop purchases if 30% of spare parts of the commodities in "off-shore procursemont" comes from Japan and other industrial countries, Nippon Keizai Shimbun of August 16 pointed out that the newU.5. dec= ision aimed at establishing the principle that products shipped to foraign countries under the U.S. "fcreign aid" programme should be 100% U.S,
The paper also reported that the U.S. Deputy Assistant Secretary of State for Economics Affairs, Philip Trigise, indicated to the Japanese ‘nbnassador to the United States on August 20th that the United States would impose similar import restrictions on Japanese woolen fabrics as on Japanese cotton fabrics and that an international agreement had to be concluded, Prior to this the Japanese radio reported that the United States had decided to raise the import duties on 22 items of imports, Japanese commodities to be affectod were trucks, mesos, films, scissors and six other items,
The radio said that the Japanese shipping circles wore worried by the prospect of further pushing ahead by the U.S. of the “ship American" policy as it would further affect Japan's non—trading international payments, Colossal deficits head appeared for threo successive years in Japan's non—trading intsrnational payments chisfly owing to increasing deficits suffered by Japenese shipping business, The non-trading intornational paymonts deficit this yéar was estimated at three hundred and twonty million dollars,
These U.S, measures to shift its economic crisis onto Japan under the name of "defence of the dollar" have arousod strongro.¢tion from the Japanese government, According to the Japanese radio, the Ministry of Finance made it. . clear that Japan might have to change its line of tking the United States as its. main market.
The Japanese Prime Minister Ikeda pointed out not so long ago that Japan must study why the United States adopted such stern "defence of the dollar" measures and Japan's basic policy vis-a-vis this problex. He said that Kemedy's message had caused a tremendous effect on Japan's cconomy especially as the United States had special relations with Japan and it was “regrettable” that the United States had not consulted the Japanese government on this matter before-hand.
; based on Hsinhua reports