Section 2. North America
1. The United States
1-1. Domestic Affairs
(1) Beginning of the Presidential Campaign and Declining Support for President Bush
In the latter half of 1991, activities geared toward the Presidential election in fall 1992 gradually got underway. President Bush's approval rating, which had reached 90 percent at the end of the Gulf Crisis, began to decline thereafter, but still stayed fairly high in comparison with those of other presidents at comparable times, and his re-election was considered to be certain as of the summer of 1991. Therefore, Democratic candidates were slow in announcing their candidacies except for former Senator Paul Tsongas, who announced his intention to run for the election in April 1991. In September, Senator Bob Kerrey of Nebraska, Senator Tom Harkin of Iowa and Governor L. Douglas Wilder of Virginia announced their candidacies, followed by Governor Bill Clinton of Arkansas and former California Governor Jerry Brown the next month.
As memories of the Gulf Crisis faded, however, people became increasingly anxious about the economic outlook, and debates arose on widening income gaps and deteriorating real living standards, which all led to growing discontent with the Bush Administration.
Such public sentiment of dissatisfaction manifested itself in the November Pennsylvania special election. This was to elect the successor to the late Republican Senator John Heinz, who was killed in an accident, and the Bush Administration put Attorney General Richard Thornburgh, former Governor of Pennsylvania, on the ticket to ensure victory. At the beginning, he had an edge of more than 40 percent, but in the end, Thornburgh was defeated by his Democratic opponent who campaigned on the domestic economy and health care issues.
Immediately after this election, President Bush announced that he would postpone his trip to Asia including Japan scheduled for November. This, however, only revealed how much the Administration was shaken. After this, the Bush Administration came to admit that the American economy was worsening. President Bush visited Asia from the end of 1991 to the beginning of 1992, and this trip became geared toward the "job" issue. But public dissatisfaction remained deep-rooted over Bush Administration's handling of the domestic economy, and the President's announcement of economic measures in the State of the Union Address could not change the tide. Furthermore, Los Angles riots in late April through early May (triggered by the acquittal of the four policemen who beat up an African-American motorist charged with a traffic violation) only helped highlight various American domestic problems, such as racial issues, poverty, crime and depressed inner-cities.
(2) The Presidential Election - Voters' Distrust of Politics and Choice for "Change"
The election to choose the first President after the end of the Cold War began with the primaries in February 1992. With the backdrop of sluggish economy, there was an undercurrent of dissatisfaction with the status quo and distrust of politics in this election.
As a result of primary elections and party caucuses for half a year, President Bush was nominated as the Republican candidate and Governor Clinton of Arkansas as the Democratic candidate. Both candidates' paths to getting the nomination were not easy. President Bush was challenged by Mr. Pat Buchanan, a conservative columnist who advocated "America First," and was forced to take a more conservative stance. Governor Clinton also had a tough campaign due to criticism over his alleged "dodging" of the Vietnam War draft and other allegations.
One of the notable characteristics of this election was Mr. Ross Perot, a businessman from Texas. After he indicated his interest in running for the election in March, Mr. Perot's popularity rose, but he announced in July that he would not run, and it was not until at the final stage of the campaign that he declared his candidacy. But Mr. Perot's appeal to break out of the existing political system gained nationwide support, and he became a factor which neither the Bush nor the Clinton campaign could ignore. Mr. Perot's announcement not to run for the election, which coincided with Governor Clinton's nomination at the Democratic Convention, undoubtedly gave momentum to Clinton's campaign.
Under these circumstances, Governor Clinton advanced a steady political campaign, and after the Democratic Convention in July, he always maintained a lead over President Bush, who tried to narrow the gap through the Republican Convention in August and TV debates in September and October, but did not succeed.
In the Presidential election in November, Governor Clinton won in 32 States and the District of Colombia, and received 43 percent of the popular votes, about 5 percent higher than that of President Bush. Mr. Perot received 19 percent, an unusually high figure for a third candidate in recent presidential elections. The voter turnout was 55 percent, about 5 percent higher than in the previous election.
