Sep 1 memo

7111497

l-l

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MEMORANDI]M

subject: Eighth

lOR T11I ?RESIDIM

U.s.-Ja?an Jotnt Econonic

Comittee Meetins

Uith the assistance of fty coUeagues on the cablnet co@ltteeJ as e1I a6 that of ?eter Petefson &d Hedy Kissinger, e have been uolklng at fo!ru1at_ ing the positions to be taken and the objectiveE to

be sought ln the @eting sith the Japane8e on septenle! 9 and 10, thich I vil1 chair.

In the light of thi6 vork I propose, sith yor approval, that the Aoericd delegation follo the Auidelioes set forth belo,. I afr sending a coPy of this nâ‚Źmred@ to each rember of the delegation, as ,e11 as to 14r. PeteisoD and Dr, l(issinser. for any cmdts they My deslre to nake, Additionally, ! and my Cabinet Comittee colleag@6 ale meeting on September 2 {ith lepleâ‚Źentatives of the nongovemmental Advisofy co6ci1 on Japan-u.s. Econonic

Very sifrp1y scated, ou! undellying objective i6 to presefve and strengthen our vitally important re_ lationship with Japan. i,ie should st!e56 the importance whlch we attach to close coopelatlon vith Japan and o@ recognition oI he! role a6 3 responsible! cooperative wolld p@er. At the same time, ve 6hou1d attempt to pe!6uade Jap4ese ninistefs to accept the fact that sEh a rote requlles early and effective establish a appropfiate balance in its extehal econ@ic lelationships, includine those ith the U.S. SECRNT

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2.

If oe are to achieve these objeetives, and recogntzing thele nay be specia! characteli6tic. oI the Japanese 6y6tem, {e nust avoid appearing Eo single out Japan for discrininatoly tleatoent on economic mattels. & vhen dealine with othet @jor countries, pro?osaLs Irom our side should be corsistent sith a broader equilibliu 1n the uorld economy.

Ue must aLso imember

the oft-lepeated

JaPanese

llea to the united States, "TeII us ,hat you eant us to do, but donrE publicly pless us to do it."

The Japanese ministers should be Mde to unde!6tand that the U.S. ,i11 have to achteve a djor turn-around in its balan.e of palrents. speaking plainly, this uilt requife that countries ,hich have lun huge. surpluses in their balance of parments uith us ailt no longet !e able to do so. Sde comtrles uhich have had deficits ,ith us will have Eo see those deficits inclease. Given the large tradi.A relationship betNeen Japan and the United States, which oe aish to see e*panded, and the U. S. need fo! a satisfE.tory nultilatelaI equilibli@, ,e si1l requtle a reasorably balanced trading lelationshiP betweâ‚Źn the two countrles. Our analysis strooAly indlcates that a global tlade $4gltrg of the dinension oece66aly fo! the U.S. equilibriu caonot be achieved with a deftclt ln ou! Jaganese trade. It i5 ou! inten-

tion to revie{ constantly progress in ou! ove!-all balance, and to applalse the colsistency of developnents ln inpoltant bilateral accounts, to assure achievement of ou! goa1. ve hope Japan recognlzes the validity of this analysis and ain, and uill periodically levlee Progress uith us.

thl6 end. ue should seek a6 priorities: 1) a clear undelstandlne by the Japan$e ministers

To

that the United states considels a naior reval@tion SECRET

.1.

the ven 1n relation to the do11ar to be a condition olecedent to a sarlsFacLolv ecoroDic relaLion_ shiD ,lrh Lhe thlEed sLares. ue uoLid rol ar i\iq reeiine IndicaLe rne rtvel uhi.h de sotld consider satisfactory or negotiate bilatela11y on this subject.

