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ATDENTIAL -5- and further appropriations for economic assistance to Japan would then have to be considered in the light of possible defenge needs, such financial arrangements as might come into effect after a peace treaty in connection with expenditures of U.S., forces in Japan, and a poses sible additional need to bring Japan's monetary resources up to adequate levels for a sovereign country independent of external ecom nomic assistance, While Japan could continue to provide coods and services required by U.S. military forces stationed in Japan without significant effects on the volume of exports, the rapid development of Jonan's oun seaurity forces vould probably reduce the production of goods for export. Unless this vere counterbalanced by dollar come pensation for Japanese contributions to the support of U.S. forces, continued balance of payments assistance would be required. The further improvement of Japan's living standards to levels equal to and beyond prewtar will depend on the success of Japan's om efforts in increasing production and expanding trade. Dut vhile stability in Japan and economic self support are inportant both to the Japanoso and to the United States, economic policies for Japon should look beyond the considerations of mechanical balance in Japan's international accounts or of immediate increases in living standards. It is essential also to U.S. objectives in the Far East that Japan bocone econonically strong in order to enable it to make a positive contribution to the eccnomic progress and stability of South and Southeast Asia. Japan nust or:pand its trade vith these areas in ways vhich vill assist their development as well as furnish new markets for its manufactured goods and new sources of rav naterials and foode stuffs.

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    "ocrText": "ATDENTIAL\n-5-\nand further appropriations for economic assistance to Japan would then\nhave to be considered in the light of possible defenge needs, such\nfinancial arrangements as might come into effect after a peace treaty\nin connection with expenditures of U.S., forces in Japan, and a poses\nsible additional need to bring Japan's monetary resources up to\nadequate levels for a sovereign country independent of external ecom\nnomic assistance, While Japan could continue to provide coods and\nservices required by U.S. military forces stationed in Japan without\nsignificant effects on the volume of exports, the rapid development\nof Jonan's oun seaurity forces vould probably reduce the production\nof goods for export. Unless this vere counterbalanced by dollar come\npensation for Japanese contributions to the support of U.S. forces,\ncontinued balance of payments assistance would be required.\nThe further improvement of Japan's living standards to levels\nequal to and beyond prewtar will depend on the success of Japan's om\nefforts in increasing production and expanding trade. Dut vhile\nstability in Japan and economic self support are inportant both to\nthe Japanoso and to the United States, economic policies for Japon\nshould look beyond the considerations of mechanical balance in Japan's\ninternational accounts or of immediate increases in living standards.\nIt is essential also to U.S. objectives in the Far East that Japan\nbocone econonically strong in order to enable it to make a positive\ncontribution to the eccnomic progress and stability of South and\nSoutheast Asia. Japan nust or:pand its trade vith these areas in ways\nvhich vill assist their development as well as furnish new markets\nfor its manufactured goods and new sources of rav naterials and foode\nstuffs."
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