• Register Email Updates

• Advanced Search
• Help

Japan-Canada and Japan-U.S. Summit Meetings

1. Political aspects of the Japan-Canada summit
2. Political aspects of the Japan-United States summit
3. Economic aspects of the Japan-United States summit
4. Growth of the Japanese economy
5. Foreign workers in Japan
6. Domestic demand-led growth in Japan
7. Japan's trade surplus with the United States
8. Japan's view of its own role in Asia
9. Humanitarian issues surrounding the financial crisis
10. Japanese domestic financial situation

1. Political aspects of the Japan-Canada summit

   Director of the First North American Division Tadamichi Yamamoto of the Japanese Ministry of Foreign Affairs: Good afternoon. I will start off the briefing on the Japan-Canada talks first. Then, I will explain a little bit about the subject matter that was taken up between the President and the Prime Minister. Then, Mr. Tsuruoka will explain what transpired concerning economic matters regarding the Japan-U.S. Summit.

   On the Japan-Canada Summit, this is basically a call by Prime Minister Hashimoto on Prime Minister ChrＵien, who is acting as a Chairman for the APEC Summit meeting. They said that they would look forward to the meeting. Prime Minister ChrＵien asked Prime Minister Hashimoto to lead off tomorrow's luncheon meeting on COP3, the climate change convention to be held in Kyoto for coming to an agreement on this matter. Prime Minister Hashimoto accepted this. Two other topics were touched upon. One was a very short one: since Prime Minister Hashimoto is going to be making an Official Visit in a couple of days' time, they both said that they are looking forward to this. Then another topic that they touched upon lightly was the issue of the Asian economies. Both agreed that the fundamentals of the Asian economies are basically sound, though there are some problems. Prime Minister ChrＵien expressed his wish that such recognition, or perception, of the two would be shared by the Leaders at the upcoming APEC Summit. This is it for the Japan-Canada meeting. The meeting between the Prime Ministers took place this morning, late morning.

2. Political aspects of the Japan-United States summit

   Director of the First North American Division Tadamichi Yamamoto of the Japanese Ministry of Foreign Affairs: Regarding the Japan U.S. Summit meeting which took place this afternoon, the subject matters taken up were: (1) the security issue, which was very lightly touched upon; (2) then COP3, the climate change conference; (3) economic issues, which Mr. Tsuruoka is going to explain. On security issues, this was a very short exchange between the two. The Prime Minister said that he would like to work with the United States of America concerning the new Defense Guidelines, and he explained that Okinawa issues are still key issues for his Government, and that he would seek cooperation from the United States Government on this issue. The President simply said that on security issues, the cooperation between the two was coming along very well. On the climate change conference, the Kyoto Conference to be held in December, they both expressed the hope that some fruitful agreement would be reached and that the meeting would be a success. The President explained that for the climate conference to succeed, he would need the participation of developing countries. The Prime Minister shared the same view, but expressed that perhaps more flexibility on this account might be useful. The Prime Minister also explained his desire to see the meeting come to a success. I think I will stop there and ask Mr. Koji Tsuruoka to explain more about economic issues which were taken up between President Clinton and Prime Minister Hashimoto.

3. Economic aspects of the Japan-United States summit

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: On the invitation from Prime Minister Hashimoto to address issues of interest to President Clinton, President Clinton raised economic issues namely: (1) the economic situation in Asia, especially the financial and currency situation; (2) the economic relations between Japan and the United States, the bilateral relationship that is; (3) COP3, the Kyoto Conference that Mr. Yamamoto has already explained. So let me discuss the two issues that the two leaders discussed first: the financial and currency as well as economic situation in Asia, and the bilateral economic relations, with particular attention to the Japanese economic situation.

   On the economic situation in Asia, the President mentioned, and the Prime Minister agreed, that the recent agreement reached at Manila for a new framework for enhanced Asian regional cooperation to promote financial stability is a framework that should be supported, and that this will be useful to stabilize the situation of concern to both countries that is currently existing in Asia. At the same time, they also recognize that the Asian economies continue to maintain high potential for growth, on the basis of solid and sound economic fundamentals, and they believe that the further growth of the Asian economy would be possible through the strengthening of the basis for self-sustained economic development, and that Japan and the United States will continue to coordinate closely for the stability and further prosperity of the Asian economy. This was an exchange between the two leaders on the Asian economic situation, also touching lightly on the various situations existing in some countries, including the Republic of Korea. Both Japan and the United States have voiced their support for supporting the Korean effort which is now being discussed between the Republic of Korea and the IMF, to alleviate the difficulty of the Korean economy. The two countries will, as is the case with the other situation in Asia, continue to coordinate closely between the two to support the efforts currently undertaken by Korea.