If the Japanese ploposed a figuie io the neighborhood of 1oZ, v; vould need to indicate a latger o!de! of oasniLude i6 necessa.y. Ue eould also indicale Lh.t ue feel .egocidEions on ch:6 slbjeeE should be carried out in uhatever 6ultilateral form is agleed upon bv Europe, Japan and ourselves, refetline to the Septm_ ber 15 neetlng of the "CrouP of Ten,"

of

Re should seek elininatlon of Japanese quotas and other restrictlons i11eea1 under the GATT as weLl as non-tariff ba!!ie!s and export subsidies, ineludlng t4 incentives fo! exPort6.

2)

palticulaf,ly interested in the ,moval of quotas on ce;tain fam ploducts, cmputels, aifcraft, and integlated cilcuits. l,ie are

Additionally, ve should

6eek:

3) SlgoificaEt unllateral

reductioEs of Japanese

Japanese encoulagerent of inPo!t., esPeciallv by sen;raI ;timulation oI the Japane6e econorv and inve6tnent in social infra6 truc ture.

4)

5) ile

should recogoize as constrEtive the es-

tablisbrenE unilatelal1y by the GoJ of a â‚Źvstem to mnitor Japaaese expolt6 to the United State6 of sensitive goods j e.g. ! automobile6! calculatols, con6eer electfonlcs.

6) we shoulil 6eek substantlaI, lndeed dranatic' i"crea'". in the mount of J4Paoese econ@lc aid, es_

p""i.uy i"

southeast

Asia.

Even

@!e inpoltant than

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the tuount would be softenlde of tems elphasis on export plomotion and oore sho!1d Eeek incleased Japaese militaly plocreoent in the irnited statses a5 the Japdese defense

7)

We

8) Elimination of lestrictions on capital investnent lncooslstent ith our Treaty of lrlendship, Comerce dd Navigation tud ,ith the obligations hich the Japsnese h&e ass@d id the OECo. Eo.tunatelr, all of the above, except fo! the degree of levaluation which we seek, 6re inchded to a greatei o! lesse! e*tent in the COJ'S eight-point ploAra elready approved or in the package vhich the Eoteign Offlce, the ns loleign Ministe!! and sato are tfying to get accepted.

At thls Eeetin8 the Japanese uil! above a1L vant to knos o@ prlce for reftoval of the 10% surchalAe. Thls !s ho,eve!, impoltant to us in our rcgotiation6 relatine to ou! total positloo,lth other costiies, as eeII as Japan, dd mst iD any case aoait a satlsfactoly overall erchaoAe late settl@nt. All we ca say at this @etins i6 to plonise it6 !enova1, as temal posltion is assuled. e should sEless, h6eve!, the very inportant steps which ve are taklna v*hin rhe tnired states to collect the contribution of ou! oh inflatlon to olr trade On the side of our cooperation sith Japan, ee 6hou1d offer cooperatloo sith the Japanese in the

fo11o,log areas in

rhich

e have mutual lnterests.

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5.

a) Joint effort to seek libelalization of the trade policles oI the lropean conb) work within the oECD High !eve1 Group Lo Prepale the ka. to! a ejor drlLilateral attack on txade barriers. c) Developnent of inteoational procedure6 tor ad:udicaLing invesrrenE dispuLes :n developing countties.

d) A progrd to encourage plivate investots of both comtries to establi6h joint ventures in less develoPed co@tries an effoft to obtain gfeate! secufity these investfrents.

e)

scientlfic couabolation in seeklng 6olutlons to comon problem6 in the rields of t!4sportation dd ecology.

Close!

f) In the fle1d of nuclea! enelsv we should leaffitu the offe! which we have ffide to ten coht!1es--the EEC, L(, Canada, A!st!a1ia, and Japan to discus6 the !ossibility of 6e11tng thm classified u.s. tectmology for use of the ga6eous diffusion plocess fof enllctment of uranim on a nn ti lateral basis.

g)

we should assure the Japanese nediately upon the coEpletion

that in-

of the xcoNcol4 Meeting, the Presiddt sitl send the Agreement fo. Reversion o! okinaua to sen-Le kith a very sElong fecomendaLior foz its eally latlflcation.

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the

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6.

DISA?PROVE

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