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Press Conference by Prime Minister Ryutaro Hashimoto
at the 1997 APEC Meetings in Vancouver

(This is a provisional and unofficial transcription produced from simultaneous translation)

1. Statement by Prime Minister Ryutaro Hashimoto
2. Asian financial crisis
3. Japanese economy
4. Use of public funds in crises
5. Exchange of economic experiences among APEC members
6. Kyoto Conference on climatic change and membership of the Russian Federation into APEC
7. Demand-led growth in Japan
8. Japan's economic role in Asia

1. Statement by Prime Minister Ryutaro Hashimoto

   Prime Minister of Japan Ryutaro Hashimoto: The major matter of interest for this APEC Vancouver Meeting was how to respond to the current situation in the face of the currency and stock market disruptions in Asia. As fundamentals of Asian economies are essentially good, and high-growth potentials are maintained, I am convinced that continued growth is possible by conducting sound macroeconomic management and restructuring their economies. In fact, I shared this recognition with Prime Minister Chretien and President Clinton and also with the other leaders of the APEC economies. I stated that I support the new framework for enhanced Asian regional cooperation to promote financial stability that was agreed on in Manila recently. We agreed to continue to address the Asian financial and currency problems as APEC. I explained to the meeting our policy to stabilize the Japanese financial system. I believe that the major achievements of the meeting were that we were able to reaffirm, at the state and government level, open regional cooperation as a principle of APEC, that the momentum for trade and investment liberalization and facilitation should not be lost because of the current situation and that APEC should do more to promote trade and investment liberalization and facilitation. We saw important progress in that the ministers in their meeting were able to designate nine priority sectors for early voluntary sectoral liberalization. With only one week remaining until the Kyoto Conference on the mitigation of global warming, I, as representative of the Chair, called for cooperation by APEC members to make that conference a success. On emission reduction targets, I explained specifically that Japan is prepared to make tough efforts to realize our own proposal. I asked industrialized members to yield to each other on the basis of the Japanese proposal. At the same time, I asked the developing members to see global warming as a problem for themselves as well, and I asked them to work on this problem in the future, by explaining Japan's own experiences since the oil crisis. As a result, strong support for a successful conclusion of the Kyoto Conference was stressed by the leaders, and we agreed that developing and developed countries need to address global warming cooperatively. Further, APEC members can, in fact, make important contributions to these efforts. This was indeed a very important achievement. Also, we shared the recognition that it is important to improve energy efficiency. In this connection, I explained that Japan recently decided on the "Kyoto Initiative" to help developing countries make these efforts by providing human resource training opportunities for 3,000 people from developing countries, yen loans at a low 0.75 percent with 40 years repayment period and also knowhow transfer related to global warming. With regard to the other issue of new membership, we agreed that starting with the meeting next year in Malaysia, three new members will participate, namely the Russian Federation, Viet Nam and Peru. In fact, Japan has been supporting their membership and we welcome the fact that APEC be a more complete forum that will wholly represent theAsia-Pacific economies. It w as also agreed that there shall be a ten-year moratorium after that. This is my general assessment of the meeting. I believe that we were able to engage in a very meaningful and constructive exchange of views. I should like to express my respect to Prime Minister Chretien who, with outstanding Chairmanship, led our meeting to a success. May I also express by heartfelt gratitude to the Government of Canada as well as the citizens of Vancouver for their very warm hospitality and welcome. Thank you very much.

2. Asian financial crisis

   Q: The main theme of the APEC Conference this time was Asia-Pacific economic issues related to currency fluctuations and stock market problems. Was the conference successful in coming up with effective measures to combat this situation? Do you think that the present situation in the financial market and economy will effect the economies around the Asia Pacific region.

