Press Conference by Spokesman for the Delegation of Japan Hiroshi Hashimoto
Outline of Japan's Strategic Positions at the Denver Summit of the Eight

Major Topics

1. Introduction of speaker and briefing status
2. Japan's Strategic Positions at the Denver Summit of the Eight
3. Northern Territories issue
4. Russia's participation in the G-7 process
5. Globalization and currency rates
6. Japan's global approach to the aging problem
7. Japan's view of European Monetary Union
8. The G-7 approach to Africas
9. Japan's position on United Nations Security Council reform
10. Japan-U.S. trade relations and the deregulation process

1. Introduction of speaker and briefing status

   Official of the International Press Division of the Ministry of Foreign Affairs: Good morning, ladies and gentlemen. Welcome to a press conference by the Japanese delegation regarding an outline of Japan's positions at the Denver Summit. The briefer this morning is Mr. Hiroshi Hashimoto, Spokesman for the Prime Minister of Japan. After his announcement, there will be a question and answer session. When you have questions to him, please come to the nearest microphone and disclose your name and affiliation. Mr. Hashimoto, please.

2. Japan's Strategic Positions at the Denver Summit of the Eight

   Spokesman for the Prime Minister Hiroshi Hashimoto: Good morning, ladies and gentlemen and welcome to the first official briefing of the Japanese delegation on the upcoming Summit. I think we have distributed a copy of my presentation to you, so in order to save time I will just quickly touch upon several points which have already been written on the sheet of paper distributed to you, and after that I will be happy to respond to any questions you may want to ask. The first part is an overview. This is self-explanatory. This is how we see the focal points of the Summit in these three ways. Secondly, what Japan wishes to achieve at the Denver Summit. There are many subjects to be discussed in Denver and it is very difficult for us to prioritize. However, the United Nations, Africa, regional issues, including the situation on the Korean Peninsula, the environment and active aging are all areas which Japan will place particular importance upon during this Summit. I would like to talk on some concrete subjects. Would you please turn to page 2? The first item is reform of the existing international institutions, notably of the United Nations. It is an urgent agenda to push ahead with reform of the Security Council, fiscal reform and reforms in social and economic areas in an overall balanced manner within this year as the momentum for UN reform is strong, while maintaining the principle of responsibility-sharing. Japan's position on the reform of the Security Council is the following. New permanent Security Council members should be chosen from the limited number of developed and developing countries which possess the will and capacity to fulfil global responsibilities. A figure in the lower 20s, including a limited number of new, non-permanent members, would be a realistic framework for the total number of the members. Regarding vetoes, no state should use its veto to further parochial national interests particular to itself. Possible discrimination in status between new and existing permanent members would arise if the power to veto is not provided to new permanent members. In any case, this question should be resolved at the final stage of the negotiations as part of a comprehensive package of Security Council reforms. The second area is fiscal reform. Japan emphasizes the importance of financial support being proportionate to responsibility. The third area is reform of economic and social areas. Japan emphasizes the importance of strengthening the functions and the role of the Economic and Social Council (ECOSOC) and others. Would you turn to page three? Another important subject is the integration of certain countries into the globalizing international system. First, Russia. The fundamental policy of Japan towards Russia is to do its utmost toward the accomplishment of complete normalization of bilateral relations by resolving the Northern Territories issue based on the 1993 Tokyo Declaration signed by Mr. Yeltsin and then-Prime Minister Hosokawa, signing a peace treaty with Russia while supporting the reform efforts of Russia and strengthening cooperation in a wide range of areas, including multilateral fora. Japan welcomes Russia's participation in the Denver Summit, and looks forward to deepening cooperation at future Summits of the Eight. Japan sincerely hopes that Russia will take concrete steps toward contributing to the traditional Summit subjects which the G-7 have been jointly tackling, as well as to new subjects which will emerge in the future. Now that Japan and Russia are working together at the Summit of the Eight as partners, it is necessary to fully normalize bilateral relations to realize what I have just described. Japan hopes Russia will agree that there is a need to fully normalize bilateral relations with Japan. Turning to China, it is now the common position of Japan and China to encourage the development of Japan-China relations, which is important not only to the two countries but also to the Asia-Pacific region and hence the entire world. Japan will continue to support China's reform and open policy and at the same time to promote further cooperation between China and the international community through supporting China's early accession to the WTO and other means. On Africa, we welcome the fact that President Clinton has taken the initiative to talk on this subject at the upcoming Summit. In order to promote trade with African countries, Japan applies preferential customs duties. Imports from Africa to Japan increased by 12.3% in 1995 from the previous year; however, imports and exports with Africa count for only 1.5% of the total value of Japan's trade. Japan has only limited investment in Africa, with only 0.7% of Japan's foreign investments in Africa. We have been extending grants and technical assistance to Africa over investment, too. On the other hand, Japan's aid to Africa is second only to its aid to Asia, at