Section 2. North America
Item 1. The United States of America
1. Internal Situations
The Bush Administration, inaugurated in January 1989, has made a steady advance in general enjoining a high public approval rating running around 70%. It can be pointed out that President Bush's high popularity stems from the following factors: (1) President Bush firmly handled foreign affairs, (2) the U.S. economy, though showing a sign of slowdown, continued to expand, and (3) President Bush took appropriate measures, through the announcement of timely policy proposals, for issues of national concern.
Though occasionally criticized, mainly by the Democratic members of Congress, for not being brave enough in shaping policies needed to deal with the internal and external situations, President Bush won the confidence of many of the American people with his cautious and realistic approach and strong leadership in foreign affairs. Regarding the fiscal deficit, which poses the most serious challenge to his administration, President Bush announced in June 1990 that he might consider tax revenue increases, reversing his previous pledge not to take such a step. It remains to be seen whether the change would affect the budget debate in Congress and the domestic political situation prior to the midterm election scheduled for November 1990.
(1) Bush Administration's Response to Internal and External Situations and Its Conflict with Congress and the Democratic Party
President Bush took almost six months after taking office to solidify his political base by lining up his administration, making policy reviews and announcing new policies. He aptly dealt with such issues of national concern as environmental protection, drugs and crime, and education. He pushed for revision of the Clean Air Act long overdue, announced the Natural Drug Control Strategy in September 1989 and held an education summit later the same month with the participation of the governors of all the 50 states and most members of his Cabinet. However, his new policy proposals were constrained due to the fiscal deficit.
Despite his appeal in his inaugural speech to the Democrats for a cooperative bipartisan relationship, President Bush experienced since autumn 1989 several difficulties with the Democrats holding the majority in Congress. The President's attempt to push through a bill for reducing tax on capital gains in accordance with his campaign promise was strongly opposed by the Democratic leadership, who charged that the measure would only benefit the wealthy. The bill passed the House of Representatives with some Democrats voting for it. In the Senate however the bill met strong resistance, forcing President Bush to abandon the idea for the time being to give priority to the long-delayed passage of the budget related bills. Meanwhile, President Bush was criticized, mainly by the Congressional Democrats and some media, for failing to take initiatives in educational, environmental and other domestic policies as well as in the extension of assistance to Poland and Hungary, by reason of the fiscal deficit.
President Bush also got involved in a conflict with Congress over his policy toward China following the Chinese Government's crackdown on the pro-democracy movement highlighted by the Tiananmen Square incident of June 4, 1989. The disclosure of a secret visit to Beijing of Brent Scowcroft, national security adviser, angered Congress. Among other China-related matters which pitted Bush against Congress was the Pelosi bill concerning the visa status of Chinese students in the U.S. President Bush, who wished to avoid isolating China, vetoed the bill. (The Senate failed to override the veto by a few votes.) Since the mood of the American people was reported to be shifting from conservatism to a middle-of-the-road line, Congress responded unfavorably to President Bush's conservative posture on abortion issues and on a proposal for a Constitutional amendment for prohibiting the physical desecration of the U.S. flag.
(2) Rise In the Presidential Approval Rating Following Progress In U.S.-Soviet Relations and Invasion of Panama
Against the background of increasing demand for a stronger presidential leadership to deal with the dramatic changes in the Soviet Union and Eastern Europe, President Bush announced late in October that he would hold a summit meeting with Soviet leader Mikhail Gorbachev in Malta in December. In the wake of the collapse of the Berlin Wall, the Malta summit put U.S.-Soviet dialogue on a steady course and heralded the advent of a new U.S.-Soviet relationship. As a result, President Bush received higher credit for his dealing with the Soviet Union. The President's decision to send U.S. troops to Panama and the subsequent arrest of Gen. Noriega also helped boost his public approval rating by 10% to 80%, the second highest mark ever recorded in the Gallup poll.
(3) "Peace Dividend" and Reduction of Fiscal Deficit
The rapid improvement in East-West relations prompted arguments that the defense budget should be reduced to be used for other purposes as so-called "peace dividend" and discussion on the amount and usage of the dividend was widely held. The administration proposed reductions in the defense budget for fiscal 1991 (October 1990 to September 1991). In Congress, where the amount of the reductions was criticized as not large enough, the debate on the issue is still under way. There is a strong argument in some quarters that the "peace dividend" should be used not for reducing the fiscal deficit but for implementing domestic programs.