Various factors can be pointed out for Governor Clinton's victory. The sluggish American economy, with the annual growth rate remaining a little over l percent and the unemployment rate staying high around 7.5 percent, worked against the incumbent. Also, the end of the Cold War and the disappearance of the Communist threat took away one of the pillars uniting the Republican Party. Due to the conservative faction's discontent with the fact that the President had broken his earlier pledge and agreed to a tax increase in the 1990 budget agreement, the President was forced to take a more conservative stance at the Republican Convention in August, which revealed a rent in the Party unity.
In the meantime, while criticizing the Republican Administration, Governor Clinton appealed under the slogans of "change" and "putting people first" that he would revitalize the American economy through "investing" in social infrastructure, research and development, and education, which attracted wide public support.
Other factors which contributed to Governor Clinton's victory include: advocating a generation change by choosing Senator Albert Gore Jr. as the running mate, who is of the same generation and was even rumored to be a potential presidential candidate; demonstration of Party unity at the Democratic Convention in July to the degree not observed in recent years, to win back the White House after 12 years; and the skillful campaign management.
(3) Distrust in Politics and Congressional Elections
Deepening public distrust of politics was well reflected in the congressional elections, held simultaneously with the Presidential election. Especially, in connection with the scandal in which members of Congress overdrew rubber checks on their accounts with the bank in the House of Representatives, more than 300 names of members of Congress were made public in spring 1992, and touched off a growing anti-incumbent mood, which set the basic tone of this election. Also, it cannot be ignored that debates on abortion rights and sexual harassment issues highlighted by the confirmation hearings of U.S. Supreme Court Justice nominee Judge Clarence Thomas affected the voting behavior of female voters.
In the Senate, elections were held for 35 out of 100 seats, and taking into account the outcome of the special election held in December the net result was that there was no change in the power balance between the two parties after all. However, it is particularly worth noting that the number of female Senators tripled to six, that the first ever African-American female Senator came into office, and that a native-American Senator was elected for the first time in about 60 years.
All 435 seats in the House of Representatives were re-elected, and due to the reapportionment and redemarcation of Congressional districts based on the 1990 census, on top of the anti-incumbent mood mentioned earlier, 66 incumbents did not seek re-election, a postwar high, and 110 new members of the House were elected, accounting for about a quarter of the entire seats. It was the first time in 44 years that more than 100 members of the House were newly elected, since 1948 when 118 members were newly elected. It is also noteworthy that members of minority groups including females made great advancements. As for party strengths, the Republicans gained 10 seats whereas the Democrats lost 10.
(4) Transition to the New Clinton Administration
President-elect Clinton established a transition team after the election and began announcing major appointments in December, proceeding with preparations for the inauguration of the new administration in January 1993. Although there were no outstanding specific developments related to policy in 1992, it is worthy of attention that the President-elect invited more than 300 representatives from various sectors to Little Rock in December to convene a large economic summit, and that he announced a strict ethics code to be applied to members in the transition team as well as to officials in the new administration, as part of the effort to respond positively to the concerns expressed by the voters during the campaign.
The latest Presidential election campaign, with the major focus on the rehabilitation of the domestic economy, indicated the strong sense of frustration among the American people about the present economic status as well as a mounting apprehension about the future. In the third quarter of 1992, the U.S. economy showed signs of a recovery, with annual growth of its real GDP recording 3.4 percent. It will, however, take sometime to judge whether this pace of recovery can really be sustained. The unemployment rate has been on a declining trend since last summer, yet it still remained at a high level of 7.3 percent in December 1992. Moreover, although the trade deficit had been declining in recent years it widened again in 1992. One can point out structural problems as well as cyclical factors as the major factors behind this sluggish U.S. economy. Structural problems include the heavy reliance on debt by government, corporate, and household sectors that deepened during the 1980s, and deteriorating assets of the financial sector.