   On the bilateral side, President Clinton stated that there are a number of points of interest that he would like to see in the Japanese economy. First, he sees the revitalization of the Japanese economy as being the key for the recovery of the Asian economy, and in order to achieve this goal, the Japanese economy should: (1) continue to expand its domestic demand-led growth; (2) reform the financial system; (3) observe existing trade agreements; (4) achieve concrete results on the deregulation effort in Japan, to be confirmed at the occasion of the Birmingham G-7 Summit which is to be held next May. It is expected that the two leaders will again meet on that occasion, and therefore they look forward to confirming efforts that will be undertaken against that target. These were the points raised by President Clinton, and let me share with you the response by the Prime Minister.

   First of all, the Prime Minister stated that despite the Japanese expectation that the Japanese economy would continue to grow on the basis of domestic demand-led growth, because of the protracted recovery of individual spending, even though the basis of economic recovery is solid, the Japanese economy continues to be in a stall. The difficulty stems from the lack of a transparent outlook into the future, and Government policy in response is mainly based on deregulation as well as structural reform. The Prime Minister stated that he is hoping that these reforms will bring back confidence on the side of entrepreneurships as well as consumers, and that again we will be a leading domestic demand-led economy.

   Touching on the second point that the President raised, the reform of the financial system in Japan, the Prime Minister explained that in the recent past, Japan has experienced difficulty in the financial sector. This has been seen in two major financial institutions ceasing to function, one of which was one of the four major securities companies. The change, however, should not be seen necessarily as a negative, because this is an indication of the implementation of the economic reform currently implemented by Japan. The failure of these financial institutions in no way will endanger any benefits on the side of the investors, the liquidity users, or any other relevant parties, because all necessary safeguards have been implemented, and there is no ground for any concern. The Prime Minister further stated that, on deregulation, we agree that we will try to do our best to achieve the most constructive results at the Birmingham Summit meeting next May; and that while the Japanese Government will continue to promote deregulatory efforts, even after the initial three rolling plans are concluded at the end of this year, the effort will continue on from next year. He hoped that the Birmingham Summit Meeting, at which occasion the two leaders will meet bilaterally, would present a good opportunity to assess and evaluate the real progress that both of us agreed to make.

   In brief, that is what the two leaders have discussed. I think we will be prepared to take a few questions on that basis.

4. Growth of the Japanese economy

   Q: Does the Japanese Government accept the U.S. characterization of the Japanese economy's health as the key to helping Asia recover from its current economic crisis? Did the Prime Minister indicate that there was any willingness on the Japanese Government's part to adopt measures beyond which it is already committed to stimulate its economy?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: The Prime Minister did not directly respond to the characterization by President Clinton that the Japanese economy is -- let's say, "key" is my own words. It is not necessarily President Clinton's word, but that is what, I understand, was his meaning when he was characterizing the interrelationship between the Japanese economy and the rest of Asia. The Prime Minister, while not necessarily linking the Japanese economy with the rest of Asia, was stressing the importance in his own view that the Japanese economy grow on the basis of domestic demand, and that the reform of the financial system that is already underway continues on, while at the same time, secures the interest of all the investors and the creditors of those financial institutions. If I separate myself from what the Prime Minister and President Clinton discussed, in general, I am trying to answer your question, I think that there may be stronger emphasis on the side of the United States in looking at the interrelationship between the Japanese economy and the rest of Asia. First of all, we see this as more of our own problem. Second of all, we see this as a problem that is interconnected between the rest of Asia. The closer it gets to Japan, the more important it becomes, because of the deeper interdependence we have with countries that are nearer to us geographically. Traditionally, we have had very strong economic ties with countries such as, for example, the Republic of Korea. So, even though the two leaders did not discuss precisely the characterization that President Clinton made, I think that if I may be so bold as to give you my own characterization, it is safe to say that both countries see the situation in a similar light. It was on that recognition that the two leaders welcomed and supported the new framework agreed to in Manila, and they believe that both leaders again have agreed that the effective implementation of the new framework as it is being applied to individual financial difficulties, while at the same time coordinating the implementation between the two countries, will be the appropriate response that is currently available for Asia, as well as for both Japan and the United States.