President Bush started budgetary consultations, known as the "budget summit," with Congressional leaders without any preconditions in May 1990 after it became certain that the fiscal deficit would expand larger than projected. The widening of the deficit resulted from these factors: 1) The U.S. economy has begun to show a sign of slowdown after eight years of continuous expansion, the longest in peacetime, and 2) the administration will have to spend huge funds for relieving the failed savings and loan associations. In June, the President issued a statement on deficit reduction measures including the need for a tax increase which was a reversal of the stance he had assumed during the presidential election in 1988. On one hand, the move was praised as the expression of the President's firm determination to reduce the fiscal deficit. On the other hand, however, it threatened to affect the President's relations with conservative Republicans who demand tax reductions. Yet, some states recently approved proposals for tax increases to improve their infrastructures, thus raising the prospect that Americans might be ready to endorse tax increases if it is spent appropriately.
(4) The 101st Congress
The leadership of the Congressional Democrats, in particular Senate Majority Leader George Mitchel and House Speaker Thomas S. Foley, initially accepted President Bush's appeal for bipartisan cooperation. However, conflicts over such issues as a reduction in the capital gains tax and policies toward China put an end to the honeymoon period between the new President and Congress. However, the Democrats have failed in their efforts to seize policy initiatives toward the 1992 presidential election. From the opening of the 101st Congress to early July 1990, President Bush vetoed bills on 13 occasions, all of which Congress failed to override. Meanwhile, the Bush Administration and members of the Cabinet have maintained their basic posture of seeking a compromise with Congress through consultation.
During the 101st session, Congress continued debate on many issues related to Japan, including the Structural Impediments Initiative talks, the "Super 301" provision of the Omnibus Trade Act, opening of Japan's financial market and increasing Japanese investment in the U.S. Changes in the U.S.-Soviet relationship and domestic fiscal restraints shifted the attention of both the Republican and Democratic parties and prompted their arguments on economic nationalism.
(5) Midterm Election
In the November 6 midterm election, 35 senators (Note), all the 435 members of the House of Representatives, the governors of 36 states and the chiefs of other local administrative bodies will be up for election.
In the 1990 election, such issues as abortion and environmental protection are expected to become controversial in some states. But, no issue has emerged as the national issue. Few foresee a major change in the strength of both parties in Congress barring a worsening of the economic environment. It remains to be seen, however, whether controversies on tax increases and relief funds for the savings and loan associations would affect the outcome of the election. Each party has been trying to prevail over the other, with the Democratic Party seeking to extend its political strength with the momentum of its victories in the gubernatorial elections in New Jersey and Virginia in November 1989 (Note) and the Republican Party taking advantage of President Bush's popularity.
The number of House seats allotted to each state is subject to change on the basis of the 1990 census. In this connection, the outcome of gubernatorial and state legislature elections is being watched closely, as they play a key role in redistricting. In California, Texas and Florida, where the number of House seats is likely to be increased, the Republicans and the Democrats are running very competitive races for the gubernatorial seats all of which are currently held by the Republican Party.
(6) Economy
The U.S. economy grew only 2.5% in 1989, down from 4.5% in 1988. Though the U.S. economy has continued to grow at a moderate pace since 1982 in the longest peacetime expansion, growth declined to a mere 0.3% in the fourth quarter of 1989 due to a slowdown in personal consumption and private-sector capital investment, a situation which must be watched closely. Upheld by the economic expansion, the unemployment rate sagged for the seventh consecutive year, standing at 5.2% as of 1989. Commodity prices have also been getting stabilized since the latter half of 1989 thanks to tight-money policy, with consumer prices rising 4.8% during the year. The administration forecast that U.S. economic growth in 1990 will temporarily decline to the 2.0% level, but rise again to the 2.8% level in 1991 and further to the 3.0% level in 1992.
The so-called "twin deficit," which poses a serious problem not only to the U.S. economy but to the world economy as a whole, still remains on a high level despite showing some improvement. The fiscal deficit, which totaled $221.2 billion in FY 1986, shrank to $152 billion in 1989. However, the administration, in its midyear budget review, predicted that the fiscal deficit is likely to expand again largely in and after FY 1990. Consultations have been under way since May 1990 between the administration and Congressional leaders on how to settle the fiscal deficit.
Results of U.S. Financial Balance and Its Estimate
The U.S. trade deficit continued to decline in 1989 as in 1988, registering a five-year low of $109.4 billion, though the rate of decrease somewhat narrowed in the second half of 1989. The favorable trend has been continuing since the turn of the year. The trade balance with Japan improved, but by a smaller margin than with the European Community, Canada and the newly industrializing economies in Asia. Accordingly, the trade balance with Japan continued to stand out despite the decline in the margin.