   Prime Minister of Japan Ryutaro Hashimoto: Currently, we see fluctuations in Asian currencies and share prices which do carry a lot weight in the world economy. We do certainly understand that there is that concern for possible impact on the world economy. The meeting took place against that backdrop. But, I believe that we shared the common understanding that the Asian economies still enjoy good fundamentals and that they still have very large growth potentials. We were able to come up with a timely message to the market. For economic stabilization in this region, I believe it is important, in the first place, that all countries and economies concerned engage in sound macroeconomic management and also in efforts for restructuring. Of course, they need to have the determination to work for economic and financial stabilization as well as currency stabilization. Japan should like to make utmost cooperation for such policy efforts under an international framework. I believe that Asian economies still maintain high growth potentials. We believe that we should engage in cooperation to draw out these latent potentials of the Asian economies by strengthening the self-sustained growth potentials of the Japanese economy. For economic development, there is no doubt that an open market mechanism would be a plus. Therefore, under the current economic situation, we should make efforts as Japan in APEC and other fora, so that the momentum for trade and investment liberalization and facilitation will not be lost. We can rate very highly that we were able to agree on sectoral liberalization, in addition to promoting comprehensive global liberalization under individual action plans. While the Asian economies are not necessarily in good condition, I think that this agreement was a very courageous one. I believe that APEC is, in fact, making progress steadily toward the achievement of the Bogor objectives. In the environment, medical equipment and telecommunications areas, we believe that the priority sectors that Japan had jointly proposed with others were very strongly adopted, and I highly rate this agreement. It is obvious that there is understanding among the APEC members that such early voluntary sectoral liberalization will be conducted under the principle of voluntarism. Japan will, under that premise, engage in these efforts from now on.

3. Japanese economy

   Q: What concrete measures is the Government going to implement in order to restore confidence in the market?

   Prime Minister of Japan Ryutaro Hashimoto: On 24 November, Yamaichi, one of the big four securities houses in Japan, announced its voluntary decision to discontinue operations. As for the Government of Japan as well as for the Bank of Japan, we shall take all necessary measures so that any possible effects that emerge in the process of closing down and that might have on the domestic and overseas markets as well as the Japanese economy -- so that the stability of the financial system as a whole will not be undermined and that we will not, in fact, see disruptions in the marketplace. We shall continue to make all efforts for the stability of the Japanese financial system and to retain confidence domestically and overseas. Even taking into consideration the off balance-sheet liabilities of Yamaichi, it does have a sufficient capital account. However, in order to prevent any unforeseen eventualities, it has been decided that the Bank of Japan (BOJ) will provide special loans. Also, these BOJ special loans will be provided in foreign currencies as well, so that trouble will not be caused to overseas investors and depositors either. That is to say, no losses will be incurred on the part of either Japanese or overseas investors and depositors. APEC leaders are very much interested in this matter. I, therefore, explained what I just said to them. BOJ special loans will also be supplied, so that overseas investors and customers will not be exposed either, and I was able to put to rest their concern. I mentioned that, in the past, we had this strong desire to avoid, as much as possible, any failures of financial institutions, securities houses included, now that we are engaged in financial system reform. We have already made up our mind to reconcile standards with international standards and open up the Japanese market. Therefore, we will not allow the rescue of Yamaichi -- Of course, the racketeering incident involving Yamaichi is not something that can be forgiven. If we had maintained the past policy, we may have attempted somehow to retain Yamaichi's survival. But, we can no longer do that under the present system. So, what we are trying to do is not to protect and preserve the financial institution itself, but rather to protect the depositors, the investors and the financial system. This is what I explained to my colleagues and that explanation was understood by them. The non performing loan problem is being disposed of -- that process is underway. But, of course, I cannot guarantee that there will no further incidents. It is not that I am in the know entirely, but should anything happen, our fundamental stance is that the investors and depositors will not be made the victim. In the case that Japanese institutions are operating overseas, we also have to make sure that overseas investors and customers will not be sacrificed. Also, we have to make absolutely certain that the stability of the financial system will be preserved. I hope you understand these points.

