Econcom opening statement and objectives

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{renth nnniv6rsary) TAEL! OF

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Opening State ent

Visit Sc\edu1. conf.rance aci-eCule a)rd Lq.nda I'.ch.

Ljsi df larticitants ljst of Interpreters

Japanesc rcoroniy

u.9, Balnn.. oi P.yrEDts Japa's natanla ot Payii.nts U.S. - Japan Balance oI Pav.entr: U.S. Defen.. sp.ndirg in Japar Ihtorrationrl Ionctnr, llerelor,nente JaPanEse ,!id io r,Dc 5 souiheas! Asi r arid Proslects !!.!ere!ces Ior lDCrs Japanese Ihporl: Pestri.ei ons Industrial IrPort nestrictions Agriculturat Inport Restrictions Japarese lxports to u, s. nestri.tions on F.raiqn hvestnEnt r

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lnt.rnationar trade Liberaliz.r ion

East lrest frade l,liwate lnvestnent in lDCis

luropear Com,unity utiliziDs Natural Resourccs Transportation o.cupatiola1 safety

New Ecooonic Proqran Jalanese Educational Exchang. Proposal

Biogralhic sketches larite !oDs. Dinner

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rhe p!rpo.. oI tnesa joinr cabinot iFori.ls

fron their initiatioD in 1961 has becn ro str..grh.n ou, bilateraf relatiorship. llc are two strons nations vrith differcnt traditions but viir:h cohio.

9oa1s, tre both value leace, prosperity, an oF.,n Norld ecolony, qol,ernment hy consert oa the gcvefiee.

A close and frjendly relati.Dship bctNe.n .ur tird countries is vital to pe:ce in th. I.cific and nore broadly to tba kjnd of |,or1.r \?e Loi:h sant, It is no secrct that our rel.ti.ns have tr..n subjecEe.r to strain. Yotr a,. aNa,c ot th. c,-fth and extent of the conccrn, cvoD a1a.p, jD Uri. corutry abouL cu, tra.lc, inr.strE.t, nrd ba1an.. of payn.nts xelatjors. to/ for olr r,arr, ar. a?are of rhe apprehensio. in J.pan follovrin:J the Pr.sidentis initiative on China afld tho d.nouc.:rorl of tis N., ou! partnershi! is too imPortarr to borh oi us to let natters driit.

1le riust not p.rnit our diff.rences issu.s io dividc Ds.

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,e r,e.id ro use this .ccasior to reso_rvei or at Icist to movo !e11 lonrard on, re nost acute usettled bilatelat problens bereeen sane tlme, we iust hot lose siqht of rhe fnct that the area of our shared inrâ&#x201A;Źrosts an.t coryion .oncerns is ver:y broadi and ue shoula consider how ae cm sorL toqether to advaDce olr comon let

me

oltline briefly rlte hajor issues

as

of the JaFane.e e.onomy has astonlshed the Nor1d. over th. pf,sr tel yedrs the f,eaf ourlur of your econony tlas tripledr yonr Tbe dynmise

exports hale quadxuDlc.l, your rradâ&#x201A;Ź barance has shiftad flcn doficir to srbstanrjal sDrplus, d your foraign exchanqe reserv.s have qrov! naryfold. All tlle relevait economic jndicatoxs poinr

ro great poHer statls. Jsd indeed Japd is tic sccord larqest econony in the non-coitrnu.isr \rorld. llut your .xchanrae r.!e )ras r.nain.it ,L thc parity estalrtish.d ir 1953 !n.n ,rapan ,as a vedk a.d vulneraLle ..cn6ny, qhile inporrs ini. ),our mar,iet nave been hindorcd by

iIler.:L quotas r.d

liccl.in,j rcq!jrLr,!,rr, n.d .r!)orts t).v. trc.r, artif i.ia1Iy st imulnt.d.

The result ih balan.e of payitrents !ern6 has treen a global Japanes. cuffert a.counr surplus in excess of 92 billion in eacl of tne I)ast tvo years and i! eacess oI S 4 billion ar an arndal !a!e this yea!. Net lonq-teh capital outfloes ham nor ,ed.t.'naL.Fcl rh 5e surplu..s. the lesu1t in psy.holocical terns has be.n tesentment in Lusiness ahd lahor circlcs in tbe United states at tlr. restri.tjoDs oh US exports and investlient,r .na aDDroh.rsion abour rhe

lEnctratior of the us nar)rat by Japai.s. goods, I an, oa conrse, araie tnrt libcralizati.r of trade abd invesem.nt in tlapan has procecd.d on a deflDite schedule, blt the pacc of libcratizatio! without revaluatioD of ihe yan has clearly not been fast enoush to leep a reason.Ite barance in t a!a.is external ac.olnts. rDdaad ,ith a fl.at:ing canadian .urrencies in thc !:st Eei monrhc, rhc ye. rras been effccttvery delreciatod in tha exchon.re rarkets until a fortnieht aqo/ when rhc y.r: vas penitt.d

