HC Deb 29 April 1935 vol 301 cc5-6
10. Captain PETER MACDONALD

asked the Secretary of State for Foreign Affairs whether he is now in a position to make any further statement with regard to the protests which have been made to the Japanese Government with regard to the proposed oil monopoly in Manchuria; and what action the British Government proposes to take to obtain fair treatment for British interests in this connection?

Sir J. SIMON

The point at issue in this dispute is as follows:

A monopoly of the sales of oil has been set up in Manchuria. A company, known as the Manchurian Oil Company, has also been formed to operate a refinery in Dairen, which will supply the sales monopoly with part, and eventually with the whole, of its requirements. The South Manchurian Railway Company, which is well known to be controlled by the Japanese Government, is a large shareholder in the Manchurian Oil Company.

His Majesty's Government, who had early notice of these projects, have made repeated representations to the Japanese Government pointing out that the creation of a monopoly would be contrary to obligations contained in treaties between China and foreign Powers which are binding on the present régime in Manchuria, and were expressly recognised by the latter when it was set up; that it would also be contrary to the assurances repeatedly given by the Japanese Government and by the present régime in Manchuria that the principle of the "open door" in Manchuria would continue to be observed; and that the participation of the South Manchuria Railway in the Manchurian Oil Company involved in the circumstances a further breach of Article 3 of the Nine Power Treaty of Washington.

The text of the Japanese reply rejecting the arguments of His Majesty's Government has now been received. It was reported in the press, and rather than attempt to summarise it I will circulate the text in the OFFICIAL REPORT. Under instructions from His Majesty's Government, His Majesty's Ambassador in Tokyo has now addressed to the Japanese Government a further note which I will also circulate in the OFFICIAL REPORT.

Captain PETER MACDONALD

Has any other Government equally concerned with the British Government taken any action; and will my right hon. Friend consider taking joint action with such countries as America in protesting against this breach of a treaty?

Sir J. SIMON

We have been in touch with other Governments on the subject.

Following is the Japanese Government's aide-mémoire referred to: In the Aide-Mémoire of 24th November, 1934, with regard to the petroleum system in Manchukuo the British Government expressed their opinion respecting the views of the Japanese Government which had been furnished on 5th November, 1934. The British Government stated that the new petroleum system in Manchukuo was contrary to the declarations repeatedly made by Manchukuo, and that the measures taken by the Japanese Government in connection with it were not only opposed to their past pronouncements but constituted action amounting to a plain breach of treaty obligations. Steps to put a stop to this new petroleum system should accordingly be taken by the Japanese Government; if they did not devise such steps the Japanese Government would not be able to escape the obligation to make compensation for lossss suffered on that account by British interests. The Japanese Government are unable to discover, in the above criticisms made by the British Government, any reason for altering their former contentions. Apart from the complete disregard, shown in the British Government's contentions, of the fact, already recognised by the Japanese Government, of the independence of Manchukuo, it is difficult to discover any ground for these contentions. It must, moreover, be stated that it is a contradiction of their argument, based as it is upon a denial of the fact of the existence of Manchukuo, to cite the contents of only such of the unilateral declarations which have been made by that country as are conjectured to be in one's own interests. Although the Japanese Government have not declined the labour of every kind of mediation in order that a harmonious business settlement might be achieved between the parties involved in the petroleum question in Manchukuo they are not in a position to intervene, or concern themselves directly, in a question which as is here the case, is one of the domestic questions of that country. The Japanese Government regret that the British Government should on this occasion again wish to invite argument upon fundamental questions relating to their recognition of Manchukuo, which, as they have already made clear, is their unchangeable national policy. Furthermore, the Japanese Government, in view of the above-mentioned contentions made by the British Government, desire to set forth the following points:
  1. (1)The Manchukuo Government's scheme for the control of the petroleum industry is in fact the scheme of the Manchukuo Government, and the Japanese Government are not concerned in it. Further, according to the information possessed by the Japanese Government, the Manchuria Petroleum Company do not possess, under the Manchukuo legal system, any kind of exclusive monopolistic rights in the petroleum industry, and, with regard to the holding of shares in this company, there are, as stated, among other things, in the Japanese Government's Aide-Mémoires of 2nd August and 5th November, 1934, no discriminatory provisions according to nationality. The Japanese Government are unable to allow that any question arises either of the infringement by Japan of the provisions of existing treaties or of the contravention of pronouncements made by the Japanese Government, either in connection with investments in the Manchuria Petroleum Company, a Manchukuo juridical person, made by the South Manchuria Railway or other Japanese capitalists, or, naturally, in connection with the above Manchukuo scheme for the control of the petroleum industry.
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  3. (2) It is evident, according to international law, that the provisions of the treaties between China and other countries cannot be understood as being taken over uniformly and unconditionally without any sort of new arrangement consequent upon the independence from China of Manchukuo. It is believed, accordingly, that it was proper that Manchukuo, when first established as a nation, should have declared that in the treaties hitherto in force between China and other countries only 'such things as ought, in the light of international law and international usage, to be taken over' should be taken over and respected. Furthermore, although it is a fact that in the communication in which Manchukuo proposed the inauguration of her diplomatic relations with foreign countries the Open Door policy was proclaimed, yet it is evident that these foreign countries, who completely disregarded her proposal, have not the right to accept unilaterally those parts alone of her communication which happen to suit their own convenience. Moreover, even leaving out of consideration the present state of affairs in Europe and America, where the most extreme policy is being put into practice in the control of commerce and trade, the application of the necessary control, by an independent nation, to industries such as the petroleum industry, which have an important relation to her existence as a state, is the proper right of a nation, and it is inconceivable that when, in announcing her independence, Manchukuo made the above-mentioned comprehensive declaration she was abandoning her proper national rights. Thus it cannot be allowed that there is in fact involved in her present scheme for the control of the petroleum industry any contravention by Manchukuo of treaties or declarations.
  4. (3) In short, the Japanese Government are unable to agree, either with such a proposal as that they should bear the responsibility for the actions of Manchukuo, or with any contention whatever which has for a premise the denial of the independence of that country.
25th March, 1935.
Following is the text of the note addressed to the Japanese Government: His Majesty's Government are unable to accept the Japanese contentions as valid, and deeply regret that the Japanese Government, so far from using their undoubted authority to ensure the fulfilment of the assurances given by themselves and by the Manchurian authorities regarding the maintenance of the principle of the 'open door' in Manchuria, and the fulfilment of treaty obligations, have attempted to justify action which involves a clear breach of these assurances and obligations. His Majesty's Government cannot but hold those responsible for the Manchukuo Oil Monopoly Law responsible also for the losses which it will entail for British interests. 12th April, 1935.
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