The fiscal deficit, which is the hardest barrier for restructuring the U.S. economy, continues to expand despite the Gramm-Rudman Act and the fiscal agreement of 1990. In FY 1992, it reached a record $290.2 billion. The U.S. Government itself announced the need to reduce its fiscal deficits, and the Government of Japan has repeatedly pointed out this need, by taking such opportunities as President Bush's visit to Japan in January 1992, and the Structural Impediments Initiative (SII) Talks. Under the new Clinton Administration, whose immediate task is to achieve economic recovery, fiscal deficit reduction will depend on its economic management (whether the emphasis is placed on fiscal reconstruction or economic stimulation). It is hoped that various policy measures for fiscal reconstruction which President Clinton indicated during his presidential campaigns, such as expenditure cuts, more equitable taxation on the wealthy people, and restraints in medical and insurance costs, will be implemented effectively.
The trade deficit fell for four consecutive years to $65.4 billion in 1991. In 1992, there was increasing trend of imports accompanying the signs of a domestic recovery and sluggish exports bound for Japan and the EC. Against this background, the total trade deficit up to November, 1992 showed a more than 20 percent rise from the previous year. Various arguments can be made about major causes of the U.S. trade deficit, including macroeconomic factors, but the declining competitiveness of U.S. industries can be pointed out as one of the fundamental factors. President Clinton stressed the importance of recovery in competitiveness, placing emphasis on restructuring of human capital in his policy of "putting people first." During the election campaigns he promised to take policies with a medium-and long-term perspective by conducting educational reforms, educating and training workers, improving social infrastructure and encouraging private sector research and development.
The Clinton Administration is taking an active stance in tackling issues such as reducing fiscal deficits and strengthening competitiveness. In this regard, achieving economic revitalization will be the major task of the new Administration.
1-3. Foreign Affairs
(1) Seeking a New World Order after the Collapse of the Soviet Union
The collapse of the Soviet Union in December 1991 put an end to the postwar U.S. foreign policy based on the containment of the Soviet Union. Against such a background, the concept of "collective engagement" was introduced (testimony by Secretary of State James Baker before the Senate Foreign Relations Committee in February 1992). This concept aims to cope with various challenges of the post-Cold War era through concerted efforts with allies and friendly nations. Thus, it attracted much attention as indicating the orientation of the post-Cold War U.S. foreign policy. Secretary Baker enumerated the Conference on Security and Cooperation in Europe (CSCE), the Middle East Peace Conference, the United Nations Security Council Meeting at the Level of Heads of State and Government, Conferences on Assistance to the New Independent State (NIS) of the former Soviet Union, etc., as embodiments of this concept. Among these, Secretary Baker specifically took the initiative in organizing the Conferences on Assistance to the NIS as a new association that would promote democratization as well as transformation to a market economy.
However, receding external threats, as the result of the end of the Cold War as well as the victory in the Gulf War, turned the eyes of the U.S. public to the accumulated domestic problems. Hence public attention turned inward, in favor of putting domestic issues ahead of foreign affairs. Moreover, Secretary Baker, the main promoter of foreign policy in the Bush Administration, moved to the White House in the summer of 1992, and by and large, no big movements were seen in foreign affairs, except for the relations with Russia and progress in the Middle East Peace Conference.
(2) Progress in U.S.-Russia Relations
Just prior to the collapse of the Soviet Union in December 1991, Secretary Baker, in his speech at Princeton University, recognized the then Soviet Union as a partner in ending the Cold War, and expressed his view that the Soviet Union must be lifted to the mountaintop named freedom and democracy. Based on such a recognition, the United States supported various reform efforts by the government of President Boris Yeltsin in Russia, and through two summit meetings, made efforts to establish partnership in political, security and economic areas.
