Section 3. North America
(1) The United States
A. Overview
(a) Japan and the United States, sharing the common sense of value on freedom and democracy, have expanded friendly and cooperative relations in a wide range of areas from security cooperation under the Japan-U.S. Security Treaty to close economic relations symbolized by two-way trade exceeding $112 billion. The two countries must jointly try to solve their economic problems with the favorable defense cooperation maintained, in order to prevent these problems from affecting the fundamental base of healthy, firm bilateral relations. Japan and the United States have promoted cooperation on not only bilateral but also global issues. The Japan-U.S. cooperative relations based on a global perspective must be promoted further given their great economic sizes and roles in the international community.
(b) Japan-U.S. friendship has been growing stronger despite various problems pending between the two countries.
The personal friendship between Prime Minister Yasuhiro Nakasone and President Ronald Reagan, built up since their exchange of visits in 1983, was promoted further through the prime minister's U.S. visits in January 1985 and April 1986, and their summit talks on the occasion of the seven-nation Tokyo Summit in May 1986. From late April to early May 1987, Prime Minister Nakasone made an official visit to the U.S. at the invitation of President Reagan and held two rounds of talks with the U.S. leader. The official visit in a sense symbolized their close friendship and mutual trust.
Foreign Minister Tadashi Kuranari held talks with U.S. Secretary of State George Shultz at a United Nations General Assembly session in September 1986 and had further meetings in December 1986, March 1987 and April 1987.
(c) Prime Minister Nakasone's official visit to the U.S. in 1987 was a focus of attention because it took place when severe anti-Japanese sentiments were raging in the United States surrounding serious economic problems. The Prime Minister's talks with the President made great achievements in that the two leaders shared views that Japan and the United States could not leave their respective current account imbalances unchecked and should play their respective roles in improving the imbalances with firm political determination. They also shared the recognition that the cooperative Japan-U.S. relations were too important to be affected by economic problems. They also agreed to regularize Japan-U.S. summit talks to expand bilateral cooperation in the global context. The agreement indicated U.S. willingness to further consolidate its relations with Japan for peace and prosperity of the world.
B. Japan-U.S. Economic Problems
(a) Against the background of growing concern over the huge U.S. trade deficit, given as $166.3 billion for 1986 by the U.S. Commerce Department, omnibus trade bills were introduced in the new U.S. Congress inaugurated in January 1987. These bills include tough measures for promotion of fair trade and protection of intellectual property ownership. The U.S. administration has criticized these bills for their strong protectionist characteristics. However, given its need for negotiating authority in the GATT new rounds, it is believed to be almost certain that a trade bill of one form or another will pass the Congress.
In the United States, there exists deep dissatisfaction with Japan, whose trade surplus with the United States, $58.6 billion for 1986 by the Commerce Department, is equal to about one-third of the total U.S. trade deficit. There is also irritation caused by the fact that the U.S. dollar's recent depreciation against other major currencies has failed to reduce the U.S. trade deficit as early as expected. On April 30, the House of Representatives passed its omnibus trade bill which includes the so-called "Gephardt Amendment" which requires foreign countries running trade surpluses with the United States to reduce the surpluses 10% every year. U.S. trade legislation is expected to have a great adverse effect on Japan-U.S. economic relations. Japan has been continuing efforts so that the U.S. Congress will not pass any protectionist trade legislation.
(b) Japan and the United States have already solved many of their economic problems through their joint efforts. Economic problems solved this way in 1986 include leather products, cigarettes, machine tools and textiles. The problems on lawyers and fishery products were solved in early 1987.
Japan and the United States at their foreign ministers' talks in January 1986 tentatively concluded their MOSS (market-oriented, sector-selective) negotiations to improve U.S. access to Japanese markets. But they have launched new MOSS talks on transportation equipment where auto parts trade has been the subject of consultations. The interim report on negotiations on the matter was unveiled in February 1987, and the final report was adopted in August 1987.
(c) Japan still continues consultations with 'the United States to solve individual trade problems. On semiconductor trade, the United States announced a unilateral trade action against Japan on March 17, 1987, claiming that Japan had failed to comply with the September 1986 arrangement for improvement of U.S. access to the Japanese semiconductor market and prevention of semiconductor dumping. Japan has denied the alleged failure in observing the arrangement and has insisted that the U.S. action runs counter to GATT. Japan has sought consultations on the U.S. action under Section 1 of GATT Article 23 and requested the United States to withdraw the action through working-level consultations. The United States withdrew part of the action in June.
