Cable No. 1456, Ambassador Kuriyama to the Foreign Minister, 'Japan-United States Summit Meeting (Small Group Meeting) (1 of 2)'

Number: [TN: blacked out]

Primary: North American Affairs Bureau Director-General

Sent: United Nations, February 12, 1994, [TN: time blacked out]

Received: MOFA, February 13, 1994, [TN: time blacked out]

To: The Foreign Minister      

From: Ambassador Kuriyama

Japan-United States Summit Meeting (Small Group Meeting) (1 of 2)

No. 1456 Secret Top Urgent

(Limited Distribution)

Divided telegram

On the 11^th, from 11:35 in the morning to 1:10 in the afternoon, the Japan-United States Summit Meeting (small group meeting) took place in the Oval Office of the White House. A summary of its main points is as follows. (Attending from the other side: President Clinton, Vice President Gore, Secretary of State Christopher, National Security Advisor Lake, [TN: name blacked out] NSC [TN: part of title blacked out], and an interpreter ([TN: name blacked out]); attending from our side: Prime Minister Hosokawa, Foreign Minister [Hata], Deputy Minister for Foreign Affairs Fukuda, Deputy Minister for Foreign Affairs Matsuura, and an interpreter (Suzuki from First North America Division).)

(Prime Minister) Since this administration’s inauguration half a year ago, we have been climbing one high mountain after another. I think that you have had the same experience. Some in my coalition government, worn out from climbing the mountains, would like to go hide away in a tunnel. In newspaper political cartoons, I am drawn in a pinch on the edge of a cliff. I am, so to say, a “cliff-hanger.”

Mr. President, you successfully pulled off the triple play of the NAFTA [North American Free Trade Agreement], APEC [Asia-Pacific Economic Cooperation], and UR [Uruguay Round]. I have been promoting three major reforms – political, economic, and administrative – in the middle of fighting between the “conservative faction” seeking to preserve the old system and the “reform faction.” I will continue with determination to promote reform.

Through political, economic, and political reform, I have aimed for a real “political restoration.” Overcoming the resistance of the special-interest politicians and the bureaucrats on the construction issue, UR, and such was like walking a tight-rope, but I have achieved some degree of success.

Concerning economic stimulus measures, I hear that the United States sees it as insufficient, but our intention was to put together a substantial package. Rather than economic stimulus measures for the time being, it is something that we undertook as part of fundamental reform of the tax structure.

These reforms are “internal reforms.” They are fundamentally different from the changes made in Japan to date under external pressure. However, these “internal reforms” have only just gotten under way. From this point forward, there will be a full-scale undertaking. I would like you to watch this with interest and support it where you can.

(Clinton) I feel strongly for what you are doing. This is not only for Japan. As an example of democracy, it is for all the world’s countries. A problem for democratic countries is that when external threats disappear and interest turns inward, gaining popular support for change is difficult. Through my own experience, I think that, as it is in the United States, carrying out change in Japan is hard. Last summer, I had the budget reconciliation act passed by one vote in the House and Senate. At the time, the Democratic Party seemed made up of three different parties, so the situation was different for each vote.

I strong support your political reform. We, too, are making efforts for similar reform in the United States and would like to have the legislation passed in Congress in the next four months.

US economic advisors are saying that Japan’s economic stimulus measures are not large enough. I understand the pressure that you are under. Personally, I think that they are substantial. Based on the experience of the United States, or perhaps the situation is different in the case of Japan, but once you cut taxes, with the expectation that a tax increase will be carried out the next year, much of it goes into savings, not into consumption.

What I would like to talk about in this small group meeting is how to make sure that we are sending the right message to the world. We failed to come to an agreement on trade, but Japan and the United States have many common interests in the security, political, and economic fields. Somehow, we have to show to the people of the United States and Japan, and the world as well, that we are committed to the US-Japan relationship. Concerning the security field, I would like to talk about the issue of North Korea’s development of nuclear weapons. Also, on the economic side is the task of implementing the GATT agreement, where you were having a hard time with the rice issue. In addition, on the political side, there are many areas of cooperative relations, such as in assistance for Russia’s privatization efforts, environmental issues, AIDS, and mutual support for each country’s political reform.

