THE WHITE HOUSE
Office of the Press Secretary (Tokyo, Japan) ______________________________________________________________ For Immediate Release July 9, 1993
PRESS BRIEFING BY COUNSELOR TO THE PRESIDENT DAVID GERGEN, UNDER SECRETARY OF STATE JOAN SPERO, UNDER SECRETARY OF TREASURY LARRY SUMMERS, AND SPECIAL ASSISTANT TO THE PRESIDENT BOB FAUVER
Hotel Okura Tokyo, Japan
1:00 P.M. (L)
MR. GERGEN: Good afternoon. If I could have your attention -- it may not be undivided, but if I could have your attention. We wanted to do a briefing on the communique and where we are as of midday today. I, as you know, will be back to talk to you later today. The President has a press conference later on today.
The President came back to the hotel just a short while ago, and I think it's fair to say he's in high spirits. He feels that the talks have been going extremely well and he's really come to feel that the group of seven is seriously interested in achieving results, not just a lot of rhetoric. And so, on all those counts, he's pleased. He's also very pleased with the communique, the economic declaration, that came out this morning.
I just came down from talking with him for a few minutes and asked him how he felt about the communique, and he said, "I like it a lot," -- this is the economic communique -- "I like it a lot because, first of all, it doesn't sound like a government document. It talks about jobs, it talks about growth. There's a little gobbledy-gook in it. And it talks to people. That's not always been the case in documents of this sort."
And he said, "Secondly, it's specific about a couple of things that have been very important to the American side -- specific about the market access agreement; specific about Russian aid." That's, obviously, a follow-up to the press conference we had here last night.
He said, thirdly, it reflects very much his suggestion about having a jobs conference in Washington in the autumn. And you've heard from us on that subject as well.
And finally, he said, you know, without sounding self-serving, this document -- (laughter) -- put those words in my mouth. This document does endorse the administration's economic program and said it was long overdue.
Sandy Berger of the National Security Council team has been checking communiques, had someone research this. And if you go back, he said, back to 1980, every communique coming out of this conference since 1980 has been implicitly or explicitly critical of the United States for failing to address its deficits. Now, this is a first in that period to say the United States is basically taking the right course.
It's also of note that there are four leaders here who have been attending these conferences longer than the President, who have signed on to this document: Prime Minister Miyazawa, Prime Minister Major, Chancellor Kohl, President Mitterrand, all of whom then have said that in this document that they endorse what the United States is doing. And it's of note that three of those four do represent conservative parties within their own countries. So on all those counts, the President found this document to be very encouraging. And, of course, he -- everything down to the last point of the title, A Strengthened Commitment To Jobs And Growth, which was something, I gather, was changed quite late last night.
Now, the President also had a bilateral with President Mitterrand. Two or three issues that were discussed there: It was a good session. They did talk about GATT and the prospects for final agreement on GATT. President Mitterrand indicated he would like to push it forward, but also underscored the difficulties of French politics.
The President raised the issues about sanctions with regard to Libya. As you know, with regard to the background of this, there are a couple of folks that the Libyans are still holding in regard to the Pan Am incident -- Pan Am 103. And there are U.N. sanctions now against Libya in place. But those sanctions have not yet brought enough pressure to bear so that the Libyans have coughed up these two people.
The President committed to families of the 103 victims during the campaign that he would give this matter his personal attention and pursue it seriously. And that's the reason he brought it up with President Mitterrand today. There has, as I think you know, been some discussion of whether tougher sanctions might be possible. There's been some discussion in the press and elsewhere about the possibility of moving on the oil -- to a greater degree, on oil or putting some greater financial pressures on the Libyans. The President brought this issue up to President Mitterrand and President Mitterrand said he would like to talk further about it. So I would anticipate some further conversations in the future between the Americans and the French.
