Summary of Trade Agreement between Japan and India,
January, 1934
1. Most favoured nation treatment : In respect of customs duties, Japan and India shall reciprocally accord the most favoured nation treatment to any articles, produce or manufacture of the other country,
2. Negotiations to be held concerning modification of customs tariff : Subject to reservation by both countries of the right to make such changes in their customs tariffs as may be necessary for the protection of their own interests,
Japan and India agree that, should any modification of customs tariffs by either country result in trade interests being adversely affected in any appreciable measure, they shall upon request of the country so affected enter into negotiations with the object of reconciling so far as possible trade interests of the two countries.
3. Measures to correct effects of exchange fluctuation : Nothing in this agreement shall be held to prohibit the imposition or the variation from time to time by the Government of India of special rates of customs duty on articles, the produce or manufacture of Japan, other or higher than those levied on similar articles produced or manufactured by any other country, at such rates as the Government of India may consider to be necessary to correct the effects of any variation of the exchange value of the yen relative to the rupee subsequent to December 31, 1933.
Imposing or varying, or on being requested by the Government of Japan to vary, such special rates of customs duty, the Government of India undertakes to give full consideration to relevant factors which tend to raise the export prices of Japanese goods, such as the purchase by Japan of raw materials in markets outside Japan and the adjustment of internal Japanese prices, and to limit such rates to what is necessary to correct the effect of the depreciation of the exchange value of the yen relative to the rupee on the duty-paid value of Japanese goods imported into India. Provided, that no charge in such rate shall be made until it has been in force for at least five weeks.
Reciprocally, the Government of Japan shall have the right of imposing or varying special rates of customs similar to those for which provision is made in paragraph 1 of this article (3), on articles, the produce or manufacture of India, under similar circumstances, and subject to conditions similar to those provided for in paragraphs 2 and 3 of this article (3). Provided, that the said right shall not accrue to the Government of Japan unless the exchange value of the rupee relative to the yen shall be depreciated below the value of .732 yen.
4. Customs duties on Japanese cotton piece-goods imported into India : Without prejudice to agreements concerning the most favoured nation treatment, and the measures to correct the effects of exchange fluctuation, customs duties to be imposed by the Government of India on Japanese cotton piece-goods should not exceed the following rates :
Duty on plain greys......50 per cent. ad. valorem or 5.25 annas per pound.
Duty on others......50 per cent. ad. valorem.
It is understood that the Government of India shall not impose on Japanese cotton piece-goods other than plain greys a specific duty exceeding 5.25 annas per pound subject to agreement concerning the most favoured nation treatment.
5. Importation of Japanese cotton piece-goods into India :
(a) Calculation of the quota of Japanese cotton piece-goods to be exported to India in a period of one year beginning April 1 shall be fixed in accordance with quantity of Indian raw cotton exported to Japan in a period of one year beginning January 1 of the same year.
(b) It is to be noted that the period of one year for the purpose of fixing the quota of Japanese cotton piece-goods (or piece-goods year) shall be from April 1 to March 31 of the following year, while the period of one year for the purpose of calculating the quantity of Indian raw cotton to be exported to Japan (or cotton year) shall be from January 1 to December 31.
6. Basic quota and its modification : The basic quota of Japanese cotton piece-goods to be exported to India in a piece-goods year shall be 325,000,000 yards and it shall be linked with 1,000,000 bales of Indian raw cotton exported to Japan in the corresponding cotton year.
(a) In case the export of Indian raw cotton to Japan in any cotton year should fall below the 1,000,000 bales quota, the Japanese cotton piece-goods for the corresponding piece-goods year shall be determined by reducing the above basic quota at the rate of 2,000,000 yards for every 10,000 bales of deficit.
(b) In case, however, such export in any cotton year should exceed the 1,000,000 bales quota, the Japanese cotton piece-goods for the corresponding piece-goods year shall be determined by increasing the above basic quota at the
rate of 1,500,000 yards for every additional 10,000 bales, provided that quota should in no case exceed 400,000,000 yards.
(c) In case the export of Indian raw cotton to Japan in any cotton year should exceed 1,500,000 bales, the quantity thus exported in excess of 1,500,000 bales shall be for the purpose of determining the relevant quota of Japanese cotton piece-goods added to the quantity of raw cotton exported to Japan in the following cotton year.
(d) In respect of both cotton piece-goods and raw cotton re-exported the quantity shall be deducted from imported quantity.
(e) The year shall be divided into two half-yearly periods, the first half-yearly period running from April 1 to September 30 and the second half-yearly period from October 1 to March 31 of the following year.
(f) The quota for the second half-yearly period shall be provisionally fixed at the quantity which will be derived by deducting 200,000,000 yards from the yearly quota, calculated on the basis of estimated export of Indian raw cotton to Japan in the corresponding cotton year.
7. Adjustment : The adjustment of export of Japanese cotton piece-goods to India shall be made by the end of the said period on basis of exact quantity of Indian raw cotton exported to Japan in the corresponding cotton year, subject to rules of allowances between periods.
A transfer from the quota of the first half-yearly period to the quota of the second half-yearly period shall be permitted up to a maximum of 20,000,000 yards.
From the second half-yearly period to the first half-yearly period of the succeeding piece-goods year and vice versa, transfer up to a maximum of 20,000,000 yards shall be permitted.
8. Classification of quota into categories :
The quota of cotton piece-goods shall be classified into the following categories in conformity with the following percentages :
Plain greys.. .. ..45 per cent.
Bordered greys .. ..13 per cent.
Bleached .. .. .. .. 8 per cent.
Coloured and other ..34 per cent.
The percentage allotted to each of the above categories may be modified subject to the following conditions :
Increase in category either of bordered greys or bleached shall not exceed 20 per cent. of quantity allotted to that category, and an increase in any other category shall not exceed 10 per cent. of quantity allotted to that category.
9. Transfer : The quantity transferable from category either of bordered greys or bleached shall not exceed 20 per cent. of quantity allotted to that category and the quantity transferable from any other category shall not exceed 10 per cent. of quantity allotted to that category : and
The total quota of cotton piece-goods for any piece-goods year shall not be increased by the above modification of quantity allotted to each category.
10. The quota for the period intervening the enforcement of the arrangement and the commencement of the first piece-goods year :
(a) The quota of cotton piece-goods for the period between the date on which the present Indian customs on cotton piece-goods year begins shall be the proportionate fraction of the quantity that would have been allotted to the whole piece-goods year from April 11, 1933 to March 31, 1934, on the basis of the quantity of Indian raw cotton imported into Japan in the cotton year of 1933 (From January 1 to December 31).
(b) The quota for this period and the first half-yearly instalment of the first piece-goods year quota should be consolidated into one for the period of approximately nine months, ending at the end of September, 1934.
The treaty shall come into force immediately after an exchange of ratifications, and shall remain in force until March 31, 1937.