Press Conference by Spokesman for the Delegation of Japan Hiroshi Hashimoto
Afternoon Session of the Leaders' Meeting

Major Topics

1. Introduction of speaker and briefing status
2. Briefing on the Afternoon Session
3. Economic statement
4. Remarks on the communique
5. Initiatives on Africa
6. The Korean Peninsula
7. European monetary integration
8. China's participation in future Summits

1. Introduction of speaker and briefing status

   Official of the International Press Division of the Ministry of Foreign Affairs: Ladies and gentlemen, welcome to this on-the-record briefing by the Japanese delegation regarding the Afternoon Session of the Leaders' Meeting. The briefer is Mr. Hiroshi Hashimoto, Spokesman for the Prime Minister of Japan. After Mr. Hashimoto's briefing, there will be a question-and-answer session. When you have questions for him, please come to the nearest microphone and state your name and affiliation before asking your question. Mr. Hashimoto, please.

2. Briefing on the Afternoon Session

   Spokesman for the Prime Minister Hiroshi Hashimoto: Good afternoon, ladies and gentlemen. I am a bit disorganized and I am not sure whether I can really brief on the contents of this Afternoon Session but I will do my best. In the meantime, while I am here, I hope my colleagues will provide me with further information. At the afternoon session, the G-7 Summiteers gathered together as you know and published the communique, or statement. So you are already familiar with the content. I would like to tell you what Prime Minister Hashimoto said to his colleagues at the Afternoon Session. Prime Minister Hashimoto talked about, first of all, the macroeconomic situation, and he pointed out that sound public finances and structural reforms are common issues among the developed G-7 countries. Having said this, Prime Minister Hashimoto said that in order to maintain the international financial system, it is important that the process of the single currency in the European Union should proceed in a stable manner. He said that Japan would like to contribute to efforts being carried out by the emerging economies in Asia to deal with a stable financial market. He said that there are still a number of developing countries which cannot get any benefit from the economic globalization, and we would like to encourage those developing countries to develop their own economy through appropriate economic policies. He emphasized the importance that the G-7 countries should cooperate jointly on macroeconomic policies. Prime Minister Hashimoto talked about the issue of China's participation in the World Trade Organization. We should utilize the good momentum of the negotiations on China's participation in the WTO; we should accelerate the process of the negotiations while asking the Chinese side to give more offers for liberalization of trade, including better offers on market access. The Prime Minister said that we should welcome China as a constructive partner in the international society, and went on to say that Japan wishes that the present Hong Kong will be maintained after its reversion to China. The Prime Minister touched on his personal initiatives which was made at last year's Lyon Summit on the so-called Initiative for a Caring World. He especially picked up the issue of active aging and he said how about asking experts to further study what we should do on the issue of active aging, and the Summiteers will discuss this issue at next year's Birmingham Summit. He proposed to include issues related to health and infectious diseases. His presentation was supported by his colleagues. This is what the Prime Minister said to the Afternoon Session of the G-7 Summit. As far as the actual discussions of the afternoon are concerned, I think you already know and a statement has been issued already.

   Very quickly, I would like to tell you what the Prime Minister told his colleagues during the Working Lunch. I understand that they exchanged views about the active aging, the issue of structural reform and the small- and medium-scale industries. The Prime Minister talked about the issue of active aging again. He said that it was important to give more opportunities to elderly people who opt to work, and to give them opportunities to continue to contribute to the development of the economy and society, rather than just treating this problem as a measure against old people. He introduced to his colleagues what the Japanese Government was endeavoring on now, picking up for example on the issue of establishing a new insurance law for the elderly. He talked, as well, about his opinions on the development of small- and medium-scale industries. He said that it was important to look into the activities of small and medium enterprises owned by a single private person from the viewpoint of absorbing further employment. Again, he talked about some aspects of active aging. In the case of Japan, the number of elderly people who start to receive pensions is increasing every year by one million people. The cost of medical care for elderly people is also increasing. As a result, the cost of running the social security and welfare system is naturally increasing. Next year, it is expected to increase by 800 billion yen in comparison with this year, but because of the budget deficits, the Government has decided to squeeze down the budget allocation to the ceiling of 300 billion yen to meet this. The Government met strong resistance with the Parliament; however, the Japanese Government is determined to go ahead with structural reform. The Chair of the Summit of the Eight asked about Japan's lifetime employment system. Mr. Hashimoto replied that even if the lifetime employment system still remains in Japan, the content of the system is changing, and unemployment is becoming serious, even in Japan. The Prime Minister talked about the situation surrounding the national deficit in Japan, and we have to endeavor to reduce the debt so that in three years' time, it is hoped that the ratio of Japan's deficit as a proportion of GDP will decrease to 3 percent against GDP. This is what I can tell you about the Working Luncheon and the Afternoon Session.