2. Foreign Policy
From 1989 through 1990, the United States took diplomatic initiatives toward a historic reform looking beyond the Cold War and building a new international order. Among the U.S. initiatives are proposals in the area of arms control and disarmament such as reductions of strategic, weapons, conventional forces in Europe, chemical weapons; support to the democratic reforms in Eastern Europe; intellectual and technical assistance to the introduction of market economy in the Soviet Union; the holding of a conference of the four major powers plus the two Germanys (the so-called "Two plus Four Conference") for achieving a peaceful German unification; a nine-point proposal to the Soviet Union for the same purpose; various proposals concerning the North Atlantic Treaty Organization; efforts for settling regional conflicts in Central America, the Middle East, Cambodia, and Africa; holding of the international conference on the protection of the global environment. They were all aimed at building a stable and peaceful international community based on the American ideal of freedom, democracy and respect of human rights. The U.S. initiatives were basically supported by Japan and other industrial democracies and most of them were implemented with the cooperation and coordination of these countries.
The changes in the Soviet Union and Eastern Europe starting in 1989 were so dramatic that they threatened to confuse the entire situation unless they were dealt with properly. Fortunately, the U.S. exercise of its well-managed leadership and the cooperation extended by Western democracies have enabled the countries concerned to overcome the difficulties.
Meanwhile, the Bush Administration has laid down the following five points as its major foreign policy objectives in the decade of the 1990s: 1) Consolidating democracy, 2) building free markets, 3) helping the peacemakers, 3) protecting the world against transnational dangers, and 5) renewing the Western alliance.
(1) Policy on the Soviet Union
In May 1989 President Bush announced a new policy toward the Soviet Union, looking beyond containment and integrating the country in the international community. Consequently, at the Malta summit in December the same year President Bush outlined plans for supporting the economic reform of the Soviet Union focusing on the introduction of the market principle. The president declared that the U.S.-Soviet relationship was entering a brand new era in the wake of the Soviet reform.
The next round of the U.S.-Soviet summit, held in Washington May 31 to June 3 following three preparatory Foreign Ministers talks, produced positive results including an agreement to regularly hold summit meetings between the two countries, and put the new era of the U.S.-Soviet relationship on a steady footing. The documents signed at the Washington summit included a basic agreement on strategic arms reduction talks, an agreement on scrapping chemical weapons, protocols on the verification of nuclear tests, a trade agreement providing for the granting of most-favored-nation treatment to the Soviet Union, a long-term grain agreement, and a civil aviation agreement.
While the U.S.-Soviet relationship has undergone a qualitative change, from conflict to dialogue and cooperation, the United States has continued to urge the Soviet Union to accelerate the introduction of market-oriented economy, divert its resources from the military to the non-military sector, and to reduce assistance to countries abetting regional conflicts.
(2) Policy on Europe
For the Bush Administration, which advocates "a whole and free Europe" as one of its major foreign policy objectives, the drastic changes taking place in Eastern Europe since the summer of 1989 and the subsequent collapse of the Berlin Wall, has opened realistic possibilities for making the division of Europe a thing of the past. Against such a background, the Bush Administration has been extending positive support to German unification, while taking various measures for lessening Soviet anxiety over a unified Germany's entry into the North Atlantic Treaty Organization. The measures include moves for an early completion of talks on conventional forces in Europe (CFE) including reductions of U.S. forces, a reform of the NATO and the building of a new relationship between the NATO and the Warsaw Treaty Organization, the expansion of the function of the Conference on Security and Cooperation in Europe (CSCE). At the same time, the Bush Administration, aware of the growing importance of the European Community in the world, advocated in December 1989 the "New Atlanticism" to strengthen the U.S.-EC relationship.
Despite the changes in Europe, the United States firmly maintains the stand that the importance of NATO remains unchanged and that it would keep its troops in Europe as long as European countries want the U.S. presence. The U.S. has repeatedly emphasized that the CSCE would not be able to supersede NATO even if its functions are strengthened.
(3) Policy on Asia
The Bush Administration puts emphasis on the Asia-Pacific region with the notion that the importance of the region will further increase in the future. With annual trade between the United States and the Asia-Pacific region now totaling more than $300 billion, 1.5 times the volume of U.S. trade with Europe and accounting for approximately 36% of the total U.S. external trade, the administration recognizes that the peace and stability of the region directly affect U.S. interests. Accordingly, the U.S. is striving to secure the stability of the region by strengthening its relations with Japan and other allied or friendly countries in the region and deploying its troops on forward bases. In April 1990, the Bush Administration announced its policy of restructuring or partially reducing its forward deployed forces in the Asia-Pacific region in stages in the next 10 years in view of changes in the international situation and U.S. Congressional pressures for curtailing the defense budget. But, the administration has clearly denied its intention of drastically reducing troops in the region, and at the same time clarified its intention of maintaining its forward deployed forces needed for the stability of the region.