!zo:i.clrior{, for tl)e ,eds al,.iad are ror Japan... trad. and current aceounL sur!1uses ol nassive proitorLjons that aro elearly inconpatiblc Hith the position of Japnn's trading Parthers, with tha xequilemeDts of the intornational nonetary system, and with Japan's o\rn needs. A pelsistent ad gf,owing balan.e of paynents sutplus is a rorld problem and not 6inply a us-Japan bllatetal probten. as a cou.tll' in chronic surplus, Jatan has ai obliget-o,

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o Lr'E Li . r -n<-. !y

incre.sing :ir,I,orts, elimin.ting e;port incentives, Etimulating carital oltflo$, aDd ul,r.luing its exchdle late - - to brinq j.ts lJlLol,al balan!:e of !ayhe.ts irto eqri r.ibriur. !o! our pnrt - - and I riIl spcaL franllt - re scek as plioritt heasurcs: 1. A najo, revaluation of the yetr in rcLtion to the dollar. r'his is the sin.rlc most inlortant actioh !.eded for irprovinq th. .cor,onic relaLio.s bet!re6, our tv, .outrics, a.d 2. Tl,e cLinihation of Japanes. i-nport .lrotas ard licansiag ..equir.iLerts i1legal rDdcr th. cnTT, espeeially on itens of trade ihtarcst to tha Us.

$e r.uld cl:pect rhat Jalan vo,jld ta\c frrthcr stirulat. inlotts, ar.l vould Jlso

elininale lehaining artificial incentives to exlorcs. 1{e \rould hope to see a substantialr i.deed dleatlc incrcase, in Jajranese concessionat aid to developing counlries, cspecj.ally i. southeast asia We vo!1d expect increased nilitary plocucment in the US as the Japanese defense budgct riscs. And {e look tor a substantial liberalization ol lestrlctions on caPital investnert,in Japan.

Fina11y, tre have an intelest ,ith vo! in the expansio! ol the JaPar.s. domesti. Gc.nomv. ue have Doted t]]c very sr!!tant.:.a1 fis..I .!irtlrs you a.e a?plying. The exfansion in domeFtic dehed that slould follot: is clearlv a hecessarv elemen! in a shift in your e:Aort ard imfort Positio, I l.no, that measur.s along tbcso Iines ale cortcmplated ir .omc dclree in your covernnentrs eiqht-point p:ogre. nc hava a 1jve1y inteest in r" ( ploJr .:,I o :bont it ir decail, I vdrr Ld s./ F ,!. !or'lj

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Nixor's tic, ijco.,ohic Progrer. a bola fa.inq up to pr.ssinq and interrelated donestic and internatioDal ecoionic protrrcms.

It was directeit to: controlling inftation, leducirg unenproFent, realigning e:chahqe rateB and xefohing rhe monetary sysrem.

Specificalty. tie president slspended rhe convertibility of the dotla! and imposed a romDordy suxeharga o, iilporta. the lrograh is not a retrear eo isotarionish.

Nor i3 it a rtovc to{ard a hosti]e confrontarion qlti oDr Iriends an.i atlies. rt is a candid recoqniticn that or p.6itjon - our econo)iic tosition is out of ti.. ad mlsr be alt.r:ed, and th-t rh. sys_en nc!d. J ron ..: L-orlu.r,. nr, In seeking to.hangc rhc exjsiing s),sten, se are Dot arguiD, that the s)stem has hor serv.d !s ecll. ID rhe 25 yes sinc. rl,orld oar tr, ee have had hparallcl.d e':pansion of rorla rrade, unlrral1e1e(l c:!::nsion oj internr.tio!a1 invcstnenr f1o?s, rising enployNlrt, rising lroduction, rising levels of persoDal cols[rprjor ana ve]r-bcinq, and rnlrecedented ..olonic stali1ity.

vith cliex iDstjtutions, the international Ronetary system i. not static. It requires chanqes.

Now is such a tine. The pattorb of fixea! ercharge rates ha5 become overly rigid. the us dol}ar, at the cente! of the slsteh, is oxt of alignmeht with otner majoi culencies. This is a pribcilal cause of ou barece ot paymant. dd traae dlfficulties.

