REMARKS BY THE PRESIDENT
TO AMERICAN AND JAPANESE BUSINESS LEADERS
Capitol Tokyo Hotel
THE PRESIDENT: Thank you very much. I have to practice saying"Mr. Ambassador" instead of "Mr. Speaker." But I want to say first to TomFoley how very grateful I am for his willingness to undertake this serviceinJapan.
I think there could be no better evidence of the importancethatthe United States attaches to our relationship with Japan than the factthatin the last six years the United States has been blessed to be representedinJapan by former Vice President Walter Mondale and former Speaker of theHouseAmbassador Tom Foley.
I am very proud of Tom Foley, who has guided and advised me.Andif I'd listened to him more, I would have even done better. (Laughter.)AndI'm very, very grateful to him for his service here.
I'm glad to see Glen Fukushimi again and I thank him for hiswelcome. And I thank him for his eagerness to get me to the platform.(Laughter.) I wanted to come here today. I didn't intend to go anywhere,Glen. I was going to stay around. (Laughter.)
I thank Patsy Mink for her distinguished service and herintroduction, as well as Senator Max Baucus and Congressman NeilAbercrombie,Congressman Earl Pomeroy, and Delegate RobertUnderwood, and all the members of the Cabinet and administrationwho are here. The United States is well represented in thisdistinguished group this morning. I thank you for inviting me tospeak and for the work you do at the forefront of the new globaleconomy, where so much of America's prosperity will reside in the21st century.
Today I want to talk about the current internationalfinancial crisis, what we are doing about it, and the specialrole the United States and Japan must play to lead Asia and theworld back to stability and growth.
Of course, in part, the present difficulties are theproduct of our own successes. The world financial systemfashioned at the end of World War II has played a central role indramatically expanding trade, promoting prosperity, reducinghunger and disease throughout the world. But today the sheervolume of economic activity intensified by technological changehas created new risks -- risks which are not adequately beingmanaged today by many national systems or by the currentinternational arrangements.
The root of the problem lies in the sheer volume andspeed of the movement of money -- $1.5 trillion a day ininternational exchange transactions -- far, far in excess of thetotal volume of trade in good and services on any given day. Incountry after country we have seen rapid, large infusions ofcapital, often very highly leveraged, into banking systems andinto corporations, without adequate balance sheets or riskassessments necessary for appropriate loan rates.
Then we have seen the equally rapid withdrawal of themoney, too often leading to enormous debt, devaluation, anddislocation, and ultimately into political crisis and, in manycountries, great personal suffering. The collapse of communism,the rise of democracy, the information revolution -- all thesethings have spurred people to seek the benefits of greater tradeand investment. But in many places, institutions have not caughtup with aspirations.
Lack of openness, weak legal systems have bredirresponsibility and, on several occasions, corruption. Theyhave fueled social unrest and, in turn, further economicinstability.
Now, I know these challenges are quite complex. But Iam convinced with responsible leadership from Japan and theUnited States, from the European Union and from many developingeconomies, we can restore hope and spur growth. We can build atrading system and a new financial architecture for a new centuryif we act promptly, responsibly, and creatively.
In September, after consulting with Japan and otherpartners, I called for specific and urgent steps to boost ailingeconomies, to halt the contagion, to restore growth, and along-term adaptation of the global financial institutions so thatwe can tame the cycles of boom and bust over the long run.
Nations around the world have rallied to this commonagenda. America, Japan, and other nations have cut interestrates. We at home have met our obligations to the IMF. We'reproviding credit and investment insurance to encourage capitalflows into developing nations. Brazil is taking strong measuresto address its fiscal problems and ward off the contagion. Theinternational community has come through with an aid package tohelp.
We have developed a precautionary finance facilitydesigned to head off problems before they get started incountries that are vulnerable to economic unrest but haveessentially sound economic policies. The World Bank and theAsian Development Bank will more than double their support tostrengthen social safety nets across Asia to aid those who aresuffering the most.
Just a few weeks ago, Japan announced the Miyazawa Planto address the central challenge, helping viable Asian banks andbusinesses emerge from crushing debt burdens. And just thisweek, Prime Minister Obuchi and I announced a new U.S.-Japaninitiative to extend this effort. Together, we will mobilize newfinancing to recapitalize banks and also increase funding fortrade finance and technical assistance.
