MEMO FOR RECORD: (SCAPIN - 1926)
WFM/FEP/JMC/bmy
6 August 1948
1. The attached proposed SCAPIN covering the export trade is basic to the proposal that the Japanese adhere as closely as possible to normal private trade.
2. Several steps are being taken to implement this program.
a. A form of buyers and suppliers contract has been crafted and approved.
b. An application for license to export has been drafted and approved.
c. The Japanese Government has been informally requested to simplify the procedure for allocation of raw materials in the cast of export contracts.
d. Arrangements have been made to administer fiscal control of export transactions through the Japanese and foreign banks in Japan.
3. Missions to Japan headed by Mr. Draper and Major General Noce both urged an early resumption of private export trade. The attached SCAPIN will remove the legal barriers to private contracts and retain the essential controls of export trade.
4. The essential controls are:
a. That the export program be not exceeded so as to interfere with the maintenance of the minimum Japanese economy and for this reason an export license approved by the Japanese Government and validated by SCAP is required.
b. It is necessary to require that the fair value in acceptable foreign exchange be received by the Japanese Government for any export so as to prevent Japanese individuals establishing illegal credits abroad.
c. It is necessary to make provision for the satisfaction of claims which are established by buyers to be paid in acceptable foreign exchange.
5. In the circulated draft, a provision had been included prohibiting the export of goods which involved an infringement of trade marks, copyrights or patents of allied nations or which are subject to restitution, restoration or reparations to allied nations. Since these provisions are covered adequately elsewhere and since phrasing of the restrictions is not suited to a SCAPIN covering export procedures, it has been informally agreed by ESS and Legal Section to eliminate the paragraph involved.
6. At the request of Legal Section, the paragraph relating to settlement of claims has been re-worded. The wording suggested by Legal Section in the attached Check Sheet has been altered in form although not in substance, with the informal approval of the Legal Section.
7. At the request of Antitrust and Cartels Division and Finance Division of ESS, a new paragraph has been added to the end of the Directive requiring the Japanese Government to eliminate the functions and personnel of the Foreign Trade Kodans to the extent that the functions are restored to private trade.
8. The interests of Korea are not affected.
9. Concurrences:
ESS/ST - Lt. Col. E. C. Allan ESS/IND Mr. Wm. Vaughan
ESS/TEX - Mr. Carl Campbell CTS Mr. Paul Richers
ESS/RP - Mr. W. V. Turnage LS Mr. C. C. Carpenter
ESS/PD - Mr. H. F. Alber G-l (No interest) Maj. Wilder man for Col. S. F. Hudgins
ESS/AC - Mr. E. C. Welsh G-4 Lt. Col. G. O. Deyoung
ESS/FI - Mr. W. K. LeCpunt Reparations Sec. (No interest) Lt. Col. Harding
F. E. P.
The movement of goods into and out of Japan is governed by SCAP Circular No. 21, 26 June 1948, subject: "Control of Entry and Exit of Property and Cargo into and from Japan." The responsibilities of the Eighth Army, AG 091.31 (3 Aug 48) ESS/FTC dated 3 August, 1948, subject: "Control of Entry and Exit of Property and Cargo into and from Japan."
No further supervision is required as a result of the present memorandum for the Japanese Government.
Board of Trade
2 July 1948
NEW PROCEDURES FOR LIMITED PRIVATE TRADE
1. Private traders can freely make business negotiations with foreign buyers in the capacity of a party to the sales contract.
2. Procedures
a. The seller may negotiate with the buyer with regard to the dollar price but the dollar price thereof will be decided by the Board of Trade with the approval of GHQ, SCAP, as done before. Any dollar price arrived at above the floor dollar price (where one has been established), will be approved. With regard to the yen price, the seller may submit three copies of "Application for Approval of f.o.b. Yen Price" (provisional appellation) to the Board of Trade, for approval upon the initiation of negotiation with the buyer. In cases where the yen price can be determined on the basis of a ruling of the Board of Trade, the seller need not submit the application.