Now, to give you really a much greater authority or view of the communique we have a couple of people to brief today. Joan Spero, who is the Under Secretary for Economic and Agricultural Affairs at the State Department; Larry Summers, the Under Secretary for International Affairs at the Treasury; and also here with them is Bob Fauver who is, as you know, been serving as a sherpa, the head sherpa for the American side at this session, and he's also a Special Assistant to the President for National Security and Economic Policy.
Joan and Larry will actually make the initial comments and begin the briefing and Bob will be available for questions as we go. And then I'll come back -- if you have a question or two, I'll come back the framework or other issues like if you want to discuss them.
MS. SPERO: What I would like to do is just give you a brief overview of the highlights of the communique that Larry and Bob and I worked on until early this morning. As David said, the communique reflects the U.S. emphasis on this summit as a job summit. It's reflected in the title, A Strengthened Commitment to Jobs and Growth. It's reflected in the fairly lengthy session of the discussion of structural unemployment. And it's reflected in the endorsement by the summit of President Clinton's proposal for a job summit to be held in the U.S. this fall.
First, on the world economy, the communique highlights the global growth strategy the U.S. has been pursuing in the last six months. It welcomes strong actions by the U.S. to bring down the budget deficit. It says it's been long overdue. For the Europeans, they are committed to the overriding importance to ensure -- and I'm quoting here -- "that conditions for rapid reductions in interest rates are created." So, for Europe, the emphasis is on interest rate reduction.
For Japan, the emphasis is on domestic demand. I will quote: Japan pledges to -- quote -- "implement fiscal and monetary measures as necessary to contribute to significantly reducing external imbalances." So domestic demand growth is linked to the question of excessive external imbalances.
The second area in the communique is
excessive and external imbalances. The second area in the communique is trade. The conclusion of the Uruguay Round -- I know you've been extensively briefed on that -- but the Uruguay Round is given the, quote, "highest priority." And the recent market access agreement that Mickey Kantor worked so hard on is welcomed as a, quote, "major step."
The third area is Russia. The communique recognizes the $3 billion special privatization and restructuring program that the U.S. proposed. And it endorses the U.S. proposed support implementation group. That is a mechanism for coordinating aid and support for Russia in Moscow.
Another area -- final area that I would mention briefly is the environment. I think it's worth noting that this is the first time in three years that environment has not been a contentious issue in discussion at the summit. And that is because of a change in approach of the Clinton administration regarding environmental issues. The fact that we have now signed the text that came out of the Rio meeting last year, the U.N. Conference on Environment and Development, made it possible for us to give a strong endorsement to a follow-up to the Rio meeting, including following up on two critical treaties that were signed there.
You may be interested to know that the President made a very lengthy intervention on the environment in the heads of state meeting, discussing both what his administration is doing within the United States and emphasizing an interest in cooperating with other G-7 on international environmental issues.
Finally, under the environment category, I would nuclear safety -- nuclear reactor safety. There is a lengthy passage there. This is something of particular concern to the Europeans; it would have concern to everyone.
And with that, I will turn it over to Larry Summers.
MR. SUMMERS: I have very little to add to what Joan and David have said. I would just say there were three critical issues at this summit under the umbrella of creating jobs: growth, trade and support for Russia. And on all three of those issues, we made more progress than any summit in the last five years.
On trade, we've got a market access agreement, which we haven't had in earlier summits. On growth, we have a common global strategy, which we haven't had at previous summits. And on Russia, we've got a program of support that's underway and delivering resources on schedule. So we're very pleased with how this summit has gone on the three critical priorities.
We'd be happy -- any of us would be happy to answer questions.
Q Bob, since you're a veteran of previous summits, I'm hoping you can tell us a little bit about President's Clinton's interaction with the other leaders and what you discerned, and give us a little sense of how you think he did with them and how you think they viewed him.
MR. FAUVER: I think this was the first time that the President had extended periods of time with these leaders. He had met a number of them before for extended bilaterals. He met with all of them bilaterally that he had not yet met just before the summit began. But this was the first extended period of time of interchanges, both formally and informally at coffee breaks and as we had breaks when communique language was being worked on.