The summit meeting in June was particularly productive with the following achievements: (1) reaching an agreement on drastic reductions in strategic nuclear warheads; (2) signing of various declarations and treaties including the Charter for Partnership and Friendship (the so-called Washington Charter) which advocated constructing a new relationship between the two countries; and (3) reaching an agreement to conduct a joint search of POW's or MIA's since World War II. Particularly notable was an epoch-making achievement in the security field of reaching an agreement to reduce strategic nuclear arms much deeper than the target of the Strategic Arms Reduction Treaty (START). As President Bush put it, "With this, the nuclear nightmare recedes more and more for our children, and for our grandchildren as well as ourselves." President Yeltsin said it was "an expression of fundamental changes in the political and economic relations between the United States and Russia." Also, the two presidents agreed to work together with allies to study the idea of "GPALS," which aims to protect the U.S. and its allies from limited missile attacks, instead of the Strategic Defense Initiative (SDI), which was based on the premise of Soviet ballistic missile attacks.
The Bush Administration entered the presidential election by emphasizing the victory in the Gulf War and the end of the Cold War as great foreign policy achievements. But, with the public interest focused on domestic issues, the Administration was unable to turn these into crucial election issues, and thus lost to Governor Clinton.
1-4. Relations with Japan
Japan-U.S. relations faced a turning point in various senses from late 1991 into 1992. The 50th anniversary of Pearl Harbor and the 20th anniversary of the reversion of Okinawa provided opportunities to look back on the paths Japan and the United States traveled since World War II through the postwar period. The Tokyo Declaration on the Japan-U.S. Global Partnership and its Action Plan, issued on the occasion of President Bush's visit to Japan in January 1992, established a guidepost for future Japan-U.S. relations.
At the same time, public opinion in both countries became more critical of the other. In the United States, while there was little notable criticism of Japan in the Congress due to the Presidential election, the sentiments among the general public toward Japan increased in severeness, as demonstrated in the "Buy American" movements (discussed later). In Japan, a sense of disregard for the United States is gradually spreading, caused by a combination of various reasons such as antipathy against U.S. pressures, and a sense of disappointment for the American society due to the grave degree of its domestic problems as indicated by the Los Angeles riot.
(2) History Revisited - Toward Future-oriented Japan-U.S. Relations
The 50th anniversary ceremony of Pearl Harbor in December 1991 provided an opportunity to reflect on the paths of postwar Japan-U.S. relations and to offer momentum for future progress. President Bush, in his speech at the Arizona Memorial, stressed the importance of Japan-U.S. cooperation for the future, overcoming the hostility during World War II as part of the past. The Government of Japan welcomed such remarks.
At the beginning of January 1992, President and Mrs. Bush paid a State visit to Japan, which was rescheduled from late November 1991. Through this visit, the importance of future-oriented Japan-U.S. relations was highlighted. After a summit meeting, the two leaders announced the Tokyo Declaration on the Japan- U.S. Global Partnership and its Action Plan, which reconfirm the shared responsibility of the two countries for world peace and prosperity and indicate concrete guidelines for future cooperation.
Regrettably, in the United States, President Bush's visit to Japan was deemed as a failure thereafter. Also, remarks by high-ranking Japanese officials triggered "Buy American" movements against Japanese products. And, though very few, "hate crimes" targeted at Japanese nationals in the United States, Americans of Japanese descent or Asians took place.
The 20th anniversary ceremony of the reversion of Okinawa in May 1992, with invited former U.S. Government officials concerned, served as a good opportunity to remind the Japanese people of the significance of this historically rare endeavor of reverting the administrative jurisdiction peacefully, and especially, of the importance that the United States attaches to its relations with Japan, as well as the American people's friendship.
(3) Prime Minister's Visit to the United States
In July 1992, Prime Minister Miyazawa visited the United States on his way to the Munich Summit, and met with President Bush to have substantial exchange of views in preparation for the Summit, and strengthened personal rapport with the President. Prime Minister Miyazawa also spoke at the National Press Club and articulated Japan's policy for the Asia-Pacific region including the "two track approach" for this region's security.
(4) Presidential Election and Japan-U.S. Relations - Toward Making a New Chapter of Japan-U.S. Relations
With the presidential election campaign coming into full swing, Japan-U.S. relations remained calm after the summer. As mentioned earlier, the presidential election was fought over the economy and social issues in the United States, and Japan-U.S. relations did not become an issue.