   Q: You say that the United States puts a stronger emphasis than does the Japanese Government on the importance of Japanese economic growth for the rest of Asia, but they see this situation similarly. I am a little confused by your answer.

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: As you may know, the Japanese economy is not in the best shape right now. So, we have concerns of our own. When the United States looks at the totality of the Asian economy, I think that the U.S. view will address both the interrelationship between the various economies, while we are focusing on our own economy. Also, in conjunction with that, we are trying to support the other Asian economies. This is one of the themes that the APEC leaders will want to discuss. In an effort not to mislead you into saying that this issue was discussed between the two leaders and, therefore, I can confirm that there was an agreement, I am trying to describe what I know of the background that exists on the side of Japanese policy makers.

5. Foreign workers in Japan

   Q: Prior to this financial crisis, there has already been a massive influx of migration from other countries to Japan, because the economies in other neighboring countries are not conducive to finding jobs or employment. With this financial crisis, do you anticipate more migration from the other countries, given that Japan is perceived to be the strongest economy in the region? If so, how do you plan to handle that?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: I think that this question does not necessarily relate to the meeting between the Prime Minister and the President. So, if I could respond in general terms, I do not think that we are witnessing any surge in the incoming foreign workers into Japan at this time. We have not analyzed this in any detail. But as I stated earlier, we believe that the economic fundamentals of Asian countries continue to be very sound. One of which is a diligent labor force in each and every country. We are not at this time seeing any workers fleeing their country to go and work in other economies. At this time, I know that there has not been any major influx of foreign workers coming to Japan.

6. Domestic demand-led growth in Japan

   Q: U.S. officials said that Prime Minister Hashimoto indicated that U.S. concerns that had been repeatedly expressed throughout this year about domestic demand-led growth in Japan had turned out to be, and I quote, "reasonably accurate." Is that how you would characterize what the Japanese Prime Minister said?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: I think we are still debating somewhat over the forecast, because, first of all, the calendar year has not been concluded. And, whatever analysis we can conduct at this time will be a kind of interim report. However, you are quite right that the U.S. Administration has been raising in a number of meetings -- not necessarily between the two leaders only, but at various levels -- that they are interested to see the Japanese economy grow in the form of domestic demand-led growth. We, of course, have been intending to have the Japanese economy grow, led by domestic demand. However, mainly because of the rise in the consumer tax, the indirect tax that was raised from three percent to five percent on 1 April of this year, started to chill the consumer's psychology. This led to various other financial difficulties, and was coupled with other financial difficulties domestically in Japan, which now culminate into rather sluggish domestic growth in the Japanese economy. We were not anticipating this happening, necessarily, and we are not happy to see the Japanese economy in its current state of affairs. So, by contrast to what has been indicated as a prediction by the U.S. Administration, I think it is safe to say that the U.S. forecasts were closer to what we now see, as opposed to our own predictions.

7. Japan's trade surplus with the United States

   Q: Was the trade surplus issue between Japan and the U.S. mentioned during the discussions?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: The trade surplus between Japan and the United States, as such, at this present stage, was not, I believe, mentioned concretely by the President or the Prime Minister. The reference to the trade imbalance was made in terms of a prediction into the future: if the Japanese economy continues to be in the current state that it is, it is possible that the Japanese trade surplus with the United States will grow. This is, again, a prediction that, once it becomes reality, could be of concern. But the issue as such was not discussed between the two leaders.

8. Japan's view of its own role in Asia

   Q: I really want to make sure that I understand your previous answer to my question, because you said, "We are focusing now on our own economy," I think were your words. If I understand your briefing correctly and the briefing we just had over in the White House Briefing, which very closely coincide, President Clinton's position seems to be that, in some sense, Japan has a special role to play here in getting Asia out of this pickle it is in. Your statement that we are concentrating on our own economy, if I understand it -- obviously, the Japanese Government is concerned about the Japanese economy for its own sake; obviously, that is your prime concern -- are you saying that, in a sense, you do not agree that Japan has any particularly key role to play here? I think your use of the word "key" very aptly summarizes what they say that President Clinton said about Japan's role vis-　-vis the problems in Asia right now. Are you saying that Japan does not agree with the U.S. perception that Japan has some special role to play right now in getting Asia out of this mess?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: We did not discuss those things in any length. This was a very abstract characterization by the President, which I summarized as the key. What I have stated following that characterization was more the awareness on the side of the Japanese Government. Of course, if the Japanese economy was much more vital than it is today, it would contribute positively to the growth and recovery of the Asian economy. There is no doubt about that. But, in order for the Japanese economy to play that role -- and I think this is very much in line with what the U.S. Administration has been telling us at the same time -- was for us to try to address our own problems, which, if and when we succeeded, would indeed bring fruit to the rest of the Asian economy. We do not disagree with that perception, of course, because this is more factual than a value judgement.