3. Submission of IE 202, Application for License to Export
When business agreement is reached between the buyer and the seller, the latter is required to submit to the Board of Trade Form JE 202 with his signature thereon.
a. The yen price in IE 202 will be the one approved by the Board of Trade.
This yen price shall be final except where otherwise provided under Board of Trade ruling and except under the following special circumstances. When the change in yen price is necessary under special circumstances, the seller is required to apply for a change in yen price to the Board of Trade by submitting "Application for Approval of Change in f.o.b. Yen Price".
(In the above case, the Board of Trade may approve the change in yen price without referring it to GHQ, SCAP, for validation.)
b. The Board of Trade will, by the approval of this application, effect payment of yen equivalent of the draft amount to Japanese seller when the foreign bank in Japan negotiates the draft drawn by the seller.
c. The present form of the Materials Calculation will be replaced by a form attached to IE 202. The Materials Calculation List for those commodities which Standard Bill of Materials are made, is required to be prepared in accordance with the Bills.
d. The Board of Trade may stipulate a term in IE 202 that an inspection by the Board of Trade is required until such time as the Export Commodity Law becomes effective.
4. Submission of Sales Contract.
a. In case a contract is concluded, the seller will submit the Buyer-Seller Sales Contract, with signatures of the buyer and himself, direct to the Board of Trade. Hithereto, the draft contract has been submitted to the Board of Trade, who, as a formal seller, has made the formal contract with the buyer.
(1) The contract when it is submitted to the Board of Trade, is required to be accompanied by IE 202.
(2) In case of the production for program, IE 202, with BOTE number and without SCAP case number may, first, be submitted for allocation of raw materials. And when the contract is concluded for goods to be produced or which have been produced by the allocated raw materials and submitted to the Board of Trade, it is required to be accompanied by the respective IE 202, stating additional information and referring BOTE number of the initial IE 202 for raw materials allocation and SCAP case number.
5. Approval by the Board of Trade.
a. When the Board of Trade, after obtaining a signature of a competent official of the respective production bureau concerned on the Materials Calculation List attached to IE 202, recognized IE 202 appropriate and approves it, it will submit it to GHQ, SCAP for validation.
b. When the Board of Trade recognizes IE 202 of the sales Contract inappropriate, it will return it with the reason therefor.
6. Validation by GHQ, SCAP.
When IE 202 and the Sales Contract are submitted to GHQ, SCAP, they will be validated “by GHQ, SCAP and returned to the Board of Trade.
7. Materials.
a. When IE 202 is approved, the Board of Trade reports thereon to the respective production bureaus concerned with a request for the production and the issuance of distribution coupons.
b. The seller, when IE 202 is approved, applies to the Government offices concerned for materials for the manufacture of commodities, and to the Materials Section of the Board of Trade, for packing materials, to have the relative distribution coupons issued respectively.
8. Financing.
The seller may receive accommodation of "Stamped Bill" on presentation of the original copy of the approved sales contract to a bank, and the presentation of advice of acceptable letter of credit in foreign exchange. However, in respect of commodities for which the price ratio is not fixed, the Statement of Approved f.o.b. Prices will have to be presented.
9. Letter of Credit.
The buyer, in accordance with the terms of the sales contract, establishes the letter of Credit in favor of the seller.
The seller in Japan may notify in advance the foreign banks concerned of the names of the Japanese banks with which the seller may have transactions, for the purpose of having the establishment of the letter of credit communicated to him through such Japanese banks.
The seller is responsible for checking the particulars of the letter of credit with the terms of contract by liaison with the Japanese Banks, before the goods are shipped for export.
10. Inspection.
a. In the new contract form No. 10, it is required that the goods for export are inspected by an inspector designated by the buyer in accordance with the terms of the contract. In case when the buyer fails to designate an inspector, the seller, at his own expense, will have the inspection made and the inspection certificate issued.
b. In addition to the above, the goods of which inspection is required under the Law concerning Control of Staple Export Goods and other regulations will be inspected accordingly.
11. Shipping.
Shipping arrangements will be made, as a rule, by the buyer or his agent in accordance with the terms of the contract. In case the buyer fails to wake the necessary arrangements within a certain period of time, the seller, at the expense of the buyer, may make such necessary arrangements.