Japan and the United States are also making efforts to solve other trade problems such as U.S. participation in the construction of new Kansai International Airport and Japanese government procurement of supercomputers.
(d) Japan's efforts to improve economic relations with the United States are not limited to individual trade problems. Japan believes that structural problems in both countries exist behind the Japan-U.S. trade imbalances. Japan has thus requested the United States frequently to reduce its budget deficits and improve its competitiveness, while on its own having strived to restructure the economy and increase domestic demand to implement recommendations of the Maekawa Report compiled by the Economic Structure Research Panel headed by former Bank of Japan Governor Haruo Maekawa.
(e) Prime Minister Nakasone mainly discussed economic problems with U.S. President Reagan during his visit to U.S. last spring. They reaffirmed that the two countries would cooperate in macroeconomic measures and currency exchange rate stabilization and should continue efforts to solve individual economic problems.
C. Japan-U.S. Security Relations
(a) Close Consultations and Cooperation
It is difficult for Japan to ensure its national security by itself in today's international society. Japan has thus chosen to ensure its security by possessing minimum necessary defense capabilities and maintaining the Japan-U.S. Security Arrangements. These arrangements have enabled Japan to be free of any threat of armed aggression and prosper in peace. The Japan-U.S. Security Arrangements have contributed to maintaining peace and stability of not only Japan but also the Far East.
Japan and the United States maintained good cooperative relations in security in 1986 as reaffirmed on such occasions as the Japan-U.S. summit talks, U.S. Defense Secretary Caspar Weinberger's visit to Japan, Defense Agency Director General Yuko Kurihara's visit to U.S. and the bilateral foreign ministers' consultations.
(b) Smooth Operation of Japan-U.S. Security Arrangements
1) The Japan-U.S. Security Treaty and the bilateral agreement on the status of U.S. forces in Japan allow U.S. forces to be stationed in Japan for the nation's security and the international peace and security in the Far East. The Japanese government has taken various measures to ensure the effective operations of U.S. forces in Japan. It continued efforts in 1986 to improve facilities and areas for U.S. forces and facilitate their activities under the Security Treaty. In implementing these measures, the government has given considerations to the harmony between U.S. forces' activities, and economic and social development of regions surrounding their facilities and areas, while seeking to ensure the smooth operations of U.S. forces.
2) The U.S. forces in Japan employ about 20,000 Japanese workers. Their employment needs to be stable to ensure the effective operations of U.S. forces. But the recent economic changes have forced U.S. forces to fast increase their expenses in dollars. The government has decided to bear part of cost for Japanese workers in order to maintain stable employment and ensure effective operations of U.S. forces. A special agreement was signed for this purpose between Japan and the United States in June 1987.
3) Japan and the United States continued various efforts in 1986 to enhance reliability of deterrence based upon the bilateral security arrangements. Port calls of major U.S. naval ships, including battleship New Jersey, in Japan and various joint exercises in Japan, including the first combined joint field training exercises, epitomized the good security relations between the two countries.
(c) Technical Exchange in Security and Defense
1) The Strategic Defense Initiative (SDI), as advocated by U.S. President Reagan in his address in March 1983, is a research program to study the feasibility of a system to render ballistic missiles ineffective by non-nuclear defense means and pursue ultimate elimination of nuclear weapons. Japan made a decision on the participation in the SDI research program as was explained in a statement of September 1986 by the chief cabinet secretary, acknowledging (i) that the U.S. research program implemented for the purpose of eliminating nuclear weapons was in conformity with the position of Japan committed to peace, (ii) that Japan's participation in the SDI research will contribute to the effective operation of the Japan-U.S. security arrangements, and (iii) that Japan's participation in the SDI research may contribute to the progress of related technologies in Japan.
2) Japan opened the way in 1983 for the transfer of Japanese military technologies to the United States. It was determined, in 1986, that Japanese technologies concerning portable surface-to-air missiles, and construction and modification of U.S. naval ships are appropriate to be authorized for transfer to U.S., as first three cases of this category.
D. Japan-U.S. Aviation Relations
(a) At the comprehensive revision talks on the aviation agreement resumed in March 1986, Japan sought an increase of flight frequencies of Nippon Cargo Airlines between the two countries. The United States requested Japan to allow freight forwarders' charter flights and to take measures to improve the doing business conditions including simplification of customs clearance procedures and relaxation of airport regulations. Intensive talks were held and in July 1986 the two countries reached agreement on three additional weekly flights for Nippon Cargo Airlines, freight forwarders' charter flights (100 flights a year) and other matters.