But nothing is so vital to world growth as ensuringthat the United States and Japan, the world's two greatesteconomic powers, also do what is necessary to expand our owneconomies. For the United States, that means continuing thesound fiscal policies that have brought us to this point,investing more in our people and in our future, and continuing towork to open global markets.
For Japan, of course the challenge is even greatertoday because of the economic difficulties of the present and thelast few years. But no people have done more in the last 50years to overcome obstacles, to exceed expectations, to provethat they can adapt to new economic realties than the Japanese.The people of Japan turned a closed society into an opendemocracy. They built from devastation a robust economy thatbecame an engine of growth for all of Asia. They have createdproducts and technologies that have improved the lives of peopleall around the world, including the United States. They havebeen leaders in development aid to help other nations build theirown prosperity.
Even with current economic difficulties, Japancomprises 70 percent of Asia's economy. With others in theregion still struggling, Japan -- and only Japan -- can lead Asiaback to stability and growth by meeting its own economicchallenges.
I want to be clear about something that I'm surprisedthere could be any doubt about: The United States wants a strongJapan, with a strong and growing economy. Japan's prosperity isvital to our own future. Already we have nearly $200 billion inannual trade and over $600 billion invested in each other'seconomies. We have a strong political and security partnershipwhich is vital to the peace of this region and the peace of theworld, and which I am convinced cannot be maintained over thelong run unless our economies are also strong.
Though the U.S. and Asia -- indeed, all the world --will benefit from a revitalized Japanese economy, the greatestbeneficiaries will be the Japanese people themselves -- with newjobs, higher living standards, and a better capacity to deal withthe looming issue of an aging population, a challenge thatconfronts virtually every advanced society in the world today.
The keys to Japan's recovery are easy to articulatebut, of course, more difficult to achieve. Reform of the bankingsystem to clear up the balance sheets, protect depositors, getgood lending going again; an increase in domestic demand forJapanese goods and services; greater deregulation, investment,and opening of Japanese economies to create more jobs throughincreased competitive activity.
Prime Minister Obuchi has announced a new package oftax cuts and funding increases to stimulate demand, and he hasobtained passage of major legislation aimed at repairing Japan'sbanking system -- legislation which must now be vigorouslyimplemented.
As America learned with our own financial crisis,involving our Savings and Loans -- and those of you who were inAmerica in the '80s know that we wound up closing over 1,000 ofthem -- delay in a crisis like this only makes matters worse. Bywaiting too long to act in America, we increased our eventualcleanup cost by over 500 percent. Rapid, vigorous implementationof bank reform legislation, therefore, will make the banks moreopen and accountable, prompt them to sell off bad loans, get themback into the business of lending to those who can create jobsand opportunities.
And rapid implementation of the economic stimulus planis also important. Indeed, the people here may conclude thateven more must be done to jolt the economy back into growth.
I think I should say in light of the town hall meetingwe did last night with Japanese citizens and the fascinatingquestions I was asked, that I was immensely impressed with thelevel of knowledge and interest of ordinary citizens in thiscountry in the present conditions.
And one of the things that I hope our visit here willdo is to at least convince the Japanese people that the leadersof the United States -- all of the Cabinet members, all of theCongress members, the high White House officials, all of us whoare here -- we have every confidence that Japan is fully capableof restoring growth to this country and all of Asia, fullycapable of mastering this challenge just as it has the challengesof the last 50 years.
I think having that confidence in the mind of theJapanese citizens is absolutely key, over and above anygovernment program -- any spending program, any tax cut program,any other kind of program -- in convincing the citizens thatthey, too, have a critical role to play here in purchasing moregoods and services in the domestic economy.
Now, a high savings rate is a very good thing,especially for a country that's going to have a rapidly agingpopulation. But in order for the society to work, Japan needsboth a good savings rate and a robust economy. And jobs cannotbe created unless someone is buying what the people who areworking are producing.