Governor Bill Clinton of Arkansas was elected the new President as a result of the Presidential election in November 1992. President Clinton has great interests toward Japan, as demonstrated by his visits to Japan three times as Governor of Arkansas, and he has expressed his intention to place importance on Japan in the new Administration's foreign policy.
The advent of the Clinton Administration signifies the beginning of a new Japan-U.S. partnership in the post-Cold War era. One of the major foreign policy agendas for Japan in 1993 would be to strengthen Japan-U.S. partnership with this Administration for the common tasks facing the world in the midst of transition.
(5) Economic Relations
Japan-U.S. economic relations have become increasingly interdependent. Both countries have increasingly recognized that they play important roles in the world economy and that they should work together toward the stable development of the world economy.
It was President Bush's visit to Japan in January 1992 which reconfirmed the importance of policy coordination in the economic field. The two leaders issued a series of documents including the "Tokyo Declaration on the U.S.-Japan Global Partnership." In these documents, the two countries made it explicit to assume special responsibilities on the world economy and their determination to counter protectionism by further opening the respective markets. Specific measures and efforts were also announced for smooth Japan-U.S. economic relations and toward a successful conclusion of the Uruguay Round. Japan-U.S. economic relations since then have been managed largely along this Tokyo Declaration.
During Prime Minister Miyazawa's visit to the United States in June 1992 en route to the Munich Summit, he reconfirmed with President Bush the U.S.-Japan Global Partnership in the economic field. Japan said it intended to boost the domestic demand-led economy and to achieve sustained growth by taking measures including fiscal policy. The United States expressed its intention to take appropriate measures to improve macroeconomic management, including the strengthening of its competitiveness and the reduction of the fiscal deficit.
Against the background of the close and mutual interdependent relations between Japan and the United States, the Structural Impediments Initiative (SII) Talks to discuss economic structural issues played a major role in offering a forum for consultation to ensure favorable management of Japan-U.S. economic relations. At the end of July 1992, the second annual report was compiled, following the policy of revitalizing the SII announced by the Tokyo Declaration and its action plan. In this report, the two countries set out their proposed structural reforms including new measures. Through these reforms, it is hoped that Japan-U.S. economic relations will become more harmonious. From its beginning, SII set forth the following as policy priorities for each side; fiscal deficit cuts and strengthening competitiveness through educating and training of the work force for the United States, and improving the transparency and fairness of the Japanese market and providing a more competitive environment in the field of the keiretsu and exclusive trading practices and government regulations for Japan. It is sometimes pointed out, however, that compared with concrete progress made by Japan, the United States has failed to implement its measures as attested by its record high fiscal deficit in FY 1992. In this regard, further efforts are desirable on the part of the United States.
In the midst of the growing mutual interdependence of Japan-U.S. economic relations, frictions concerning individual sectors between the two countries, as well as protectionist moves on the part of the United States, were observed against the background of relative decline in U.S. industrial competitiveness and the widening U.S. trade imbalance with Japan. For example, the question of cars and auto parts was one of the major issues raised during President Bush's visit to Japan. A solution based on industrial cooperation from a medium- and long-term perspective was attempted. Yet, such an approach was criticized both at home and abroad as a form of managed trade, not leading to the real strengthening of the U.S. industries. In the United States, on the other hand, the "Buy American" campaigns appeared to be activated; bills of protectionist nature were submitted in the Congress.
U.S. "economic patriotism" seen in the "Buy American" campaign spread to local areas and gained momentum in the first quarter of 1992, but then subsided in the final phase of the presidential election campaign in the latter half of 1992. In the background lay among the American public a profound recognition that U.S. economic problems must be solved by themselves rather than by blaming other countries. It should be remembered that President Clinton stressed in his election campaign that three quarters of the trade imbalance with Japan was attributable to the United States itself, thus encouraging the American public to make their own efforts. Protectionist moves in the 102nd Congress were observed in the form of the submission of various bills, including a bill to impose restraints on automobile exports to the U.S. and a revived version of the Super 301. However, all the bills except for the automobile labeling bill which obliges the indication of the place of origin of major parts were discarded either by Presidential veto or in Congressional deliberations, as the countries concerned including Japan strongly opposed them.
