The President. Well, yes, I do. Number one, we're looking forward very much to our trip, which will begin tomorrow. And this will be the third time that we have had the opportunity of visiting Japan, so we are looking forward to this return.

But I think the message that I would have is that the close friendship that we do have and the relationship, overall, imposes on Japan and the United States a responsibility to the world to foster peace and prosperity. Between us, Japan and the United States are responsible for one-third of all the gross national product of the world. We are the two greatest trading partners -- our relationship between each other that way. But we can make such a contribution to easing the tensions in the world and bringing the prosperity and the peace that I think the people of all the world want. Some governments may not want that, but the people want it. And between us, as I say, we have a great duty.

Mr. Shikanai. You are now having the most difficult and egregious time as President. What are the real, major objectives of your trip to Japan?

The President. Well, I think that we have a number of things that we need to talk about, because we are such close friends and allies. I think, for one thing, we have some differences with regard to trade. And as we discussed when Prime Minister Nakasone was here for the Williamsburg summit, we discussed the need for all the world to get away from the idea of protectionism in trade, trying to maintain an advantage over someone else.

The great growth and prosperity of Japan in trade and industry is due to the idea of democracy and free trade. And so free trade must also be fair trade. And I am concerned that here in our own country some of the restraints on our exports to your country have led some to a feeling of protectionism and that they must do something in retaliation. I feel that as we loosen the restraints between us in trade, that is the answer to those who could give us political problems in both our countries -- to the Prime Minister, to myself, here. So, we will be discussing all those ways in which we can restore that trade.

We have between us the biggest trade between any two countries in the world. And there is a dangerous imbalance now in that trade. So, those will be some of the things that I hope to be discussing.

Mr. Shikanai. While some Japanese feel our country should be unarmed and neutral, Prime Minister Nakasone considers cooperation between Japan and the United States absolutely necessary to Asian peace and security. I would appreciate your comment on this.

The President. Well, I agree with Prime Minister Nakasone very much. The Pacific Basin is the area of the future, and Japan -- I recognize you have some constitutional problems with this -- but a strong Japan, a Japan able to manage more of its own defense, will be a great factor for stability in that whole area. And while we're talking peace, there are some who seem to suggest that if you're talking military strength, you're talking against peace. Well, I don't know of anyone that ever got into a war because they were too strong.

What we need is to be able to deter others who are destabilizing -- the forces, such as from the Soviet Union with their attempts at expansionism. What we need is to have the military strength to deter aggression at the same time that we try to convince the aggressors that they, too, will be better off in a peaceful world.

So yes, we appreciate very much what Japan has done in increasing their own defense. I know that a goal, and one I hope they'll achieve soon, is to be able to protect for 1,000 miles around your trade lines and your supply lines. And we want to continue the relationship we have in that regard.

Mr. Shikanai. Trade friction between Japan and the United States is serious. Do you sometimes worry that it may influence bilateral relations between our two countries?

The President. Well, I'm afraid I almost answered that question in advance to your earlier question there. Yes, those restrictions which I mentioned a moment ago. We must find where, fairly, we can reconcile the differences between our currencies. We must remove restrictions that impair trade back and forth, and we must -- just as we're friends and allies in everything else -- we must have that same kind of approach to our trade with each other, our opening of our capital markets to each other for investment.

Mr. Shikanai. American relations with the People's Republic of China and the Soviet Union influence our own relations with them. Could you discuss current American policy toward these two countries?

The President. Well, with regard to the Republic of China, we are working very hard to establish a stronger relationship, one that has always in the past characterized the relationship between our country and China. I think we've been making great progress. Prime Minister Zhao Ziyang will be visiting here this winter, and next spring I expect to visit the People's Republic of China myself.

With the Soviet Union, we have to recognize there that there is where we must have the strength to deter aggression. They seem bent on worldwide expansionism. They have 50 divisions on the Chinese border. They have about 120 SS - 20 nuclear missiles on that border. They have the largest fleet, the largest of their fleets is in the Pacific, in the area of both Japan and the People's Republic of China. So, there we must have the patience to convince them that peace would be to their advantage, also. And in the meantime, the only way to protect the peace is to have the strength to deter.

But we are very pleased with the progress we've made with the People's Republic of China in establishing friendship there.

Mr. Shikanai. You and I happen to be the same age. I, too, was born in 1911. You and I also share a deep commitment to democracy and freedom, and we long for peace around the world. It seems, however, that the forces of violence and hate are growing. What are the prospects for peace in the world, despite recent tragedies in Beirut, Rangoon, and KAL 007?

The President. Those tragic events recently, the terrorist acts, what has happened to our men in Beirut, are all evidences of how necessary it is for those of us who can, for countries like Japan and the United States, to erase the causes of such hatred and to work ceaselessly for peace.

Yes, you and I were born in the same year. I like to think it was a good vintage year. But we've had an opportunity to see war and peace throughout these years, to see how foolishly sometimes war came upon us, and at the same time to see the spread of democracy and what it has brought. When you look at your own country, when you look at South Korea, when you look at Hong Kong, Taiwan, Singapore and see where the principles of free commerce and trade, the principles of democracy are at work, how much better off they are than those countries that have followed the totalitarian path of communism and statism.

So, I think that while things can look dark and threatening, I think the very fact that there is awareness now on the part of many of us who have seen the other, that yes, we can bring peace. We can prove the need for it. And I think there's more awareness in the world today that in order to have peace we must have strength. So, I am not discouraged by what is going on.

Mr. Shikanai. Many people, both here and in the rest of the world, now refer to Japan as an economic superpower. Within the overall context of U.S.-Japan relations, what are your principal expectations for this new, more powerful Japan?

The President. Well -- and I think this is a classic example for the world -- there is one superpower in the world today that is recognized as such simply because of its military strength and not because of any achievements that it has made in commerce and industry or the living standard of its people. In fact, to maintain their military strength, that power has denied the comforts of living to its people.

On the other hand, you are the second industrial and commercial power in the world. So in that sense you have become a superpower in the peaceful pursuits of commerce and trade and good living for your people. And that is well deserved. That's why we are allies.

Mr. Shikanai. Thank you very much.

The President. Well, thank you for the opportunity.

Mr. Shikanai. Have a nice trip to Japan.

The President. We are looking forward to it. Thank you.

Mr. Shikanai. See you in Tokyo.

The President. I look forward to it. Thank you very much.

Note: The interview began at 11:35 a.m. in the Library at the White House. It was taped for later broadcast in Japan.