When the seller receives a notification from the buyer as to the name of loading vessel, the seller submits seven (7) copies of Application for Cargo Shipment, duly filled in, together with an inspection certificate and a signed copy of the IE 202 to a Japanese Bank authorized to negotiate export documents on behalf of the Board of Trade. When the bank approves the application, seller presents the approved application form to the shipping company concerned. The Application for Cargo Shipment will not be approved unless it shows that funds are available to pay for the shippment.
The approval given to the above application is to be understood as an equivalent of that given to IE 201 in the past.
12. Drafting of Foreign Exchange Bill.
On completion of loading, the seller will draft a foreign exchange bill and present it, together with the letter of credit and the shipping documents, to the designated Japanese banks handling exchange business. The above banks will, after close checking, forward them direct to local Ranches of foreign banks, which will credit the SCAP Commercial Account.
13. Payment in Yen Currency.
The seller will present to the-designated Japanese banks a copy of the approved IE 202 together with the foreign exchange bill and other relative documents mentioned in the preceding paragraph and the sales contract.
The designated Japanese banks will pay yen value when the foreign exchange bill has been negotiated by a foreign bank.
The agent fee, etc., will be paid as heretofore to the seller and, in turn, to the agent, etc.
14. Submission of Shipping Documents.
Japanese banks will submit a set of shipping documents to the Board of Trade, two sets to GHQ, SCAP (one set for the use of the Headquarters
Japanese banks will also submit, if necessary, the shipping documents as heretofore to the relative Foreign Mission.
15. Claim.
When the seller has received a claim from the buyer and an agreement has been reached thereon, the agreement shall be subject to the approval of the Board of Trade and the validation of GHQ, SCAP.
The above validation having been secured, the Board of Trade will issue a notice of collection to the seller and collect the sum in yen. The Board of Trade will report when the payment in yen has been made and GHQ, SCAP will accordingly draw the corresponding amount from the SCAP account or, as the case been due to the SCAP account.
16. Provisions for Transitory Period.
The new procedures will be applicable to the sales contracts and the relative IE 202 which will be presented to the Board of Trade on and after 15 July, excepting the following cases:
a. In case IE 100 and Contracts have been presented to the Board of Trade in accordance with the present procedure on or before 15 July.
b. In case the existing procedures have been followed by the use of the present forms on or before 15 July and it is difficult to adopt the new procedure under particular circumstances, the present procedure may be followed even on and after 16 July.
c. In case only IE 100 has been presented to the Board of Trade or in case it has been validated by GHQ, SCAP, the new procedure will be followed and a Form IE 202 will be filed.
Number of Copies Required (Distribution Arrangement)
1. Application for Approval of f.o.b. Price
Section in charge of relative commodity, Export Bureau .............................................1
Assessment Section of Account Bureau ...............................................................1
Seller..............................................................................................1
Total 3
2. IE 202
Board of Trade .....................................................................................4
(Material Section; Transportation Section; Section in charge of relative commodity; General Affairs Section)
(To be forwarded to Fund Section after validation)
Kodan .............................................................................................1
Competent Ministry for the Production ..............................................................1
GHQ ................................................................................................6
(4 copies will be kept by GHQ and 2 will be returned to the Board of Trade, one of which will be kept by General Affairs Section and another will be sent to Seller)
12
3. Sales Contract
Section in charge of relative commodity, Export Bureau .............................................1
General Affairs Section, Export Bureau .............................................................1
(To be forwarded to Fund Section after validation)
GHQ ................................................................................................5
(Two copies will be kept by GHQ and 3 will be returned to the Board of Trade, one of which will be kept by General Affairs Section through competent Section, one by Buyer and the remaining one by Seller)
7
Seller will be requested to present the contract in the case of negotiation.
4. Application for Cargo Shipment
Section in charge of relative commodity ................................................................... 1
Local Japanese Bank ....................................................................................... 2
District Bureau ........................................................................................... 1
Custom .................................................................................................... 1
Shipping Company......................................................................................... 1
GHQ ....................................................................................................... 1
Total 7