In December 1992, the North American Free Trade Agreement (NAFTA) was signed by the United States, Canada and Mexico. (See Chapter 2, Section 1, 8)
As a result of the Presidential election, the Clinton Administration was inaugurated in January 1993. Anew economic partnership to meet the needs of the new era is being sought. It is important for each country to tackle its own domestic problems before it is pressured by the other country, as it helps construct a new economic system and promote smooth Japan-U.S. relations. It is also important for both Japan and the United States to refrain from reacting emotionally, distracted by incidental events and their subsequent media overreaction. This would be tantamount to denying the growing mutual interdependence or the essentially close bilateral economic relations.
It is true that frictions between the two countries are no longer limited to economic dimensions, but are extending to cultural and psychological ones, because of the further development of the bilateral economic relations. This is reflected in the mood among the Japanese public vis-a-vis the United States, described as "kenbei (dislike America)." Only if the people of both countries deal with the bilateral economic relations constructively and calmly, grasping the reality of the steadily increased mutual interdependence, not only in trade and monetary matters, but also in investment and technological cooperation, it will be possible to maintain sound, cooperative, competitive and open bilateral economic relations. Unilateral U.S. measures, as represented by Section 301 of the Trade Act, will solve no bilateral problems. It is indisputable that the development of favorable economic relations between the two countries is important not only to the Japanese and Americans, but to the stable development of the world economy.
(6) Security Affairs
(a) Significance of the Japan-U.S. Security Arrangements
More than 30 years have passed since the conclusion of the Japan-U.S. Security Treaty. The explicit will of the United States to defend Japan as embodied in the Japan-U.S. Security Arrangements and the U.S. presence in the Asia-Pacific region have provided a peaceful and stable environment for Japan in a dramatically changing world.
The dissolution of the Soviet Union brought the East-West Cold War to a complete end, but the Japan-U.S. Security Arrangements are still indispensable for the peace and stability of Japan. Although the Cold War has ended, and arms control and disarmament efforts are also being advanced, the international community is still full of uncertainties, with increased instability in some areas. Russia and China continue to possess nuclear weapons. Under these circumstances, in order for Japan to continue to benefit from peace and prosperity under its policy of maintaining the minimum required self-defense capability, the U.S. deterrence based on the Japan-U.S. Security Treaty will remain necessary in the future. In addition, the U.S. presence in Asia and the Pacific is a stabilizing factor for this whole region. The Japan-U.S. Security Arrangements provide indispensable means for ensuring this U.S. presence and thus for promoting peace and prosperity in the region. Furthermore, the Japan-U.S. Security Arrangements give added credibility to Japan's basic stance not to become a military power that could threaten other countries.
(b) Host Nation Support to U.S. Forces in Japan
Based on the Japan-U.S. Security Treaty, some 45,000 to 48,000 currently active duty military personnel of the U.S. forces are stationed in Japan for the security of the country and for international peace and stability in the Far East. The Government of Japan has, on its own initiative, made utmost efforts to share the costs of stationing of U.S. Forces in Japan (USFJ).
Specifically, the Government of Japan has constructed and provided barracks and houses for the USFJ in U.S. military facilities and areas in Japan. To help with the labor costs of Japanese workers for USFJ, the Government concluded the new Special Agreement on host nation support in 1991 which stipulates that Japan can pay up to 100 percent of the utilities costs for USFJ and the base pay of Japanese workers in the U.S. bases over the five years beginning in FY 1991. If Japan is to bear all these costs at the end of FY 1995, it will be shouldering about 50 percent of the total cost of the USFJ (Note 1). Japan paid approximately \517.7 billion (Note 2) in FY 1992. This effort is highly regarded by the U.S. Government. With the decreasing trend of defense expenditures at a time of U.S. fiscal constraint, Japan's efforts are becoming increasingly important in ensuring the presence of U.S. forces in this region.
