Written Responses to Questions Submitted by the Japanese Newspaper Asahi Shimbun

April 28, 1987

Japan-U.S. Trade Relations

Q. Are punitive measures the wave of the future in U.S.-Japan trade relations? Will harsh sanctions resolve the semiconductor dispute? How will you balance the interests of the consumer against the need for fair trade?

The President. I decided to place high tariffs on $300 million of Japanese exports to the United States because of evidence that the semiconductor agreement was not being fully implemented. We are encouraged by recent actions by the Japanese Government to improve the implementation of the agreement. When the arrangement is working as intended, the sanctions will be lifted. We remain committed to the semiconductor agreement and want to see it function as intended. That would best satisfy both the interests of the American consumer and the need for fair trade.

My action is aimed at redressing a specific trade problem that has proven to be particularly difficult. The tariffs will affect less than one-half of 1 percent of Japan's exports to the United States. The economic relationship between our two countries is close and mutually beneficial, and the semiconductor issue should be kept in perspective. We will continue to seek to resolve problems through cooperation, and our commitment to free trade and opposition to protectionism also remains unchanged.

Q. Since last year, despite the yen-dollar currency realignment, the U.S. trade deficit has not decreased. Recently the dollar has plunged, and the latest U.S. figures indicate that the deficit has continued to climb. Are you satisfied with the current yen-dollar rate? How effective do you believe currency devaluations will be in significantly reducing the trade deficit?

The President. As Treasury Secretary Baker has said, all seven major industrial nations remain fully committed to strengthening policy coordination, promoting growth, and cooperating to foster stability of exchange rates. We all believe a further decline of the dollar could be counterproductive to our efforts.

The best way for the United States to reduce its trade deficit is by exporting more to trading partners. Since the Tokyo summit last May, Japan and the United States have worked positively to coordinate economic policies among industrialized nations, and Japan has said it will prepare a comprehensive economic program to stimulate domestic demand. Japan can make a major contribution to reducing external imbalances and sustaining world economic growth by adopting policies to promote stronger domestic demand in the short run and, over the longer run, by implementing fully the structural reforms identified in the Maekawa Report to ease Japanese dependence on exports as a source of growth.

Q. The United States now intends to raise the rice issue at the new round of the GATT. The Japanese, however, consider rice a political sanctuary. Would you like to see an open market in Japan for foreign rice?

The President. Yes. An open market would be in the interest of the Japanese consumer and the world trading community. I want the GATT negotiations on agriculture to be comprehensive. We have said that we are willing to put everything on the table, but we expect other countries to do the same. We have an opportunity to resolve problems in agricultural trade which have been an economic drain on many countries. In order to solve these problems, we must all cooperate, and we must all be willing to put our agricultural programs and policies on the negotiating table.

International Trade Bill

Q. Congress is preparing trade legislation that is considerably more protectionist than the administration bill. How will you reconcile Congress to the administration position? Can the United States produce a trade measure that will uphold the principle of free trade?

The President. As you know, I submitted a comprehensive trade and competitiveness bill that included important trade provisions to both Houses of Congress early in this session. Our proposal aims to enhance U.S. competitiveness, to uphold free and fair trade, and serve to keep U.S. and overseas markets expanding, not closing. I do not want to make specific comments on any of the proposals that Congress is considering, because the legislative process is not complete. The bills which are being considered by the House and the Senate contain both provisions which I fully support and provisions which I continue to find objectionable. My administration will continue to work very closely with Congress to achieve the goals in trade legislation that will result in beneficial, GATT-consistent, expanding trade.

Japan's Military Role

Q. Japanese defense expenditures are now expected to go beyond the symbolic ceiling of 1 percent of her GNP. Would you like to see a significantly more powerful Japanese military presence? What do you expect the next stage of Japan's role and mission in the Pacific to be after the current 5-year defense buildup has been achieved in 1990?

The President. I do not believe the decision by the Japanese Government to abandon the 1 percent of GNP ceiling represents a fundamental change in Japanese defense policy. Rather, I understand that it was found that that artificial formula was no longer suitable for Japan's defense needs. Those needs reflect well-defined roles and missions adopted by the Japanese which are defensive in nature and complementary to the roles and missions of U.S. forces in our mutual security relationship. As Japan's ally, we welcome the more realistic approach to defense. I do not expect Japan's military roles and missions to change significantly in the future, but we will continue to consult closely on the security environment of the region and the most effective cooperative defense measures in response to change.

Japan-U.S. Relations

Q. The U.S.-Japanese relationship has become increasingly important, both economically and politically. On the economic side, the two countries are competing more and more each day for world influence and markets. In fact, a recent study at the Harvard Business School concluded that the United States and Japan may be on a ``collision course for world economic leadership.'' Are there confrontations ahead? How can they be avoided?

The President. There need not be any collisions if the leaders at the helm chart their courses together, as Prime Minister Nakasone and I have done. The Prime Minister and I firmly agree that the United States and Japan can help preserve peace and achieve greater prosperity by working together. Within the family of industrialized democracies, Japan's support has been essential to our success in building Western solidarity and expanding the global economy for the past 5 years.

In the business world, we have seen both increased cooperation and greater competition among U.S. and Japanese industries. We have made progress in fields ranging from superconductor research to the globalization of financial markets. Creative and open minds as well as open laboratories and markets have made such progress possible, and we are confident that a balanced two-way exchange in research and training will accelerate the rate of progress for both countries. However, along with the benefits of openness, there are responsibilities of economic leadership which must also be shared. Our democracies must be compassionate, but they must also facilitate necessary economic adjustment. We only harm ourselves by closing markets. Cooperation and fair competition can assure economic progress and a better future.

