June 22 letter, kissinger trip

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MEMOXANDUM !OR:

Ji,*"iZJ^.*7/rV.LeLrer lrom Paur McCracken on US- Japan Econodic Relatiors

Paut Mccracker haB vriter yon (Tah B) swgesting thai ve and the Japanese rork towar.l a.lecpening ol rclations in thc ecoromic area, vork togeiher lor policies to achiewe and susiair leasolab1y full utitization of llee vorrd prorluciivâ&#x201A;Ź resources, ad move toward a more Iibelal internaiional economy. I had Mccracl<en's lettet in land on my tlip to Japan, and e*proreil in genelal a nrEbe! of nis ideas. I foud ihe Japanese quiiâ&#x201A;Ź receptive to rorking out heans of iaproving our economic relaiioaEnip, and have repolted on there in sreater depth in a separate memorandrm to you.

At Tab A is a iespoDse io Mccracken thaakiaE hih for hit Ieiter and indicaiing tlal I pusned in general a nlmbei .l

lis ideas vit! the Japanese and foDd them receptive to working ou! says .l iDploving ou, lelationship.

Thai you sign the letter to Mccracken at Tab A.

Jue 15,

t9?2

MEMORANDUM FOR: ROBTRT HORMATSEll

Leiter irom Paul Mcciacken on US Japan Economic RelatioN Parn M.Cra.ken Las rvritten the President (Tab B) providing ,ecomhendations and vievs on means oI irploving our relationEhi! witl Japan, You had a copy of his ]etter on your trip. The memoranitlm lor tle P!e.iden! (Tah I) srlMrizes Mcclaclen's virys, initicates i]rat you iliscussea similar ideas with the Japanese ard foud them leceptiwe to working out ways to imptove ou lelaiionr]1ip, and recome,a6 tnat le sign the letter to Mccracken ai Tat A.

RECOMMINDATION: you sign the ].

reroran.lm lor

the Plesident ai

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IMPEIIIAI, H()TEI-

Dea! !. Presldenr, Dlling the last tuo Feeks r have had conversarions hele ,irh rne Pr:ae Ministe!) - thoEe eho es3enrialty delehrne nati;nar poli.y-in. J.pan. tHavinq been in .Jap sei,e!dt times, r xh& rdny or inese people nov pelsondLry,I oul or these djscussions Lo Dut berore yoL Lo! liltkt uorirr. rcy also be use.ut Lo Henry irrev "av oe Aissinoe! in rokv. srnce he ady be reawirq soon, T sendin; tai;-i;ii.;,;;ii:."11

,

l: y::r: bi c.sy fo! 'erationshrps bel,cen Japan and the unrred oear or annoyancp back home, and udersledebry so, qrrtr trie course of Jabah,s econoric potrcy. Japtu held ro! a serrousry uder-va1u-d yenr theratry pufttnq Loo .r"r, over t@ {rde a or ou! narxers. rn"y i.* 0.." ,!iiii.iir, ".".="." '.nseresLrjctions. slou in ribelarizinq 1,.v ,i ri .".ii"ij. ii-iliiii, no!e. than nihority particjpatror

in enL;rpljses wrfch h6 deep root. jn thejr hisLory and ..rtrr.t.ra resistance--_ genurhery hard ror then 16 understand rh *euti'g of: rt "e"r" "T!v to see n@ rr looks fron our poirt of ,ie..-t A! they see thing., h@ever, re have qiveh them sone sevele bups. teade!3 are biite!. ahey bave been folced Thej! !*!iIe indusrry "wlutarily'_to lestlict er?olts ot steer. (B;th actions t;;;qrven a peerrlt inperB to cartet-mind"a.."" t" :""-.j rii" i.-

,l:"y are rncraned to thin( rhar u,""" n.* i""" ::1.y!:t. p.!r b.cause I.s. ihdusLry hasi,"i"i decd on ]:!":-":^*"9:T in workels eone no lorqer uork hard, ana has becoe sic*. rr kourd be ea6y dL or it-Gr"-i"i"jii", rerat:onships to be d@rnateo by bic,.erinq "ii ahd onrltcl. is, heevq r a nole construcrtve and r betieve thai. the tlhe hay be liDe to pu.sue it. approach, Ftn cjat sd busihess be receptiwe, aDo Lhe goverrrenr could not act thl. supDort. rhere wi soon be a hek coverment here ll:l.l! ard inentiwe Lo acr vloolousty.