   Q: In effect, this is not exactly what we were told in the briefing. But it seems to me that what the United States is saying to Japan right now is that Japan has to look beyond, in fact, a lot of its own national economic concerns that it was taking into account before, and that it has to take into account the need to stimulate growth in Asia region-wide. Further, even though Japan has been basing its economic policy up to now on the concerns about the retirement of the population in the next century and so forth, that because of the crisis right now and the huge size of Japan relative to the Asian economy overall, Japan has somehow some additional responsibility, and that it must change the course that it is on. I am wondering if you accept either of those assertions?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: We participated very actively in the Manila Deputy Finance Ministers' Meeting. I think it is well known that Japan was one of the promoters of the idea that led to the establishment of the new framework. So, we ourselves see the Japanese economy dependent on the health and sound development of the Asian economy. There is no doubt about that perception being very much alive in Japan. If the question is more specific and concrete as to, for example, what Japan as a nation will do to address the financial situation in Korea, this was not discussed. Therefore, I cannot give you any results of that discussion. But, I know that we have our own interest in seeing the Korean economy be in good health. As I said, we are coordinating with the United States, promoting and encouraging the Korean Government to have an agreement with the IMF, so that it will provide a sound basis for the other countries, also, in supporting the Korean self-promoted efforts in addressing their present difficulties. So, I am not quite sure there is much of a difference in how the Japan policy-makers are now looking at the Asian situation. Many of them are attending various conferences at various levels outside of Japan. These are people that are indeed preparing Japanese international economic policy toward the region. Our efforts have not dwindled down because of the importance of addressing the Japanese domestic economy. These are, of course, the two tracks without one of which we will never succeed. So, these are two wheels that continue to roll on.

9. Humanitarian issues surrounding the financial crisis

   Q: Has there been discussion throughout this conference regarding the human cost of the financial crisis in the region, and have there been discussions on, say, possible safety nets to prevent further human problems like unemployment, diseases, violence against women, that sort of thing?

   Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: Not at the meeting between the President and the Prime Minister today. The meeting was not addressing all the issues that the APEC Meeting could address. So this issue was not discussed between the two leaders today.

10. Japanese domestic financial situation

    Q: The Clinton Administration officials say privately that Japan needs to pursue an aggressive fiscal stimulus program. Did Prime Minister Hashimoto give any response to President Clinton on whether he is prepared to go ahead with a big fiscal stimulus program at home?

    Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: I am not aware that the President raised with the Prime Minister the question of having as what you now just described as a big fiscal stimulus program to be implemented in Japan. The issue was discussed in terms of revitalizing the Japanese economy in terms of domestic demand-led growth. To which, the Japanese Prime Minister responded that we will try to resort to various possible alternatives, the main pillar of which is deregulation, at the same time, addressing the financial difficulties by alleviating any concern that they may exist on the part of the financial institutions, the investors and creditors, and so forth, so that the Japanese economy will be able to restart its growth by force of market mechanism.

    Q: Did Prime Minister Hashimoto say that he may reconsider some of the tax increase that went into effect in April, for instance, that has been described as some private analysts as a disastrous step and a key reason why Japan's economy as you described it has now stalled?

    Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: This issue was not discussed between the two leaders.

    Q: Did you also discuss the possible size of a bailout package to help the banks? Some people have suggested US$64 billion might be under consideration. Did that issue come up of how much might come up to help the banks?

    Director of the Second North American Division Koji Tsuruoka of the Japanese Ministry of Foreign Affairs: There was no specific discussion about bailing banks out of any difficulty. The two financial institutions that need to be addressed are well known. The Government has made its resources available through facilities provided by the Japanese central bank, and also the Japanese Government is closely monitoring whatever difficulty the investors or the creditors may have with those institutions. We are making sure by using all available resources that these difficulties by the financial institutions will not spread into a major crisis of the Japanese financial system as a whole. We have no concern of that kind at all. We believe that we were successful in addressing those two difficulties which was demonstrated by the rise in stock prices, contrary to the expectation that this will trigger a major downfall in the stock prices. This was indeed the implementation of the reform and the market-led forces that will hopefully streamline the Japanese financial institutions.