U.S. relations with China have remained stagnant following the incidence of June 4, 1989. The U.S. Government has welcomed recent Chinese measures such as the release of political prisoners, lifting of martial law in Beijing and Lhasa, and the permission for Fang Lizhi to leave China. Yet, the U.S. Government has been urging the Chinese Government to take further action toward the respect of human rights and democratization in order to improve U.S.-China relations.
The Bush Administration announced July 1990, its new policy of opening a dialogue with Vietnam on the Cambodian issues and withholding its support to the Coalition Government of Democratic Kampuchea (CGDK) as the holder of Cambodia's seat in the U.N. This new policy represents Washington's determination to prevent the Khmer Rouge from coming back to power.
3. Relations with Japan
(1) Overview
(i) Japan-U.S. Relations on Trial
Japan-U.S. relations, founded on the alliance under the Mutual Cooperation and Security Treaty and the high interdependence between the two economies have remained basically firm and sound, being bolstered by long nurtured close ties between the two peoples.
The bilateral retaliations were, however, put to trial on several occasions from 1989 through the first half of 1990.
First, against the background of the continued large trade imbalances, pressure for tougher policies toward Japan intensified in the U.S., especially in the Congress. Individual trade issues (satellites, supercomputers and forestry products) raised in connection with the Super 301 provision of the Omnibus Trade Act and how to deal with the Structural Impediments Initiative emerged large as big political issues.
Secondly, while Americans are becoming less conscious of Soviet threat in the wake of changes in U.S.-Soviet relations, there has been observed an increasing sense of threat from Japan's economy and technology with the rising level of Japanese direct investment and keen competition in the high technology area.
Thirdly, the "Revisionist Thinking," drew much attention in the U.S. which argued that there is no choice but to adopt a different set of rules against Japan, because it is inherently different from other countries in all aspects of life, be it economy, society or the way its people associate with one another. Such arguments raised questions about the way the two countries understand and perceive each other
(ii) Valued Mutual Trust Between the Two Leaders
While both sides have made a lot of efforts to cope with these issues, personal trust between the two leaders proved particularly important in addressing them.
Prime Minister Toshiki Kaifu visited Washington at the end of August 1989 shortly after taking office, and established a warm personal relationship with President Bush. At their meeting, the two leaders reaffirmed the importance to maintain and strengthen the bilateral relations, and agreed to advance their global partnership in dealing with international issues, thus confirming basic principles of the management of Japan-U.S. relations. The two leaders have since fostered a solid relationship of mutual confidence through frequent exchanges of telephone conversations and letters, and through their subsequent meetings, one in Palm Springs, California, in March 1990 and one in Houston in July the same year.
The Palm Springs meeting was held at a time when Japan-U.S. economic relations stood at a crossroads. "Super 301"-related issues had to be settled, and an interim report on the Structural Impediments Initiative talks was impending. Frank and in-depth discussions at Palm Springs led the two leaders to confirm their political determination to resolve pending issues, and greatly contributed to the successful settlement of those difficulties.
Supported by the relationship of mutual confidence between the two leaders, the two countries managed to settle major pending economic issues prior to the Houston Summit of Major Western Industrialized Countries through strenuous efforts based on the spirit of cooperation and coordination.
(iii) Strengthening Global Partnership
Japan and the United States, whose combined gross national product accounts for approximately 40% of the world's GNP, should share responsibilities in dealing with issues of global magnitude, as well as for managing bilateral concerns. The importance of this global partnership is now widely recognized in both countries, and efforts are consciously made to strengthen such partnership.
Consequently, in the Asia-Pacific region, the Japan-U.S. cooperative relationship has produced some concrete results in such areas as policies toward China, assistance to the Philippines, and efforts to settle the Cambodian problem. The partnership is now expanding to other geographical regions as seen in our response to reform efforts by the Soviet Union and our assistance to Central and South America. The partnership has also started to cover new spheres of issues such as illegal drug trafficking and environmental problems.
This constructive partnership between Japan and the U.S. shows how much the two countries can do for the peace and prosperity of the world when they work together. This will help the United States disabuse itself of the argument that Japan is an inherently different country, which poses a threat to the U.S. and at the same time provide strong ground for repudiating such views.
