1. The Government of Japan, prompted by a genuine desire to come to an amicable understanding with the Government of the United States in order that the two countries by their joint efforts may secure the peace of the Pacific Area and thereby contribute toward the realization of world peace, has continued negotiations with the utmost sincerity since April last with the Government of the United States regarding the adjustment and advancement of Japanese-American relations and the stabilization of the Pacific Area. The Japanese Government has the honor to state frankly its views concerning the claims the American Government has persistently maintained as well as the measures the United States and Great Britain have taken toward Japan during these eight months.

2. It is the immutable policy of the Japanese Government to insure the stability of East Asia and to promote world peace and thereby to enable all nations to find each its proper place in the world. Ever since China Affair broke out owing to the failure on the part of China to comprehend Japan's true intentions, the Japanese Government has striven for the restoration of peace and it has consistently exerted its best efforts to prevent the extension of war-like disturbances. It was also to that end that in September last year Japan concluded the Tripartite Pact with Germany and Italy. (Costello II)

However, both the United States and Great Britain have resorted to every possible measure to assist the Chungking regime so as to obstruct the establishment of a general peace between Japan and China, interfering with Japan's constructive endeavors toward the stabilization of East Asia. Exerting pressure on the Netherlands East Indies, or menacing French Indo-China, they have attempted to frustrate Japan's aspiration to the ideal of common prosperity in cooperation with these regions. Furthermore, when Japan in accordance with its protocol with France took measures of joint defense of French Indo-China, both American and British Governments, willfully misinterpreting it as a threat to their own possessions, and inducing the Netherlands Government to follow suit, they enforced the assets freezing order, thus severing economic relations with Japan. While manifesting thus an obviously hostile attitude, these countries have strengthened their military preparations perfecting an encirclement of Japan, and have brought about a situation which endangers the very existence of the Empire. (Costello II)

Nevertheless, to facilitate a speedy settlement, the Premier of Japan proposed, in August last, to meet the President of the United States for a discussion of important problems between the two countries covering the entire Pacific area. However, the American Government, while accepting in principle the Japanese proposal, insisted that the meeting should take place after an agreement of view had been reached on fundamental and essential questions.

3. Subsequently, on September 25th the Japanese Government submitted a proposal based on the formula proposed by the American Government, taking fully into consideration past American claims and also incorporating Japanese views. Repeated discussions proved of no avail in producing readily an agreement of view. The present cabinet, therefore, submitted a revised proposal, moderating still further the Japanese claims regarding the principal points of difficulty in the negotiation and endeavored strenuously to reach a settlement. But the American Government, adhering steadfastly to its original assertions, failed to display in the slightest degree a spirit of conciliation. The negotiation made no progress. (Costello II)

Thereupon, the Japanese Government, with a view to doing its utmost for averting a crisis in Japanese-American relations, submitted on November 20th still another proposal in order to arrive at in equitable solution of the more essential and urgent questions which, simplifying its previous proposal, stipulated the following points:

(1) The Governments of Japan and the United States undertake not to dispatch armed forces into any of the regions, excepting French Indo-China, in the Southeastern Asia and the Southern Pacific area.

(2) Both Governments shall cooperate with the view to securing the acquisition in the Netherlands East Indies of those goods and commodities of which the two countries are in need.

(3) Both Governments mutually undertake to restore commercial relations to those prevailing prior to the freezing of assets. The Government of the United States shall supply Japan the required quantity of oil.

(4) The Government of the United States undertakes not to resort to measures and actions prejudicial to the endeavors for the restoration of general peace between Japan and China.

(5) The Japanese Government undertakes to withdraw troops now stationed in French Indo-China upon either the restoration of peace between Japan and China or the establishment of an equitable peace in the Pacific Area; and it is prepared to remove the Japanese troops in the southern part of French Indo-China to the northern part upon the conclusion of the present agreement. (Costello II)

As regards China, the Japanese Government, while expressing its readiness to accept the offer of the President of the United States to act as "introducer" of peace between Japan and China as was previously suggested, asked for an undertaking on the part of the United States to do nothing prejudicial to the restoration of Sino-Japanese peace when the two parties have commenced direct negotiations. The American Government not only rejected the above-mentioned new proposal, but made known its intention to continue its aid to Chiang Kai-shek; and in spite of its suggestion mentioned above, withdrew the offer of the President to act as so-called "introducer" of peace between Japan and China, pleading that time was not yet ripe for it. Finally on November 26th, in an attitude to impose upon the Japanese Government those principles it has persistently maintained, the American Government made a proposal totally ignoring Japanese claims, which is a source of profound regret to the Japanese government. (Costello II)

4. From the beginning of the present negotiation the Japanese Government has always maintained an attitude of fairness and moderation, and did its best to reach a settlement, for which it made all possible concessions often in spite of great difficulties. As for the China question which constituted an important subject of the negotiation, the Japanese Government showed a most conciliatory attitude.