US$1.353 billion in 1995, or 12.6% of total bilateral aid. In 1996, Japan announced a comprehensive package of concrete measures for human resource development assistance, including Education For All, Health For All, and the holding in 1998 of the second Tokyo International Conference on Africa Development (TICAD) in order to formulate an action plan for the development of Africa towards the 21st century. One of the most important components of the action plan is how to transfer the experiences and lessons of economic development in Asia to the future development of Africa. When we held the first TICAD, already the main subject was how to transfer the experiences of economic development in Asia to the future of Africa. Asia has much to contribute to African development. Democratization is self-explanatory. Could I draw your attention to several concrete subjects on which we have been cooperating with other countries all over the world, notably in Cote d'Ivoire, Tanzania and El Salvador. Next is regional issues, the Korean Peninsula. Japan is sincerely concerned with the situation in North Korea. In response to the famine in North Korea, Japan has provided 500,000 tons of rice as well as financial assistance amounting to US$500,000 in 1995 and US$6 million dollars in 1996. Hong Kong: as for the reversion of Hong Kong to China this July, the Japanese Government believes that it is important that the free and open systems under the rule of law which have sustained Hong Kong's prosperity will be maintained after the reversion. Myanmar: Japan welcomes Myanmar's accession to ASEAN and intends to continue to urge for further efforts to advance democratization and to improve the human rights situation in Myanmar. Cambodia: Cambodia is a hot issue. We have to watch carefully what is happening over there. In any case, for Cambodia's rehabilitation, stability of domestic politics based on solid cooperation among the leaders of the country and strengthening democracy through free and fair elections are the most important issues. The Middle East; Japan has engaged in a wide range of activities, including contributing US$252 million to the Palestinians, dispatching a 77 personnel monitoring team (the largest from a single country) to observe the Palestinian elections, and supporting the peace process in the Arab countries surrounding Israel, namely Egypt, Jordan, Syria and Lebanon. On Bosnia, as a member of the PIC Steering Committee, Japan is particularly active in efforts to restore peace to this area, contributing around US$410 million to assist in rehabilitation and reconstruction, as well as in humanitarian and refugee assistance. Terrorism: the basic principles confirmed repeatedly at annual Summit meetings are to firmly condemn and combat all forms of terrorism, and to make no concessions to terrorists. At the Denver Summit, it is expected that Japan will share with the other leaders lessons learned from the hostage-taking at the Japanese Ambassador's Residence in Peru. Furthermore, Japan recently established a network with ASEAN for exchanging information on terrorism. Environment: at the United Nations Conference on the Environment (UNCED) held in Rio de Janeiro, Japan declared that it would expand and strengthen its environment-related assistance (ODA) by 900 billion yen to 1 trillion yen over five years from 1992. As a result, Japan's environment-directed aid between 1992 and 1996 totaled 1.44 trillion yen. We regard global warming issues as very important. Toward the Third Conference of the Parties (COP III) to the Framework Convention on Climate Change to be held in December this year, Japan is proposing a legally binding commitment regarding CO2 emissions that is fair, substantially effective in preventing global warming and highly feasible to implement. Specifically, each country should set for itself the goal of reducing either per capita or total emissions of CO2 after the year 2000. The Government of Japan emphasizes the improvement of developing countries' capacity to deal with environmental issues, and you can understand that we have helped establish environmental centers in China, Thailand and Indonesia, and we have been implementing several programs related to environmental protection, together with the United States, and we have also been emphasizing the importance of tackling AIDS and the aging of the population as well. Developing an employment environment for the elderly and an economic regime with the capacity to absorb the aged across society as a whole. Lastly, the six areas of reform which the Japanese Government is now conducting. In order to achieve sustainable economic development in harmony with the global economy, Japan has been engaging in six reforms under the initiative of Prime Minister Hashimoto. The first one is financial reform. We call this Japan's version of the "Big Bang". It is going to be realized with the aim of restoring the financial market in Japan to a par with international financial markets, such as those of London and New York, by the year 2001. We are now tackling fiscal structural reform; in this context, unfortunately, the budget deficit is now 7.3% against GDP; it is unsustainably large. We intend to reduce the national deficit to 3% or less by the year 2003. In this connection, we also have to cut the ODA budget as well. The ceiling for the FY1998 budget for ODA is a maximum of 10% below that of FY1997. Japan intends to implement ODA effectively by prioritizing budget allocation to ensure that Japan does not lose its stature as a contributor to the international community. Japan is also conducting reform of the social security system, engaging in administrative reform, and conducting economic structural reform (notably deregulation of the economy), and lastly Japan is undertaking educational reform. We are tackling those six reforms simultaneously in order to enjoy sustainable economic development, not necessarily relying on public expenditure using taxpayers' money, not necessarily relying on the export of Japanese goods and services, but relying more on the expansion of the domestic market. Having said so, I am ready to answer any questions you have.