Pacific Regional Cooperation

Q. You have talked of the ``Pacific Era'' and the importance of cooperation among Pacific rim nations. What initiative should Japan and the United States take to bring these nations closer together? What should China's role be?

The President. The strong economic growth that is expected through the next century will give the Pacific region increasing significance and influence. The United States and Japan, as the economically strongest industrial democracies, have a unique opportunity to influence the pace and scope of cooperation within the region without, of course, interfering with the independence of its nations. In order to promote a prosperous Pacific community, the United States and Japan should use their economic strength and democratic traditions to help create a climate of political stability, security, and economic growth. Certainly, these efforts might include opening domestic markets to the goods of developing Pacific nations. We will also encourage Japan to expand and deepen its role in the IBRD, IMF, GATT, OECD, and international development banks.

China, the world's most populous country, has become an increasingly important economic actor in the Pacific region. The United States and Japan should continue to encourage China's modernization and a positive Chinese role in the region.

Arms Control

Q. In negotiations with the Soviets, is it still feasible to ask the Soviets to simultaneously accept deep cuts in strategic systems and SDI?

The President. SDI and reductions in nuclear arsenals are not mutually exclusive goals. It is quite the contrary. It is SDI that brought the Soviets back to the negotiating table and persuaded them to negotiate deep reductions seriously for the first time. SDI is also our insurance policy against the possibility that an agreement is not fully implemented. We intend that SDI provide the stability necessary for further reductions as well. With significant reductions in U.S. and Soviet nuclear arsenals, we could rely more on defense than offense for deterrence. We would also need fewer strategic defenses than would be required at today's strategic offensive force levels. Accordingly, it makes sense to pursue SDI and an agreement on offensive force reductions concurrently. We should also not lose sight of the fact that offensive reductions apply equally to both sides. We are not seeking to bargain away SDI; instead, we are negotiating for mutual 50-percent reductions in offensive strategic forces and for a jointly managed transition to a defense-oriented posture. Such an outcome would make sense for both sides.

Q. Do you think the recent initiatives in INF will lead to an agreement?

The President. As I said on April 15, we believe the exchanges that Secretary Shultz had in this area increase prospects for an interim agreement on intermediate nuclear forces. There remain, however, important outstanding issues to be resolved, particularly on SRINF and verification. We are consulting intensively with our allies in Europe and Asia, including Japan, on these issues.

Q. What stumbling blocks remain to a START treaty?

The President. First of all, we must reach agreement on the relationship between a START agreement and the negotiations over defense and space weapons. We believe an agreement on 50-percent reductions on offensive weapons should be the highest priority. It need not be delayed while the United States and Soviet Union resolve the issues in the defense and space forum. Second, the Soviet side must address the important concerns the United States has regarding stability. The United States has proposed certain sublimits on the most dangerous and destabilizing ballistic missiles. Sublimits are an essential part of any future START agreement, in our view. Although the Soviets have, themselves, proposed similar sublimits from time to time, they have backed away from these earlier positions. This issue, as well as the subject of effective verification, needs to be adequately addressed before an agreement can be reached.

Soviet-U.S. Summit Meeting

Q. What are the chances for a U.S.-Soviet summit in the United States this year?

The President. When General Secretary Gorbachev and I met in Geneva in November 1985, we agreed to intensify the dialog between our two countries at all levels. To stimulate this process of dialog, I invited the General Secretary to visit the United States. I can't speak for the General Secretary as to whether, or when, he will accept; I can only say that my invitation remains open and the welcome mat is out.

Korea

Q. U.S. diplomats have been instructed to engage in a substantial dialog with diplomats of N. Korea (Democratic People's Republic of Korea) when opportunities arise. What has brought about this change?

The President. The United States is committed to the reduction of tension on the Korean Peninsula. We hope that we will begin a process of reciprocal steps that will ultimately lead to a reduction of those tensions.

Q. How do you view the continuing constitutional crisis in the Republic of Korea?

The President. We believe that Korea needs a more open, broad-based government. We have repeatedly urged both major political parties in the Republic of Korea to come forward to negotiate in a spirit of compromise. Koreans themselves must design a more democratic system.

Q. What is the U.S. approach to stabilizing the Korean Peninsula?

The President. The United States encourages greater stability on the Korean Peninsula by providing a firm security commitment, supporting democratic progress, and encouraging North-South dialog and understanding. We look to those on the peninsula, however, to take the lead in ensuring peace, stability, and democratic progress there by increasing contacts, developing understanding, and building confidence.

Q. What do you expect the role of Japan to be in this effort?

The President. No outside nations are more interested in reducing tension on the Korean Peninsula than Japan and the United States. We remain in close contact with the Japanese Government on this issue, working to promote political and economic policies toward the peninsula which will promote the cause of peace.

Venice Economic Summit

Q. In your seventh participation at the industrial nations summit in Italy, what area will be of primary interest?

The President. There are a wide range of issues, many of which we discussed last year in Tokyo, that I and my colleagues will wish to examine. I believe that the focus will be on agriculture. At the Tokyo summit, we agreed that a cooperative effort is needed to redirect the agricultural policies of the summit countries. We must go beyond this at Venice, underscoring our firm commitment to comprehensive and expeditious negotiations in the Uruguay round to achieve the reforms that would help all of us. The agricultural subsidy and trade practices of the various summit countries hurt farmers and consumers and deprive developing countries of opportunities to produce more agricultural products.

Note: The questions and answers were released by the Office of the Press Secretary on April 29.