3. Economic statement

   Q: Could you tell me about the economic statement that was issued, in particular the part on Japan. There seemed to be a fair amount of criticism of the Japanese surplus and indications that Japan needs to do more in terms of deregulation. Is that how you view that?

   A: First of all, the circumstances and priorities of each country of the G-7, are as you know, described in the statement. We understand that the efforts of the Japanese Government are well-described here. However, having said so, Japan's trade surplus was not mentioned in the Afternoon Session among the G-7 countries. Japan, as we repeatedly said in the past, has the objective of achieving strong domestic demand-led growth and avoiding a significant increase in the external surplus. We further continue our efforts to go ahead with the six reforms. And in the Afternoon Session, special criticism of Japan's economic policy was not raised by the other members of the group.

4. Remarks on the communique

   Q: The U.S. side is telling us that they consider it significant that for the first time since 1993, the communique has singled out things that each country needs to do. Do you also agree that it is significant and that Japan is singled out on the trade issue?

   A: I confirm that since the 1993 Tokyo Statement, the circumstances and situation of each member country are described for the first time in the Denver Summit statement. But at the same time, I would like to remind you of the fact that the G-7 Financial Ministers' statement also touched on those different situations and the communique of the last OECD Ministerial Meeting also touched on individual economic circumstances. Therefore, there is no surprise that this kind of formula has been adopted at this time at the Denver Summit.

5. Initiatives on Africa

   Q: I was given to understand that today the discussions would also focus on Africa and I am just wondering if that was the case and could you fill us in, although we know the Africans are not here, on what discussions covered and what you think may come out in the communique tomorrow?

   A: It is a pity you did not have a chance to come to my press conference earlier. I thoroughly briefed the press on the African issue. I hope that my colleagues will distribute to you the papers which in detail talk about this issue. Having said so, we are very happy that we talked about the issue related to Africa, because Japan took initiatives to create a new concept of cooperation between the developed and developing countries including Africa. The focal point of this concept is to develop jointly among the developing countries a development strategy for each country. On the basis of the self-help efforts of the recipient country, the donors should extend appropriate economic cooperation. By doing so, we hope that the African countries can develop their own economies, something in line with the experiences which emerging economies in Asia have had so far. Japan held the International Conference in Tokyo on African Development in 1993 and next year, we will have the second Tokyo International Conference on African Development. The subject of the first conference and the second conference was how to transfer technology or experiences of economic development of Asian countries to the future development of Africa. We have had mutual interest in this, and we hope that many African Heads of State and Government will participate in the international conference next year. In any case, we will give you a fact sheet on the initiatives of Japan on Africa and I hope it will help you understand what we have been doing and what we are going to do.

6. The Korean Peninsula

   Q: I would like to confirm whether the Korean Peninsula was discussed during the Morning Session or Afternoon Session of today's Summit. If yes, on what; if not, why? As you may know, the White House spokesman's briefing did not mention the Korean Peninsula issue and also the State Secretary has not mentioned the Korean Peninsula this afternoon. As far as the Summiteers are concerned, this morning they did not talk about regional issues. Over the luncheon, they did not talk about regional issues either, and this afternoon, mainly they talked about macroeconomic policy and international financial issues, etcetera. Simultaneously, the foreign ministers met and discussed and the progress report has been issued. Have you read that?