I think that honest disagreement on the trade issue is proof that the US-Japan relationship is strong and reliable, and it will not do for it to harm the relationship of friendship and trust between the United States and Japan. Yesterday evening, I read your book (note: The Time To Act Is Now). I now understand what you are trying to do and what kind of obstacles you are facing. I do not know what is going to happen in the future concerning the trade issue. I would like to talk about how to handle it.

Frankly speaking, I do not think that admitting our differences will hurt the ties that bind the United States and Japan. Both you and I have established a reputation for tackling difficult problems that have been long neglected until now. I would like to handle the trade issue openly. In the long term, I think that it will be a proof of strengthening the US-Japan relationship.

(Prime Minister) I agree. Concerning the Framework Talks, it is regrettable that we made progress to the point of nearly negotiating an agreement on government procurement and insurance but were unable to clear the final hurdle of numerical targets.  However, relations between Japan and the United States in their entirety must not be broken on account of this. I am in agreement with you on that point.

Many people think that the general pattern for the past 20 or 30 years has been one of reaching ambiguous settlements between Japan and the United States to get by, with Japan being forced in the end under “external pressure” to make concessions. That there has been a build-up in mutual frustration because of that is a fact. As you have said, we need a mature, adult relationship. The form in this new era of the Japan-United States relationship, which occupies a major place in the world, is one of saying what one wishes to say, of frankly admitting that “we will agree on things on which we can agree and will not agree on things on which we cannot agree.” In any case, my administration is earnestly promoting domestic reform and carrying out the deregulation and administrative reform that the bureaucracy opposes. The United States, too, is facing such difficult problems as reducing its fiscal deficit. Both our countries are tackling difficult issues, so I would like the Framework Talks to go forward with our continuing to talk to one another in the spirit of cooperation.

(Clinton) First, I agree that the United States and Japan have suffered in the past from unclear agreements. It is not good, that, first, there is among the Japanese people the perception that Japan has been changed according to “external pressure.” Next, after a while, there has emerged in the United States the perception that, despite trade agreements between the United States and Japan, harmful trends have continued and no changes have been brought about. In this way the criticism arises that the United States and Japan are not doing what they should be doing, and the governments of both countries lose the trust of their people.

Second, I am making requests to Japan not only for the sake of the United States but with various foreign countries in mind as well. I am promoting policies not only for the sake of Japan but for that of Britain as well. I would like to give two examples. First, there was criticism of Japan’s economic stimulus measures because of the concern that a tax cut limited to one year would be insufficient not only for stimulating the global economy but for the Japanese economy as well. Next, concerning the issue of access to the Japanese market as well, we are not asking for special treatment for the United States alone. The United States has always argued for open markets and market competition.

Last, I would like to point out several points regarding the trade relationship. First, many of the things that you are pursuing will make the Japanese economy open and help the US-Japan relationship. Second, concerning numerical targets, we are pursuing this for a certain purpose. Looking at the contents of the agreement in July last year in Tokyo, we are measuring progress in six fields. I think that objective standards are necessary in each of those fields. At the same time, I think that progress will be judged according to other factors as well, such as whether the United States is making efforts in each of those fields and is making products of a price and quality suitable to the Japanese market. However, we cannot reach an agreement if there is not any way of measuring progress. Third, regarding the continuing of negotiations in the Framework Talks, last night Foreign Minister Hata and United States Trade Representative Kantor conducted negotiations until four o’clock this morning. Also, to prepare for this meeting, we held a meeting on the US side for over an hour this morning. The result of all this is that, as of this time, our positions are extraordinarily far apart. It seems to me that there is nothing much to discuss. If the Japanese side has new points, then I would be happy to hear them. If not, then we are facing a deadlock, so I think that it would be best to have a period of reflection.

(continued)