3. Northern Territories issue

   Q: The Russian delegation last night characterized the trend in Russo-Japan relations as positive, and I wanted to know what specific proposals the Japanese delegation brings to this Summit for resolution of the Northern Territories/Kurile Islands dispute, what methods you might have in mind for investment in the Russian Far East or joint development of that area.

   Spokesman Hashimoto: Only this morning over breakfast, there was a meeting between President Yeltsin and Prime Minister Hashimoto. We hope in the due course of the day that we will brief you on the outcome of the meeting. But I would like to tell you about the recent development of the bilateral relations. Last year, the exchange of higher-level people between the two countries was notable. The Prime Minister visited Moscow, the Foreign Minister met Mr. Primakov several times, the Japanese Defense Minister visited Moscow, etc. And this year, Mr. Primakov visited Japan and Foreign Minister Ikeda visited Moscow, the Russian Defense Minister visited Japan, and First Deputy Prime Minister Nemtsov of the Russian Federation visited Japan. By doing so, the atmosphere of bilateral relations has been improving. It is a notable change in the bilateral relations of today. When Foreign Minister Ikeda visited Moscow last time, Mr. Yeltsin took the initiative and proposed to hold an annual bilateral summit between the two countries, and it was again a very positive sign from the Russian side. Having said so, as I already explained to you at my initial presentation, Japan wants to fully normalize relations with Russia, solving the Northern Territories issue and signing the peace treaty. It may take some time to realize or conclude this issue; however, with the goodwill of the two governments, we would like to be optimistic about the possibility of realizing the signing of the peace treaty. At the same time, Japan is determined to support the reform efforts of Mr. Yeltsin, and recently, when Mr. Nemtsov visited Japan, Mr. Nemtsov promised to take concrete measures to improve economic relations with Japan. All in all, we have a positive sign of developing good relations. So, at this Summit of the Eight, we can enlarge our cooperation with Russia, and we hope that every year we can strengthen our cooperation bilaterally and in the international field.

   Q: How do you want to resolve the Northern Territorial issue? Only on your conditions, or you are ready to make concessions?

   Spokesman Hashimoto: When Mr. Yeltsin visited Japan in 1993, the two governments issued a joint declaration -- the Tokyo Declaration, we call it. The two governments declared that they would endeavor to solve this issue on the basis of law and justice. We hope that, in line with what the two countries have promised, we will find a way to solve the Northern Territorial issue. But at the same time, we would like to also enhance a good atmosphere surrounding the Northern Territorial issue. In this sense, we would like to take some concrete steps in this direction. Japan and the Russian Federation have been negotiating on the so-called Fishing Framework for the waters surrounding the Northern Territories, and we hope that we can finalize the negotiations soon so that we can show to the countrymen of both countries the tangible results of improvement of the bilateral relations between the two countries.

4. Russia's participation in the G-7 process

   Q: Turning to Russia and Japan relations and the relation of both countries toward the G-7, this is called the "Summit of the Eight," but it is not the G-8. Do you think that after this Summit it will be possible to have the full integration of Russia inside the G-7 in transforming this into the G-8?

   Spokesman Hashimoto: I personally am not sure how important the terminology is. In any case, at this Denver Summit of the Eight, Mr. Yeltsin will participate in a variety of discussions with other G-7 leaders, and we welcome that. But at the same time, there are still certain subjects, notably international financial issues and macroeconomic coordination issues, which the Russian Federation is not ready to be in, and those traditional subjects should be discussed among the G-7 countries. But we are sure that Russia's integration into the international economic order will be further strengthened in the future. Now we are talking about, for example, Russia's participation in the WTO, but the negotiations have not made progress yet. Japan is ready to extend and has already been extending technical assistance on this aspect. Probably it will take some time for the full integration of Russia into the international economic system. Having said so, I am sure that Japan can deepen cooperation - with Russia on various subjects which Russia and the other G-7 countries, including Japan, can tackle jointly.

