February 8, 1978
Page 2791
JAPAN AND THE UNITED STATES IN THE WORLD ECONOMY
Mr. MUSKIE. Mr. President, on January 12, our colleague, Senator KENNEDY, delivered an address to the Foreign Correspondents Club of Tokyo. The speech expresses the dilemmas of our current trade relations with Japan so well that I wanted to bring it to the attention of the Senate.
Almost every day my office receives requests for help from an industry hurt by imports. Workers write to me saying they want jobs, not welfare checks.
I have always believed that the great industrialized democracies must work together to develop a stable international economic system. But we cannot be the only country to abide by the rules of open trade.
I agree with Senator KENNEDY's statement:
Much of the world believes that Japan maintains too many practices that keep out foreign imports. As a result, Japan is also increasingly vulnerable to charges of unfairness in its trade.
And I also share the optimism of his comment:
Japan and the United States are on the threshold of a new period of partnership and leadership in the free world. Committed to one another, secure in our friendship, we move ahead to the future, confident that the promise of our two great nations will be fully met.
Mr. President, I ask unanimous consent that the entire speech, as well as Senator KENNEDY's statement on the joint Strauss-Ushiba trade statement be printed in the RECORD.
There being no objection, the statements were ordered to be printed in the RECORD, as follows:
JAPAN AND THE UNITED STATES IN THE WORLD ECONOMY
(Address by Senator EDWARD M. KENNEDY)
It is a privilege for me to be here in Tokyo with you today in this auspicious week for relations between our two nations. In recent years, the relationship between Japan and the United States has become a beacon of increasing strength and durability in a rapidly changing world. We pride ourselves, and rightly so, on our capacity to find solutions to common problems and our ability to cooperate with other nations. Our bilateral relationship is built upon a firm commitment of cooperation and partnership in Asia and the world.
This close and enduring relationship between our two countries is perhaps the best example in the world today of how two nations with different cultures in different parts of the world can find common bonds of friendship. Our relationship is all the more unique, because it has risen like a Phoenix from the ashes of a tragic war. Through wise leadership and skillful statesmanship in both our nations, we have created a strong and enduring alliance between our two highly industrialized democracies. It is an alliance founded upon mutual benefit, mutual dependence, mutual trust, and mutual respect.
In the past twenty years, Japan has surpassed all other nations in its ability to modernize its economy and to create new industries capable of competing with any on the international stage. In the wake of the oil crisis, no country has moved more rapidly than Japan to improve its international trade position, in order to meet the soaring costs of natural resources. This very success makes Japan vulnerable to the frustrations of other countries which have fared less well in their efforts to solve this central global problem.
There is a more important source of frustration, however. I am not here today to make demands of Japan. You have already received a great deal of unsolicited advice in recent months. But there are facts to face. Much of the world believes that Japan maintains too many practices that keep out foreign imports. As a result, Japan is also increasingly vulnerable to charges of unfairness in its trade.
In light of these charges, it is right that Japan should consider ways in which it can foster more open trade and reduce its current surplus. It should also encourage greater imports of manufactured goods. Currently, Japan imports a far lower proportion of manufactured products than any other industrialized trading partner of the United States. The concern over this fact among industrial workers in the United States is evident to every Member of Congress in our nation.
Japan should also consider the ways in which it organizes its trade with its trading partners. Importing and exporting operations are complicated by many levels of marketing and traditional relationships. These relationships impede competition in importing goods that Japanese industry and Japanese consumers desire.
I come from a region of the United States that is particularly sensitive to these problems. In the recent past, imports of products such as textiles and shoes have wiped out entire industries in many parts of my region of New England. In my state of Massachusetts alone, over 150,000 people are now unemployed. And New England, like Japan, is heavily dependent on foreign oil.
More than any other factor, the demand for jobs and job protection is creating a new wave of protectionism in the United States. An unemployed textile worker or steel worker does not want to hear complex economic arguments in support of open trade policies. He does not want a welfare check. He wants a job. It is easy for him to see the threat of imports to his job and family. It is difficult for him to see the benefits of exports and expanding trade.