(c) 20th Anniversary of the Reversion of Okinawa
In May 1992, Vice President Dan Quayle, who visited Japan to attend the 20th Anniversary ceremony for reversion of Okinawa to Japan, announced a message to the people of Okinawa, indicating that the United States would take steps to consolidate its facilities and areas in Okinawa (Note 3).
(d) Technological Exchanges on Security and Defense Matters
Under the Japan-U.S. Security Treaty, both Japan and the United States are to maintain and develop respective defense capabilities through mutual cooperation, and Japan has received technological and other assistance from the United States to improve its defense capability. Taking the new situations such as Japan's recent technological improvements into consideration, it has become very important for Japan to increase defense technological exchanges with the United States to ensure effective implementation of the Japan-U.S. Security Arrangements.
From this viewpoint, the Action Plan for the Japan-U.S. Global Partnership, announced by the two leaders during President Bush's visit to Japan in January 1992, confirmed the further promotion of mutual transfers of defense technologies. The Action Plan stipulated that an arrangement for joint research on a ducted rocket engine would be concluded, based on the Japan-U.S. Mutual Defense Assistance Agreement. It also confirmed the continuation of examinations on joint research in the four defense technology areas, including a millimeter-wave/infrared dual mode seeker. As for the joint research on the ducted rocket engine, official notes were exchanged in September 1992, and this research activity has already started.
In addition, the ongoing joint development program of the next support fighter (FS-X) for the Air Self-Defense Force, which combines the sophisticated technologies of Japan and the United States, has great significance in promoting bilateral technological exchanges. It is important to implement this project smoothly based on the trust between the two countries.
(e) Reorganization of U.S. Forces in the Asia-Pacific Region
The United States is making phased adjustments to its forces deployed in East Asia and the Pacific region against the background of severe fiscal constraints and the changing international situation. Specifically, while maintaining its forward deployment strategy in the region, and the basic bilateral security arrangements, and also taking into full account the strategic situation, the United States is adjusting the deployment of its forces in three phases within the 10 years beginning 1990 (1990-92, 1993-95, and 1996 onward). In the first phase, 4,800 U.S. forces personnel in Japan were reduced.
Nevertheless, the United States has made it clear on every occasion, that its commitments to its allies remain unchanged and that the forward deployment policy of U.S. forces will be maintained. In particular, the United States recognizes that the Japan-U.S. relationship is the pillar of its strategy in the Asia-Pacific region. The report President Bush submitted to the Congress in July 1992 on U.S. strategic framework for the Asian-Pacific rim indicated that although in the second phase personnel of U.S. forces in Japan would be reduced by about 700, changes in its strategic attitude would not basically be expected.
2-1. Domestic Affairs
The Mulroney Government is facing certain difficulties due to the dragging recession and the failed attempt to amend the Constitution.
Prime Minister Mulroney had been tackling the question of the Constitutional amendments since his inauguration as Prime Minister. In August 1992, an agreement was reached among the Federal Prime Minister, provincial Premiers and representatives of native communities on the draft amendments. This agreement covered a wide scope of Constitutional changes, such as the recognition of Quebec as "distinct society" to restore the province to the Canadian Constitutional system, the assurance of the inherent right to self-government of the native Canadians and reforms of the Federal Parliament. However, in the national referendum held in October, a majority of Canadians voted against the Constitutional changes based on this agreement, and thus rejected the draft amendments. The question of amending the Constitution seems to have been shelved for the time being. Canada consists of a diverse "mosaic" of people and regions such as English-Canadians and French-Canadians, aboriginal peoples and immigrants. Eastern Canada has a general understanding of the special status of Quebec and Western Canada joined the Federation later on and attaches more importance to the equality among all provinces. The question of the Constitutional changes will continue to pose difficult challenges for a multi-cultural nation like Canada.