4. Use of public funds in crises

   Q: With the closure of the Yamaichi securities operation, the Liberal Democratic Party (LDP), the ruling party and also the Hashimoto Administration Cabinet, for financial stability, and the disposal of non-performing loans, public funds should be introduced. But, on the other hand when the jusen problem had been taken care of through the use of public funds, people became very critical about the policy taken by the Japanese Government. Based on that kind of experience, what do you think of the possibility of introducing a public fund in order to dispose of these problems?

   Prime Minister of Japan Ryutaro Hashimoto: Looking at the current financial situation, what is necessary to maintain confidence in the financial system and its stability is a question that we are asking ourselves very seriously. We have continued with numerous efforts to date. There is a need to consider seriously what additional measures that we can introduce. As was suggested in the question, with regard to this is question of mobilization of a public fund among the Japanese people and also within the Japanese Parliament (the Diet), very serious debate is going on. We need to respond to this situation with great interest. Taking into consideration the various opinions in Japan, we shall consider all possible options and we believe that we need to look at more possibilities. It was midnight when I got back to my room in the hotel after completing all the programs. I received a phone call from the Liberal Democratic Party that they wanted to establish a headquarters to deal with this matter, and I said, "yes." So this is another endeavor to look at all possible options and pick the most effective measure. Those are the efforts that we are currently making.

5. Exchange of economic experiences among APEC members

   Q: This morning, there were a good deal of comments from President Zedillo, President Clinton and others seeming to lecture Asia on how to run their economies. I am wondering how you felt coming here to Vancouver and taking lectures from the likes of Mexico?

   Prime Minister of Japan Ryutaro Hashimoto: For some time, I have been having discussions on the Mexican economy with my Mexican friends. I believe that, several years ago, the United States proposed a Central American Fund, and Japan also participated. Finance Minister Pedro Aspe is a good friend of mine. Of course, each country has had numerous desperate experiences; we should exchange that information and make use of that. APEC, in fact, is for that very purpose. So, this time we were able to learn very good lessons from each other. Having said that, following an explanation by President Zedillo on the Mexican experience, one of the ASEAN leaders said that, in the lecture by President Zedillo, there was no mention of a U.S. backup. President Zedillo said that he did not think about that. Also, he said in front of President Clinton that he hesitated to talk about things he might have to say thank you to President Clinton for. Anyway, I think that I had a very good experience this time.

6. Kyoto Conference on climatic change and membership of the Russian Federation into APEC

   Q: Regarding this global greening in relation to global warming in relation to its prevention, during this APEC Conference and through the discussions there and toward the Kyoto Conference to be held in December, what kind of response were you able to attain through the discussion? Also, in relation to global warming, such emission base rates, etc., now being discussed, what kind of response were you able to obtain? Russia is also going to participate in COP3. But, Russia also being admitted to APEC next year, I believe that APEC itself, next year, might change significantly. So, in that relation, I would like to see how you view it. Also, what do feel of the Japan-Russia relationship and the impact it has on the Asia-Pacific situation?

   Prime Minister of Japan Ryutaro Hashimoto: Each leader has very serious and earnest interest in the Kyoto Conference and I was very much encouraged by that. When each country thinks about its own situation, I think that there is a tendency for each country to find it difficult to agree on say a decision that itself would bear a disproportionate burden. So, developing countries have their own domestic problems. Therefore, consensus-building among developing countries would not be easy. But, targets must be realistic and fair and equitable. Bearing that in mind, I think we have to engage in utmost efforts to arrive at an agreement. APEC colleagues have shown their strong support for a successful Kyoto Conference. And, there is also understanding that improved energy efficiency is very important. We have come up with a strong message in this respect. So, I did feel a very encouraging response from my colleagues. On specific questions of numerical targets, how to engage developing countries in these efforts, I believe that things will not be easy ahead, but we would nevertheless like to continue with efforts to try and produce an agreement. Now, Russia is admitted to APEC. In Krasnoyarsk, I told President Yeltsin that if Russia wishes to participate in APEC, I would support Russian membership and that I would actively work on other APEC members to accept Russia. Since I was the one that floated this idea to President Yeltsin, I myself am the most gratified that Russia has been accepted by all. When we look at the APEC region as a whole, the greatest CO2 emitter is the United States, followed by China. Of course, Japan is inno position to blame others, because Japan is the fourth largest CO2 emitter in the world. But, this means that the APEC region itself would account to one-half of the global emission of CO2. Then, APEC will be joined by Russia. We therefore feel that the weight of APEC has become even greater in the environmental area. Of course, serious efforts are being made to restructure Russia's industry. Against that backdrop, what sort of cooperation can we extend to Russia in the environmental area. That is something that we have to think about. But, I believe making such efforts will also contribute to improving relations between our two people. I am sure that will play a big part in nurturing an environment in signing a peace treaty between the two countries.