In the current international economic climate of stagnation and sluggish growth, the existence of serious trade barriers in any nation is an invitation to other countries to develop their own restrictive practices.
I am sure you are aware that the present situation is troublesome, not only for Japan,but also for those of us in the United States who are friends of Japan and who hope to maintain an open trade policy. It is extremely unlikely that the Congress of the United States will continue to support an open trade policy on the part of America, when a variety of restrictive policies continue to be practiced on the part of Japan.
We are aware, of course, that Japan's prosperity is dependent on raw materials imported from overseas. But the Japanese economy is a strong and resilient one. As a modern economic superpower, Japan should be in the vanguard among nations seeking to support the stability of the world economy. Such steps are also essential in the long run, if Japan's own trade-oriented economy is to prosper in the future.
We have no illusions as to the difficulty of this challenge. A world energy crisis, simultaneous recessions and inflation, world food shortages, and drastic trade imbalances pose constant threats to international economic stability. Often, wise adjustments in trade policy are easily blocked or impeded by domestic political reactions. Because of the power of special interest groups in both our nations, these needed adjustments rarely take place overnight.
But the outlook is not without some signs of hope. A number of recent events have been encouraging. We welcome Prime Minister Fukuda's effort to achieve a growth rate of seven percent for fiscal year 1978. The announcement of an economic stimulus program, tariff reductions and increases in Japanese quotas are encouraging signs that Japan intends to increase its imports and reduce its current account surplus.
Ambassador Robert Strauss, President Carter's Special Trade Representative, is in Tokyo today and tomorrow. He is here to carry on the kind of frank dialogue about these difficult matters that marks the close and growing partnership between Japan and the United States.
In the spirit of this frank approach to our mutual problems, I believe we can work more effectively together to resist the harmful protectionist pressures that threaten to undermine our own trade relations and the stability of trade throughout the world. Such pressures, if allowed to grow, can bring severe damage to many nations. They can blight the economic, social, and political future of the entire world.
To avoid this disastrous vision of the future, we must promote stable economic growth in our respective domestic economies.We must strengthen economic cooperation among all industrialized nations. And we must pursue policies that are more responsive to the aspirations of developing nations.
The lessons of history teach us that our trade policy mirrors the aims and aspirations of our nation.
In protest against a tariff in the year 1773, the people of Massachusetts threw shipments of tea into the Boston Harbor, thereby taking a major step toward the American Revolution. During the great depression, our nation moved into isolation. We retreated intoa virulent form of protectionism , that reached its peak with the passage of the Smooth-Hawley Tariff, a law which only served to prolong and deepen the depression.
Fortunately, in the post-war era, we succeeded in reversing this trend toward isolation and protectionism. We opened our doors to trade. We entered a period of unparalleled economic growth and prosperity.
One example from recent history illuminates our current dilemma. During the Administration of President Kennedy in the early 1960's, the United States had a trade surplus with Japan. Japan was justifiably concerned about this surplus, and rightly demanded further reductions in trade barriers.
President Kennedy responded generously to the challenge of open trade. He called for the removal of trade barriers, because he understood the responsibilities of the United States to Japan and other nations of the world community. He said, "No nation can long bear the heaviest burdens of responsibility without sharing in the progress and decisions — just as no nation can assert for long its influence without accepting its share of these burdens."
Now the tables are turned. Japan has the surplus, and it is a large one. And the role of Japan has also changed. As a leading economic power in the modern world, Japan is now being asked to share the responsibilities, as well as the benefits, of creating and maintaining a healthy global economy.
There are also economic burdens and responsibilities to be faced by the United States. A weak American economy poses the greatest threat today to international economic stability. We cannot fairly ask Japan to act, without also taking actions in the United States to put our own house in order.
We have much work to do at home. Our national energy program must be enacted without additional delay, in order to reduce America's excessive and growing dependence on foreign oil and to increase the use of alternative sources of energy. We must hold down the rate of inflation.