5. Globalization and currency rates

   Q: I have two related economic questions. The dollar-yen or the yen-dollar has fluctuated substantially in the last two years. The dollar went down to 0.80 yen to the one cent to a high of 1.55 yen to one cent; now it is at 1.12 yen to one. Could you comment on what this means, and the positives and the negatives of the change in the dollar-yen relationship? And then number two, in your opening statement you talked about the -- if I could rephrase it -- the giant steps towards globalization: Halifax, Lyon and now Denver. Could you also help me understand how many more giant steps need to be taken until we have full integration, and what they are?

   Spokesman Hashimoto: On the first question of yours, I am not representing the financial authority of Japan, so I cannot make a comment on the exchange rate itself. But in any case, what I would like to explain to you is that the exchange rate reflects the fundamentals of the Japanese economy. For the last several years, Japan experienced a sluggish economy; however, last year, we recorded more than 3% economic growth annually, and we hope that we can enjoy that kind of sustainable economic growth in the future. But in order to do so on a long-term perspective, we have got to reform our structure and society. I explained to you at the beginning of my statement that we would like to further go ahead with reform so that the Japanese private sector can show more entrepreneurship and contribute more to the development of the Japanese economy, rather than relying too much on governmental spending. The second question is related to, if I understand correctly, the integration of countries into the globalizing international system. It depends upon the country. First of all, if we talk about China, we fully support the early participation of China in the WTO. China is already recording remarkable economic development, and China would definitely be even more influential, both in economic and political terms, in the Asia-Pacific region in the future. So it is desirable for China to be more and more integrated into the international system. If we talk about Russia, already Russia is a member of the Summit of the Eight, but at the same time, if we talk about the participation of Russia in the WTO, still the negotiations in real terms have not yet started. We would like to help Russia to be ready to negotiate on a bilateral basis and a multilateral basis as well, on the WTO membership issue. If we talk about the African situation, although there has been progress among certain countries, it may still be rather difficult for them to be integrated into the international system. Therefore, the developed countries should endeavor to extend assistance in all forms to the African countries. If you quickly look at the history of the economic development in the Asia-Pacific region, we can hope that the poorer countries will have the potential to develop their own economy in the future. So we hope that the countries concerned will try to develop their own economy on their own, introducing appropriate measures, and on the basis of this, we hope that the developed countries can help more for the sustainable economic development of these countries.

6. Japan's global approach to the aging problem

   Q: I was wondering if you could address the aging issue, and more specifically talk about Japan's interest in raising this issue at the Summit, and what types of policies or structure you would like to see developed and going out of this meeting to deal with this issue in the future?

   Spokesman Hashimoto: Already, a bit more than 15% of the Japanese population is composed of people above the age of 60. I think, if I remember rightly, the relevant figure in the United States is about half of this percentage. By 2020, the percentage of elderly people in Japan will increase to 25%. This means that we have got to ask the elderly people to continue to work, and the younger people will have to support the society and the welfare of the elderly people. In the past, the Japanese people at the age of 60 began to get pensions, but because of the national deficit, because of the aging society, already the people of 60 years old cannot start getting pensions. We are now in a transitional period, but eventually people of the age of 65 years can start to get their pension, and so on. This illustrates the difficulties which Japanese society faces. So while we are decreasing the deficits of the government, at the same time, we have got to ask even the elderly people to pay more for medical care, social welfare, social security, etc. Individually, Japanese people will have to bear more money for their future life. In this sense, it is desperately necessary to achieve sustainable economic development for a long, long time, with the initiatives taken by the private sector rather than with an increase of public spending. I think Japan has joined the developed countries which have been facing the same difficulties. The Prime Minister last year, at the Lyon Summit, for the first time touched upon this subject, saying that we industrialized countries should share the experiences and try to learn from each other what we should do to cope with the various social and economic issues, including the aging population.

7. Japan's view of European Monetary Union

   Q: I'm sorry; this is also an economic question, but maybe you can answer. I want to know what the Japanese Government thinks of the advent of the Euro in 1999? Do you think that could help to stabilize the international monetary system, and do you think it could become an important world currency on par with the dollar? What are your views about that?

   Spokesman Hashimoto: The EMU can have a big influence on the international financial market. Therefore, we sincerely hope that the process of the single currency will be implemented as a stable process. This is one thing I can say. At the same time, the Japanese want to see that the European Union remains open to the outside world, and while the members of the European Union are endeavoring to boost their economy, eventually with the single currency, for the time being Japan herself wants to restructure her economy, and we also can enjoy sustainable economic growth in the future. That is basically what we think of the EMU.