As for the principle of non-discrimination in international commerce, advocated by the American Government, the Japanese Government expressed its desire to see the said principle applied throughout the world, and declared that along with the actual practice of this principle in the world, the Japanese Government would endeavor to apply the same in the Pacific Area including China, and made it clear that Japan had no intention of excluding from China economic activities of third powers pursued on an equitable basis. Furthermore, as regards the question of withdrawing troops from French Indo-China, the Japanese Government even volunteered, as mentioned above, to carry out an immediate evacuation of troops from Southern French Indo-China as a measure of easing the situation. (Costello II)

It is presumed that the spirit of conciliation exhibited to the utmost degree by the Japanese Government in all these matters is fully appreciated by the American Government. On the other hand, the American Government, always holding fast to theories in disregard of realities, and refusing to yield an inch on its impractical principles, caused undue delay in the negotiation. It is difficult to understand this attitude of the American Government and the Japanese Government desires to call the attention of the American Government especially to the following points:

1. The American Government advocates in the name of world peace those principles favorable to it and urges upon the Japanese Government the acceptance thereof. The peace of the world may be brought about only by discovering a mutually acceptable formula through recognition of the reality of the situation and mutual appreciation of one another's position. An attitude such as ignores realities and imposes one's selfish views upon others will scarcely serve the purpose of facilitating the consummation of negotiations. (Costello II)

Of the various principles put forward by the American Government as a basis of the Japanese-American Agreement, there are some which the Japanese Government is ready to accept in principle, but in, view of the world's actual conditions, it seems only a utopian ideal n the part of the American Government to attempt to force their immediate adoption. Again, the proposal to conclude a multilateral non-aggression pact between Japan, United States, Great Britain, China, the Soviet Union, the Netherlands and Thailand, which is patterned after the old concept of collective security, is far removed from the realities of East Asia.

2. The American proposal contained a stipulation which states: "Both Governments will agree that no agreement, which either has concluded with any third power or powers, shall be interpreted by it in such a way as to conflict with the fundamental purpose of this agreement, the establishment and preservation of peace throughout the Pacific area." It is presumed that the above provision has been proposed with a view to restrain Japan from fulfilling its obligations under the Tripartite Pact when the United States participates in the War in Europe, and, as such, it cannot be accepted by the Japanese Government. (Costello II)

The American Government, obsessed with its own views and opinions, may be said to be scheming for the extension of the war. While it seeks, on the one hand, to secure its rear by stabilizing the Pacific Area, it is engaged, on the other hand, in aiding Great Britain and preparing to attack, in the name of self-defense, Germany and Italy, two Powers that are striving to establish a new order in Europe. Such a policy is totally at variance with the many principles upon which the American Government proposes to found the stability of the Pacific Area through peaceful means.

3. Whereas the American Government, under the principles it rigidly upholds, objects to settle international issues through military pressure, it is exercising in conjunction with Great Britain and other nations pressure by economic power. Recourse to such pressure as a means of dealing with international relations should be condemned as it is at times more inhumane than military pressure. (Costello II)

4. It is impossible not to reach the conclusion that the American Government desires to maintain and strengthen, in coalition with Great Britain and other Powers, its dominant position it has hitherto occupied not only in China but in other areas of East Asia. It is a fact of history that the countries of East Asia for the past hundred years or more have been compelled to observe the status quo under the Anglo-American policy of imperialistic exploitation and to sacrifice themselves to the prosperity of the two nations. The Japanese Government cannot tolerate the perpetuation of such a situation since it directly runs counter to Japan's fundamental policy to enable all nations to enjoy each its proper place in the world. (Costello II)

The stipulation proposed by the American Government relative to French Indo-China is a good exemplification of the above-mentioned American policy: Thus the six countries¡ªJapan, the United States, Great Britain, the Netherlands, China and Thailand¡ªexcepting France, should undertake among themselves to respect the territorial integrity and sovereignty of French Indo-China and equality of treatment in trade and commerce would be tantamount to placing that territory under the joint guarantee of the Governments of those six countries. Apart from the fact that such a proposal totally ignores the position of France, it is unacceptable to the Japanese Government in that such an arrangement cannot but be considered as an extension to French Indo-China of a system similar to the Nine Power Treaty structure which is the chief factor responsible for the present predicament of East Asia. (Costello II)

5. All the items demanded of Japan by the American Government regarding China such as wholesale evacuation of troops or unconditional application of the principle of non-discrimination in international commerce ignored the actual conditions of China, and are calculated to destroy Japan's position as the stabilizing factor of East Asia. The attitude of the American Government in demanding Japan not to support militarily, politically or economically any regime other than the regime at Chungking, disregarding thereby the existence of the Nanking Government, shatters the very basis of the present negotiation. This demand of the American Government falling, as it does, in line with its above-mentioned refusal to cease from aiding the Chungking regime, demonstrates clearly the intention of the American Government to obstruct the restoration of normal relations between Japan and China and the return of peace to East Asia. (Costello II)