We must promote economic growth adequate to reach full employment. We must increase our own productivity and efficiency, in order to compete more effectively with imports. And we
must educate the American public and the American Congress to the fact that open trade policies will mean more jobs for more Americans and a more prosperous life for more peoples everywhere.
The future of the developing world depends on the will of the industrialized nations to redress the inherited disadvantages of the poor. We must seek agreements to promote development through a variety of steps:
Stabilization of world prices for commodities from developing countries.
Increased direct technical and development assistance.
Preferential access to markets in industrialized countries.
Increased multilateral assistance through institutions such as the Asian Development Bank.
And improved financing, including longer terms and lower interest rates, for exports from developing countries.
Building a new framework of cooperation between the developed world and the developing world has become one of the major challenges of the final quarter of this century. We have an opportunity to move away from military confrontation to economic cooperation, from the pursuit of militant and narrow national interests to the pursuit of broader international development. We can substitute health clinics for fighter planes, schools for tanks, and housing for guns.
Both of our two countries have begun to respond to this challenge. Japan's intention to double its development assistance in the next five years and to untie its aid programs are major steps forward. We look ahead to promote action that will implement this plan. We will both have to do more together in the years to come.
Here again, I am happy to see active and productive cooperation between Japan and the United States. I understand that Governor Gilligan, our AID Administrator, is holding extensive consultations this week with his counterparts in the Japanese government, and that once again, good mutual friendship and understanding are producing good results.
Together, we seek to shape the future of a world profoundly different from the world scarred by war a generation ago. New relationships are being born. Past differences have given way to a new movement toward an international system in which all nations share common goals and dreams.
As we move toward greater interdependence among our nations and peoples, old myths must be discarded and new realities must be embraced. The actions on which we have now embarked can be the beginning of a new and even more prosperous historical era for our nations.
Japan and the United States are on the threshold of a new period of partnership and leadership in the free world. Committed to one another, secure in our friendship, we move ahead to the future, confident that the promise of our two great nations will be fully met.
STATEMENT BY SENATOR EDWARD M. KENNEDY ON THE JOINT STRAUSS- USHIBA TRADE STATEMENT
I welcome the joint statement issued earlier this afternoon by Ambassador Strauss and Minister Ushiba. I commend the governments of both Japan and the United States for concluding this first stage of our newly developing trade relationship in a hopeful manner.
While many of the provisions in the joint statement had been publicly signaled by earlier discussions in recent months, there are three points in the statement that are relatively new and significant.
First, I am pleased to see the breakthrough on the question of additional imports by Japan of manufactured products. The indication that Japan anticipates an increase not only in the total volume of imports of manufactures, but also the proportion of manufactured products in total imports, is a welcome development that should help ease the resentment of American industrial workers over the current restrictive pattern.
Second, I am pleased to note the statement by the Government of Japan of its intention to take all reasonable and appropriate measures to meet the stated seven percent growth target for fiscal year 1978. This new statement of intention should help allay the recent fears that the Government of Japan "could not get there from here" — that the public expenditure measures announced so far were not sufficiently stimulative to meet the seven percent target.
Third, it is significant that Japan has now indicated that its aim in 1979 and future years is to reduce its current account surplus to equilibrium, including a willingness to accept a deficit in the course of these actions.
Of course, other aspects of the statement are also significant, particularly the increased quotas on beef, oranges, and citrus juice. Overall, the joint statement is a worthwhile step forward in our trade relations. The road to this result has been an arduous one, and we should have no illusions as to the difficulties still to come. But I believe the package is adequate to buy the time needed to achieve the results we all desire, free of unwarranted obstruction by protectionist forces in both our nations.
Ambassador Strauss and Minister Ushiba deserve our praise for the result they have achieved. The joint statement is a useful sign of the new maturity in our close relationship with Japan, and it augurs well for our common, peaceful, and prosperous future.