7. Demand-led growth in Japan

   Q: The Ministry of Finance has said that the fall in the value of the yen is concern. Today, it dropped to a new five-year low. Is this indeed a concern to you? And, how do you respond to the Clinton Administration remarks that Japan must not export its way back onto a growth path?

   Prime Minister of Japan Ryutaro Hashimoto: Yesterday, I had a tete a-tete meeting with President Clinton yesterday which followed our early meeting at the time of the Denver Summit of the Eight. That is not what President Clinton told me yesterday -- at least he did not command me. Japan itself certainly is aware that Japan needs to grow its economy with an emphasis on domestic demand. We do not need to be taught by other countries. It is because of this that we are working to deregulate and engage in overall reform or restructuring. Efforts are being made for our self-interest. I hope you are not mistaken about that. Now, the United States has always been very sensitive with regard to the problem of trade imbalance. Not that we alone are responsible for such imbalances, but of late, the Japanese yen has been weakening somewhat vis-a-vis the U.S. dollar. Therefore, inevitably, the United States would be concerned about expanding exports from Japan. Seen from my position, I certainly understand that concern. Perhaps we have to refer various numbers and engage in cumbersome negotiations, but that is not something that we hope for. Having said that, even if governments agree on a certain level of exchange rate, ultimately it will be decided in the marketplace. Therefore, whatever efforts we might make with utmost caution will only face limitations. Now, with the weaker yen, the environment will facilitate Japanese exports. Not just in terms of Japan's relations vis-a-vis the United States, but if we look at Japan's relations with the APEC member economies and relations between APEC economies and the United States, the same applies. So, instead of having a chip on the shoulder, I believe that we should try to be mutually cautious and look around and pay as much attention as possible to the situation.

8. Japan's economic role in Asia

   Q: Do you think that Japan has a responsibility to play a role as a locomotive economy for the Asian region? As the biggest economy in the region, do you think that you have some special responsibility to help the region get out of its crisis by increasing growth in Japan? If you do, does that not mean that Japan needs to adopt a more stimulative fiscal policy?

   Prime Minister of Japan Ryutaro Hashimoto: We are certainly not complacent enough to think that we cannot be a locomotive for Asia-Pacific. In the Asia-Pacific region, we are ready to take on roles that are appropriate. But, that does not mean that Japan can be complacent enough to think that we can pull ahead of other economies in the Asia-Pacific region as a locomotive. Of course, the Asia-Pacific economies are interested in what sort of role Japan can play, and we shall play appropriate roles. Ever since the eruption of this currency crisis, we ourselves have already been acting with a positive stance of cooperation vis-a-vis certain countries which have already concluded their consultations with the International Monetary Fund. Each economy has its own ways, of course. They have the liberty to do so. Therefore, each of us recognizes each other's freedom, philosophy and methods and none of us are in a position to impose our own ways on others. But, wherever we can cooperate, we shall participate actively. In the case of the environment, for example, we should like to see other countries make use of past mistakes that we have made. We will therefore continue to cooperate with the various economies. Thank you very much.