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The problem r:as t,een groNing up over a tong

peiloal of time dd tras nade acrta by the severe inflation of the past fi!'e ycarE. Througholt the 196ors, ve tljed to deal pith the ploblen by a

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variety of h.ars! Il. tied Iorci9n aidr curhed the outfloH of doi]ars 1or Us roreiqn invristment, lut a ta* on foreign secur:iti.s floated in th. trs narhel; roduced tourist duty-frcc affovaDc.sr tied plocurehent for dcfcnse ed other pulposcs to L;s good3, ad lrged our allies lo pnrchase mititary equipnent here or in other rays to offsec tt\c latance ol payments effccts of us militarJ exlenditures naae in thoir codntries in the coman defensc. lut t!e deEicit peEisted.

Il tras bo.otr. app.ront tl)at piec.n al nâ&#x201A;Źasures

canot deal v/i.:h th. Us balance .f piynents probleh,hjch lies largely in a distolred exchahge tate structuxe and in a systen ahich needs impro!,ement to remove excessive rigidity and distortions, Speaking t)lainly? the US Nilf have to aehieve a najor tue-aroEd in its balance of paynents.

This cannot be achievcd without a substantial irplorenent in or culrent aceouit losirion eith otne! najor industrial courrics. our analysis erg96sts that nuch of our inprove ent will havo to cme on trarle aecour, and it j.s difficult

to se6 ho{ it c be achieved so Iong as Ne are in deficit in olr tradc vith Japan, I knotr you aro concemed aborr the ihpolt surchdge. ,Jet n. assure you that the sulcharge ls not di.ected a! Japan. It applies across the board to all cauntries. It js a tempora.y ren'oval must, of course, aPait a 6atisfactory setttement ,ith ou! najor cradinq ,a!tne!s. Ire need reEsonablc arsnrances rhat rhe Prospects for clr bafance of payirents are good, lilateral diffcrences enconlass only a snall palt ol the total US-Japan relationship. Thoie

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is inrdequete recoqniLion ox of tl)e P.cl.ii. that n soli.l L,.dxoL* of inlerescs una.!1i.s our rel ationship, touch bri.fly on soN. of the ar.as of interast on whieh thc !s and ,ralan can probabl.y

Japan and the unj ted States are each hea!:/

investors abrond. Jap.n's overseas i.v.stnents tend to ba cdncertrrted in extractive in.tnsrries shich, in onr experience, axe vulnqrabt. to

Ir thi., as in othcr arâ&#x201A;Źas/ I thir,: cach .f us ca. Iearn fron tna oth.r. yolr .verseas investment na. Lc.n rndc in val.s xhi.h ca. mahe foicign ounershi! and co.trol of key nario.al assets easi.r fo! less develoD.d countrics ro tolerate. ,ie, too, are lookinq .r such things as joint venture., ninority inrerests, limited 1if. iDlestrelts, or clcn l.cr1 onarershi! eith foreign ma:aqe,rent d l.ng-term supply contracts Your investors and ours night consider the advantages oI !,artici!ating roqe,jher ih jojn! ventures in the developin.l rorld/ ald peihats (,

.10 our t o iiovernn(nts coxld nelp lhjj proscss, art the sane tire, v. are shep:icnt rhat the iftitations lhat often a..oipany foreiqn inrostrent can be e.tirely retrtoved. ue realizo rha! Ja|oesc iDvestors so far harc .ot had to face exFroDriation questions to thc.rtent

that our investors

have.

ilvestors probibty nra ehjoying a kind of honeynoon leriod, He assume that !h.n and if you are confronted !itl1 atra.ks on your iDvestme.ts by govexnn.nts, trhi.h for reasons of- ideolo!], o, shortaqe of (ash, or lro:rh, are not pr.paxed to pay ju:t coiLf.nsntion/ you, to., I,ill I)e racirq the san. dilemm?s that trc h.ve e...urit.red. ro, these rca.oxs, vc hopc thrt you n,ill join us in trring ro avoid thes. .tiffi.ulti.s lhrolqh the encouraganeit of a nu]rilater.l .tP oach to disputa sottlen.nt and to tnc spr:ea.tirg of comlensatio! .os!s. I f.ior to th. lrrernati.nil Center Ior the settr..reDr of rnvcstJien! disptrtcjj, abd th. plcposed Inr:crnatio.f,l Aqency (TIIA), !oti! $ithi. the \,Jorl d Bank qroup.

It is req:.ttrb1e that tho lrogr.ss oJ lrrrl Your

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s1or. Ionrard noiion thus lar is largcly a r.:ru1t oi Urj.te.1 ijtates initjatives.