8. The G-7 approach to Africa

   Q: At this Summit, Africa is an agenda item. Persons have raised concerns about African leaders not being here -- how can you have a Summit and talk about Africa with African leaders not being here -- and what are your thoughts on that? And the conference you are going to have in Tokyo in 1998: are African leaders and NGOs planning to be there, and are they going to be invited? And what do you expect to come more out of the conference than, "You can learn from us?" What concrete things are you going to put on the table, if possible?

   Spokesman Hashimoto: The G-7 Summit traditionally has been exchanging views on various subjects which are not directly related to those countries concerned. This time, we are going to talk about Africa; it is very timely to talk about Africa, because the globalizing international system is going ahead, and we hope that the African countries should not be marginalized in this process. At the same time, those G-7 countries have been enjoying many opportunities to exchange views with the African countries; therefore, we would like to discuss among ourselves what we can do for more constructive relations between the developed countries and the African countries in the future. I am sure that the African countries will be satisfied with the results of the discussions. Secondly, on the Tokyo International Conference on African Development, as I already told you, in 1993 Japan co-hosted the conference, and at that time, many Heads of Government and State from Africa participated in the conference, together with the G-7 countries, and as a result of the first meeting, we have had an Asia-Africa Seminar in Indonesia to follow up on the subject of how to transfer the technology and experiences of the economic development in Asia to Africa. The first seminar was successful, and now the second Asia-Africa Seminar is taking place in Bangkok. Today it will be over. Next year, on the basis of these seminars and the preparatory talks which will be held this year, we would like to strengthen further our efforts on this agenda. This means that Asia, in a sense, is a model case for self-help efforts and international cooperation in the development of the economy over there. The Asian countries are very enthusiastic to transfer this know-how to the African countries. Of course, in addition to this, we will discuss all aspects of African development next year, and we hope, as was the case at the first Tokyo International Conference on African Development, even more Heads of Government and States from Africa will participate.

9. Japan's position on United Nations Security Council reform

   Q: I would like to know if Japan would support Brazil's aspiration to participate in the enlarged U.N. Security Council?

   Spokesman Hashimoto: As I explained to you, Japan supports an increase in the limited number of permanent members which have the will and capacity to implement the international responsibility. However, we have not yet reached a stage where specifically which country should be in. What we say is that if Japan is requested to be a member of the Security Council, Japan is ready to implement its responsibility as a permanent member. At the same time, we also have proposed a limited number of non-permanent members, and again, we do not specifically mention the number of seats for those new permanent members or new non-permanent members. We would like to wind up the negotiations by fall of this year, and for the time being, we would like to deepen the exchange of views of the various countries, including Brazil. The most important thing is that we make common ground among the members of the United Nations on the directions of the reform of the Council.

10. Japan-U.S. trade relations and the deregulation process

    Q: The U.S. and Japanese sides gave rather different interpretations to the agreement on deregulation reached early yesterday. Is this the last we will hear at this Summit of U.S.-Japanese differences on trade?

    Spokesman Hashimoto: I am not sure what you have in mind. I wonder if you have read the communique on relations with the enhanced Working Group on Deregulation. That is self-explanatory. We have decided to set up an upper committee in addition to the existing Working-Level Committee on Deregulation. The upper committee is headed by the deputy minister level; they will meet at least once annually, or more often if they want, and they will report to the leaders of the two countries. But this forum is not the place to decide something; rather, the main function of the committee is to exchange views on how to further deregulation. At the same time, this committee will not necessarily talk about the deregulation of the Japanese economy, but also pick up some issues in relation to deregulation in the United States as well. So on the nature of the consultations between Japan and the United States, we have already had a Working Group meeting under the so-called Framework Agreement, but we have now enhanced the Working Group meeting, and we have another committee. So we hope that we can further exchange views, but I would like to stress once again that whether the Clinton Administration emphasizes it or not, Japan has got to go through various reforms, including deregulation. The main purpose of Japan's deregulation is to enjoy sizable or sustainable economic growth in the future. Unless we succeed at this, sustainable economic growth will not be the case. Because of the huge national debt, Japan is not in a position to use more of the public money to expand our domestic demand. We have got to utilize the individual entrepreneurship of Japanese business people to help develop the economy. So in this sense, we are very much sincere in dealing with deregulation. Thank you very much, ladies and gentlemen.

    Official of the International Press Division of the Ministry of Foreign Affairs: Thank you very much for coming. We will have three more briefings this afternoon. The first one will begin at 15:00, with two topics: "Japan's Economy: Policies and Prospects," and the other subject being "Africa and the Environment from Japan's ODA Point of View." Please come to this place again this afternoon. Thank you very much.