And so I hope that part of what has happened here willgo beyond government policy, and that there will be a greatdebate among the citizens in this country about how they can haveboth the benefits of appropriate savings for their own retirementand the benefits of a growing economy by contributing in buyingthe products and services of the people who are going to workevery day. Both will be required to deal with the challengesthat Japan, the United States, Europe, other advanced countriesface with an aging population.
I also believe that Japan will benefit by going forwardwith efforts to increase outside investment and to deregulate keyeconomic sectors. Primarily, let me say, given the present stateof things, I think this is important because it can make a majorcontribution to job growth here in Japan.
Just since 1993, when I took office and we began anaggressive effort on telecommunications, which was culminated afew years ago by the passage of the Telecommunications Act, wehave seen an enormous number of new jobs coming in to theAmerican economy because of the telecommunications deregulation.
Since we deregulated our domestic airline industry, wehave seen tens of thousands of new jobs created. I am convincedthe same thing would occur here. Yes, there would be some changeand some disruption, but the net effect would be to create morejobs and better incomes and more stability for the people ofJapan.
We made real progress on our enhanced deregulationinitiative earlier this year at the G-8 summit, and I think it iscrucial that we make further progress by the time the PrimeMinister and I meet again next year.
We also have to do more on trade. Since 1993 theUnited States has been party to 260 trade agreements, openingglobal markets from agriculture to automobiles to create goodjobs and lower prices for consumers. In 1994, at our APECsummit, the leaders resolved to create an Asia Pacific Free TradeZone by 2020, and we have made good progress in some areas,especially with our information technology agreement to erasetariffs on computer and telecommunications equipment.
This week at APEC, we moved forward on the earlyvoluntary sector liberalization initiative, to open trade in ninekey sectors worth more than $1.5 trillion a year by referring theprocess to the World Trade Organization. As all of you know, I'msure, we had some differences with our friends in Japan on thoseissues, and we wish that they had been more forthcoming on allnine areas. But the most important thing now is that Japan playa leadership role in getting a WTO agreement in all nine sectors.This is very, very important.
Again, I say, restoring growth in Japan and restoringgrowth in Asia need to be seen as interlocking objectives. Thisyear the Asian ailing economies' exports to Japan are down by $13billion. In America they're up by $5 billion. We believe thatthis is something that we have to do together.
Let me say that I understand that every society hascertain sectors which are especially sensitive to trade-openinginitiatives. I also understand that even wealthy societies, andespecially developing ones, face a constant conflict between thedesire to get the aggregate benefit of an open economy and thegnawing fear that it will not be possible to maintain the socialcontract in the face of global economics, and that this canundermine the solidity of communities and families and of societyitself.
The key, as I said in a speech to the WTO in Geneva afew months ago, is to involve all sectors of society in theprocess of setting 21st century trade rules, to make a commitmentup front that there ought to be due account taken of the need topreserve the social contract to advance the health and well-beingof people as trade advances, to make sure ordinary citizensbenefit from advanced trade, to make sure we're improving theglobal environment, not destroying it, as we expand trade.
We know that these things can be done. But the worstthing that can happen is if it appears that when times are tough,borders are closing up, other markets are being heavilypenetrated in ways that can't be justified by economic forces,and then you're going to have, I'm afraid, a round of retaliatoryprotectionism. I'm quite worried about this now.
We had a meeting early on when it was obvious to usthat this economic difficulty in Asia was going to be very, verysevere. And I made a decision with the full support of my entireeconomic team that we would do everything we could to leaveAmerica's markets as open as possible, knowing full well that ourtrade deficit would increase dramatically for a year or two. Idid it because I thought it was a major contribution we couldmake to stabilizing the global economy and the economies in Asia.
And so far, on balance, because our economy iscontinuing to grow, the American people and American politicalleadership have supported that. But if there is a perception ofunfair trade, the consensus can disappear. You know this -- Iwant this mostly to be a good news speech, but I have to say, inthe United States now we have had this year, in one year, a 500percent increase in the imports of hot-rolled steel from Japanand a 300 percent increase in the import of hot-rolled steel fromRussia. No one seriously believes that this is solely because ofchanging economic conditions.
