Cable No. 5515, Ambassador Hatano to the Foreign Minister, 'Japan-United States Summit Meeting (Separate Telegram 2)'

Number: [TN: blacked out]

Primary: North American Affairs Bureau Director-General

Sent: United Nations, September 28, 1993, [TN: time blacked out]

Received: MOFA, September28, 1993, [TN: time blacked out]

To: The Foreign Minister      

From: Ambassador Hatano

Japan-United States Summit Meeting (Separate Telegram 2)

No. 5515 Secret Top Urgent

(Limited Distribution)

Outgoing Cable No. 5513 Separate Telegram 2: Reconfirmation of the Basic Framework between Japan and the United States, Policy Coordination (Including APEC)

(Prime Minister) The role of Japan and the United States for the growth of the global economy has been growing increasingly large. Acting on the basis of a partnership between Japan and the United States, which together account for approximately 40 percent of global GNP, is indispensable for the entire world in the middle of a fluid international situation. In that sense, there is something that I would like to reconfirm. First, I would like to adhere to the Japan-United States Security Treaty. Then, I would like to support and develop a good relationship between Japan and the United States. That is to say, I would like to develop the relationship in a balanced form on three pillars: politics and security, global cooperation, and economic relations. On these points, it is inheriting the policies of the current administration.

In the world economy, problems have arisen from the fall in consumption. In this area, would it not be possible to expand global consumption through cooperation between Japan and the United States? For example, in China, with its population of one billion persons, there is a demand for one billion pairs of shoes. In India, too, there is a large population. I think that, other than these, there are any number of markets where consumption can be expanded. I think that it is necessary for Japan and the United States to cooperate and to make efforts to increase purchasing power.

(President) I agree. A focus on economic issues is important. I am looking at them from two courses. The first course is the opening of the Chinese market. There is also the need to promote market opening in other markets with large populations, such as the Indian market. This is exactly what the United States is arguing for NAFTA. It truly is from such a point of view. I hope that, not only Mexico, but all the countries of Latin America become open economies. Latin America, in combination with North America, has a population of one billion. I think that it can contribute greatly to global economic growth. The second course is further promoting policy coordination for the economies of the advanced countries: Japan, the United States, and those of Europe. For the foreseeable future, Japan, the United States, and Europe will undoubtedly account for the majority of the world’s wealth. I think that it is necessary that these countries adopt policies promoting global economic growth. For example, one can point to the phenomenon of a reduction of the fiscal deficit in the United States leading to lower market interest rates in Germany. Talks were started on the basis of the Framework Agreement between Japan and the United States but, even with this Framework Agreement, it would be desirable that action be taken to the extent possible that would lead to economic growth. I have not decided in detail the whole picture of America’s global economic strength, but I am thinking of pushing forward these two courses.

(Prime Minister) The negotiations based on the Framework Agreement started in September. I would like to work so that (the negotiations) move ahead smoothly. Concerning global market opening and the expansion and growth of the global economy, would it not be good, for example, to use the November APEC meeting to which I have been invited? I would be happy to attend the APEC non-official summit meeting in this connection. With APEC, for example, looking at the trade statistics of China and the United States, there is the problem of a gap of some hundreds of millions of dollars emerging due to differences in how statistics are gathered. I am considering the concrete proposal of carrying out the handling of statistics in common in APEC.

(President) I would like to coordinate closely an approach with Japan prior to the APEC meeting. I would like to coordinate not only on the economic issues but on the political issues as well. The whole world is taking note of the meeting’s results in regard to how the United States and Japan are dealing with the Asia-Pacific countries. Also, relations between the United States and China are relatively good on the economic side, but there are still issues on the political side, and I imagine that attention will be paid there. I would like to coordinate with Japan in advance so that the United States can be a proper host of the meeting. For example, I would like to talk on the telephone with the Prime Minister. Forty percent of US exports are to Asia. For example, if we take a look at California, it is the center of the US defense industry, but the state’s economy has been suffering from a decline in defense spending. Also, half of the illegal immigrants from Mexico are migrating to California. One aspect of the decision for NAFTA is linked to decreasing the influx of illegal immigrants. In any case, California is turning its gaze to the Pacific, Japan, and Asia. For the sake of rebuilding the economy, it is important to develop economic relations with the Asia-Pacific.

(After talk had turned to other topics, there was again the following exchange on the subjects of the Japan-United States Framework Agreement and such.)

(Secretary of State Christopher) Mr. President, with your permission, I would like to speak. [TN: part of section blacked out] I well understand that the new Hosokawa administration is advancing difficult reforms in many areas. Therefore, I think that the time available for negotiations based on the Framework Agreement may become reduced. The White House, too, is carrying out a careful assessment of the situation in Japan. However, around the President are persons looking into whether the Economic Framework Talks are making progress or not. I would like to be able to point by February to substantial progress not only on the economic stimulus policy but also in regard to each basket. In negotiations based on July’s agreement, complicated talks are taking place among trade specialists. In this meeting there has been reference to the importance of the Economic Framework Talks, and I would like Prime Minister Hosokawa to understand that it is important to see progress there.

(Prime Minister) I understand well that there is a large current account imbalance between Japan and the United states. I understand that Japan agreed in the Framework Agreement to undertake “a meaningful reduction in the medium term (in the current account balance).” The talks have just begun, and it has been only one and a half months since the Hosokawa administration was inaugurated. However, as a short-term policy, we have adopted an emergency economic policy of 6 trillion yen and a deregulation policy. Also, as a medium-term policy, we have tasked the National Tax Administration Agency to issue a report by the beginning of December on income tax reduction and other issues. Concerning the issue of the so-called “objective criteria,” we agreed to set them as a standard to evaluate progress, so I would like to keep an eye on the progress made in the talks. The situation differs according to sector. I am concerned that, depending on the situation, there may be difficulties. In any case, I would like to work to achieve the best results possible. I would like to make it so that good and visible results emerge from late January next year until the Summit in February.

(President) I would like to add to what Secretary Christopher said. I strongly hope for your success, Mr. Prime Minister, and that of the new coalition government. I well understand that you and your government have assumed office only a little while ago. I am also aware that not everyone who supports political reform necessarily supports economic reform. I also know, Mr. Prime Minister, that you are facing, as I am, a bureaucracy that does not support either political or economic reform. What I would like to say to you today is that the United States is making it clear externally that it supports you, Mr. Prime Minister, and the new coalition government in the changes that you are making. On the other hand, what Secretary Christopher said is also correct. At some point, if there is no progress, it will undermine my ability to support you, Mr. Prime Minister. Between ourselves, I want to tell you that I would like to see results based on the Framework Agreement and, next year, I hope that you are able to show progress not only on political reform but on economic reform as well. Until then, I would like to support you, Mr. Prime Minister, externally as much as possible.

Passed to all [Japanese] diplomatic missions in the United States (except for Agana and Detroit), Britain, Germany, France, Italy, Canada, Mexico, Permanent Mission of Japan to the International Organizations in Geneva, Mission of Japan to the European Communities, Delegation of Japan to the Organization of Economic Cooperation and Development, Australia, New Zealand, ASEAN, China, and Republic of Korea. (End)