I thought he established a superb rapport, give and take, and feeling for the other leaders. It was clear towards the end that the camaraderie, that the style of discussing things back and forth, even when interpreters had to be used, was one of establishing a personal relationship back and forth. I think that's a very useful change for future discussions.
Q A couple of things -- on nuclear safety, was there any commitment, commitment of funds, of course, especially for Russia? And on David's reference to Libya, even the hint of an oil embargo, is it only with the French that the President has raised this, or at least does he intend while he's here to really campaign for American-style sanctions against Libya?
MS. SPERO: Let me just comment briefly on the last part, which is on Libya. There have been other discussions about the possibility of sanctions. This is not a decision point right now, so this is still in the discussion stage and there is no specific proposal.
Q Did he talk to the Italians about it? Aren't they one of Libya's best customers, unless I've lost track?
MS. SPERO: Well, we've been talking to a number of people particularly in the U.N. context as well as in the bilateral. And I think we'll just limit it to that.
Let me answer your question about nuclear safety. Last year the Munich summit began the initiative on nuclear safety. The Group of Seven set up a working group to examine what can be done about nuclear reactor safety both in Russia, in the other NIS states and in Eastern Europe where Russia has sold a number of these reactors.
That group received a report -- it was covered fairly extensively in the press about a month ago -- stating various options. We've now extended the life of that group. It's going to spend, working with the World Bank and with the International Energy Agency, to come up with a specific program about what can be done. They are going to be working with other lending institutions, the World Bank being one of them, the European Investment Bank, the EBRD, to see what kinds of funds can be made available.
A lot of this is going to be contingent on what those countries and particularly Russia themselves are willing to do. You can take a horse to water but you can't make it drink. And so, if you look at the communique language you will see there is an encouragement to those, particularly to Russia, to address this issue with great urgency.
Q There was a lot of skepticism before this summit about what these countries could do, what the leaders could do to get the world economy out of the doldrums, and so forth. And I understand, of course, the market access agreement gives a big jump-start to the Uruguay Round. But even if the Uruguay Round comes about in December, it's going to be an awfully long-term increase in growth. And if you look at this economic declaration, there seems to be an awful lot of escape clauses for both the Japanese and the Germans. The Japanese are allowed to keep in mind the need for long-term fiscal prudence, which, of course, as you well know, they keep in mind a great deal.
The Germans are -- or the Europeans are just supposed to make the conditions that would eventually allow interest rates to come down. So, I mean, can you dispel any of the cynicism that people here might be -- or skepticism, whatever, the people might be feeling about what's actually been accomplished in terms of getting the world economy going in the near-term?
MR. SUMMERS: The question is, Paul is cynical about the growth strategy -- is the question. (Laughter.) Some would say, Paul's just cynical. The answer is that we've got agreement on common directions. Deficit reduction in the United States, fiscal expansion in Japan, interest rates down in Europe. We've had that agreement in place since the February finance ministerial.
We've seen important steps coming into the summit in all three areas. The U.S. deficit reduction plan, which has brought down interest rates by 100 basis points, something no previous deficit reduction plan has done ; the fiscal stimulus program in Japan, which this year came two months earlier, legislated four months faster, and 30 percent larger than last year's; and the reduction of 150 basis points in interest rates in Germany.
And we've got commitments not to do certain actions
no matter what happens to economies, but to take steps that are
necessary to ensure strong domestic demand growth in Japan, in
domestic demand growth in Japan in recognition of the importance of the problem of reducing significant imbalances. And we've got recognition of governments in Europe, who, after all, aren't the central banks. They need to take the steps that are necessary as conditions for rapid reduction in interest rates. That, along with the success the President is having with his deficit reduction program, suggest that this growth strategy will continue over the next six months.