In the economic field, Canada has been promoting policies aimed at strengthening its international competitiveness, such as inflation control, reduction of the fiscal deficits and implementation of tax reforms (Goods and Services Tax was introduced in January 1991). A negative growth rate of 1.5 percent was recorded in 1991 due to the high interest rate policy in Canada and the sluggish economy in the United States, which is the largest export destination for Canada. Unemployment remained high at around 10 to 11 percent in 1992. The growth outlook announced by the Canadian Government in December 1992 was about 1 percent for 1992 and about 2.5 percent for 1993 revised downward from the figures announced at the outset of the year, indicating a slow economic recovery.
The year 1993 marks the fifth year since the last election in November 1988, and a general election is expected to be called by the end of this year.
2-2. Foreign Affairs
The continued emphasis was placed on maintaining and strengthening relations with the United States, with which Canada has very close political, economic, military and cultural relations. The leaders of the two countries have had frequent meetings and telephone conversations, and enjoy close personal ties. With regard to external economic relations, efforts were directed toward the smooth implementation of the U.S.-Canada Free Trade Agreement, which saw its third year of implementation. Meanwhile, consultations were held with the United States on pending issues such as automobiles and lumber. In August 1992, Canada, the United States and Mexico agreed on the North American Free Trade Agreement (NAFTA, scheduled to come into effect in January 1994).
Canada is also playing an active role in the United Nations, the Conference on Security and Cooperation in Europe (CSCE), the Organization of the American States (OAS) and various other international organizations and multilateral fora for consultation. With regard to U.N. Peace-keeping Operations (PKOs), Canada is the only country that has participated in all PKOs in the past. In 1992, Canada took part in PKOs in Cambodia, Bosnia-Herzegovina, Angola, etc., sending more than 4,000 Canadian national defense troops in just one year. On the other hand, an announcement was made in February 1992 that Canadian bases in Europe, which had been maintained due to Canada's membership in the North Atlantic Treaty Organization (NATO), would be closed by 1994 for fiscal reasons.
2-3. Relations with Japan
Recently, Canada has been actively strengthening its relations with Japan and other Asia-Pacific countries. In particular, since "Pacific 2000 Strategy" was announced in 1989, exchanges of politicians, government officials and journalists have expanded under this strategy. A Canadian consulate was established in Fukuoka in November 1991, and another one was opened in Nagoya in November 1992.
The "Japan-Canada Forum 2000," which was established by an agreement between the Prime Ministers of both countries during Prime Minister Mulroney's visit to Japan in May 1991, submitted various recommendations to the leaders of both countries in December 1992 regarding how to strengthen Japan-Canada partnership in the areas of politics, economy, international cooperation and mutual understanding based on long-term perspectives. Promotion of Japan-Canada cooperation in various fields will be beneficial for Japan in playing a more active role in international affairs, in light of Canada's knowledge of and interest in the Asia-Pacific region through the Asia Pacific Economic Cooperation (APEC) and the ASEAN Post-Ministerial Conference, as well as its strong ties with Europe as a member of NATO and CSCE.
Japan's bilateral economic relationship with Canada is stable and balanced in comparison with Japan's other bilateral economic relationships, and it has been developing smoothly in general. Japan s exports to Canada were $7.3 billion and imports were $7.7 billion in 1991, and the outstanding Japanese direct investment in Canada reached about $6.5 billion in FY 1991.
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Note 1: According to forecast costs and the exchange rate at the time the agreement was concluded. The United States, in its defense report for U.S. FY 1992, predicted that, if salaries of U.S. military personnel and workers are excluded, Japan's total host nation support will be about 70 percent of the total USFJ cost.
Note 2: Including the estimated rent of state property to USFJ and the budget for subsidies on civil works to reduce noise levels around the Atsugi Naval Air Station.
Note 3: The message also said :hat training in the urban-combat training facility in the U.S. area in Onna Village in Okinawa would be terminated and the facility dismantled. The withdrawal of this facility was completed in July 1992.