(iv) Promoting Deeper and Wider Mutual Understanding
Japan and the United States are allies which share basic values of freedom and democracy and together enjoy prosperity on the basis of market-oriented economies.
The two countries, however, are yet to fully understand each other. Arguments in the U.S. tend to overlook the fact that the Japanese and American peoples have more in common than in difference, as they are together being faced with problems of today's world. It also tends to be unnoticed that Japan is always changing and will continue to change. On the other hand, some arguments in Japan tend to underestimate the power of the United States which in fact cannot be substituted by any other country. Other arguments ignore the diversity of the United States, which owes a large part of its energy and vitality to its people of diverse ethnic and cultural backgrounds.
It is necessary for Japan and the U.S. to make conscious efforts to deepen mutual understanding at the grass-roots level in order to lay down a stable basis, on which the two countries will further develop their bilateral relations, in which they have successfully dealt with various problems. With this need in mind, Prime Minister Kaifu put forward the Communication Improvement Initiative (CII) in his July 12 speech in Atlanta, delivered on his way back from the Houston Economic Summit. In the actual implementation of this initiative, it is important to expand the scope of the grass-roots dialogue beyond the furtherance of mutual understanding but to cover global issues facing not only the two countries but the entire world.
(2) Economic Relations
(i) Overview
Japan-U.S. economic relations have become increasingly close in recent years. Never before has the interdependence between the two countries been closer in the field of trade finance and technology. Yet, a huge trade imbalance still exists between the two countries, though it is showing a sign of improvement. Frustration over the difficulties in improving the trade imbalance with Japan is causing increased protectionist sentiment in the U.S., mainly in Congress.
The Japan-U.S. trade imbalance decreased in 1989 for the second consecutive year. Japan's imports from the U.S. increased 14.8% or $6.2 billion in 1989 from the previous year, while its exports to the U.S. rose 4.0%, curtailing Japan's total trade surplus with the U.S. by 8.6% to $44.9 billion from the previous year.
(ii) Moves over "Super 301"
On the basis of the "Super 301" provision of the Omnibus Trade and Competitiveness Act enacted in August 1988, the U.S. Government picked Japan as a "priority country" for the self-initiation of investigation of practices with regard to supercomputers, satellites and forest products," along with Brazil for its quantitative import restrictions, and India for its curbs on trade-related investment and established practices in its insurance market. Expressing strong disappointment toward the unilateral U.S. action, the Government of Japan made it clear that it would not negotiate with the U.S. if the U.S. insists on holding the negotiations by threatening unilateral imposition of retaliatory measures.
The Government of Japan made clear its strong objection to unilateralism evident in the "Super 301" provision at the OECD ministerial council in May 1990 and at the Arch economic summit in Paris in July. It was argued in those meetings that unilateralism, together with the tendency toward bilateralism, sectorism and managed trade, jeopardizes the multilateral trade system and. damage the Uruguay Round trade negotiations. However, Japan decided to settle individual problems pending between the two countries, holding that the two countries should calmly talk about problems each side is facing and settle them through cooperation and joint efforts, so that good bilateral economic relations- might be maintained and developed. As a result, settlements were made on issues related to the three areas of satellites, supercomputers and forestry products in June 1990, following negotiations with the U.S. side without threat of sanctions.
In March 1990 the U.S. Trade Representatives issued an annual report, as in the previous year, concerning trade barriers in foreign countries. Referring to Japan, the report cited over 30 items, such as amorphous metal, intellectual property rights and auto parts, as constituting barriers.
In April, President Bush announced that he would exclude Japan from the 1990 list of priority countries under the "Super 301" provision, evaluating Japan's positive response to trade issues since the meeting between Prime Minister and President in March. Japan issued a statement of the Foreign Minister evaluating the U.S. action as appropriate.
(iii) Japan-U.S. Structural Impediments Initiative Talks
Talks on structural impediments, called "Structural Impediments Initiative," dominated Japan-U.S. economic relations from 1989 through 1990. When President Bush announced the invocation of the "Super 301" provision in May 1989, he proposed the holding of high-level consultations between Japan and the U.S., outside of the "Super 301," on structural impediments which affect bilateral trade. As both sides agree on the proceedings for the talks, officially called the "Structural Impediments Initiative (SII)," President Bush and Prime Minister Uno in their summit meeting held on the occasion of the Arch summit, announced the innitiation of SII talks which would continue for about a year.