Policies affect economies over time. But I think next year, you'll see much more rapid growth than we saw this year in the G-7, and that the coordinated policies that we have in process are a large part of the reason why.
Q Have the summit leaders decided already to invite President Yeltsin to NATO? Has that decision been taken?
MR. SUMMERS: I don't think so.
Q Because, apparently, Chancellor Kohl says that that's already happened.
MR. FAUVER: The question is, have the leaders decided to already invite Yeltsin to next year's summit in Naples. The invitation would be coming from the Italians because they will be the host. There was some discussion, and I think leaders have come very close to a decision; and I would ask your Italian friends if there will be an invitation coming.
Q But Clinton said last night he expected to see him at the next summit.
Q Prime Minister Major said that this morning.
Q Is it just a formality?
Q The summit declaration speaks of strong actions which have been long overdue in the U.S. and which we welcome are being taken to ensure substantial steady reductions in fiscal deficit, et cetera. How do we know that that's a reference to the Clinton program, which has not been enacted as opposed to, say, the 1990 budget deal which has? Because we wrote it, or what?
MR. SUMMERS: That language was, I'm sure, understood by the heads of state to refer to the ongoing Clinton program. And, certainly, by the sherpa group that drafted it, it was understood to refer to the Clinton program. This is something that other countries have stressed repeatedly and on their own hook in dialogue with U.S. policymakers all along these last six months.
I think, Brit, there is a critical point that has to be noted in connection with the President's deficit reduction program. And that is that 100-basis-point reduction in long-term interest rates tied in timing terms to the deficit reduction program is something that's unprecedented and wasn't achieved with any of the other deficit reduction programs, the budget resolution, Gramm-Rudman-Hollings, and so forth. And that's because there's real meat in this program.
Any questions for Joan?
MS. SPERO: Let me just add one other thing to what Larry said. And I think that this is the first time in over a decade that the U.S. has not been under attack because it has a deficit and because the U.S. was not moving on its deficit reduction. And I think the whole mood, Larry, I think it's fair to say was very much shaped by that reality.
Q If I could follow up then, what is the President telling the other leaders about the prospects for his budget to get through Congress?
MR. FAUVER: The President explained that at the moment it's passed both Houses in slightly different versions; that there is the conference coming up; that he thinks it will be a difficult fight but that he is confident that in the end the budget will pass.
Q And adhere to the $500 billion deficit reduction target?
MR. FAUVER: Yes.
Q Question on the framework. Can you give us an idea of how those communications are going right now?
MR. GERGEN: No. The talks are continuing today. And I don't think we have any better sense of how that will come out today than we yesterday. But they have talks every day since the President met with the Prime Minister. And I would -- the President said just a little while ago, obviously, he would welcome a deal if it's a good deal, but he's not signing up to one that's not a good deal. And until the negotiators complete their talks and the language is settled, it's hard to determine whether the deal is one that he would want to embrace.
Q Are the talks going to end tonight?
MR. GERGEN: Well, if they, obviously, don't reach an agreement here in Tokyo, they'll continue beyond Tokyo.
Q Are they going to end in Tokyo?
MR. GERGEN: I think for guidance purposes, I'll just say this. It's not anticipated that tonight's dinner will be a negotiation. It's anticipated that the dinner would be more in the form of a social conversation. Now, whether there will be some further conversation about the potential agreement or an agreement that may have been reached by then, I think one can't exclude that possibility; but this is not intended as a negotiation.
Q Will the President be talking to us about the agreement at 8:00 p.m. tonight?
MR. GERGEN: Well, if there is an agreement when he comes out for a press conference at 8:10 p.m., I'm sure that -- he'll talk about it.
Q Do you think there's a slight chance there won't be?
MR. GERGEN: Do I think there's a chance there won't be?
Q Do you think there's the slightest chance that there won't be?
MR. GERGEN: Oh, I think there's absolutely a chance there won't be. I can just --
Q And you'll tell us tonight?