This is a ro:le He c.n no lonqer sxstai! by oulseleâ&#x201A;Źs if orly lrecau3c thc acceptali1ity and cffcctiveness of IIIA a6 a frqttilateraf insliturion eo!1d be coqs:iderably dlminished if i! cane to ba tholqht of as an essenlially A,relican mechanisn. Ne wouldr thercfore, uelco(e your lrelp in stinulatinq the lank staft itself to gleater .fforts, and in shaling our leadership on this qlestion in the Doard has bee! so

Like :ou, se ar. obselv1ng !i!h int.rrast thc .levatopnent .f tl:. Erroi?ean Cormnniry. Our fe.Iilg is that enlarq..ment oI rhe comu.itt is a con.trucrive and desir:rhle delelolncnr, lur it rrilt obviols1y qiv. u3 prol,lcfts as it ,i11 your and qe ioutd exp..t to For)r ctosell virh you on tnjs.

kolId tiader!, ,:ta!ad and tne Us sl)are r comnon inte:.st iD i.ntonational action to reducc barriers to trrde. LrIr:il erlargeient of the ,uloirean Comnxiir], is effect.d and until necessary .hanges have ]l.er nad. jn the sttruclure of oactr.n.re lates and tho r,onetary system that will strengthen lhc US baLan ' o' p-tr. i.L-. q6 s I n.t )r. 'r d positio. to pnrsue a ajor jntcrnational erforra As

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trad. llbeialiration, ,rhe i)lftdinte futr.. is a periotl for imporr t nrepalatoxy work, .sleciaDy in the oxcD fiisl) IEveI croup. 1,Je are ple.sed to note that you axe assigning Mr. ,lngiuara to th.r Like you/ \re ar. increasinqly conscious 6f our en.rqy prol,lem and quâ&#x201A;Źstions relatinq ro supplies of fuel, estccially petroteun, t\t

that you hav. this problcm i. an .cxte fore. t",e must contilu. cl.osa collabdration and contact, prin.rily through the oticD oit Comittee ln the Elated ficld oi nuclo& .n..!,),, I shou!.i lilre t. r.affixir the oft.r trc ina.r. n short ti c ago to ten conntries ,Iafan, c r.da, irustralia, the UL and tha f,ftop..n Connunity - - th.t ac .rc willing to chter inlo discu:isions re.,rrdin( rh. possibility of s.11i.s .lassif)cd Us rcchr.ro.y for the use of the qas.ous diffusion !r..':,s ror .nrrchinq u, _i tr, ..o....1 d the procass is nultinati.la1 an(t c.rtair secu.itv recogniTe

safc!uards arc obs.rvcd.

Pofrution is a sro,in!, lrobL.n for atl of u- but even nor. so lor Japai {ith its linitlid

ldd alea (

and high

derre. oI indu.r:rjaI denslry..

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c.rof.:rrtin,j in Lcci.tc.l

.xc\an.Jes, bbi,e !iLl vanL

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or the txade alpects of chli'onrenr nroractior as wel1, !o avojd corpetitive distorriors fron liidety aisparate standards arC difterenr ncrhoas or finan.ilg pollxtion cdntrol.

I arl told thai for sone jnportant exFort cort,ol , y . upvards of 10t of total i.vcstic)!:. ct.arly, j.f in sore countries thcse costs arc rarri..l by thc in.lustry nnd are rcftccted in price, vhil. in othe! countries thcf de tinan.ea by tho qovernront with no etfect on piicâ&#x201A;Ź? the corperirivo situ.i:ioD ,i11 be al.tered as ui11 elisring inter!ationat trade !art.r.s. iJe thjnk it inrpo.tn.r rhar industrial colrttries shoutd agrec principle, nan.1y that irdusLrial pol1utj.n cosrs should be Dorn. by th. i.dustr) rasronsible, loti the Unitec stat.s .rd Japan hr\,. agre.d oi this prirci!1e.

Bot\ oux corutries de iorkins ir th. cEcf Elvixonr.ntat aomriti:cc to r.ach rqrccl.rr 6n gencral guid.lines to qovern the envirornEntal

l4 poti.ics ci t1,,, iniL:,r:rial counr:ries, irclud!n9 the qu.stion ol Uhe allocatio. oI costs a.d the fnrther qlesLjoD of appropriate n!tional standards. fie vroutd hopr that Lrapr. could .acrcise a leadelshiP role in thjs o,lcD effort. To do so qoulil clearly serve botn its en\,ilonme.tal as $ol1 as its cor.r:,

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uinister Fukida, r Iope that in the ncxt wo days !,e and orr Cabincr colreagxes Nill be able to er?lore in sonc depth tlre issuei I,have outlincd. nefore I t&. to ,ou to rcpty, I vrould like to say a brieF vord rbotrt okin.,fa. lhe Prcsidcnt has asrred nc io .ssur. you '"hat trNradiatcly Dpon lhe c.n!,1ei.ion of r:h.re joint r,.tiris, nr tiII send rhe i,qr..r.nt fo, nlversion oI o{in.!. to the Scnate tritl, e rrrj], .tronq rc.om.Ddatior lor i!s early ratificlaicD.