And if you put that against an inability to open moremarkets, to have more investment, to have more deregulation, tohave more market access, it will create in our country thepotential for a retrenchment here in a way that will not be goodfor Asia or Japan or for the United States over the long run. SoI say again, we want to keep our markets open, but we need fairrule-based, disciplined expansions, and we need to avoid marketpenetrations that have no relationship to market factors.
All of you in this room know a lot better than I dothat it still remains extremely difficult for some non-Japanesebusinesses to succeed in the market here. We will continue towork for greater opening, but I will say again, I believe thatwhat we're doing is not simply good for the United States, Ithink it's good for Japan as well. I would not come here andadvocate any course of action that I believe was good for us butbad for Japan. That, in the end, is self-defeating.
We should follow these policies only if they are goodfor our countries, both our countries, over the long run, and notonly good for us who are in positions of decision-making but goodfor the ordinary citizens of our country, good for their futureprospects, good for their ability to raise their children in amore secure and stable and prosperous world.
So the last point I want to make is let's not forgetwhat this is all about. It's about more even than the success ofyour businesses, more than the profits that you might earn, morethan the jobs you might have. It's about making it possible forcitizens in free countries to pursue their chosen destinies, tolive out their dreams, to give their children a chance to liveout their dreams, to manage the tumult of the modern world in away that seizes all the brilliant opportunities that are outthere and deals with the challenges in a forthright and fair way.
I believe that this is terribly, terribly important.Let me also say I believe that it is very important that Japanand the United States, as two great democracies, continue ourpartnership for peace and freedom. There are those who say,well, all these global economic problems are inconsistent withdemocracy; democracies can't deal with these issues; we need moreauthoritarian governments.
Well, if you look at the evidence, it contradicts it,that assertion. Many more authoritarian governments havefinancial institutions and processes that are insufficientlyopen. One great democratically elected leader, the President ofthe Philippines, President Estrada, said the other day, noting --he was referring to calls for greater open processes and greateropenness in institutions, he said, now when Alan Greenspan andthe common people have the same view, we should listen.(Laughter.) I wish I would have thought of that line myself.(Laughter.)
But if you look around the world, if you see theencouraging signs from Thailand to South Korea to eastern Europeto Mexico, you see that if people feel they have a stake in theirsocieties, they are willing to sacrifice, they are willing totake responsibility, they are willing to give their governmentsleave to make decisions that are difficult today because they areright for tomorrow.
And so I say also, I hope that on this trip the UnitedStates and Japan will reaffirm what we have in common: oursupport for democracy, our support for openness, our support forthe march of peace and freedom as well as the return ofprosperity to Asia and the rest of the world.
In closing let me say, we have to have your help in allthis. You know that. The private sector has a critical role toplay if we're going to address the broad challenges of globalchange and the challenges of the financial crisis. All of thisyou understand, I'm quite sure, better than I. We need yourcreativity, your entrepreneurial strength. We need yoursustained, direct investment in emerging markets, your supportfor training, health care, and good workplace conditions toensure a strong work force and stable, broad-based support foropen markets and global free enterprise.
Above all, right now, in every country, we need yourleadership to support creativity and change. The world isdifferent and it is changing at a rapid rate. Inevitably,economics changes faster than politics. And yet, in the end, ifwe want stable societies and successful economics, we must havegood politics. You can help us to achieve that.
President Franklin Roosevelt once said, "True wealth isnot a static thing." How well we know that. It is a livingthing, made out of the disposition of people to create anddistribute the good things of life. We must find the rightformulas to make this living thing grow stronger. Over ageneration of extraordinary progress, the people of Japan haveshown what is possible.
Now it is the challenge of Japan and the United States,working at home and working together; to fulfill this promise, torestore stability to this region, growth to this country and tothe world. I am absolutely convinced that the 21st century canbe the best time humanity has ever known. I am more optimisticand idealistic today than I was the day I first took the oath ofoffice as President in 1993. But I am also absolutely convinced,as my daughter's generation says, that denial is not simply ariver in Egypt. (Laughter.)
We know what the challenges are and we have to find themeans to meet them. If we do, we will be richly rewarded. Thankyou very much and God bless you. (Applause.)
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