SII is, supplementing the efforts being made under the framework of economic policy coordination, agreed upon to identify and resolve the structural problems that stand as impediments to adjustment of trade and trade balance in the two countries. The U.S. side cited as Japan's structural impediments (1) savings and investment patterns, (2) land policy, (3) distribution system, (4) exclusionary business practices (5) keiretsu relationships (6) pricing mechanisms. Japan, on its part, cited as U.S. structural impediments (1) savings and investment pattern, (2) corporate investment activities and supply capacity, (3) corporate behavior, (4) government regulation, (5) research and development, (6) export promotion, (7) work force training and education. The first SII session was held in September 1989. After holding subsequent sessions in November 1989 and February 1990, both sides worked out an interim report at the fourth session. At the fifth session in June 1990 they issued the final report incorporating measures to solve structural problems of each side.
It is expected that measures jointly taken by Japan and the U.S. will benefit not only Japan and the United States but also a stable development of the world economy as a whole. It is important for the two countries to steadily implement the agreement reached at the SII talks. The two countries are expected to follow up the SII talks.
(3) Security Affairs
(i) Japan-U.S. Security Treaty
In today's international community it is difficult for Japan to maintain its security by itself. Japan is ensuring its security by possessing the minimum necessary defense capability and maintaining security arrangements with the United States. Japan has enjoyed peace and prosperity over the past 40 years as these arrangements effectively functioned as a system of deterrence.
Today, the Japan-U.S. Security Treaty has significance in the following sense:
Firstly, despite the progress in U.S.-Soviet relations and the progress of detente in Europe, unstable elements still exist in the Asia-Pacific region, in particular in areas around Japan, due to a qualitative improvement of Soviet military power and in view of the situation on the Korean Peninsula. Japan, therefore, still needs the U.S. deterrence based on the Japan-U.S. Security Treaty in order to maintain its peace and stability.
Secondly, Japan must push for positive dialogue with the Soviet Union and other countries in order to realize in the Asia-Pacific region the new international moves developing in Europe, which seek dialogue and accommodation. To this end, the alliance relations between Japan and the United States upheld by the Japan-U.S. security agreements is essential. In this context, it is evident that progress of East-West dialogue and negotiations in Europe was made possible only because of strong Western solidarity through the North Atlantic Treaty Organization.
Thirdly, the Japan-U.S. security arrangements constitute a framework for ensuring the stability and development of the Asia-Pacific region. The Japan-U.S. security arrangements serve as the main pillar for maintaining a positive U.S. presence in the region. At the same time, the Japan-U.S. Security Treaty gives international credibility to Japan's basic policy of not becoming a major military power strong enough to pose a threat to other countries. The Japan-U.S. security arrangements provide an important basis for stably developing relations with neighboring countries of the Asia-Pacific region.
Fourthly, the Japan-U.S. Security Treaty constitutes the foundation of Japan-U.S. relations, the most important bilateral relationship for Japan. Japan shares with the United States the values and ideals of freedom and democracy and maintains close relations in the political, economic cultural and all other fields. Such a close relationship would not exist without the security treaty with the U.S.
On the occasion of the 30th anniversary of the conclusion of the Japan-U.S. Security Treaty in June 1990, Prime Minister Kaifu and President Bush held telephone talks in commemoration and issued a joint statement hailing the Treaty. The statement said that the Security Treaty would remain a vital instrument for ensuring the freedom and security of the two nations and promoting peace and prosperity throughout the Asia-Pacific region, and that the two nations would steadfastly maintain the Treaty. The Japanese Government dispatched a member of the Diet, Shintaro Abe, to Washington as a special envoy to commemorate the anniversary. In a speech at a commemorative luncheon hosted by Secretary of State James Baker and Secretary of Defense Richard Cheney, Abe pointed out that the Japan-U.S. alliance relationship based on the bilateral security treaty had contributed to the peace and development of the Asia-Pacific region and had brought great benefits to the two countries. He also called Japanese and U.S. public attention to the present-day significance of the Treaty at a time when the international situation is undergoing structural changes. Secretary Baker and Secretary Cheney, on their part, expressed the U.S. intention to remain committed to the Japan-U.S. security arrangements, since the Security Treaty constitutes the basis for Japan-U.S. relations and for the peace and development of the Asia-Pacific region.
(ii) Close Consultations and Cooperation
Japan and the U.S. are holding various consultations on security and defense issues.
The 19th meeting of the Security Subcommittee was held in Tokyo in October 1989 with diplomatic and defense officials of the two countries conducting a frank and meaningful exchange of opinions on the world situation and the situation in the Asia-Pacific region as well as on Japan-U.S. security cooperation.