MR. GERGEN: Sure. I think that -- I guess it's conceivable talks could continue tomorrow. But I think the anticipation is that we'll know by the end of the day. But this is still fluid, and I just -- I think it would be inappropriate to assume that this is going to come to fruition during the day. I think it's still quite fluid.
Q A follow-up on the earlier question, the earlier simple question that Paul asked about. I'll follow up with another simple question. Does the watered-down reference to Japan -- what Japan's going to do maybe on stimulus, was there a feeling that since the Japanese government is in a rather awkward situation and they really shouldn't push their hand too hard to do something on further economic stimulus since there may be a new government in place soon?
MR. SUMMERS: I don't think the current political developments played an important role in shaping the language addressing concerns about Japan. I think the language makes clear that Japan will do what's necessary to ensure strong domestic demand growth, and it explicitly acknowledges the problem of imbalances.
Countries have their own legislative calendars and their own independent central banks. So these aren't -- these meetings aren't occasions for announcements of new fiscal policies and like, but they are occasions for moving the process along. And I think if you compare this statement with the kind of statement we had in the April finance ministerial meeting, you'll find that G-7 cooperative process for the first time in years is moving along.
MR. GERGEN: One last question.
Q On the fiscal point, this is a question for Mr. Summers, you were saying that Japan needs to do much more to stimulate the domestic economy. Do you think that Japan needs to take much bolder actions than the latest package, like income tax reductions, if we are to make a significant dent in the trade surplus? And do you think Japan has enough fiscal cushion to do that?
MR. SUMMERS: I'm not sure I heard the whole question, but I think I captured the drift because I've heard questions like it before.
Japan's got plenty of unused capacity. Industrial capacity -- industrial production has been declining in Japan. And Japan's got a large fiscal cushion -- substantial, structural budget surplus. And it's got a large imbalance with the rest of the world. And those are the set of conditions that make stimulus to domestic demand through fiscal policy a very natural economic prescription -- not just in the interests of the world, but in the interests of the Japanese consumer as well.
You know, five years ago, Japan embarked on a program that was directed, in one phrase, at becoming a lifestyle superpower. At that time, consumption represented more than 60 percent of Japanese GNP. Five years after that attempt to become a lifestyle superpower, the share of consumption and GNP is now closer to 58 percent. We think helping the Japanese consumer can help the Japanese economy and the world economy.
MR. GERGEN: Let me just say one other word about this bilateral agreement. There is no appetite in the American delegation to sign on to an agreement just for the sake of an agreement. It's been often said in another context that no agreement is better than a bad agreement. And I think that is very much the attitude with which the administration is approaching this issue.
There's interest in simply going on with another coonskin on the wall. That's not what's at stake here. So this is going to be looked at very carefully, evaluated very carefully. The President is going to want to see the language, the fine print, understand the interpretations before signing on to it. That has not occurred. And until some language is put in front of him from the negotiators, it is simply not possible to make an assessment of how this will come out.
Now, I'm not anticipating just for the sake of briefings here, I see no particular reason why we need to provide you with yet another briefing later in the day, given the fact that the President is -- and I know -- I'm sure there's no clamor for it in this room. The President will have his press conference around 8:10 p.m. tonight, about a half an hour.
If there is the need for a readout after the dinner tonight, we'll provide that. It's impossible for us to say whether there's going to be anything there that is worthy bringing to you, but someone will come back into the briefing room this evening after dinner and be available. Whether we do a formal readout or just talk informally, we'll have to wait and see. But we'll have somebody come back and be responsive to you because I know some of you are going to be interested in that.
The dinner is -- I think the dinner probably doesn't start until around 9:30 p.m., 9:45 p.m., so it's going to be a little latish, I'm afraid, when we'll have somebody. But we'll try to make sure somebody's available to you for those who want to pursue that.
END1:30 P.M. (L)