Nara Treaty Debacle
Begins: Today our intelligence agencies and bureaucrats tell us that China is the enemy. But less than 50 years ago the same agencies and bureaucrats (or their predecessors) were warning us that the enemy against which we had to prepare was Japan .
The story begins in the early 1970’s when Tokyo began to revive its long-standing request for the same kind of friendship, commerce and navigation (FCN) treaty as it had with most of its main trading partners.
There had never been any good reason for Canberra to say no – other than postwar anti-Japan sentiments and the problems of protecting Australian firms competing with Japanese goods. But Tokyo had promised trade safeguards for those goods anyway.
In 1973, Gough Whitlam, fresh from his success in opening relations with China, and with some media pressure from myself in Tokyo and Max Suich at Fairfax, felt the time had come to do something about Japan.
He was due to visit the country in October 1973. And to show he was a progressive not bound by the stodgy conservatism of his predecessors he decided he would offer Japan much more than the common-or-garden FCN treaty refused by previous conservative governments in Canberra.
Instead he would offer a treaty that would cover the full ambit of relations with Japan. And since he would be visiting the city of Nara during the Japan visit, he would announce the plan there and have it called the NARA Treaty – the Nippon Australia Relations Agreement
Early in 1975 as a member of PM&C’s Policy Coordination Unit I was asked to join the IDC, or Inter-departmental Committee, already considering the treaty.
When Tokyo had produced its initial draft all hell had broken out. It had Included something that came to be called retrospective MFN (most favoured nation) trading treatment.
Normally a FCN treaty will include a clause calling for MFN treatment. In effect it says I will offer you the same privileged trading conditions – lower tariffs etc – as I am currently offering other important trading partners
But with Australia, retrospective MFN was seen as allowing Japan the right to demand the same privileged conditions as we had given the UK and US over many years past.
This was out of the question the bureaucrats said. It would allow Japan completely to dominate the Australian economy.
So Tokyo quietly dropped the idea. It said it was happy just to have the standard MFN provision provided there was a guarantee of ‘fair and equitable’ treatment.
And that normally should have been that.
But not in Canberra’s IDC. Headed by Foreign Affairs conservative, Michael Cook, we were told we had to be ultra-cautious about the fair and equitable wording.
Why had Tokyo asked for retrospective MFN in the first place? And had they really withdrawn the dangerous idea? Surely deep down lurked some kind of plot to dominate Australia’s economy.
Aiding the speculation was the long dormant voice of an intelligence agency type based in Tokyo. He said his secret sources had confirmed how the Japanese demand for retrospective MFN still existed, and would emerge after the NARA treaty was signed.
This was just the confirmation Cook wanted. Further negotiation on the treaty was impossible, he said.
I tried to argue that if the Japanese draft of the treaty said just MFN, then that was that. The other side to the treaty could not turn round later and say it was retrospective.
That argument went nowhere. The Japanese request for fair and equitable treatment seemed reasonable I argued. But that too went nowhere.
The Japanese were ‘slippery pigs’ in the words of one IDC member. They would find a way round to get what they wanted whatever words were used.
I said we should simply ask them what was the meaning for them of the words MFN in the final draft of the treaty. That would get rid of any ambiguity.
No way, said Cook. He had read books about how the Japanese negotiated and knew their tricks. They could not be trusted with words.
Just to ask them for definitions would open the path for more devious tricks.
In that case, I said, we would write into the treaty our own meaning of the words MFN and demand the Japanese side accept that.
Once again it was a negative from the FA man. The only answer to Japanese duplicity was silence, he said. That would force them to realise we were aware of their tricks and bring them to their senses.
If the result was no treaty then that would have to be that. Deadlines could be forgotten.
Meanwhile another battle was going on within the Whitlam camp.
For them dumping the treaty was a firm no-no. It had been promised by The Leader (as they called him).
Besides, any kind of information from the spies was suspect.
But the Melbourne spies had already been working to break down Whitlamite suspicion. Their favourite technique was passing on DSD decoded Japanese materials to prove they had inside views into Japanese plots and plans.
It worked well, even if it meant the DSD operation would later be exposed front page in the Financial Review by the well-known journalist, Brian
Toohey, close to the Whitlam camp.
The material from the man in Japan warning of continued Japanese plotting was on the table. Even Whitlam had come to accept that he would not be able to get his NARA treaty until the Japanese had been made to realise we could not accept their nefarious plotting.
Meanwhile I was using my own sources to find out what was going on.
The Japanese diplomat sent down from Tokyo to handle the treaty negotiations, Hideo Kagami, had been a good friend from Moscow days.
His explanation was simple. Whitlam had said Japan was especially important for Australia and had promised a special treaty going beyond the standard FCN.
Tokyo had taken those words seriously. In their eyes that meant the standard MFN clause could be made retrospective.
Whitlam had promised to shake Australia free from its US and UK shackles.
But if that was a problem for Canberra then fine. It could easily be deleted.
But even that did not sway the FA man and the coterie of security cleared officials around him. As one of them put it to me; ‘Greg, we are working from top classified material and if you could see what we see it you would agree this treaty is bad for Australia.’
I never got to see any of this material. And Whitlam was never to get to see his Treaty.
He went on to the Dismissal and a bad defeat in the 1975 election.
It is unlikely that the NARA debacle meant much for the voters. But it was made clear to me that preventing Whitlam from being able to declare a diplomatic victory with Japan did mean a lot for the hard-eyed US-Australian cadre who saw themselves as the controllers of our destiny.
Cook went on eventually to be ambassador to the US. I went back to my files in a backroom.
That he and the spy agent in Japan were able so easily to derail a victory for Whitlam says much. The sequel also says much.
With the 1975 election out of the way, Malcolm Fraser in power, and me packing my bags for Japan (I had already had a few more arguments with the Canberra establishment over East Timor, economic policy and the stupid Vietnam Cables affair) Canberra decided it could talk to Tokyo about a treaty after all.
The bureaucrats came up with the draft of what was to be called the Basic Treaty of Friendship and Cooperation.
It was very similar to the treaty Whitlam had wanted. Once again there was no hint of retrospective MFN. But one of the negotiators later told me an interesting story.
In a bid to disabuse Tokyo of its evil retrospective MFN obsessions Canberra had sent to Tokyo their expert on international law – Elihu Lauterpacht, QC
There he was shown the authoritative guide to international law, which happened to have been written by his father. In it was a chapter on the first trade treaty ever written – between the UK and Portugal in the 19th century.
There it had been agreed MFN should be offered on a retrospective basis.
Needless to say, none of this appears in the glossy pamphlet later produced by FA to celebrate the signing of the Treaty.
There we are told how the negotiators under Cook had taken the original Whitlam idea and through skillful and prolonged negotiation had turned it into a treaty over which both countries could feel pride.
In his memoirs published well after the NARA Treaty wrangling, John Menadue, head of PM and C during the affair, writes:
‘They (the intelligence agencies) are, however, adept in doling out juicy bits of information that are often untested but draw one into the inner circle of people with privileged information, a twilight world of secrets and gossip. Perhaps we all read too many spy thrillers and vicariously want to be part of the action. Few are immune.’
I wonder if among the juicy bits doled out by the spies was the false information aimed to destroy Whitlam’s NARA treaty.
I wonder also if it was part of the strategy leading to the Dismissal.