(b) After such pending issues were solved, the two countries again resumed the comprehensive revision talks on the aviation agreement. The talks were held in Tokyo in September 1986, in Washington in December and in Tokyo again in March 1987 for exchange of views on future long-term Japan-U.S. aviation relations.
E. Japan-U.S. Medical and Scientific Cooperation
(a) The Japan-U.S. Cooperative Medical Science Committee, established in January 1965, held its 22nd meeting in Toyama on July 24 and 25, 1986, for exchange of views mainly on the reports that its nine subcommittees submitted on their respective activities.
(b) The 11th meeting of the co-chairmen of the Japan-U.S. Committee on Scientific Cooperation, set up in 1961, took place in Tokyo on October 30 and 31 mainly to review its activities upon the 25th anniversary of its establishment.
F. Japan-U.S. Energy Relations
(a) The Japan-U.S. Energy Working Group, a government-to-government forum on energy problems, was held its eighth meeting in Washington in October 1986 and its ninth meeting in Tokyo in March 1987.
(b) The U.S. Government published a report in June 1986 on the impact of the possible lifting of a ban on exports of Alaskan North Slope crude oil. U.S. oil imports have increased due to oil price drops since late 1985 and the U.S. Government issued a report titled "Energy Security" in March 1987, warning U.S. oil imports might cover 50% of its total domestic oil demand by the middle of the 1990s.
(c) The Japanese and U.S. private sectors continued discussion on the Alaskan Chuitna coal project.
(d) A Japan-U.S. pre-feasibility study continued on Alaskan North Slope LNG project.
(2) Canada
A. Overview
(a) Japan-Canada relations have smoothly developed thanks to the emphasis placed by the Mulroney government on the bilateral relations. Prime Minister Nakasone's visit to Canada in January 1986 and Canadian Prime Minister Mulroney's visit to Japan in May 1986 are representative of the good relations. Through the exchange of the top leaders' visits in 1986, Japan and Canada reaffirmed their common stance in international society and laid down basic themes for bilateral cooperation in the future. Based on the basic themes, Japan and Canada have been making steady progress in bilateral cooperation in such fields as pursuit of peace and disarmament, struggle against protectionism, and expansion of bilateral economic relations.
(b) Prime Minister Mulroney, Foreign Minister Clark and other Canadian cabinet ministers, and Canadian parliamentarians visited Japan in 1986 to exchange views with their Japanese counterparts.
B. Japan-Canada Economic Relations
Japan and Canada have been maintaining their complementary trade relations in which Japan exports manufactured products to and imports raw materials from Canada. The two countries' two-way trade totaled US$10.42 billion in 1986, up by 12.1% from the previous year. Japan was the second largest trading partner after the United States for Canada in terms of both exports and imports. A notable change occurred in bilateral trade relations in 1986. Japan had run trade deficits with Canada persistently, but posted a trade surplus in the year for the first time. The Japanese trade surplus was about US$630 million.
In automobile trade, Japan and Canada agreed to jointly monitor Japan's exports to Canada in 1986 as in 1985.
Japan imported 17.54 million tons of Canadian coal (including 16.27 million tons of coking coal) in 1986, which accounted for 19.6% of Japan's total coal imports. Canada was the second largest coal exporter to Japan after Australia in 1986 as in the previous year.
Japan and Canada held bilateral fishery consultations in May 1986 centering on Japanese fishing quotas in Canadian waters and bilateral trade in fishery products.
As for investment, a Japanese automaker decided in 1986 to build an assembly plant in Canada, following another Japanese company's similar decision in 1985. A notable change was a sharp increase of Japanese investments in Canadian bonds toward the second half of 1986.
In bilateral economic exchange, a large economic mission, led by Minoru Kanao, Japanese representative to the bilateral businessmen's conference, visited Canada in October 1986 to discuss future economic relations with the Canadian government and business leaders including Prime Minister Mulroney. The mission made great progress in deepening bilateral relations.
Bilateral forums in 1986 included the Japan-Canada Governmental Consultations on Financial Affairs in October, as well as the Japan-Canada businessmen's conference, that took place in Nagoya in May with a total of almost 500 businessmen present from the two countries.