In February 1990, U.S. Secretary of Defense Cheney visited Japan. His visit was significant since it came at a time when the world situation was undergoing major changes, and since frank exchanges of opinion took place with the Japanese side, including Prime Minister Kaifu and Foreign Minister Nakayama, on international affairs and Japan-U.S. security matters. Specifically, Secretary Cheney and the Japanese side shared the view on the following points: 1) Though bright prospects are opening in East-West relations, uncertainty remains in the international situation, 2) the situation in Asia remains more complex and unstable than in Europe, and 3) it is important for the Japan-U.S. security arrangements to be firmly maintained for the future. The two sides also reaffirmed the U.S. commitment to the Asia-Pacific region.
(iii) Host Nation Support
On the basis of the Japan-U.S. Security Treaty, some 50,000 U.S. troops are stationed in Japan to ensure Japan's safety and international peace and security in the Far East. Although the deployment of U.S. troops in Japan, constitutes the nucleus of the Japan-U.S. security arrangements, the U.S. costs related to this deployment has come under considerable pressure for various reasons amid the changes in the international situation surrounding Japan. Under these circumstances, Japan is voluntarily making utmost efforts on the matter, recognizing the fact that it is extremely important to ensure the smooth operation of the Japan-U.S. security arrangements, which is essential for the security of Japan.
Since 1979 Japan has constructed and offered barracks and houses for the U.S. forces in U.S. military facilities and areas in Japan. (The fiscal 1990 budget earmarked \100.1 billion for that purpose). Japan has also shouldered part of the labor costs of the Japanese workers for the U.S. forces (now numbering an estimated 22,000) since fiscal 1978. In 1987, Japan concluded a special agreement with the U.S., providing for special measures in regard to Article 24 of the Status of Forces Agreement. Under the agreement, aimed at dealing with the economic situation surrounding Japan and the U.S. in the 1980s, Japan shouldered part of 8 categories of allowances, including the retirement allowance for Japanese workers. In 1988 the special agreement was revised, calling for Japan's fiscal 1990 budget to pay costs of all the allowances included in the special agreement. The total of labor costs including those covered by the special agreement amounts to some \67.9 billion in fiscal 1990.
In addition to providing facilities and areas for the U.S. forces in Japan, the Japanese Government pays rents for public property and environmental compensation for areas around U.S. forces facilities in Japan. These related costs included, Japan shoulders as much as \411.5 billion including rents for national property (estimated) in expenses related to the stationing of U.S. forces in Japan in fiscal 1990. (Note)
The United States is urging its allies to share more of the costs in view of its own financial difficulties and the increasing economic strength of the allied countries. But, the United States highly evaluates Japan's contributions, while strongly expecting that Japan will continue efforts to further increase- its share of the costs for the stationing of U.S. forces. In the autumn of 1989, U.S. Congress added a clause to the National Defense Authorization Act for Fiscal Year 1990, urging Japan to increase its share.
(iv) U.S. Forces Adjustment in East Asia
Currently, the U.S. deploys about 130,000 troops in the East Asian region excluding Guam. Against a background of the increasing fiscal deficits, the United States is considering phasing out these troops. Secretary of Defense Cheney briefed the Japanese side on the plan during his visit to Japan in February 1990. The Japanese side pointed out that 1) adjustment of U.S. forces must be carried out by taking the politico-military conditions into account, 2) the U.S. forward-deployment strategy is indispensable for the stability of the Asia-Pacific region, and 3) the maintenance of coordination and consultation is important and stated that the Japanese side realized the U.S. policy prudent.
In April, the U.S. Administration submitted to Congress a report titled "A Strategic Framework for the Asian-Pacific Rim-Looking Forward to the 21st Century." The report said that the United States as a Pacific power, would continue to basically maintain its forward deployment strategy and bilateral security arrangements, and that, while closely watching the strategic situation, adjust the deployment of U.S. troops in three stages in the next 10 years (first to third year, third to fifth year and fifth to 10th year). Specifically, the report envisioned a reduction of 14,000 to 15,000 troops, which is around 10% of the total forces deployed in the Asian region in the next three years - 5,000 to 6,000 in Japan, about 7,000 in South Korea and about 2 000 in the Philippines.
(v) Technological Cooperation in the Security and Defense Areas
In November 1988, Japan and the U.S. signed an exchange of note concerning the joint development of a new support fighter (FS-X) of the Air Self-Defense Force which will replace the F-1 fighter now in use. However, calls for a review of the plan mounted in the United States, mainly in Congress in 1987, and led to a new round of talks, which was settled in April. In July, U.S. Congress passed a Byrd-Bruce joint Senate-House resolution seeking the imposition of certain conditions on the implementation of the joint development, but President Bush vetoed the bill. In September, the Senate unsuccessfully voted to override the veto, with those in favor stopping one short of the two-third majority needed. This finalized the joint development of the FS-X as originally scheduled.