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Plea to trle Lr::i:.i sre:rc

to do, but con t Pubti.If

o, "U,l,.,rou.d th -Ls b l-,12 or' - .j sp-... rcqL1re Lret cot,n._i , . -,c.., lavc ."- . - i. -/, tri. *.lt :..,.,1:i-.r-., :: o". ...r, ,,:ve.,,te tftc .1^ .o i.a uj ircd c.:n 45..r r .. rt"LeJ, \h h o. .1o 11" ,s. ,,ecd ")n,nd ror a s.1.. :.c:or r., 1 : 1 .j, .u,, r\ ,. I -... requr.a a reaso,r.. Lv bdl.ncel ..",;i" 1dL'on-LrP ) e _'_' ^ " vt.;;i-ii;'; ..':: ,Y".' ";;:y:.. ::I""1:.:li"";'

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tdd r; t,r. !.novat .f / .on-rj!--, e irc.rIL, 11lditior..!1, / \r. r.Lo!td srel.r

3) si!.ni fici-it unilar.,rl ,cd!rcrr.s o! lraF.n-sr ,a) Japanese :n.ou.agerent of i:,!.r:s, esDeciatlv by q!r!e:al stinuti .1or) of tlre .rapare:: rconqn.T- aa6 iaveslnent in s..ial 5) l,e sloul.i :e.:olliz. c.,i.::r.:i.,,. rhe .s tabl.i:.rxeit unlta:-rrlrtl hy tI:sc CoJ o:. systen to nonrro-.raPrn.6.

Ulitca:i:a:.s of senritiv. goodi i e.q., .!torobi .onsune: eiectronr.s.

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sholld seek ircreased

Japanose

Eilitary

procuierent in i.ne Unjtod srate. as ihe Ja?anese

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3) Elihinal.ion of xe3tlicticne on caDitar i,vesrmnt i..consi rrca{v o. L!i-ri]:nip, co..1r.cao n:vrrJtion -.h- virh !ha obtiqJtj.ns L,,:ch ihe.laLlnese have 6ssrftd in rhe or.D. lolthately, all cf tha abc@t except for the degree of levatnation ?hich \re seekr are includ.d to a great;r or le:ser ort-nr -n tho .Tis "jqhr-. in.pProvcd or n: :a-:- \.nicn tfe .o-erq. o,'.icL, Eh"_ new loreisn Yinister, and salo are t.Jins ao ser acaepred. nr:c- lor .encv11 0_ rir _0q srrcl,.r9e. Th.s is noqcvor, iip.;tarr to !s in cur !.gotiario;s ,etarinq to our lota] losilion !:ith orhcr cou.iries, as velr as Japnr, and hDst in y case avait a saalsfa.torv overalj evcirnrje raie s L-led-. ,.t we ,c.rdy r" th-s 1 "LLiq is !o proi:.e :!. rcf,ov,:, "- soo" "- ou-r.rre.na1 !,osirLon knou our

. j...o, Ldnr .E-P: the co.tributi.n oi otr. oln 1nf1i!i.i to our trade ifr c. .1 . .1--.c.. .: qi l.o.-vcr, h. ..h un

Lha sloe ot ou r.. oa r .h ..prn, v- 5j...rtJ . On -oopL!-Lion LiLn- -(o.p olfer , a?an s n '" ;:.ridinJ "r-"s hawe riururl i L,r or.qrs

a) Joint elforts to seek liberalization of polici.s of rhe lrllopoa cotrnriity, b) Eolk eitnin the O::cD lti.q)r L:vet Groui: ro the vay o, a dro! muti:_:. .r._ a jc^ c) DevcloPlr\:nt of inrehatio.al Drocedlres ror adjuo-..' ,3 in!..r1-ijL or!pr..- 1n d-.eLopi,.! !r)

A prog.j: to.'..o,.-o"

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_,.f -ro,s o! b..r ro.bLcl^ oruat.r

develop^ c..r'. i, s secdr y ror rle.c irv(sLn. 15.

Closer s.icntitic .o11.lroLation in sceking sotutions io.omor p.cDl.ris in the fi.tas oa rra.spo,tarion

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