   A: No mentions in the progress report? I have got to check with my colleagues who attended the ministers' meeting and will talk to you later on. In any case, Japan as you know regards the Korean Peninsula issue as very important and I do not know whether the foreign ministers have really exchanged views on the Korean Peninsula issue or not, but we never forget about the importance of the Korean Peninsula situation.

7. European monetary integration

   Q: Two questions. You mentioned that Mr. Hashimoto said that fellow leaders hoped the EMU would proceed in a stable manner. Is he at all concerned that it would not proceed in a stable manner and that is why he brought it up? Right after that, you mentioned that he would like to contribute to financial market stability in emerging market economies in Asia. Can you expand on that?

   A: On your first question, he didn't express his concern about the instability of the market. What he meant to say is that, in general terms, it is very important to secure stable, international financial markets for the development of the world economy. In this sense, it is very important to coordinate among the G-7 countries, and he pointed out that the European Union is now dealing with a single currency and he said that this process should be implemented in a stable manner. On the other occasions, when he met Mr. Blair yesterday, he said that up until last year, he personally expected that the process of a single currency would be realized more quickly. At that time, he wished that the EMU would become the second key currency in the world. If that is the case, Japan doesn't want to see the yen be localized. Japan should endeavor to reform the structure so that it can enjoy economic growth. Having said so, Mr. Hashimoto said that when the single currency is born in the EMU, it is important that a strong EMU will be created. That is what he said. So in line with what he said to Mr. Blair this afternoon, he did not mean he was concerned about a single currency. On the second issue, what he meant to say about that is the emerging economies in Asia have been developing very rapidly in terms of economic growth recently, but in some countries, every now and then they are concerned about the possibility of overexcessive economic growth. Some concerns have begun to be heard about the stability of financial markets in those emerging economies, and we experienced some disturbances in the international financial market. On the basis of this, I think Prime Minister Hashiomto meant to say that the efforts by the emerging economies to make their financial system stable should be encouraged by us, including Japan. So he told this in general terms; he did not say anything specific on this matter.

8. China's participation in future Summits

   Q: I would like to ask a China question. You mentioned that the Prime Minister expressed a desire that China's entry into the WTO be accelerated. The United States is hoping to get Russia into the WTO, and Russia thinks it can be done by the end of 1998. Does Japan feel that China should be admitted first, before that date? And also now that this is a Summit of the Eight, a lot of talk is that China should be added as well. Do you think that five years from now China will be in at these meetings?

   A: From a realistic point of view, the negotiations with China on the WTO participation have been taking place for a long time, while the negotiations with Russia on WTO participation have not made progress. In addition to this, we think that now China is seriously thinking about early entry into the WTO, so we should encourage China to give better offers for market access, etcetera, so that China can be in the WTO in the very near future. If you talk about Russia's participation, we may have to continuously extend some kind of economic assistance for the realization of free trade practices or we may have to continuously ask Russia to liberalize their trading system. But in any case, we have got to start serious negotiations with Russia if Russia really wants to participate in the WTO. We have got to be very realistic about this. We do not want to talk about this issue from the political point of view. It has nothing to do with our political considerations. It depends upon the degree of readiness of those countries conducting the negotiations of the WTO. On your second question, China is an important partner of our trade. But at the same time, China's participation in the Summit is not on the agenda. We would like to give clearer signals to China that we have no intention to confront China; instead we would like to develop closer relations with China. In this sense, Japan thinks it very important to realize the early entry of China into the WTO. Incidentally, on the Russian issue, up until this morning I have been asked by many journalists to what extent Japan welcomes Russia's participation in this Summit. I repeatedly said that Japan welcomes Russia's participation in the Denver Summit, but there are several issues such as macroeconomic coordination and international financial issues in which Russia is not yet ready to participate. But if Russia conducts its own economic reform and liberalizes further their trade, and if Russia is fit into the international economic system, including the participation of Russia into the WTO, OECD, etcetera, of course it is natural that Russia should be participating in discussions such as international financial issues as well.

   Q: What about China?

   A: As far as China is concerned, China has not raised that issue, therefore it is a bit difficult for Japan to make a comment on your issue. Thank you.