The U.S. Strategic Defense Initiative (SDI) is a research and development program aimed at neutralizing ballistic missiles with non-nuclear defensive means and obtaining data for judging the feasibility of a system for ultimately abolishing nuclear weapons. Under a Japan-U.S. governmental agreement concluded in July 1987 concerning Japan's participation in SDI researches, Japanese business corporations participated in researches in the Western Pacific regional strategic missile defense initiative, a part of SDI, for a year starting in November 1988 and for another year from December 1989.
1. Internal Situation
The Progressive Conservative Government of Prime Minister Brian Mulroney engaged in a number of substantive and pragmatic policies such as the curtailment of national budget and the implementation of tax reforms for the purpose of financial reconstruction. At the same time, it vigorously worked to open the way for the participation of the province of Quebec into the Canadian Constitution.
An agreemment on Quebec's participation in the Constitution (so-called "Meech Lake Accord"), which was reached in June 1987 among the Prime Minister and all the provincial premiers, would have taken effect if all the federal and provincial legislatures had ratified the bill by the deadline set for June 1990. It was one of the highest priorities for the Mulroney Government, whose political commitment was the "reconciliation among the federal and provincial governments." The issue raised substantial interest and debate among the Canadian public. However, this undertaking for Quebec participation in the Canadian Constitution ended in failure, since two provinces refused to ratify the bill by the deadline.
Under these circumstances, the support rate for the Progressive Conservative Government, which reached its peak at 49% shortly after the general election, experienced gradual downturn, and dropped to as low as 17% in June 1990. The Government has been thus facing a difficult domestic situation.
Since 1984, the Mulroney Government pursued steady economic growth and high employment rates by placing strong emphasis on vitality of the private sector, and as a result, attained robust economic growth (5% in 1988). However, buoyant exports to the United States, private facility investment and other key factors which had sustained the high economic growth started to stagger, and the growth rate for 1989 remained 2.9%.
Deteriorating balance of payments (trade deficit in 1989 amounted to a record high of $19.7) and rising interest rates are among major concerns for the future economic prospect.
2. Foreign Policy
The Mulroney Government continued to place primary importance on the relationship with the United States, and has maintained close and friendly ties with the Bush Administration. At the same time, active efforts were made to contribute to East-West relations, as exemplified by Prime Minister Mulroney's visit to the Soviet Union in November 1989, the Open Skies Initiative Conference that Canada hosted in February 1990, and Soviet President Gorbachev's visit to Ottawa in May 1990.
Under the Canada-U.S. Free Trade Agreement (F.T.A) enacted in January 1989, elimination and reduction of tariffs set for the first year have been implemented, and the bilateral dispute-settling panel has been instituted. Thus the process for the establishment of the free trading zone between the two countries based on the F.T.A. has been in good progress.
3. Relations with Japan
The bilateral relationship between Japan and Canada has been progressing without any outstanding issue. Prime Minister Kaifu visited Canada following his trip to the U.S. and Mexico in September 1989, and reached an agreement with Prime Minister Mulroney on a scheme for Japan-Canada cooperation towards the 21st century. The agreement, which gives significant orientation for future Japan-Canada relations, consists of three frameworks of cooperation: Pacific Rim cooperation, bilateral cooperation for international contributions, and promotion of better mutual understanding and exchanges between the two countries. In the meantime the Canadian Government announced in October 1989 a program designed to strengthen its relations with Asia-Pacific countries including Japan. The program, known as "Pacific 2000 Strategy," is to be implemented over five years starting in 1990.
Economic relations between the two countries have also been generally favorable. Canada is Japan's seventh largest trading partner, while Japan is Canada's second largest partner after the United States. Canada's exports of manufactured goods to Japan has been on the rise, which is a desirable trend for building balanced bilateral trade relations.
Note: Of the 35 seats at stake, 33 (one-third) were those of the senators serving out their terms and two were those appointed for vacancies.
Note: The Democratic Party won the New Jersey governorship and a black Democrat was elected governor of Virginia. Both Democratic governors were in favor of the right of abortion.
Note: Counting expenses related to engineering works for dealing with noise around the Atsugi Air Base under the custody of the Air Self-Defense Forces, the budget related to the stationing of the U.S. forces in Japan totals about\440.5 billion.