And rher; d iteep desile ror dood relarioDships_uirh Aflelica.

The.fact is Lhat we do \awe lalde ctuon There

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lnteresrs ln.connic quite oareoul-

IMPERIAI HOTEL -21, t{e are Japa's 1algest ttading paltner, and apa.t flon canada Japan is ou! }a!gest.

2. l{e have a cmon state lh concelted actlons to achieve mole rapid expansion within donestlc economies of the flee ,o!ld. The econdiea of the u.s,, canada, the 0.(.r JaPe, Italy, .nd a lew others ha@ ev.es6iwe uenploYment. If anv one naEion noves ahead Loo rapidly, its lmporls will outpace itE exports (othersi ihDortE) , grvlng rL a balance of p6yaerts plobIen. Thus the need lor a cmrdinaled and synchronized apploach.

Mole vigolous expansion for Japan is palticulally essential. lrheir cNP is about 10 pelent belor Potential. If thei! dohestic econorv continues to staqlate, importB silr remaln

sluggish, an ovelly latge trade surPlus vill persist, and tnev vill theD be uder qt@lnq intefiationa] pressute Lo le-'varue the ven .qdin (;oneEhing uhLch thev verv nu.h uaE

about tendercies 3. rle have a c@oD lnterest nulopean Econ@lc g.@irg of tte a tdald "inwaldne3s" dffi of trade barller3 is nultilatelel scalinq comuirv. A gettrDg rhe comuitv's ultihately to .pproach the besL extemal ba;!ie!s dorn, and a hultilaterally Lradtnq wolld 1s in any case superio! to one of trade blocs cluching aoalnst ea.h othe.. a tlttle "concelted" corcern on the #rt or nalions outslde, su.h as the u.s, 6nd Jap4, mav help to keep Lhe comslty reminded of the fact tnat they are stitl palt of a larqer uolld â&#x201A;Źcon@y. for this all to be nore than a vague agreehent that ,e laveofa it.

Io! como^. sdethina is needed as a concrete erpressions

sDqqeats Lhe deairability or.onsidelinq sonelhins like a "U.s.-Japan Econ@lc and cultural Ftiendship Aqreement o! Treatv.

rhi.

1. 1t could recoqnize that a particutarly lalge alea of c@on inteleEt exists between the tvo natlons, and the t o ale detemineat to ,oik tosald a deepeninq of these !elationships.

2. rt could agree to wolk toqether fo! pollcies to achiere aull uLilization o' productive re' and sustajn reasonablv .ree (a kind of inLernational "Enployd)rld in ttl. sour.eB 3. It could recosnize the ioint @!ces of tbese t o natiors that the free eorld rove toward a ole liberal inteinatlonal â&#x201A;Źconomy, pledging joint effotls to iniriate da naintain

IXIPERLA.L IIOTEL - 3,

this n@ent@. Thls coula be the ba6is for fulther tlade talks vlth Japan ed also for colstructive pressure on the Ecormlc comuity. (Adjustments incident to renovins trade balriers/ itrciderlalIy, are hard to negotiate unle.s they occur uithin tne @nteat of reasonably flll employ4. It could also .ta!t the plocess fo! 6one needed ]egislation hele (in .rapd) to open up hole plivate suppolt fot .ulturar ad educational activities. The Goverment qould, in fact. probablr welcme such a prod.

An initiative t@ard a deepening of undelstanding and of !elationshlps betueen these t o nation3 is desilable at thi. juctue. Japan rculd, I believe, be receptive. It would p!ovide a ,lder and mole affimativâ&#x201A;Ź flmevoik within which we could ebdeavo! to work out oE diffelen.es. And it {ould be corsisterr with the kind of hultilaterally opelating rcrld economy that is th 6ur comon interests.

I al.o pass along a your qreat achieeements May

gratiude a.d admiration for